Published by EH.NET (July 2005)

Sarah Babb, Managing Mexico: Economists from Nationalism to Neoliberalism. Princeton, NJ: Princeton University Press, 2004. xv + 292 pp. $21.95 (paperback), ISBN: 0-691-11793-4.

Reviewed for EH.NET by Jaime Ros, Department of Economics, University of Notre Dame.

This book provides a captivating account of the evolution of economics as a discipline and the economics profession in Mexico, as well as of the changing ideological and political context within which this evolution took place.

After an introductory chapter that places the contributions of the book in the context of various subfields of sociology, chapters 2 and 3 examine the origins of Mexican economics. Chapter 2 describes the creation of the first Mexican economics program at the National University (UNAM) in 1929 by a group of Mexican intellectuals, particularly such state-institutions builders as Jesus Silva Herzog and Daniel Cos?o Villegas. The economics profession at the time was state-centered, resembling the Continental European model more than the Anglo-American one. This was so in at least two ways. First, teachers were full time public servants (the taxi professors) that taught early in the morning or after leaving the office in the evening. Second, the main, in fact practically the only, employers of UNAM graduates were government organizations (the Ministry of Finance, the Central Bank, and the Ministry of Trade and Industry being the major ones). Chapter 3 illustrates how the spirit of the era, shaped by the Great Depression and the nationalist Cardenas government, influenced the economics profession at the UNAM in its initial years. It also examines the reaction of conservative business leaders to what they regarded as the dominance of leftist ideology at the UNAM, a reaction that would lead to the creation of Mexico’s Technological Institute (ITM, later ITAM) in 1946.

Chapter 4 looks at the evolution of economics during the Mexican miracle, the period from 1940 to 1970. In particular, it examines how the postwar developmentalist and Keynesian consensus had a role in the increasing internationalization and technification of the profession together with the role in this of the Central Bank (Banco de Mexico) as an elite institution of professional economists. The consensus was reflected in a relative degree of convergence in the economics programs at UNAM and ITM and the shared policy paradigm, favorable to state intervention in the economy, in the undergraduate theses written during this period.

Chapter 5 describes the breakdown of the Keynesian-developmentalist consensus in the 1970s and how this led to the division of economics. On the one hand, the revised economics program of studies at UNAM came to reflect the influence of a radicalized student movement after the 1968 massacre at Tlatelolco with the inclusion of several courses on political economy (largely Marxist political economy) and extensive training in economic history and history of economic thought. By contrast, with the Central Bank acting as a professional constituency, academic reforms at ITAM were inspired by U.S. academia and took the opposite direction by emphasizing the teaching of neoclassical economic theory, mathematics and statistical methods. At first sight, revolutionary Marxism at UNAM and Chicago-school monetarism at ITAM replaced developmentalism, but as argued in chapter 6, the consequence of the changes in the UNAM curricula, at least as reflected in the theses produced, was not so much an ascent of radicalism as a decline of developmentalism. At the same time, at ITAM the emphasis on Chicago-school economics was to some extent diluted by other mainstream American approaches. In any case, changes in the economics programs at both institutions were accompanied by changes in the employment and career prospects of UNAM and ITAM graduates — increasingly bleak for UNAM graduates and progressively more successful in both the private sector and the government for ITAM students.

Chapter 7 describes the rise and triumph of neoliberalism in the 1980s and 1990s as a result of the interplay of external factors — external pressure from international financial markets and leverage of the U.S. government and international financial organizations — and internal factors, the presence of a large group of U.S.-trained economists within the Mexican government. It also addresses the key question of whether neoliberalism has worked to generate growth and rising living standards in Mexico. The author’s answer is that the “evidence suggesting that Mexican neoliberalism is a success is surprisingly weak.” From 1983 to 1999, GDP growth has averaged 2 percent compared to 6.5 percent during the stabilizing development period (1955-1970). By the mid 1990s real wages were still a fraction of their 1980 level, and poverty and inequality persisted.

The final chapter reflects on the globalization of economic expertise and the convergence across the world towards American economics and standards, considering the role of professional success in America leading to voluntary imitation and, more crucially, the role of resource dependence, particularly in developing countries, as well as leverage of international financial institutions following the 1982 debt crisis. It also looks at the contrast between Europe and Latin America: while U.S.-trained technocrats were able to flourish in Latin America, due to the strong influence of international finance in internal political affairs, they did not in some European countries as their presence in high government positions could weaken electoral support. The book concludes that neoliberalism is here to stay unless catastrophic events, similar to the Great Depression, were to happen. One wonders, however, whether developmentalism is not bound to make a comeback in some new form if neoliberalism continues to fail in delivering economic growth.

Despite some sporadic lack of precision — such as regarding Celso Furtado and Osvaldo Sunkel as dependentistas rather than structuralists or developmentalists (p. 143) or officials such as Javier Alejo and Jos? Andr?s de Oteyza as having taught at the Center for Economics Research and Education (CIDE, p. 157) — and some occasional repetition across chapters, this book makes a very fine contribution to the history and sociology of the economics profession and of economics as an academic discipline in Mexico, while providing useful insights on the rise of neoliberalism in Mexico and other developing countries.

Jamie Ros specializes in development economics with special reference to Latin America. His books include Development Theory and the Economics of Growth (University of Michigan Press, 2000).