Monterrey’s Rise and Fall: Only a Working Class-Led Government Can Stop the Bloodbath
By Claudio Romano
This article combines details of recent events with a historical analysis of the development of Monterrey’s capitalist class and its relation to the Mexican ruling class as a whole. The Monterrey bourgeoisie provides a highly expressive example of the history of industrial development in Mexico. The marked peculiarities that have characterized the process of growth and consolidation of this considerable section of the Mexican bourgeoisie reveal its historical limitations very well. These limitations have become patently obvious in the descent of Monterrey and surrounding states into the abyss created by the quasi civil war between the government and the Sinaloa cartel against all of the other cartels and against the zetas and other lesser independent zeta-like gangs.
When the 1910 Revolution began, Monterrey was the leading industrial center of Mexico, with a population of 80,000, five times smaller than the capital city [Mexico City]. The construction of the Monterrey Iron and Steel Foundry in 1900 made Monterrey into the leading industrial city. Its original productive capacity was of 90,000 tons of steel. But the foundry, with an investment of 10 million pesos — an unprecedented investment form the period — was only the most spectacular manifestation of the industrialization of Monterrey.
Earlier, in 1890, the Cuauhtémoc Brewery was founded: its development consolidated the industrial group that distinguished the city. In 1909 this group built the Glass Works and started on its way to the great vertical monopoly it held until recently. The Monterrey bourgeoisie very quickly achieved a cohesion that is totally missing in the country’s other capitalist sectors. Vigorously rooted in industrial development (largely of heavy industry), it constituted the closest approximation to the model of Western industrialization within Mexico and the national accumulation. Then Mexico lacked a large industrial base, and unlike today, its economy lagged behind Argentina’s, Brazil’s, and Chile’s.
Yet, America protectionism, rampant since the arrival to office of William McKinley, accelerated the development of a Mexican national metallurgical industry more than anywhere else in Latin America. In 1890, just when President McKinley arranged a tariff barrier to imports there were three hundred applications for concessions to establish metallurgical plants. Among the applicants were various foreign capitalists, but mainly, Mexican nationals.
History found in Monterrey a class of merchants who had been considerably enriched by the height of commerce in the decades just before the triumph of the Juarez republic. The end of the Civil War, in Mexico as well as in the U.S., was a hard blow for Monterrey as it was the Northern commercial city par excellence during the first half of the 19th century. The extension of the railroads was the blow that definitively closed this era of commercial prosperity.
The entire northern region found the railroads to be easy and rapid channels of communication with the border, where U.S. industry offered cheaper and better products. Family-style smuggling from then on became a great flood that, drop by drop, impeded the rise of large-scale commerce and the strengthening of the consumer-goods industry in the city. But whereas Monterrey did not become a great commercial city, as say Panama would, it became an industrial proletarian city.
In the 1880s the rich Monterrey merchants saw their salvation in the beginning of industrialization that a partnership with U.S. economy provided them with. The mine owners of the American South and West, by pressuring the government to make the competition of Mexican metals more difficult, became godfathers of Monterrey’s industrialization.
Monterrey did not develop alone. It depended on the Cerro Del Mercado, in Durango, which supplied Monterrey with its iron ore.
Monterrey’s capitalist development
Monterrey was a proletarian city, a city where capitalism in Mexico had achieved its most exemplary model. In its role as the Chicago of Mexico, the city has enjoyed certain privileges resulting from the working of the law of combined and uneven development in the country’s economy. During the 1920s, when the ruling Revolutionary Institutional Party (PRI) initiated its industrializing and modernizing efforts, Monterrey was the only city that had already developed a base, permitting it to take advantage of the new trends most rapidly.
The city quickly resumed many of its old prerogatives. Many industries shut down during the civil war of 1910-1920, but they did not disappear. When it became active again, the city’s bourgeois class already possessed an experience and a tradition that its counterparts in Mexico City and in other cities springing up under the shelter of the new state sponsored protectionism.
Soon the advantages of such a situation became obvious. From the 1940s to the 1980s, when the bourgeois nationalist model of substitution of imports went on full-steam ahead, Monterrey was enjoying the highest industrial productivity in Mexico. In spite of the fact that it only had 2.9 percent of the urban population, it accounted for 12.8 percent of the national production. Even today, Monterrey’s productivity of labor is higher than anywhere else with the possible exception of Puebla.
This high index allowed the bourgeoisie to benefit from considerable profit differentials. The local industry developed at a faster pace than the national one during the 1940s and part of the 1950s. But the dynamics of nationally subordinated industrial development exercised its influence at once, and began to erode the partial advantages of this industrial region.
From 1950 on, a major migratory flow of people began which is principally responsible for the increased population of metropolitan Monterrey, from 300,000 inhabitants in that year to 1,250,000 in 1970. In this way the turbulent industrial city, pride of the country’s traditional liberal bourgeoisie, found itself affected by the iron-clad process determining the country’s distorted growth. Inequality of income was accentuated; a belt of slums appeared not unlike those found in Mexico City, San Paulo, or Buenos Aires; an immense tide of migrants forced wages down, together with the dynamics of organic composition of capital: the replacement of flexible capital-human labor-with fixed capital: machines.
Still the city would remain the most astounding example of the “Mexican miracle,” of the capacity of the Mexican bourgeoisie to industrialize and “modernize” the country under the heavy rule of the PRI. But the PRI-led “miracle” just like all of the other miracles (the Brazilian miracle, the Peronista miracle, and many other short lived miracles) could not resolve one of the great contradictions of all societies with an uneven and combined development: the gap between the country side and city.
Mexico became just another Latin American country in the 1960s. Monterrey became just another Latin American city in the 1960s as well: urban marginalism, unemployment, and underemployment of considerable strata of the population appeared and have never disappeared since. The safety valve of illegal immigration to the U.S. never quite compensated for the lack of opportunities and it is now closing down because of the great recession and repression. The petty transfer of capital in the form of remittances provides a temporary increase in the internal market, one that fluctuates with the ups and downs of the U.S. economy. When it sneezes, Monterrey and the rest of Mexico catch a cold.
Economists consider one of the most important indicators of development to be an industrial working population that represents some 50 percent of the economically active population. In 1960 Monterrey had practically attained this level. But it has regressed steadily since because of a combination of factors.
The Monterrey Group
In the 1960s, the ephemeral historical privileges that allowed the Monterrey bourgeoisie to nourish its arrogance toward the leadership of the PRI, began to disappear.
The inter-capitalist conflict between the Monterrey Group and Mexico City based ruling class of the government is one of the fundamental conflicts of Mexico’s contemporary political history. In Monterrey the Mexican bourgeoisie managed to reach or almost reach the economic levels of its Western models. Although the Monterrey Group is one of the principal pillars of the Mexican dependent bourgeoisie, its economic strength and influence did not compare at all with its political influence, which was visibly underrepresented in the scheme of the PRI only Party.
The Monterrey bourgeoisie (following in the footsteps of Porfirio Diaz) thought of themselves as representatives of the purest free traders. When the Revolution of 1910 broke out, and especially during the civil war until 1917, the Monterrey bourgeoisie was not exactly in the vanguard of the struggle for democratic and constitutional rights.
Always feeling more bound to North American capitalism than the D.F., the Monterrey bourgeoisie could never gracefully accept the breakup of the liberal free trade bourgeois-democratic model that marked the regime that came out of the revolution. It remained an isolated minority under Lázaro Cárdenas, though Presidents Alvaro Obregon and Plutarco Elías Calles had already incorporated it into the mainstream of the PRI. The bourgeoisie that already existed in Monterrey (practically the only fundamental section of the old ruling class that remained relatively intact), took good advantage of this opportunity.
Yet the Monterrey employer’s center remained the most inflexible and most class-conscious bourgeois tendency in the country. The reforms offered by the Cárdenas government in the 1930s included an organized labor movement, although one controlled by the state. The tendency headed by the Monterrey Group did not agree, and offered a tenacious resistance to the organizing efforts of the official union of that period, the Confederation of Mexican Workers (CTM). Several important conflicts took place between the federal government and Monterrey ruling class.
Although the Monterrey Group gave support to the oil expropriation law in 1938, it never gave up its policy of opposition to Cárdenas, a policy that objectively played the role of faithful guardian of the deepest bourgeois class interests and the role of constant reminder to the national ruling group that it should not go too far with the reforms. In Monterrey itself, a general strike took place in 1938. Monterrey’s employers had announced their intentions to stop the formation of unions, assuming that their control over many public officials would help them in this purpose.
In September 1938 the Monterrey Employers Center asked Cardenas to intervene; the governor of the state made the same request. The crisis sharpened further after the arrest of Ramon Contreras, a CTM organizer, held on charges of attempted murder.
This resulted in a threatened general strike in Monterrey, provoking the mockery of the bosses who declared that, “the CTM does not represent the working people of Monterrey.” In response, the headquarters of the electric company and the urban bus transport shut down; telephone service was suspended; the railroads’ ’roundhouse’ stopped activity; and the furnaces at the steel foundries were left to cool.
The impasse did not last long. The judge who had ordered the jailing of Contreras found that, after all, there was no legal basis for the arrest and ordered his freedom. The strike stopped immediately. In this way the Monterrey proletariat “convinced” its bourgeoisie of the need to at least abide by the reforms.
The Rise of the PAN (National Action Party)
From the time of the general strike onwards, the Monterrey Group remained a loyal and benign “opposition,” fully incorporated into the government and the regime. The protectionist policies of the 1930s-1980s benefited the Monterrey bourgeoisie a great deal, although not to the point of escaping the reality of its insertion within the ruling class of a large country, but a neocolonial country nonetheless.
Thanks to protectionism and the policy of nationalizations and building of national industries, Mexico’s economy grew larger than Chile’s in the 1940s, and Argentina’s in the 1960s, ranking only behind Brazil, which itself had overtaken Argentina as Latin America’s biggest economy in 1959. But the economic growth allowed by the bourgeois nationalist model went only so far in increasing living standards, which remained lower for most Mexicans than the living standards of their Argentinean, Uruguayan, Colombia, Venezuelan, or its Brazilian counterparts. Still the national bourgeoisie, including that of Monterrey, enjoyed a captive market, enabled by the national government and the regime of the PRI.
The oil boom triggered by the discovery of the Cantarel oil field in 1976 gave this alliance between the PRI’s center and the Monterrey Group a new lease on life. The financial crisis of 1982 triggered the schism which would eventually create the political space for the PAN. Hitherto, the Monterrey Group had supported the PRI rule without much ado.
When in 1971 mounting student and labor unrest became untenable and a problem for business, the Monterrey Group swallowed its pride and asked for “Los Halcones,” the central government’s shock troops that perpetrated the Tlaltelolco massacre in 1968. The Monterrey Group also went along with the PRI’s left-court foreign policy: looking the other way when retired Mexican army officers provided military training to a group of exiles from Cuba led by a Raul Castro, Camilo Cienfuegos, and Ernesto Guevara; pretending not to notice when the PRI became a part of the Second International in 1971; supporting Jose Lopez Portillo’s alignment of Mexican foreign policy with that of the then existing Soviet bloc and non-aligned movement.
But 1982 was a deal breaker: The nationalization of all of the banks to avoid default ended the central government’s largesse which had kept the Monterrey Group a happy camper. Foreign exchanges were nationalized as well to prevent further flight of capital, which had reached $54 billion while the foreign debt — the second largest in the world — reached $ 80 billion. Hyperinflation started.
Lopez Portillo had promised that Mexico would become a developed country by 1982. Instead its economy crashed. The Monterrey ruling class became a potential candidate in a debt-for-equity swap, under the terms of foreign capital creditors. At the same time, the Reagan administration began pressuring Mexico to make it a more docile partner both politically and economically. The Republican Party in particular, began pressuring for the repeal of the gains of the 1910 Mexican Revolution and of the decades subsequent, calling for privatizations, deregulation, and an end to the political monopoly of the PRI in alliance with unions and peasant organizations. Fearing becoming more dependent on the central government, the Monterrey Group needed a new vehicle to rekindle its privileged links to the U.S. ruling class: hence the PAN.
In the 1982 elections, and ever since, the Monterrey Group backed the PAN, which received a surprising 16% of the vote nationwide. The PAN would continue to grow and eventually it would become the governing party, when a broader sector of the ruling class would adopt it as a main vehicle — instead of its former persona, as the vehicle of the Cristeros, or the Catholic Church.
This switch did not help the steel foundry. In 1986 it was allowed to collapse, and Mexico’s biggest metal works disappeared, and with it, thousands of jobs.
The Fall Into the Abyss
By 2010, the hitherto spared members of the ruling class of Monterrey became targets of kidnappings by the Zetas and others. Their cars became the subject of “impoundments” by corrupt state police and federal custom officers. Many have fled to Texas, and it is said that the Nuevo Leon’s governor’s family spends most week-ends in San Antonio, Texas, as does the governor himself every now and then.
The fact that Zeta and Cartel violence has reached the very top of Monterrey distinguishes Mexico from Honduras or El Salvador or even Colombia in the past, where the very rich could or can buy protection. One must reach to Afghanistan and/or Somalia for a comparison. If those at the very top are not safe, one can imagine what happens to those at the bottom. Even in Ciudad Juarez, where the number of actual killings is greater, the nouveau rich are protected.
The arteries between Monterrey and Reynosa, Monterrey and Nuevo Laredo, and Tampico and Matamoros regularly fall out of the control of the authorities for periods that can last as long as two days. During those times the state and federal government rely on aerial surveillance and U.S. intelligence to appraise the situation. Trucking has been severely disrupted, which ironically has helped rail freight and diminished air pollution. But overall production and business activities have been disrupted. Night travel is severely limited and night life in Reynosa and Matamoros has all but disappeared. In smaller towns, such as Ciudad Mier, the police force often flees en masse, as does the population as well. The UNHCR has described Mexican displaced persons from the north as refugees.
This process of decay filled the vacuum created by the disappearance of heavy industry, the closing down of the steel works and heavy industry and the increase in unemployment in a city with an already large segment of unemployed youth. This and the fact that Monterrey is at the center of the drug trade routes, geographically speaking, differentiated the decline of Monterrey from the decline of similarly situated (from an economic standpoint) Cordoba, Argentina. Whereas the decline of Cordoba’s once large auto industry could have had the effect of opening the space for the drug cartel and related crime phenomena, it did not. This is due largely to the fact that Cordoba lies south and not north of the cocaine belt, and also the fact that unlike Monterrey, Cordoba did not already have a large slum belt exploding with desperate young unemployed workers and youth.
Politically speaking, the PAN government led a so-called war against the Cartels and paradoxically weakened the very roots of the PAN, the Monterrey Group.
The north of Mexico is becoming feudalized. Mexico is not a failed state; it is a state made to fail by world capitalist economics. Only a united front of the mass organizations, aiming to rescind all of the globalization treaties and the profitability of drug trading, only a government of the mass organizations can even begin to stop the ongoing slaughter.