Received Wisdom: Stavenhagen’s “Erroneous Theses” and the Mexican Maquiladora Industry

The Maquiladoras of Sonora

The fiftieth anniversary of the publication of the “Seven Erroneous Theses” is close to the fiftieth anniversary of the establishment of first maquiladoras on the northern Mexican border. It was said at the time that they would result in the training of a skilled labor force that would contribute to a well-integrated industry, and eventually more intermediate processing and use of Mexican materials would somehow generate an industrial mentality or culture (Schmidt, 1998). This initial argument has not changed much in the past 50 years. As Stavenhagen pointed out, the facts and figures both belie and curb any optimism.

Three stages of development of the maquiladora industry in Sonora can be identified: the beginning (1966–1975), with strong growth and an increase of 49.73 percent per year in the number of companies; the second stage (1975–1982), with slow growth, some periods of decline, and the establishment of maquiladoras golondrinas (so-called because they flew away without warning.); and the third stage (1983–2000), the peak of number of plants and employment. Lara, Velázquez, and Rodríguez (2007) identify a fourth stage following the 2001 economic crisis, when, because of a slowdown in the growth of U.S. manufacturing, the number of maquiladoras declined by 28 percent and employment by almost 25 percent. Following this crisis there was a fifth stage of specialized and internally oriented growth from 2005 to the present day (Robles, 2016).

Starting in 1984, a maquiladora corridor was created across the municipalities of Nogales, Hermosillo, Guaymas-Empalme, and Ciudad Obregón (Díaz, 2009). In the cities of Guaymas-Empalme, a single company, Maquilas Teta Kawi S.A. (part of the Offshore Group) was responsible for staff recruitment and the location of facilities for foreign companies that wanted to establish plants in the area, and it is now one of the largest companies in the state (Secretaría de Economía, 2012). In the past seven years various governments have supported this group in making the region an important aeronautics enclave (Gómez, 2013). According to Robles (2016: 163),

If industrial development rests on a single company or group, it may exercise strong labor control. A worker dismissed from a client company belonging to this group can hardly expect to find another job in this regional industry. Hosting means that the company may provide everything from a sheet of paper to personnel, training, transport, logistical services, and union relations, which are also centralized around a single boss.

The growth of this company, which at times has employed up to 12,000 workers, has resulted in labor shortages, meaning that it has had to “pull people in from all over the place.” A Maquilas Teta Kawi industrial park manager in Roca Fuerte said, “I have workers from all over: Empalme, Guaymas, the short and long valleys,” ¹ which means that he hired Yaqui workers.

Addressing this situation from the viewpoint of Stavenhagen’s “Seven Erroneous Theses,” we can say that this company and region are representative of internal colonialism. ² Citing the alleged benefits of maquiladoras and industrialization, state and federal policies seek to extend them, establishing plants in some of these Yaqui towns; this is the objective of the Law of Special Economic Zones introduced in September 2016 by President Enrique Peña Nieto. Stavenhagen’s political analysis showed us how political, social, and economic structures have deepened internal colonialism in accordance with the logic of “What’s good for General Motors is good for the nation and the world” (González Casanova, 2003: 19). Policies aimed at benefiting local companies or transnational ones are implemented in the name of regional economic development even if they often go against the interests of the local inhabitants or of national societies and actors.

Received Wisdom about Maquiladoras and “Seven Erroneous Theses”

“Seven Erroneous Theses” was a milestone in the social sciences and in the discussions of Latin American issues by development and modernization theorists in the 1960s. The first thesis was “Latin American countries are dual societies” (1967 [1965]: 25). This erroneous idea, widely accepted in 1965, was updated after the signing of the North American Free Trade Agreement (NAFTA) in 1994 to assert that the land and primary activities in general were a thing of the past. Industry was the new, modern element that would allow economic development, and primary activities were something to be overcome in order to achieve “modernity.” This apparent division of society into two separate sectors implied that achieving goals in one of them (industry) meant eliminating the other. Starting in 1982, institutions such as INMECAFE, Tabamex, and Azúcar S.A. (parastatals charged with regulating the prices of coffee, tobacco, and sugar) were abandoned, liquidated, sold, or simply closed down. Development banks that supported producers withdrew state support from rural development programs; credit unions disappeared, and, gradually, so did the Compañía Nacional de Subsistencias Populares (in charge of guaranteeing the prices of basic foodstuffs). Article 27 of the constitution was modified to allow privatization of ejidos (communal lands) in 1992 (Sánchez, 2004). At the same time, the maquiladora industry was being actively promoted, according to Schmidt (1998) as a proposal rather than an industrial project but under the same formula, cheap labor and favorable access to land.

“Modern society” in Mexico means “industrial society,” and it essentially takes two forms: manufacturing, which emerged from the import-substitution model in Nuevo León and part of Coahuila, and the maquiladora industry. In the industrial sector, presumably “the norms and values of the people tend to be oriented toward change, progress, innovation and economic rationality” (Stavenhagen, 1967 [1965]: 26). However, the two apparently separate and contradictory poles (the land and industry) represent “a single unified society” (27): both are products of the same historical, social, and economic process. The issue is not the existence of these poles but the relations between them.

Ramírez (1987) says that the maquiladora industry divided Sonora in two: the land and industry. Stavenhagen saw this as a consequence of the conditions under which the economic integration of the country took place, fragmenting regional economic spaces and replacing reciprocal relations between regional actors with links to external markets. All this “prevented the kind of development that prioritized equity and the reduction of the social and economic inequalities that were exacerbated during this period” (Zapata, 2005: 15). The maquiladora industry’s contradictions and current problems are, essentially, neither dual nor separate: after almost 50 years and despite the triumphal discourse and the advantages of location and cheap labor they have changed little. The industry employs 2,245,438 workers, and the model shows no sign of leading to change and progress. The situation is the product of the turn taken by the Mexican economy in 1982, when it moved from an import-substitution development model to one oriented toward the external market.

Mexico has been sold abroad as a source of cheap labor. The maquiladora industry is a favored sector for foreign direct investment, mainly in the border region. However, “this has proven to be the least profitable form of industrialization, since the limited integration of domestic inputs, negligible technology transfer, and the type of employment it fosters (usually low-skilled) mean that the country profits very little” (Pozas, 2006: 77). The industry and its revenue have not led to the improvement of workers’ living conditions, wages, training, innovation, or change. The average monthly wage (for workers, technicians, clerical personnel, and managers) in this industry in January 2015 was 11,615 pesos, compared with 11,462 in July 2007, representing a meager 9.86 percent increase over a period of almost eight years (INEGI, 2015). Stavenhagen concluded that Latin American underdevelopment followed development, given that the export sector could produce a crisis of unemployment whenever international demand was interrupted. There is no doubt that the logic of the maquiladora industry is linked to international markets and demand, whose cyclical nature is apparent in the decline in employment after the 2008 economic crisis (Figure 1).

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Figure 1.

Employment in the maquiladora industry (data from INEGI, 2015).

Previous crises, such as that of late 2000, had led to the loss of more than 300,000 jobs, 60 percent of them in border towns, and the effects of this crisis had lasted for more than three years. In addition to unemployment there was a decline in wages, which went from US$1.88 per hour in 2001 to US$1.77 in 2003, alongside a 36 percent increase in productivity—from 11,100 to 15,500 pesos (average monthly per worker) between October 2000 and February 2004 (Carrillo and Gomis, 2005). This shows the validity of Stavenhagen’s critique of the first thesis when applied to a kind of industrialization that did not even exist at the time he wrote.

The second thesis was“Progress in Latin America will come about by the spread of industrial products into the backward, archaic, and traditional areas (Stavenhagen, 1967 [1965]: 29). In questioning this diffusionist thesis, Stavenhagen argued that it implied among other things that “the centers of modernism themselves are nothing but the result of the diffusion of ‘modernist’ traits (technology, know-how, the spirit of capitalism, and of course, capital).” This presumably beneficial dissemination, he pointed out, had been taking place for more than 400 years.

In this regard, we must note that one of the most popular theses regarding the maquiladora industry’s benefits is precisely the spread of industrial apprenticeship as a path to national industrialization and, as a result, the industrialization of the northern border. There has of course been a degree of industrial apprenticeship, but what kind of training has it been? Where has it led us? Up to now it has been controlled by transnational corporations and oriented toward specific products and processes without establishing links to the localities in which the corporations settle. When these companies withdraw, their departure leads to unemployment and economic crisis rather than being a stimulus for change and endogenous development. In short, absent these relationships the knowledge acquired becomes useless local capital.

Stavenhagen also criticized the diffusionist view held by some 1960s proponents of modernization that industrialization was like a spot of oil that would slowly spread over an increasingly large backward area. This argument is used to highlight the benefits of the maquiladora industry with regard to the diffusion of industrial culture and apprenticeship, but inequalities and contradictions persist. It is the relations of production that define social classes, with the degree of development of the productive forces playing a derivative role. A basic premise for Stavenhagen was that “to the extent that the localized development of certain areas in Latin America is based on the use of cheap labor (is this not what principally attracts foreign capital to our countries?), the backward regions—those that supply the cheap labor—fulfill a specific function in the national society” (1967 [1965]: 27). Today as 50 years ago, cheap labor is one of the keys to these plants’ creation. The maquiladora industry is not intended to industrialize a region, state, or country; that would, in fact, be contrary to its interests. Industralization cannot be left in the hands of foreign industry.

Stavenhagen’s arguments remain valid even in the face of changing discourse. There is currently very little talk of creating an internal market and developing a national, progressive capitalism. The development model of export-oriented production follows a global logic and no longer depends on local decision making, nor is it targeted toward the development of national entrepreneurs. We have also witnessed, as mentioned above, a relative deterioration in wages, a variable that affects domestic consumption and shows no signs of recovery. In fact, since the shift to an export-oriented economic model, although per capita gross domestic product has increased in absolute terms, Mexico has not made significant gains in closing the relative gap with the United States and Canada (Figure 2).

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Figure 2.

Gross domestic product per capita, United States, Canada, and Mexico (data from OECD, 2016).

The current development model is clearly based on foreign direct investment and does not act in response to local markets; the economic logic is no longer rooted in national capitalism, and this leads to new rules. Huge investments seek to trigger industrial development, and there are no comparable investments in infrastructure for rural development. For example, US$1–1.5 billion is being invested in the construction of the Sasabe–Puerto Libertad–Guaymas pipeline (Zepeda, 2012), which will be part of a network linking gas transport across Chihuahua, Sonora, and Sinaloa. Sonora has partially justified this questionable investment, meant to attract foreign direct investment to the southern part of the state, in terms of 75,000 new jobs and the development of industrial clusters (Gómez, 2013). One of the goals is for transnational corporations to move in because of the lure of cheap labor. However, this investment in infrastructure is not accompanied by an industrial policy conducive to the comprehensive regional development that would benefit not just individuals or economic sectors but Sonoran society as a whole.

What is important here is to establish the basis for an understanding of these relationships and the new scenarios of persistent class struggle, in addition to addressing the relationships between the state, the national bourgeoisies, and the transnational corporations and among workers, firms, and institutions. This will provide analytical elements that, while not new, are rarely employed to address the maquiladora industry. Doing so would provide new perspectives on these realities.

The fifth thesis was “Latin American development is the work and creation of a nationalist, progressive, enterprising, and dynamic middle class, and the social and economic policy objectives of the Latin American governments should be to stimulate ‘social mobility’ and the development of that class” (Stavenhagen, 1967 [1965]: 32). Stavenhagen contested this thesis arguing that classes could not be defined in terms of values, incomes, or consumption habits; groupings on this basis were simply statistical concepts. Marx clarified this issue when he pointed out that a class should be identified not in terms of income or role in the division of labor but in relation to the means of production. Two individuals might have identical incomes but belong to two different classes: say, two carpenters, one employed by a company while the other owned his workshop. The strength of these arguments is apparent today. Income, consumption habits, and values vary over time even though there is no upward social mobility. When the maquiladora industry was implemented, greater regional dynamism was supposed to be one of its benefits, leading to increased employment and higher wages. However, five decades later, no upward social mobility can be observed. The growth of the so-called middle sectors or middle class is questionable. One of the bases for social mobility is having a profession or trade, and the average number of years of schooling of the economically active population is 9.6, barely beyond the third year of junior high school. Rates within the maquiladora industry have altered little over the years: 85 percent of employees are workers and technicians, while 15 percent are administrative staff (INEGI, 2015).

The sixth thesis was “National integration in Latin America is the product of miscegenation” (Stavenhagen, 1967 [1965]: 35). Stavenhagen posited that regional integration was not due to biological attributes or external issues but an objective process that depended on structural factors. Regional integration—understood as the “full participation of all citizens in the same cultural values, and the relative equality of social and economic opportunities” (Stavenhagen, 1967 [1965]: 35)—required not the creation of a new biological category but the disappearance of internal colonialism. Regional integration is still being addressed as if it were up to a variety of financial, corporate, institutional or government agencies rather than being a process linked to structural issues in which the relationships between the various actors and the resulting economic conditions and relations of control, power, and domination are key. At the same time, the discourse employed by the various actors has changed. Back then regional integration was considered an objective process and national consciousness a subjective one. Since the introduction of maquiladoras regional integration has been seen mostly as an economic process and the issue to be addressed as how the different social actors and institutions are integrated. In dealing with the maquiladoras and transnational corporations, both official and sometimes academic discourse have abandoned the idea of national consciousness as a factor in integration and moved on to integration into the economy and the subjective pursuit of global consciousness.

The seventh thesis was “Progress in Latin America will only take place by means of an alliance between the workers and the peasants, as a result of the identity of interests of these two classes” (Stavenhagen, 1967 [1965]: 36). Stavenhagen said that if the concept of internal colonialism was valid, the social structures of the time did not favor such an alliance. While the discourse of a worker-peasant alliance has been abandoned, the concept of internal colonialism and its implications remain valid. Zapata (2012) points out that both workers and peasants can be seen as “disappearing social actors.” Piore and Sabel (1984), Contreras (2000), and Zapata (2005), among others, discussing the labor flexibilization and fragmentation of the work process found in the maquiladora industry, point to the loss of control over the pace and intensity of work and of “manufacturing know-how.” This, in turn, leads us to reinterpret fundamental issues such as working-class consciousness or peasant consciousness and their current transformations from the perspective of class struggle and relationships among the different actors. According to Stavenhagen (1968 [1965]: 30), the relationship of dependency between societies and the industrial metropolis was “an organic, structural relationship between a developing pole of growth or metropolis and its backward, underdeveloped and underdeveloping internal colony” (Stavenhagen, 1968 [1965]: 30). After 50 years of the maquiladora industry, dependency in Mexico persists because of the limited progress of industrialization and the fact that these plants produce neither national industrial nor engineering development. We are witnessing the fulfillment of that astonishing 50-year-old prediction.

Fifty years, however, have not been enough to create recognition of the real obstacles to economic growth and democratic political development. Today, just as 50 years ago, instead of adopting a global perspective we remain concerned with isolated factors such as the belief that the maquiladora industry’s problems are independent of internal colonialism.

Conclusions

Stavenhagen’s arguments not only transcended their own time and the prevailing (import- substitution) development model but also apply to production methods and hiring practices such as the maquiladora industry and the neoliberal hosting and flexible production systems, which did not yet exist or were just being introduced in Mexico. Official federal and state government discourse presents as a strategy for reducing unemployment, stimulating the regional economy, and acquiring industrial know-how the same received wisdom that has been repeated for 50 years with questionable results. We must find new approaches to the economic model established in 1982 and the maquiladora model introduced in the 1960s. Their presumed achievements and progress have failed to materialize. The maquiladora industry encapsulates the contradictions and erroneous theses regarding economic development reiterated over the past five decades while we wait for some new agreement, investment, government, or industry to change our enduring landscape. Globalization, changes in the meaning of labor, neoliberalism and its global logic, and the pursuit of better economic indicators in foreign direct investment and a solution to the unemployment problem on the northern border through maquiladoras have deepened our political, economic, and social contradictions. Unemployment and the number of people in the so-called informal economy have increased, and workers’ benefits have decreased. These and many other indicators reveal that we are still mired in error. At the same time, the proposal to open new lines of research in the social sciences raises questions: What does the continuing validity of Stavenhagen’s arguments reveal? What kinds of relationships are being established between national economic structures and transnational corporations that deepen internal colonialism? Fifty years after the first maquiladoras opened, we must create new avenues of research. Paradoxically, this may mean that we have to go back to 50-year-old arguments to find new perspectives from which to address today’s problems.