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Theorizing business power in the semiperiphery: Mexico 1970-2000

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Abstract

This study explains why the power of neoliberal business over the Mexican state increased during the last three decades of the twentieth century. It identifies three sources of increased neoliberal business power that occurred in conjunction with neoliberal reforms: (1) active mobilization by neoliberal business, (2) increased access to the state by neoliberal business, and (3) increased economic power of neoliberal business. It thereby contributes additional evidence that counters the view of Mexico’s state neoliberalizers as acting autonomously from business. It further outlines two conditions that were instrumental in bringing about the increased power of neoliberal business: the onset of economic crisis in the 1970s, and a shift in foreign capital preferences in Mexico. The analysis demonstrates how Mexico’s sources and conditions of business power differed from those in advanced industrial societies, and outlines why the Mexican case may be a good starting point for devising a historically-contingent theory of business power in the semiperiphery.

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Notes

  1. Some date this more conciliatory orientation towards Mexico’s major industries to the 1940s (Hamilton 1982), while others date it to the 1960s (Camp 1989:112).

  2. I use the term “advanced industrial societies” as a convenience to refer to the elite group of wealthy societies that were among the first nations to industrialize, despite the fact that many have recently experienced significant de-industrialization. I use the term “business” to refer to the private sector rather than “capital,” because some business may not have very much capital, and because “capital” is often used to refer to the influence the private sector may have via its structural or economic power as opposed to lobbying or networking (Maxfield and Schneider 1997).

  3. In addition to developing historically-contingent theories of state-business relations, political sociologists have developed historically-contingent theories of how the political process frames business interests (Neuman 1998); the effect of political opinion on policy (Manza and Cook 2002); the progressiveness of income tax (Jacobs and Helms 2001); and voter turn-out (Winders 1999).

  4. Poultanzas pioneers the logic of a historically-contingent approach to the state in his explanation of the different forms which capitalist states take (Poulantzas 1976:9). He argues that “the present phase of capitalism” must be taken into account in order to explain the “forms of regime,” but that the phase of capitalism “does not simply determine all these forms and changes by itself,…it is only relevant in so far as it determines the conjunctures of class struggle, the transformations of classes and the internal balances of socio-political forces which alone can explain these regimes and their evolution” (Poulantzas 1976). In making this argument, Poulantzas differentiates himself from instrumentalists (Miliband 1969), who have argued that business interests dominated the state via their direct representation within the state.

  5. This argument contrasts with those who have argued that business generally tends to act as a united class (Miliband 1969), possibly via an inner-circle of business elite (Useem 1984).

  6. They show that both monopoly and non-monopoly segments of business conceded that self-regulation of the economy had not worked (Domhoff 1996; Quadagno 1988) and that business mobilized through business associations and networks with policymakers (Domhoff 1990; Levine 1988: 73) to advocate “schemes for economic rationalization that called for some sort of governmental institutionalized assistance to the capitalist class” (Levine 1988:61).

  7. Levine explains that state managers engineered NIRA such that it incorporated both the demands of monopoly as well as non-monopoly capital (Levine 1988:87), and as a result: “Capitalists generally thought they had received much-desired price and production controls. Monopoly capital received a lifting of the antitrust laws. Smaller and more competitive capitalists thought they had received protection from monopolies and that they could now save themselves from the more disastrous consequences of monopoly growth” (Levine 1988:78). The subsequent collapse of this unity (Levine 1988:80, 81, 93) suggests the economic crisis and attendant increase in capital dependence played an important role in securing unified business mobilization, if only fleetingly. Furthermore, the correlation of NIRA’s failure with the loss of unity among industrialists points to the importance of unified business mobilization as a proximate source of business power in the U.S. The government did not try to revive the pro-business aspects of NIRA after the Supreme Court deemed it unconstitutional in 1935, yet it reintroduced the pro-labor provisions of NIRA as a separate act. In contrast, most of the provisions in the Agricultural Adjustment Act of 1933—the program instigated to help farmers resolve their increasing capital dependence—remained in place as farmers remained unified (Domhoff 1996:109–113).

  8. Scholars have variously attributed the state’s autonomy during the Great Depression to the state’s greater responsiveness to newly mobilized societal groups (Leuchtenburg 1963), its reduced economic dependence on business (Block 1977), or its structural insulation from societal interests (Skocpol 1980; Skocpol and Amenta 1986).

  9. Historically-contingent accounts of the New Deal also avoid several problematic assumptions made by others who are similarly skeptical of the state’s autonomy during the Great Depression (Bernstein 1968; Domhoff 1972; Miliband 1969; Radosh 1972), such as that the capitalist class tends to act in a unified fashion, or that it can accurately predict what policies will best resolve increased capital dependency.

  10. NIRA not only: (1) “justified the partial suspension of anti-trust laws for 2 years” and (2) promoted cooperation of industry through trade associations to eliminate unfair competitive practices (Levine 1988:77–78), it also (3) established the right to collective bargaining in order to mitigate rising class conflict on the shop floor. The NLRA incorporated many of the original labor provisions of NIRA.

  11. Unified business mobilization successfully weakened the Full Employment initiative in 1946 and helped ensure the passage of the Taft-Hartley Act in 1947, which curtailed many rights won by unions in the NLRA (Domhoff 1990: Ch. 7).

  12. The importance of the state’s structure was elucidated by Poulantzas when he argued that “the establishment of the state’s policy must be seen as the result of the class contradictions inscribed in the very structure of the state” (Poulantzas 1978b:132). His argument has been extended by some to mean we should “bring the state back in” (Evans et al. 1985) and that the state’s relative capacity to carry out a coherent, non-personalistic agenda (Rueschemeyer and Evans 1985; Skocpol 1980) determines the extent to which business has power. But, historically-contingent theorists point out this extension overlooks how state structures originated in a particular set of inter- and intra-class conflicts (Levine 1988:9) and how, therefore, the contradictions which capital accumulation generates become embedded within the state’s structure (Levine 1988:11; Prechel 2003:313).

  13. The political processes which provoke state actors to reorganize the state are wide-ranging across advanced industrial societies (Akard 1992:610; Thelen 1999).

  14. Because monopoly capital was the fraction best able to accommodate the increased demands of labor, it became the fraction that participated in the new state institutions established to incorporate labor (Levine 1988:17).

  15. These reforms represented a shift away from Mexico’s economic policy from the 1940s through the early 1970s. During this earlier period, Mexico used high import tariffs to protect domestic manufacturers, large and small, from international competition. It also subsidized domestic manufacturers with funding for transportation (roads, railroads) and industrial inputs (oil, electricity and steel). Cárdenas (1996) offers a useful evaluation of these policies in Mexico, known as “import substitution industrialization.”

  16. Liquid asset holders, like bankers, can more easily weather the market volatility which has accompanied international financial integration (Frieden 1991). In contrast, those with fixed assets (that is, investments in factories and heavy machinery) have a harder time doing so and are therefore more selective in their support of market-oriented reforms, depending on their past market orientation (Silva 1996). Large industrialists, for example, are more likely than small industrialists to be able to take advantage of the new possibilities offered by trade liberalization, in part because they can more easily internalize the costs of re-orienting towards export markets (Thacker 2000:31–32; Winters 1996).

  17. Mexico’s economic policies during the 1980s and 1990s have been amply detailed elsewhere (Aspe 1993; Lustig 1992; Middlebrook and Zepeda 2003; Otero 1996; Pastor and Wise 1997). Teichman (1995) provides a comprehensive analysis of the extent and process of privatization.

  18. Journalists made clear the degree to which their assaults created a political crisis. In 1975, for example, they declared that “Resolving the ‘breach of trust’ [between government and the private sector] may be the key issue for the new [presidential] administration” in a leading business magazine. See Editores, “Crisis Evidente,” Expansión, 11/10/1976.

  19. The proportion of leaders in the cabinet that were traditional party leaders from the party’s constituency-based organizations declined from about 50 percent during the 1970s, to less than 25 percent during the 1980s (Centeno 1995:139–40). Thus, by 1983, technocrats constituted 59 percent of the cabinet. Most of the technocrats who gained political power after the 1980s built their careers in the Finance Ministry during the 1970s (Centeno and Maxfield 1992; Maxfield 1990), a part of the state bureaucracy which had historically close associations with bankers (Maxfield 1990; Story 1982), established through dense social network ties (Centeno and Maxfield 1992; Maxfield 1990). Finance Ministry technocrats in the 1970s also had more private sector experience than prior generations of top-level bureaucrats (Centeno 1995:128–30; Centeno and Maxfield 1992; Hernández Rodríguez 1988; Luna 1992).

  20. Because Mexican technocrats were career government employees, rather than elected politicians, scholars argued that technocrats were less encumbered by the typical concerns for how policies might affect their political support, and were therefore more autonomous than most bureaucrats (Centeno and Silva 1998; Fischer 1990; Galjart and Silva 1995).

  21. After a 9 percent average growth rate in manufacturing during the 1960s, Mexico’s manufacturing sector’s growth rate dropped to an average of 6.7 percent between 1970 and 1976 (Ayala Espino 1988:287, 382 & 449). The consumer price index doubled (from 31.1 to 61.2) between 1971 and 1976, after having only increased from 26 to 30 between 1965 and 1970 (INEGI 1985:808–809). Finally, the exchange rate slid from 12.5 pesos to the dollar, the rate for more than twenty years, to 22.6 pesos to the dollar by early 1977 (INEGI 1985).

  22. The external pressures which contributed to the crisis included the decision by the Organization of Petroleum Exporting Countries (OPEC) to quadruple the price of oil in late 1973, the related decline in investments from Transnational Corporations (TNCs) which followed the saturation of Mexico’s internal market, and the decline in global demand for exports from Mexico (Escobar et al. 1978).

  23. The percent of the federal government’s budget directed towards the economy peaked during the Echeverría administration at 62 percent (INEGI 1985:657), exceeding the budget directed towards the economy of most prior Mexican administrations by twenty percent. This spending helped Echeverría’s administration obtain a financial interest in 845 enterprises, increasing more than eight-fold the typical number of enterprises established by previous administrations (Teichman 1995:29). In theory, public enterprises helped subsidize industrialization by maintaining low prices for industrial inputs. Six years of deficit spending and massive foreign borrowing made this expansion possible. The budget deficit grew from five percent of the GDP in 1973 to nine percent in 1975 (Maxfield 1990) as Mexico’s public debt grew from eleven percent of the GDP in 1970 to 27 percent in 1976. Mexico’s foreign portion of the public debt grew from an average of eight percent between 1965 and 1970 to 24 percent in 1976.

  24. This new multi-sector organization, called the Business Coordinating Council (Consejo Coordinador Empresarial, CCE) (Luna 1992:46) (Valdés Ugalde 1997:189), stated in their doctrine published in May 1975 that “The systematic tendency for the state to intervene as an employer constitutes a grave impediment to exercising the rights of individuals. As a guarantee that state intervention is subordinated to the demands of economic development and the common good, we need a free and effective political regime” (CCE 1975:10). Threatening to withdraw support from the current administration they contended: “Centralized state planning of the economy is not compatible with a democratic regime…” (CCE 1975:11).

  25. Monterrey’s industrial sector dated back to the pre-revolutionary period and had historically viewed the post-revolutionary regime with suspicion (de los Angeles Pozas 1993). They were, therefore, historically more politically independent than the industrialists concentrated in the interior cities.

  26. This organization was the National Chamber of Manufacturers (Cámara Nacional de la Industria de Transformación - CANACINTRA). It represented the industrial sector that had emerged in the big interior cities, such as Mexico City and Guadelajara, as a result of the protectionist industrial policies adopted by the post-revolutionary Mexican government. Thus, CANACINTRA had long championed the state’s protectionist industrialization project (Puga 1993:107–8) and centralized economic planning, which it again defended in the early 1970s stating: “There are various sectors that have declared themselves, with very little courtesy, against the positions which this Chamber has upheld regarding the necessity of planning in our economy…verbal terrorism is something that must be exiled from this country.” See Editorial, “Diálogo Sin Epítetos,” Transformación, 6/1974, p. 44. They argued that Mexico’s economic growth in 1974 justified their confidence in national economic policy in Editorial, “Confianza En El Porvenir,” Transformación, 10/1974, p. 44. Their position regarding the CCE is made clear in Olavarrieta, Joaquin Pria, “Mirar De Frente Al Futuro,” Transformación, 10/1976, p. 2.

  27. “El CCE: ‘Juntos Pero No Revueltos’,” Expansión, 5/28/1975. Larger industrialists, however, temporarily subverted resistance within CANACINTRA when northern CANACINTRA delegates from the powerful chemical industry, an industry dominated by large companies who criticized Echeverría, replaced leadership sympathetic to Echeverría in 1976 (Puga 1992:31; Tirado 1987:489). This change in leadership facilitated CANACINTRA’s entry into the CCE by late 1976 and temporarily dampened the enthusiasm with which CANACINTRA defended protectionist industrial policy.

  28. External changes included rising interest rates on debt owed to foreign creditors in 1981, which in turn increased the payments Mexico owed on its exorbitant foreign debt; and the declining price of oil, which reduced Mexico’s access to foreign currency.

  29. By this time, Mexico had the world’s second largest foreign debt at $80 billion (Quijano and Berhens 1985:77), representing 29.5 percent of the 1982 GDP (Frieden 1991:76, 78). The Mexican government declared that it could not repay its numerous foreign creditors on August 13, 1982.

  30. Don Lorenzo Servitje, a long time leader of COPARMEX, as reported in Servitje Sendra, Lorenzo. 70 Años Al Servicio De México. Mexico City:COPARMEX, 2000.

  31. Northern industrialists, particularly Monterrey-based conglomerates sought to unify business opposition (Luna 1992:83). Northern business associations such as the local Monterrey Manufacturer’s Chamber, CAINTRA, and local branches of COPARMEX took the lead in organizing the national leaders in COPARMEX and CONCANACO to align private sector support behind a broad anti-state agenda (Luna 1992:83, 97; Valdés Ugalde 1987:441).

  32. Both CCE presidents during this period—Manuel J. Clouthier del Rincón (1981–1983) and Jorge Chapa Salazar (1983–1985)—were northern-based businessmen and PAN sympathizers (Luna and Tirado 1992:48).

  33. Although northern-based business had played an important role in founding the PAN in 1939, by 1970 business had largely drifted away from the PAN in favor of the PRI. The resignation of the PAN’s orthodox Catholic leadership in 1978, however, made it possible for business leaders to regain influence in the PAN (Chand 2001:83–84; Puga 1993:100). Particularly in the northern state of Chihuahua, major business executives briefly joined the smaller and medium-sized businesses, who were less likely to benefit from state contracts or credits, in supporting the PAN (Chand 2001:112–3). By 1988, a newly aggressive vanguard of northern-based industrial conglomerates had taken over the PAN’s leadership (Chand 2001:148). Indeed, the PAN candidate for governor of the northern state of Sinaloa in 1986, and president in 1987, was Cloutheir, a successful Sinaloan agroindustrialist and former CCE president with close ties to the more radical northern-based business association, COPARMEX (Chand 2001:133). Vicente Fox Quesada (president 2000–2006) continued this tradition as a businessman from the northern state of Guanajuato and former head of Coca-Cola’s Latin American operations.

  34. Smaller industrialists blamed private banks for the growing difficulty they had accessing credit in the late 1970s (Gaspar and Valdés 1987:520). The executive committee of CANACINTRA defended bank nationalization as necessary “[i]n order to prevent the disappearance of small and medium industry,” saying, “The objective of the gradual reorganization of Mexico’s banking and finance system is to orient internal savings towards national political priorities…” See Editorial, “Canacintra Y Los 12 Puntos,” Transformación, 6–7/1982, p. 25 and Editorial, Transformación, 9–1983.

  35. Note that the business associations representing the financial sector, such as AMCB and AMIS, along with those representing large industrial and commercial interests, integrated with financial enterprises (such as CAMCO and CMHN), were initially ambivalent about joining public opposition to the state (Luna 1992:109, 1994:207; Puga 1993:170). The ascension of northern PAN sympathizers in CCE leadership revealed the latter eventually convinced the pragmatic financial sector to at least tacitly support their attacks on the regime (Valdés Ugalde 1997:201,206).

  36. The finance minister was Moctezuma Cid, a monetarist with no prior Finance Ministry experience who was widely respected as the leader of the conservatives in the federal bureaucracy (Centeno 1995:155).

  37. Indeed, López Portillo appointed new ministers, only to encounter fresh conflicts among economic ministers.

  38. For example, President De la Madrid moved the responsibility for industrial development from SEPANAL—the ministry considered “a power basis for the statist bureaucrats” (SEPANAL) (Teichman 1995:74) which favored gradual trade liberalization (Bailey 1986:135) and privatization (Teichman 1995:140)—to the new Ministry of Commerce and Industrial Development (SECOFI) (Lajous 1988b). As professionals in the ministry that had been responsible for commerce, SECOFI bureaucrats were sympathetic towards reducing trade barriers and less defined in their position regarding industrial development and productivity. SECOFI became the locus for negotiating NAFTA in the early 1990s (Thacker 1999:62). Meanwhile, SEPANAL was constricted to overseeing a diminishing roster of parastatal enterprises and renamed the Ministry of Energy, Mines, and Parastate Industry (SEMIP).

  39. The initial negotiations, which took place in December of 1987, produced the Economic Solidarity Pact (PSE). The agreement was renewed in monthly tripartite meetings for much of the 1990s. Participating in these anti-inflationary pact meetings granted the CCE unprecedented access to the formal policy-making process (Schneider 2004).

  40. This incorporation of business into formal policymaking was part of a broader effort to reorient the state’s consultation mechanisms with society away from the old corporatist sectors tainted by corruption and towards territorially-based organizations directly linked to the presidency (Bruhn 1996; Cornelius 1996; Dresser 1991; Otero 1996) after the PRI nearly lost the presidency for the first time in 1988.

  41. While some underscore private sector agencies (Thacker 1999) more than others (Cameron and Tomlin 2000; Mayer 1998), the minister of commerce (Secretaría de Comercio y Fomento Industrial - SECOFI) clearly instigated this increase in business access to policymaking.

  42. The new organization, the Coordinating Council of Foreign Trade Business Organizations (COECE), drew its leadership from that of a voluntary business association historically dedicated to galvanizing free trade businesses (Thacker 1999:65): the Mexican Business Council for International Affairs (CEMAI), founded in 1988.

  43. Although CANACINTRA did not control Mexico’s economic agenda, it had always been consulted by policymakers (Shadlen 2004).

  44. Angered by CANACINTRA’s more conciliatory stance and energized by the hope of democratization, many of CANACINTRA’s core constituents left to form a new organization which they believed would more effectively represent their interests and oppose trade liberalization (Shadlen 2004). The structure of the business organization representing business in the NAFTA negotiations (COECE)—one of thematic groups requiring extensive participation from business leaders—also disadvantaged smaller businesspeople less likely to have the time and expertise to participate (Thacker 1999:67).

  45. The proportion of Mexico’s private sector foreign debt accounted for by Mexican companies rose from an average 23 percent between 1971–1976 to an average 87 percent between 1978–1981 (Cardero and Quijano 1983:255).

  46. Short-term loans are typically characterized as those due in less than 90 days.

  47. This shift represented a general shift in lending practices to developing countries during the 1970s (Quijano and Bendesky 1983:148). Moreover, Mexico was one of the largest single recipients of these loans. Mexico’s share of short-term foreign bond debt held by a sample of 93 developing countries rose from an average 23.6 percent between 1976–1978 to 40.4 percent between 1979–1982 (Quijano and Bendesky 1983:149). Both changes in foreign capital preferences can be attributed to the growing number of private lenders interested in lending inside Mexico after wealthy OPEC countries made large deposits in the 1970s. The percent of Mexico’s foreign debt contributed by private lending institutions increased from 58 percent in 1970 to 81 percent in 1982 (Quijano and Berhens 1985:111) and the percent of foreign lending to Mexico by foreign banks alone rose from 15.5 percent in 1971 to 47.9 percent in 1980 (Quijano and Bendesky 1983:148).

  48. Additional indicators of increased concentration within industry include the share of fixed investments of larger industrialists (those with production values over 5 billion pesos), which increased from 39.1 percent in 1982 to a whopping 87 percent in 1992 (Hernández Rodríguez 1991; Thacker 2000:90), and the fact that northern regions, dominated by large export oriented industrialists who often worked closely with TNCs accounted for a growing proportion of the nation’s industrial plants in the 1980s (Tamayo Flores 1997:35; Thacker 2000:97), while regions dominated by smaller industrialists, like Mexico City, de-industrialized (Tamayo Flores 1997). Industrial employment increased 100 percent from 1981 to 1991 in northern states, compared to only 13.9 percent in central states (Velasco Arregui 1993).

  49. These are the number of conglomerates among the top 500 companies as listed in “Las 500 Empresas Mas Importantes De México,” Expansión, 8/19/1981, p. 129.

  50. Mexico’s four largest conglomerates acquired 32 companies between 1978 and 1981, up from nine between 1975 and 1977 (Maxfield 1990:105). In 1981, some holding companies included up to 150 companies. See “Las 500 Empresas Mas Importantes De México,” Expansión, 8/19/1981, p. 129.

  51. The growth of Mexico’s financial sector also helped shift the balance of the private sector’s assets towards liquid assets. Mexico’s new private financial sector quickly eclipsed a languishing state-owned bank industry after 1982.

  52. See Eggerstedt and Brideau (1995) for a summary of various estimates of capital flight from Mexico.

  53. The growing gap between private and public investments can be partly attributed to the state’s lost revenue after oil prices fell in 1986 (Thacker 2000:Chapter 3).

  54. Note, however, that “no particular activity (whether defined in terms of its output or of the technique used) is inherently core-like or periphery-like” (Arrighi and Drangel 1986:18).

  55. See Introduction in Arrighi (1985) and Martin (1990), as well as the Appendix in Schwartzman (1989) for further discussion of semiperiphery definition. While some argue that semiperipheral state status depends on a state’s political centrality in the world geopolitical order, as well as a state’s economic status (Snyder and Kick 1979; Wallerstein 1976), others contend that it depends more directly on where a country falls in global trade networks (Nemeth and Smith 1985) or on a state’s gross national project (GNP) per capita (Arrighi and Drangel 1986). I agree with the latter scholars who restrict their characterization of a semiperipheral nation to its economic features, both because the nature of the semiperipheral state has evaded generalization, and because incorporating features of the state into the definition of the semiperiphery presumes precisely that which I am arguing we need to empirically examine and theorize: the relationship between the economic structure and the character of the state’s relationship to business.

  56. Wallerstein reasoned that semiperipheral states are generally more likely to intervene in the economy because, unlike core states, semiperipheral states cannot hope to maintain, let alone improve, their economic position in the world economy through market mechanisms (Wallerstein 1979: 72, 1985:35). Furthermore, because semiperipheral states have more to lose than peripheral states, they may attempt to shift the mix of activities in a core-like direction by establishing “new links that are ‘core-like’ in nature” with their peripheral neighbors (Wallerstein 1985:35).

  57. Policies designed to avoid exclusion encourage “(1) greater specialization in activities in which the semiperipheral state has or can acquire some kind of competitive advantage, (2) an active involvement in relations of unequal exchange in which the semiperipheral state supplies commodities embodying low-wage labor to core states in exchange for commodities embodying high-wage labor, and (3) a more thorough exclusion of peripheral states from the activities in which the semiperipheral state seeks greater specialization” (Arrighi 1990:17). Policies designed to avoid exploitation encourage “(1) the undertaking…of a wide range of activities regardless of comparative advantage, (2) the self-exclusion of the semiperipheral state from relationships of unequal exchange with the core states, and (3) an active involvement in relations of unequal exchange in which the semiperipheral state supplies commodities embodying high-wage labor to peripheral states in exchange for commodities embodying low-wage labor” (Arrighi 1990:17).

  58. Some have similarly traced the tragic transformation of the German state in the 1930s to divided business mobilization (Abraham 1981). Just as in Mexico, business (Abraham 1981; Brustein 1996), as well as organized labor (Gates 1970), was starkly divided over economic policy. Although the extent to which big business sympathized and directly aided the Nazi’s has been the subject of considerable debate (Abraham 1984a, b; Feldman 1984), there seems little doubt that a fiercely divided yet mobilized private sector hastened the demise of Germany’s Weimar Republic by forcing democratic leaders to manage competing business pressures and creating political opportunities that the Nazi party exploited (Flint 2001). Given Germany’s current status as one of the world’s leading advanced industrial societies, and its categorization as a member of the world’s economic core after 1938 (Arrighi and Drangel 1986), we might not have expected its trajectory to have mirrored Mexico’s. But, during the inter-war period, Germany’s economy was more like a semiperipheral than a core economy (Flint 2001). This can help explain why unlike in the U.S., the Great Depression in Germany provoked divided rather than unified business mobilization.

  59. Domestic property owners, the “indigenous” or “national” bourgeoisie, “look upon the state as their negotiating instrument with the rest of the capitalist world-economy” (Wallerstein 1976:469), while foreign businesses such as multi-national corporations (the “external bourgeoisie”) may also have a keen interest in securing special treatment from local governments (Wallerstein 1976:468).

  60. Some argued that semiperipheral states are prone to authoritarianism because labor is more militant (Korzeniewicz 1990; Silver 2003) and social protests are more widespread (Chase-Dunn 1989, 1990; Martin 1990) in the semiperiphery. Yet, with fewer resources than core states, semiperipheral states have greater difficulty satisfying potent social pressures from below (Arrighi 1990:32).

  61. Wallerstein advances this argument by associating interventionist economic policies with controlling the flow of goods and capital, the size of the internal labor force, taxation rates and redistributive state expenditures (Wallerstein 1979: 72, 1985:35)

  62. Indeed, some contend that without actively brokering elite consensus around a particular economic strategy, semiperipheral states might not be able to secure social order or political legitimacy (Chase-Dunn 1990:5).

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Acknowledgments

Please direct correspondence to Leslie Gates, Sociology Department, Binghamton University, Binghamton, New York 13902 (lgates@binghamton.edu). I thank the anonymous reviewers and the editors at Theory and Society as well as Kate Griffith, William Martin, Harland Prechel, Nella VanDyke, and the 2006–7 members of DaDNYRG, Tim Bartley, Liz Borland, Michael Mulcahy and Rachel Sherman for their valuable suggestions. Rebecca Desiletz and Ayse Serdar provided able research assistance. I am indebted to the Fulbright-García Robles Foundation, the University of Arizona’s Final Project Fund, and the Tinker Foundation for funding research in Mexico and the Fulbright Scholar Program for subsidizing research and writing undertaken while in Venezuela.

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Gates, L.C. Theorizing business power in the semiperiphery: Mexico 1970-2000. Theor Soc 38, 57–95 (2009). https://doi.org/10.1007/s11186-008-9070-4

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