The Dangers of American Economics in Mexico

By Donald Appel

“War is a judgment”, says Dorothy L Sayers, "that overtakes societies when they have
been living upon ideas that conflict too violently with the laws governing the universe . . . Never
think that wars are irrational catastrophes: they happen when the wrong ways of thinking and
living bring about intolerable situations."
It should be no surprise to anyone that knows anything about the abuse and poverty in
Chiapas that a revolution has started there. And it should not be a surprise to anyone that one of
the causes of the uprising is the NAFTA agreement. I agree with those that have made the
observation of the grievances about NAFTA by the Mayan Indians, that it was not necessarily
their idea. But it certainly is not a wrong objection. Some learned person of that group has hit
upon an important point -- European and North American economics is not the solution for
Mexico's unemployment or for its poverty. In actual fact, it will intensify those situations. Why
is that? Mainly because the basis of the economics of the wealthy nations is that of greed and
exploitation.

The Philosophy of Modern Economics

Let me quote from one of the most influential British economist in the 1930s and the
author of modern economics, Lord Keynes. In 1930, during the worldwide economic
depression, he felt moved to speculate on the "economic possibilities for our grandchildren" and
concluded that the day might not be all that far off when everybody would be rich. We shall
then, he said, "once more value ends above means and prefer the good to the useful."
"But beware," he continued, "The time for all this is not yet! For at least another hundred
years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is
useful and fair is not. Avarice and usury and precaution must be our goods for a little longer
still, for only they can lead us out of the tunnel of economic necessity into daylight." He
continues, saying: That economic progress is obtainable only if we employ those powerful
human drives of selfishness and greed. (Which religion and traditional wisdom universally call
upon us to resist.)
The modern economy is propelled by a frenzy of greed and indulges in an orgy of envy,
and these are not accidental features but the very cause of its expansionist success. If whole
societies become infected by these vices, they may achieve astonishing things but they become
increasingly incapable of solving the most elementary problems of everyday existence. The
Gross National Product may rise rapidly: as measured by statisticians, but not as experienced by
the actual people, who find themselves oppressed by increasing frustration, alienation, insecurity,
and so forth.

The Failure of the U.S. Economics

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 If the American economics is the way to full employment and the better life, then why is
that America, the riches nation in the world, is unable to solve its problems of unemployment,
homeless population, drug abuse, and crime? Why--because "foul is fair and fair is foul,” greed
and exploitation has dulled the sensitivity of the American government to the wisdom that is
required to solve these problems. The economic machine must be fed at all cost and if a few
million people have to be flushed down the toilet -- so be it.
The most striking thing about modern industry that supports the modern economy is that
it requires so much to accomplish so little. Modern industry seems to be inefficient to a degree
that surpasses one's ordinary powers of imagination. Its inefficiency therefore remains
unnoticed. Industrially, the most advanced country today is undoubtedly the United States of
America. With a population of about 220 million, it contains 6.0 percent of mankind, and that
6.0 percent of the world population which lives in the United States requires of the order of forty
percent of the world's primary resources to keep going, and all estimates indicate that it will
continue to require more and more of the world's primary resources to continue its economy.
Where will the United States find those resources, in countries like resource wealthy Mexico?

The Rich Get Richer

The unfortunate thing is that those who have "power" in the United States and Mexico are
part of that system that sees "Foul is fair and fair foul." For they all have been well indoctrinated
in this modern economy, and what also helps them to be blind to the faults of modern economy
is that they are part of the group that will benefit the most from this economic philosophy -- the
wealthy. Saline, the president of Mexico, has done little to improve the unemployment situation
in Mexico or ease its poverty, but he has succeeded in creating eight additional billionaires in
Mexico. It is also interesting that the privatization of the government's businesses has been
solely purchase by thirteen Mexican families, showing that the old cliché, "The rich get richer
and the poor get poorer," is alive and well in Mexico.

The Poor Gets Poorer

What happens when the economy of the rich is installed in a third world country?
Without fail it creates wide scale unemployment. Why is that? Third World countries are
convinced by the rich countries to start with the latest technology, which they do not have the
basis in education and skills to support. This usually means the rich countries must come in with
their skills and management to operate the system. Thus much of the increased employment is
external of the country. The low level technology that is in place and that supports the rural
villages is replaced by the highly efficient, high technology.

Modern Economics Creates Neocolonialism

Far more serious is the dependence created when a poor country falls for the production
and consumption patterns of the rich. For example: a textile mill installed in Africa its
management explained in an interview, with considerable pride, that his factory was at the
highest technological level to be found anywhere in the world. Why was it so highly automated?
"Because," he said, "African labor, unused to industrial work, would make mistakes, whereas

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automatic machinery does not make mistakes. The quality standards demand today," he
explained, "are such that my product must be perfect to be able to find a market." He summed
up his policy by saying: "Surely, my task is to eliminate the human factor." Nor is that all.
Because of inappropriate quality standards, all his equipment had to be imported from the most
advanced countries; the sophisticated equipment demanded that all higher management and
maintenance personnel had to be imported. Even the raw material had to be imported because
the locally grown cotton was too short for top quality yarn and the postulated standards
demanded the use of a high percentage of man-made fibers.
This is not an untypical case. Anyone who has taken the trouble to look systematically at
actual "development" projects -- instead of merely studying development plans and economic
models -- know countless such cases: soap factories producing luxury soap by such a sensitive
processes that only highly refined materials can be used, which must be imported at high prices
while the local materials are exported at low prices; food-processing plants; packing stations;
motorization, and so on -- all on the rich man's pattern. In many cases, local fruit goes to waste
because consumers allegedly demands quality standards that relate solely to eye-appeal and can
be met only by fruit imported from Australia or California where the application of an immense
science and fantastic technology ensures that every apple is the same size and without the
slightest visible blemish.
Poor countries slip -- and are pushed -- into the adoption of production methods and
consumption standards that destroy the possibilities of self-reliance and self-help. The results are
unintentional neocolonialism and hopelessness for the poor.

Modern Economics Causes The Failure of Rural Economy

As a result of this type of technology the rural economics collapse. In order to make a
living, the rural poor migrate to the cities, where, due to their lack of education and skills
required by modern industry, fail to find employment and they find themselves hopelessly locked
in a situation of intense poverty and degradation.
This unhealthy and disruptive tendency create a "dual economy," in which there are two
different patterns of living as widely separated from each other as two different worlds. It is not a
matter of some people being rich and others being poor, both being united by a common way of
life: it is a matter of two ways of life existing side by side in such a manner that even the
humbles member of the one disposes of a daily income that is a high multiple of the income
occurring to even the hardest working member of the other. The social and political tensions
arising from the dual economy are too obvious to require description.

The Mexican Government Does Not Help The Poor

It is obvious that the purpose of the Mexican government is not to help the poor but to
help the rich, for it is hard for me to believe that the elitist economist do not know these things.
They believe that they can put this into operation without the common people knowing the
difference. What is embarrassing now to the government is that the dissatisfaction and
inequalities of the Mexican government is already being felt in Chiapas and is being expressed
by its inhabitants. Unless the Mexican government removes itself from the sure destructive
economics of the rich countries, the revolution that has started in Chiapas will not abate, but
intensify, for there is no solution in such an approach, only the lost of sovereignty and dignity.

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The rich think that they can control the situation and keep the poor in check, once before this was
proven to be wrong and it will again.

Mexico’s Economic Solution

What is the solution for Mexico? It is an economy that is not "mass production" but
"production by the masses," which Mexico had a close approximation before the dismantling of
the Revolution of 1910 by the Saline’s government. In many ways Mexico is unique to other
third world countries in that it has some modern, high-tech industries. But its industries operate
primarily within Mexico where it is protected from outside competition. With NAFTA,
Mexico's industries' protection will cease and they must compete on the world market where the
technology and standards are far beyond Mexico's ability to compete. The rich and powerful
North American Industries will pour their products into Mexico causing the collapse of Mexico
present industries -- resulting in neocolonialism.

Production By The Masses, Not Mass Production

Only 15% of Mexico's population is engaged in manufacturing, 85% are still farmers and
such living in small villages through out Mexico. In some fashion these people or employed
whether it be farming or local crafts. They too will be effected by NAFTA. With the inflow of
the manufactured and farm products of the rich countries, farming and local crafts will not be
able to compete -- thus massive unemployment.
The system of mass production, based on sophisticated, high capital-intensive, high
energy dependent, and human labor-saving technology; presupposes that you are already rich, for
a great deal of capital investment is needed to establish one single workplace.
The system of production by the masses mobilizes the priceless resources that are
possessed by all human beings, their clever brains and skillful hands, and supports them with
first hand tools. The technology of mass production is inherently violent, ecologically damaging,
self-defeating in terms of nonrenewable resources, and stultifying for the human person. The
technology of production by the masses, making use of the best modern knowledge and
experience, is conducive to decentralization, compatible with the laws of ecology, gentle in its
use of scarce resources, and designed to serve the human person instead of making him a servant
of machines. What is the typical condition of the poor in most of the so-called developing
counties? Their work opportunities are so restricted that they cannot work their way out of
misery. They are underemployed or totally unemployed, and when they do find occasional work
their productivity is exceedingly low. Some of them have land, but often too little. Many have
no land and no prospect of ever getting land. There is no hope for them in the rural areas and
hence they drift into the big cities, but there is no work for them in the big cities either and, of
course, no housing. All the same, they flock into the cities because the chances of finding work
appear to be greater there than in the village, where they are nil.

Rural Unemployment Becomes Urban Unemployment

The open and disguised unemployment in the rural areas is often thought to be due to
entirely to population growth, and no doubt this is an important contributory factor; but those
who hold this view still have to explain why additional people cannot work because they lack

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"capital." But what is "capital?" It is the product of human work. The lack of capital can
explain a low level of productivity, but it cannot explain a lack of work opportunities.
The fact remains, however, that great numbers of people do not work or work
intermittently, and that they are poor and helpless and often desperate enough to leave the village
to search for some kind of existence in the big city. Rural unemployment produces mass
migration into cities, leading to a rate of urban growth which taxes the resources of even the
richest societies. Rural unemployment becomes urban unemployment.

Rural Programs will Help Employment For The Majority

The problem may therefore be stated quite simply thus: what can be done to bring health
to economic life outside the big cities, in the small towns and villages that still contain -- in most
cases -- eighty to ninety percent of the total population? As long as development effort is
concentrated mainly in the big cities, where it is easiest to establish new industries, to staff them
with managers and men, and to find finance and markets to keep them going, the competition
from these industries will further disrupt and destroy nonagricultural production in the rest of the
country, will cause additional unemployment outside, and will further accelerate the migration of
destitute people into towns that cannot absorb them.
It is important that at least an important part of the development effort should by-pass the
big cities and be directly concerned with the creation of an "agroindustrial structure" in the rural
and small-town areas. In this connection it is necessary to emphasize that the primary need is
workplaces, literally millions of work places. No one, of course would suggest the output-per-
man is unimportant; but the primary consideration cannot be to maximize output per man; it
must be to maximize work opportunities for the unemployed and underemployed.

Rich Country’s Economics Is No Good For Mexico

The task, then, is to bring into existence of millions of workplaces in the rural areas and
small towns. It is obvious that modern industry, as it has arisen in the developed countries,
cannot possibly fulfill this task. Modern industry has arisen in societies that are rich in capital
and short of labor and cannot possibly be appropriate for societies short of capital and rich in
labor. Puerto Rica furnishes a good illustration of the point. To quote from a recent study:

Development of modern factory-style manufacturing makes only a limited

contribution to employment. The Puerto Rican development program has been
unusually vigorous and successful; but from 1952-62 the average increase of
employment in E.D.A. - sponsored plants was 5,000 a year. With present labor
force participation rates, and in the absence of net emigration to the mainland,
annual additions to the Puerto Rican labor force [will] be of the order of
40,000 . . . Within manufacturing, there should be imaginative exploration of
small-scale, more decentralized, more labor-saving forms of organization such as
have persisted in the Japanese economy to the present day and have contributed
materially to its vigorous growth.

Rich Countries Also Victim Of Modern Economics

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 It is not only Mexico that faces the violence, exploitation and destructiveness of the
modern economy, but also the rich countries. The rich countries can stave off the crushing truth
of its economic insanity by continual expansionism, by exporting its economical philosophy to
the third world counties like Mexico and duping them into its idea of economic success and
consumption. In the mean time, the rich countries can pick the pockets of the third world of their
resources.

Modern Economics Is Bound To Fail

In the final analysis, this economic system is bound to fail because the modern economics
is not self-sustaining. It regards natural resources as an unlimited "income" rather than see it as
"capital," as should be its proper definition for a correct balance sheet. Any businessman knows
that you cannot spend your capital and expect to stay in business. But, if you can steal someone
else's "capital" then you can stay in business a little longer. This is not moral, but who cares, for
we have already established that the modern economist creed is "foul is fair, and fair is foul."
There is nothing in the experience of the past forty years to suggest that modern
economics and modern technology, as we know it, can really help us to alleviate world poverty,
not to mention the problem of unemployment that already reaches levels of thirty percent in
many so-called developing countries, and now threatens to become endemic also in many of the
rich countries. In any case, the apparent yet illusory success of the last forty years cannot be
repeated because of the apparent three crises that the world faces:

First, human nature revolts against inhuman technological, organizational, and political
patterns, which it experiences as suffocating and debilitating.
Second, the living environment that supports human life aches and groans and gives signs
of total breakdown.
Third, it is clear that the inroads being made into the world's nonrenewable resources,
particularly those of fossil fuels, are such that serious bottlenecks and virtual exhaustion loom
ahead in the foreseeable future.

Any of these three crisis or illnesses can turn out to be deadly. What is quite clear is that
a way of life that bases itself on materialism, i.e., on permanent, limitless expansionism in a
finite environment, cannot last long, and that its life expectation is the shorter the more
successfully it pursues its expansionist objectives.

Why Should The Majority Of Mexicans Look To Modern Economics?

So, why should the indigenous people look to the North American modern economy for
their salvation when their ancient economy has served them for thousands of years and could
continue indefinitely? Their plight has been brought about by the introduction of the Western
economy of greed and exploitation. The indigenous people or conquered people and the
metaphysics of that continue today. So, is it wrong for the conquered to rise up against their
conquers, whom for five hundred years maltreated and exploited them? If only this could be as
clearly seen in the modern and rich countries that the worker is the conquered and industry is the
conqueror.

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There Must Be An Holistic Approach To Economics

If we do not act in some positive humane way the whole world is headed toward
destruction -- f or it is the nature of the "beast" of modern economy. Government and
technological fixes are not going to make things right, unless we give up the idiotic, dangerously
simplistic motive of Modern Economics, which is -- profit for profits' sake. Our equation for
economics must include people, the community, the environment and the effect on future
generations, and not just dollars and cents. There needs to be a spiritual awaking to stave off
such destruction. Jesus in his sermon on the mount gave an outlook that could lead to
Economics of Survival.

--How blessed are those who know they are poor: the kingdom of Heaven is
theirs.
--How blessed are the sorrowful; they shall find consolation.
--How blessed are those of gentle spirit; they shall have the earth for their
possession.
--How blessed are those who hunger and thirst to see right prevail; they shall be
satisfied;
--How blessed are the peacemakers; God shall call them sons.

It may seem daring to connect these beatitudes with matter of technology and economics.
But may it not be that we are in trouble precisely because we have failed for so long to make this
connection? It is not difficult to discern what these beatitudes may mean for us today:

--We are poor, not demigods.

--We have plenty to be sorrowful about, and are not emerging into a golden age.
--We need a gentle approach, a nonviolent spiritual approach toward the earth and
its people.
--We must concern ourselves with justice and see right prevail.
--And all this, only this, can enable us to become peacemakers and to live a happy
and prosperous life.
Much of the information and quotes were taken from the book "Small is Beautiful" by
E.F. Schumacher, Published first in 1973 by Blond & Briggs, Ltd. London. It was republished
in 1989 by Harper & Row, 10 East 53rd. Street, New York, N.Y. 10022.

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