The Mexican devaluation and subsequent crisis of December-January, 1994-1995 put all Latin American governments on alert. The “tequila effect,” as the Mexican debacle was known, was the result of problems facing the whole region, despite avowals by government ministers in Brasilia and Buenos Aires that “we are not Mexico.” Even in Mexico, whose leaders claim that the economy has stabilized, the real crisis is not over. It is deeper than mere exchange rate disequilibria, and relates to the changing nature of global capitalism.
As global capital has expanded relentlessly into the former communist world and also into countries that had previously offered some degree of protection to national capital, the rules of economic life have changed. In the advanced countries, insecurity for workers has increased: jobs, wages—and in the United States, health insurance and pensions—have all became provisional, subject to removal due to corporate downsizing or the relocation of production abroad. In newly industrializing countries such as Mexico and Brazil, tighter integration within global networks of finance and trade has spelled even greater hardships. Welfare bureaucracies have been stripped and state firms privatized as governments seek to balance their budgets and thereby capture as much foreign capital, much of it short-term and speculative, as they can....
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