Abstract
The recent reforms to open Mexico’s energy sector to private and foreign investment are considered by Cypher to be the most radical change to the Mexican economy since the approval of NAFTA. In an historically contextualized analysis of these reforms, he argues that the selling off of publicly owned hydrocarbon reserves is being carried out in such a way as to privilege their transfer to the Mexican oligarchy. At the same time, Cypher observes that strategic alliances with transnational petroleum firms are promoted in order to gain access to the technology that these firms control for exploiting non-conventional oil and gas reserves. The whole process, he theorizes, can be seen as a sort of “institutionalized bonanzaism” which gives continuity to a historically entrenched culture of plunder and a rentier ethos stemming back to the Conquest. He points to new conflicts emerging around the construction of oil and gas infrastructure in different parts of the country and predicts that they will intensify and multiply as private investment begins to flow into infrastructural development and to increase the overall rate of extraction.
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Notes
- 1.
What is understood with this concept is that the socioeconomic context of a society at a given moment is profoundly conditioned by social structures constructed in the past. Although the concept does not assume historical determinism, it affirms that when a “path” has been established—for example, the adoption of a “model” of national development —it is difficult to undo the path taken; at the same time, it isn’t easy to leave the path established at present or in future due to the effects of cumulative causality. At times, those who adopt the theory of path dependence use the term “lock-in effect,” when the results of an evolutionary economic process are irrevocable. But, this extremely deterministic posture does not have to be generalized to the whole economic environment and is not representative of the analysts who employ this concept. Rather, it refers to certain very specific micro-processes (Ruttan 1997: 1522–1524). All of this is in contrast to the ahistorical and decontextualized approach of the neoclassical school of economics. The concept of “path dependence” has been widely used in several schools of economic thought in recent years. It has especially been used (without being referred to as such) by the “Original Institutionalists”—given that it is very similar to the concept of “cumulative causation” frequently used by the founder of this school of thought—American economist Thorstein Veblen (1857–1929)—and his followers (Schwardt 2013: 41–58).
- 2.
Throughout this chapter, we use the word “privatization ” in a scientific manner, although it has been banned by (informal) decree by the Mexican government in order to linguistically and ideologically mitigate what we have called, “The theft of the century in broad daylight” (Cypher 2014). At the same time, with respect to the land grabbing to exploit new oil and gas fields and areas where new infrastructure will be built, we use the term “expropriation,” since the usufruct of land is based on the free and complete access of the landowner(s), although they never become technically the owners of the subsoil.
- 3.
The concept of “bonanzaism” is not related to the supposed “resource curse or paradox of plenty,” which is a questionable neoclassical concept which does not take into account the central issue of the institutional structure. If this structure is, essentially, one of resource plunder, there is no way to use natural resources as the basis of a viable national development project. Without doubt, the concept of development is not in opposition to the mining /oil and gas industry, nor with natural resource-based production, such as agricultural activities. There is extensive literature demystifying the supposed “resource curse” and the inevitability of the “Dutch disease” (David and Wright 1997; Wright and Czelusta 2004). Likewise, there is a wide range of countries that have based their start-up and development strategies on the mining and oil and gas industries, as well as agricultural and forestry activities—such is the case of Australia, Canada , and Norway.
- 4.
Veblen in his classic book, Imperial Germany and the Industrial Revolution, concentrated his analysis on the predatory spirit in the case of nineteenth-century Prussia, emphasizing the “habituation to the servile state [which had] induced in the subject population a passably stable spirit of allegiance to their noble masters” (Veblen 1942 [1915]: 157). Therefore, a major part of the institutional structure of “bonanzaism” is the “consent”—in the Gramscian sense—of the subject population. He asserted that the Prussian nobility was imbued with a “spirit of chicane and effrontery that comes of a predatory settlement,” where their actions were tolerated given the servile loyalty of the underlying population (Veblen 1942 [1915]: 158). Thus, for Veblen, a predatory culture “is essentially a parasitic culture ” (Veblen 1941 [1914]: 166), wherein “self-interest displaces the common good” (Veblen 1941 [1914]: 160). In the Mexican case, we understand the phrase “self-interest” as the interest of the oligarchy and we assume that this oligarchy is capable of joining together to confront the interest of the underlying population, as we will see in the following text, in the case of the squandering of the spoils of the oil boom between 1977 and 1983.
- 5.
“An aristocratic (or servile) scheme of life must necessarily […] involve the corollary that wealth and exemption from work (otium cum dignitate) is honourable and that poverty and work is dishonourable” (Veblen 1941 [1914]: 183, emphasis in original). As a result, there is no escape from the predatory environment at the social level because: “The canons of pecuniary repute preclude the well−to−do, who have leisure for such things, from inquiring narrowly into the facts of technology , since these things are beneath their dignity, conventionally distasteful; familiarity with such matters cannot with propriety be avowed, nor can they without offence and humiliation be canvassed at all intimately among the better class ” (Veblen 1941 [1914]: 178). Thus, the counterpart of the degradation of work (manual and skilled) is ignorance by preference and disdain for technology . Here, we affirm that, due to the effects of “path dependency,” this disdain of science and technology , which Veblen considered an essential characteristic of a pre-industrial society, has not been erased, at least in present-day Mexico (Leonard 2003; Arocena and Sutz 2001).
- 6.
If the “number of barrels of oil per day (and the equivalent in gas) per employee” is taken as the point of comparison, Mexico’s yield was approximately 24 barrels, that of the PDVSA in Venezuela was 25 barrels, and Brazil’s Petrobras reached 31 barrels. Given its high level of efficiency, it is worthwhile noting that Brazil’s national development project is centered on Petrobras. In industrial circles, once esteemed PDVSA, despite being now considered completely inefficient, slightly surpassed PEMEX (Simpkins 2013).
- 7.
In fact, the changes in the oil regime imposed by the law of 2008 already allowed service contracts. According to Escamilla Haro (2015: 44): “[An important] process took place between the years 2001 and 2008, when measures were legislated to allow PEMEX to contract out private services in oil and gas drilling and production works, although under a system in which the private companies who won the contracts were not partners of PEMEX but rather service providers. Both reforms were fundamental to authorizing new business arrangements that allowed the large multinationals to undertake natural gas and oil exploitation in the main productive regions of the country.”
- 8.
This quote departs from the conventional analysis regarding the objective of oil companies—which is to argue that pursuit of “oil rents” (explained below) constitutes the prime motivator for all extractive activities. Francisco Garaicochea emphasizes the somewhat unique conditions prevailing in Mexico: Given the paucity of technological capacity and the absence of a capital goods industry, Mexican-owned firms will have to allocate considerable capital—at least in the short to intermediate term—in order to acquire the operating equipment “inputs” needed to operate within the privatized oil sector. To give form to the emerging petro-bourgeoisie, Mexican firms will make considerable upstream and downstream (supply chain) payments to the transnational, Houston-based, firms (to lease equipment, for patents, to purchase machinery and equipment, and/or to obtain complex exploration, drilling and testing services from subcontractors (such as Schlumberger)). Garaicochea brings to bear a novel argument; the mass of profits to be obtained from such transactions by the transnational oil giants will be so large as to exceed the “oil rents” received by the Mexican petro-bourgeoisie.
Oil rents, a return on capital in excess of the “normal” rate of return on invested capital, are a long-term characteristic of the oil industry. According to Ross (2012: 35): “There are two broad conditions that generate rents in the petroleum or any other extractive industry. One is favorable geography, which gives some producers access to cheaper and better-quality oil than their competitors. …Since there is a limited supply of fields with low extraction costs and high-quality oil, new companies that enter the petroleum business cannot easily obtain these rents. Producers can also earn “scarcity” rents when the demand for oil temporarily outpaces supply. In theory, the supply of oil will eventually catch up with the demand… But these adjustments can take years, either because oil supplies are growing scarce, or even if they are not scarce, because the price elasticity of supply is relatively low….”
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Cypher, J.M. (2018). Energy Privatization and Land Grabbing: The Scope and Contradictions of the Mexican Neoliberal Oil Mega-initiative. In: Tetreault, D., McCulligh, C., Lucio, C. (eds) Social Environmental Conflicts in Mexico. Environmental Politics and Theory. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-73945-8_2
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