Flashback: Mr. President and the Bull.. and the Free Market

In November of 1991, Mexican forces began pulling corpses from a mass grave in rural Veracruz near the small town of Ojo de Agua. Cartel graves? No... the handy work of a traditional local cacique named Toribio "el toro" Gargallo. Once a tool of the PRI in controlling votes in the region, Mr. Bull ran afoul of NAFTA. Not the treaty itself (there is no "liquidate the caciques" clause), but the move by the Salinas de Gortari administration to prove to the US and Canada that the application of the rule of law in Mexico made it THE place to do business. The gutting of article 27 on land reform, the normalization of relations with the catholic church, and the attack on labor union leaders formerly beholden to the PRI all fell in the same category.

In October of 1991, El Toro and his men were stopped at a check point by forty police officers in a "routine" roadblock... and in the following shoot out El Toro took seventeen shots to the body including, according to the LA Times, one at close range between the eyes. Not long after that authorities began exhuming dozens of human remains from El Toro's 7,500 acre plantation (er, ejidal land), resolving the disappearance of many locals.

According to The Capitalist Revolution in Latin America El Toro was an example of what happens when there are not strong and honest institutions at work in a nation. According to the authors of that 1997 Oxford U press book, Mexicans enter into a sort of competition with the criminal state and create what they call "the blocked society." What is a blocked society? According to freemarket reformers it is

"one in which markets are closed, regulated, or monopolized by the state, leaving little or no room for individual free enterprise and unhampered product and market innovation. Survival in the "blocked economy" requires connections; bribes; and payments of regulatory, licensing and various tax fees for access to markets, resources, capital, and a work environment undisturbed by strikes and regulatory harassment or confiscation." (Richard Ebeling review of The Capitalist Revolution in Freedom Daily, August 1997.)

What I find interesting is that for Mexico, The Capitalist Revolution argues that the legal basis of the corruption and murder of not only caciques and drug traffickers is the 1917 Mexican constitution. Because it "abrogates the rights of individuals" in favor of a powerful government that (because no entrepreneurial avenues are open) breeds corruption. Such corruption encourages competition from the populace in the form of caciques and cartels. Crime, it essentially argues, is the result of the welfare state. Wow. Mexico's entire history of plunder politics and foreign exploitation as well as the market demands from the US for a black market product all swept away in favor of free market ideology. For good fun, turn the book over and see that the book was endorsed by George Schultz, Jose Pinera (Pinochets minister of finance), Pedro Aspe (Salinas Minister of Finance), and an economist from the University of Chicago.

The rule of law, I think, is perhaps one of the most perplexing presences in the entire discussion of free markets ... and perhaps one of the least discussed.