What Significance Hath Reform?

Selling fruits at the tianguis.

The smell of steaming corn and fresh ripe fruit wafts past the endless rows of used automobile tires, new CD players, and stylish blue jeans. Mexicans from far and wide shop in this sprawling inner city market that is home to some 10,000 street merchants selling their wares out of portable stalls known as tianguis. An additional four permanent market structures with about 700 stalls each provide both jobs and shopping opportunities for local residents.

Despite peso devaluations, an earthquake, and new inequities and higher poverty rates linked to neoliberal restructuring, this Mexico City inner city slum neighborhood is thriving. Even non-locals were here seeking market vending opportunities and condominiums built by the government after the earthquake.

When I first began working in Mexico in 1967, I could not have predicted this vitality. Yet even then I found that social scientists, planners, and policymakers incorrectly portrayed shantytowns surrounding cities as slums of hope and inner-city areas as slums of despair. With the exception of Oscar Lewis, they did not study the inner city first-hand or in-depth.

As a graduate student in Mexico City, I explored an old inner city slum, a shantytown on the Federal district periphery, and a government-built housing development officially intended for the popular sector. I administered questionnaires, talked with people informally, attended local meetings, and consulted relevant documents. Combining these methodologies, I began to understand the communities, which I visited again several times in the 70s through the 90s.

Over the years Mexico has changed politically and economically. The discovery of large oil reserves, a simultaneous blessing and curse, sent peasants from the relatively unprofitable agricultural sector pouring into the cities or across the border to the United States. The boom fizzled, and the Party of the Institutionalized Revolution (PRI) resorted to neoliberal initiatives to rebound from a deep foreign debt and economic crisis in the early 1980s. Driven by economic and fiscal considerations, the state became leaner and meaner. Political reform slowly accompanied the waning of the paternalistic state.

How did the gente humilde in Mexico City experience these changes? I revisited the three communities to get a sense of the neighborhood impact of neoliberal economic restructuring. This longitudinal research provides a unique opportunity to see how changes at the macro level are experienced at the grassroots level and why.

The Center City Area

Despite congestion and poor housing quality, most residents in the inner city lived there by choice. By the mid-1980s, heads of households had lived in the district an average of thirty years. When an earthquake then left tenement-dwellers homeless, they fought for the right to stay. They convinced the government to rebuild the community for them. After initially resisting, authorities sold condominium units at cost to damnificados, as the earthquake victims came to be known. The area contained vagabonds, alcoholics, drug addicts, and delinquents, but, more importantly, it included people enmeshed in a rich network of ties and was home to a dynamic informal economy. The area even had its own subculture, based on values somewhat at odds with national mores, and its own slang.

In the 1990s, I found that inner city slum residents adapted better to the neoliberal economic restructuring than did low income residents in the two other areas. They were old pros at adapting to informal sector alternatives.

Inner city commercial dynamism was rooted in a combination of legal and illegal activity. Second-hand goods sold at a local market included recycled stolen items, while factory-new consumer goods sold locally included contraband until the government slashed tariff taxes in conjunction with the neoliberal reforms. Once trade liberalization lowered tariffs, local comerciantes continued to have an edge over vendors and shopowners in outlying districts. They could still sell their goods for less and profit more, because of the volume of their business and the better terms on which they obtained credit.

Vendors could obtain easy credit because of their high sales volume, giving them a competitive advantage within the informal commercial economy. One of the most influential local comerciante leaders, for example, operated an informal savings and loan association that entitled members to borrow up to three-fourths of the money they paid into the caja de ahorrros (credit association) with only nominal interest charges (1 to 2 percent). Members were expected to deposit about $12 per week into the caja. In the shantytown, on the other hand, vendors relied on loan sharks and more costly supplier credit. Thus, in the interstices of the informal commercial economy evolved a stratified informal banking economy.

Meanwhile, the informal value of stalls rose over the years, with the transfer price bringing as much as $12,500 by the end of the 1990s, up from the $5,000 of just ten years earlier. Locals sometimes sold to outsiders not only their informal claims to vending locations, but also the condos the government built for earthquake victims in response to grassroots pressure. New apartments built by the government after the 1985 earthquake rose 15-fold (in current dollar value) in one decade. New owners were often outsiders who used the apartments for commercial storage. Street vendors were required to set up and disassemble daily. The center city experience suggests that poor people need not move to outlying shantytowns to enjoy the economic benefits of home ownership and that inner city areas are not inherently places of blight.

However, the vibrancy of commerce squeezed out local craft production in this former hub of the leather and shoe trade. The remaining shoe activity in the inner city centered on its more lucrative commercialization. Local changes mirrored citywide de-industrialization.

As vibrant as local commerce had become, vendors found their income immediately halved by the 1994 Zedillo peso devaluation, and economic hard times spurred new illegal activity, especially in Mexico’s drug economy. It is estimated that by the latter 1990s, about a third of local youth were involved in narcotrafficking. Drug traffic brought profitable earnings, but also violence, with an average of three drug-related homicides per week. Even families committed to the inner city who had overseen its renaissance after the mid-1980s earthquake moved to more peripheral areas, to provide a safer haven for their children.

In sum, the local informal economy offered opportunities that more peripheral areas did not, but, as non-locals increasingly bought their way into the community, local youth, in particular, were squeezed out. Market forces, both legal and illegal, were eroding a community that just a decade earlier, after the earthquake, had fought for its own preservation.

The Shantytown

Urbanists optimism about shantytowns was mainly premised on home ownership. Yet the shantytown that I came to know over a 30-year period increasingly housed tenants, poorer than the homeowners, contributing to a community socioeconomic downgrading. Moreover, for tenants housing was not an economic asset.

Other homeowners used their property as a family asset. As housing prices in Mexico City rose, nuclear family living became a luxury few second-generation local families could afford. Homes not transformed into rental units were over the years increasingly turned into multi-generational abodes.

Urbanists have argued that shantytowns offered not merely inexpensive housing, but economic opportunities as well. Properties could be used for income-generating businesses, and residents could sell goods and services in local markets. However, shantytown vendors lacked access to low interest-charging informal credit associations and faced contracting consumer demand from a poorer clientele, as well as competition from a growing number of itinerant tianguis vendors who lived elsewhere but sold locally in the streets certain days of the week.

And even more than in the inner city, shantytown youth were hard-pressed for work, and increasingly looked to both the U.S. and the border area for economic opportunities. Here, as in Mexico City in general, decades of rural-to-urban migration began to slow down. As the economic base of the country shifted to the north, more integrated into the U.S. economy. With few economic opportunities, social problems and narcotrafficking proliferated.

Thus, the shantytown had come to be more aptly described as a slum of despair than a slum of hope, the opposite of what urbanists had theorized. With the economic crisis of the 1980s and 1990s many residents experienced economic hardship. The community esprit among squatters when they first staked claims to the area in the latter 1950s had long since disappeared. Political dynamics eroded collective grassroots activity that might have countered the moral, economic, and social decay.

The Housing Development

From the beginning, the housing development with its freestanding homes was more prosperous than the other two areas. Indeed, the planned community quickly came to house lower and working class families in only one section, therefore the only section I continued to study in the 1980s and 1990s. The one area contained the smallest and least expensive units.

As in the shantytown, in the poorer area of the government-built development, residents transformed homes designed for nuclear family use into multigenerational households this was also for economic reasons. Few local families, however, converted their homes into rental units, because of space limitations and less severe economic need.

Though the community was planned, the chief architect had not addressed the most fundamental socioeconomic issue: employment creation. Market forces generated few local work opportunities in the informal or formal economies. The younger generation, though more educated than its parents, also experienced unemployment and underemployment.

And not surprisingly, in the absence of economic opportunities, here too social problems such as drug addiction and theft set in. Good intentions of the architect to create a socially viable and meaningful community notwithstanding, the planned project proved no more successful than a squatter self-built shantytown in addressing poor people’s economic needs and in creating and maintaining a moral community. Broader market, political, and social forces eroded the positive effects the state-subsidized planned community was to have.

Democratization for Whom?

If the neoliberal reforms left city poor worse off economically than in years past, especially after the 1994 peso devaluation, did the political reforms provide a means to correct market injustices? Residents of the three areas contributed to the erosion of PRI’s hegemony that became so transparent by the turn of the century. However, informal political dynamics limited the distributive and redistributive effects formal democratization had.

In the 1980s a Juntas de Vecinos initiative officially deepened administrative democratization, from the district to the community and block levels. The reform proved to democratize governance, however, more in form than fact. The administrative reform gave the communities greater input into who governed, while reelection restrictions constrained incumbents from monopolizing leadership and perpetuating their own rule.

An extension of formal democratizing administrative rights served, in practice, more to regulate the communities than to provide residents with real power, access to resources, or the means to decide how resources were utilized. The presidents of the Residents Associations, for one, had no budget or decision-making power.

Meanwhile, democratically elected officers relayed information downward and sought local support for concerns of their superiors. The principle of  no reelection also kept community leaders from building up an effective local political base that could strengthen their bargaining position with city and national officials.

The power-dampening effect of the no reelection principle could be seen in the center city area. There, the main leaders of street vendors could serve for life and even pass on their leadership position to their children. They owed their position to the people they informally served and represented, not to authorities or to formal political status. Powerful within the informal economy, and commanding as many as l,000 members, the leaders were in a strong bargaining position vis a vis the government. Their informal clout enabled them to successfully negotiate rights to street vending and community reconstruction after the earthquake.

At the same time, in the housing development and the center city, multiple Residents Associations impaired community-wide organization for common concerns through formal administrative democratization. In these areas formal as well as informal channels of communication and coordination were vertically structured. The democratically selected Association presidents in the different sections of the two areas only had contact with each other through the district Juntas de Vecinos office (and through PRI offices at the district level).

The PRI continued to operate locally in its long-standing machine-like manner. It sought to buy votes in exchange for material favors. District offices offered occasional legal, medical, dental, and hair-cutting services, plus meals and gifts on major holidays and during political campaigns. PRI officers gave out juice, napkins, T-shirts, pots, and pitchers, and they organized raffles for servibars, bicycles, and gas stoves. Desperate for votes, as other political parties became no longer merely nominal but serious political contenders, PRI district functionaries even paid cadres to go door-to-door. Politics, as one politico noted, became profitable. And in the center city area functionaries reminded vendors that they owed their street location claims to PRI’s interception on their behalf.

Accordingly, through spring, 1997, the political and administrative reforms gave a deepening-of-democracy veneer to a system of governance that continued to subordinate local to non-local concerns and that higher-ranking authorities tried to manipulate to PRI’s advantage at a time of national PRI decomposition. Under the circumstances residents in the three areas anticipated, just three months prior to PRI’s devastating citywide electoral defeat, that little would change if PRI lost. They did not view the PRD (Cuauhtemoc Cardenas reconstituted Democratic Current), a Center-Left alternative to the PRI party, as a solution to their plight. Some were pragmatic and understood that organizational strength, not partisan politics, was the key to political influence. Reflecting this viewpoint, an activist in a center city tianguis association noted that she liked the PRD’s goals, but felt the party, run by intellectuals did not know how to administrate. She did not worry about a PRI electoral defeat, though, for she felt that her tianguis group would be able to negotiate with whatever party won because, she said, We’re a large force and have tradition in our favor.

Other residents viewed all the parties as a clan that did not represent them. In general, the popular sector, as represented in the three areas I studied, did not feel the electoral democratization to be as significant as did either the middle and upper classes behind the reforms or the political parties. Residents had learned the hard way to be cynical about political change.

Nonetheless, people’s attitudes towards voting had changed by 1997. In the 1960s and 1970s the government and the PRI successfully convinced most urban poor that support for PRI was synonymous with patriotism and that voting was not merely a right but an obligation. By the 1990s, though, the electorate came to view voting as a right: including the freedom to abstain or to vote for parties other than the PRI. And they had come to feel they could be public about their non-PRI sympathies without fear of reprise.

Thus, urban neighborhoods have not had the effects academics and planners believed them to have. My research reveals that, independently of where they live, people with low incomes are increasingly taking history into their own hands, economically within the informal sector and politically through formal channels. In the inner city they also have turned to informal mobilizations to defend their neighborhood rights to both housing and work. Their options are restricted by macro economic dynamics but they are their own best hope for a better future.