The Mexican Domino

March 17, 1995|By JONATHAN POWER

London -- You reap what you sow when you attempt to develop an underdeveloped country. This is Mexico's lesson -- and Algeria's, Pakistan's, Turkey's and Egypt's.

A whole range of half-developed countries are finding out belatedly what they were told 30 years ago -- if you don't have land reform, if you don't breed a strong and prosperous peasantry, if you don't halt the mad rush to the town, if you don't make your villages attractive with safe water and rural clinics, if you don't educate your young girls so that they themselves are moved to control the birth rate, you are going to have economic, if not political, Armageddon.

Economic Armageddon has now arrived and political Armageddon seems not far behind. Ernesto Zedillo, Liamine Zerousal, Benazir Bhutto, Tansu Ciller and Hosni Mubarak should have read Barbara Ward, Gunnar Myrdal and Mahbub ul Haq.

The Mexican disease could prove to be contagious. A lot of middle-ranking developing countries are in over their heads and dependent on large flows of speculative foreign funds that, as is clear from Mexico, flee at the first sign of trouble.

An industrial revolution, run by capitalists, is wonderful, but only if you have an agricultural revolution first.

This is as true today as it was in Britain in the 18th century. Without Coke of Holkham, who introduced crop rotation and manuring, and Turnip Townsend, who introduced winter feed, there would have been no rural wealth on which to build the new industrial society.

It was the same for Japan; there would have been no take-off without the land reform rammed through by the U.S. occupation under General Douglas MacArthur.

The ''Asian tiger'' economies are those that pushed through comprehensive land reform at the onset of their modernization process. The old patriarchal landed gentry were not only lazy, they were spendthrifts. The new peasant land owners made the land astonishingly productive, and they produced savings that were tapped by the new industrialists.

Today these countries not only experience consistent economic growth, they have a rather good distribution of income, little poverty and a well-educated female population with a controlled reproduction rate. They are socially stable societies and, not surprisingly, they have developed stable political institutions.

Mexico should have been a similar success. It was in Mexico in 1910, after all, that the first great social revolution of the 20th century erupted, drawing much of its inspiration from a dispossessed peasantry whose goal was the recovery of lands and livelihood that had been wrested away during 50 years of expanding agrarian capitalism.

But in Mexico, unlike Japan, South Korea and Taiwan, no ground was laid for a modern economy and a fair distribution of its benefits. There was no follow-through after land reform. There was no irrigation, no new seeds, no new practices, no new information.

Not until the presidencies of the populist Luis Echeverria in the mid-1970s, and the oil-rich Jose Lopez Portillo in the late '70s, was much attention directed toward peasant agriculture.

But it was too late -- population pressure, landlessness and the stagnation of production in staple crops was endemic. Successor presidents, including Carlos Salinas, lost interest and tried another, more modernist, route to growth.

The guerrillas of Chiapas and the monetary chaos are the fruits of this neglect. The modern economy that the Harvard-trained whiz kids have tried to construct in Mexico is fatally undermined. It is too dependent on international monetary confidence and sophisticated, capital-intensive industrialization. It pays too little attention to the urban shanty towns or to employment-enhancing opportunities in the rural backwaters.

You reap what you sow. One can say from afar that Mexico should try a little more democracy and honesty in government. At least that's a safety valve. But, frankly, unless there are quite inconceivable changes in both the government's economic priorities and in the rules and institutions that govern international finance, a disaster in Mexico seems almost unavoidable.

And that is just as true for Algeria, Pakistan, Turkey, Egypt and a large number of other precariously balanced countries.

Jonathan Power writes a column on the Third World.

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