Capital accumulation in the Mexican construction industry, 1930-82

Capital accumulation in the Mexican construction industry, 1930-82 by Michael Ball and Priscilla Connolly

Rapid industrialization and urbanization create enormous opportunities for capital accumulation in construction. Mexico’s radical social and industrial transformation over the past 50 years has placed it among the ranks of the NICs (newly industrializ- ing countries). During this period, construction has been a major sphere for accumulation. There is now a powerful block of domestic construction capital, including some of the largest construction firms in the third world. This paper looks at how this was achieved: how capital in construction has grown through the benevolent hand of the Mexican state, and how employment practices adopted by the industry have maximized the exploitation of a cheap, passive, almost endless pool of building labour. We shall also indicate the contradictions created by this accumulation pattern and their implications for future growth of construction capital. Whatever else, the development of the Mexican industry belies notions of a uniform type of ‘third world’ construction industry and that all construction industries develop towards an advanced capitalist ‘norm’.

I The growth of construction industry in Mexico

1

Over the last four or five decades, the construction industry has acquired a prominent position in the Mexican economy. From contributing less than 2% to the total GNP in the 1920s and 1930s, construction is now at around 6% and output has roughly doubled every decade over the last 50 years (Figure 1). Similar increases have been recorded in the percentage of total economically active population employed in the sector. The rapid rate of growth, over and above that of the economy as a whole (which itself grew by an average of 6% per year from 1940 to 1970) is often cited in support of the idea that construction has become a leading

Construction’s position in the economy

* This paper forms part of a wider project on the Mexican construction industry being undertaken at the Centro de la Vivienda y Estudios Urbanos (CENVI), and the Universidad Autonoma Metropolitana - Azcapotzalco, Mexico City, under the overall direction of Priscilla Connolly.

154 Capital accumulation in the Mexican construction industry, 1930-82

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:ONSTAUCTION G 0.P

TIBLIC INVESTMENT N CONSTRUCTION-

'RIVATE INVESTMENT N CONSTRUCTION - . -

PUBLIC INVESTMENT IN HOUSING

n 1950 1960 1970 1980

Sources: GDP, total and construction: 1940-59 Nacional Financiera (1981), Table 2.2 ; 1970-82 Mexican National Accounts (Sria. de Programacion y Presupuesto). Total federal investment: 1940-49 Secretaria de la Presidencia (1964); 1950-79 Nacional Financiers( 1981)Table 6.24. Publicandprivate investment in construction: 1940-68 Bustamante and Escobedo (1967); Connolly (1977) p. 36; 1967-76 SPP (1980) p. 910. Public investment in housing: 1940-72 Connolly (1977) p. 119; 1973-83 Comision Intersectorial de Planeacion, Programacion y Presupuesto (Sria. de Desarrollo Urbano y Ecologia).

Michael Ball and Priscilla Connolly 15 5

sector of the economy. At the same time, its capacity for generating large quantities of unskilled employment, its low consumption of fixed capital (less than 0.1% of the national total), its heavy intermediate consumption (about 10% of the national total of manufactured inputs in the form of cement, glass, etc.) and the fact that it contributes more than half of gross national fixed capital formation, are all seen as indicators of construction’s strategic role in Mexico’s economic growth.

For the purposes of understanding why and under what conditions this ex- ceptional development came about, Mexican construction could more appropriately be characterized as a following sector rather than a leading strategic industry. In a country which has undergone the profound social and economic changes that have transformed Mexico since the 1940s, it is logical that construction should appear as one of the main protagonists of this transformation. By definition almost, the twin processes of industrialization and urbanization imply building; much more building, in fact, than recorded in national accounts and other official statistics. An important part of the built environment in Mexico, including the majority of houses and many other building types, is still produced directly by artisans and master builders, or falls into the category of ‘self-build’ or other non-commodity forms of production, all of which escape the net of the census gatherers. So, the process we are looking at is exclusively the evolution of a national capitalist building industry, as induced by the country’s general economic transformation; an industry which at the same time contributes significantly to the substance of this transformat ion.

2

The specific characteristics of the emergent construction industry must be under- stood in the light of certain features of Mexico’s transformation into a newly industrialized country. Perhaps the most important single aspect is the state’s key role in promoting economic growth, especially by means of public expenditure on necessary physical structures. The importance of public investment for can be seen in Figure 1. According to one set of estimates (Bustamante and Escobedo, 1969), from as early as 1950, public investment constituted around two thirds of total investment in construction. Another source (SPP, 1980) divides total investment roughly in half between the public and private sectors, with slight annual variations.’ Whatever the precise quantitative importance of public investment in the total demand for construction, variations in public investment are clearly the main determinant of construction’s cyclical growth pattern: both overall public investment and construction output follow the constitutionally imposed six-year presidential cycle. At the beginning of each incumbent’s terms of office, there is an inevitable slowing down of policy implementation in the wake of administrative upheavals.

The importance of public sector demand

The substantial discrepancies between the various data series on investment in construction are due to their being derived from different sources and also, perhaps, to the fuzzy demarcation of what is meant by ‘private sector’.


The close ties between construction output and state investment is not limited to the demand relationship. It has also implied a direct financial ckpendence. Public agencies forward substantial advance payments which virtually cover the entire production costs, before work commences. Contractors are thus able to operate with a minimum of capital of their own, while dispensing with the need for credit from financial institutions except for short-term bridging loans.

The major part of the Mexican construction industry’s growth resulting from direct result of public spending lies to the heavy civil engineering end of the construction spectrum. Over the period 1975-80, between 73% and 84% of output derived from public investment was taken up by heavy industrial and agricultural infrastructure, transport and communications, contrasting with almost all of private demand which is for residential and other types of buildings. Given the hlgh level of dependency on public investment, developments in civil engineering have responded to the particular demands arising out of the States’s economy policy.

3

Taking a long overview, analysis of federal expenditure from the 1920s onwards shows that the budget priorities have varied substantially over the years, in accordance with the different phases of state intervention. For example, up until the mid-1930s over two thirds of public demand for construction was concentrated in transport and communications, of which over three quarters went into the reconstruction of the railway network, severely damaged during the revolution. During the Cardenas regime, roadbuilding began to assume a more prominent role, as did the creation of irrigation systems in support of that government’s agrarian policy. After the expropriation of oil in 1938, the development of this sector began to provide work for Mexican contractors, although heavy public investment in oil extraction and refining did not occur till the mid-1950s.

The initial phase of industrialization achieved during the years of the second world war and the subsequent decades of rapid economic growth brought new demands for government spending which both multiplied in volume and diversified in scope. During the 1940s and 195Os, irrigation programmes began to give way to electrification schemes; new types of urban facilities, such as health and further education services began to draw substantial amounts of the federal budget. In the 1960s, giant hydroelectric projects and airports were also being demanded of the construction industry, along with intensified investment in electrification, the petroleum industry, health and education facilities and roadbuilding.

The 1960s also saw the introduction of the social interest housing finance programme, opening up the middle-income market for building contractors. State involvement in financing large-scale housing projects intensified during the following decade, when the housing funds for workers and government employees were set up2. These provided the base for the consolidation, not only of the capitalist housebuilding sector, but also of the related real estate development sector (Schteingart, 1984; Connolly, 1982).

The changing pattern of state expenditure

Michael Ball and Priscilla Connolly 157

For construction as a whole, the most significant items of public spending during the 1970s were in heavy industrial, infrastructure, port and touristic developments and, especially, the petrochemical industry. Such renewed emphasis on productive investment responded largely to an emerging ‘outward-looking’ export- orientated economic base, which had gradually been taking over from the import substitution model from the late 1960s and became clearly articulated in official policy and planning from 1977 onwards. Ostensibly as a response to the economic bottlenecks leading up to the devaluation crisis of 1976, the new plans for development involved encouraging exports of manufactured products and intermediate goods, raising productivity and, in general, decentralizing economic growth away from the Metropolitan Area of Mexico City and the other large established industrial centres where the domestic market is concentrated (EUM, 1980). The public investment in providing the infrastructure for this type of development was to be financed by extensive loans from the international banking system, guaranteed by increased exports of crude oil and petroleum derivatives, which themselves required massive investments in exploration, extraction, refineries and petrochemical plants, also financed largely by foreign debt (Bueno, 1983; Connolly, 1985).

The inordinate increase of public investment in this kind of heavy industrial infrastructure between 1977 and 1981 (more than 80% of which was in the energy sector) is clearly reflected, in percentage terms, as a quantitative, qualitative and geographical reorientation in the aggregate demand for construction over this period. This might suggest that there has been a corresponding restructuring of the construction industry derived from this product change. Mertens (1982, 28-34), for example, in his analysis of the demand for construction in Mexico between 1977 and 1980), argues that the increased public investment in construction and the nature of this investment has brought about important changes both in the structure of firms within the construction industry and in the technological processes applied in the projects. The extent to which this has occurred will be discussed in the following section, where the characteristics of the construction industry itself are examined. For the moment, from the point of view of the demand alone, it is questionable whether the oil boom of the late 1970s really constitutes a serious departure from the previous pattern of investment in construction and, therefore, whether it is possible to derive a corresponding change in the building industry from this.

If a long overview is taken, such as that briefly presented here, it can be seen that public investment has constantly imposed product changes on the construction

The National Housing Fund for Workers (INFONAVIT) and the State Workers’ Social Security Housing Fund (FOVISSTE), both founded in 1972, are financed by a 5% tax on wages and salaries payable by the employer. The investment in housing thus mobilized is not therefore subject to the traditional cyclical variations in public spending. As interest rates on mortgages offered by these institutions are extremely low (4% pa) while inflation is around loo%, these funds effectively provide a constant demand among the low-income sectors for medium-priced housing built by construction companies.


industry: from irrigation to hydroelectric dams, airports to deep-drainage channels and mass transit systems. The sudden emphasis on the oil and petrochemical sector is not new, either; there have been similar spurts of investment in this sector in the late 1950s and in the mid-1960s. In other words, construction capital involved in the production of public works has continuously been subjected to alterations in investment policy. The necessity to adapt and respond to such changes should, therefore, be considered as an intrinsic characteristic of this sector of the industry.

The important role of state investment for the development of Mexico’s construction industry has not been without problems for capital involved in t h s sector. In this first place, there is the much decried problem of discontinuous demand derived from the six-yearly presidential cycles (Quintana, 1969). More important, the direct dependence of construction firms on the advance payment they receive has provoked perennial financial problems. The payments are often late or erratic, due also to political factors influencing the public budget. At the same time, the industry’s financial capacity, in the form of the firms’ own capital or credit rating, has been slow to develop (Connolly, 1977).

Il Building capital

Forty years of rapid growth in output has surprisingly not led to centralization of construction capital in Mexico. Individual firms have grown substantially, so con- centration has proceeded apace. But firms of all sizes have increased the mass of capital they advance, while others have entered; leading to a quantitative growth in the industry with roughly the same firm size hierarchy. The result is that the largest firms have neither raised their share of the market nor of the industry’s total fixed assets. Construction firms, moreover, are overwhelmingly domestic capital. Foreign construction firms have only played a minor role in Mexico since the 1940s. When they undertake construction projects, foreign firms are primarily in subordinate relationships to domestic capital - as partners or subcontractors for specific tasks requiring specialist skills or equipment.

Both centralization of capital and foreign dominance would be regarded by many as key tendencies in the development of Latin American construction industries. Such suppositions stem from theories about the logic of capital accumulation and economic dependency. The absence of both tendencies in Mexican construction, therefore, needs to be demonstrated and explained. The explanation highlights the importance of understanding the relationships between construction capital and the state, and between construction capital and the labour power it hires.

1

One of the reasons why the largest firms have not increased their share of total construction assets is that, since the 1940s, the largest firms have always been in a

The hierarchy of construction capital


dominant position. As Table 1 shows,in 1979 the top 1% of firms owned 43% of total assets in the industry. But similar proportions prevailed in 1950, with 3% of firms controlling 41% of the assets. At the lower end of the firm size hierarchy, around 75% of firms in existence controlled only 12-15% of the total capital. As is

Table 1 construction industry 1950-79l

Firm size and ownership of total registered capital assets in the Mexican

As proportion of all registered firms’ registered

1950 1970 1979 1950 1970 1979

Share of total capital

Smallest firms 68% 79% 82% 12% 14% 15%

Largest firms 3% 2% 1% 41 % 36% 43% Number (19) (70 ) (53)

Total number of firms 587 3440 8345

Total capital registered (in thousands of pesos) 41 1 3862 24256

NB. The available data forced this rather complicated presentation of the f i rm size hierarchy. The table should be read as ’the bottom 68% of registered construction firms owned 12% of the total registered construction firms owned 12% of the total registered construction capital in the Mexican construction industry in 1950, whereas the top 3% owned 41% of the capital, and so on.

Notes: Firms registered with Camara Nacidnal de la lndustia de la Construccidn. ’ Figures rounded to the nearest whole number.

Sources: Connolly (1977) and Fidel eta / . (1984).

common in advanced capitalist counties, in Mexico a handful of giant construction firms coexist with a large number of small ones.

What is perhaps most surprising is that so many large construction firms existed at the beginning of Mexico’s period of rapid industrialization in the 1940s. Little detailed empirical work has yet been undertaken on the history of the construction industry during this period, but sufficient information does exist to piece together a plausible explanation.

As was shown earlier, since the 1930s the prime role of the capitalist sector of Mexico’s construction industry has been to provide the built environment necessary for commercial agriculture and the development of manufacturing, along with con- commitant expansions of transportation and urbanization - and the state has always played a key role in instigating construction projects.

Profitable, large-scale public works can either induce and consolidate domestic construction firms or lead to an influx of foreign ones. Large-scale construction


capital emerged in nineteenth-century Britain, for example, partially as a result of the public works required during the Napoleonic wars and the forms in which contracts were let (Cooney, 1955; Ball, 1981). Whereas, in oil-rich Middle Eastern countries in the 1970s a sudden expansion of public works led to an influx of foreign capital.

In nineteenth-century Mexico, construction work led to similar temporary influxes of foreign capital. Revolutionary wars in the years after 1910 paralysed public and private investment in construction. During the 1920s and early 1930s, however, the emergent postrevolutionary political and economic structure began to encourage the development of domestic construction capital. Economic power was narrowly concentrated, and financial largesse and corruption were key means of consolidating political power. Successful revolutionary military leaders amassed fortunes. Frequently, at local and national levels, public works contracts were used as a means of milking the state coffers. Either the work was not done or only at exhorbitant cost. Often, construction firms would exist only for the duration of specific ‘projects’. But sometimes they remained and grew. The origins of many present-day construction firms can be traced back to this murky p e r i ~ d . ~

Such accumulation can take place only when construction is relatively simple. It needs tasks that require primarily a mass of readily available, unskilled labour - as is possible in roadbuilding and the digging of irrigation channels. More sophisti- cated work during the 1930s seems to have been undertaken once again by foreign capital (Quintana, 1969). How foreign firms actually won their work, and forged their links with the state and domestic firms, is unclear. All that is known is that at the end of the 1930s foreign firms suddenly left Mexico. Construction was affected, along with other industries, by the disruption caused to Mexico’s previous trading patterns by the Second World War. Both in home and foreign markets, domestic capital was given an enormous boost by war time conditions, and construction firms shared in the bonanza. By 1945, building firms had reached a sufficient degree of consolidation to found the Asociaci6n Mexicana de Contratistas. In 1953, the powerful employer’s organization, Camara de Nacional de la Industria de la Construccih (CNIC), was set up; a body with tight links to the state bureaucracy.

Construction firms in Mexico tend to specialize in particular sectors of work, with the larger ones having subsidiaries active in several sectors. Not surprisingly, the largest firms are dominant in the subsectors where economies of scale confer strong advantages. In 1979, for example, 12 large firms took 31% of all work associated with industrial projects, and 9 firms had a 25% share of heavy constructional work; whereas, in general building, there was only one firm of equivalent size with a mere 1.5% of the market (Mertens, 1982, Table 23). Construction firms, moreover, frequently are not independent capitals. Instead, they are often subsidiaries of the handful of giant conglomerates, which, along with multinationals, dominate the

Hansen (1971) documents the cases of two of the richest generals and the role played by construction and real estate in their rise to wealth.

Michael Ball and Priscilla Connolly 16 1

Mexican economy. Through these interlocking ownershps, significant direct links are forged between construction firms and indigenous building materials producers.

Sectoral specialization and interlocking ownerships help, in part, to explain the continued stability of the firm size hierarchy in construction. Firms of different sizes often do not come into competition with each other. While ownership by conglomerates limits the need to accumulate within the industry itself. A giant conglomerate can take a broad view of investment opportunities in the wider Mexican economy and abroad; syphoning capital into and out of construction as necessary.

Subcontracting is another means by which the hierarchy of firm sizes is sustained. The largest construction firms are organizers of construction projects; undertaking a varying degree of management and productive activity, and providing the circulating capital through which production can proceed. It is primarily through the subcontracting of specific construction tasks that foreign firms retain a presence in Mexico. The other, and more important, aspect of subcontracting and its influence on the structure of the industry is the way in which workers are employed.

2

Casual employment is the norm in Mexican construction industry. Building firms rarely employ workers directly; instead they deal with various types of labour agent, with whom long-term relationships are built up. Labour agents can be divided into four principal categories: subcontractors, jobbers (destajistas), maestros de obras and trades unions (Germidis, 1972, on which this description draws heavily). Subcontractors undertake specific tasks required in the main contract. They may themselves hire workers directly or deal with other types of labour agent. Jobbers differ from subcontractors in that they are workers employed on piecework, and should be subject t o the general terms of employment laid down in Mexican labour law. In effect, such workers are their own labour agents.

Maestros de obras play an important part in the Mexican construction industry. Their prime function is to act as middle men in the labour process, but they also oversee the activities of the workforces on site. When used by construction firms, maestros bring access to a network of potential workers who can be hired or fired as the tasks dictate. Generally, such workers are in a client relationship to specific maestros, each of which informs operatives from their network when jobs are available. The relationship is that of obligation' and, to a certain extent, mutual reciprocity. The maestro will cover the labourer for absences or faulty work, for instance. But they also often deduct substantial commissions from wages paid by construction firms. In short, the maestros are akin to master craftsmen with a 'family' of associated workers. Such a system clearly guarantees the availability of a docile workforce.

Trades unions are the final type of labour agent. These may negotiate agreements with construction firms so that workers for a specific project must be hired via that union. At the same time, workers who contract with a particular union are bound

The importance of labour agents


to working only on those sites where the union has an agreement with the construction firm (Hiernaux, 1983). In this way, the unions effectively hinder the mobility and bargaining power of their members. Construction unions tend to be tied in with the political patronage system of the government party and, here again, will operate to further the interests of local leaders rather than to improve the situation of the workforces they nominally represent. Local political patronage and the benefits derived from union office lead to the fragmentation of union organization and to competition between rival unions. Employers are thus assured of a passive workforce tied to the interests of the unions that hire them. Although the unions are present in practically all types of building works, their role as recruitment agencies is particularly important in large-scale new development projects where thousands of building workers are suddenly needed over relatively short periods (Hiernaux, 1983).

Labour agents are at the base of the institutional hierarchy of the Mexican construction industry. They are essential for the existence and continued reproduction of labour power. They usually deny the workers access to protection by Mexican labour laws. They may also control the immediate labour process, as well as recruitment, as do the maestros, for example. As a result, construction firms frequently do not know, and have no interest in knowing, how many workers are employed on their projects and under what conditions. One byproduct of the labour agent system is that published statistics on the construction industry generally overstate wage payments, as they take no account of commissions. They also under- state the numbers employed and the accident rate because of the casual forms of hiring and firing in the construction industry.

In summary, labour agents fulfil several functions for construction firms. First, they help to reduce the circulating capital required in the sector. The effect is to lower both the direct and indirect costs of labour and to increase the flexibility of the workforce employed. As we have seen, the state is also generous to construction firms, paying them considerable sums in advance for materials and other initial expenditures. In the second place, labour agents displace a direct relationship between capital and labour with an indirect one, principally to the advantage of capital. Organized struggles for improving workers’ conditions are made virtually impossible by the individualized or corporate patronage relationships in which workers are placed. Such relationships of personalized obligation are extended through to the point of production under the maestro system through the process of supervision. On big projects, where workers are hired through the unions, there is a rupture between the labour agent and the supervision. So here, production control is more indirect, though not necessarily less effective.

The particular forms of labour relations prevalent in the Mexican construction industry are sometimes disadvantageous to capital as well. For they also constitute fundamental contradictions for accumulation and individual construction capitals have little or no means of overcoming them.

First, the isolated ways in which advanced technologies and reorganization of the labour process are employed limit their long-term cumulative effect on labour


productivity. The labour agent system operates on the basis of socialized work norms, over which capital does not have direct control. Although harsh, the work norms are not necessarily amenable to reorganization and the introduction of Taylorist or Fordist production techniques. So changes in construction productivity as a whole tend to be limited (as will be shown later).

Second, by giving labour agents such a crucial role in the organization of the labour process, construction capital loses control over key aspects of the conditions of reproduction of that labour process. Labour agents can only organize what exists. Certain types of construction processes cannot function, as a result, because they do not fit into the social organization of the industry. Most directly, this lack of fit appears as a shortage of appropriate workers, either with specific skills or when the pace of accumulation in the industry outstrips the ability of the traditional maestro system to provide skilled workers. For certain projects, such difficulties can be intense. Such was the case during the construction boom of 1978-8 1 when many geographically isolated heavy industrial and petrochemical projects were affected by a critical shortage of certain types of specialized labour, particularly machine operators and welders. This problem tended to be magnified and generalized by construction industry spokespeople into a major labour shortage, a clearly exaggerated complaint (Mertens, 1982).

I11 Reproduction of labour power: wages and skills

One of the keys to understanding the production relations in the Mexican construction industry is the almost inexhaustable supply of cheap labour power and the way that it is reproduced within the organizational structure of the industry.

The reproduction of labour power for a particular production sphere requires two distinct conditions. First, the biological conditions of subsistence of the worker have to exist, and possibly that of his or her family and of future generations as well. Second, the worker must be prepared to perform the tasks demanded by capital in the production process. In economic terms, the first set of conditions relates to wages and the second to skills and training.

One of the most prominent features of the construction industry in Mexico is its low wage level. Except for some skilled and specialized jobs, construction workers consistently earn less than practically all other employment categories except for agricultural labourers. From 1939 to 1982, the average real construction wage seldom rose above 75% of the average urban wage or 80% of the average industrial wage (Pascoe and Bortz, 1978). Neither relative fluctuations of productivity in construction nor variations in output seem to have any permanent effect on building workers’ earnings. At the moment (April 1985), an unskilled construction peon (general labourer) needs to work seven and a half hours to buy a kilo of meat, 22 minutes to buy one and a half kdos of tortillas or 10 bread rolls and at least three days to buy a cheap pair of trousers. For many construction workers, there are no social security benefits, either. Only about 3% of the construction workforce

164 Capital accumulation in the Mexican construction industry, I930-82

is permanently registered in the social security system, as all other employees must be under Mexican labour law. Furthermore, up till 1981 when changes in insurance procedure were introduced, scarcely 30% had temporary coverage for accidents, although these are frequent: among those insured, the accident rate has been calculated at around 15 per 100 (Mertens, 1982). Given the casual nature of employment on building sites, construction workers’ earnings are intermittent, lowering the effective monthly wage even further. Clearly, under these conditions, the unskilled construction labourer, and even some of the skilled workforce, cannot maintain him or herself (there are women building workers, too), let alone a family and children.

If the construction worker lives in the city, the subsistence problem has to be confronted by combining different occupations within the domestic economy. These may or may not take the form of wage labour. Also, in times of unemployment, a male building worker may hire himself out in the non-commodity housebuilding or self-build sector. Many construction labourers still live in, or maintain strong contacts with, a rural community, often centred round the communal smallholding property system (ejido) reinforced by the postrevolutionary agrarian reform. During the initial stages of large-scale industrial or tourist complexes, construction labour has to be imported from other rural areas. These temporary workers, most of whom seldom stay more than three to five months at a time, are housed in tin-roofed unserviced barracks and minimize on housing and food expenses in order to send most of their earnings back home to buy next year’s seed and certain indispensable market commodities (Jacobs, 1983). The immediate reproduction costs are thus reduced to a minimum, while construction wages essentially supple- ment reproduction of the main family unit within the peasant or domestic economy.

It is clear that the construction industry draws on the vast pool of labour power partially reproduced within the rv 31 (or urban) domestic economy. Only part of reproduction needs are taken care of by construction wages. In this respect, construction, llke commercial agriculture, is subsidized by non-capitalist production relations, while at the same time it ensures the persistence and continued recreation of these relations.

With regard to the skills training aspect of reproduction of labour power, the domestic economy also plays an important role in the training of certain types of specialized workers, such as plumbers and electricians. Technical knowhow in these trades are often passed on from one generation to another, within the family division of labour. More important for the general training of construction labour is the maestro-apprentice system. The low wages paid to the unskilled peons is seen to be justified by the learning process which accompanies the job. Effectively, when peons can demonstrate that they know basic building techniques (correct concrete and mortar mixes, reinforcement and bricklaying), they may be elevated to the status of media cuchara (semiskilled) and will then earn twice the previous wage. Vertical ascendency in the building industry is limited, however. As we have seen, many peons are only part-time construction labourers. To become a maestro


requires certain intrinsic advantages, such as contacts with architects or construction firms, social standing in the recruitment sphere, as well as a sound knowledge of building processes.

Other, formal, training mechanisms are available on a limited scale, but the traditional maestro-peon system still provides the vast majority of skilled building labour power. As maestros are in limited supply and do not cover all fields of work, especially in the large-scale industrial projects, the construction industry faces finite limits in the ability to reproduce efficient labour skills. The traditional forms of reproduction, consequently, have long-term effects on labour productivity, and the Mexican construction industry’s record here has been far from impressive.

IV Roductivity change

As in other countries, construction in Mexico is labour-intensive. Labour intensity, however, is not a ‘natural’ characteristic of construction. It exists in Mexico because of earlier patterns of accumulation and their effects on construction labour processes. Mexican construction firms generally have not invested extensively in fixed capital and, for many types of work, technologies have changed little over time. Some of the consequences can be seen in aggregate construction statistics; in particular, the record of productivity increase has been patchy over the past 30 years.

In a number of respects, the Mexican construction industry occupies an intermediate position between the construction industries of the third world and those of advanced capitalist countries, befitting Mexico’s status as a NIC. A comparative study of construction industries in developed and developing countries undertaken at the end of the 1960s (Strassman, 1970) put Mexico in such an intermediate place. In terms of productivity change, for instance, most third world countries achieved virtually no increase over the decade from 1954 to 1964; while in advanced capitalist countries, on average, construction productivity rose by 3.3% per annum. Mexico’s performance was better than the third world average at 0.7% per annum, but nowhere near that of the advanced capitalist countries!

Detailed data are available on construction productivity change in Mexico since the 1950s. Like all productivity statistics, they are highly dependent on the accuracy of the data and on the definitions used (Flexing, 1966). Not surprisingly, different data sources give varying estimates, among other reasons because comparable

‘ Strassman used a sample of 12 developing counties and 14 developed ones, measuring productivity by dividing value added in the construction industry by numbers of recorded employed.


employment figures are only available from 1970 onwards’. Even with these caveats in mind, it is still worthwhile looking at long-term patterns of productivity change in the industry (Table 2) . It can be seen that there have been opposing tendencies over the three decades from 1950 to 1980.

Table 2 Productivity change in the Mexican construction industry, 1950-80

1 Banco de Mexico esrimafes (based on value added returns and the population census) 1950 prices

Construct ion Manufacturing Ratio of output per head in productivity productivity in construction and manufacturing

Output per worker (pesos) Index Index

1950 13,260 100 100 0.75 1960 14,960 103.4 114.5 0.73 1969 17,180 118.7 133.9 0.72

2 National income estimates 1970 prices

Construction productivity

Recorded economy in construction and productivity recorded economy

Ratio of output per head

Output per worker (pesos) Index Index

1970 29,050 100 1 00 0.85 1980 27,490 94.6 132 0.61

Sources: Banco de Mexico: CUenrasy Acenosde Capiral, 1969; National income accounts, 1982

Data from before 1970 are particularly suspect as an accurate national accounting system, backed up by returns from companies, was drawn up only at the end of the 1960s. Before then, construction output returns were derived from the employers’ organization, CNIC. Employment statistics, on the other hand, were based on extrapolations from population census returns. Construction workers are selfdefined in these censuses, and the data are likely to include many workers who have no relation with the production recorded as construction output; while many workers temporarily employed and/or working on isolated projects far away from population centres are likely to be missed by the censuses. From the 1970s, returns are available from the CNIC on the number of ‘jobs’ created by construction forms. They are more likely to relate to the industry’s recorded output, as both figures come from the same source. But underestimates can still arise because, for example, ‘jobs’ created by construction firms may he undertaken by more than one construction worker.


During the 1950s, the data suggest that productivity increases were slight; trailing way behind those in manufacturing. In 1950, each construction worker produced about three quarters of the net output of a worker in manufacturing. Over the decade, the productivity gap increased even further. In contrast, the 1960s were golden years for productivity increase. Construction productivity rose substantially during the decade, with increases not far behind manufacturing. We have no idea why this sudden improvement should have occurred. One possible explanation is that labour power was displaced by the use of hydraulically-based lifting and moving equipment (such as mobile excavators), which was generally being introduced into construction at the time as a result of technical advances reaching through into mass production. If this explanation is correct, the increases in productivity were one-off results of imported technology; the new technology replaced certain labouring activities rather transforming the construction process as a whole. In any case, the substitution of machines for labour in the heavy lifting and digging tasks of construction has not gone nearly as far as it has in most advanced capitalist countries, as casual inspection of any Mexican building site would show. In all spheres of construction work, there is a bewildering and seemingly irrational mixture of advanced technical processes requiring the appropriate highly qualified personnel, and traditional or highly labour-intensive operations using a mass of unskilled temporary workers. Because of this combination, many construction labour processes could be regarded as islands of high technology in a sea of peons.

The important point here is that the new technology does not seem to have substantially changed the social relations and organization of the construction process, although certain new specialist skills were inserted within their midst.

During the 1970s, general increases in productivity seem to have ground to a halt. National income data suggest that production per head even fell during the decade. Employment data from the population census suggest a slightly better picture, but, the data from this source are rather suspect (see Footnote 5). Again, there is little information to explain why the stagnation occurred. The extent of the productivity crisis in the Mexican construction industry can be seen by comparing relative output per head in construction with other economic sectors. The comparative figures for the recorded economy as a whole show a bleak picture, with construction’s net output per head falling sharply over the decade (see Table 2) .

For construction capital, low productivity growth is not an immediate problem, except in so far as it reduces the opportunity of gaining temporary increases in profitability. More important is the effect on the relative prices of construction products, which are likely to rise over time and restrict demand in the long run. If the productivity figures are correct, they - along with rising input prices - help to explain why construction costs rocketed during the 1970s. Given the preponderance of public expenditure on construction products, Mexico’s external debt crisis was undoubtedly exacerbated by the problems of the construction industry.


V Conclusions

We have argued that the specific characteristics of Mexico’s construction industry need to be explained in the light of two key processes.

The first is its unique relationship to the public sector in a situation where the state has played an increasingly important role in the development of the economy as a whole. Growth in construction has followed the pattern of public investment, a dependence which has important implications for the nature of the industry. Not only has it been subjected to many changes in the types of project funded, in accordance with the variations in state economic policy. It is also constrained by the politically imposed cyclical fluctuations in public demand. The instability and unpredictability of demand has, in turn, limited the financial capacity of all but the largest construction firms. At the same time, the way that public works are pre- financed by advance payments, implying high rates of profits at the beginning of the production cycle, has partially eliminated the need for firms to develop their own financial capacity by reinvesting profits or consolidating access to independent credit sources. The industry’s resulting trait - often described as opportunistic - has been reinforced by close personal links between building entrepeneurs and high-office public servants. Such links are themselves a product of the genesis of the contemporary Mexican state. As the construction industry has consolidated and become more powerful, its intrinsic dependence on state policy has become twoway: it is not difficult to find instances where the construction sector has intervened in determining investment policies. (For example, the setting up of housing finance organisms, Connolly, 1977.) The contradictions arising from the industry’s ultimate dependence on the state, the fluctuations in demand, the financial bottlenecks and so forth, are thus constantly reproduced.

Labour relations constitute the second basic process underlying the dynamic of accumulation in the Mexican construction industry and the contradictions it faces. Given the maestro system and its antecedents, capital could never have gained an initial footing in construction by increasing the intensity of labour in comparison to preexisting norms. Such speedups were essential for the genesis of industrial capitalism in general (Marglin, 1976) and, in Europe, capital penetrated construction by destroying the privileges enjoyed by workers under feudal guilds and simple commodity production (Ball, 1981). Instead, capitalism developed in Mexican construction because of the economic advantages capital possessed in gaining contracts and in organizing large-scale production with the selective application of advanced techniques. In other words, capital took advantage of, and continually reproduces, preexisting social relations and labour processes, rather than replacing them with industrial forms of production. Such a form of development is highly rational from a capitalist point of view. It does not arise simply from the cheapness of wages relative to additional fixed capital, but from the way in which labour power is used and controlled in production. For capital, the contemporary mixtures of advanced technology and simple, labour-intensive activities are by no means ‘backward’ or outmoded; they are the key to continued profits.


VI References

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Bortz, J . forthcoming: La estructura salarial en MCxico, Universidad Autbnoma Metropolitana, Azcapotzalco.

Bueno, G.M. 1983: Endeudamiento y estrategias de desarrollo en MBxico 1976-82. For0 Internocional XXIV.

Bustamante and Escobedo 1969: La demanda y planificacibn en la industria de la construccibn en MCxico, 70. Congreso de la Chmara Nacional de la Industria de la Construccibn, Mexico.

Connolly, P. (Coord.) 1977: El capital en la produccibn de vivienda. Mexico: COPEVI.

1982: Uncontrolled settlements and self-build: what kind of a solution? In Ward, P., editor, Self-help housing; a critique, London: Mansell.

1985: Mexico: state investment in the built environment and the debt problem. The production of the built environment No. 6, Bartiett Schdol, University College London.

Cooney, E. 1955: The origins of the Victorian master builder. Economic History Review 8, 167-76.

EUM 1980: Plan Global de Desarrollo 1980-82. Poder ejecutivo Federal, Estados Unidos Mexicanos.

Fidel, L.C., Garcia, C.B. and Godinez, E.A. 1984: Relaciones laborales en el complejo de la construccibn. Universidad Autbnoma Metropolitana, Mexico: (Mimeo.)

Fleming, M. 1966: The long-term measurement of construction costs in the UK. Journal of the Royal Statistical Society A 129, 534-56.

Germidis, D. 1972: The construction industry in Mexico. Paris: Development Centre OECD.

Hansen, R. 197 1 : The politics of Mexican development, Baltimore: Johns Hopkins University Press.

Hiernaux, D. 1983: Los trabajadores de la construccibn en Ciudad Lhzaro Chrdenas. Documento de Investigacibn No. 7, Centro de Investigaciones y Documentacibn de AmCrica Latina (CREDAL), Paris.

Jacobs, M. 1983: Compesinos y la industria de la construccibn en Tabasco 2000. Universidad Autbnoma Metropolitana, Xochimilco, (Mimeo.)

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Marglin, S. 1976: What do bosses do? The origins and functions of hierarchy in capitalist production, Review of Radical Political Economy 6.

Mertens, L. 1982: Algunas tendencias actuales en el mercado de trabajo de la construccibn en MCxico, Programa de Planificacibn y Politicas del Empleo. Mexico: PNUD-OIT. (Mimeo.)

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Strassman, P. 1970: Empleo y alternativas financieras en la vivienda mexicana. In Araud, C. et al. La construccibn de vivienda y el empleo en Mtxico, El Colegio de MBxico.

Y a-t-il quelque chose que I'on puisse appeler un secteur de la construction typique du tiers-monde, et se developpe-t-il en direction des normes de construction dans les pays capitalistes avances? Cet article examine le developpement du secteur du Bitiment capitaliste au Mexique de ses origines a la decade 1930. Ce secteur ne s'est pas approprie la totalite des travaux de construction; une large partie est encore assuree par des formes de production simples echappant au systeme capitaliste. Cependant, tousles travaux a grande echelle et bitements publics sont realises par des entrepreneurs capitalistes. Le secteur de la construction represente un element central du processus d'emergence du Mexique en tant que pays nouvellement industrialise, et un element cle de la strategie de developpement du gouvernement. Les changements de strategies de la developpement se sont traduits par des variations de composition des travaux de construction, dont le volume global a double en terrnes reels durant chaque decade depuis 1940. Les entreprises de construction mexicaines a grande echelle n'ont ete que tres peu pknetrees par des capitaux etrangers independants; en fait, les entreprises de TP mexicaines sont actives dans d'autres pays d'Amerique Latine. Les capitaux mexicains dominent dans le secteur de la construction a cause de la structure sociale qui est apparue dans le Mexique post-revolutionnaire. II y a des liens etroits entre I'Etat et d'autres capitaux interieurs. La main d'oeuvre est employee indirectement par le canal d'agents qui contrblent Ctroitement la formation professionnelle, le niveau des salaires et les cadences de travail. Les auteurs pensent que les relations sociales dans le bitiment au Mexique sont I'element central qui explique le developpement du secteurcapitaliste de la construction. Elles ont permis une production ex t rhemen t rentable et donc une rapide accumulation de capital, et elles expliquent egalement le melange de haute technologie et de main d'oeuvre manuelle non qualifiee, et la faCon dont d'enormes armees de mainoeuvres et d'ouvriers sont rassembles dans des zones eloignees pour realiser de nouveaux projects de developpement. Les contradictions de ces relations sociales vis-a-vis du capital sont nombreuses. Parmi les aspects negatifs, o n citera la croissance relativement faible de la productivite, le manque periodique de main d'oeuvre qualifiee et la montee trop rapide des cofits deconstruction. qui ont touscontribue a la crise economique et sociale actuelle au Mexique. Il est difficile d'ailleurs de voir comment la structure sociale actuelle du secteur mexicain de la construction pourra s'adapter pour surmonter ces probl6mes. I I est clair que la construction au Mexique n'est pas conforme a une norme tiers-mondiste idtale. Ce n'est pas non plus un secteur industriel arriere empruntant une courbe de developpement lintaire vers le progres. En fait I'environnement construit du Mexique est autant le produit historique specifique de luttes sociales dans le domaine de la production que dans le domaine de la consommation.

Gibt es eigentlich eine fur Entwicklungslander typische Bauindustrie mit Tendenz zu Baunormen fortgeschrittender Kapitalistischer Lander? Diese Frage ist Ausgangspunkt der vorliegenden Arbeit, in der die Entwicklung einer Bauindustrie in Mexiko nach Kapitalistischem Muster - von ihren Anfangen in den 30er Jahren bis zum heutigen Zeitpunkt - aufgezeigt wird. Auf diesen Teil des Bausektors entfallt keineswegs der gesamte Anteil der Bauarbeiten. Ein GroBteil wird immer noch vorn traditionellen Sektor rnit seinen einfachen. nich-wirtschaftlichen Produktionsmethoden ubernommen. GroB- und offentliche Bauprojekte werden jedoch ausschlieBlich von Unternehmen des kapitalistischen Sektors ausgefuhrt. Der Bausektor hat nicht nur zentrale Bedeutung beim Aufstieg Mexikos zu einem Schwellenland sondern auch Schliisselfunktion im Rahmen der von der Regierung verfolgten Entwicklungsstrategien. Veranderungen der Entwicklungsstrategien spiegelten sich stets in einer Schwerpunktverlagerung bei den Bauprojekten wider, deren Zahl sichseit 1940alle lOJahre real verdoppelt hat. Mexikanische Groahauunternehmen sind nur in geringem MaBe von auslandischem Kapital abhangig und werden statt dessen selbst in anderen lateinamerikanischen Landern aktiv.

Michael Ball and Priscilla Connolly 1 I1

Aufgrund der gesellschaftlichen Struktur, wie sie sich nach der Revolution in Mexiko entwickelt hat, dominiert inlandlisches Baukapital. Im iibrigen sind Staat und andere inlandische Kapitalgeber eng miteinander verbunden. Arbeitskrafte werden indirekt iiber Agcnturen beschaftigt, die Ausbildung, Lohnhohe und Arbeitsgeschwindigkeit genauestens iiberwachen. Die gesellschaftlichen Zusammenhange innerhalb des mexikanischen Bausektors sind von zentraler Bedeutung, wenn es darum geht. die Entstehung eines Bausektors nach kapitalistischem Vorbild zu erklaren. Diese ermoglichten namlich eine gewinnorientierte Produktion und schnelle Kapitalakkumulation. AuBerdem kann damit das Nebeneinanderbestehen von Hochtechnologie und ungelernter Arbeitskraft sowie die Tatsache erklart werden. daB ganze Hecre von Bauarbeitern zur Durchfiihrung neuer Entwicklungsprojekte in entlegene Gebiete entsand werden. Die Nachteile dicser Sozialstrukturen, denen sich Kapitalgeber gegeniiber sehen. sind zahlreich. Sie zeigen sich in einer relativ langsam steigenden Produktivitat, einem periodischen Mangel an gelernten Arbeitskraften und steigenden Baukosten. Alle diese Faktoren haben zu Mexikos gegenwartiger Wirtschafts- und Gesellschaftskrise beigetragen. Doch eine Losung des Problems, wie die gegenwartige Sozialstruktur der mexikanischen Bauindustrie zu verandern ist. um diese Schwierigkeiten zu iiberwinden, ist nicht in Sicht. Mit Sicherheit kann gesagt werden, daB der Bausektor in Mexiko nicht einer idealisierten Norm der Entwicklungslander entspricht. Ebenso wenig kann behauptet wcrden, daR es sich dabei um einen riickstandigen Industriezweig handelt, der einen steten Kurs in Richtung Fortschritt eingeschlagen hat. Vielmehr kann davon ausgegangen werden, daB die gebaute Umgebung von Mexiko das spezifische geschichtliche Ergebnis gesellschaftlicher Kampfe im Produktionsbereich ist so wie sie es auch im Konsumbereich ist.

iExiste realmente una industria constructora tipica del terccr mundo. que ademas cstC evolucionando hacia las normas de construccion de 10s paises capitalistas avanzados? Estc documento estudia cl desarrollo de una industria constructora capitalista indigena en Mexico. desde sus origenes en la decada de 10s 30. Esa industria no ha absorbido toda la construccion. gran parte de la misma es realizada todavia bajo formas d e produccion simples no comerciales. Sin embargo, todas las obras de gran escala y de edificios publicos son llevadas a cabo por contratistas capitalistas. La construccion ha formado un elemento central en la aparicion de Mexico conio un pais reciCn industrializado, y un componente clave en las estrategias de desarrollo del estado. Los cambios en las estrategias de desarrollo se han reflejado en una composicion variada de las obras de construccion, que por lo general se han ido duplicando en terminos reales cada decada a partir de 10s anos cuarenta. Existen empresas constructoras nacionales de gran importancia con muy poca ptnetracicin independiente de capital extranjero; en cambio, las empresas constructoras mexicanas son activas en otros paises latinoamericanos. El capital de construccion domestico domina dada la estructura social que surgio en el Mexico postrevolucionario. Hay lazos estrechos con el estado y con otros capitales domesticos. La mano de obra se emplea indirectamente utilizando agentes de miiiio de obra, que ejercen un control estricto sobre la capacitacion obrera. 10s niveles de salarios y la velocidad de las obras. Este documento sostiene que las relaciones sociales de la industria constructora de Mexico son factores centrales para explicar el desarrollo de la industria constructora capitalista. Han permitido una produccion muy rentable y una acumulacion rdpida: explican la mezcla de aha tecnologia y mano de obra no cualificada, y las formas en que las cnormcs multitudes de obreros de laconstruccion son reunidos en zonas apartadas para llevar acabo nucvos proyectos de dcsarrollo. Por lo que se refierc al capital, las contradicciones d e estas rclaciones sociales son numerosas. Entre 10s aspectos negativos esta el crccimicnto rclativamente lento de la productividad, la escasez periodica de mano de obra cualificada y la subida de 10s gastos dc edification, 10s cuales han contribuido a la crisis socioeconomica que padece actualmentc Mexico. No obstante, cs dificil ver como la estructura social actual de la industria constructora de Mexico puede adaptarse para superar e m s problemas. Claramente, la construccion en Mexico n o se ajusta a una norma tercermundista idealizada. Tampoco es una industria atrasada en una trayectoria lineal de desarrollo hacia el avancc. En cambio. el ambiente construido de Mexico es tanto el producto hist6rico especifico de luchas socialesen laesfera de la producci6n como en al csfera del consumo.

Documents

Capital accumulation in the Mexican construction industry, 1930-82