256 JOURNAL OF POST KEYNE

256 JOURNAL OF POST KEYNESIAN ECONOMICS cial and economic crisis has indeed weakened their principal arguments and created a space for the questioning of the finance-led accumulation regime that has come to define the global economy. Many have questioned the free market model and the viability of the finance-led regime of accumulation, the globalization consensus, and the neoliberal model (see, e.g., Wade, 2008). In our view, the current crisis reflects the internal limits of the finance-led accumulation regime and underlines the contradictions at its heart, including the polarization of wealth and its corresponding unemployment, the hollowing out of productive sectors and public institutions in return for the short-term profitability of a handful of financial firms, and the increasingly frequent and severe financial crises. The analytical framework of finance-led capitalism highlights several defining features of the present-day accumulation regime. In the words of Serfatí (2009a, p. 2), “Finance capital represents specific social relations which give claims’ owners the right to collect revenues (interests, dividends, fees from intellectual property rights, . . .) which in last resort, can only be drained from value created in production and nonmarket wealth (land, accumulated knowledge).” From this viewpoint, the current crisis is particularly serious, as it profoundly disrupts the mechanisms of profit generation. In other words, it is precisely the financialized profit formation of the world’s largest corporations and financial groups that is at the heart of the crisis. This is the case not only in the United States and Europe, but in Latin America and other developing regions as well. The problem therefore is not simply one of deflation of (toxic) assets prices, but one of deterioration of the most important sources of business and profits for transnational companies, investment funds, and banks. These include a variety of forms of corporate cash management and securitization, with mergers and acquisitions (M&As) playing a predominant role (Vidal, 2004, 2008, 2009a). The financialization of corporate profits can be traced to several factors. Shareholder composition has changed during the past decades, and investment companies have acquired greater influence (Plihon, 2003b), using their property rights to impose financial-based logic on corporate strategies (Guttmann, 2009, p. 22). Such logic has included the creation of incentives for firms’ upper management to employ aggressive cash management, including the issuance of multiple types of securities and the transformation of nonliquid assets, such as inventories, future sales, research and development, and a variety of intangible assets, into liquid assets and profits. The ascendancy of institutional investors has been accompanied by their increased internationalization, yet at the same time, the advance

FINANCIALIzATION IN MEXICO: TRAJECTORY AND LIMITS 257 of financialization in corporations headquartered in the United States, United Kingdom, and other European countries (as well as in some Asian and Latin American countries) has also led to a steady centralization of profits. Within this context, the relationship of Latin American economies with other countries and regions and the differences in the composition of their respective financial systems continue to be of utmost relevance. In Latin America, trade opening and financial crises have greatly damaged the position of local corporations and have exerted great pressure on the largest domestic corporations that are funded abroad. The need for foreign currency has grown both for domestic and foreign corporations, investment funds, pension funds, and hedge funds that require dollars for capital outflows such as interest payments and profit remittances. One of the key transformations in this liberalized, deregulated, and global form of capitalism has been the deepening of the role of finances in profit generation and therefore the growing role of financial corporations in determining wealth distribution and political power. The current financial crisis has therefore cast into doubt not only the viability of banks and global finance, the principle vehicles of the remarkable centralization of wealth in recent decades, but also of the existence and reproduction of highly concentrated fortunes and wealth based on financial assets. Deregulated or neoliberal capitalism has also profoundly transformed government institutions constructed during the so-called golden age of capitalism, implying changes in the ownership of assets and new mechanisms of profit generation. Some state institutions were dismantled, others were renewed, and many others were transformed under various formulas of privatization, including those operating basic services, health, education, national security, and justice. Galbraith (2008) has recently documented in the United States the same phenomenon that has been present in much of Latin America for the past three decades, although under different modalities. With these factors in mind, the following questions must be raised: Are we in the midst of a change in the regime of accumulation? Are we facing the limits of the financialization model? Is this the terminal phase of modern globalization? These are questions that currently confront the conceptual instruments whereupon Marxists, regulationists, and post Keynesians have been analyzing the transformations in capitalist economies and financial systems over the past thirty years. This article seeks to contribute to the debate over the direction of current capitalism and the process of financialization and its limits through an overview and analysis of the Mexican economy over the past three decades. First, we examine various elements that constitute the concept