Assessing the Obstacles to Industrialisation: The ... - Innovation

6 Stephen H. Hailerthan 2,500 persons, indicating that they were peasants who lived intraditional villages.' X good portion of this population (close to 60 % insome states) could not even speak Spanish, implying that they functionedonly in local markets.' Finally, Coatsworth's national income estimates forthe nineteenth century suggest an economy characterised by low incomelevels. Gross Domestic Product per capita in I 84j was only $56 (1950dollars), and was, as has previously been mentioned, shrinking.'' Themarket for manufactures would in fact have been even smaller than this$j6 figure indicates, since the nation's skewed distribution of wealth nodoubt produced an extremely uneven distribution of income. In fact, atthe turn of the century, when real GDP per capita had doubled since I 845,average household incomes were still so low that in years of bad cornharvests, when the price of this important staple rose, Mexico's workingclass could not afford to purchase cotton cloth."Not only was the market not conducive to the growth of manufacturing,neither was the legal-institutional environment. In the UnitedStates and England, for example, legal systems had developed in whichdecisions were based on precedent, in which judges made rulings based onpride in craft, and in which well-defined bodies of contract, commercialand patent laws were established. This made property rights, at least forthe 'respectable classes', easy to protect. In Mexico no such state of affairsexisted. Until the last two decades of the nineteenth century no legislationexisted to encourage the formation of limited liability corporations, amodern patent law did not exist, nor was there a body of mortgage creditlaw designed to protect long-term investments. Indeed, as was the case inearly modern Europe, economic activity of all kinds still required specialpermits and licences for which special taxes and fees were charged. Aboveall, litigants faced a corrupt and whimsical judicial system. Thus it wasextremely difficult to enforce contracts, collect on loans (especially if theywere to the government) or enforce property rights without resorting topolitical machinations. As David Walker has pointed out in his work oncommerce in nineteenth-century Mexico, without access to those whoJames K.Wilkie, The ,ZIesican Revolution: Federal Expendrture and Social Change since 1910(Berkeley, 1970), p. 218.Vtreccion General de Estadistica, Estadisticas Socrales dei Porfiriato, 1877-1910 (hlextco,19)6), pp 118-20. The data are for 1895, when in the nation as a whole 17% of thepopulation spoke only an indigenous language. The percentage of non-Spanishspeakers in the mid-nineteenth century was certainly significantly higher than the 1895figure. But even in 189j the majority of the populatton in indian-dominated states likeYucatan and Oaxaca spoke only an tndigenous language. In seven other states (out ofji) over 20% of the populatton spoke no Spantsh in 1895. It is highly likely that inthe mtd-nineteenth century the nattonal average approached the levels of these states.lo Coatsworth, 'Obstacles to Economic Growth', p. 82.I' El Economrsta ,Zlesicano, 7 >la)- 1904, p. I 14.