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Mexico City, one of the largest and most densely populated cities in the world, is located in the picturesque valley surrounded by mountains. It is the city of contrasts, in which the ultramodern skyscrapers adjoin poor dirty slums. Nearly 40% of the population of Mexico City live below the poverty line, and the capital of Mexico is considered to be one of the most criminal capitals in the world (Wilson and Silva 2013, 4). The incorrectly chosen neoliberal policy applied and imposed on the citizens of the country causes all these problems. The given research paper represents the case study discussing democracy, neoliberalism, poverty, housing, labor markets, and security in Mexico City. Being modern urbanistic capital, the city consists of the class society, the most part of which lives in poverty. Neoliberal policies aimed at further enrichment of the elite and impoverishment of the poor social layers contribute to the issue.

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The democratic regime ruling in Mexico proves its ineffectiveness since actually, the democratic rights and freedoms are not implemented. The neoliberal policies deteriorate the political and social life in the city. Poverty, as well as housing, are the main problems of Mexico City and the country as a whole. What is more, the difficulties with security also compose the issue of interest for the given research paper.


The struggle for democracy and implementation of the neoliberal policies in Mexico City worsens poverty and class division problems. Since the earliest stages of history, Mexico has been facing serious problems in the attempts to come to national integration and genuine democracy. It is impossible to designate the exact starting date of the transition to democracy in Mexico. Starting from the War of Independence at the beginning of the 19th century, the country has struggled for the establishment of true democracy and mode, which the law had to control (Bruhn 2009, 321). However, the state reforms created the gap between the goals of the political regimes and their actual achievements in Mexico City.

Despite the fact that the Mexican Constitution of 1917 called for the democratic ruling, its formation in the country began only at the end of the 20th century. Throughout the most part of the 20th century, Mexico was in the power of the institutional and revolutionary party - Partido Revolucionario Institucional (PRI), the monopolistic political group, which was often criticized for imposing the consumer social order based on patronage (Wood 2012, 94). PRI dominated the Mexican policy both at the national level and at the level of states and cities (Bruhn, 2009, 322). Thus, the activity of this militarized dictatorship interfered with the authentic democracy principles and resulted in increasing poverty in the country.

The current government of Mexico does not implement true democratic postulates. Instead, the neoliberal policies combined with pseudo-democracy promote further and more distinct class divisions in the country. While the Mexican government concentrated all forces on the fair elections as the way to democracy, that unilateral commitment finally led to the unsuccessful realization of the strong democratic basis. The state and local elections held in July 2010; PAN and PRD united to win over PRI in Oaxaca, Sinaloa, and Puebla states. Although the majority of the Mexican population perceived that victory as the step in the right direction, it marked further split in the multi-party system, which was created for the development of democracy. However, the new democracy applied in the country does not allow its citizens to believe in the changes for better. People think that the moral decay of officials and politicians, corruption, bribery, illegal actions and violations of the law can be eliminated, and the real bases of democracy will rule the country.

The sluggish democratic management and neoliberal principles promote the growth of corruption and class division, which destroys the trust in the state. Mexican government achieved little in the field of war against poverty and inequality – the factors, which develop the criminality and violence, not to mention the threat of the self-elimination of the secular society as well as the loss of the democratic legitimacy. The commitment of the government to the market model assumes the use of the authoritative and technocratic forms of decision-making, cool relations with the civil society, and unacceptance of people not agreeing with the principles of neoliberalism. This orientation interferes with the implementation of active measures aimed at effective struggle against poverty and class division.


The dominating impact of the economic neoliberalism on Latin America negatively influences all spheres of life in Mexico. Unlike the classical liberalism, it does not deny the state regulation of economy but leaves it only the function of the establishment of competition principles and laws of the free market considering the free market and unrestrained competition a fixed asset of the progress and achievement of social justice, possibly, first of all, on the basis of the economic growth, which the gross domestic product measures(Maucourant and Plociniczak 2013, 521). The neoliberal economic regulation started in the early 1980s in Mexico.

The above-mentioned type of regulation in Latin America brought a set of results including the stabilization of currencies, the opening of economies, and decrease of the state intervention among others. In many cases, the state entities were privatized. However, the neoliberal policy implementation in Mexico City also had negative consequences, for example, the reduction in the level of living of population, class division, and violation of the natural balance.

In order to understand the negative sides of neoliberalism in Mexico, it is necessary to consider them from the theoretical point of view. The critic of the free market Karl Polanyi represents useful research in this separate case. The essence of the neoliberal theory can be demonstrated through four main ideas (Maucourant and Plociniczak 2013, 522):

  • People are the individuals motivated only by their own interests; all interactions of people including economic, political, and social among others can be explained only from the perspective of personal interests;
  • Own interest does not lead to the chaos; it leads to harmony since the chain of interactions, which own interests cause, is the part of the course of nature;
  • The course of nature finds its full embodiment in the market;
  • Market is formed naturally.

However, despite the negative impact of the neoliberal theory on the economic and social life of Mexico City, the self-regulating mechanism of demand and supply creates natural order and harmony among the individuals pursuing their interests. It improves the marketing situation in the country and tries to establish an effective balance of all social layers avoiding the class division.

The structural transformations in Mexico City began during the administration of Miguel de la Madrid (1982) followed by Carlos Salinas (1988) as well as the present president Enrique Pe`a Nieto (Bruhn, 2009, 322). Due to the privatization, a decrease in the public expenditures owing to the reduction of the state employment happened. In addition, the salary level was frozen. There was active stimulation of export, and the labor law concerning workers was toughened. Besides, the economy of Mexico City, as well as that of the whole country, became more open. The economic cooperation with the USA was amplified through the integration of the country into the North American Free Trade Agreement (NAFTA) (Wood 2012, 98). NAFTA provisions were even more neoliberal, which was expressed in the restriction of the state influence on the industrial policy, decrease in the social expenses and economic redistribution, and elimination of the barriers to foreign investments. Thus, the application of the neoliberal policy in Mexico City made an essential contribution to the deterioration of the political, economic, and social state of the city and country.


Due to the severe and fierce neoliberal rules in Mexico City, the small percentage of people live a luxurious life while most part of the population suffers from poverty. Poverty represents the state of a need or the shortage of the necessary material means, which allows satisfying the individual’s needs for the normal life (Garza-Rodr?guez 2016, 143). According to the statistical data of Christopher Wilson and Gerardo Silva (2013), 46% of Mexicans live in poverty. This indicator is nearly seven points higher than the average one in the countries of Latin America. The latter consists of 29, 4%. The Mexicans living in poverty constitute 13, 3% of the total population while the average value across Latin America is equal to 11, 5% (Wilson and Silva 2013, 5). In the country, there is the highest indicator of the difference between the minimum and maximum wages in the world as well as the wide-spread class division. About 20 million people live below the poverty line (US Embassy-Mexico City 2013, 1). The free-market policies did not show their efficiency. On the contrary, they promoted the increase in the poverty rates in the city and country.


The neoliberal politics aggravate the problem of housing in Mexico City, which, in turn, results in the lack of housing there and leads to further class division. Mexico City is the overpopulated and urbanized city mostly consisting of the villagers who came there in search of better lives. In this city, 45 percent of the population compose people under 15 (Herbert, Belsky and DuBroff 2012, 3). The unbalanced division by age leads to social and economic problems. Housing is one of the most urgent issues of modern Mexico City.

There are slums almost around the whole perimeter of the city. Local authorities subsidize the big housing fund. However, the accommodation in these houses requires stable income, which is affordable for no more than 40 percent of the urban population. Only about 10 percent of citizens can buy or lease housing in the private housing market (US Embassy – Mexico City 2013, 1). Owning to the fact that there is no socialism in Mexico, millions of peasants leaving their native villages to come to the cities where they meet housing problems. All over the country, even in Mexico City, there are no multi-storied residential districts. The vast majority of locals live in poor hovels located in the private sector.

In Mexico City, there are three types of housing areas. The colonies proletarians are the pathetic hovels built in the suburbs of the city. The inhabitants settle down in these areas self-occupying the land and without the intervention of the state. Vecindadas belong to the second type of housing. They are mainly located in old parts of Mexico City where numerous families live in abandoned buildings. Two million people in the city live in these houses. Ciudades perdidas represent the third type of housing. They are similar to colonies proletarians but are located not in the suburbs of the city but in its center. The bodies of the city authorities had destroyed some of them. The built-up areas make more than 94 percent of the federal district of Mexico City, and only 6 percent belong to the free sites (Herbert, Belsky and DuBroff 2012, 5).

In the majority of houses, even in the safe areas of Mexico City, there is no hot water. The citizens install black barrels on the roofs of their houses and use the warmth of the sun to heat the water. The water is given to most parts of Mexico City hourly. What is more, despite the terrifying heat reaching +45 in the shadow at summer, a huge number of inhabitants do not have air conditioners. In many houses, even in the capital, there is no possibility of connecting to the Internet. Thus, instead of improving the current situation, the free market, which the neoliberal policies imposed, deteriorated the problems of housing and class division in the city.

Labor Markets

The neoliberalism represented by the free market greatly influences all spheres of life in Mexico including the labor market leading to an increase in the unemployment rate. Due to the fact that the Mexican government tensely works at the development of the “labor flexibility” policy, the employment security became less certain, the unemployment and part-time employment rates grew, and when the market became more independent, the earning level fell (Ball, De Roux, and Hofstetter 2011, 4). In Mexico, the labor unions had a great influence on the state. The ruling PRI traditionally united trade-union management and party leadership. The impact of the labor unions decreases as long as the ruling party implements the neoliberal policy.

According to Quintanar (2015), the dismissals, suburbanization, and segregation, which the neoliberal “free market” policy caused, have led to the higher level of unemployment (about 20%) and a significant increase in the employment rate in the informal sector, which grew by 80% in the 1980s (Quintanar 2015, 18). The reduction of the labor impact and corresponding strengthening of the role of market forces exerted a negative influence on the level of living. Having raised the role of the self-regulating market, the Mexican government promoted the decline in the living standards and further division of the population into classes. Thus, Quintanar (2015) summarizes her arguments about the barriers to effective employment in Mexico City in the following quotation:

Suburbanization, decentralization and residential segregation result in poor workers being further away from jobs or in spatial disconnection. This disconnection worsens when workers depend more on public transport and social networks to find work (Quintanar 2015, 20).

The number of the unemployed population in Mexico constitutes 2, 2 million people, which is the highest level for the previous decades – 4, 76% (Figure 1). At present, according to the data of the U.S. Embassy in Mexico City (2013), the economically active population in the country constitutes 45, 2 million people, out of which 2, 2 million are officially registered as unemployed. The basic reasons for the growth of unemployment are the economic crisis and dependence of Mexico on the American market. The labor power in Mexico City is divided as follows: 42, 3% are occupied in the service sphere, 19,9% – in trade, 15,1% – in light industry, 12,6% – in the agricultural industry, 8,4% – in the construction, and 1,7% – in the energy sector. Mexico City has the highest unemployment level, which is nearly 6% (U.S. Embassy – Mexico City 2013, 2).

In Mexico, the neoliberal policies are still applied. They lead to the social disorganization, decrease of the population standard of living, class division, and the emergence of harmful impact on the environment. The neoliberal policies directed at the decrease of the unemployment rate caused the appearance of self-regulating free market mechanisms, which only worsen the unemployment problem in the capital.


The neoliberal policies applied by the government also resulted in the deterioration of the security problem in the country. In Mexico, the crime rate is extremely high as compared to that in the European countries. Millions of people possess guns, rifles, grenades. Therefore, Mexico City is one of the world's main illegal sellers of guns and similar goods. The suburban areas of the city with a private sector are especially dangerous. However, there are also many hooligans and gangsters on the central streets. The thefts and pilfering as well as drug wars are peculiar for Mexico City (Shrink 2013, 2).

Often, the bandits dressed as the police officers commit crimes in Mexico City. What is more, there are also the thefts connected with the ATMs in the Mexican capital. The thieves put a special virus into the ATMs that allow them to receive all funds from the users’ cards. Private taxi drivers are also dangerous. According to the information from the United States Department of State Bureau of Diplomatic Security report (2015), approximately, fifty thousand taxi drivers in Mexico City have no license for transportation, and the majority of them earn not by driving but by robberies. Daily police officers fix violence, robberies, and even murders, which the taxi drivers commit (OSAC 2015, 4).

The region called Tepito is one of the most dangerous areas in Mexico City. The same name belongs to the main street of the colony. This place is known for its constant problems with drugs, underage prostitution, and an extremely high crime rate (Shrink 2013, 2). There, local people sell and buy stolen things, the drug dealers conclude bargains, and the prostitutes earn their living. Small streets of Tepito serve as the arena for the showdown of the local gangs (OSAC 2015, 6). Fights, shootings, robberies, and murders became the hallmarks of this area a long time ago. Thus, the free market policy resulted in the increased criminality rate in the city, enhancement of delinquency number, and decrease of the security level in the country.


Thus, Mexico City is a modern urbanistic city, in which society is divided into the rich and poor layers. The neoliberal policies, which the government applies to the city and country, are aimed at the further enrichment of the elite and impoverishment of the poor layer. The given case study showed that the whole complex of the historical, political, social, and economic factors caused the problems in Mexico City to exist even today. After long years of struggle for a better life, Mexico, at last, has come to democracy. However, this achievement is threatened. Mexico City still faces the challenges, which the historically developed political isolation, corruption, authoritarianism, universal poverty, and high level of social inequality produced. All these factors are closely interconnected, and all of them lead to the weakening of the Mexican state.

The fall of productive activity and impoverishment of the working class result in certain specifics of the capital accumulation in Mexico City – the process, which shows the clear symptoms of long-term depletion. Neoliberalism quickly won wide popularity right after its emergence. The nationalists, in particular, PRI of Mexico supported the new economic model. However, the process was rather chaotic and resulted in the deterioration of the level of life of the most part of the capital population, poverty as well as problems with housing and security. The given research paper opens wide opportunities for the future study of the current issues concerning Mexico City. More detailed research of the politics of Mexico City can be narrowed to the outlining of the possible intervention of the foreign states in the internal policy of the country aimed at the improvement of the situation and direction of the neoliberal policies to reaching prosperity of the state.

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