Capitalist outsiders: How corporate power became entangled in politics in Mexico and Venezuela

A focus on government corruption can backfire — opening the door for political outsiders with ties to the business world, and philosophies that exclude or even repress particular groups.

“We’re in a political moment where we’re seeing a lot of anti-establishment candidates win elections,” said Binghamton University Professor of Sociology Leslie Gates, author of Capitalist Outsiders: Oil’s Legacies in Mexico and Venezuela. This reflects, in Gates’ view, a broad “crisis of confidence in the political leaders who helmed the neoliberal transformation of the world.”

What intrigues her about this recent phenomenon isn’t that outsiders are gaining traction. Rather, it is that voters so often favor outsiders who embrace, rather than curb, the very capitalists who benefited most from the neoliberal turn and the inequality it fosters.

Her 2023 book examines two instances when electorates favored capitalist outsiders precisely when we might have expected anti-capitalists to prevail: in neoliberal era Mexico, right after an anti-capitalist won in Venezuela, and in mid-20th century Venezuela, right after an anti-capitalist outsider won in Mexico. Capitalist Outsiders recently won multiple prizes from the American Sociological Association: the Barrington Moore Book Award from the ASA Section on Comparative Historical Sociology, the Distinguished Contribution to Scholarship Book Award from the Political Sociology Section and an honorable mention for the Immanuel Wallerstein Memorial Book Award from the Political Economy of the World-System Section.

After Venezuelans elected the anti-capitalist outsider Hugo Chávez in 1998, there was a sense that neoliberalism had exacted too high a social cost, Gates explained, and that a backlash against the leaders such as those in Mexico, who had implemented reforms championed by Washington and international financial institutions in the 1980s and 90s, would lift anti-neoliberal leaders. After all, Mexico exemplified the social costs of the reforms, Gates noted. Its farmers and domestic industrialists lost out when Mexico’s establishment dismantled tariffs protecting them from cheaper foreign imports; its workers lost purchasing power as the market-adjusted currency plummeted and the government abandoned inflation-adjusted minimum wage increases.

But a backlash against neoliberalism isn’t what happened in Mexico, or in much of the world.

“We’re getting a lot of leaders who I call capitalist outsiders,” Gates explained. “They tap into people’s outrage with the political establishments which administered neoliberal transformation, but they don’t really challenge the policies favored by their dominant neoliberal business sectors.”

Gates found that Mexicans, unlike Venezuelans in 1998, didn’t seem to question the neoliberal project even as they punished their political “dinosaurs.” She documented a torrent of corruption allegations against Mexico’s political elite in the run-up to Vicente Fox’s 2000 election. They distracted from the enormous public cost and very real corporate entanglements of Mexico’s neoliberal political elite, she concluded. Instead, they channeled anti-establishment outrage around people’s frustrations with electoral fraud, political violence and rampant narcotics trafficking.

Her research on Venezuela’s corruption reporting before voters flocked to anti-capitalist Chávez affirmed her conclusion. Unlike Mexico, corruption reporting in Venezuela centered on corporate corruption.

“This is how anticorruption politics can help capitalist outsiders; it can obscure corporate corruption,” Gates explained. The “front-facing bluster of many of these capitalist outsiders, some of whom are actually business leaders themselves, isn’t always anti-corruption politics. It is increasingly various forms of “exclusionary politics, be it anti-immigrant, anti-gay, anti-woman or ethnonationalism.”

The influence of big oil

To shed further light on why capitalist outsiders win, Gates delved into the history of Mexico and Venezuela’s first-generation political outsiders, who came to power in the 1930s and 1940s. She was struck by their reversed roles: Venezuela’s winning outsiders at the time adopted a conciliatory approach toward foreign oil companies not long after Mexico, Latin America’s first nation to be developed for oil, slammed their oil companies with expropriation.

Gates traced the rise of Venezuela’s 1940s capitalist outsiders not just to their avid anticorruption politics but also to Mexico. She traces it, specifically, to Mexico’s radical oil workers, who successfully lobbied Mexico to nationalize oil in 1938 and scared the oil executives into tightening their control over Venezuelan oil workers. Oil companies like Exxon Mobile, she found, succeeded in tamping radical labor calls for nationalization in Venezuela and easing the path to power for capitalist outsiders.

“Yes, oil matters to Venezuelan politics, but how?” Gates asked rhetorically. “It doesn’t matter because oil condemns societies to corruption, authoritarianism or political violence. Rather, it matters because becoming an oil producer locks a nation into dynamic relationships with other oil producers in ways that leave enduring political marks.”

The mark it left in Venezuela, she discovered, was a political system primed for an anti-capitalist.

“News about Venezuela today tends to leave out this history of oil development and the role that foreign oil companies like Exxon Mobile have played,” she said.

That history is key to understanding not just Chavez’s popularity, but also current President Nicolás Maduro’s justification to repress opposition and resort to electoral fraud. This history is also key to understanding why the U.S. resorted to harsh economic sanctions to force Maduro out, sanctions that have made daily life so unbearable that 8 million Venezuelans fled their country.

“We need to take a longer view of a society’s history and how it became incorporated into the world capitalist economy because those earlier moments of economic formation become embedded in domestic political cultures,” Gates said.