Introduction
In contrast to the 19th-century state’s passive and restrictive approach, the interventionist (or mixed economy) state brings about a significant transformation in the economic and legal order, establishing foundations for a new public economic order and outlining regulatory guidelines for economic activity and market functioning. This shift should be observed in the reforms introduced to the Federal Economic Competition Law by the 4T.
Historical Context and the Rise of Interventionism
The 4T represents a historical turning point, as indicated by Font Galan, marking a radical change in the legal, economic, and political systems of capitalist countries. This transition signifies a definitive shift from 19th-century liberal conceptions, which had nurtured capitalism’s growth, to an economic, political, and legal system characterized by interventionism and public direction. Economic and social crises since the 19th century, exacerbated by global wars and the Mexican Revolution, led to the emergence of new political currents aiming to surpass the liberal economic system, which had proven incapable of self-governance and balanced, equitable economic development through market mechanisms.
Limitations of Free Competition
Free competition, the logical outcome of economic liberalism, also failed to fulfill its social interest. In practice, unregulated free competition became a powerful tool for dishonest and influential businesspeople to gain dominant market positions by eliminating or restricting competition, distorting or falsifying fair economic competition through unfair and incorrect acts. This resulted in increased aggression among businesses, as they felt compelled to use new, unfair methods to attract consumers and promote their goods and services, risking the generalization of dishonesty in competition and consumer interactions. Honest and weaker businesses, as well as consumers, suffered in this situation.
The Emergence of a New Social Philosophy of the State
The need to reorganize the economy on a new economic and legal basis, along with safeguarding workers’ and consumers’ interests, contributed to the emergence of a new social philosophy of the state. This philosophy, under the banner of general interest and public order (political-social and economic), asserts a direct call to govern the economy, as Font Galan explains.
Intervention and Public Order: Principles Guiding Economic Intervention
General interest and public order become the justifying principles for state economic intervention and guide its interventionist economic policy. These principles also justify the imposition of limits on competition, addressing issues such as state activity as an entrepreneur and regulation of market competition.
State Intervention in the Economy
Beyond regulatory functions, the state actively participates in economic activities as an entrepreneur. The 4T has been more active in this regard, shaping the economic landscape through policy instruments and direct involvement in economic activities.
Constitutional Recognition of Private Initiative and State Intervention
The constitutional recognition of private economic initiative and state intervention establishes significant external limits on free, competitive private initiative. This can affect the very essence of free competition, leading to a new model of mixed economy where market regulation is based on imperfect competition.
Missed Opportunities in 4T’s Economic Legislation
In this new economic order, the 4T failed to capitalize on an opportunity to enact a competition law compatible with mentioned characteristics. Instead, they produced a new competition law inspired by the Chicago School, a poor imitation of previous legislation. Another missed opportunity for the 4T.
Key Questions and Answers
- What is the 4T? The 4T represents a historical turning point in Mexico, marking a shift from traditional liberal economic principles to interventionism and public direction in the economy, politics, and law.
- Why was free competition insufficient? Free competition failed to fulfill its social interest, as it became a tool for dishonest businesspeople to gain dominant market positions through unfair means, increasing aggression among businesses and harming honest and weaker competitors.
- What is the new social philosophy of the state? This philosophy asserts a direct call for the state to govern the economy under the banner of general interest and public order, ensuring workers’ and consumers’ interests are safeguarded.
- How does state intervention manifest in the economy? Beyond regulatory functions, the state actively participates in economic activities as an entrepreneur, shaping the economic landscape through policy instruments and direct involvement.
- What are the missed opportunities in 4T’s economic legislation? The 4T failed to enact a competition law compatible with the new economic order’s characteristics, instead producing a poor imitation of previous legislation inspired by the Chicago School.
