Hedging neoliberalism: derivatives as state policy in Mexico

This article fills the gap in the critical political economy literature by acknowledging the adoption of derivatives as state policy in middle-income countries such as Mexico. The article argues that the Mexican state has turned derivatives into a policy instrument to deal with the capitalist contradictions intensified by neoliberalism. This has created a particular institutional setting that favours large firms and financial investors over working classes. The article examines the role of derivatives as policy instruments in Mexico through the Mexican Ministry of Agriculture’s use of corn futures options during the 2007–8 food crisis and Ministry of Finance's and Central Bank's adoption of hedging strategies through oil derivatives and US dollar put options to preserve the state budget and increase foreign reserves respectively during the 2007–10 global financial crisis.