The collapse in demand in the USA has hit Mexican exports hard. Already around 36,000 businesses have closed with the loss of 735,000 jobs. Unemployment, however, is far higher than the official statistics pretend, as the latter includes the millions of Mexicans who scrape a living selling chewing gum in the streets and metro or cleaning the windows of cars stopped at the traffic lights as being in employment.

Above all, the remittances from Mexican migrant labor in the USA have fallen dramatically, as migrant workers with few rights are the first to be laid off. Since there are whole areas of Mexico and Central America that depend almost entirely on the money they receive from relatives working north of the Border, this is creating an extremely serious situation with potentially explosive consequences.

The explosive mood that has been accumulating beneath the surface of Mexican society for decades was dramatically revealed on 2006, when the blocking of the opposition PRD candidate López Obrador provoked a national uprising in which millions of ordinary Mexicans, workers, peasants, students and unemployed came out onto the streets. The famous Zócalo in the centre of the capital was occupied by a city of tents for two and a half months. But finally, the absence of a determined leadership led to a falling off of the movement, and the right wing government of Calderón and the PAN was imposed on a reluctant populace.

The program of the PAN from the beginning was a direct attack on the living standards and democratic rights of the working class. This policy was not the result of any caprice, but a reflection of the dire position of Mexican capitalism. The figures speak for themselves. In 2009 the Mexican GDP will fall by 5.5%, according to official government estimates. However, the OECD says that the fall will be even steeper at -8%.

The fiscal deficit stands at about 400,000 million pesos and is set to rise to 500,000 million pesos next year. The Calderón government is determined to place the entire weight of the cuts in public spending on the shoulders of the masses. However, the Mexican ruling class forgot one small detail. The Mexican workers and peasants have a long revolutionary tradition.

The PAN government has increased VAT and is contemplating charging VAT on food on medicines, which till now were exempt. Since many poor families spend most of their income on food and medicines, this would represent a very serious attack on living standards. At the same time as Calderon slashes the income of the poorest sections, he is handing out lavish subsidies to the bosses, following the example of the governments of far richer nations. While the poor suffer, the profits of the banks and financial sector increased in the second quarter of 2009 by 18,714 million pesos, an increase of 70% over last year.

All this is provoking a profound discontent in the population, a fact which is not lost on the strategists of capital. The newspaper La Jornada (8th November) published an article with the headline: It is not the financial crisis but the economic and social crisis that is worrying. Alemán Velasco, the former governor of Veracruz, was reported as warning that the country was on the point of no return.

He told a forum of Mexican industrialists: "The country is on the point of no return, like an airplane in mid-Atlantic". And he stressed that Mexico must do everything necessary to be as competitive as other nations. On several occasions in the course of his speech, Alemán reiterated the idea that he was worried about the situation of the country, and that this was the general feeling of the business community in Mexico.

On Monday 9 November La Jornada quoted the richest man in the world, the Mexican Carlos Slim as saying that he did not expect a substantial recovery any time soon. Slim stated that since the crisis of 1982 the growth of income per head of population has been practically zero. His recipe for combating poverty was predictable: more investment to produce more jobs and get people to work instead of receiving benefits from the state: "It is employment that that combats poverty, not social security, and for this we require investment and economic activity." The capitalists will only invest when they are sure of obtaining profits, and since the profits of the bosses are extracted from the unpaid labor of the workers, the conclusion is inescapable.

Translated into simple language this means: more profits and lower taxes for the bosses and the slashing of all state aid and benefits for the poor. This is precisely the rationale behind the policies of Calderon and the PAN government, which is the faithful representative of the voracious Mexican capitalists.

The government not only wants to cut wages directly but also to reduce the budget deficit by slashing the social wage: reducing and eventually eliminating the state assistance that has made life at least a little more bearable for millions of poor Mexican families: health. Education, housing and the anti-poverty programs are all under threat.

For decades the Mexican bourgeoisie, using the PRI party, adopted a skilful policy of keeping the workers quiet, on the one hand by controlling the bureaucratic apparatuses of the trade unions and other popular organizations, on the other hand by giving concessions in the form of social security. The PRI even nationalized certain sectors of the economy, notably oil, which was nationalized by Lázaro Cárdenas in 1938, and electricity, over which the Mexican state gradually obtained control in the 1950s.

This clever policy of balancing between the classes in reality disguised the dictatorship of the Mexican bourgeoisie, which did not hesitate to use the most brutal repression when the movement threatened to get out of control. But by a combination of corruption and repression, they succeeded in maintaining control for a long time. Now that is all finished, and a new period of convulsive class struggle opens up. This explains the worry of people like Aleman and Slim.

The world economic collapse has cruelly revealed the weakness of Mexican capitalism, and has exposed the deep fault lines that divide Mexican society. Until fairly recently, with the income from oil, tourism and the remittances from migrant workers, they succeeded in keeping the lid on the class struggle. But 2006 was a dramatic turning point on the situation.

The eruption of the masses onto the scene made the whole edifice tremble. The Mexican bourgeoisie, and the reformist leaders of the PRD, looked into the abyss and saw what the future holds for México. Like the Sorcerer’s Apprentice, the PRD candidate López Obrador had conjured up forces he could not control, and drew back from the abyss, handing power, in effect, to Calderón.

The fact is that the Mexican capitalists can no longer afford to tolerate the kind of situation that existed under the PRI. The economic collapse means that they no longer have the same room to maneuver. Instead of the sly, hypocritical methods of the PRI, the bourgeoisie is forced to resort to the open, blatant, aggressive methods of the PAN.

The previous government of the PAN under Fox attempted to push through a program of cuts and privatization but was forced to retreat by the movement of the working class. Now the Calderón government has drawn the necessary conclusions: in order to carry out the necessary measures, we must first smash the main obstacle in our path: the organized working class.

It is very clear that the government took advantage of the internal power struggle between rival wings of the SME bureaucracy to provoke a conflict with the powerful electricians union, precisely because it was one of the strongest and most militant in México. On 11 October the government announced the closure of the state-owned electrical company, Luz y Fuerza without any warning. The news fell like a bombshell on a shocked workforce.

I spoke to a member of the union today, who told me: "We were shocked when we heard that they had closed Luz y Fuerza. We were expecting some kind of attacks from this government, but we thought they would begin with the weaker unions." Just as in Britain in the 1980s, Margaret Thatcher provoked a fight with the miners to give an example to the rest of the British working class, so the PAN government has decided to make an example of the SME to terrorize and intimidate the other unions.

Those who planned this operation knew what they were doing. The closure of Luz y Fuerza immediately dealt a heavy blow against the union, above all at the level of its bureaucratic apparatus. The truth is that, despite its (justified) image as a powerful union, the SME was under the control of a highly corrupt bureaucracy, which enjoyed huge privileges, and was closely linked to the company itself. When the state closed the company, with the stroke of a pen, it cut the ground from under the feet of this once powerful bureaucracy.

The government immediately put into action plans that had obviously been worked out long ago. They used the age-old tactic of stick and carrot, and the equally venerable tactic of divide and rule. The government offered what they call "liquidations" to the former employees of Luz y Fuerza. In exchange for accepting the closure, the authorities offered sums of money, and also dangled the prospect of future re-employment.

This was a divisive tactic, since the amounts on offer varied from 100,000 pesos to several millions, according to length of service. The offer of future re-employment was also a divisive fraud. Out of a total of 45,000 sacked workers, only 10,000 would even be considered, and these would only be those who accepted the liquidation offer. Even then, only 7,500 would eventually qualify for employment.

Scandalously, about a third of the old officials have accepted the liquidation, thus abandoning their members to their fate. This tells us a lot about the nature of this bureaucracy. Fortunately, the strength of this union, like any other, lies not in its head office with its army of functionaries, but in its working class base, which has reacted angrily to the actions of the PAN.

Interestingly, the old corrupt leader of the union, Martín Esparza, has opposed the closure of Luz y Fuerza and the liquidation scheme. But neither he nor Alejandro Muñoz, the leader of the opposition tendency, Transparencia Sindical, have a serious strategy for winning this sharp and bitter struggle. Most of their effort has been to make legal appeals to the state, and while they have called for action, there has been very little real effort to organize a mass campaign of explanation in the factories, in order to achieve mass solidarity action – the only way to force the government to retreat.

The real possibility of obtaining such action was shown on 15th October when up to half a million workers and youth answered the call for a mass demonstration in support of the electricians. This shows that the workers understand that the attack on the SME is a preparation for a general onslaught on the organized workers. The mood of the demonstrators was angry. Most of the slogans were directed against the government and in defense of Luz y Fuerza. But some of the demonstrators chanted: "Si no hay solución Habrá revolución" ("If there is no solution, there will be a revolution."), and "Esta lucha llegará a la huelga general" ("This struggle will end in a general strike").

The march ended with a mass meeting in the Zócalo, the ancient centre of México City. The size of the demonstration can be gauged by the fact that the last contingents were entering the Zócalo one hour after the meeting had finished. Some did not even get there, dispersing in the side streets after hours of demonstrating. The march lasted seven or eight hours. A very important (and new) element was the presence of a large number of young people.

Many students marched with the workers, including students from the Universidad del Valle de México, a private school for the children of the rich. On the other hand there was a contingent from Tepito, a very poor area, where many people live from the sale of pirate discs and goods illegally imported from China – an area where the police are afraid to enter and are met with sticks and stones if they do. In other words, here we had an expression of virtually every section of the workers, youth and poor people of México, demonstrating their support for the electricians.

Also significant was the presence of workers from the Social Security union, whose leader is a PAN member of parliament. The government has been completely ruthless in using the Social Security to crush the electricians and break their spirit by attacking their families, their wives and children. The offices of the Social Security have nursery facilities for the children of working mothers, which is legally withdrawn after two months unemployment. However, it has been the custom of workers in these offices to ignore this rule and allow unemployed mothers to keep their children in the nurseries. But the Social Security bosses, on orders from the government, have issued strict instructions to expel the children of unemployed electricians.

More than anything else this reveals the true cruel face of Mexican capitalism. The electricians are being attacked remorselessly from all sides. The press has always been hostile to the union. But it has now intensified its attacks to an unprecedented level of ferocity. Previously the papers spoke of "privileged and unproductive workers." In the case of Luz y Fuerza the line was: "Let them strike and close them down!"

On Thursday 5th November the union convened a mass meeting attended by some 2,000 people from about 40 different unions, as well as student organizations. Among other unions represented were: telephone workers, university and teachers unions, as well as public sector and car workers. Some unions had never participated in action before, such as the state legal office workers, while others were unions traditionally dominated by corrupt right wing bureaucrats ("charros"). There were also a handful of members of parliament from the PRD and PT (Workers Party). Speaker after speaker pronounced in favor of a "paro nacional" (national stoppage).

The mood is undoubtedly hotting up. The SME leaders called on the sacked workers to put red and black flags on the closed offices of Luz y Fuerza (the colors are a reminder of the old anarcho-syndicalist tradition that was once powerful here). This was done in many areas, but in some places it went far further than the leaders anticipated. In some places the workers turned up at the offices, not with flags, but with buckets of red and black paint, with which they proceeded to decorate the buildings. This artistic activity led to violent clashes with the police, in which the workers fought back.

In Necaxa (Puebla) the workers broke the locks of the gates. This also occurred in Pachuca. In the Salonica area of Mexico City, the authorities sent mobile cranes to tow away the lorries parked on Luz y Fuerza property. The workers found out and immediately blocked the gates, stopping anybody from entering or leaving – including the police. They remained there for hours, until the mobile cranes went away: a small but significant victory.

During the mass meeting on 5th November, one of the speakers was a worker from Juandho. At first he spoke nervously (probably he had never spoken in public before): "We workers were not doing any harm, just carrying on our normal trade union activity, But then the police started to provoke us. We fought back and one of our comrades was wounded. But the police had even more injuries and were forced to retreat." These words were greeted by a stormy ovation. The speaker seemed to rise in stature, carried away by the emotion of the occasion. There was now no trace of any nervousness, as he addressed the union leaders: "What we need is more decisive action. WHAT WE NEED IS A STRIKE!" The mass meeting agreed with him. It voted unanimously for a national stoppage on Wednesday 11th November.

What is being proposed stops short of a general strike, and is open to many different interpretations, from a 24 hour strike to partial stoppages of one or two hours, or even calling in sick. However, since there has not been a general strike in México since 1916, the calling of a national stoppage was a big step forward. Some sections are sure to strike, mainly in education and part of the public sector. The students will join in, as usual. But unfortunately, since there has not been a systematic campaign of mass meetings in the factories, it is likely that stoppages in the key sectors of industry will be sporadic. The miners, a traditionally militant section of the class, sent representatives to the mass meeting, but they did not call for a strike. The same was true of the key metalworkers union.

It appears that there will be no central demonstration in México City. Instead what is being proposed is the blocking of traffic and spontaneous local demonstration. This tactic unfortunately leaves plenty of scope for provocations and police violence. Despite these limitations, there is no doubt that there will be a widespread movement of protest in many parts of the country with many demonstrations. Particularly important is the movement in Michoacán, where the industrial workers will join together with teachers, students, peasants and the rank and file of the PRD. The paro nacional can be an important way of preparing the ground for a real general strike at a later date. This is how it is seen by many workers.

As I write these lines, on the evening of the 11th, preparations for tomorrow are in full swing. I have just received an enthusiastic phone call from a comrade in the Polytechnic, a traditionally combative section of the students, saying that a mass meeting of around 400 has voted unanimously to support the action. There have been rumors that some workers are planning to occupy the company installations. This will mean further clashes with the police, with the possibility of workers being injured or even killed. Such a tragic development could rapidly transform the whole situation. The spokesmen of Capital know that México is a powder keg that can explode at any moment. We can expect dramatic developments.