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Revitalization under Lázaro Cárdenas: 1934–1940

In 1934, Calles chose Lázaro Cárdenas as the PNR's presidential candidate. Unlike his three predecessors controlled by Calles, Cárdenas threw off the jefe máximo's power and set about implementing a re-vitalilzed revolutionary agenda. He vastly expanded agrarian reform, expropriated commercial landed estates; nationalized the railways and the petroleum industry; kept the peace with the Catholic Church as an institution; put down a major rebellion by Saturnino Cedillo; founded a new political party that created sectoral representation of industrial workers, peasants, urban office workers, and the army; engineered the succession of his hand-picked candidate; and then, perhaps the most radical act of all, stepped away from presidential power, letting his successor, General Manuel Ávila Camacho, to exercise fully presidential power.

Cárdenas came from the southern state of Michoacan, but during the revolution had fought in the north, rising to the rank of general, and becoming a part of the northern dynasty. He returned to Michoacan after the revolution, and implemented a number of reforms that were precursors of those he enacted as president. With Calles's founding of the PNR, Cárdenas became part of the party apparatus. Calles had no idea that Cárdenas was as politically savvy as he turned out to be, managing to oust Calles from his role as the power behind the presidency and forcing him into exile. Calles had increasingly moved to the political right, abandoning support for land reform. Peasants who had joined the revolution with the hope that land reform would be enacted, and the constitution had empowered the state to expropriate land and other resources. During Cárdenas's presidency, he expropriated and distributed land and organized peasant leagues, incorporating them into the political system. Although in theory peasants and workers could come together as a single powerful sector, the PNR ruled that peasant organizations were to be separate from industrial labor, and organizing the countryside should be under the control of the party.

Cárdenas encouraged working class organizations and sought to bring them into the political system under state control. The CROM, an umbrella labor organization, had declined in power with the ouster of Calles. Radical labor leader Vicente Lombardo Toledano helped create the Confederation of Mexican Workers (CTM), a nationalist, autonomous, non-politically affiliated organization. Communists in the labor movement were aligned with the Moscow-controlled Communist International, and Cárdenas sought to strengthen the Mexican labor organization aligned with the Mexican revolutionary state.

His first acts of reform in 1935, were aimed towards peasants. Former strongmen within the land owning community were losing political power, so he began to side with the peasants more and more. He also tried to further centralize the government's power by removing regional caciques, allowing him to push reforms easier. To fill the political vacuum, Cárdenas helped the formation of PNR-sponsored peasant leagues, empowering both peasants and the government. Other reforms included nationalization of key industries such as petroleum and the railroads. To appease workers, Cárdenas furthered provisions to end debt peonage and company stores, which were largely eliminated under his rule, except in the most backwater areas of Mexico. To prevent conservative factions in the military from plotting and to put idle soldiers to work, Cárdenas mobilized the military to build public works projects. That same year another Cristero revolt occurred. This was partially caused by Cárdenas' mandate for secular education early in his presidency in 1934. The Cristeros were not supported by the Catholic hierarchy and Cárdenas quashed the revolt. The Catholic Church told rebels to surrender themselves to the government. In the next year, 1936, to further stabilize his rule, Cárdenas further armed the peasants and workers and begins to organize them into formal militias. This proved to be useful later in his presidency as the militias came to his aid in a military coup in revolutionary Mexico in 1938. Seeing no opposition from the bourgeoisie, generals, or conservative landlords, in 1936 Cárdenas began building collective agricultural enterprises called ejidos to help give peasants access to land, mostly in southern Mexico. These appeased some agriculturalists, but many peasants would have preferred receiving individual plots of land to which they had title. The aim of ejidos was to replace the large-scale landed estates, many of which were foreign owned. Andrés Molina Enríquez, the intellectual father of article 27 of the constitution empowering the state to expropriate property, criticized the move, saying that the state itself was replacing private landowners, while the peasants remained tied to the land. Ejidos were not very good at feeding large populations, causing an urban food crisis. To alleviate this, Cárdenas co-opted the support of capitalists to build large commercial farms to feed the urban population. This put the final nail in the coffin of the feudal hacienda system, making Mexico a mixed economy, combining agrarian socialism and industrial capitalism by 1940.

Cárdenas dissolved the revolutionary party founded by Calles, and established a new party, the Partido de la Revolución Mexicana, organized by sectors. There were four sectors: industrial workers, peasants, middle class workers, largely employed by the government, and the army. Bringing the military into the party structure was controversial, privately opposed by General Manuel Avila Camacho, who succeeded Cárdenas and in the final reformulation of the party, removed the military sector. Cárdenas calculated to manage the military politically and to remove it from independently intervening in politics and to keep it from becoming a separate caste. This new party organization was a resurrection of corporatism, essentially organization by estates or interest groups. The party was reorganized once again in 1946 as the Institutional Revolutionary Party, which kept sectoral representation but eliminated the military as a sector.

Cárdenas left office in 1940 at age 45. His departure marked the end of the social revolution and ushering in half a century of relative stability. However, in the assessment of historian Alan Knight, the 1940 election was "a requiem for Cardenismo: it revealed that hopes of a democratic succession were illusory; that electoral endorsement of the regime had to be manufactured; and that the Cardenista reforms, while creating certain loyal clienteles (some loyal from conviction, some by virtue of co-optation) had also raised up formidable opponents who now looked to take the offensive." He had a long and lustrous post-presidency, remaining influential in political life, and considered "the moral conscience of the Revolution". Cárdenas and his supporters carried "reforms further than any of their predecessors in Mexico or their counterparts in other Latin American countries."