THE SOCIO-POLITICO-ECONOMIC CHANGES HAPPENING IN THE PHILIPPINES AND THEIR EFFECTS ON THE BUSINESS ORGANIZATION

Ruel F. Pepa

The agricultural base of Philippine economy has stunted considerably as its potentials have obviously been ignored by our country’s leaders and economic planners. The normal course of development that runs from agriculture to agro-industrialization to industrialization has not been properly consummated because the country hastily barged into the periphery of industrialization and has since been frantically involved in the maintenance of an economy that is not fully industrial but can best be described as a semblance of industrialization, or perhaps it is simply “pseudo-industrial.” In the whole process, we have been fully dependent on foreign investments that have put up assembly plants and factories manufacturing spare parts whose raw materials are imported. The outputs of these plants are exported not really for the country to gain revenues but for the foreign investors to accumulate enormous profits.

What could have actually benefited the country economically is a comprehensive long-term program for agro-industrialization which would afterwards usher in authentic industrialization with a national character.

As an aftermath of our present tragedy, many of our fellow countrymen have become overseas contract workers (OCWs/OFWs). These are Filipinos who could not hack working locally and be paid a meager income in foreign-funded factories that have been benefiting from cheap labor. The OFW phenomenon has adversely affected the social fiber of the Philippines. For every parent who goes abroad to work, a family may gain economically but the price of such a sacrifice is tremendously high in terms of the family disintegration it creates. Such disintegration causes problems in the strengthening and empowering of morally upright personalities in growing children that can only happen in a strong family context.

In the local scene, exploited labor in foreign-funded factories has not raised the Filipino standard of economic life a bit higher. Poverty still dominates every nook and cranny of Philippine society. Amid this situation, the polarization of government in relation to the people is a reality as the former generally serves the interest of the exploiters and the latter struggle on a daily basis to make both ends meet. Most of the middle class, however, in our society have been seen on the side of the economic exploiters and in the process are, likewise, party to the further oppression of the poor segment of our society.

Even if the country is said to be benefiting from the technological inventions and innovations of the post-industrial era inaugurated by highly developed nations, we are still a poor nation. The trappings of development are actually witnessed only among the few who constitute the upper, upper-middle, middle and lower-middle classes in a lopsided economy where the distribution of the nation’s wealth is unequal.

In conclusion, I would like to believe that the situation of business organization in the Philippines will continue to be subservient to the demands of foreign interests and the requirements and policies of a government that has long been a partner taskmaster of these foreign interests. The basic question at this point in time is still “Who calls the shots?” However, on the positive side, with all the new technologies of the Third Wave civilization that we have right in our business organizational arena, we could at least hope that perhaps such development could somehow lead us to a more comfortable tomorrow, so that amid all the exploitation and oppression we suffer in an environment of corruption, the information technology still promises the emancipation of the working class and leads it to a new dimension of awareness that will ultimately end their woes and misfortunes.

© Ruel F. Pepa

ON THE DIALECTICS OF TRANSFORMATIVE RESEARCH

Ruel F. Pepa
Trinity University of Asia

I. Introduction

Spontaneous theorizing should be one outstanding capability of academics to fit into the mold of transformative researchers. Academics in this category should therefore be impulsive writers imbued with a serious commitment to the ideal of perennially upgrading the standard of their profession. Transformative research should be considered a vital component of academic life. The whole process of transformative research in the academe is the actual application of the dialectics of research.


II. Research as a Dialectical Process

Research follows a dialectical path to make it meaningful and significant in terms of realism, responsiveness, practicability and effectiveness. Dialectics makes a research study/project transformative. Unless research connects with the principle of dialectics, it will just be a superficial theorizing abstracted from the commitment to make things better. Transformative research therefore starts off with what is actually happening—with an actual state of affairs. Using the components of the Hegelian dialectical process. the actual state of affairs is the thesis characterized by certain material forces making such state of affairs the only acceptable type of thesis. Actual happening, actual state of affairs, actual practice performed by real people in such state of affairs, whatever you want to call it, is the material starting point in an honest-to-goodness research study.

An actual state of affairs becomes the starting point of a research study if and only if it is, or it is the location of, a problematic situation that affects a larger context where such state of affairs is part and parcel of. In this connection, the motivation of a research study is generated from a problematization focused on an actual event rather than on the research study itself. In other words, a research study is aimed at resolving a problem, improving a system, developing a better mindset or having a better understanding of things; not simply a satisfying of a course requirement per se or an institutional requirement just to promote the researcher to a higher position in the hierarchical structure of the institution or to project the image that the institution—which is not really a specialized research institution—is a progressive one, the fact that is has engaged itself in varied and multiple research projects of superficial and trivial impact. A general research climate geared to expanding the frontiers of knowledge and technology

has the defining character of spontaneity and perceptiveness due to a profound concern toward relevant issues or problems of real life. And the persuading influence that draws a researcher to do an investigation or a study of something of significance comes from a sense of immediacy generated in the constancy of a dialectical interaction between the prospective researcher and the issue or problem at hand. Research activity is not an enforced undertaking or an obligatory enterprise artificially created as a superficial form to showcase the message—how contentless and fruitless it may be—that research activity is going on. This type of “research” activity is the prime culprit why so many researches have ended up in uncharted bookshelves engulfed by cobwebs and dust. (Pepa )


III. The Dialectics of Research as Praxis

The dialectics of research is a praxis (Freire) wherein the researcher involves her/himself and participates in the continuous process of reflection on and action in a state of affairs. The state of affairs which is an amalgam of varied experiences is the thesis and the reflection or theorizing done on such state of affairs becomes the antithesis. The recorded outcome produced out of reflection/theorizing—the theoretical outcome—is afterwards brought back to the realm of actual experience—the state of affairs—for two reasons: 1) to test the correctness of the theoretical outcome, and 2) to make the theoretical outcome useful to its intended purposes.

Honest-to-goodness research is inherently regulated by a dialectics that starts off from significant experience and practice, which is thence reflected upon on the theoretical plane that complements programmed investigation and controlled experimentation along the way. The result of such a research completes the dialectics if brought back to experience and practice, which is precisely its objective. For how can the research actually address the problem(s) it purportedly aims to solve, and how can we test the effectiveness of the solution it offers, if such a research is not brought back to experience and practice? (Pepa)

The transformation effected by its application constitutes the synthesis which completes the dialectical process on this level of specific consideration. The process does not however stop here for in the synthesis is created a new thesis. A fresh level of specific consideration is hence thereby created to start a new round of dialectics.

According to the late Brazilian philosopher of education Paulo Freire, this dialectics affirms the significance of human existence:

. . . [M]an is the only one to treat not only his actions but his very self as the object of his reflection; this capacity distinguishes him from the animals, which are unable to separate themselves from their activity and thus are unable to reflect upon it. In this apparently superficial distinction lie the boundaries which delimit the action of each in his life space. Because the animals’ activity is an extension of themselves, the results of that activity are also inseparable from themselves; animals can neither set objectives nor infuse their transformation of nature with any significance beyond itself. Moreover, the “decision” to perform this activity belongs not to them but to their species. . . . . . . . . . .

In contrast the people — aware of their activity and the world in which they are situated, acting in function of the objectives which they propose, having the seat of their decisions located in themselves and in their relations with the world and with others, infusing the world with their creative presence by means of the transformation they effect upon it — unlike animals, not only live but exist; and their existence is historical. Animals live out their lives on an atemporal, flat, uniform “prop”; humans exist in a world which they are constantly re-creating and transforming. For animals, “here” is only a habitat with which they enter into contact; for people, “here” signifies not merely a physical space, but also an historical space.


IV. Research as a Transformative Endeavor

Research becomes a transformative endeavor through the dialectical process. A research study that is not aimed to transform is an exercise in futility. The task of research to inform is a given. But it cannot really effect transformation unless the person involved in a research study is her/himself likewise transformed in the very act of doing the research and by the effect of its outcome. The involvement factor is very significant in this consideration. It leads to a realization of wisdom that is imbedded deep in the very humanity of the researcher. And s/he can only access that depth if s/he is convinced that what s/he has been doing is of utmost importance to the point of being crucial. Once this level of awareness has been achieved, the usefulness and relevance of the research outcome can at this point outflow to effect transformation in a wider dimension. This whole event which likewise constitutes a dialectics has been explored by a fellow transformative philosopher Yasuhiko Kimura. According to him, three “formations” have to be considered in this transformation model which he calls Triformational Learning Matrix:

In the last several years, I have been teaching a particular model of transformation, which I call the Triformational Learning Matrix. Tri means, of course, three, and so the formational element comprises three formations: information, metaformation, and transformation.

Informational learning is what we normally go through in our educational system and in our own lives. We read books, we listen to people, and we gain knowledge and experience. We develop a more and more comprehensive body of knowledge based on some principle of organization. Metaformation is sometimes called inspiration or intuition; it is a higher form of knowledge that sort of knocks on your door and you become aware of something that is eternal. So when this higher intuition, or metaformation, gets integrated into your own informational learning, you then start to reconfigure the whole context within which you have held the body of knowledge that you already have. And at the same time, you are able to incorporate the higher metaformational knowledge into your own body of knowledge. In this dance between information and metaformation, a transformation takes place. Metaformation is returning to the source of your being, the ground of your being from which you intuit a new form of insight. Then, when that insight is successfully married with the body of knowledge that you already have, transformation takes place. That is my way of understanding transformation.


V. Conclusion

In conclusion let me propose a method of transformative research which consists of a multi-procedural cycle of progression toward transcendence and renewal. The cycle is constituted by the tasks of 1) translation: the propositionalization of a phenomenon/event; 2) hermeneutics/interpretation: the abstracting intellectualization of the propositionalized phenomenon/event; 3) analysis: an investigation into the salient components or mechanics of the interpreted phenomenon/event; 4) pragmatization: the verification of how the analyzed and synthesized mechanics of the phenomenon/event are operationalized in human experience; and 5) evaluation: a propositional assessment of the transformative worth of the phenomenon/event, wherein the transformation could effect a new paradigm of existence.
Transformative research is an act of critically “gliding” along the empirico-rational milieu of the cultural apparatus with an aim to effect transformation of being and strength of character in the stability of a well-defined state of affairs through cognitive enlightenment and intellectual empowerment with the instrumentality of transformative research’s multi-procedural cycle of progression toward transcendence and renewal. Transformative research is a reflective act/ active reflection that looks deeply into the ordered chaos/chaotic order of human flexibility/flexible humanity equipped with all the capability of embracing the persistence of the recurrence of eternity/eternal recurrence in space-time/time-space continuum.

Transformative research as a process of knowledge acquisition shows the five distinct steps involved in the entire process of human knowing. The human being who experiences a state of affairs translates—propositionalizes—and interprets her/his experience of such reality. Propositionalization and interpretation constitute an explanation and hence an understanding of a state of affairs. Henceforth, s/he can then move on to the stages of analysis for the purpose of critiquing such understanding of the world. Then s/he moves on to pragmatization—action—based on the emergent understanding. Pragmatization will afterwards trigger further critiques—evaluation—regarding the merit of the pragmatization. These five steps are done to strengthen our knowledge of a state of affairs.

Human beings under normal circumstances have the natural inclination to aim for clarity. They only rest their case about a state of affairs when they are convinced that an answer has already been arrived at. Their deliberate perception provides them with the reasonable medium that distinguishes knowledge from ignorance. This condition is precisely the reason an interpretation of a state of affairs requires the application of analysis.

Experience provides us with information by way of translation/propositionalization and interpretation. Analysis then attempts to formulate a theory to capture a comprehensible agreement among the propositionalized and interpreted pieces of information.The application of analysis and synthesis intensifies pragmatization to gain further knowledge. Evaluation tries to determine the worth of the structure of the pragmatized event.

A state of affairs which is the subject of a transformative research study becomes better known by way of this multi-procedural cycle of progression toward transcendence and renewal.



REFERENCES:

Freire, Paulo. Pedagogy of the Oppressed. http://www.marxists.org/subject/education/freire/pedagogy/ch03.htm

“A Philosopher of Change,” in What is Enlightenment?, Issue 22, Fall-Winter 2002. http://www.wie.org/j22/kimura.asp?page=2

Pepa, Ruel F. “On the Edge of Chaos in the Age of Kairos” in Aninag, Vol II, NO. 1, ed., Roderick Pineda (Quezon City: Trinity College of Quezon City).


©Ruel F. Pepa 2005

ELECTION AS A DEMOCRATIC INSTRUMENTALITY APPROPRIATED IN PHILIPPINE POLITICS VIA THE AGENCY OF THE COMMISSION ON ELECTIONS (COMELEC)

Ruel F. Pepa
Trinity University of Asia

-I-

The free election of government officials in a country is said to be a classic legacy of democratic politics. In the context of the Philippines, it is a legacy of what we have come to know as the American brand of democracy. Generations before the Americans came to colonize the country after more than three centuries of Spanish colonization, US democracy had already been an institution in its own right where elections happened at all levels of government and hence were an institution in themselves. Through time, a general impression has been created in the minds of the peoples of different countries that in one way or another have been substantially influenced by US politics largely through its imperialistic foreign policies. The Philippines is one of them. In Benedict Anderson’s “Elections in Southeast Asia,” the author mentions that

National-level elections were introduced in the Philippines by its American conquerors in 1907. The immediate background for this innovation was Asia’s first modern revolution, the successful insurrectionary movement launched in 1896 against Spanish rule which began in the environs of Manila and later spread through much of Luzon and tangentially into parts of the Visayas. While the movement was led largely by small-town notables and provincial gentry, it also involved widespread participation of the popular classes, and by women and adolescents, as well as by adult males. Hence the Americans’ counter-revolutionary intervention required a ruthless military campaign which may have cost up to a quarter of a million Filipino lives. (Anderson, pp. 272-273)

I would like to believe that the Philippines is the country most influenced by US politics to the point of actually having been “brainwashed” to think that the single measure of a democratic political way is the regular holding of elections at all levels of government. In fact, the general feeling of the adult population segment when Marcos declared martial law in 1972 was democracy died because no more elections would be held henceforth. In a sense, there is some theoretical truth to such a feeling and belief. I myself am prone to believe that theoretically, involvement in elections is a very concrete manifestation of a people’s actual taste of democratic life in the politics of a nation. Choosing the leadership of one’s barangay, municipality, province or country should create in a person a feeling of importance for being a part of a nation’s political dynamics. If this situation is a reality, it could be confidently said that democracy is truly alive and well. This is what we call true people’s power—a political condition where the majority reign and where they reign, elections are the best channel.

Free elections are certainly not all there is to democracy; but in every modern nation that is generally called democratic, free elections are, as they always have been, the basic device that enables the people to control the rulers. In short: No free elections, no democracy. (Ranney, p.158)

-II-

It had not been the case in the distant past from the time of primitive communalism to the time of feudalism. During those days, brute force exercised in warfare, both internal and external, always with the intent of the powerful to overrun the weak and characterized by elements of greed, deceit and murderous drives, catapulted leaders of immense power. Those early stages of social development were in a political climate that bred a highly stratified social context also known as caste system. The nobility occupied the highest stratum while denizens of less-than-human recognition inhabited the lowest.

The latter were the farmers and workers who bore the burden of society’s economic productivity in a situation of exploitation that pushed them to poverty, hunger, sickness and even death. They were a major factor in sustaining the economic base of society, yet they were the most dehumanized and disempowered in terms of political signification. They gave the most of what they could in a society’s economy, yet they had been pushed to the outer fringes of their society’s politics and government. In fact, a relevant case in point as we discuss this matter is the society of the ancient city-state of Athens during the time of the first classical philosophers. Those who belonged to the lowest rung of the Athenian society were not even considered citizens. Hence, ancient democracy as it was inaugurated in Athens during that time was not the democracy we know today.

Later within the same wide temporal scope, political power established through sheer brute force was sustained by the succeeding generations of immense wealth of geographic scope characteristic of the magnificent monarchies that ruled the world. If the caste systems were inaugurated in the earlier generations, they were strengthened and institutionalized during this period. The advent of true democracy, its guiding principles and ideals, was yet a distant possibility whose reality was not even dreamt of by the most idealistic political theorist of the era.

As people in feudal societies of the past realized more and more the value of their humanity, freedom became an ideal to be pursued for such freedom was the only way whereby their humanity could authentically be expressed. In the inter-subjective sense, an individual’s freedom was as important and inviolable as any human being ‘s freedom in a society. This was the germinal seed of what later on developed into what we now call democracy where individual freedom to be meaningful in the social context should not only be guaranteed but in the process should also be subjected to certain principles that will promote general human welfare and flourishing. In simple terms, we say that the adult populace of a society, under normal circumstances, is given importance, empowered and granted certain political responsibilities to make the society healthy, strong, progressive and dynamic. At this point of modern time, the general will of the people, regardless of their economic situation in life plays a highly responsible and active role in politics and the best expression of it should be in the choice of their leadership through the instrumentality of fair and free elections.

One of the requirements for a free election is what is often called universal suffrage: that is, the rule that all adults have an equal opportunity to vote. However, this principle has never been interpreted to mean that everyone in the community must have the right to vote. No democratic nation has ever permitted ten-year-old children to vote and no democratic theorist has ever called their exclusion undemocratic. Most democratic nations also exclude aliens, people confined to mental institutions, and criminals in prison, and a few people think this violates the principle of universal suffrage. (Ranney, p. 160)

-III-

In the context of the Philippines, the importance of elections is enshrined in the 1987 Constitution being a political right known as the right of suffrage. In Article V Section 1 of the said charter , we find the following provision:

Suffrage may be exercised by all citizen of the Philippines not otherwise disqualified by law, who are at least eighteen years of age, and who shall have resided in the Philippines for at least six months immediately preceding the election. No literacy, property, or other substantive requirement shall be imposed on the exercise of suffrage. (The 1987 Philippine Constitution)

Suffrage, however, is more than election. It also includes plebiscite, referendum, initiative and recall. (cf. de Leon, pp. 144, 145). The agency in the Philippines constitutionally mandated to oversee, manage and administer elections from the most basic political unit to the national is the Commission on Elections (COMELEC). Again, referring to the 1987 Philippine Constitution, the COMELEC is one of the constitutional commissions along with the Civil Service Commission and the Commission on Audit.

Constitutional commissions are independent bodies (cf. Article IX Section 1 of the 1987 Constitution).

In the exercise of their powers and functions, they are supreme within their own sphere and may, therefore, be considered, in that respect, coordinate and co-equal with the President, Congress, and the Supreme Court. Like the other organs of the government, however, their acts are subject to scrutiny by the Supreme Court on certiorari. (de Leon, p. 273)

Regarding the purpose of the COMELEC, de Leon (p. 296) comments:

The purity of elections is one of the fundamental requisites of popular government. It is obviousl that the sanctity of the ballot and the free and honest expression of the popular will can best be protected by an independent office whose sole work is to enforce laws on elections. The Commission on Elections is organized for that purpose. The intention is to place it outside the influence of political parties and the control of the legislative, executive, and judicial organs of the government. It is an independent administrative tribunal, co-equal with the other departments in respect to the powers vested in it.

-IV-

However, the kind of democracy we have in the Philippines is simply a semblance of what we find in truly democratic states. We may have the political structure of democracy but the cultural orientation of the Filipinos has not been given the chance to inhabit the inner chambers of such structure. Perhaps the forces that prevent them to do so are just so strong or the structure itself could be illusory and hence non-existent. In the political evolution of the Filipino people, they have not really broken away from their feudal past and they have not really imbibed yet the democratic way of life. And if democracy in our context is flawed, so are its instrumentalities as they operate and function in practically all political exercises we engage in even the elections we have had since the first time they were experienced by our American-inspired ancestors. Because of our colonial and feudal past, we presently have a very peculiar kind of political experience where the essence of such past and the forcible ramming of theoretical democracy of American design down our throats have not actually found a connecting point of harmony. This is basically the reason why the Philippines has not achieved yet political stability and economic strength. The artificial blending of colonial feudalism and superficial US-brand democracy more aptly termed by the Irish historiographer Benedict Anderson “cacique democracy” is actually a parody, for how can feudal lords—even warlords—or “caciques” become politically dominant in a truly democratic social arrangement? As we have determined earlier, the entire set-up has totally engulfed the way the instrumentalities of democracy function in the Philippines to the detriment of the nations economy, government and culture.

In the same vein, Philippine elections are therefore as less democratic as they can be for generally, warlords are the ones calling the political shots in both the municipal and provincial levels of government. Only those who have “guns, goons and gold” have the supremacy to run in elections, making every election a contest of cacique powers. And where do we find the masses? They are simply as disempowered as they always are—sycophants to candidates or simple nobodies. In places wallowing in poverty, vote-buying is a common thing and the general order of the day is, the more money a candidate has, the better are the chances of winning an election. Besides this, cheating is rampant in all parts of the country during the conduct of actual elections as well as during the counting of votes. Even if the major mandate of the COMELEC is to safeguard the sanctity of the ballots and protect the purity of the electoral process, this mandate has never been effected. The resonance of violent drives characteristic of ancient power play are, in fact, still heard in the sounds of gunfire during the heat of campaigns, during the election proper, even during the post-election period.

Democracy is corrupted in the graft and corruption found in government people and offices. Hence, we have all the reasons to say that even the political instrumentalities—and the electoral process is one of them—of a government that has continually corrupted democracy are themselves tools of corruption and deception aimed to perpetuate corrupt people in power. Related to this, Anderson comments:

Naturally enough, the form of electorism introduced [in the Philippines] was modeled, even if parodically, on America’s own. It is useful to recall that, in the first decade of the twentieth century, the United States had arguably the most corrupt form of electorism among all the industrial powers. Not only were women excluded from the vote, but so were millions of adult non-white males. Poll taxes and gerrymandering were widespread, to the benefit of court-house cliques and urban machines. Violence, in the South and the West, was far more a part of electoral politics than in advanced Western Europe. Furthermore, the United States of that era was quite peculiar in the general absence of a national-level professional bureaucracy, such as had emerged in Britain, Sweden, Germany, or France. (p.273)


We are therefore not surprised if in reality even the very agency that is mandated to make elections credible becomes itself an instrument employed by the forces of corruption and deceit to destroy the very foundation of democracy



REFERENCES

Anderson, Benedict. The Spectre of Comparisons, Nationalism, Southeast
Asia, and the Word. Quezon City: Ateneo de Manila University Press. 1998, 2004.

De Leon, Hector S. Textbook on the Philippine Constitution (2005 Edition).
Quezon City. Rex Printing Company, Inc. 2005.

Ranney, Austin. Governing: An Introduction to Political Science. Singapore:
Prentice-Hall Pte Ltd. 1999.

©Ruel F. Pepa

AN “IMPRESSIONISTIC” REFLECTION ON THE DEVELOPMENT OF POST-WAR PHILIPPINE ECONOMY IN THE LIGHT OF THE CLASSIC THEORIES OF ECONOMIC DEVELOPMENT

Ruel F. Pepa
Trinity University of Asia

Post-war Philippine economy has passed through the rough and circuitous roads of development conditioned by certain socio-political and cultural factors which have led to its slow-moving and sluggish pace. Immediately after the country’s liberation from Japanese occupation (courtesy of the US), the Philippines was relatively on top of the Southeast Asian (in fact, Asian) economic ladder fir a short period of time—of course, until Japan finally fully recovered from war devastation through the inflow of massive US war reparation aid and later the institutionalization of industrial and commercial presence to stabilize and make dominant Japan’s economy not only in Asia but even globally. At the point of Japan’s economic stabilization, the Philippines comfortably found itself in the second spot which was definitely still highly satisfactory from all angles of evaluative concern.

The ensuing years saw the initial but painful period of Philippine political evolution that directly affected the economy as well as the socio-cultural apparatus. The period was generally characterized by political manipulations that began to hurt the country’s economic foundation through the exploitative maneuverings of US hegemony. This factor put in place all conditions which later pulled the Philippines further down the path of political decadence and more seriously that of economic retardation. This particular point was concretely shown a few years after the resolution of the Korean War when the Philippines gradually slipped down the economic ladder from the place second only to Japan to the third below Malaysia, to the fourth below China, to the fifth below South Korea, to the sixth below Thailand and to the seventh below Vietnam this time considering that Vietnam had been literally razed to the ground after the utter devastation it suffered through the longest and costliest war a country ever experienced in the 20^th century. But the like the proverbial phoenix that rose from the ashes, Vietnam in the 21^st century is indubitably a very stable economic force to reckon with.

Roughly, it is a sober admission of practically all reasonable and level-headed viewpoints that US hegemony by way of imperialistic programming has a direct hand in what the Philippines has gone through in its social, political, economic and even cultural journey as a suffering and struggling people.

It is nevertheless of interesting significance at this point to track down and reflect on the most prominent phases, features, characteristics and influences of certain Philippine economic formations through which a clearer and more meaningful assessment could be effected and advanced. In doing so, a battery of theoretical formulations and models are readily on hand, giving special credence and professional assent to the reflection and discussion intended in this paper. Specifically, the present reflection/discussion is limited to the respective parameters of classic theories of development as follows; (1) the linear-stages-of-growth models, (2) theories and patterns of structural change, (3) the international-dependence revolution, and (4) the neoclassical, free-market counterrevolution.[1] Towards the end of Todaro and Smith’s Chapter 4 discussion, the present-day relevance and importance of these models and theories should properly be noted and explicitly recognized, even reconciled in spite of the differences

You may wonder how consensus could emerge from so much disagreement. Although it is not implied here that such a consensus exists today or can indeed ever exist when such sharply conflicting values and ideologies prevail, we do suggest that something of significance can be gleaned from each of the four approaches that we have described. For example, the linear-stages model emphasizes the crucial role that saving and investment plays in promoting sustainable long-run growth. The Lewis two-sector model of structural change underlines the importance of attempting to analyze the many linkages between traditional agriculture and modern industry, and the empirical research of Chenery and his associates attempts to document precisely how economies undergo change while identifying the numeric values of key economic parameters involved in that process. The thoughts of international-dependence theorists alerts us to the importance of the structure and workings of the world economy and the many ways in which decisions made in the developed world can affect the lives of millions of people in the developing world. Whether or not these activities are deliberately designed to maintain developing nations in a state of dependence is often beside the point. The fact of their dependence and their vulnerability to key economic decisions made in the capitals of North America, Western Europe, or Japan (not to mention those made by the IMF and the World Bank) forces us to recognize the validity of many of the propositions of the international-dependence school. The same applies to arguments regarding the dualistic structures and the role of ruling elites in the domestic economies of the developing world.

Although a good deal of conventional neoclassical economic theory needs to be modified to fit the unique social, institutional, and structural circumstances of developing nations, there is no doubt that promoting efficient production and distribution through a proper, functioning price system is an integral part of any successful development process. . . .[2]

1. The Linear-Stages-of-Growth Model

The linear-stages-of-growth model is an outgrowth of the Cold War politics of the 1950s and 1960s. It has two successive theories. The first was advanced by the American economic historian Walt W. Rostow, while the second is the Harrod-Domar model which injects to the Rostow model “the mobilization of domestic and foreign savings in order to generate sufficient investment to accelerate economic growth.”[3] Rostow described “the transition from underdevelopment to development . . . in terms of a series of steps or stages through which all countries must proceed.”[4] As cited in Todaro and Smith, Rostow’s opening chapter in The Stages of Economic Growth mentions of the five categories within one of which may be identified societies in the economic dimensions where they specifically belong. These five categories according to Rostow are: (1) the traditional society, (2) the pre-conditions for take-off into self-sustaining growth, (3) the take-off, (4) the drive to maturity, and (5) the age of high mass consumption.[5]

In the light of the Rostow growth model, Philippine economy has not even yet positioned itself on the take-off platform, which is actually the third stage. More reasonably, it could be surmised that Philippine economy at this point in time is still located in the “preconditions” stage. Clearly, we have passed the traditional stage considering that we have all the simulacra of a modern western society in terms of technological and commercial amenities which are factors that make us aware of the pre-conditions that will allow us to take off into self-sustaining growth. However, we as a people in general have not even really experienced yet the actualities of such pre-conditions in concrete ways. What we only experience so far is a distant glimpse of the take off. In other words, through the successive terms of post-war government leaders, we have always said we are almost there time and again. But in no specific historical moment have we ever been quite there. There is so much of the features of a capitalist society amidst us in terms of industry and technology but never can we deny the fact that vestiges of traditional society still linger and forcefully exert an enormous effort to retard social, political and hence economic formations and mobility. A habitus has actually developed in the people’s general culture that at the same time has seemingly created a hopeless domestic situation. Prof. Jose Ma. Sison in this light may therefore be justified to make the initial assessment that Philippine society in reality is semi-feudal and semi-colonial. If we look into the intertextuality of the Rostow model’s categories and Alvin Toffler’s “waves’ profusely discussed in his trilogy.[6] Toffler’s first-wave or agricultural society is in-between Rostow’s traditional society and the “pre-conditions” stage which Toffler identifies as the initial formation of the industrial era. The “take-off” stage of Rostow can hence be figured out in Toffler’s second-wave of industrial society, because a genuinely economic take-off in the context of modern Western society may be realized once all the components of industrialization are in place. The rest of Rostow’s stages are of course the major conditions to bring about what Toffler calls “the third wave” or “post-industrial” society in the age of information.

Going back to the discussion of the linear-stages-of-growth model, the Harrod-Domar variety zeroes into the concrete operationalization of Rostow’s take-off stage. The Harrod-Domar growth model contends that no take-off may happen unless there is an actual mobilization of domestic and foreign savings via investment.

Every economy must save a certain proportion of its national income, if only to replace worn-out or impaired capital goods (buildings, equipment, and materials) However, in order to grow new investments representing net additions to the capital stock are necessary.[7]

Basically, Philippine government recognizes this very well as evidence by the presence of export processing zone areas (EPZAs) in different parts of the country. The single major problem we find in this state of affairs is the subordinated location of the Philippines in relation to the more superior foreign investors on the negotiation table. In other words, the Philippines is always at the mercy of foreign investors in the face of a “take-it-or-leave-it” implication. Because of massive unemployment in the domestic scene, Philippine government has naively placed the country in a situation of utter desperation granting arrogant foreign investors much leeway to utterly call the shots in negotiations which ultimately lead to the inauguration of foreign investment entities whose main purveyors are dye-in-the-wool capitalists armed only with what we know as “portfolio investments.”

The whole situation takes advantage of the country’s cheap labor and available liquid capitalization provided by domestic banks and the savings of existing local businesses “recruited” as partners of these foreign investors. The grave downside of this scenario leads to the downgrading of most of the professional and technical skills readily available among the locals considering the high-level training and education that Filipinos have undergone in a variety of specialized fields of productive endeavors. In relation to portfolio investment, the only investment carried by a foreign investor is her/his successful performances in her/his country of origin and/or other places. No liquid capitalization is brought into the country and the investor relies solely on locally available capitalization. A large percentage of the profit therefore goes to the foreign investor and very little to the domestic coffer.

The “tragic” consequence possible in this situation is when the so-called profit of the investor is not returned to the cycle of the domestic economy but instead brought out of the country for whatever purpose the investor deems it necessary in favor of her/his selfish interest at the expense of the locally-generated capitalization which has only accrued very minimal interest.

Todaro and Smith are not ignorant of these consequences:

The main obstacle to or constraint on development, according to this theory, was the relatively low level of new capital formation in most poor countries. But if a country wanted to grow at, say, a rate of 7% per year and if it could not generate savings and investment at a rate of 21% of national income . . . but could only manage to save 15%, it could seek to fill this “savings gap” of 6% through either foreign aid or private foreign investment.

Thus the “capital constraint” stages approach to growth and development became a rationale and (in terms of cold war politics) an opportunistic tool for justifying massive transfer s of capital and technical assistance from the developed to the less developed nations. It was to be the Marshall Plan all over again, but this time for the underdeveloped nations of the developing world.[8]

Further, Todaro and Smith comment:

The Rostow and Harrod-Domar models implicitly assume the existence of these same attitudes and arrangements in underdeveloped nations. Yet in many cases they are lacking, as are complementary factors such as managerial competence, skilled labor, and the ability to plan and administer a wide assortment of development projects. But at an even more fundamental level, the stages theory failed to take into account the crucial fact that contemporary developing nations are part of a highly integrated and complex international system in which even the best and most intelligent development strategies can be nullified by external forces beyond the countries’ control.[9]

Structural-Change Theory

Todaro and Smith Say that “[s]tructural-change theory focuses on the mechanism by which underdeveloped economies transform their domestic economic structures from a heavy emphasis on traditional subsistence agriculture to a more modern, more urbanized and more industrially diverse manufacturing and service economy.”[10] Philippine economy fits well into this model considering the fact that Philippine economy is definitely underdeveloped and in its present experience, there have been efforts in the country to move things up from traditional subsistence agriculture to at least the level of modernization and urbanization. Two theoretical approaches are considered in the structural-change model: the Lewis theory of development and the Chenery “patterns of development” analysis.

The Lewis model assumes that two sectors constitute the underdeveloped economy: “. . . a traditional, overpopulated rural subsistence sector characterized by zero marginal labor productivity—a situation that permits Lewis to classify this as surplus labor in the sense that it can be withdrawn from the agricultural sector without any loss of output—and a high-productivity modern urban industrial sector into which labor from the subsistence sector is gradually transferred.”[11] The Lewis model is therefore after the full realization of high productivity in the sector of modern urban industry which the model assumes to be the concrete goal of genuine economic progress in a country. The modern urban industrial sector may actually expand its productivity via the transfer into it of labor coming from the rural subsistence agricultural sector. And since the modern industrial sector offers wages 30% higher than average rural income, the situation becomes very inviting for traditional agricultural sector workers to leave their rural origin and migrate to the urban setting.

In the Philippine experience, the Lewis model did not yield a more rosy promise of economic progress as it disempowered the agricultural sector in particular and hence Philippine economy in general. The urban magnet of “the good life” precluded the empowerment and stabilization of agricultural productivity which if genuinely pursued could have provided the foundation for agro-industrialization. Hence, it would in turn have become the foundation of national industrialization. The Lewis model creates a lopsided situation in an underdeveloped economy by way of a polarization of sectors that leaves the agricultural sector a wasteland and the industrial sector at the mercy of foreign investments, at least in the context of Philippine experience.

The Lewis model truly enhances capitalist industries in a country which in the final analysis amounts to the rise of the GNP. But in a capitalist situation, it is only the capitalists who benefit by way of enormous profits. Hence, the wealth of the nation as reflected in the GNP does not actually prove “the good life” of individual families, much less of individual persons in the country because, as it happens in the Philippines, there has always been an absolutely unequal distribution of wealth.

In this connection, the late Harvard economist Hollis Chenery came up with a theory that expresses the realization that “increased savings and investment are perceived . . . as necessary but not sufficient conditions for economic growth.”[12] This theory is operationalized in the structural-change model which stresses both domestic and international development constraints. “The domestic ones include economic constraints such as a country’s resource endowment and its physical and population size as well as institutional constraints such as government policies and objectives. International constraints on development include access to external capital, technology, and international trade. Differences in development level among developing countries are largely ascribed to these domestic and international constraints. . . . [T]he structural-change model recognizes the fact that developing countries are part of a highly integrated international system that can promote (as well as hinder) their development.”[13]

This so-called “highly integrated international system” affirms and provides a solid foundation of economic analysis and evaluation for the advancement of another economic development theory expressed in at least three models.

3. The International-Dependence Theory

Todaro and Smith score the point that “[d]uring the 1970s, international-dependence models gained increasing support especially among developing-country intellectuals, as a result of growing disenchantment with both the stages and structural-change models. While this theory to a large degree went out of favor during the 1980s and into the 1990s, versions of it have enjoyed a resurgence in the early years of the twenty-first century, as some of its views have been adopted, albeit in modified form, by theorists and leaders of the anti-globalization movement.”[14]

The theory has seen expressions in three models: (1) the neoclassical dependence model, (2) the false-paradigm model, and (3) the dualistic-development thesis.

The neocolonial dependence model is basically Marxist in its assumptions. “It attributes the existence and continuance of underdevelopment primarily to the historical evolution of a highly unequal international capitalist system of rich country-poor country relationships.”[15]

In the case of the Philippines’ underdeveloped economy, Jose Ma. Sison, in a lecture delivered at the University of the Philippines (UP) on 15 April 1986 entitled “Historical Roots of the Philippine Crisis,” documents the following:

The defeat of the Philippine revolution resulted in the direct colonial rule of modern imperialism or monopoly capitalism, the highest stage of capitalism, over the Philippines. Capitalism in the US had advanced from the stage of free competition in the 19^th century to that of monopoly capitalism in the 20^th century.

Monopolies had become dominant in the American economy. Bank capital, traditionally merchant, had merged with industrial capital. US capitalism was impelled to export not only its surplus commodities but also its surplus capital. In the competition among capitalist powers, the United States was looking after its own monopoly interests. Through monopolies, trusts, syndicates, cartels and the like the United States had moved into a world epoch of intense struggle for colonial and semi-colonial domination. The struggle for a re-division of the world among the colonial powers led to war.16]

Todaro and Smith concur thus:

. . . [T]he neo-Marxist, neocolonial view of underdevelopment attributes a large part of the developing world’s continuing and worsening poverty to the existence and policies of the industrial capitalist countries of the Northern Hemisphere and their extensions in the form of small but powerful elite or comprador groups in the less developed countries. . . . Revolutionary struggles or at least major structuring of the world capitalist system are therefore required to free dependent developing nations from the direct and indirect economic control of their developed-world and domestic oppressors.[17]

Again, in the case of the Philippines, Sison further records by way of another lecture delivered at UP on 22 April 1986 entitled “Crisis of the Neocolonial State” the confirmation of what has previously been said by Todaro and Smith:

Under conditions of much-worsened economic crisis, the political crisis of the ruling system also worsens to the point of armed conflict among factions of the ruling classes. The lessening of economic loot for the factions intensifies their political struggle.

The economic crisis results in widespread social unrest and in the rise of an armed revolutionary movement. . . [18]

Getting to the second model—the false-paradigm model—of the international-dependence theory brings us face-to-face with “a less radical international-dependence approach to development which . . . attributes underdevelopment to faulty and inappropriate advice provided by well-meaning but often uninformed biased and ethnocentric international ‘expert’ advisers from developed-country assistance agencies and multinational donor organizations. These experts offer sophisticated concepts, elegant theoretical structures, and complex econometric models of development that often lead to inappropriate or incorrect policies.[19]

Post-war Philippines has seen the proliferation of religiously oriented international NGOs of American Protestant origin like World Vision, World Relief and World Concern among others. Non-religious entities of the same intentions allegedly to support national socio-economic development efforts likewise came in so that the Philippines has accommodated a myriad of so-called development consultants and advisers to make the country a better place to live in for its local inhabitants. But generally, the country has also experienced the reckless implementation of innumerable development programs and projects based on misplaced, inaccurate and groundless advices provided by pseudo-experts coming from developed countries and whose local presence has been made possible by the aforementioned international development organizations operating in the country.

The truth of the matter is none of these international organizations have genuinely lifted the Philippines from underdevelopment and poverty. In fact, it could be reasonably opined that what these organizations brought to the country is not true development but exploitation which has further pulled it deeper hardship and poverty. More extreme and radical views even claim that development organizations have been intentionally fielded into the country by agents of US imperialism to perpetuate in it social, political and economic disempowerment.

Out of this reality came the dualistic development thesis of the international-dependence theory. Todaro and Smith advance the notion that “[i]mplicit in structural-change theories and explicit in international-dependence theories is the notion of a world of dual societies or rich nations and poor nations and, in the developing countries pockets of wealth within broad areas of poverty. Dualism is a concept widely discussed in development economics. It represents the existence and persistence of increasing divergence between rich and poor nations and rich and poor peoples on various levels.”[20]

Though the models that represent the international-dependence development theory legitimize the theory itself by way of a reality check, Todaro and Smith cannot afford to end their discussion of the theory without a very important caveat:

If we are to take dependency theory at its face value, we would conclude that the best course for developing countries is to become entangled as little as possible with the developed countries and instead pursue a policy of autarky, or inwardly directed development, or at most trade only with other developing countries. . . . [T]he key to successful development performance is achieving a careful balance among what government can successfully accomplish, what the private market system can do, and what both can best do together.[21]

4. The Neoclassical Counterrevolution: Market Fundamentalism

The neoclassical counterrevolution theory which purveys market fundamentalism challenges not only the international-dependence theory but more so the exorbitant government interference with economic activities whose major locus is the market. The theory is carried out through free markets, public choice and market-friendly approaches. Todaro and Smith observe that

In developed nations, this counterrevolution favored supply-side macroeconomic policies, rational expectations theories, and the privatization of public corporations. In developing countries it called for freer markets and the dismantling of public ownership, statist planning, and government regulation of economic activities[22]

Further, Todaro and Smith comment that “it is this very state intervention in economic activity that slows the pace of economic growth. The neoliberals argue that by permitting competitive free markets to flourish, privatizing state-owned enterprises, promoting free trade and export expansion, welcoming investors from developed countries, and eliminating the plethora of government regulations and price distortion in factor, product and financial markets, both economic efficiency and economic growth will be stimulated.”[23]

As the neoclassical counterrevolution theory comes out, developing countries like the Philippines are now in a more definitive position to realize the fact that the enemy which is exploitative monopoly capitalism is concretely found in the free markets which are not really free at all but controlled and regulated not by national government but by the minions and the local agents of monopoly capitalism. In this light, the call of neoclassical counterrevolution for freer markets and the dissolution of public ownership, centralized planning and regulated economic activities by government is nothing but a myth meant to deceive in the context of developing countries where monopoly capitalism can never actually operate unless there is a conspiratorial agreement between foreign investors and the local comprador big bourgeois who are enormously, extensively and excessively supported, represented and promoted by and in the government machineries, both national and local, of a developing country. Hence, all the theses and approaches that constitute the neoclassical counterrevolution theory are nothing but bubbles in the air in the circumstances of developing countries. In fact, it could even be inferred at this point that this theory has been advanced as an ultimate saving act to extend the life of monopoly capitalism in its dying moments.

In a developing economy like that of the Philippines characterized by semi-feudal and semi-colonial condition, Sison rightly observes that “[t]he comprador big bourgeoisie is the dominant class in the relations of production. It determines the semi-feudal character of the economy. As the chief trading and financial agent of US monopoly capitalism, it lords over the commodity system and decides the system of production and distribution.”[24] Sison further comments that “[u]pon the behest of US monopoly capitalism and inaccordance with their own class interest, the comprador big bourgeoisie opposes and prevents the comprehensive industrialization of the Philippines and shares with the landlord class the fear of land reform.”[25]

As a parting shot, let this reflection, though “impressionistic” in tone and temper be a re-affirmation of the international-dependence revolution theory as the only genuine expression of a realistic analysis and evaluation of the present conditions and future realizations of developing economies including that of the Philippines.

rfp/tua/gs/020507

[1] Michael P. Todaro and Stephen C. Smith, Economic Development (8^th Edition), (Singapore: Pearson Education South Asia Pte Ltd, 2003), p. 111.

[2] Ibid., pp. 132-133.

[3] Ibid., p. 113.

[4] Ibid., p. 112.

[5] Loc. Cit. From Walt W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto (London: Cambridge University Press, 1960), pp. 1, 3, 4, and 12.

[6] Cf. Alvin Toffler’s Future Shock (1971), The Third Wave (1981), and Powershift (1990). All have been published by Bantam Books, New York.

[7] Todaro and Smith, p. 113.

[8] Ibid., p.115.

[9] Ibid., p.116.

[10] Ibid., p.114.

[11] Ibid., pp. 116-117.

[12] Ibid., p. 121.

[13] Ibid., p. 122.

[14] Ibid., p. 123.

[15] Ibid., p.124.

[16] Ruel Pepa and Dennis Paul Guevarra, A Compendium of Readings in Philippine History: A Critico-Transformative Approach (Quezon City: Trinity College of Quezon City, 2006), pp. 130-131.

[17] Todaro and Smith, p.124.

[18] Pepa and Guevarra, p. 146.

[19] Todaro and Smith, p. 125.

[20] Ibid., p. 126.

[21] Ibid., p. 127.

[22] Ibid., p. 128.

[23] Loc. Cit.

[24] Pepa and Guevarra, p. 139.

[25] Ibid., p. 140.

A CRITICAL LOOK INTO THE CRUX OF PHILIPPINE ECONOMIC DEVELOPMENT VIS-À-VIS ECONOMIC PLANNING, DEREGULATION, PRIVATIZATION AND DECENTRALIZATION

Ruel F. Pepa
Trinity University of Asia

Introduction

In the modern socio-political dispensation, national governments have assumed a direct hand in the economic development of countries as an act of providing order to endeavors and undertakings that purportedly aim to serve the well-being and improve the lives of people. It doesn’t however mean that governments have always been successful in achieving this explicitly pronounced intended purpose. Tadaro and Smith remark:

National governments have played an important role in the successful development experiences of the countries in East Asia. In other parts of the world, including some countries in Africa, Latin America and the Carribean, and the transition countries, government appears to have been more of a hindrance to development than a help, stifling the market rather than facilitating its role in growth and development.[1]

In developed countries where the broad majority experiences a life of relative contentment in a situation of economic prosperity, we find a narrow chasm that separates the rich and the poor. (In fact, “the poor” in a developing—or underdeveloped—society evokes an understanding different from what the same concept mean in a developed society.) We can imagine an ideal scenario of economic productivity generally driven by an enthusiastic group of entrepreneurs and an army of satisfied proletarians that spontaneously perform collaboratively, cooperatively and coordinately with less government policy intervention. As we have said, this is a situation conditioned by economic prosperity and hence social contentment. But on the opposite side, we can also imagine the breaking down of “the good life” in a comfortably prosperous setting as history reminds us of certain large-scale economic crises in emerging powers like the US of the early 20^th century when the stock market crash of October 1929 led to the Great Depression of the 1930s. In the early 1990s, the US experienced another economic setback in the form of a recession. Another case in point was the economic crisis that hit South Asia also in the early 1990s heavily damaging the emerging economies of Thailand, South Korea, Indonesia, and, in some ways, Malaysia. This is where we find government policy intervention reconsidered. The eminent economic guru of Nobel Prize in Economics fame, John Kenneth Galbraith, comments:

However intervention by the state may be condemned in the age of contentment, it has been relatively comprehensive when the interests of the contented are involved and relatively limited when the problems are those of the poor. In consequence, one may reasonably conclude that a recession or depression is much less likely to trigger redemptive government action than in the past. Intervention to provide employment and alleviate enhanced poverty and suffering is far less likely than hitherto. The contented electoral majority is or has been made relatively secure; it can watch the adversity elsewhere with sympathy but with no strong call for corrective measures.[2]

In this connection, it is at this point deemed important to critically examine the controversies that surround the relationships between government policy intervention and private market activities in the economic development process. In other words, we find the burden of our present concern in the area of realizing the contextual conditions that properly make relevant private market disposition on the one hand and government policy dispensation on the other. Todaro and Smith observe:

The problem is one of achieving the proper balance between private markets and public policy. In early years, a perception of the state as a benevolent supporter of development held sway, at least implicitly; but the record of corruption, poor governance, and state captive by vested interests, in so many developing countries over the past few decades, has made this view untenable as a “positive” or empirically accurate description of government. More recently, a negative view of government has predominated, but it too has been based more on theory than fact and has failed to explain the important and constructive role that the state has played in many successful development experiences, particularly in East Asia. Finally, a middle ground is emerging, recognizing both strengths and weaknesses of public and private roles, and providing a more empirically grounded analysis of what goes wrong with governance in development and the conditions under which these flaws can be rectified.[3]

A. Economic Planning

Todaro and Smith define economic planning “as a deliberate governmental attempt to coordinate economic decision making over the long run and to influence, direct, and in some cases even control the level and growth of a nation’s principal economic variables (income, consumption, employment, investment, saving, exports, imports, etc.) to achieve a predetermined set of development objectives.”[4] In economic planning, it is thus assumed that government plays an indispensable role to stabilize, normalize, and hence strengthen a country’s economy by regulating domestic economic activities as well as standardizing economic programs by way of certain policies intended to protect the general interests of the general public engaged in both areas of production and consumption. Todaro and Smith further note:

Proponents of economic planning for developing countries argued that the uncontrolled market economy can, and often does, subject these nations to economic dualism, fluctuating prices, unstable markets, and low levels of unemployment. In particular, they claimed that the market economy is not geared to the principal operational task of poor countries: mobilizing limited resources in a way that will bring about the structural change necessary to stimulate a sustained and balanced growth of the entire economy. Planning came to be accepted, therefore, as an essential and pivotal means of guiding and accelerating economic growth in almost all developing countries.[5]

A myriad studies done in various parts of the world on developing economies prove head over heels what proponents of economic planning claimed according to Todaro and Smith. In the case of Philippine economy, it is a somewhat more complicated matter considering that the Philippine society is basically semi-feudal and semi colonial whose economy is of mixed character, i.e., a mixed economy characteristic of a developing country. Mixed economies “are characterized by the existence of an institutional setting in which some of the productive resources are privately owned and operated and some are controlled by the public sector.”[6] Philippine “mixed economy” operates uniquely in a socio-political setting that renders obsolete the demarcation line separating the private and the public sectors.

Patronage politics has “legitimized” the entire socio-political landscape which is heavily controlled by the comprador big bourgeoisie and the big bureaucrat capitalists—the intertwined major economic force that has intensified economic dualism in the country. In this case, Philippine politics gets under the aegis of capitalist patrons, on the one hand, and Philippine economy, on the other hand, gets protected by the bureaucratic demigods. In the lecture “Crisis of the Semi-Feudal Economy” delivered by Prof. Jose Ma. Sison at the University of the Philippines in Diliman on 18 April 1986, Sison clarifies that “[t]he comprador big bourgeoisie is the dominant class in the relations of production. It determines the semi-feudal character of the economy. As the chief trading and financial agent of US monopoly capitalism, it lords over the commodity system and decides the system of production and distribution.”[7] The big bureaucrat capitalists, Sison further says, are “big compradors and big landlords who have stood our as such by using their public offices, privileges issued by the state, state banks, and state enterprises to amass private capital and land. In Philippine history, the most outstanding example of bureaucrat capitalism would be that of the fallen Marcos regime.”[8] In simple terms, it is not quite inaccurate to say that the Philippine socio-politico-economic formation is controlled by a conspiratorial powerhouse. Those in control of the economy are directly or indirectly the same people who call the political shots at least in the executive and legislative branches of government.

B. Calling for Deregulation?

Given this reality, the ideals of being simply emancipated from severely burdensome government regulations and control is definitely precluded. Such an ideal call is actually realized only in a democracy where those who truly control governance are the sovereign people whose political empowerment cannot be assailed by an elite block. What we have in the Philippines is a pseudo-democracy, a semblance or a simulacrum of popular rule wherein the mechanics of a democratic state are operational but the dynamics are certainly expressive of a habitus of subservience to the ruling elite. State bureaucrats cannot in whatever way open an iota of possibility to relinquish its tight grip on the economy and allow the flowering of high-level competition in domestic and commerce much less in industrial productivity.

But whatever the case maybe, government regulation will always play a necessary role even in the private markets of a liberally democratic country. Deregulation is therefore either an imagined alternative of a difficult road to travel on. Galbraith remarks:

But while government in general has been viewed as a burden, there have been, as will be seen, significant and costly exceptions from this broad condemnation. Excluded from criticism, needless to say, have been Social Security, medical care at higher income levels, from income supports and financial guarantees to depositors in ill-fated banks and savings and loan enterprises. These are strong supports to the comfort and security of the contented majority. No one would dream of attacking them, even marginally, in say electoral contest.[9]

Taking our lessons from the American experience, deregulation in several ways derailed major economic sectors so that in the fragile economy of a developing country like the Philippines, no concrete large-scale benefit can be had once we go the way of deregulation full-speed ahead. Galbraith informs us on how deregulation failed in US:

Perhaps the worst financial devastation has been the nation’s airlines. Here an ill-considered deregulation—faith once again in the market in a public-service industry where utility regulation is normal—has been combined with corporate raiding and leveraged buyouts on an impressive scale. The results have been heavy debt, the bankruptcy of several of the larger airlines, the folding up of Eastern Airlines and of Pan Am, a chaotic muddle of fares and available routes, an inability to replace aging equipment and, in the end, quite possibly an exploitative monopoly by the survivors.[10]

Further, Galbraith says:

Then with the age and culture of contentment, there came the new overriding commitment to laissez faire and the market and the resulting movement toward general deregulation. The commercial banks, once released from regulation, greatly increased the interest rates there available to depositors, which meant that if the similarly deregulated S&Ls were to compete, they would need to pa higher rates to their depositors. Sadly, however, these payments would have to be met by the low rates then in place on a large and passive inventory of earlier mortgage loans.”[11]

In this connection, economic planning and hence government regulation is reaffirmed at this point buttressed by the realization of the fact that the imperfect market, like government, fails. Todaro and Smith point out the “three general forms in which market failure can be observed: The market cannot function properly or no market exists; the market exists but implies an inefficient allocation of resources; and the market produces undesirable results as measured by social objectives other than the allocation of resources. Market failures can occur in situations in which social costs or benefits differ from the private costs or benefits of firms or consumers; public goods, externalities, and market power are the best known examples.”[12]

C. What About Privatization?

We now focus our attention on fully-regulated, wholly-owned and exclusively-controlled government corporations whose service instrumentalities are aimed to facilitate the public in terms of power sourcing and distribution, water and sewage management, transportation conveyances, and communication deliveries. In the Philippine context certain areas of public facilitation have already been transferred to private ownership, operation and control.

Generally, the only expressed rationale for the privatization of state-owned public service facilities is to fully enhance and upgrade the efficiency and effectiveness factors in the delivery of said services to the public. The obvious picture the whole situation leaves us with is a grossly ineffective, inefficient, mismanaged and absolutely corrupt government system that in the final analysis is going nowhere but to the dogs. At the end of the day, no one is the loser except the Filipino people themselves who have been led to a dark road of confusion and uncertainty because at this very point of their so-called national life, they have no one to turn to. On the one hand, government is so inefficient and hence unreliable. In other words, we cannot expect genuine public service from government whose main interest is focused largely on the self-gratification of its people. And that is precisely the reason why government has failed miserably to manage its responsibilities to the public. In well-managed and highly efficient governments of developed countries—and this I personally experienced in some Scandinavian countries I visited—there is an explicit performance of responsible public service in major state-owned instrumentalities of facilitation like in transportation, communication, water and sewage management, and power provision.

On the other hand, once public service facilities have been handed over to the private sector, the people are now faced with monopoly capitalism in operation and a developing country like the Philippines will inevitably be swallowed by the mouth of intensifying poverty considering the fact that the privatization of public service facilities may only be effected in negotiation with well-entrenched comprador big bourgeoisie in the land. The main concern, therefore, of the owners of these privatized public service corporations is the classic capitalist objective of profit-generation through exorbitant service charges to which the people cannot complain at all.

D. Leveling the Field through Decentralization

The late eminent German-turned-British economist and social critic of the 70s, Ernst F. Schumacher, entitled his bestseller Small is Beautiful. It could be construed to have created an impetus for big-deal thinkers to reconsider their vantage point and place more importance on the depth and high-definition projection of small, specific concerns of human life. So that even on the issue of social, political, and economic problematizations, both academic and professional theorists have learnt to value and appreciate the beauty of small things. In a more serious tone, the whole pattern of movement at this juncture is form the enormity of central concerns o the specificity of definite locales by way of a decentralized approach. Decentralization de-complicates—simplifies, in simple terms, of course—processes with absolutely no details sacrificed. It is a zeroing into definite issues and concerns that are genuinely meaningful to real people directly affected in actual contexts. Looking back to economic planning, decentralization simplifies it and makes it more relevant to the recipients. In connection with deregulation and privatization, they seem to become insignificant concerns in the face of decentralization.

Gunnar Myrdal of Asian Drama and Nobel Prize in Economics fame explains decentralization as “a synonym [of democratic planning] especially in reference to political self-government within units smaller than the state. The basic idea is that of organized corporation between people in the same region or locality, or in the same industry or occupation.”[13] Myrdal beforehand establishes the notion that decentralization is actually democratic planning which according o him “is a term that is popular in South Asia. It embraces many ideas, but the most prominent are the following: First, ‘democratic planning’ is held to mean that planning and the policies coordinated in the plans should enlist not only the support of the masses but also their active participation in preparing and implementing planning. Secondly, it is generally held to mean that this popular participation and cooperation should emerge voluntarily so that state policies can be carried out without regimentation or coercion.”[14]

Todaro and Smith’s concurrence revitalizes the notion of decentralization even in the 21^st century:

Decentralization has long been a long-term trend in developed countries. . . . Decentralization has been steadily gaining momentum in most European countries. . . .

Recently, trends toward decentralization and greater urban self-government have been growing in the developing world as democracy has spread in Latin America, East Europe, and elsewhere, and the political process has allowed for providing greater autonomy, notably more fiscal autonomy, for regional and local levels of government. . . .[15]

The entire decentralized situation in governance strongly encourages citizens’ participation in crucial decision-making undertakings which will spontaneously and ultimately dissolve in time national government’s serious trouble with deregulation and privatization because a decentralized state of affairs realizes the demands of either deregulation or privatization. The celebrated futurist John Naisbitt attests to this as decentralization was actually experienced by Americans in the early 1980s:

The failure of centralized, top-down solutions has been accompanied by a huge upsurge in grassroots political activity everywhere in the United States. Some 20 million Americans are now organized around issues of local concern. About 25 percent of the population of any neighborhood in the country say they are members of a neighborhood group. Neighborhood groups are becoming powerful and demanding greater participation in decision making.[16]

Conclusion

Considering the geographical formation of the Philippines being an archipelago, decentralization of governance in a decentralized political, administrative, fiscal, and market sectors is a challenging matter worthy of serious study. On a positive note, Philippine economic development could truly be a matter of exciting consideration if reckoned in a decentralized landscape which will ultimately make obsolete the hegemonic power of “Manila imperialism” and in the process spawn the seeds of real economic growth in a multiplicity of centers across the archipelago from Batanes to Sulu.

However, there is no easy road to complete decentralization. What we are faced with at this point in time is an awful array of difficulties in the realm of culture that surely hinders us to fully get to the smooth terrain of successful decentralization.

© Ruel F. Pepa

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[1] Michael P. Todaro and Stephen C. Smith, Economic Development (8^th Edition), (Singapore: Pearson Education South Asia Pte Ltd, 2003), p. 679.

[2] John Kenneth Galbraith, The Culture of Contentment, (New York: Houghton Mifflin Company, 1992), p. 162.

[3] Todaro and Smith, pp. 679-680.

[4] Ibid., p. 681.

[5] Loc. Cit.

[6] Ibid., pp. 681-682.

[7] Ruel F. Pepa and Dennis Paul P. Guevarra, A Compendium of Readings in Philippine History: A Critico-Transformative Approach, (Quezon City: Trinity College of Quezon City, 2006), p 139.

[8] Ibid., p. 140.

[9] Galbraith, p. 23.

[10] Ibid., pp. 57-58.

[11] Ibid., p. 62.

[12] Todaro and Smith, p. 683.

[13] Gunnar Myrdal, Asian Drama: An Inquiry into the Poverty of Nations (Abridged Edition), (New York: Vintage Books, 1971), p. 169.

[14] Ibid., p. 168.

[15] Todaro and Smith, p. 714.

[16] John Naisbitt, Megatrends: Ten New Directions Transforming Our Lives (New York: Warner Books, Inc., 1982, 1984), p. 121.