Sunday, July 10, 2005

Why The Issue Goes Beyond "Hello Garci?"

I believe excerpts of this insightful book on Philippine political economy explains why merely changing Presidents is not enough, why the issue at hand goes beyond whether GMA is guilty of violating the constitution or whether she indeed made that call. It speaks of fundamental flaws in the social fabric of this country and why in times of crisis such as now, it should behoove us all to think beyond the "circus" unfolding before our eyes.

Words in italics, bold or underline are my own.

This, people, is the story of our lives. If you don’t understand certain terms, never mind, read on.


Booty Capitalism by Paul Hutchcroft

When this book first began to take shape in 1989 and 1990, my primary goal was to explain the Philippines’ longstanding “developmental bog.” In contrast to its booming neighbors, the country was plagued by very low – an occasionally even negative – rates of economic growth.

The 1980s provided an especially glaring contrast: whereas the so-called Asian tigers and tiger cubs grew on average by 6.9 percent per year, the Philippines lagged behind…

...By almost any measure of economic growth, the country was in a quagmire; despite tremendous human and natural resources, the Philippine political economy displayed a particularly strong resistance to fundamental change.

…a major source of obstacles to sustained development in the Philippines lies in the political sphere, and these obstacles are revealed through the careful examination of relations between the state and dominant economic interests. In other words, successful economic development has been constrained to a large extent by weaknesses of political development.

…By all accounts, the Philippines should have al the ingredients necessary for developmental success: tremendous entrepreneurial talents, an enormously talented and well-educated workforce (readily conversant in the dominant language of international business), a rich endowment of natural resources, and a vibrant community of economists and development specialists.

…The Philippines may seem to have everything going for it, but for most of the postwar period the country has been unable to go very far very fast.

…The Philippines provides a clear-cut example of what kinds of obstacles to capitalist development can result when the power of an oligarchic private sector is never tamed, and there is no concerted effort to promote the development of the public sector.

…the Philippines’ developmental quagmire can be traced in large degree to the endurance of a predatory oligarchy and a patrimonial state. Together, the distinctive features of state-oligarchy relations in the Philippines make up the system of booty capitalism.

Throughout modern Philippine history, one finds far more oligarchy building than state building: the oligarchic families have had ample opportunities, historically, to consolidate their power with the support of external forces, while the state has remained woefully underdeveloped. As a result, the state apparatus continues to be easy prey to powerful oligarchic class that enjoys an independent economic base outside the state, yet depends upon particularistic access to the political machinery as the major avenue to private accumulation.

…Faced with the myriad particularistic demands of powerful elite interests, the Philippine state has rarely displayed the capacity to formulate or implement a coherent policy of economic development.

Indeed, the Philippines presents a stark example of a state that has failed to effect the kind of economic change found among the East Asian NICs…Unlike the Korean and Taiwanese states, which at certain crucial historical junctures enjoyed considerable autonomy from dominant economic interests, the Philippine state is so lacking in autonomy from dominant economic interests that even the most basic regulation of capital is continuously frustrated.

…The limitations of the Philippine state apparatus, however, go far deeper. Not only is it incapable of replicating the kind of interventionist capacity of its East Asian neighbors, it is also incapable of providing the even more basic legal and administrative underpinnings necessary for “free-market” capitalism.

Even advocates of a relatively minimalist role for the state, such as the World Bank, emphasize that “governments need to do more in those areas where markets alone cannot be relied upon. Above all, this means investing in education, health, nutrition, family planning, and poverty alleviation; building social, physical, administrative, regulator, and legal infrastructure of better quality; mobilizing resources to finance public expenditures; and providing a stable macroeconomic foundation, without which little can be achieved.”

In the Philippines, the major issue is not the virtues or demerits of capable state interventions in the economy…the major issue is the capacity of e state to carry out even the most minimally defined functions.

The Logic of Booty Capitalism

…Within booty capitalism, a group with an economic base outside the state is plundering the state for particularistic resources.

In creating and responding to opportunities for enrichment provided by favorable access to the state machinery, the major families have created highly diversified conglomerates, and few have any strong loyalty to specific sectors of the economy. Because particularistic access to the state apparatus plays such a central role in the creation of wealth, the most enduring division of capital is that of the “ins” versus the “outs.”

For most families who find themselves on the right side of this ever-shifting line, the spoils are legion. As one former presidential adviser explains, “every administration in this country has spawned its own millionaires.”

There is, in fact, a certain social mobility at the helm of Philippine society, as new families appear out of nowhere and some of the old families fall by the wayside.

…As new faces gain favorable access to the state apparatus, they too can achieve big-time success in Philippine business. We find in the Philippines not a fixed aristocracy, but rather a social group that is based on wealth and that changes over time.


As in the past 2 1/2 EDSAs, today we are witnessing what could potentially be a mere change of faces, a mere change of elites (whether they be old rich, new rich, artistas, sons of artistas, journalists, trapos or basketball players) and a continuing wretched cycle of a State unable to free itself from the choke-hold of only a few with the power and means to do so.

In the mean time, ordinary folk, you and I, must deal with, and largely on our own, sky-rocketing oil-prices, deficient (indeed non-existent) public services, and a government that is concerned with so many things other than governance.

Aren't you sick and tired of it? I am.

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