Academics, Power, and the Crisis of the University

Mar 08

More recently, the influence of academia on politicians and
policymakers has been most evident in the massive impact of Milton
Friedman and the University of Chicago School of economics. The
political success of the free market policies of Ronald Reagan and
Margaret Thatcher in the West is inconceivable without the intellectual
foundations provided by the Chicago School. But even before Thatcher
and Reagan, the intellectual power of the Chicago School had manifested
itself in the wholesale restructuring of the Chilean economy by the
so-called "Chicago Boys" after the 1973 coup initiated by Gen. Augusto
Pinochet. From Chile, the neoliberal revolution went on to capture the
citadels of power in most other countries in Latin America.

Like Latin America, the Philippines was captured by neoliberal economics.
For those of us who see mainly corruption and the selfish play of
interest groups as the driving force of Philippines politics, the role
of ideas in policymaking may sound quaint. But think again. Over the
last 19 years, we have had a revolution in the Philippines, in case you
did not know it. But this has been a revolution that has come from the
right, not the left. The vanguard of this revolution, which reached its
apogee during the Ramos period, have been economists and technocrats
who captured the highest reaches of the academe, government, and
business, who were united in the belief that if you engaged in free
trade, lowered tariffs, enacted more liberal conditions to attract
foreign capital, and reduced governmental regulation of the economy,
the result would be growth, prosperity, and the end of inequality. Let
the market rule-this was the battle cry of the neoliberal revolution
that reached its climactic point during the presidency of Fidel Ramos.

The ideological character of economic policymaking during the Ramos
period was partly a reaction toward the Marcos regime, which many in
the urban middle and upper-middle classes had identified not only with
dictatorship and the loss of human rights but also with cronyism,
protectionism and rent-seeking. But more important in my view was the
zeitgeist of the Reagan-Thatcher era. Academics and technocrats with
advanced academic training were key in this process, and many of them
had done their graduate work in the late 1970s and 1980s, when
state-oriented Keynesianism lost its luster and neoliberalism came into
vogue not only in the economics departments of US universities but also
in key local institutions such as the School of Economics of the
University of the Philippines and the Center for Research and
Communications (now University of Asia and the Pacific).

The "neoclassification" of the Philippine technocracy reached its
apogee under Ramos not as a result of a sudden coup but of a gradual
takeover of the strategic heights of the technocracy by these
free-market-oriented policymakers coming from the academy, government
and business. In an interview with my associate Joy Chavez Malaluan,
one pivotal figure pointed out that she and her colleagues who played
prominent roles in the country's free-market turn acted not only out of
external pressure from the World Bank and the IMF but out of belief:
"Imposed, maybe in one way, but on the other hand the mainstream
decisionmakers-[the] technocracy and policymakers-also internally
believe in that. So there's a confluence of policy direction Another
figure stressed the emergence of a broader "consensus" among the elite
and middle class around free market reform: "[No] policy reform becomes
credible, workable policies, unless the people accepted. Yes, there
were researchers and economics pushing for that, yes there were donor
communities pushing for that.but ultimately it is a question of whether
the public accept that policy."

In any event, the "neoclassical revolution" had achieved a critical
mass by the time Ramos came to power, and its hegemony was consolidated
during his administration. "It's the dominant sector," one player put
it. "It's the president, it's his chief economic advisers, both formal
and informal; the House of representatives; the Senate-the mainstream.
The mainstream is pushing for liberalization" This player, Gloria
Macapagal-Arroyo, was a neoclassical economist and would herself become
president in 2001. One cannot find a better statement of how academic
hegemony imposed itself on our political and economic elites.

Ramos and his allies in government, business and the academy were all
impatient to get the Philippines out of the rut and join the ranks of
the vaunted "Asian tigers." Their view of how their neighbors achieved
success was, however, filtered through their neoclassical ideological
prism. Against much evidence, they saw the high growth rates of the
East Asian and Southeast Asia economies as products of free market
policies instead of strategic state interventions in the market.
Typical of this selective interpretation of the Asia miracle was the
following comment of Jesus Estanislao, Corazon Aquino's secretary of
finance, and a Ramos supporter:"Government takes very good care of
macro-economic balances, takes care of a number of activities like for
example infrastructure development, and leaves everything else to the
private sector. And that is exactly what Singapore, Malaysia, Indonesia
and Thailand have done, and that is what the Philippines should be
doing, and we are beginning to do it."

Ideology thus accounts for the speed with which initiatives aimed at
deregulating, liberalizing, and further privatizing the economy
unfolded.Liberalization was seen to be an essential component of
globalization, a process of global integration of production and
markets that, according to economic pundits local and foreign could
only lead to more prosperity all-around. With the state socialist
regimes of Eastern Europe and the Soviet Union having collapsed and the
social-democratic, state-interventionist economy of Sweden in disarray,
the ideology of liberalization seemed irrefutable. The prosperous
state-assisted capitalist regimes of East Asia were, of course, a
living contradiction to the neoliberal credo, but even there,
technocrats paid profuse lip service to free markets as a smokescreen
intended to defuse US pressures on them to open up their markets.


The UP School of Economics and the Neoliberal Revolution

In the Philippines, the bastion of neoliberal thinking has been the
University of the Philippines School of Economics. By the early 1990's
both Keynesian economics and radical economics, with which some faculty
members had identified in the 1970's and 1980's, had been marginalized.
The intellectual cadres of the UP School of Economics, along with their
brethren from UP Los Banos, staffed the key economic agencies of
government, notably the National Economic Development Authority, which
provided strong comprehensive guidance for policymaking at the other
government units. The result was a remarkable continuity in
policymaking from the Cory Aquino administration to the Arroyo
governments. As Dr. Cielito Habito, head of NEDA under Fidel Ramos, put
it, "We can expect every serious candidate [for political office] to
obtain economic advice from largely the same small pool of highly
trained ecnomists in the country (unlike lawyers, there really aren't
all that many of us, believe it or not!)."

The result of this revolutionary policy of liberalization led by
UP-based intellectuals is now clear for all to see: nothing less than
an unmitigated disaster. We have been converted into a net food
importing country.

Employment in agriculture has dropped precipitously. Whole sectors of
our agriculture, such as corn, are in the throes of crisis owing to
imports being dumped on us. As one of our trade negotiators told his
counterparts in Geneva before the Cancun ministerial of the WTO in
2003, "Our agricultural sectors that are strategic to food and
livelihood security and rural employment have already been destabilized
as our small producers are being slaughtered by the gross unfairness of
the international trading environment. Even as I speak, our small
producers are being slaughtered in our own markets, and even the more
resilient and efficient are in distress."

The results have been equally stark in industry. Doctrinaire
liberalization resulted in multiple bankruptcies and job losses. The
list of industrial casualties is awesome. It includes paper products,
textiles, ceramics, rubber products, furniture and fixtures,
petrochemicals, beverage, wood, shoes, petroleum oils, clothing
accessories, and leather goods. Our textile industry, for instance, has
shrunk from 200 firms in the 1970's to less than ten today.

The undermining of our industry and agriculture, however, has not been
the only negative effect of doctrinaire liberalization. By reducing our
tariffs so radically, we also drastically reduced government revenues,
thus contributing to the fiscal crisis. Probably, the best estimates of
foregone revenue are provided by economist Clarence Pascual of LEARN,
who finds that total foregone revenue rises from P58 billion in 1998 to
P108 billion in 2003, averaging 2.4 per cent of GDP for the period.
These are magnitudes that are, he notes, simply "mind boggling." These
are the magnitudes that led former Finance Secretary Jose Isidro
Camacho to admit the obvious: "The severe deterioration of fiscal
performance from the mid-1990's could be attributed to aggressive
tariff reduction."

The crisis of the Philippine economy has been replicated throughout the
world. Neoliberal, free market policies have been correlated with
rising poverty, growing inequality both within and between countries,
and economic stagnation. When it comes to empirical evidence, the
battle has long been won by the critics of neoliberalism.


Opposition to Neo-liberalism

There has been rising opposition to neoliberalism, but that has not
come principally from within the academic community, unlike the case in
the sixties and seventies, when faculty members and students in the
arts and sciences, even within what is now the School of Economics,
challenged modernization theory and conventional development economics
with varieties of nationalist analysis, including the paradigm of
nationalist industrialization. Much of the articulation of the
opposition to the reigning free market model has arisen in civil
society outside the university, among people's organizations, NGO's,
the environmental movement, non-academic intellectuals, and even
dissident capitalists like George Soros.

The following comments may or may not apply to UP, but on the western
university scene, after serving as the base for the renaissance of
Marxism in the sixties and seventies, the social sciences and
literature were drawn in the eighties and nineties to varieties of
post-modernist thinking or, as in the case of sociology, to debating
these influences in other to save sociology's status as a science. This
is not to say that post-structuralist thinking was not radical. Indeed
it was, but radical energies were channeled into intra-university
academic politics rather than towards the outside. As the
neoconservative thinker Irving Kristol expressed it in his classic
put-down of the left, post-modernist radicals in the US shifted their
ambitions from seizing political power to seizing the chairmanship
ofthe English Department.

An important element in the decline of opposition to neoliberalism and
the disengagement of many progressive academic intellectuals was, of
course, the collapse of the socialist regimes in Central Europe and
Russia and with it the total collapse of the paradigm of central
planning. This could not but have a negative impact on Marxist
analysis, which had for so long served as the main discourse of radical
critique in many intellectual circles both in the West and in the South.

There was, however, one place where there was resistance to
neoliberalism within the academe, and that was within the field of
political development.
The dispute had to do with the role of the state in development in East
Asia, which was the high growth area in the eighties and nineties. Here
academic analysts like Chalmers Johnson, Alice Amsden, and Robert Wade
led the way in showing how the state in East Asia promoted development
by distorting the market rather than by getting itself out of the way
of the market. This was an important counterattack on the pretensions
of neoliberalism, by academics who felt that the validity of their
field, political economy, or the study of the complex interaction
between political power and economic arrangements, was under threat by
a perspective that saw the state as having little economic role except
to expand the ambit of the market. Important as it was, however, this
counterattack was not able to stop the IMF and the World Bank from
passing off the East Asian newly industrializing countries (NICs) as
products of a miracle of the market and governments from continuing to
adopt neoliberal policies in the belief that they were the key to
development.

For the most part, however, the intellectual resistance to
neoliberalism has been articulated mainly by non-academics or by people
who were non-university activists first and academics second. Susan
George and George Soros exemplify the non-academic intellectuals who
performed an important catalytic role in the struggle against
neoliberalism. George had no academic affiliation, yet her books How
the Other Half Dies, Faith and Credit, and The Lugano Report were on
the forefront of the intellectual critique of neoliberalism. Soros'
three books on market fundamentalism have performed a vital role in
discrediting neoliberalism in more mainstream sectors owing to his
status as a successful global capitalist player.

In the Philippines, the intellectual struggle against neoliberalism is
associated mainly with people like the late Junie Kalaw, Nicanor
Perlas, Sixto Roxas, Maitet Diokno, Men Sta. Ana, Lidy Nacpil, Joseph
Lim, Alejandro Lichauco, and Leonor Briones. There are, of course, more
people that deserve to be named. The common characteristic of these
individuals is that they have pursued their intellectual activism
largely in a non-academic context though they may have maintained
academic links or even held academic positions. This was in large
contrast to the neoliberals, whose power base was really their
intellectual stronghold at the University of the Philippines School of
Economics. The debate between the anti-neoliberals and neoliberals
raged outside, but it barely touched the University of the Philippines.
Indeed, some say, it has been sometime since a debate of earthshaking
intellectual proportions has rocked the university.


The University: Haven of Critical Thinking?

Some would say that the image of the university as a debating society
of rival schools of thought, one that is as hospitable to the left as
it is to the right, is an idealized model that does not fit historical
reality.

Left-wing Cambridge in the 1930's, Berkeley in the 1960's, UP in the
1960's, in this view, were more the exception than the rule. It is not
surprising that the neoliberal revolution began and entrenched itself
in universities like the University of Chicago or UP since, according
to this view, universities, despite their image as catalysts of
critical thinking, are inherently conservative institutions geared at
maintaining the current configuration of economic and political power.
This is not, of course, a simple process, and proponent of this view
would be the first to claim the relative autonomy of the cultural
realm. Nevertheless, in the last instance, they claim, the university
promotes system maintenance.

These critics would go on to cite not only Marx but also Nietzsche who
could only really flourish once he got out of the confines of the
University of Basel. Then there was Jean Paul Sartre, the towering
figure of French existentialism, who stayed away from an academic
career for fear that it would compromise his thinking. These critics
would not deny that radical perspectives can find a foothold in
universities but they would claim that the really innovative work is
done on the outside and only gradually make its way into the
university. It is worthwhile examining these issues with respect to UP.
Such an investigation, carried out with sensitivity, can provide us
with very important insights into the process of the formation of
intellectual hegemony both within and outside university walls.

But whatever the results of this investigation, one thing is
indisputable:the contribution of university-based intellectuals to
elaborating a paradigm or paradigms that break with the reigning
neoliberalism would be greatly appreciated.. Neoliberalism is in
crisis, everywhere. But like the dead hand of the engineer on the
throttle of the speeding train that is about to round the bend, its
policies continue to rule for lack of viable alternatives. Without
credible alternatives, policymakers fall back on the failed policies of
liberalization, deregulation, and privatization despite the empirical
evidence from over two dismal decades. University-based academics,
including those in our college, can provide these alternatives with
solid intellectual foundations. Otherwise, the crisis of neoliberal
ideology may lead not to change but to chaos and stagnation. Crisis, we
must recall, does not always result in the seizure of opportunities.

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