Can the Philippines Handle Globalization?

Mar 09

I would like to thank the organizers of this event, particularly my
co-awardee of the Right Livelihood Award for 2003, Nicky Perlas, for
inviting me to speak at this event. Nicky’s optimism, as many of you
know, is infectious, and I do hope all of us will be infected by it

I think our previous speakers have already alluded to the mood of
dispiritedness that shrouds the country today. Perhaps more than at any
other time, self doubt has become a chronic collective neurosis. For
some the way out is to emigrate, an option that according to the polls
is preferred by one out of five Filipinos. As has often been pointed
out, once out of the national milieu, Filipinos do indeed excel, and
one can hardly keep track of the numbers of Filipinos who have become
prominent as entrepreneurs, professionals, NGO leaders, and
intellectuals in their adopted countries. Yet one can never really
leave the homeland. Even if one is a success abroad, one never really
feels complete knowing about the collective failure at home. Many in my
generation that left for the US in the late sixties and became
successful in their fields do not relish retiring in California or
Florida but are now seeking ways to contribute their skills to the task
of collective upliftment of the nation.

Let me address the crisis of spirit in the Philippines by sharing a
witty statement about China that I came across recently: “China has had
a few bad centuries, but it’s now back on its feet.” To be a Chinese
from the mid-19th century to the mid-20th century was to share in a
communal spirit prone to despair and a sense of collective
disintegration. To be Chinese at the beginning of the 21st century is
to share in a sense of pride in a country that is not only back on its
feet but well on the way to becoming an economic superpower.

I say this to underline the importance of having the long view, of
putting our current travails, both material and spiritual, in
perspective. We can say, similarly that we Filipinos have had a few bad
decades, but, don’t worry, we’ll get back on our feet. Why should we be
this confident? Because at various times in the past, we not only
pulled together but also became a shining example to the rest of the

Take the Revolution of 1896. This was the first modern national
liberation movement in the whole of Asia, one that served as an
inspiration to so many other peoples. Read the novels of Pramodya
Ananta Toer on the making of modern Indonesia, and you will see how
Rizal and Aguinaldo and our struggles against the Spanish and the
Americans helped spark the nationalistic imagination of Indonesia. Go
to Malaysia, and you will come across people, including former Malaysia
Deputy Premier Anwar Ibrahim, who regard Rizal as the first giant
figure in the making of the modern Malay consciousness.

Yet the Revolution was not our only “finest hour” as a nation. We also
had the four years of tremendous collective sacrifice that brought
together our country against the Japanese invaders. Then we had the 16
years of struggle against the Marcos dictatorship that climaxed with
the first EDSA Revolution, which became an inspiring model of a largely
non-violent struggle based on people power for many other peoples in
the world suffering under the yoke of dictatorships.

The Causes of our Discontent

Since EDSA I in 1986, the Philippines seems to have traveled steadily
downhill. How could we have squandered such a golden opportunity to
take a new course after the disaster that was the Marcos period? The
answer, to paraphrase Shakespeare slightly, lies not in the stars nor
in ourselves, but in our ever short-sighted elite. I think it is
important to stress this, that our failures have less to do with our
culture or our so-called personality as a nation but with the failure
of the institutions and policies established by our national elite
post-EDSA I to deliver both genuine democracy and development.

It is fashionable to denounce corruption at the top as the reason for
our failures. Of course, we must condemn corruption, but it’s much too
easy an explanation since there have been other countries, among them
South Korea and China, that have had levels of corruption similar or
even worse than the Philippines but have achieved impressive records of
economic growth. We must do a more hardnosed analysis of the structural
causes of failure in order to forge a pathway out of it. Allow me to
share some possible insights into our national failure over the last 19

Some say that the promise of the post-EDSA I political and economic
system was killed early on when President Corazon Aquino made two
historic compromises. First, in protecting the family estate Hacienda
Luisita, she failed to put her moral authority behind land reform,
resulting in a land reform law with a thousand and one loopholes.
Second, she chose to make repayment of the foreign debt the national
economic priority, thus starving the country of the investment
necessary for development. The combination of the lack of structural
reform and capital starvation doomed the country to stagnation in the
period 1986 to 2004.

President Fidel Ramos tried to take another path, that of triggering
growth by liberalizing trade, deregulating the domestic economy, and
privatizing state or state-run enterprises in line with neoliberal,
free market doctrine. Social reform was placed on the back seat, behind
so-called market reforms. The Ramos saga ended with the financial
crisis of 1997, which was brought about by the panicky exit of the
speculative capital that Ramos’ technocrats had courted, precisely by
eliminating many controls on their volatile movements and liberalizing
the financial sector.

Lower class disaffection with conservative social and economic policies
resulted in the election of Joseph Estrada. Estrada’s populism,
however, transmogrified into a mafia capitalism in which the president
became the apex of an engine of capital accumulation that linked the
underworld and the state. The more established section of the elite
allied itself with the middle class to overthrow Estrada and displace
the new rich faction during EDSA 2. The disaffected nouveau riche tried
to get back by riding the spontaneous lower-class anger at Estrada’s
arrest during the aborted EDSA 3.

Under Gloria Macapagal Arroyo, all social reform initiatives were
placed on the backburner, and development policy was reduce to a
strategy of getting US aid and investment by allying the Philippines
with Washington in the so-called War against Terror. The
administration’s overriding preoccupation became that of getting Arroyo
elected. After elections in which the opposition candidate Fernando
Poe, Jr., was widely perceived as having been cheated of victory, the
administration has been overtaken by fiscal crisis and has had little
to offer the country in the way of vision except more and more
indebtedness to foreign banks.

It is important to provide this survey because if we talk about the
Philippine crisis, we are saying that one of the causes is a failed
democratic state, failed in the sense that over the last eighteen
years, what I have referred in other writings as the “EDSA State” has
not lived up to its promise of being a mechanism of achieving more
democracy but has been employed by our elite utilized mainly as a
mechanism for succeeding one another in office, as an engine for
personal and familial capital accumulation, and as a defense mechanism
against comprehensive social reform.

The Tragedy of Market Fundamentalism

But the institutional failure of the EDSA system is only one of two
fundamental causes of our crisis of the spirit. The other, equally
important, source of disaster is the neoliberal or market
fundamentalist policies that have been followed by EDSA administrations
from Aquino to Macapagal. 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 government, academe, 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.

So confident were our technocrats that they not only pushed us to join
the WTO but also institutionalize its participation in any future
political arrangement. Democracy does not contradict the development of
an effective state. Indeed, democracy promotes an effective state by
endowing it with legitimacy.

A second element of a post-EDSA development strategy is focusing on the
internal market as the driver of development. Export oriented growth of
the kind that was pursued by the NICs is no longer possible in an era
of tremendous manufacturing overcapacity and the resulting
protectionism in developed country markets that this has spawned. And
even if developed country protectionism were not a problem, export
oriented manufacturing would not be an advantageous strategy today,
given the tremendous advantage that China has in labor costs. Given the
renewed centrality of the internal market, the imperative for massive
income distribution to create consumers with purchasing power becomes
very critical. Concretely, this means renewing the drive for effective
land reform. It would also mean effective programs of taxation of the
richer parts of the population, in order both to increase mass
purchasing capacity through transfer payments, as well as to accumulate
the capital necessary for strategic investments.

Creating a viable internal market is one priority. Protecting it from
artificially cheap imports that stem from subsidization or
overexploitation is another. However, protectionism can no longer
remain opportunistic, an incoherent policy that is simply dictated by
vested interests. Protectionism must be strategic, one that is linked
to deepening the country’s industrial and manufacturing structure
through selective tariffication or selective liberalization. Building
up capital intensive industries such as steel, transportation
equipment, and computers will necessitate a flexible tariff policy,
coupled, of course, with investment incentives and state-sponsored
technological development.

A fourth important dimension of a post-EDSA economic strategy is
sustainable development. The pillage of our natural resources has
proceeded to the point where the economic future of future generations
of Filipinos has been severely threatened. The high 6-8 per cent growth
of the NIC model simply is not possible to replicate without inviting
more environmental dislocations. The key lies in opting for a strategy
of lower, sustainable growth rates, which is only possible if there is
much more equitable sharing of the fruits of a sustainable economy
(meaning, you can’t have sustainable development without radical social
reform), a reinvigoration of agriculture along the lines of a
smallholder system producing mainly for local and national markets with
environmentally friendly agro-technology, and the greening of
manufacturing technology. It will also mean reinvigorating local
manufacturing and agricultural industries through flexible application
of the principle of subsidiarity, meaning whatever can be produced at
least cost at the local level should be undertaken at that level Strong
central leadership of the strategic planning process must be coupled to
decentralized, sustainable production in key areas like agriculture.
This is the challenge of development in a Philippine context in the
21st century.

A fifth critical element is coordinating our national development
strategy with those of our neighbors. The reality of international
economics in the 21st century is the existence of large economic blocs,
the most important of which are the European Union, the United States,
and China. It is difficult to see small and medium nation states being
able to effectively develop or participate in the international economy
without becoming part of a larger formation, whether this is based on
common interests as developing countries—for instance, the Group of
20—or being part of a regional bloc such as a reformed ASEAN that is
marked by comprehensive economic cooperation.

Let me explain briefly. The problem with ASEAN, however, is that its
most important economic project, the ASEAN Free Trade Area, or AFTA, is
one that is strategically directionless. The aim of AFTA is to reduce
and eliminate tariff barriers among participating economies, but
whether this is for the purpose of serving as a step towards global
free trade or as one towards a regional market protected by tariffs and
quotas to serve as base for regionally coordinated import substitution
has not been decided. This indeterminacy has left the regional
formation unable to effectively undertake planning, technology sharing,
and institutionalizing a division of labor at a regional level. Without
such a program, the different national economic actors will see tariff
reductions as leading to a zero-sum game in which the more advanced
industrial elites will end up dominating the regional market.

An even greater concern is the democratic deficit in ASEAN. This
regional formation was a creation of government elites that was done
with no consultation of peoples in the region. Not surprisingly, being
part of an entity called ASEAN is not in the consciousness of the
peoples of ASEAN. This means that projects that technocrats agree to in
the name of ASEAN unity such as AFTA enjoy little legitimacy and
binding power. Democratizing ASEAN is essential if it is to become an
effective participant in a world marked by the dynamics of big economic

Participating in a reformed ASEAN regional bloc should just be one of
several cooperative initiatives the Philippines must engage in. The
Philippines is already part of the Group of 20, a larger formation that
also includes India, China, Brazil, and South Africa. The potential of
this group in terms of coordinating the policies of its members beyond
the immediate issue that brought them together in Cancun—opposition to
agricultural subsidies maintained by the developed economies—is great
and can extend to technology sharing, transborder industrial policy,
shared investment policies, and common environmental strategies. The
organizational framework for what has been called, in the language of
development economics, “South-South development cooperation” is present
in the G 20. A forward-looking Philippine government can make an
invaluable contribution in translating this potential into reality.

Finally, national, regional, and South-South initiatives must be
coupled with Philippine leadership in restructuring the system of
global economic governance, which is today dominated by the powerful
developed economies. The key institutions that have institutionalized
the hegemony of the North are the International Monetary Fund, the
World Bank, and the World Trade Organization. Reform of these
institutions has proven to be extremely difficult, while dismantling
them seems to be a political impossibility. A coalition of developing
countries can, however, aim at reducing the power of these institutions
and work to gradually supplant the current system of global governance
with a more pluralistic system of institutions and organizations
interacting with one another, guided by broad and flexible agreements
and understandings. In other words, this strategy would aim at turning
the current multilateral giants into just another set of actors
coexisting with and being checked by other international organizations,
agreements, and regional groupings. It would include strengthening
diverse actors and institutions as UNCTAD, multilateral environmental
agreements, the International Labor Organization, and regional economic

The aim of such a strategy is to create space in the global economy for
developing countries like the Philippines to put together unique
strategies for development that respond to their values and rhythms as
societies, something that is not now possible owing to the
one-size-fits-all neoliberal model promoted by the IMF-World Bank-WTO

There is an Alternative

In sum, there is an alternative to the political economy of
anti-development that currently reigns in the Philippines. A hard,
unromantic analysis is the key to a viable program for change. We will
not get anywhere unless we accept the fact that the interests of our
elite and the Filipino people diverge, and it is time we put the
interests of the people ahead of that of our elite, which is
distinguished by the fact that it is one of the most unenlightened in
Asia. We will not get anywhere unless we accept the fact that
corporate-driven globalization is part of the problem, indeed a major
part of the problem, not the solution. We will not get anywhere unless
we adopt a policy framework that consistently puts national development
in command instead of free trade and the free flow of corporate
capital. We will not get anywhere if we continue to be seduced by false
doctrines such as that of market fundamentalism peddled by such
institutions as the UP School of Economics. (Incidentally, contrary to
popular perception, I come not from the UP School of Economics but from
the UP College of Social Sciences and Philosophy. The difference,
friends, is night and day.)

Let me end by telling those who call us the sick man of Asia, those who
talk about our “damaged culture,” those who say that our best chance is
by adjusting ourselves to the demands of corporate-driven
globalization: Listen: the best years of this country are still ahead
of us. The project called the Philippines is not over. It’s barely

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