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Philippine State

Continuity in its basic patterns of interaction with dominant economic interests

Often incapable of meeting even the most basic infrastructural needs of the economy

Making its comprehensive analysis central to political economy

State Apparatus

Major avenue for private accumulation

Repeatedly choked by an anarchy of particularistic demands from:

1. Particularistic Actors – oligarch and cronies (currently favored by top officials)

Weak Institutionalization

Determinant of Business Success

Personal favor and disfavor of those currently in power

Political Administration

Personal affair

Weak Institutionalization

Determinant of Business Success

Personal favor and disfavor of those currently in power

Political Administration

Personal affair – Practically depends on personal considerations

Objectively defined official duty – is unknown to the office that is based purely upon personal relations of subordination. Instead of bureaucratic impartiality…the opposite principle prevails*

*(Weber’s description of Patrimonial State)

Patrimonial Framework Helps us to understand two important elements of

government-business relations in the Philippines1. High degree of favoritism Rent Seeking Gone Wild

2. The capacity to inflict punishment on their enemies

Patrimonial Features (Postwar Philippine State) Rarely displayed the capacity to formulate or

implement a coherent policy of economic development Highly fractured and ineffective bureaucracy Lacking in autonomy from dominant economic interest Korean and Taiwanese states: At certain crucial historical junctures enjoyed considerable

autonomy from dominant economic interest

Historical Context in understanding developing states :

Bureaucratic capacity of the developing states in East Asia can only be understood as part of a long historical experience (Peter Evans)

Development models are not simple packages of policies; they are configurations of political, institutional, and historical events (Haggard and Cheng)

Laissez-faire

Without state involvement in the economy

However the Philippines presents kinds of economic problems resulting from insufficient development of the state apparatus

World Bank

Emphasize a minimalist role of the State:

“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, regulatory, and legal infrastructure of better quality; mobilizing resources to finance public expenditures; and providing a stable macroeconomic foundation, without which little can be achieve.”

Limitations of the Philippine state apparatus:

1. Incapable of replicating the kind of interventionist capacity of its East Asian neighbors

2. Incapable of providing the basic legal and administrative underpinnings necessary fro free-market capitalism

Providing adequate electricity

Infrastructure

Basic regulation and administrative services

Patrimonial States Have proved incapable of pursuing any coherent policy at all (Zaire and

Haiti) Policy and policy-making common to relatively more advanced countries

require major modification when applied to states with strong patrimonial features

The essential business of the state minister is not to make policy. It is to modify the application of rules and regulations on a particularistic basis, in return for money and/or loyalty. (Robert Wade talking of India)

In 1960, the transitional societies in Southeast Asia have not fully incorporated the view common to rational-legal systems of authority that the appropriate goal of politics is the production of public policy in the form of laws. Rather, power and prestige are often treated as values to be fully enjoyed fro their own sake and not to rationalized into mere means to achieve policy goals. (Lucian Pye)

1967 in the Philippine policymaking; political competition among the elite did not involve policy, but power and the distribution of spoils. (David Wurfel)

Capitalism in a Patrimonial State

(Weber) Bureaucratic actions are often highly arbitrary, only certain types of politically determined capitalism are able to thrive

Such from of capitalism often reach a very high level of development

Absence of calculability in thee political sphere ultimately inhibits the development of more advanced forms of capitalist accumulation

Typologies of Capitalism:

Rent Capitalism

Overarching term to describe a system in which money is invested in arrangements for appropriating wealth which has already been produced rather than in arrangements for actually producing it

Production-oriented Capitalism

Standard Categorization of Capitalism in developing countries:

Philippines Fall somewhere along a continuum between laissez-faire

and statist model

Key economy does not exhibit key characteristics of either typology

Laissez-faire and statist capitalism dichotomy: Highlights the two vital dimensions:

1. Intra-capitalist variation – relative strengths of the state apparatuses and business interest

2. Variation among state apparatuses – like patrimonial feature

Matrix of Elements of Capitalism

Statist Capitalism

(developmental state)

Laissez-faire Capitalism

(regulatory state)

Bureaucratic Capitalism

(Patrimonial administrative

state)

Booty Capitalism

(patrimonial oligarchic state)

State apparatus relatively strongerVis-à-vis business interest

State apparatus relatively weakerVis-à-vis business interest

Relatively more rational-legal state

Relatively more patrimonial state

Explanation of the Matrix Upper Portion

Form of production-oriented capitalism differentiated according to the relative strength of state apparatuses and business interest

Lower Portion Distinguishing between types of rent capitalism both having

foundations of a relatively patrimonial state Bureaucratic Capitalism

Bureaucratic elite extracts privilege from weak business class Built on the foundation of a Patrimonial administrative state

Booty Capitalism Powerful business class extracts privilege from incoherent bureaucracy Arises out from a political foundation of Patrimonial oligarchic state Thus aiming to achieve a more accurate characterization of Philippine

capitalism

Philippine Economy (Montes)

Rent Seeking Economy Society ownership of property alone guarantee the access

to wealth… and the operations of the state determine the assignment of and the continued enjoyment of economic advantages

In contrast to Profit Seeking Economy Productivity improving economic activities

Assets and income are won and lost on the basis of the ability of the business owner to develop the property…operations must be organized to produce a surplus and surpluses earned in the operation must be correctly reinvested

Oligarchic collectors of booty in the Philippines well organized at a level of the family conglomerate

Poorly organized at any broader level of aggregation

Little separation between enterprise and household

Social Mobility As new families appear out of nowhere and some of the

old families fall by the wayside.

Highlights the appropriateness of the term oligarchy for analysis of the Philippine political economy

Philippine not a fixed aristocracy but rather a social group that is based on wealth and that changes over time

As Aristotle puts it, oligarchy is rule for the benefit of the men of means not rule for the common good

State role External economic relations It disburses aid and loans received from abroad and its sets

policies on foreign exchange, trade, and investment

Policy making

External forces play key role in maintaining both the physical and economic viability of the state

Country’s role as host of the US military bases

Countries geopolitical importance entailed foreign aid missions and multilateral agencies

Thus the combination of poorly developed state apparatus, a powerful oligarchy, and ready support from an external military power has left the Philippines with a booty capitalism

Implications of a booty capitalistic structure

A kind of private sector imitative overwhelms an externally stocked but nonetheless weak state in the quest for particularistic resources

Not self-sustaining

Ultimately depends on the international dole

However withdrawal would bring an increase of pressure to begin to orient the system towards more internationally competitive modes of operation

Reasons of why the power of the oligarchy so clearly overwhelms the power of the state.

16th and 17th century Spanish colonizers encountered a very localized political unit Unlike much of the Latin America which was clearly a organic statist colony the

Philippines was neither organic nor statist Spaniards were attracted to galleon trade making few developed strong ties to

agricultural or other ventures based in the local economy

19th century Strengthening of the agricultural commercialization Manila was no longer the single entrepot it had been during the years of the galleon

trade Making regional economies each had their own separate ties with the world market

Strong centrifugal forces that weakened the emerging nation (Alfred McCoy)

Unlike Thailand and Indonesia bureaucratic-aristocracy elites which had descended from pre-colonial kingdoms were strengthened by the commercialization of agriculture (Harold Crouch)

This gave rise to a new class – landowners who were quite separate from the bureaucracy – economic base was firmly outside central state

Reasons of why the power of the oligarchy so clearly overwhelms the power of the state.

19th century 1899 – these landowners formed the primary social base for the first Republic of the

Philippines Americans successfully co-opted local caciques into newly formed political

institutions, they never effectively undercut their base of power at the local level The American superimposed a weak central state over a polity of quite autonomous

local centers of power Reinforcing the decentralized nature of the Philippines by concentrating on the

introduction of representative institutional bureaucracy Representative institutions enabled local caciques to consolidate their hold on the

national state and fostered the creation of a solid, visible national oligarchy The oligarchs have remained highly dependent upon US aid, investment, and

counterinsurgency support 3 years after the independence the Philippine state nearly collapse Rehabilitation assistance was plundered by the oligarchs to pay for duty-free imports

of consumers durables There was mounting evidence that the body politic was incapable of action in the

interest of all Filipinos (Frank Golay)

Reasons of why the power of the oligarchy so clearly overwhelms the power of the state.

Postwar years By that time US was rising as a superpower making it difficult for the Philippines to

emerge as a truly sovereign nation Oligarchs have needed external support to sustain unjust, inefficient, and graft-

ridden political and economic structure – making Washington receive an unrestricted access to two of its military installations

After Independence Seemingly strengthening of patrimonial features

1. Central bureaucracy – personal contacts became even more important for entrance to the bureaucracy, and the role of competitive examination became relatively marginal

Bureaucracy expanded rapidly especially during elections 1959 – 50-50 agreement between the Palace and the Congress

2. Patron-client relations were undergoing significant changes Patron found expanded opportunities in obtaining external and office-based resources Increased the role of state resources within longstanding patron-client relationships

3. Particularistic control over the elements of the state apparatus through a spoil system

Civilian machinery of state remained weak and divided Despite the growth of the bureaucracy the bureaucratic elite never emerged

Reasons of why the power of the oligarchy so clearly overwhelms the power of the state.

Historical development in the Philippine bureaucracy created opportunity for social mobility that resulted I the formation of an indigenous bureaucratic middle class

Reasons of why the power of the oligarchy so clearly overwhelms the power of the state.

Comparative of Thailand and Philippine Bureaucratic Culture

Philippines Thailand

Entrance in the bureaucracy

access to public education and the examination system ensured that the civil service did not swiftly become a self-perpetuating class

entrance in government post was greatly restricted by the bureaucratic elite

bureaucracy long subordinated to particularistic elite interest

Elite traditionallybased in bureaucracy

Many opportunities outside the bureaucracy in Manila than in Bangkok, (prewar era) in which many middle-class Filipinos actually left the bureaucracy for jobs in the business

Old oligarchy showed little interest into moving to bureaucratic ventures for they already had a firm economic base outside the bureaucracy

Reasons of why the power of the oligarchy so clearly overwhelms the power of the state. US colonization was considerably oligarchy building, but very little in the way of state

building Countless opportunities for enrichment that the American regime have brought unto to

consolidated oligarchy As source of largesse cam in the form of preferential access for Philippine agricultural

products in American markets Payne-Aldrich tariff act of 1909 – establishing free trade between the United States and

the Philippines US tariff and commercial policy was the most important factor in stimulating the

expansion of the Philippine coconut industry which enjoyed a tremendous advantage over the other producers (Gary Hawes)

As source of largesse came from effective manipulation of the growing colonial state apparatus 1913-1921 - Under democratic governor-general Francis Burton Harrison Filipino elites

began to control both houses of Congress, and considerable influence within the executive branch through the Council of State (Governor-general, Speaker of the House, Senate President, and Members of the Cabinet)

Bureaucracy was substantially Filipinized Expansion of the oligarchy control of the state Philippine National Bank – the richest new source of booty for emerging national

oligarchy

Reasons of why the power of the oligarchy so clearly overwhelms the power of the state.

Eve of Pacific War Oligarchs enjoyed the arrangements provided by the

American colonial regime that they were loath to make transition to independence

However independence was the last thing they desired, precisely because it threatened the source of their huge wealth: access to the American market (Anderson)

1946 – when the independence did come, it was accompanied by provisions that was clearly advantageous to the landed oligarchy that controlled the state Bilateral free trade act - ensured dependence on the

American market $620 million in US rehabilitation assistance for war damages

Oligarchs in effect, both responded to and created new sources of booty that could be tapped through access to the state machinery, and their economic interest became much more diversified (agriculture, commerce, manufacturing, and finance)

Developments in the central bureaucracy and local patron-client relations, as well as the expansion of governmental economic responsibilities highlight the seeming strengthening of patrimonial features within the postcolonial Philippine State.

Neopatrimonial – helps to capture the historical sequence Thus the combination of historical factors bequeathed to

the postcolonial Philippine provided fertile ground for booty capitalism

Civilian state apparatus remained weak and divided in the face of the powerful oligarchic interest and most of all underdeveloped

Despite changes in the regime basic patterns persisted throughout the first forty-five years of postwar era: while the state was plundered internally, it was repeatedly rescued externally

Lastly, with a positive note, the withdrawal of the US military bases in 1992 seems to have provided a n important stimulus for initiating a program intended to transform many basic aspects of the operation of the Philippine political economy