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Richard Javad HeydarianForeign affairs/Economic analyst
Why the Philippines Failed?
Posted: 04/19/2013 4:08 pm
In his seminal book, The Protestant Ethic and the Spirit of Capitalism (1905), Max Weber, widely known as the father of modern sociology, provided (arguably among the first and most compelling) arguments on the relationship (or correlation) between 'culture' and 'economic productivity.' As an established economic analyst, Weber was interested in understanding why protestant nations of the West -- with the United States figuring on the top of his mind -- emerged as not only the harbinger of capitalism -- the epochal transformation in the means and scale of material production -- but also the forerunners of industrial expansion and growth. The thrift, sheer hard work, communitarian values, and (religiously-grounded) appreciation for material prosperity among Protestants, Weber argued, explained their central role in pushing the boundaries of capitalism towards ever-greater strides in industrial output and financial success. After the Reformation, the Protestant states, beginning in the 1700, clearly overtook their Catholic peers in economic terms, enjoying, on the average, a 40 percent edge in per capita income. Even the colonies of Protestant states, on the whole, outperformed their Catholic counterparts.
Weber was not, however, confined to a comparative analysis between protestant and catholic states within the West. In his sequel to The Protest Ethic, Weber, in Confucianism and Taoism (1916), tried to differentiate between China and the West by examining how Confucianism emphasized 'adjustment' to the world, as opposed to Western rationality emphasizing 'mastery' of the world. Weber's work inspired a whole literature on the correlation between culture and development -- a cottage industry that survives up to this date with much vigor. Nonetheless, as British economic historian, Niall Ferguson, puts it, Weber's analysis lacked correspondence with important facts and developments on the ground. Aside from (mistakenly) dismissing the Jewish people's entrepreneurial success and contribution to the expansion of capitalism, Weber, "was also mysteriously blind to the success of Catholic entrepreneurs in France, Belgium and elsewhere..." To the contrary, Ferguson explains, "Much of the first steps towards a spirit of capitalism occurred before the Reformation, in the towns of Lombardy and Flanders; while many leading reformers expressed distinctly anti-capitalist views." Ferguson cites at least two empirical studies that show a lack of a strong correlation between "Protestantism" and "economic growth." A more nuanced perspective, Ferguson explains, looks at how Lutheran thoughts on 'individual reading,' self-reliance, and education allowed its followers to take advantage of prior developments, gaining pace during the Renaissance, in technology -- all culminating in the scientific revolution, which began in Protestant states, notably Scotland and England.
In the case of China, we can clearly see how the country -- in spite of its Confucian values -- has come to not only match the industrial might of the West, but also gradually transform into the world's leading economy. Before China, the likes of Japan (after the Meiji Restoration) and Newly-Industrializing Countries (NICs) of South Korea and Taiwan, during Post-World War II period, were able to emerge as global economic players, crucially without adopting Western religious values, but instead looking into certain elements within their own (Asian-Sinic) culture, which encouraged entrepreneurial spirit, adoption of Western technological infrastructure, and capitalist development. All these Asian tigers were able to transform from feudal, agricultural societies into hubs of innovation and production. But Asian economic miracles were not limited to Northeast Asia, where North Korea continues to be among the most repressive and backward societies (with a mighty military though), since many Southeast Asian countries, notably Singapore, Malaysia and Thailand, were also able to climb up in the global chains of production, and lift millions of people out of poverty. More recently, Muslim-majority and ethnically-diverse Indonesia has joined the ranks of tiger (cubs) -- which brings us to the topic of the Philippines, its 'tiger potentials,' and why it has been left behind for so long.
At this point one naturally tends to ask: if not culture, then what? Obviously, the article doesn't intend to provide a definitive response to this question. That would be unrealistic. (Perhaps a book or an academic journal would do the job more appropriately.) Yet, the first step to a correct investigation into the roots of the Philippines' developmental debacle -- or glaring socio-economic troubles -- is to (a) ask the right questions and (b) identify more convincing 'independent variables' (or principle cause/s) for the awry state of affairs in the country in the past decades.
James Fallows' 'A Damaged Culture' is definitely a touchy, frustrating and well-written essay on how a culture of dependence and corruption should be held responsible for the despairing conditions of America's (former and sole) Asian colony, the Philippines. However, what the essay doesn't explain is how that supposed 'Filipino culture' has continued to persist, or even worsen, in recent history -- as if culture is something eternal and static. As Edward Said trenchantly notes in his groundbreaking book Orientalism, the tendency among Western observers (and even modern social sciences) is to view non-Western races as static peoples with ahistorical, defined characteristics or 'essence.'
If there is one thing that the experience of NICs -- and their Japanese and European inspiration -- tells us is this: Culture is malleable, subject to re-configuration and improvement (depending on your interest and goals). The modern state, ranging from those in the capitalist societies, to more ominous ones among dystopian 'totalitarian' states, has the 'integrative mechanisms' to shape and re-shape society for the fulfillment of systemic objectives, theoretically serving the national interest. After all, most 'developed' Asian societies used to be paragons of complacency, stagnation and feudal destitute before they -- or more precisely their states -- shook off bad habits, and adopted as well as adapted 'best practices' from the industrial West and Japan. Following this analysis, one discovers that the Philippines' developmental troubles have a lot to do with 'state-formation' -- or lack of a strong, independent state -- in the country. This is precisely what differentiates the Philippines from many of its successful neighbors, which have had strong and enlightened executives, autonomously undertaking crucial (and correct) economic decision without pandering to specific interest groups. As Filipino scholars, notably Joel Migdal, have correctly analyzed, the main problem with the Philippines is that it never had a 'strong' state, which normally has at its disposal an enabling combination of sufficient 'policy autonomy' and 'functional capacity' to craft and implement right decision in the interest of the country. Instead, the Philippine state is basically an instrument of extra-state, parochial interests, which hardly coincide with the broader national interest.
While the Spanish colonizers relied on friars and the mestizo class to rule the Philippine archipelago, the Americans -- despite their egalitarian policies, democratic rhetoric, and efforts to 'Filipinize' the state -- relied on Spanish-era elites -- intent on preserving the status quo and expanding their base of power in a new period of prosperity -- to 'govern' the country. The modern Filipino state, largely built and upgraded during the American period, had a simplistic democratic accent: elected legislature. The problem was that the 'representative' legislature was dominated by the landed elite, who, in turn, did their best to block any effort at developing an independent and powerful state, executive leadership, and bureaucracy, which could push for egalitarian policies such as land reform. There was no corresponding effort by the colonial masters to truly establish a powerful executive and bureaucracy, capable of prospering on its own. In this sense, one could say that -- following Isaac Berlin's concepts of freedom -- the Philippines (under its colonizers) only developed an adulterated understanding of democracy, along libertarian lines, which emphasized 'negative freedom' (non-interference/intrusion of the state in individual's lives and property) at the expense of 'positive freedom' (basic social and economic rights for all citizens). As a result, the Philippines has had not only a defective democracy -- whereby citizens are formally equally, but in reality an oligarchy is in charge -- but also a weak state struggling to craft an optimal economic calculus.
In Why Nations Fail, economists Acemoglu and Robinson provide a brilliant explanation on how progress and development is largely a function of 'inclusive' -- as opposed to extractive -- governance. Using their dichotomy, the Philippines clearly falls within the extractive category, whereby the core-elite have blocked appropriate policies, which would have made the country a true democracy, anchored by a large middle class, an entrepreneurial sector, and strong institutions spurring growth and innovation. Therefore, in many ways, the developmental failure of the Philippines has something to do with its weak and divided state, which seldom had the right 'policy space' to make optimal economic decisions. Throughout the post-War period, the Philippine state has either been at the mercy of entrenched elites, pushing for particularistic interests and blocking policies/legislations aimed at national development, or international financial institutions (IFIs), which have prescribed counterproductive policies, notably 'Structural Adjustment Programs' (SAPs), causing tremendous poverty, social dislocation, agricultural decline and 'de-industrialization' across the developing world. Sometimes, the Philippines was at the mercy of both.
Luckily, the NICs, China and Japan had relatively strong states, which transcended particularistic interests and rejected simplistic policies by the IFIs. If anything, their economic miracles had nothing to do with Foreign Direct Investment (FDI), nor with mindless dissolution of trade barriers and strategic industrial policies, as prescribed by the IFIs and market-fundamentalists (a.k.a.: Neo-liberals). At the heart of their success lied one thing: a strong developmental state, which (a) judiciously provided subsidies, trade protection and benefits to identified strategic economic sectors based on a strict performance-based scheme, the so-called 'reciprocal' mechanisms, while (b) ensuring 'technology transfer' from foreign investors to local producers, and (c) astutely negotiating trading agreement that secured 'market access' to major Western markets.
As a result, initially capital-poor Asian countries -- supposedly focusing on low-end manufacturing and labor-intensive production, according to neo-classical economics -- were able to transform into major technological hubs -- and a global source of capital for consumerist societies. In most cases, we see how a strong, autonomous state changed the national culture, created its own 'comparative advantage' within the global economic structures, and sidelined predatory elites for the preservation of national interest. This is where the Philippines should begin.
