Economic and social development is the crying need of the Philippines
today, but it cannot take place without dismantling the dysfunctional
elite democratic regime that is the EDSA state and replacing it with a
political arrangement that is more congenial to this goal.  Approaches
to this challenge over the next few years will, we predict, crystallize
into four, largely conflicting, strategies.
Four Scenarios
The first would be one of reforming the system of governance, perhaps through a constitutional convention.  The so-called “peaceful way,” it is also the route most likely to be successfully sabotaged by the elite, with the support of the United States, which has no desire to see the emergence of a structurally strong Philippine state and is satisfied with the weak, easily permeable or influenced system of governance we now have.

The second approach would take the form of a military coup led by “Young Turks” within the Philippine military, like the junior officers that led the recent “Oakwood Mutiny.”   The coming together of several factions within the military could create the critical mass necessary for a successful coup.  At that point, depending on the degree of independence of the golpistas, the state could move in either of two directions: towards a modernizing populist but authoritarian state such as that set up by Kamal Ataturk in Turkey or towards a conservative modernizing regime such as that of the Brazilian military junta that seized power in 1964 or the Park Chung Hee dictatorship in Korea that initiated the so-called “Korean economic miracle.”  In the latter, the military pursues rapid economic growth to gain legitimacy for its staying in power while maintaining tight political control from the top.

The third route would be that of a Communist Revolution a la China in the Mao period.  In an age that has seen the collapse of centralized socialist regimes in the Soviet Union and Europe, the adoption of capitalist development strategies by post-Maoist China, and the discrediting of super-hierarchical communist parties as democratic agents, the appeal of such an alternative is likely to be limited.  However, the Communist Party-New People’s Army bloc, like the traditional left in Colombia, will not go away and will be able to maintain itself as a significant presence in the more geographically marginal and poorer parts of the country and play a role in parliamentary politics.

The fourth route would derive inspiration from that “other” dimension of the EDSA system—its insurrectionary side.  Both EDSA I and EDSA II began as mass mobilizations that developed into insurrections.  Owing to the threat that prolonged insurrection posed, however, the dominant faction of the elite quickly pushed to normalize politics by asserting the continuity of the elite democratic tradition and institutionalizing elections.  In contrast, an “EDSA Four” might have two stages.  First is the displacement of the old system via an mass insurrection in which the working classes and the middle class are the central actors, the key partners of an alliance built on that potent combination of tremendous class resentments of the poor and the disgust of the middle strata with corrupt elites.  In the second stage, the new configuration of social power gives rise to a democratic state, but one that is more thoroughly democratic than the EDSA state in that it institutionalizes effective mechanisms of asset and income redistribution and the methods of participatory democracy.  These institutions would serve as the pillars of a strong state that would make national development one of its priorities.  This would, in short, be the “road not taken” after the EDSA uprising of 1986: a truly democratic state oriented to development.

As of early 2004, it is not clear along which road the Filipino people will eventually travel.  What is clear is that the EDSA system is in a terminal state and we have entered an era marked by great conflict and struggle to forge a new and more responsive system of governance for the Philippines.

Toward a Post-EDSA Development Strategy

Assuming that the Philippines does not descend into chaos but moves toward the consolidation of a system of governance that is more genuinely democratic and responsive to development, what would be the elements of a post-EDSA system of social and economic transformation? 

More State, not less

High up on the list is adopting the dictum that what we need for development is not less state but more.  The Philippine state must be given a greater relative autonomy vis-a-vis the elite.  It must be able to discipline the private interests that have constantly hijacked it for particularistic ends.  In this regard, the problem with protectionism as it has been practiced in the Philippines is not protectionism per se but that it has been opportunistic–one simply oriented to promoting narrow vested interests and without reference to a strategic plan to deepen the economy. 

Yet this prescription must be taken in the light of the experience of the newly industrializing countries with a strong state.  In Korea and Taiwan, development was accompanied by authoritarianism, by regimes whose lack of democratic accountability resulted not only in human rights abuses but in the adoption of strategies that resulted in the degradation of the environment and the sacrifice of agriculture.  In any future arrangement, both the private sector and the state must be checked by the participation of civil society in both political and economic decisionmaking.  Owing to its recent history, in particular, the struggle against dictatorship, a not insignificant organized civil society has developed in the Philippines.  It is now time to 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.

The Domestic Market as the Driver of Growth

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.

Strategic Protectionism

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 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.

Taking Sustainable Development Seriously

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 systems 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.

Development in a Regional Context

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 ASEAN.

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 blocks.

Transforming ASEAN 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 contributing in translating this potential into reality.

Transforming the System of Global Economic Governance

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 blocks.

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 complex.

In sum, there is an alternative to the political economy of anti-development that currently reigns in the Philippines.  This, however, cannot be pursued without first doing away with the anachronistic system of governance that is the EDSA state.