Twilight of the
Oligarchs
By
Professor
Asian Institute of
Management
And yet, judging from the
results, the Philippines has been the laggard of Asia, posting the lowest
growth rate and the highest level of poverty. Just recently the Philippines has
been downgraded in its competitiveness ranking from 29 in 1997 to 40 in 2001.
Several explanations have been offered
for this unusual case. They ranged from a “damaged culture” to the wrong
development strategy (import-substitution rather than export promotion) to a
highly centralized bureaucracy.
And yet when the Philippines shifted
to an export-promotion strategy and devolved authority to the local government
units, no dramatic improvements occurred.
And now the latest panacea is good
governance. Under this nostrum, directors of corporations, both public and
private are supposed to be tutored in transparency, accountability and respect
for the rights of the minority stockholders and of the consumers. Being thus
schooled in good governance they will then do their duty and all will be well.
But that is placing too much faith in the
transforming power of education and too little wariness of the pervading
presence of self-interest. For under this approach, we are asking the
politicians and the business families to act contrary to their self-interest.
We are presuming that goodwill will prevail over greed when we know that it is
usually greed that prevails over goodwill.
We subscribe to the view espoused by Professor
Romulo L. Neri of the Congressional Planning and Budget Office that the causes
of poverty and bad governance are rooted in the oligarchic domination of the
Philippine political economy. According to Professor Neri, the historical
domination of the Philippines by the oligarchic elite has allowed it to distort
government policies and keep its institutions weak. The ability of the
oligarchy to distort government policy is exercised through political influence
and through appointments of proteges in the state bureaucracy.
While most will agree with the diagnosis of
Professor Neri, others are skeptical that his prescription (CPBO Report:
Towards a Decade of Sustained Growth) will work. They consider the CPBO Report an excellent compendium of the
distorted public policies that must be corrected. But they do not see any
proposal on how the government will prevent the oligarchy from frustrating its
efforts to correct the public policy distortions.
Professor Neri acknowledges that the CPBO program
will meet stiff opposition from the oligarchs.
But he argues, that the time is now appropriate given that the oligarchs
have been greatly weakened by the First
Asian Crisis.
We agree that the First Asian Crisis did weaken the
oligarchs. But we have always held that the power of the oligarchy derives not
from its shrewd use of its power and influence but from the fatal misperception
of significant sectors of society as to their true self-interest.
This point could best be illustrated by a famous
incident related by a sociologist. This sociologist wrote that he was invited
to a party in an exclusive subdivision. The residence of the host was so vast;
it included a cockfight arena. At this party, even a cockfight was staged, with
the host pitting his fighting cock against those of his equally prepared
guests.
The fighting was, of course accompanied by heavy
betting among the rich spectators. By chance, the sociologist noticed a group
of drivers avidly watching the fight. Here was groups watching their masters
easily lose in one bet, their entire yearly wage. Surely, thought the
sociologist, they would be highly resentful of their masters who probably
pampered their fighting cocks more than their drivers.
Much to his surprise, he found the drivers enthusiastically rooting for their masters.
There were no traces of resentment, simply of pride and admiration for their
masters. For this commitment to their masters’ interest, their only expectation
is that crumbs (balato) will be thrown their way.
The sociologist termed this phenomenon “vertical identification”. As opposed to “horizontal identification” where the drivers would identify with their fellow drivers or with the lower class, they, the lower class identified with the upper class.
We would argue that the tenacious hold of the
oligarchs is rooted in the vertical identification of the lower and middle
classes with the upper classes. Moreover, the leaders of the lower class, the
labor leaders and of the middle class the ideologues also identified their
interests with those of the upper class despite the compelling evidence to the
contrary.
But that is now changing. In our view, the First
Asian Crisis has become the psychological trauma that has shocked the different
sectors of society to the realization that their self-interest did not coincide
with those of the oligarchy.
When the crisis struck and the corporate ships
started sinking, there was a mad scramble for lifeboats. Much to their chagrin,
the poor and the middle class realized that there was just enough room in the
lifeboats for the oligarchs. The labor force was laid off and the management
was downsized. The savings of the middle class lodged in bank deposits,
commercial papers and stocks were wiped out while leaving the majority
stockholders enjoying the same lifestyle as before the crisis.
This bitter realization found its political
expression in the Puersa ng Masa. Through former President Joseph Estrada and
his surrogates, the poor were reminded of their dire error in confusing the
interest of the rich with their own interest. No more would they accept that
price hikes in food, in energy, in water and in housing are necessary and for
the good of all.
The political leaders presented with this new
political reality are forgetting their political debts and remembering their
political priority, popularity. Out of political necessity, they have denied
applications for rate increases no matter how justified or tempting.
While the poor have been figuratively cast into the
open seas of poverty to fend for themselves, the middle class have a more
viable option of swimming to other more hospital shores. They are taking the
option of emigration. Driven by their concern that a society composed of an
unenlightened upper class and a desperate lower class will not provide a bright
future for their children, they have decided to emigrate.
Ironically, the last holdouts to the misperception
that the interest of the oligarchs and the rest of society are one are the
labor leaders and the ideologues.
Our labor leaders presented the incongruous sight of making common cause with the
American labor unions in Seattle. The American labor unions were protesting
against globalization as this would result in American jobs being lost to
developing countries like the Philippines. Instead of seeing the additional
jobs for the Philippines that would result from such exodus, the Filipino labor
leaders chose to see this as the unwelcome entry of the American multinationals
that would overwhelm the Filipino corporations. This preference for Filipino to
multinational corporations persists despite the overwhelming evidence that
multinationals treat their labor force better than the local firms do.
The ideologues are in a greater quandary. Schooled
in the inevitability of class struggle, they must have been dismayed that an
unschooled and corrupt politician and not them could gain the confidence and
command the allegiance of the masses. Left out by the EDSA I revolution, they
vowed not to be left out of EDSA II . And so, they are now in the uneasy
position of being junior partners in political institutions dominated by the
oligarchy.
Moreover, they must be troubled that the oligarchs
are using their slogans and their banners to repel the tide of globalization.
As one oligarch has noted, no other group is as dedicated, as articulate and as
cheap as these unwitting shock troops of the oligarchy.
But we submit, we are seeing the twilight of the
oligarchs. The First Asian crisis has revealed their financial vulnerability
and more importantly their isolation from the rest of society. When the Second
Asian Crisis comes, we shall see their replacement by the multinationals.
How we shall cope with the Second Asian Crisis and
the new reality that will emerge should be pith and core of the discussions
of our policy analysts and advocates.