Charter change and further economic liberalization

July 13, 2012. Once again, our politicians and their patrons are peddling the lie that the only path to the economic salvation of the Philippines is through more intensified foreign intervention in the economy and a more intensified liberalization of “key industries”. It is almost like routine, from the administration of President Fidel Ramos, to Joseph Estrada, to Gloria Macapagal-Arroyo to Benigno Aquino III, every year or two, the leaders of both Houses of Congress peddle the proposal of changing the economic provisions of the Constitution in order to liberalize the remaining sectors of the economy with “nationalist restrictions.” True enough, faithful to tradition, Senate President Juan Ponce Enrile and House Speaker Feliciano Belmonte comes out today, a few weeks before the State of the Nation Address and the opening of the last session of Congress, to promote “charter change.”

This begs the question, is “free market” liberalization the only path to economic prosperity? A brief look at the economic history of today’s prosperous and developed nations will prove that the path to economic prosperity is paved by national industrialization with strong basis in state intervention through regulation and subsidies, and protectionism–quite the opposite of the neoliberal dogma most of these countries now peddle and force upon the throats of the people of the “third world.”

From Europe to East Asia to the United States, the historical fact is that developed countries from the age of colonialism to the industrial revolution to the post-World War 2 era up until today, violated principles of the “free market” and neoliberal economics to establish and protect their industries and develop into today’s “first world” economies.

Here are some illustrations. During the industrial revolution, the United Kingdom relied on very high tariffs against the products of its colonies to protect and develop its industries until it was way ahead of the rest of the world. It used its might and colonial force to destroy any industrial development in colonies like India and Egypt to ensure industrial monopoly, even against its own neighbors in Europe. This is the same story with the rest of the European imperialists and colonizers. The same means were employed by the United States, high tariffs were imposed on foreign steel to enable its steel industry to develop, for example, and eventually lead to the further development of its industrial base. It likewise used its imperialist might to keep raw materials cheap for its industries. Japan, with almost no natural resources, rejected post-World War 2 dictates of US advisers and instead implemented an industrial policy anchored on state intervention and support for emerging manufacturing industries. It allowed foreign investments but restricted capital flight/export. South Korea likewise relied on protectionist policies to establish its manufacturing industry and up until today, retains many nationalist economic policies that restrict foreign investment and control on key industries. Need we mention China, thanks to its few decades of socialism, was able to establish the foundations of the industries that today support its role as the world’s sweatshop.

All of these are complemented with heavy state subsidies on social services and research towards technological advancement. From commercial airlines to communications, to computers and electronics, these high technologies all relied on state initiative and public subsidies to emerge–quite the opposite of the neoliberal dogma forcing the elimination of state subsidies on industries and government services.

I do not whole heartedly agree with the economic models of today’s first world countries, but I would merely like to emphasize that none of them relied on “free market” liberalization as a means of national development. They only harped and professed loyalty to laissez faire globalization after they have firmly established their industries.

As it is, the Philippine economy has already been forced open and subjected to the dogma of neoliberal economics for the past few decades. Domestic industries and sectors of the economy have been laid at the altar of foreign control and capital (with little to no restrictions on capital flight). State subsidies, government regulation and planning has been defeated by policies of deregulation and privatization. Tax incentives have been granted to big and wealthy foreign companies. Wages have been stunted and labor policies relaxed to “attract foreign investors”. Collective and state ownership of public utilities and government services have almost been abolished.

The glaring question is, why is it that despite decades of this neoliberal project, the Philippine economy remains backward, import-dependent and export-oriented, and millions of Filipinos languish in unemployment and poverty? All these, despite the glaring fact that the Philippines possesses some of the most abundant natural resources of raw materials in this planet–in fact more than the natural resources of many of today’s developed countries?

The truth is, “free market” liberalization today is but a mere ploy of behemoth multinational corporations and economic superpowers to ensure the growth of their industries and impede the development of competition from developing countries, with the false promise that their wealth will merely trickle down to the masses of the “third world.” It is in the name and design of liberalization and globalization that the Philippines has been economically stunted and impeded from independent development. It is this design that has impeded us from establishing our own manufacturing base for industrialization. It is this design that we have to resist.

The alternative is clear. In much the same way that “developed” countries have built their economies, it is imperative for any nation aspiring for economic prosperity, like ours, to tread the path of national industrialization, building the domestic economy with strong basis on state intervention, state support and subsidies, and protectionism. (Of course, it is another story how to ensure that national development becomes equitable). We have, after all, the natural resources it takes to build industries, to process the minerals we possess and establish a manufacturing base to establish light to heavy industries and produce products for domestic consumption and export. We have no dearth of bright scientists and inventors, either. On the contrary, because we have no domestic industries and technological foundations, they are forced to go overseas to practice their expertise.

National industrialization, in the Philippine setting, also has to be complemented by genuine agrarian reform and modernization. Agriculture is the primary industry of the country’s primary force of production, the farmers/peasants, who together with their families comprise the majority of Filipinos, who will form bulk of the consumer base of the domestic economy. It is this sector which will likewise benefit from the new industries through modernization of agricultural machines and technology, and thus increase agricultural production to feed the growing population.

All these taken together point to the obvious, that charter change and the amendment of the economic provisions of the Constitution to pave the way for further liberalization is not the solution to our tragic economic misery. It will, on the contrary, aggravate existing conditions that keep the Philippines economically backward, vulnerable and dependent to foreign capital and control.

As with previous attempts at changing the Constitution, the people’s challenge remains, and the tradition of patriotic resistance continues. No to charter change! Assert genuine national development through national industrialization and genuine agrarian reform!

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