Tuesday, April 17, 2007

Globalization and the Trifurcation of the State

Over at the PDI's Current blog, Manolo Quezon and John Nery have an ongoing debate on whether the traditional role of the State is being replaced by the Cult of the Market and whether such a development is desirable or not.

Manolo, for his part, is troubled:
"THE Cult of the Market is something that’s been bothering me for some time. To me, this is the idea that politics has become less relevant to people’s lives, because it can’t deliver change or an improvement in lives better than attending to business -and letting the “free market” sort the things that politics used to consider its mission to sort out....But it seems to me that the most troubling thing remains: the growing belief that the market is the solution, not politics (whatever kind it is that floats your boat)."

On the other side, it is clear that John Nery laments that the process has not gone far enough:
"I happen to believe, not only in a smaller government, but in a smaller role for government. The Ramosian techno-speak of level playing fields, to give just one example, appealed to me — as long as the idea was sustained; that is, the government saw its role as allowing other players onto the level field too."

What Manolo worries about and what John looks forward to can be understood as a consequence of society's acceptance of the narrative of globalization, which has redefined the nature and role of the State as explained by Cameron and Palan in The Imagined Economies of Globalization. Within the globalization story "the 'idea of state' itself has moved from a 'public' principle of universal inclusion (implying an identification of and engagement with a single population of citizens) to a 'private' principle of competitiveness".

Cognitively speaking, the state (and society) has been reimagined and split into three economies, two of which share in the benefits of the system while the third remaining excluded. The table below (as presented by Cameron and Palan in their book) maps these three spaces*, i.e. the offshore, private and anti-economies in terms of its representative institutions, processes and normative characteristics.

Cognitive Map of the Imagined Economies of Globalization and Social Exclusion**
Private SectorThird Sector / Social Economy
Public Sector
Offshore EconomyPrivate EconomyAnti-Economy
World/Global economy
Global markets
Global firms Merchant banking
Global cities
Media corporations
Global governance (WTO, UN, OECD, World Bank, etc.)
Alliance capitalism
National economy
National state bodies
Formal labour market
Local state bodies
Domestic firms Borders Domestic market Retail banking
Local/peripheral economy, Community
Neighbourhood Welfare state
Informal labour market
Normative Characteristics:Normative Characteristics:Normative Characteristics:
Site of Competition
Enabling (business)
Dependent (aid or welfare)
Un- or de-skilled
Third World
**Source: The Imagined Economies of Globalization, Angus Cameron & Ronen Palan

While John Nery celebrates the benefits and hopes for the expansion of the first and second columns above (via expansion of the 'market'), he laments the continued reliance of many on government. Once we are able to see the three economies above, we begin to see why those who have been excluded, i.e. consigned to the anti-economy, continue to be dependent on government. The exclusionary mindset of those who belong to the offshore and private economy has also tranformed Civil Society's values:

"Civil society, therefore, is no longer identified by a set of core values, rights and responsibilities but by levels of access to, and participation in, 'opportunities' in the mainstream economy...the key distinction made in the mainstream debate over social exclusion is not between exlusion and inclusion, but between exclusion and 'competitiveness'."

Finally, the above map also helps in explaining the typical Filipino middle class mindset that is the source of Iniibig ko Ang Pilipinas' critique. Ultimately, Gawad Kalinga and other community based efforts are limited at the local and community level (i.e. the third column above) which as Cameron and Palan explain, is typical of the scope of anti-exclusion projects:

"Despite the enormous range of different places, peoples and problems included in these databases," [of anti-exclusion projects as compiled by the UNESCO] "their one constant feature is that social exclusion is assumed to ber manifest at the local level. Furthermore, by suggesting that the local scale is most salient and, in practice, the only scale at which social exclusion ought to be tackled, the possibilities for intervention in poverty are similarly restricted."

The Cult of the Market and the Myth of the State is the direct offshoot of the prevailing Globalization narrative that has literally captured our imagination.

*These three economies are explained in this post.


sparks said...

I don't have time to substantively respond to your post. This I will say however; Hot damn, somebody who knows and reads Ronen Palan!!!!!

Anonymous said...

Maybe five decades are more than enough for us to realize that politics will not bring the Philippines to the promised land.

And more than twenty years after EDSA 1, we have to realize that too much democracy didnt do our country any good.

If we take a look at the richest countries, the members of the G-7: US, UK, Canada, France, Italy, Germany, Japan, not one reached its present status with the help of the state.

Manolo should stop worrying, and join John Nery's advocacy.

Compared to the more recent presidents, FVR improved the economy the most. And how did he do it - through a wave of privatizations, government getting out of industries it shouldnt be in, and more foreign direct investments

An economic problem requires an economic solution, not a political solution.

A political solution is only concerned on distributing wealth. An economic solution focuses on creating wealth. All Pinoys must engage in a form of wealth creation.

Let me share a quote:

"...the strength of government intervention has not been the decisive factor behind Japan’s success…everything that has occurred in this country has stemmed ultimately from the cumulative strength of the people themselves."

from Kikuchi Makoto, “Japanese Electronics: A Worm’s Eye-View of its Evolution” Tokyo: Simul Press, 1983)

The Japanese took personal responsibility in contributing to Japan’s rise from the ashes of World War II. No one blamed the Emperor nor the Prime Minister, nor did anyone clamor for the abolition of the monarchy nor the removal of each sitting Prime Minister

cvj said...

Hi Anthony, the G7 countries you cite industrialized during an earlier era. The playing field and the rules of the game were different then. On the other hand, our contemporaries (e.g. South Korea, Taiwan, China, India, Malaysia, Singapore), all shared similar circumstances and, after World War 2, pursued a similar development strategy which involved a significant role for the State.

To attribute to our falling behind to democracy is to commit a common attribution error. Our worst economic crisis, one from which we are just now recovering from happened during the dictatorship, a period where our leaders had no political accountability. On the other hand, FVR whom you commend, was President under the democratic set-up.

To say that an economic problem requires an economic and not a politcial solution is to create a false dichotomy. As the example of the Asian Tigers show, economics and politics complement each other.

I agree with you that all Filipinos must engage in wealth creation, but the examples of the countries that developed ahead of us show that wealth creation is easier to accomplish when there is land and income equality. Wittingly (or not), that's the first step that our more successful neighbors took.

I'll elaborate on each of the above in future posts.

Anonymous said...

cvj: I believe it is inappropriate that the FAMILY institution is put in the 3rd column of the Cameron/Palan chart. This suggests that the natural tendency of a family is to be static, inflexible, dependent whose processes are in decline and doomed to obsolescence.
I point this out, not to be cute or facetious, but to shed light on what the action-items may be. An action for a person in the 3rd column is to wait for a Gawad Kalinga to give them a house, or to wait for their barangay-captain to get them a job at the munisipyo. Another action (which is what Abe Margallo seems to insist on) is for the group in the 3rd column to wait for those groups in the 1st or 2rd column who are "just lollygogging and collecting rent (or trust fund dividends)" to be more "public-good oriented" and build a factory instead to open up more jobs.
Many Filipinos, though, practice a better model. They do not wait --they seek an environment which is more dynamic, flexible, modernizing, maybe even entrepreneurial. If they find what they seek in a call center in Makati, well and good. If their search brings them to Singapore, Abu Dhabi, Hongkong or Australia, then so be it.
Should Filipinos ignore politics, then? Obviously not. The fate of public schools are shaped by the voters, for one thing.
Should Filipinos wait for politics to get things right?

cvj said...

Upn, Cameron and Palan intended the above to be a description of things as they are (currently imagined), and not a prescription of how things should be.

You are right to observe that individuals and families can and do attempt to move from the anti-economy(3rd column) to the offshore or private economy (1st and 2nd columns). The action items that you recommend is also part of the mindset that Cameron and Palan describes:

"[The poor's] route back to the amorphous space of inclusion" [the 1st and 2nd columns above] "that the rest of us inhabit is through the willing and active transformation of themselves to conform to the disciplines of the market, since it is that which they are ultimately rejoining" [Source: Imagined Economies of Globalization, Cameron & Palan}

On whether the Filipinos should wait for politics to get things right, i believe the answer would be no, we should not wait. The Filipino public has to take control. That's what People Power is all about.

Anonymous said...

cvj... my question really was:
should Filipinos in the 3rd-column(social-exclusion/welfare economy) wait for politics to get righted before taking steps to move themselves into the "mainstream economy"? Or is the better alternative to focus less on what "the government owes me" and much much more on "how do I transform myself?" so that I can be more welcome in the mainstream economy where, even if there is more competition and educational and skills requirements, there also is more dynamism/ flexibility/growth and also where the salaries/wages are better. [Hint: The institutions in "mainstream economy" zone have HR departments with a list of minimum requirements for its employees.]

As for your thought of "taking control of the politics", yes, mayors, congressmen and senators have better salaries, too than any of those who remain in the social exclusion zone. And of course, another model for "take control of the politics" is to get the people who agree with your politics/economic priotization/ development agenda into the mayors' and provincial governors' offices as well as into Congress (and of course, Malacanang).

cvj said...

Upn, as can be seen from the numbers of migrant workers, a generation of Filipinos have already been doing that as a matter of course. That's certainly better than waiting for help from the State which will most likely never come. However, for millions of our countrymen what you call the better alternative is not really there. We cannot develop with a State whose main preoccupation is to preserve the interests of the elite.

More importantly, the framework you use in coming up with the better alternative is an example of the mindset that Cameron and Palan seeks to expose:

"What we do want to draw attention to, however, is the particular way that the link being drawn between globalization and exclusion is made. Exclusion is generally seen to be a consequence of economic globalization, but this is not presented as evidence of any defect with globalization itself. On the contrary, as is so often the case, globalization is presented as an externalized economic force to which adaptation must be made. It cannot, therefore, bear responsibility for its consequences. We have already explained that the image of externality derives from the confusion of offshore for globalization. That sort of narrative is now brought home, as the status of exclusion is accorded to those who fail to keep up with the demands of 'globalization'. It is, in other words, presented as though their marginalization from a globalizing world economy is their own fault!"

When i mentioned taking control of the politics through People Power, it is not limited to (and should not be limited to) electing our representatives. In fact, acting through Representatives is in itself a limitation of democracy. People Power is a step above that.

Anonymous said...

The romance of EDSA/PeoplePower has a serious flaw. The various versions of Philippine PeoplePower/EDSA seem to have worked only for one thing -- to tear down : in particular, to remove the current resident of. Once the twohundred-thousand or so PeopleMarchers were back in their homes, the Filipino people were no nearer to getting agreement on "... so now, how do we generate more job-opportunities for the citizenry?".

Build me up, buttercup... was mentioned in a Q3-blog entry. EDSA-proponents never seemed to have enough content on ways and means to "build-me-up". PeoplePower is NOT a step above a functioning representative democracy.

Even today, none of those who speak of the romance of EDSA have shown how they propose to many more of the population to keep up with the demands of 'globalization'. They will mention "eliminate graft/corruption" or "spend the budget only on the priority-items" but gloss over the detail that the Philippine government can NOT provide cradle-to-grave security. If you give the entire budget back to the Filipinos, what each Filipino man/woman/child gets is only P11,000.00 (for their elementary-, high-school, medicine, police-protection, at iba pa).

cvj said...

In evaluating what People Power is good for, we have to distinguish between what Jurgen Habermas calls instrumental rationality i.e. "the capacity to devise, select and effect good means to clarified and consistent ends" and communicative rationality which is "oriented to understanding between individuals rather than success in achieving predefined goals". [Source: Deliberative Democracy and Beyond, by John Dryzek]

Before we even get to the point of answering the question, "how do we generate more job-opportunities for the citizenry", a question that falls under instrumental rationality, we have to get around to defining who are 'we'. If by 'we', you mean the lackluster Philippine elite that has dominated Philippine political and economic life since we can remember, then any answer would, more likely than not, be self-serving to that group. People Power, in its big and small manifestations (via EDSA and various advocacies respectively) is there to widen the space for communicative rationality thereby making our democracy more authentic.

Anonymous said...

cvj... you yourself have spoken with distaste about teachers, hospital employees, call-center workers and any and all middle-class who have shown disinterest in "PeoplePower" against GMA/Garci, so surely you are aware that People Power, neither in its big nor small manifestation, will widen the space for communicative rationality.

It remains my opinion that PeoplePower is NOT a step above a functioning representative democracy.

cvj said...

What i've shown distaste for is [many of] the middle class' apathy towards the GMA/Garci issue. Apathy is the opposite of People Power, so I don't quite get why you criticize People Power for something that is more properly attributed to its opposite.

Anonymous said...

To a number of Filipinos, Philippine PeoplePower is quite well-defined by the history of the many years. There is at least one person --- myself --- that believes that Filipino PeoplePower (in its various EDSA versions) have fallen short of moving the country forward. I also believe that by now, PeoplePower is tainted in the eyes of many more Filipinos. This, (to me) is reason for the apathy. I also believe that a number of Filipinos will not lump the GawadKalinga advocacy into the PeoplePower category.

Filipino-version People Power, neither in its big nor small manifestation, will NOT widen the space for communicative rationality. The various versions of Philippine PeoplePower/EDSA seem to have worked only for one thing -- to tear down : in particular, to remove the current resident of.

cvj said...

For many in the Middle Class, the disillusionment with People Power has to do with the 'end results', which as i explain above is ultimately an attribution error. Of course, that may mean that we have to wait for this same group to be disillusioned with apathy before we see action in this area. This cycle of public engagement and disillusionment with public involvement, which in modern democracies runs its course in 20 years, is not unique to us and has been written about some time back in Albert Hirschman's, Shifting Involvements.

I do believe though that the so-called disillusionment is also a cop out since there is an element of self-interest involved. Many among the elite and middle class believe that their interests are better served by the status quo, regardless of how unjust it is. That is why they choose to be willing (if tacit) accomplices to GMA's ongoing crime and consequently restrict their advocacies to the Community Level (via Gawad Kalinga and similar organizations). This further validates Cameron and Palan's classification above.

Anonymous said...

If I may differ:

The period wherein South Korea leapfrogged is when it was under a corrupt military dictatorship.

Japan rebounded after the war, and in the midst of a difficult playing field ("made in Japan", during the 1950s, was met with disdain)

Private initiative propelled the economies of the G-7.

As for FVR, he liberalized several sectors, like telecoms. PLDT realized later that opening the telecoms sector was a blessing, because the irony of it all is, PLDT's income is a lot bigger now with many players around, than in the past when it was the sole player. The income pie from telecoms has become bigger now. PLDT may be sharing the pie now with many players, but its income is much bigger than when the pie was smaller and it had 99% share.

FVR knew that there are some business areas better left to the private sector.

Yes, the Asian Tigers showed that economics and politics complement each other. But its more the State taking a backseat, making consistent economic policies, and letting the private sector take the lead.

The birth of the outsourcing industry in India is an interesting study. This industry began, not because India had a luxury of choosing it, but because the Indians had no choice - outsourcing was one of the few businesses that had the least government regulation! Two decades later, the Indians were grateful India did not nationalize the outsourcing industry! Their outsourcing industry boomed when India opened its economy to foreign investment.

Like the Indians, we Pinoys must show initiative. I think the Taiwanese and the Malaysians took initiative too. Why wait for the State? In the first place, our State is so inefficient.

cvj said...

Anthony, and as i pointed out above, the period our economy crashed was during a corrupt dictatorship as well. We have to look beyond superficial features (democracy vs. dictatorship) to avoid making attribution errors and dig into the actual policies implemented to find out what made Korea successful.

A key difference between the Korean dictatorship and ours is that they used their state policies to build up Korean industry (i.e. the Chaebols) though government defined reciprocal control mechanisms. On the other hand, the Marcos dictatorship only led to cronies with failed businesses and capital flight.

(The emerging dictatorship under Gloria Arroyo is no better since it would also be in place to protect the interests of the elite, in the manner i had written about here.)

FVR was right about privatizing the telecoms sector, but the results in privatizing other sectors (e.g. the Utilities) are mixed. Anyway, his privatization policy was not enough to lead to economic takeoff.

If you read this, you'll realize that what you described as the State taking a backseat is not an accurate description of what happened.

Regarding India, you are right to point to its success with Outsourcing, but that country's economic success is not just because of this sector. Outsourcing Services needs a adequate support and infrastructure services (including telecoms and education). In other areas, India also followed the pattern of reciprocal control by the state in order to develop its industries.

I do not argue against taking personal initiative, we've been doing that anyway, but as our neighbors have shown, we cannot achieve rapid takeoff without the participation of the State. At the very least, we cannot leave the levers of government as some illegitimate ruler's playground.

Anonymous said...

"the period our economy crashed was during a corrupt dictatorship as well"

Precisely. Never in our history was the State able to take the lead. Instead of just letting the private sector lead, Marcos took several steps further, and brought down the economy with him.

As for South Korea, the reciprocal control mechanisms came after the chaebols have emerged as a potent economic force. Meaning, the chaebols came first, then the mechanisms followed later.

Something similar happened to India. When the Indian government saw the actual benefits the outsourcing industry was bringing to India, government mechanisms followed! Like the establishment of a department of IT.

The development of the infrastructure necessary for outsourcing came after the key players have made considerable progress

(But there is one Indian state action which helped India's IT industry a lot. When India eased restrictions on foreign investments in 1991, a wave of foreign investments poured into India. Such that the key players now in India's IT services industry are the US IT giants - IBM, Microsoft, Oracle, Accenture, etc.)

Maybe I should clarify what I meant by the State taking a backseat. If I remember my Economics 101 (macroeconomics) right, the State can only intervene in some areas where the private sector can't operate.

As a review of the book you cited said, "...government intervention and the free market can co-exist as long as intervention is within the limits of free market economy."

The operative word is intervention. Coming in only when the situation calls for it. Like the US free market scheme. Government intervenes when a company is perceived to be anti-competition, like what happened to Microsoft and IBM.

As for FVR, his liberalization of telecoms, banking, and water were correct. If his efforts didnt result in a take-off, its because his successors failed to continue what he began.

The present State is ineffective. We cannot afford to wait for the right people to man the government first before efforts are made to move the economy forward.

The Japanese were able to do it - little State intervention, great private initiative. I dont see any reason why Pinoys can't do it also.

Maybe you can start a thread on what really ails the Philippine economy, and lets enumerate specifically the problem areas and the appropriate solutions.

Particularly, we can discuss what laws need amending, what new laws are needed, what policies need changing, etc.

(No motherhood statements)

cvj said...

Anthony, Marcos was ineffective, but his contemporaries (which he tried to emulate) were more successful. The reciprocal control mechanisms of South Korea were there from the very beginning. They were instrumental in the rise of the Chaebols. In India, the same mechanisms were there for their manufacturing industries, although with different levels of success.

The arrival of foreign investments in India is a result of the government's success in laying the groundwork, particularly in providing an educated population. To attract Multinationals, a country has to show promise by having demonstrated some earlier economic success. For our neighbors, this early successes were often the result of State intervention. The governments of South Korea, Taiwan and even India all intervened in a way that benefitted their economies. They saw early on that the situation called for it.

Contrary to what you say, the success of the Japanese economy has a lot to do with the quality of the State (along with private initiative of course, and love for country).

There is no way to get around a State that is a burden. We can do our part individually and locally, but at some point, our people have to learn to act collectively and that can only be done via the State and the Public Sphere (at the national level).

My next entry (for 28-April) will be about economics as well.

Anonymous said...

Let me quote that book on Japan again:

"...the strength of government intervention has not been the decisive factor behind Japan’s success…everything that has occurred in this country has stemmed ultimately from the cumulative strength of the people themselves."

from Kikuchi Makoto, “Japanese Electronics: A Worm’s Eye-View of its Evolution” Tokyo: Simul Press, 1983)

Sorry to disagree, but in South Korea, the chaebols came first, then the mechanisms followed later.

Yes, in India, Taiwan, and South Korea, the situation called for it. The private sector created the situations! The State intervened once the situations came to be!

The State cannot be relied upon to foresee what and how the market would be.

When the Internet was commercialized, we can hear why our laws were not attuned to the needs of the Internet era. (For one thing, its not just Philippine laws, but even US laws as well). Because nobody foresaw, not even the State, how the Internet world would come out (as we know it now). All legislatures can't be blamed. That's why the name of the game is not necessarily State initiative, but more of quick State adaptability to the changes brought about by the private sector.

cvj said...

Anthony, thanks for pointing out Makoto's book. I'll look it up. However, the 'Japan Model' did not start with the electronics industry so, even granting for argument's sake that Makoto is correct, to focus on his testimony alone will give us an incomplete picture. We have to go back to the days of the silk industry during the Meiji Restoration to see Japan's model at work as well as the role their government took.

I do not deny that entrepreneurship in Korea, India and Taiwan played an important role. However, it is incorrect to portray that the government was reactive or only 'adapted'. The governments of these countries were crucial in establishing their homegrown industries, particularly in overcoming the first-mover advantage of competitors from Europe, North America and Japan. (I'll blog more about this in the future.)