In the service of the common good

In my last entry (What to do with the Philippine oligarchs), nice but fastidious Anna has called my attention to Judge Richard Posner's blog about the IMF’s report on the effect of globalization on inequality. 

This question by Judge Posner in his blog has particularly bothered me: “Everyone is better off, and why should the fact that the rich are better off by a larger percentage concern anyone?” 

That the economy works best when regulated least is a fundamental tenet of classical economics (of free trade and free market) Scottish economist Adam Smith fathered in 1776. That may be fine but were we to realize that our unrestrained actions or, for that matter, our unfettered self-interest (ah, yes, Anna, our natural "insularity") may have dire consequences to others than ourselves, a society would need more than a “night-watchman” state to allocate boundaries or alter existing ones. Some people (like Jose Rizal or our valiant Overseas Filipino Workers) will always be bothered too by the claims of this system that not the wealthy but the poor themselves, or their laziness in particular, is responsible for the latter’s misfortunes. 

Among the early supporters of classical economics were the utilitarians who believed that if the greatest happiness of the greatest number is advanced, then the resulting suffering of the rest would be excusable. Posner's proposition is exactly utilitarian. 

Herbert Spencer (1820-1903) was another intellectual who reinforced the classical view by extending Charles Darwin’s theory of biological evolution to the economic sphere: the fittest would advance and survive but the lower kind would be left behind or possibly perish, a natural inevitability that ought not to strike the conscience of the fortunate ones. 

 Thus, if religious pretensions or sheer moral arrogance of the older era had been relied on as the excuse for the deadly doctrine of “discovery and conquest,” permitting the extermination of an entire race by supposedly civilized and moral people, “social Darwinism” was drawn upon to assuage the scruples of more recent colonizers, settlers/frontiersmen and imperial capitalists as well as racial supremacists who would cause parallel untold misery to “lesser” peoples. 

 But the poor were just poor. They weren’t dumb. They always understood the system was nothing but an institutional premise that protected powerful economic interests and promoted a culture of indifference and impunity for brutal and rank exploitation. 

 Fortunately, there were also men of probity who were considered turncoats to their class because of beliefs that human beings were entitled to certain basic measures of dignity. Activism, then as now, either by these radical humanists and or on the part of the exploited themselves, has been the only means of rectifying institutional injustices such as the dreadful plight of workers during the early phase of the Industrial Revolution in the areas for instance of child labor, safety in workplaces and security against disabilities and old age. Among these humanists was Karl Marx who also predicted that the capitalistic system would self-destruct given that the flaws of the system would drive the workers to rise up and overthrow it in a violent revolution. 

 I do not buy the Marxian inevitability of the proletariats’ violent revolution because I strongly subscribe to the view that there are alternatives to bloody confrontation in order to transform in a revolutionary way, such as the alternative of discourse. I do believe that it is through discourse for example that, on the one hand, new models of institutional vocabularies like “market” and “democracy” could be discovered or, on the other, exposed as less than God-terms in the same manner that the Divine Right of Kings was proved to be anything but God-willed. 

 Similarly, the literature is now plenty about how to re-imagine “entrepreneurship,” another institutional buzzword. To author and MIT professor of political economy Alice Amsden, the “defining characteristic of entrepreneurship is planning, or deciding what, when, and how much to produce.” And by historical standards, when it comes to milestone decisions in big business, Amsden argued, “the entrepreneurial function of planning has primarily fallen to the state,” curtailing in the process the role of the private entrepreneur. Thus, in South Korea according to Amsden, “every major shift in industrial diversification in the decades of 1960s and 1970s was instigated by the state.” The role of professional managers because of their expertise was relegated to implementing those investment decisions. It is only in small firm situation, she further pointed out, that the entrepreneurial function of planning or the initiative to investment in minor project still lies with the private entrepreneur, now “a pale reflection of the heroic figure of the past.” 

 On the other hand, economist and Harvard professor Dani Rodrik, re-conceptualizing the standard literature on “industrial policies,” has called for “the softening of convictions on both sides” in order “to fashion an agenda for economic policies that takes an intelligent intermediate stand between the two extremes” where “Market forces and private entrepreneurship would be in the driving seat of this agenda, but governments would also perform a strategic and coordinating role in the productive sphere beyond simply ensuring property rights, contract enforcement, and macroeconomic stability.” 

 As thus conceived, the Korean strategy for economic take-off, for example, was not as simple as protecting “the so-called ‘winners’ chosen by governments and their cronies,” as our free trader commenter jemy would suspect. “Industrial policy is a state of mind more than anything else,” Rodrik has concluded. 

 So, why Bayanihan Pact (a people-powered town effort) as the suggested appellation for a new entrepreneurial arrangement that may allow the Philippines to catch up or ultimately propel its economy to take off? Because, to begin with, even the text itself evinces discourse, negotiation, inclusion, and collaborative enactment; it also serves to challenge the institutional text of hierarchy, elitism, and patrimonialism as well as the sociology of exploitation and impunity or general apathy to the appalling predicament of the less fortunate, our poor or theirs. In reaction to blogger cvj's comment at mlq3’s blog on economist Dani Rodrik’s approach, I have had the opportunity to explain certain of my thoughts about the Bayanihan arrangement in two entries. 

FIRST:

. . . what’s needed in order for the Philippines to join the big-timers in the big world out there, are: 1) Not necessarily for the small guys to think big as a condition precedent but for the bigwigs (the political leadership, the economic elites and the technocrats) to think big TOGETHER. However, during this process of big thinking, the petty Pinoy of the tingi mentality must be given a bigger voice than usual, allowing the Bayanihan spirit thus generated to legitimate the process [for now, I guess, this is as close as we could get to the Lincolnian “government by the people, of the people and for the people”]. 2) The taipans must realize that low private returns from vigorous entrepreneurship in new activities may be compensated by high social returns. This demands of the economic elites a high “sense of country.” In an earlier post I have also noted: “The key to economic progress is somehow attitudinal too and this happens when economic men and political animals judge such progress to be good not only for the material comfort it brings forth for their pioneering spirit but also for national identity and dignity, the welfare of the next generation and the common good.” Historically, according to (Walt) Rostow, the decisive ingredient during the transition is the building of an “effective centralized national state” imbued with a “new nationalism” versus regional interests, the colonial power (if any), or both. When growth becomes steady and normal and institutionalized into habits and social structure and dominates the society, takeoff is said to occur. Likewise, Rostow postulated, takeoff is spurred not only by the investment in “social overhead capital” (such as in railways, ports, roads or education) and the expansion of technological development in industry and agriculture, but also by the rise to political power of a group dedicated to the proposition that the modernization of the economy is a national goal of paramount order.

SECOND:

. . . to be legitimate, Rostow’s “transitional coalition” should not be equated to Justice Laurel’s “moral and intellectual aristocracy” . . . The revolutionary path is not really what normally many of us would have in mind but only something of the Randy David’s scheme, as follows: “First, a large and articulate constituency for reform must assemble itself from the countless fragmented voices and social movements that are already making themselves heard in our society today. Its first task is to draw and agree on a realistic roadmap to national recovery [adopting the Dani Rodrik's thesis is one], carefully marking out the main obstacles and dangers and indicating the immediate priorities to be tackled. Second, the document must be explained and debated in public fora all over the country, refined, and then presented to the President and Congress for action. And third, depending on the response of the present political leadership, the reform movement may either call for new elections or a constitutional convention or both.” It is therefore revolutionary simply because it assumes the system in place, the metizo/taipan political economy (which to me is no less an extension of Friar system couched in “Madisonian democracy,” one the American founding fathers designed against the so-called tyranny of the majority) after more than a century has, in Noam Chomsky’s terms, failed to justify itself. A system that cannot be justified after that long period of time must go. The systemic failure once acknowledged, it is time to go through another experiment, our own experiment, where every member of the body politic could be committed to an open inquiry of the system. The transitional coalition, which I’d hope to come out of the Randy David scheme above, is just one proposition towards an enduring vision of an independent modern Philippine state.

When 60 million or so Filipinos are under constant threat of daily terrorism because they live on less than two dollars a day, indeed all possible propositions should be explored. I have then pointed out one barrier-breaking alternative available to Filipinos and perhaps others similarly situated:

Whether the gateway to equitable accumulation and ultimately national development could also be accessed by way of the power of consensus of people power democracy that’s willing to learn from the best practices that work and, based on ongoing experience and rising above ideologies, eschew things that don’t, or change even established notions and practices when concrete realities and the complex necessities for change in the service of the common good require.