Archive for April 28, 2008

A NEW GLOBAL FINANCIAL ARCHITECTURE IS MOST EXIGENT

April 28, 2008

 

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

From the early 1970s through the 1990s, the massive liberalization of the international financial system was executed with such dynamism, radically altering thus the international financial landscape. Look at the result of this gargantuan liberalization today: global economic catastrophe.

 

New Nationalism, in collaboration with old nationalists, socialists, and ideologies that articulate the interests of marginal sectors, argues for the immediate reform of the international financial system. It had to be admitted by everyone else that the system failed, it simply cannot be sustained under a regime of liberal capital, monetary and related financial policy regimes.

 

Both the USA and EU economies today are particularly affected by the failure of financial liberalization. The ‘virtual economy’ had taken over their respective domains, they were so badly de-industrialized notably the USA’s that there may no more be a semblance of once flourishing industrial economies there, their infrastructures are rotting and collapsing, and now the final death blow to their economic wellness had come as recession ravages like uncontrolled forest fire there.

 

On the international level, the problem can be addressed by convening at once the legitimate delegates of states, with market and civil society groups serving as observers. The task is to immediately reform the rotten international financial system, and concur a new global financial architecture. A ‘New Breton Woods’ would be apt as a label for this effort (to borrow from the economist Lyndon LaRouche).

 

The most urgent agenda is the re-examination of national currencies, return of the gold reserve standard or equivalent, institution of better regulatory mechanisms both of cross-border and  national levels, immediate economic recovery by provision of long-term low-interest rated financial instruments or ‘white knight’ finance, and clipping the predatory powers of greedy financiers such as hedge funds and ‘vulture funds’ operators.

 

A special topic would be the stock markets of each nation or region. It is now time to reform the stock markets, which have been used by greedy elements to loot national coffers and the public of direly needed financial resources. If the stock markets can’t be reformed, then the option for them is to face increasing ‘guerilla finance’ by groups that will seek to establish direct links between the market players who seek new capital funds and the potential investors from among the general public. In which case, if the latter succeeds, the stock market is out to die a painful dinosaur’s death, ditto for all those predatory stock traders whose role will become extinct overnight.   

 

The fundamental contention for the reform package, culled from the New Nationalism article, is reflected below.

 

Reform the international financial system.

 

The global financial system is indubitably a homestead of predatory financiers. Usury and global speculation, the masterpieces of financiers, are the enemies of nations. Usury in international finance is at an all-time high, raising questions about the legality and moral propriety of   current lending practices. Incidentally, the said financiers are the ones who exercise the clout within the International Monetary Fund and the World Bank, whose chiefs have always been CEOs from the bank headquarters of the financiers. The said banks have always acted out as the marketing agents of financial cartels, even as many nations that have followed the austere ‘structural adjustments’ imposed by them have been reduced to paupers.

 

It is high time for ‘white knights’ to appear in global finance, lending money accordingly for developmental and investment purposes at very low interest rates (lower than 1.5% annually) and at very long-term payments (25-50 years). Such institutions are now beginning to appear, but creditors remain cautious about their moves. Such institutions are autonomous from the power orbits of the Western financial cartels, are well niched in Asia (e.g. China), and appear to be creditor-friendly.

 

The reform though should go beyond the ‘white knight’ route. We must actively participate in Asia’s establishment of its own monetary fund and a single-currency regime, and take a leading role if opportunities allow. It may prove beneficial yet to re-institute a regime of gold reserve standard, which should back up the Asian currency. This same monetary fund will then serve as the regional ‘white knight’ that will provide credit to nations in need in the region and continent. The actions will also accelerate the economic cum political integration of the ASEAN and the economic integration for the entire East Asia, steps that will further stabilize the national economies and continuously sustain their respective growth. Meanwhile, a regional currency can stabilize soon enough upon its launching, that it would be a difficult job for criminal financiers to manipulate it, such as the success of the ‘Euro’ now exhibits to the globe.

 

Still another key intervention measure is the control of predatory speculation through a ‘Tobin tax’ on cross-border currency and related purchases (J. Tobin’s proposal in the early 70s). A tax of 0.75% alone on the current cross-border exchanges, which amounts to $300 Trillions annually, would generate $2.25 Trillions. The said money will then be used to fund the operations of international organizations such as the United Nations, UNDP and authentic international NGOs for social development purposes. The money can also be used by ‘white knight’ financing institutions of international scale. This set of actions will then induce reforms in the other institutions, with chain reaction effects leading to declining speculation in the long run, as the oligarchic  bankers/financiers adjust their rates to more competitive rates in the face of challenges coming from global ‘white knights’.

NATIONAL BANKING & FINANCIAL-MONETARY REFORMS

April 28, 2008

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

Who really is in control of a country’s central bank? Is the Bangko Sentral ng Pilipinas really in the hands of the people of the republic, under the guidance of the Constitution of the Republic? How come we cannot even see a shadow of any of the Letters of Intent of the International Monetary Fund that were supposedly deposited in the central bank here?

 

National banking has to be strengthened, the sovereignty of the Constitution over the banks have to be re-asserted here, and in other countries where this is applicable. I would quite say it strongly, that the Bank for International Settlements, the central banks that comprise it, and the IMF-World Bank group do not represent the interests of nations and marginal groups at all. They are appendages of the global financier oligarchy and remain to be weak vehicles under the direction of financier families and figures lurking in the shadows.

 

Look at how the Bangko Sentral ng Pilipinas had been systematically looted in the past, and who knows the trend continues till these days. For serving the interests of global oligarchs well, the core officials here conceal eventualities of looting under the cover of doctored accounting reports. We don’t even know any more the exact quantities and values of gold reserves here. There was massive looting of gold bars here, and who knows the trend continues.

 

There is no transparency concerning the monetary-financial-capital markets and institutions in the country and others. This had been clearly established by so many studies done in the past. Instituting transparency alone isn’t enough to strengthen these institutions.

 

The re-assertion of the central banks’ sovereignty must be done without reserve. In the Philippine case, it is the IMF that has been in control of our central bank and monetary authority. In the USA, the top financier families are the ones who really own and control the federal reserve there.

 

Where necessary, the need to institute financial-capital-monetary controls must be undertaken. Also, there must be a strong consideration for instituting an Asian Monetary Fund here, with an Asian currency backed up by gold reserves. The return to the gold standard, though in revised form, should be strongly studied and considered.

 

Without such reforms, the currency of a nation will always face the risk of being attacked by predatory underworld criminal groups tasked by their financier sponsors to destroy the same currency. Destroy a nation’s currency, and you will destroy the nation as well. Keynes and the Old Nationalists were clear about this, a contention that was amplified by the economic collapse of the Weimar republic, which saw monstrous hyper-inflation, and the scourge of depression that struck the economic giants UK, USA and Germany then.

 

This essential contention of nationalist economics must be re-echoed and re-studied. Its application though must be revised to suit the emerging context. For instance, the viability of instituting a regional currency, as exemplified by the Euro, has become a regular staple of monetary reform.

 

The excerpts from the New Nationalism article regarding the matter is reflected below.

 

Strengthen national banking and the monetary system.

 

Economic stability at all levels demands the strengthening of a national banking system, and concomitantly the strengthening of monetary system with sovereignty-backed parameters and rules. First and foremost of monetary missions is the re-assertion of the powers of the Constitution of the Republic over the Bangko Sentral ng Pilipinas. Needless to say, the country today faces a weak national bank, and necessarily a weak monetary system engendered by it. Sovereignty questions impede the effective operations of national banking in the country, as indicated by the excessive meddling of the International Monetary Fund, acting as agent of the global financial cartels, in the Bangko Sentral’s operations. The first step should be a thorough investigation by the Congress of the Republic to determine precisely who owns and controls the Bangko Sentral, and conduct related oversight functions to assess the entire consolidated assets of the said bank inclusive of unaccounted precious metals.

 

Should there be a need to institute maximum monetary controls, the national bank should be mandated by the Congress precisely to exercise such controls through a regime of currency controls, where found warranted. In no way should our national currency be subjected to attacks by predatory financier speculators, as what the latter have been doing from the mid-1997 onwards. Money is the lifeblood of the economy, and rendering our money under a regime of free exchange rates and free trade leaves us extremely vulnerable to the machinations of such greedy forces, further weakening our national economy. Monetary controls are the best antidotes to the ailment of a weak currency. Were it possible to revive a system of gold reserve standard, then let such a strategy be studied and enforced, to ensure stability in monetary concerns and the currency markets.

 

The interest rate controls should likewise continue, but the state must see to it that the rate regimes are within the bounds of sovereignty parameters, representing thereof the national interest and the subsidiary interests of the various social sectors. And, should conditions warrant, our national bank should be among the key initiators for constituting new supra-national institutions, such as an Asian Monetary Fund, thus signaling our participation in reforming the entire financial & monetary system (see below). Our involvement in an Asian Monetary Fund could be a fitful strategy to finally exit from the International Monetary Fund, further strengthening our national banking and monetary system.

 

SOCIAL CAPITAL FOR MARGINAL SECTORS IN RESOURCE EXTRACTION

April 28, 2008

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

I have always supported a ‘social capital’ framework for advancing the interests of marginal sectors in resource extraction industries. Particularly affected are the indigenous peoples and the slash & burn planters. The New Nationalism article emphasizes this point clearly.

 

I also had advanced this contention in some other articles. In a speech before environmentalists held in late 2004, I advocated for co-stewardships of mining sites with the same marginal sectors. As an official in the presidential palace, I also wrote a policy paper that stipulated the possibility of such agreements which, to my own surprise, can be legally supported by the Mining Act. This Act, to note, met enormous flak from civil society groups here.

 

The laws of a particular country may already provide entitlements for marginal sectors in the said areas, and may only need to be highlighted via research. In the USA for instance, the native Americans were able to procure concessions to co-own and manage leisure and tourism businesses that are located in their sites, and so far the concerned beneficiaries were jettisoned from out of marginalization to middle class life by this co-stewardship arrangements.

 

I am thankful to all those thinkers who argued for mainstreaming the marginal sectors via ‘social capital’. The likes of Antonio Gramsci, Mahatma Gandhi, PR Sarkar, Paulo Freire, Robert Putnam, and Peter Evans come to mind. They practically echoed the same theme: the significance of trust as galvanizing force for building social networks that can serve as ‘social capital’ for development purposes.

 

All it needs to take is political will and some ingenious methods of accounting to be able to quantify the ‘social capital’ potencies of a group of people in an area. This can be coupled with a calculation of the ‘human capital’ potencies of those who can be involved as laborers and experts of site-related industries.

 

The basic contention culled from the New Nationalism article is reflected entirely below.

 

Concur co-stewardships with communities affected by extractive industries.

 

Our mining sector had been in the doldrums for quite some time now. The production levels of both (a) base metals and (b) precious metals have surely been at lackluster levels. Meantime, logging has been totally banned to arrest further deforestration and its accompanying desertification and soil erosion. It is only in the energy sector where extraction has been impressively high, and the sector is appreciably a very dynamic one even in terms of R&D considerations. We are now at the crossroads concerning such sectors as mining and forest resources, where a revivified extraction is in the pipelines but couldn’t move because of constitutional and/or statutory constraints.

 

Note that most of the country’s natural resources for extraction are habituated by (a) tribal peoples and (b) migratory slash & burn peasants. Such populations have long ‘guarded’ the resource-rich habitats. It would surely be a faulty policy to drive them away—hidden under the euphemism of ‘relocation’—in order to give way to a mining concessionaire. Likewise would it be unsound to merely integrate some of their members as wage laborers for the extraction operations. Such actions, derived from regarding the people as ‘high disutility’ entities, are plain reactionary, even as they push the populations to the limits, leading to the folks to constitute hostile millennial movements and rebel separatists. The moves are reactionary as they contribute to the weakening of the nation, to the fragmentation of the national community.

 

The most pro-active path to address the concerned issue is to design and concur stewardship arrangements with the said populations. Three things are addressed by the stewardship: (1) the people will stay in the area, with better housing and amenities, who in turn will monitor and safeguard the entire operational sites; (2) where necessary, the same folks will be employed in the operations and administrative jobs where applicable, on a first priority basis; and, (3) the people will be co-owners of the firm, with equity/stock participation derived through a calibration of their productivity potency, historical role in stewardship of the area, and other variables. It is argued that this stewardship path is the win/win formula for the state, investors (market), and the communities concerned (‘social capital’/civil society). Consequently, the contribution to the GDP through resource extraction jumps up to a historic high level.

OPEN UP MARKETS

April 28, 2008

 

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

As one can observe from my previous articles, New Nationalism supports a continuous entry of investments to the domestic market from overseas. This article articulates the specific contention about the matter.

 

Autarchy is bad policy and practice to begin with. If it worked for the Habsburg Empire for a while, it worked only because there were draconian measures employed to make them work, and that the territory of the Empire was large enough for autarchy (also autarkie). This empire is long gone, autarchy is ridiculously obsolete, but Old Nationalists abound who still tend to be autarchic in their discourse. They are among our living dinosaurs, come to think of it.

 

Just because capital investments come from the outside shouldn’t make them necessarily suspect or deleterious to the national interest. As already previously articulated, there should be ‘safety nets’ or institutional and policy mechanisms, such as fair trade –based regimes, that can mitigate the deleterious impact of globalization.

 

But before articulating on the other base mechanisms for such mitigation, it should be first accepted that overseas capital can serve the national interest. If domestic investment and savings rates are perennially low or insignificant, there should be greater reason to open up the market to external investors. As an observation, the Philippines has had a bad track record of attracting investments amid the massive opening up of the market via financial liberalization policies.

 

The same contention should hold water for other countries. The USA at this moment needs fresh funds to the amount of trillions of dollars per annum coming from overseas to be able to bring it back to macro-economic wellness. There is no way that the USA will be semi-insular, more so autarchic, when its economy had clearly crashed.

 

However, attracting foreign investments doesn’t mean a perpetuation of trade liberalization  policies pertaining to investments and cross-border monetary flows. It’s got to do more with strengthening institutions and keeping macro-economic fundamentals at their most positive levels indicative of economic health and wellness.

 

Look at Malaysia’s previous experience for instance. As a response to the devastating effects of the financial meltdown in 1997, the state immediately instituted financial, monetary and capital control policies. They worked precisely because governance institutions and macro-economic fundamentals (particularly fiscal health) made it worthy to invest in the country, as risk levels were tremendously brought down and volatility ebbed.

 

Recently the Malaysian state decided to take down altogether the capital control policies as macro-economic wellness and financial volatilities were put under control. This is a clear case for flexibility in development policies: know when to institute regulations and deregulations well, without necessarily impeding or degrading the national interest whatsoever. I salute the grand patriarch of Malaysian nationalism for the matter, the venerable Mahathir Mohammad.

 

The contention for foreign investments culled from the New Nationalism article is shown entirely below.

 

Continuously open the market to external investors.

 

National savings continue to hover at a pathetically low rate of seventeen percent (17%), which is significant but is way below the minimum of thirty percent (30%) to render it as ‘critical mass’, like that of our neighbors’. The problem cannot be addressed sufficiently than through a continuing inflow of capital from external investors. Note that in today’s global context, the term ‘foreign capital’ has already lost its meaning, as the boundary between ‘domestic’ and ‘foreign’ has been effectively erased. The cross-country partnering cum out-sourcing arrangements among diverse firms have become the norm of today’s business, rendering obsolete the previously sacrosanct notions of ‘domestic’ capital and ‘foreign’ direct investments. Not only that. Latest researches have verified that transnational corporations or TNCs now tend to create more values within their host countries and reinvest the profits locally than remit them back to their ‘home country’ (a term that has also begun to lost meaning).

 

This doesn’t mean though that such investors should be served ‘free lunch’, through very long regimes of tax havens or through spurious ‘strike-free zones’ (read: haven for wage freeze) which makes our laborers appear like wild jackals who need to be perpetually gagged. Some forms of valves (capital controls) should also be instituted, so that the capital investments and profits wouldn’t just flow out like hemorrhage the moment that the economy hits cyclical crisis. Surely, pro-active measures can be devised to let the said investors stay, more so for those that truly re-invest their ROI for their original and diversified business concerns, as well as to those that conduct dynamic R&D and truly transfer technology.

 

In today’s globalizing context, corporate ‘national champions’ have become obsolete. The  bygone era of ‘national champions’ can still be observed in the names of certain firms, such as in the names Philippine Airlines, Philippine Long Distance Telephone, or in Bank of America, American Express. Asset re-structuring is the norm, and large corporations are becoming rapidly globalized. Mergers and de-mergers are happening at rapidly ‘chaotic’ paces. The circumstances challenge investors/stockholders to quickly grasp the lesson of   ‘thriving on chaos’ or else their ventures would face bankruptcies and foreclosures as what befell many former large ventures, inclusive of former ‘national champions’.

 

The thought that “foreign capital might harm national interest” is simply passé and out-of-context, in as much as the term ‘foreign’ has lost its meaning save for the antiquarian Old Nationalists who regard foreign things as essentially dangerous (but are they not using foreign frameworks in their perceptions of foreign things?). Let the investors come in, recombine their assets with our domestic investors’, extend their stock participation beyond the forty percent (40%) constitutional limit. Note that “our very own” big corporations are participating in ‘foreign’ countries, and their levels of investment participation go beyond forty percent (40%). It is high time that we readjust our thinking about the matter.

FAIR TRADE AND THE NATION-STATE

April 28, 2008

 

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

In a recently written book by me titled Fair Trade and Food Security: Framework and Policy Architecture (Kaisampalad, 2004), I was able to gather clear evidences of the failures of free trade policies. Not only free trade but the whole policy regime of economic liberalization—that paved the way to globalization—had downgrading effects on our currency, agriculture, and industry here in my home country.

 

I argued right then for a policy reform in the direction of fair trade. The totality of policy change should be the re-crafting of the entire policy architecture, which if commensurately followed can become fitful guides for foreign policy and diplomacy.

 

In the light of the massive acceptance of liberalization policy frameworks in the 80s and 90s, I gave their advocates a chance to prove the potency of free trade and laissez faire in general. In the long run, free trade is unsustainable, and can only be perpetuated, as shown by the experiences of the previous centuries, by imperialism.

 

Autarchy, which was experimented in the Hapsburg empire, is more of a hermitage option that can work only if, as the Hapsburg had fittingly shown, the domain for intra-trade exchange and distribution is large enough. The option, even for nationalist economics, is for the conduct of overseas trade. But whether his has to be a free trade option is contentious.

 

The British Empire, which calls itself by the euphemy British Commonwealth of Nations, is still alive today. That empire was built precisely because it is the only way by which Great Britain, or England, can sustain its trading edge through the power of the ‘stick’. But this empire, the last among the ancien regime formations, is now crumbling, and cannot hold water for long as the member nations continue to assert their sovereignty.

 

Globalization based on free trade had already crumbled, as we can see. Unless there is another perception out there. It had failed. What I am arguing for now is that globalization can succeed only if it takes into consideration the interests of nations and marginal sectors within them rather than be based on the interests of a chosen few of financier oligarchs and their TNCs.

 

The contention from the article New Nationalism is shown en toto below.

 

Let ‘unbridled free trade’ give way to ‘fair trade’.

 

In the international trade scene, the President had declared it emphatically: “no to unbridled free trade!” Fair trade should be the game in trade, not free trade. This does not mean a full return to protectionism, which proved counterproductive in the past. Protectionism had only served rent-seekers, who did not engage in full-scale S&T innovations that could have propelled us to advance in product development, achieving world-class standards in many of our articles of industry & trade quite early. Returning to a regime of protectionism is surely out of the question.

 

Permit articles of imports to come in, employ this strategy to meet ‘commodity security’ and keep prices at competitive rates, while minimizing the possibility of shocks. This should also challenge domestic market players to become more competitive, precisely by engaging in dynamic research & development or R&D, resulting to higher-level product innovations (intended for the domestic market). Meanwhile, continue to institute a regime of ‘safety nets’ and strengthen those that have already been erected. However, where ‘infantile enterprises’ are barely out of the take-off stage, e.g. petrochemicals and upstream steel, provide certain tariff protection, but set limits up to that point when dynamic R & D have made production more cost-efficient, permitting thereafter competitiveness in both the domestic and global market. The latest move of government to provide the greatest incentives on upstream steel, for instance, is a right move, as it will entice market forces to install our long-delayed integrated steelworks.

 

DOMAIN OF WEALTH OF NATIONS: BOTH DOMESTIC & OVERSEAS

April 28, 2008

Erle Frayne Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

 

The antiquated debate regarding which domain should be the main source of national wealth—whether domestic or overseas—is still alive today. In the article of New Nationalism, I argued that in the emerging context of post-industrialism, this debate has become futile and unproductive. Instead of stressing a domestic versus international mindset, I argued for a both/and frame.

 

Admittedly, the overseas domain as a source of wealth is as palatable as it used to be during the era yet of the city-states of Northern Italy (Venice, Florence). This has become the backbone of mercantilism, which in turn became the backbone of nationalist economics. Old Nationalism henceforth carried the pro-mercantilist banner of seeking wealth primarily from international operations. But this time around, this position has to be revised in the light of import-substitution success.

 

In the Philippine case, we have been having it both ways. On the one hand, our manufacturing sector’s products are largely consumed 86% of the time for the domestic market, indicating the optimization of the import-substitution aspect of our development efforts. On the other hand, our overseas employment and investments have been churning out a whopping Net Factor Income from Abroad or NFIA worth 11% of the GDP.

 

New Nationalism, to my mind, should rather have it both ways, as culled from this and other parallel experiences in emerging markets. At this time particularly, Foreign Direct Investments or FDIs by Philippine-owned or controlled companies has begun to take off and contribute to our national coffers. Add to this our exports worth 40% of GDP, and remittances from labor export of worth 10% of GDP, and one can see the broad picture of the potency of the overseas domain as source of national income.

 

Below is the entire subsection on the domains of wealth production culled from the New Nationalism article.

 

Generate wealth from both external and domestic markets.

 

Various stakeholders in the past were divided along the question of what should be the driver of growth & development (demand-side discourse): the external, or internal market? The followers of the ‘externalists’ were the ones behind the export-oriented development strategy, whose rationalizations for massive exports were quite poor recycles of the mercantilist contention that wealth should be produced more from out of the external markets (colonies during the time of empires). The ‘internalists’ were the ones behind import-substitution strategies, whose rationalizations were poor photocopies of Keynesian demand-side formulations.

 

In today’s context, it is wiser to view both the external and domestic markets as synergistic spheres for accumulating national wealth and meeting head-on the demands for delivering welfare. The external market discourse can work only in circumstances where a domestic demand has failed to develop, which in our case was the pre-1990s economy. By the late 1990s, it was clear that a significant change had taken place on the demand side of our economy, as folks were buying a lot of articles of commerce at a time of crisis. The middle class population is rising relative to the entire population, whose households’ needs have become more differentiated and have leaped beyond the bounds of ‘rice-and-galunggong’ expenditures. Today, Filipino families purchase around fifty-three percentum (53%) of their household needs from supermarkets, malls and large retail centers, even as the wet markets and sari-sari stores are declining in importance. These changes are real, and we cannot be blind to them by continuing to harp on an export-driven growth.

 

We must then fast-track large-scale redistribution schemes, such as to witness the rise in purchasing powers of our own people. This cannot be done outright during the next three (3) years, as we face a fiscal dilemma of crisis proportions. But beyond 2007 lies new opportunity fields. The fiscal route to stabilization will have been solidly achieved by then, and the nation can embark on more ambitious endeavors aimed at increasing incomes, reducing unemployment and poverty and increasing domestic consumption.

 

As the domestic market catches up in stabilizing the economy and producing national wealth, stakeholders shouldn’t be remiss in improving the competitiveness of our export products. Our great advantage is that we have ample supplies of skilled labor, with wages still relatively low. The power sector is also quite rich in supply of electricity, even as new projects are now being planned to neutralize possible supply problems in the short run. Hopefully, power supply would stabilize and electricity cost would decrease, contributing thus to rendering our exportable articles more competitive enough. Save for capital goods and petroleum, large volumes of which our producers continue to import, the other factors of production are within our hands to control and manipulate, inclusive of rent and interest rate. It is hereby argued that, with such factors controllable enough, we can optimize conditions for rendering our exportable articles maximally competitive and continue to permit the external market to be a source of substantial wealth. What more if we produce all of our essential capital goods, thus further bringing down the cost of production, given that the price of other factor inputs also go down?

 

SAVE THE PHYSICAL ECONOMY

April 28, 2008

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

Globalization is not only destroying the nation-state. It has also been destroying the ‘physical economy’ that is the economic foundation of the nation-state. All in the name of the greed of the financier oligarchs, who bred the monstrous ‘virtual economy’ founded on predatory finance.

 

The New Nationalism, as contended in my meaty article on the same, argues strongly for a restoration of the physical economy of affected nations. The USA, which produces 22% of the world’s gross economic output, is now in the phase of advanced decay as its physical economy had been looted and eventually destroyed by predatory financiers. There is now way that we citizens of the global community can’t be concerned about this, as the eventual crumbling of this megalithic economy will redound to global economic turbulence that can lead to global war.

 

In East Asia we all witnessed the horror of the economic meltdown in the late 1990s. Though the impact of that meltdown is hardly felt today, we saw the horror of it just the same. We peoples of the region simply felt so helpless as the contagion smelted the mightily growing economies here, beginning by destroying the currencies and ending with the crash of the physical economies.

 

Incidentally, East Asia has a better chance to weather the storms being caused by predatory globalization. The physical economy here has better chances of being secured, even food security has better chances of crystallizing contrasted to the crashing economies of the USA and Europe.

 

The lesson should be clearly read by every development practitioner: destroy not thy physical economy if you want peace and development to go on in sustained levels. Absent the physical economy, and the nation will crumble, leading to civil disturbances and uprisings and even to global conflicts among the world powers.

 

Below is the entire subsection regarding the physical economy culled from the New Nationalism article.

 

Continue to stimulate growth through the ‘physical economy’.

 

This writer strongly argues that the greatest driver of the economy must be the ‘physical economy’. By ‘physical economy’ we refer to the combination of (a) agriculture, (b) manufacturing, (c) infrastructure, (d) transport and (e) science & technology (S&T) whose results further induce ‘production possibilities’ in the sectors a-d. An economy that is prematurely driven by the service sector, growing at the expense of the physical economy, will create imbalances in the long run, failing in the end to meet the needs of the population. A premature service-driven economy would be subject to manipulations by predatory financiers, who would do everything to destroy the national currencies and consequently the physical economy of the nation as well. An economy driven by derivatives and every kind of speculative pursuit is a ‘virtual economy’ such as what has dominated the USA since the era of Reaganomics.

 

I would hazard the thesis that our national economy moved to a service-driven phase prematurely. Look at all the fiasco after our ‘physical economy’ had rapidly declined in GDP contributions since the early 1990s, as the service economy advanced in its stead! Relatedly, the over-hyped Ramos-era ‘Philippines 2000’ economy was largely a ‘bubble economy’ driven by speculation and portfolio capital, and was more in kinship with the ‘virtual economy’ than any other one. We have not fully recovered from the bursting of that bubble, even as we are now threatened with another bursting of sorts—of the debt bubble, leading to fiscal crisis.

 

It pays to learn our lessons well from out of the immediate past experiences. And the clear message sent forth is: get back to the physical economy and re-stimulate the concerned sectors, while simultaneously perfect those services where we have proved to be competitive, e.g. pre-need sector, retail, restaurant/f&b. We should also strive to learn some key lessons from other countries’ positive experiences such as China’s, whose economy continues to grow enormously, and grow precisely because it is the physical economy that primarily drives it up and lead it—at an enormously rapid rate—towards development maturity, permitting China to outpace the USA’s economy on or before 2014 (using GDP Purchasing Power Parity indexing).

 

EVOLVE SOCIAL MARKETS

April 28, 2008

 

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

As already exacerbated in my previous articles, this development expert strongly argues for dirigisme (state intervention). Even in the yogic-mystical terrain, I strongly argue for interventionism in the physical plane, though this paradigm may hold water only here and not necessarily in other dimensions or trans-physical spheres where money economies are absent.

 

Incidentally, we now have emerging models for dirigist paths to sustainable development. For lack of a better term, the model is simply called ‘social market’. It is an integration of state intervention and market-driven economy. Extremes of socialism and laissez faire have both proved as flops. These extreme forms are beyond salvation and are both being junked today. They have become junkshop models.

 

Asia is the best laboratory today for the conscious evolution of ‘social markets’. China, Vietnam, and India are the countries to watch. I just hope that the original ASEAN 6 (Philippines, Singapore, Malaysia, Indonesia, Thailand, Brunei) will move towards their respective version of social markets.

 

Maybe before this century will end, the exemplars for the nascent social markets will crystallize all the more. The terminology may change hence. Even the economic context will have mutated. The post-industrial economy or ‘Aquarian economy’ (using mystics’ language) will galvanize all the more though not possibly to its fullest yet.

 

This century may still see the operation of a money economy, hence the operation of a semblance of markets where people will procure the most of information and values in order to fulfill their amenities. The contention of the writer is intended largely for this nascent economy of the current century. The future generations better take on the cudgels for forecasting those that would apply for the future centuries.

 

The essential contention is summarized by the excerpt from the article as shown below.

 

Evolve from ‘capitalist markets’ to ‘social markets’.

 

The ‘capitalist market’ (or simply ‘market’) is the haven of financial predators and market  sharks, while the absence of market is the homestead of the rent-seeker and exclusively-privileged partocrat (single party bureaucrat). As the cases of the ‘mixed economies’ and that of China’s have demonstrated, the market impeccably performs a   pivotal role in stimulating growth & development, and should not be wished away too soon. Rather, we should evolve a market that is not a ‘pure market’ in the classical sense.

 

As experiences world-wide have transparently indicated, leaving everything to the market redounds to: (a) diminished welfare, as indicated by low wages, low accessibility to social services, high unemployment, and massive exploitation of labor; (b) ecological disaster, indicated by environmental degradation, depleted natural resource base, destruction of indigenous communities and their natural habitats; (c) speculation in the capital and realty markets, leading to further instabilities and proneness to shocks, both internal and external; and, (d) lackluster product innovation due to low value given to S&T development, in societies where there is a lack of entrepreneurs, such as the Philippine case demonstrates.

 

The balance lies in developing a ‘social market’, where concern for private initiatives as well as for welfare are harmonized and balanced, while at the same time controlling speculation and optimizing conditions that induce innovations. Within the context of a social market, there should increasingly evolve ‘social enterprises’ or collectively-owned enterprises: cooperatives, people’s corporations, grammin, and other related types that are rising though still at an experimental phase. While private enterprises should continue to prevail, large-scale enterprises should begin to innovate on new physical asset-ownership schemes that would eventually see a large portion of the assets co-owned by ordinary folks and corporate employees. In the long run, the ‘social market’ will be a terrain where both wealth gaining and welfare providing functions will be fused exquisitely, signifying the end of state-induced welfare and the return of welfare functions to communities.

HUMAN CAPITAL: PEOPLE ARE MOST VALUABLE

April 28, 2008

 

Erle Frayne D. Argonza

 

[Writ 23 March 2008, Quezon City, MetroManila]

 

New Nationalism, as I argued in the foundational article of mine, must also reckon with people as the most important assets of economy and society. The contention cogitated from the vantage point of human capital.

 

I already elucidated in the portion on ‘basic needs’ that people matter most. Interestingly, in Maoist China, this human capital contention was elevated to the level of cult: the cult of the masses. Mao Zedong himself declared as an adage that “people not things are most decisive.” Many poems and songs were written by the youth vanguards of Mao’s revolution, and this literary-cultural explosion centering on the populist adage spilled over to other developing states as well.

 

Shorn of the cult portion of the adage, the Maoist line makes sense. It coheres with various similar articulations of the same by experts in other countries representing diverse fields notably community development, business administration, and public administration. Today it has become one of the core elements of development: human capital is among the forms of capital needed to pursue development.

 

Much of asset valorizations have so far been premised on finance capital being the core of values. This has to be revised, and I’m very strong in this cogitation for a revision of accounting systems to include human capital.

 

Not only that, there also is ‘social capital’ that operates on the level of the collective which, without doubt, factors in very strongly in development pursuits. It is the core of synergism: building trust through cooperation. This, to my mind, must also be translated in calculable form.

 

The discourse was elaborated via the core contention that is quoted en toto below.

 

People are the most important assets, revise accounting systems!

 

The prevailing mindset perceives assets in terms of physical assets (estates, chattel, monies). Ownership is then defined in terms of right to control and dispose of such assets. Wealth is computed in terms of the values, calibrated through price, created through the utilization of the physical assets. For a while, the classicists introduced the notion of ‘labor theory’ of value, premised upon the value-producing powers of labor. But the efforts of the classicists failed to get translated into acceptable accounting systems, as such systems have always been based on physical assets and prices.

 

Look at what is happening among various agencies, especially business firms: there is a lot of ‘pirating’ of people going on among them! Likewise are there efforts to retrieve those same people ‘pirated’ by competing agencies. The same event holds true for the state and NGO sectors: ‘piracy’ on grand scales! This phenomenon is a clear manifestation that people, not physical assets, are the most important of all in an organization. When an agency loses good personnel, the effect is instantly debilitating, a debilitation that can be offset only through the timely arrival of replacements who are as good as the ones who left. The converse is also true: when an agency needs people to shore up its output levels, ‘pirate’ high-achievers from other agencies most especially those who have “made a name” in the sector concerned. The piracy of people in the entertainment world is even more instructive in indicating to us the central import of people, not physicals, as value producers. We need not belabor the point that the ‘piracy’ strategy comes often in the form of higher pay scales and incentives.

 

That is why it pays so much to manage people well, and to design new organizational principles that would bring out the maximum potencies of people most specially the highly talented ones. Bureaucracies have become outdated dinosaurs, as ‘flat organizations’ have become the wave of the present: the new organizations make plenty of room for self-initiatives, resourcefulness and innovativeness by good staff. Bureaucracies, which follow from only two principles—vertical (hierarchy) and horizontal—can stifle innovativeness, as experiences have shown. The ‘task master’ mindset and ‘boss mentality’, as well as the excessive stress on routinary processes, have turned off many achiever personnel most specially the highly talented ones whose nature of work is ‘symbolic/analytic’ (to use Reich’s term). Today, new principles are emerging that are leading to a massive ‘re-engineering of the organization’, such as Total Quality Management or TQM, web organizational structure, team work principles and ‘human resource empowerment’.

 

Yet inspite of such revolutionary changes and explosion of amazingly appropriate principles about organizations and human resources, no changes are happening in the accounting systems that can correspondingly reproduce the organizational principles taking place. The only appreciable concept is that of GDP Purchasing Power Parity or PPP, which computes total income on the basis of purchasing power of local consumers relative to those of the world’s strongest economy. Using the GDP-PPP, the Philippines’ GDP stood at $379 Billions as of the end of 2003, with GDP-PPP per capita at around $4,600 more or less. (See The World Factbook, 2004, for such index reports.) But this indexing does not in any way address the accounting question raised here.

 

Should the notion of ‘human capital’ become popular, the accounting system should consequently follow. The notions of ownership would then change, indicating the revolutionary implications of the paradigm shift. Those pretending ‘radicals’ of the day, many of whom are steeped in 19th century socialist thought, tend to view the asset realm from the focal lenses of antiquated Victorian-era ownership concepts, and are no less conservative than the oligarchs they sordidly hate. They offer no radical solutions beyond changing (antiquated) asset ownership, strategies that eventually stifle innovativeness and human expression, as criminal Stalinist regimes have shown. New Nationalism must take on the challenge of presenting a far more revolutionary concept that can, in the end, contribute to evolving a strong base of ‘human capital’, ‘social capital’ and ‘strong nation’.

 

TRI-SECTOR SYNERGY FOR DEVELOPMENT

April 28, 2008

Erle Frayne D. Argonza

 

[Writ 22 March 2008, Quezon City, MetroManila]

 

Within a nation-state, from micro to macro levels, there better be cooperation among the three main sectors of development: state, market, civil society. I stressed this well in the New Nationalism article.

 

The emerging term for cooperation today is ‘synergy’. In the original sense of the term, it denoted the causal chain of “one thing leading to another.” It had since become a staple term in ecology and cybernetics. Gradually the meaning of the term underwent change.

 

Today the term ‘synergy’ had come closer to the term ‘symbiosis’ of ecology. The neo-Weberians were among the advocates of this largely symbiotic signification, applied to the three sectors. Joel Migdal, Vivienne Shue, Theda Skocpol and Peter Evans are among these chief advocates of synergism as strategy for effecting development.

 

Synergism isn’t really new here in Asia, even here in my country of origin. For centuries now,  we had at the grassroots  level the ‘bayanihan’, practiced by helping each other in times of need. Bayanihan’s closest translation is gemeinschaft (Ferdinand Toennies’ term) or community. It means synergy precisely in today’s context.

 

There is no way that we should go back to the old days of looking at the state and civil society as relating in a perpetual state of clash. The first time that Alinsky was discussed in my sociology classes in the late 70s, I had some goose bumps about his notion of a perpetual clash, almost akin to the ‘permanent revolution thesis’ at the grassroots level. I said to myself that “this won’t work in the Philippines.” If given the chance for grassroots work, I will never apply Alinsky at all.

 

Look at the destructive effects of the ‘clash thesis’ during the 80s and 90s here. There was a time when massive strikes were the in thing most specially after Martial Law, and look at the downgrading effects they had on productivity. It was near to chaos during certain moments than.

 

Contrast that today with a healthy synergy of trade unions and management, which shot up Philippine labor-management relations to being the world’s top (per ILO update). As strikes had decreased, productivity likewise immensely increased. We are now a model of industrial peace here, thanks to the new paradigm of synergism thru the efforts of the University of the Philippines’ School of Labor and Industrial Relations.

 

However, in the past decades, before 1986, civil society players were merely kibitzers of development here. So to a certain extent the attrition caused by civil society on the state earned this sector its right to be recognized as a co-partner in development. For a long time after independence (1946), only the market and state players were in dialogue, leaving marginal groups and sectors out of the development game.

 

Now that civil society had earned its keep, its players should shift in mindset from clash-oriented (Alinsky-inspired) models to synergistic models (inspired by bayanihan, Gandhi, Evans) of development. Even the post-Martial Law constitution recognized this potency of civil society, and thus entitled the colossal sector to rights never before it enjoyed.

 

I hope this synergistic mindset is currently emerging among all the nations of the world. It is among the progenitors of the peace condition, of development with peace and of peace with development.

 

The basic contention is summed up by the excerpts from the article, to wit:

 

Promote synergy with civil society in the development path.

 

In the old formulations, development was an exclusive endeavor of state and market players. That is, the directions of development were largely the handiworks of political, bureaucratic and corporate elites. There should be an admission that this structural formulation was a factor in generating the crisis-level ailments of mass poverty, large-scale unemployment, low wages, sluggish growth and dependence. So why retain a formula that had failed us miserably?

 

The current context, where a dynamic and colossal civil society operates, points to the ever-growing recognition of the potent role of civil society in co-determining the compass of development. At the grassroots level, development efforts will be accelerated to a great extent by involving civil society formations acting as ‘social capital’ base, as studies have positively demonstrated (citations from Peter Evans’ works on ‘state-society synergy’). Insulating the state from grassroots folks, as the same studies have shown, have produced dismal if not tragic effects, e.g. India’s non-involvement of ‘social capital’ in the erection and maintenance of irrigation facilities resulted to program failure in the end.

 

Building and maintaining ecologically sound, clean cities can likewise be effected through the tri-partnership of state, civil society and market, as demonstrated by the Puerto Princesa case. Under the stewardship of the dynamic city mayor (Mr. Hagedorn), the tri-partnership was galvanized. Businesses have since been conscious of operating on clean technologies and environmental responsibilities, city streets sustain hygienic images, traffic is well managed as motorists exude discipline, and civil society groups constantly monitor the initiatives that saw their hands dipped into their (initiatives) making. All we need to do is replicate this same Puerto Princesan trilateral partnering at all level and in all communities to ensure better results for our development efforts.

 

The ‘state-society synergy’ in our country had just recently been appreciated and grasped by many state players. Being at its ‘take-off’ phase, it is understandable that synergy is only a lip-service among many state players, notably the local officials. State players still regard civil society groups with ambivalence, while civil society groups are suspicious of state players whose sincerity can only be as low as their Machiavellian propensities would dictate. Such local state players desire to subordinate civil society groups, and many politicians have constituted ‘government-initiated NGOs’ or GRINGOS as cases of non-authentic subordinated groups. On the other hand, local-level volunteer groups can at best perceive domestic politicians as ‘Santa Claus’ providers, and utilize them largely as gift-giving patrons. Strengthening state-society synergy has a long way to yet, but it is not exactly starting at ground zero in this country. It is, by and large, a core variable in developing citizenry and constituencies, and must be advanced beyond its current take-off phase.

THE STATE IS NO ‘BIG MAMA’ BUT AN ENABLER

April 28, 2008

Erle Frayne D. Argonza

 

[Writ 22 March 2008, Quezon City, MetroManila]

 

To continue, in the same article on New Nationalism, this author took up the contention about the shift from ‘provider state’ to ‘enabler state’ model. I agree to a large degree with Peter Evans regarding the matter in his elucidations on synergism and development.

 

While I argue strongly for a dirigist paradigm of development, I do not at all go for maximum state intervention such as the ones experimented on in socialist states and welfare states. Government is no Big Mama nor Santa Claus that provides everything for its citizens.

 

There should always be room for private initiatives, social spaces for people to think creatively and innovatively to provide for their own needs. State and civil society can come in to do enabling tasks when needed, but not to role-play as the Big Mama Forever of her infantile clientele who are forever dependent on ‘milk from mama’ (dole-outs, essentials of life).

 

Unfortunately, many experts today, including those with PhDs and advanced studies, haven’t gotten away with the ‘provider state’ model of development. To my own shock, I found out lately that my close friends in the academic and development fields still bear the old fogey mindset of a Big Mama state model. The rugs have already changed under their feet!

 

Consider for instance a musician friend in the University of the Philippines. He felt bad that state funds for musicians have dried up in the Philippines, but has been flowing like honey for sports. I had to explain to him that the music industry is already very mature here, that musicians and industry leaders themselves can produce and propagate music without any further state assistance, that the ‘music sector’ is in fact a model sector of an industry that had already reached a very mature level of development.

 

The same pal is as old as myself (late 40s) and has simply been accustomed to old habits. The Martial Law regime here (1972-86) was particularly very supportive of music, and the former 1st Lady Imelda Marcos took on the cudgels for state support for the culture industry including music and theatre. But that was long ago!

 

The music industry was then in its high growth state, and badly needed state support for that steep climb to glory. But eventually, the musicians and industrialists like the Jacinto family who went into musical instrument manufacturing (one of the Jacintos is s musical giant here) took upon themselves the duties for lifting up the sector. The airwaves were reformed, so that 50% of the time the radio stations should air Filipino music. And Philippine music succeeded stunningly!

 

Today the industry had matured to meteoric heights. But many musicians feel and think like it’s still the infantile days of the sector. Look at how dependency can blind people including university-based experts such as the professor of music that I’m citing here (name withheld).

 

For further elucidation, let me quote entirely the excerpts from the essay, to note:

 

Shift intervention from the ‘provider state’ to the ‘enabler state’.

 

The failure of neo-liberal policy regimes does not mean that the state should go back to a full interventionist role, performing a guardian regulator and ‘provider’ for all sorts of services. The problem with the excessive ‘provider’ role is that it had (a) bred rent-seeking on a massive scale among market players, (b) reinforced dependence among grassroots folks who have since been always expecting for a ‘Santa Claus state’ to provide abundant candies, (c) produced new forms of rent-seeking, with civil society groups serving as the beneficiaries, and (d) further reinforced graft practices in both the public and private sectors. Thus, the ‘provider state’ further reinforced  the patron-client relations in the various spheres of life (‘feudalism’ is the term used by Maoists for clientelism), consequently dragging all of our development efforts into a turtle-paced sojourn.

 

In the new intervention mode, the state, armed with a leaner organization and trimmed down budgetary purse, performs a superb catalytic role. It engages various stakeholders in the growth & development efforts, challenges them to directly embark on development pursuits, and demonstrates unto them how welfare can be accessed to through alternative means other than through the state’s baskets. As the state continuously engages the stakeholders through dialogue and cooperation, institutions will also become strengthened along the way. The state will gain its esteem as an ‘activist state’, while at the same time receive acclaim as a truly ‘modernizing state’ as it propels society gradually away from clientelism towards a context marked by rule-based (modern) institutions, citizenry and dynamic/autonomous constituencies.

 

However, within a transition period from ‘maximum provider’ to ‘maximum enabler,’ the state should continue to perform a provider role in such areas as education, health and such other human development concerns that are, in the main, crucial to building national wealth. Combining state regulations and at the same time giving ‘fiscal autonomy’ in tertiary education and vocational-technical level would remain to be a fitful strategy of ‘minimal enabler’. A similar strategy will have to be applied to some other economic sectors to be able to advance gender equity, by recognizing rights of marginalized gender to education, employment, representation in managerial positions and other related concerns.

RE-ECHOING BASIC NEEDS

April 28, 2008

 

Erle Frayne D. Argonza

 

[Writ 22 March 2008, Quezon City, MetroManila]

 

“Go back to basic needs,” I declared in the same article on New Nationalism.

 

Sometime back, the ‘basic needs’ framework rang strong bells in the development field as a potent framework for development. Having started with the defunct Ministry of Human Settlements in 1981 as a community development specialist, I still recall then how brilliant and exquisitely crafted was this Ministry’s adoption of the ‘basic needs’ framework as its guiding light.

 

“Higit sa lahat, Tao!” is the core premise of the Ministry’s development paradigm. Roughly, this translates as “man precedes everything else.” Meaning, man should be at the core of all development efforts, and not the objects of a synthetic (infrastructures, industries) or physical nature (raw materials, livestock, plants).

 

Till these days, the powerful Ministry premise had stuck with me. At that time too, the same Ministry already recognized ‘ecological balance’ as among the 11 Basic Needs of Man, and organized ‘ecology brigades’ in advancement of this contention. That was a time when environmentalism wasn’t even born in the country but was just being planted.

 

It need not be overstressed that meeting the basic needs of peoples is a fundamental yardstick for addressing development problems leading to further cooperation and peace among diverse communities. I therefore find it still a potent discourse to re-echo the ‘basic needs’ premise.

 

The excerpts from the article are entirely quoted below.

 

Go back to basic needs.

 

“Spend for your needs but save as much as you can!” would be an apt idiom that could  encapsulate the need to build up national savings within the context of an increasingly consumer-driven economy. It is argued that moderate consumption would be a most fitting behavior in today’s context, while under-consumption and over-consumption are out as they could burn us all out in the process. Consumption saved the day for us in the aftermath of the Asian crisis in 1997, so there is no reason to be morally repulsive about consumerism—provided that it should be a moderated consumerism. Low consumerism brings us back to export-driven strategies, our aggregated wealth production subjected to the vagaries of external markets that are beyond our control; high consumerism, contributing further to high debt levels, as the credit card culture entice people to acquire more articles of consumption through debts, perennially driving our economy to ‘bubble bursts’.

 

The emerging situation should have taught our market players the appropriate lessons at this time. The era of omnipresent and omnipotent markets—for goods of relatively ageless utility, stored in large inventories—is now a foregone era. What we have now is fragmented markets (chaos economics explains this well; see Tom Peters’ works), so the adjustment would be in the form of market niches. Market players should veer away from storing large inventories of a broad array of products, as obsolescence and changing consumer taste undermine the profit-gaining side of such a practice. Rather, they should be sensitive to emerging demands, and customize services and/or tangible goods based on such demands. We Filipinos particularly change taste so often, “madaling magsawa” as we  say it in the vernacular. Which means that fixed products, based on fixed ideas, are simply out of context and out-of-date, and must be reformulated towards more flexible product mixes matrixed with constantly  emerging ideas.

 

On a macro-scale, there is the continuing need to ensure ‘food security’ and its expression in other sectors as well. We should continue to be sensitive to the needs of the larger economy, such as the need for capital goods. We should design ‘vital & strategic commodity security’ frameworks and policies through a combination of domestic production of such goods as well as importation strategies. The continuing absence of strategic industries such as integrated steel could prove degenerative for development efforts such as it has done to our country, while completely shutting us off the international markets for some other goods could likewise be deleterious in the long run since domestic producers would be exercising rent-seeking, pricing articles way beyond five hundred percent (500%) of their opportunity costs as amply demonstrated by industrial chemicals (before the country began importing from China). As current experiments in grain & livestock management show, with appreciable success, the strategy should be to combine domestically produced goods with imported articles, the proper mix of which should be the subject of continuing eco-scanning and constant studies. In the end, all of our individual, community and national needs will be met, building stability and security amid a ‘chaotic’ or turbulent global condition.

VALUE-BASED FRAMEWORKS FOR DEVELOPMENT

April 28, 2008

 

Erle Frayne D. Argonza

 

[Writ 22 March 2008, Quezon City, MetroManila]

 

In the same article on New Nationalism, I advanced the thesis for value-based integrated frameworks.

 

The classical frameworks of development were largely rationalistic models, or Western-oriented. I don’t have a problem with accepting Western development frameworks. However, I found out in my own long practice of social development that they don’t completely work in the field.

 

The ‘value-neutral’ premise of rationalism is particularly suspect and dangerous, in that it can lead to the treatment of clientele as hard objects. Those frameworks coming from the East that are strongly value-based rather than value-neutral do serve the greater purpose of recognizing the powers of people to transform their own lives.

 

Being a yogi and mystic, I am particularly cognizant of the teachings of spiritual masters from the East. Just a cursory review of the teachings of Gandhi, Sarkar (Ananda Marga founder), Buddha, and Jesus (gospel teachings) can already provide the development worker with the frames of reference for a value-based integrated framework.

 

That’s why I go strongly for this sublime integration rather than the old-fogey binary frame of pitting East versus West. It should be a both/and thinking that we better adopt here. In the Philippines, we are a people who are both East and West in our culture and psyche, so we have come to gradually synthesize the disparate models of development for both. It may take some more time though before we can perfect the synthesis and experience development and peace in the islands.

 

India and China are the exemplars of development paths that took into consideration the potency of both Eastern and Western frames of development. Look at where these two countries are today: at the threshold of world economic power status. Had their development planners, managers and implementers decided to junk the Eastern jewels in their paradigm frames, they couldn’t have reached their status today as global players.

 

The excerpts from the article are entirely quoted below.

 

Make room for value-based & integrated frameworks.

 

Not only should we look up to the West for paradigms with which to construct frameworks and models of growth & development. We should also welcome the initiatives of our emerging thinkers and practitioner-gurus to integrate the Eastern paradigms in their conceptualizations, system designs and related matters. These efforts will fortify our understanding of economics, Philippine-style, in as much as we are a people forged in the cultural smelters of both Eastern and Western civilizations. 

 

Among civil society groups, the modeling of entrepreneurship and social enterprises based on integrated East-West paradigms have been demonstrated with success and clarity. We should welcome such perspectives, and do our share of the task to transport such frameworks from the margins to the mainstream of national consciousness. The resultant frameworks are often value-based in form, though they do not necessarily shun scientistic/empiricist treatment of economic problems. The common theme among such frameworks is synergy: an interconnection among various ‘social enterprises’ and NGOs reaching a far broader scale, resulting to a broad   movement. This I am well aware of, having immersed myself in civil society for a long time in the past.

BUILD STRONG NATIONS AMID GLOBALIZATION

April 28, 2008

Erle Frayne D. Argonza

 

[Writ 22 March 2008, Quezon City, MetroManila]

 

In my meaty article on New Nationalism, I advanced fourteen (14) contentions in substantiation of what neo-nationalism is.

 

The first basic contention is that the nation-state can thrive and grow amid globalization. In other words, globalization shouldn’t lead to the destruction of nation-states. The trend since the start of massive implementation of liberal reforms leading to global integration of markets has been, in fact, the destruction of nation-states. This trend has to be stopped now.

 

There is really no reason to destroy the nations just so that our global community can be integrated. In the Philippine experience, nationalism has been a positive, progressive force that had united close to 100 ethno-linguistic communities. The Philippine nation had just lately crystallized, with a national identity now in shape though in moderate level, a phenomenon that took over 200 years to build.

 

There is no way that we can allow the massive destruction of nations today just in order to whet the appetites of the global oligarchy and their transnational corporations or TNCs for control over the world’s resources and labor. The conservation of nations must be a pre-requisite to building the ‘peace condition’ nationally and globally, guided by the principle of ‘dialogue of civilizations’.

 

On the other hand, amid the failings of globalization, we simply cannot go back to the past and destroy the integration efforts altogether. We can still move on towards a more progressive globalization that serves the interests of nations rather than the global oligarchy. Nations can derive benefits from integrated markets, we can’t overstress the risk-side of globalization at the expense of the benefit-side.

 

Somewhere along the line, the striving for stronger nations must cohere with the collective efforts for integrated markets. Later on, nations would compose an integrated political entity, the global state with its own global institutions.

 

Below is the excerpt from the New Nationalism article regarding the nation-state.

 

Strong nation can thrive & grow amid globalization.

 

The nation can continue to exist, even become strengthened, while it sails deep into the middle of the ocean of globalization. The two are not necessarily contradictory. Nationhood can continuously be pursued, patriotism can move ahead while paddling astride the powerful waves of globalization. For as earlier stated, globalization holds the promise of growth through the vast opportunities it has opened. Nations must strive to concur cooperation with other nations to extend the scope and limits of the opportunities, while at the same time build internal opportunities to further optimize inducements for investments.

 

Just recently, our entrepreneurs and professionals made waves through the international awards they respectively received, such as Tan Caktiong (top entrepreneur) and F. Palafox (the only ASEAN architect to make it to the world’s Top 200 architects), signifying the high level of competitiveness our compatriots are capable of achieving. Such sterling achievements surely inspire us to continue to strengthen nationhood and to forge new areas of cooperation and growth-inducing endeavors. While forces exist that work to tear the nation asunder, forces are likewise growing that lead to the nation’s strengthening. We should all work hard to make sure that the latter forces prevail, while neutralizing and diminishing the potencies of those forces that destroy nationhood.

NEO-NATIONALISM TAKES CENTER STAGE

April 28, 2008

Erle Frayne Argonza

 

[Concluding portion of the article: E. Argonza, “New Nationalism: Grandeur and Glory at Work.”]

 

This paper now ends with a note on the prospects of neo-nationalism making waves. Note that Old Nationalism is the dominant discourse within the nationalist streams, and this fact is fully recognized in this paper. Old Nationalists will definitely have a hard time digesting the premises and contentions presented in this article. Being anchored on Western discourses, secular and materialistic to the extremes, the said articulators will have none of neo-nationalism save for viewing it as another exotic fad that will soon fade away. This is understandable. “Old dogs can’t learn new tricks!” goes the idiom, and this holds true in every sphere of human endeavor.

 

But one thing is sure at this juncture: New Nationalism is germinating right at the very center of state power, as the President herself expressed her subscription to and advancement of the new discourse. Surely, a coterie of like minds are gravitating around her, who are looking for an alternative to the neo-liberal frameworks that sorely failed, but who nonetheless find the extremist dirigism of Old Nationalism passé and repulsive. GMA’s reaching the helm of power signifies that nationalism has finally won amid over a century of struggle, as patriots of diverse ideological orientation won the previous electoral rounds nationwide. But a new phase of nationhood is coming into being, an evolving context that demands a corresponding new discourse to defend it and root it firmly.

 

Being one among those who strongly desire for an alternative framework, I am inclined to think that many potential articulators are waiting in the watersheds of civil society, political parties and state bureaucracy for the new discourse. Many of them began with the Old Nationalist frame but now find the old frame dilapidated and requiring gross recasting or replacement. My forecast is that it will take just about a minimal work to concur a synergy of efforts among these stakeholders. The moment that the synergy commences and gains momentum, neo-nationalism will quickly move into the mainstream, engulfing civil society, political parties and the state like wildfire. It may even serve as the new inspirational light of the business sector. And, who knows, maybe even church stakeholders, notably the bishops, would regard neo-nationalism as life-giving elixir-in-a-bottle floating amid wild seas intoxicated with every kind of antiquated ideological frames that have become inimical to national growth.

 

Such is the enormous prospect of neo-nationalist discourse gaining centerfold, that even the neo-liberal advocates might follow suit, taking its cue from the bandwagon effect of the new discourse that may take place in just about a couple of years from its inception. The neo-liberals are under fierce attack from everywhere, and are on the retreat, and the only graceful retreat for them is to find common grounds with the new discourse, even if they may not embrace the discourse entirely. After all, the (new) discourse does not seek to destroy the market, that it is inclusive as it appreciates the role of various stakeholders in the development game, from paupers and vagabonds to gentry and capitalists. The strength of the discourse lies precisely in this inclusiveness, a strength that makes it worth applying in the practical world.