Charting New Paths

Action for Economic Reforms was founded in 1996 by a group of progressive scholarsĀ and activists in the Philippines.

Why an independent, reform-oriented, activist policy group?

The formation of an independent, reform-oriented, activist policy group, which we call Action for Economic Reforms, has gained greater urgency and significance. The terms of reference of policy debates in the Philippines have seen radical transformation in recent
years.

The dominance of neo-classical structural adjustment and liberalization and the collapse of “statist” models of development (“actually existing socialism” and capitalist protectionism) have compelled progressive forces to rethink and redefine development strategies.

Despite the progressive movement’s gains in struggling for economic reforms, objective problems and subjective weaknesses have prevented it from maximizing opportunities and neutralizing threats in the new situation.

Peoples’ organizations, progressive political formations and a host of non-governmental organizations now realize the need to deepen their understanding of basic economic concepts and conjunctural economic issues. Yet, more must be done to strengthen the technical and academic aspects of economic reform advocacy. Within the broad movement, a strong tendency exists to gloss over technical work because of the perception that technocracy connotes elitism.

Perhaps the most controversial issue is that “populism” is deeply entrenched in the strategy, thinking and behavior of the progressive movement. Of course, populism assumes different forms, a typical example of which is invoking “economic rights” but brushing aside the accompanying responsibilities (say, demanding higher public spending but resisting taxes). To be sure, the conservatives are likewise guilty of this, as shown by their worship of individualism and anything private.

The type of populism that affects some progressive groups is manifested in the resistance to or antipathy towards market reforms and structural adjustment. It likewise shows in the uncompromising if not absolute opposition to government policies that result in price increases of politically sensitive goods. (For example, commodities like oil and rice, policies like taxes and devaluation.)

This is not to say that populism is the scourge. Populism is a natural reaction to problems that have immediate negative effects on peoples’ lives. Hence, the natural (though narrow) response to, say, an oil price hike arising from objective market factors is to oppose it.

But populism can deceive. To pursue the oil price hike example: Subsidizing oil may prevent an oil price increase, but new problems affecting ordinary people and the whole economy will surface – budget deficit, more borrowing, higher taxes, or cuts in public investments.

What is important is to broaden the information and the policy choices to deal with such controversial issues. A rigorous advocacy, even if partisan, takes the responsibility of educating and enlightening the public about the tradeoffs, opportunity costs, and other consequences.

In other instances, a number of left-wing groups have avoided directly tackling critical policy reforms, even progressive aspects that government is willing to take up. They are steeped in “the politics of revolutionary opposition.” They stick to the old method of projecting the “sharpest line” to thwart government policy initiatives. Again, such behavior can be understood in the context of the political agenda of the traditional revolutionary groups. That is, supporting government-initiated reforms would obstruct or contradict the goal of seizing political power.

What their strategy can accommodate is raising acceptable, popular general slogans and principles, without fleshing out the details. It is thus easy, for example, to unite on the principles of progressive taxation and higher government spending for education and health.

But the specific substance of the slogans, the technical arguments, and the operationalization of demands are played down, lest the advocacy be trapped in the mire of “reformism.” (But what happens if higher spending for education and health is
granted, but the resources are allocated to privileged universities and specialized hospitals that mainly cater to the upper classes?)

General principles are not enough to deal with complex issues that require nuanced analysis. The gains of the reform struggle will ultimately be measured in concrete terms: the specific features, the context, the enabling conditions, the timing, the phasing, and the sequencing.

In light of the above, an independent group can fill the gaps and inadequacies in the advocacy for economic reforms. Thus, it is a group that will attempt to serve the broader movement and complement the bigger efforts to advance the progressive cause. But more than addressing what could be transitory problems besetting the progressive movement, an independent activist policy group has the flexibility to adapt to the changed political and economic terrain in the Philippines.

Since the fall of the Marcos dictatorship, liberal democracy as a form of rule- though it is conceded that this is elite democracy – has consolidated itself within the context of a market economy highly influenced by globalization and liberalization.

On the political plane, government is legitimized through the stabilization of formal democratic institutions like elections, a relatively independent judiciary, and the free media. The widespread public opposition to the Ramos administration’s attempts to reintroduce even the subtlest features of authoritarianism is likewise proof of the depth of the democratic culture.

On the economic plane, an open, liberalized economy has taken root and has been institutionally strengthened by the development plan, policy framework, legislation, and regulatory mechanisms. Further, the structural adjustment process sponsored by the Bretton Woods institutions, whether we like it or not, is in its completion stage and is difficult to reverse. (The people have gone through much pain, and the economy has recovered. Scuttling the liberalization process at this time will lead to another bout with painful adjustment.)

In the face of a global economy, the consolidation of liberal democracy and its economic creed has the following immediate implications on progressive advocacy:

  1. The democratic space provides some latitude to press for progressive economic reforms. Exposing, opposing and weakening the government may still be the primary agenda of a number of Left groups. But the broad progressive movement must now go beyond a strategy of “exposing and opposing” so that it can secure concrete policy gains for the people it is supposed to serve, or at least for its organized constituency. Reforms have an inherent value, and without precluding long-term revolutionary goals, they are not only “means” but also ends.
  2. Polarized perspectives (e.g., state versus market, regulation versus deregulation,liberalization versus protection, etc.) have taken a backseat as policy debates require more nuanced positions. It is high time progressive groups had a hold on market reforms and the liberalization process. Liberalization policies and markets should be seen as instruments that the Left forces can use in the same way that they treat regulation or state intervention as levers to meet progressive ends. Progressives cannot afford to concede liberalization and markets to conservative forces.
  3. Response to economic policies entails greater analytical, technical and political sophistication. The handling of finer points such as timing, sequencing, policy mix, representation, costs and benefits has become all the more necessary.
  4. Political correctness cannot sacrifice rigor, integrity, and objectivity. Moreover, the progressive movement must internalize the truism that development reforms do not follow a straight path and may often require short-term costs that cut across all sectors of society.
  5. As national sovereignty is challenged by a world economy that moves into deeper integration, national policy advocacy must at the least be sensitive to international developments. Even as the advocacy focuses on national issues, it must at the same time address regional and global concerns in recognition of the bigger role of foreign capital and international institutions in a liberalized economy.