The Peace Talks and the Communist Party’s Economic Program

Yellow Pad

A good friend of mine gave me a copy of the book from the National Democratic Front of the Philippines (NDFP) titled Draft Comprehensive Agreement on Social and Economic Reforms (January 2018). This document is also known in its abbreviated form: CASER.

Sol and his wife Doods actually came all the way from Naga City not exactly to give me CASER but to pay their last respects to a dear cousin.

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Sol perhaps suspects that I won’t read it, and I surmise that he himself gave me a copy to dispose one of the many publications in his library. Doods is happy for every unwanted book removed from their cozy home. But Sol did ask me to share my thoughts on the NDFP’s economic program.

To those in the know, the NDFP is the united front of the Communist Party of the Philippines (CPP). Hence, the document is essentially the program of the CPP submitted to the Philippine government as a starting point towards forging a peace agreement.

The book makes interesting reading, for it gives the scholars and analysts, the peace advocates, and other stakeholders a handle or a marker towards determining whether the peace talks will prosper. Having a realistic reform agenda, by eschewing ideological rigidity and political sloganeering, is one good indicator that the CPP is serious in forging the peace.

To quote Jose Maria Sison, the NDFP’s chief political consultant otherwise known as the CPP’s ideological fount: “This book is highly significant and useful in demonstrating the readiness of the NDFP to negotiate with the Government of the Republic of the Philippines (GRP) and make a substantive agreement on social and economic reforms despite tremendous obstacles ….”

The document also says that the CASER “is realistic within current political and legal processes and can be implemented by the current administration as well by any succeeding non-revolutionary governments.”

For this essay, I do not intend to come out with a thorough annotation or critique of the CASER. I select a few points, which albeit limited will be sufficient to make a case that the CPP or the NDFP is seriously attempting to have a realistic CASER.

On agrarian reform, CASER says that the goal is “free land distribution as a means of achieving social justice.” Further, CASER acknowledges that the “policy of expropriation with compensation shall be adopted to encourage landlords to invest in industrial and other productive enterprises.” These points are consistent with the Philippine Constitution and with the law on the Comprehensive Agrarian Reform Program.

Current statutes can address the CASER position of subjecting to confiscation “sullied landholdings or lands proven to have been acquired through illegal and fraudulent means…and through the use of violence”

A revelation is the CASER position to allow the “sale, mortgage, or any other encumbrance or mode of transfer of lands,” after a period of 10 years from distribution. The restrictions to this (like the land not being converted to nonagricultural use or land not being sold or mortgaged to former owners, money lenders and local officials) are well-intentioned.

On national industrialization, the general provisions are abstractions and hence not quarrelsome. Take for instance: “National industrialization aims to achieve full employment, improve real wages, continuously improve the standard of living, reduce inequality, and eliminate poverty. It raises the level of science and technology, expands domestic demand, and integrates regional production and markets into one national production system.”

The devil is in the details, and so let a thousand thoughts contend once the peace is forged. A stumbling block is the CASER’s position “to amend, suspend or terminate, as applicable and necessary, all bilateral investment treaties, and agreements bilateral and regional free trade arrangements (FTAs), and agreements under the multilateral World Trade Organization (WTO) that prevent national industrialization.”

A shrewd government negotiator can just tell the CPP or NDFP to just drop this position, for it will not be enforceable. The government can always invoke the conditional phrase “as applicable and necessary” to have the status quo.

My unsolicited piece of advice to the Red comrades: Learn from Cuba and North Korea; the last bastions of “actually existing socialism” are opening up to the world and liberalizing their economies.

The last example is on macroeconomic policies.

Again, the principles are fine, like fiscal policy being “in line with overall economic planning and strategic measures to develop the economy: or monetary policy serving the “goals of rural development, national industrialization, and improving the people’s welfare.”

As expected, some specific proposals can be messy. Some, I have to say, do not even make economic sense.

To cite one, CASER demands that “the value-added tax (VAT) and excise taxes on basic goods and services consumed by the working people shall be abolished.” The question is: How do we define “basic goods and services?” In truth, the most essential items consumed by the poor, like food in its raw state, are already exempted from VAT.

The radical activists, however, claim that goods like petroleum, electricity, and processed food are basic goods, despite the fact that the main consumers of such items are the rich and middle classes. Still, abolishing VAT will result in a drastic drop in revenue. The deficiency in taxes will endanger the financing of the Left’s desired goals of achieving rural development and national industrialization.

It is foolish to think that increasing income taxes and taxes on luxurious consumption will compensate for the losses from abolishing the VAT on many items. The rich can avoid paying ludicrously high marginal tax rates on income by moving out of the country.

A sound tax system is one that balances direct taxation (mainly income taxation) and indirect taxation (including VAT). Progressive fiscal policy is not limited to progressive taxes. (Oil excise taxes and some VAT taxes, by the way, contrary to popular opinion, are mildly progressive.) It is also critical to raise enough revenue from both direct and indirect taxes to finance programs that are pro-poor and pro-equity.

From the examples discussed above, I can say that the CPP and the NDFP are negotiating a CASER that attempts to be reasonable. The general principles and provisions are acceptable. The specifics of some economic policies are disputable. But then, compromises are necessary to achieve the peace.

Perhaps, part of the problem is that the CPP and the NDFP do not have trained or full-fledged economists in their panel. Or if they do, the ideology of the comrades gets in the way.

On Karl Marx’s bicentenary, the CPP can perhaps rethink Marx, to help shape a new agenda. After all, Marx ideas have been interpreted in many ways. Even the neoclassical economists have gained insights from Marx.

An honest rethinking is most apt at a time that the CPP has recognized reason and compromise to move the peace talks forward.

 

Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.

 

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