Mainstream economics relegated political economy to a backseat position

during the dominance of neo-liberalism in the 1980s till the early
1990s. But the tide has changed. Market failures in the 1990s, as
exemplified by the successive global financial crises that culminated
in the Asian crisis, have forced a retreat of free-market orthodoxy.
Keynesian economics, including its left-wing variety, has recovered
lost ground. Further, even the strongest advocates of neoclassical
economics have recognized the need for better institutions and better
regulations. Suffice it to say that in this condition, political
economy has likewise made a comeback.

David Ricardo (The Principles of Political Economy and Taxation, 1817)
defines political economy as “an inquiry into the laws which determine
the division of the produce of industry amongst the classes who concur
in its formation.” In this connection, the study of economics is
consciously and organically linked to what is called “the practical
aspects of political action” (The MIT Dictionary of Modern Economics,
4th edition, 1996).

Against this background, we can proceed to inquire into the political
economy of the Estrada administration. How is the wealth (or the
produce) being divided? What courses of political action have been
undertaken by the dominant forces to capture the economic gains arising
from public policy?

It is tempting to say that the Estrada administration is a reactionary
one, with hard-earned reforms being thrown out the window. Indeed, the
accession of Estrada has revitalized the Marcos cronies and empowered a
new circle of businessmen and power-brokers who were in the thick of
Estrada’s campaign for the presidency. And it is payoff time, and many
want to recoup their investments at the soonest, not even waiting for
the economy to first recover on a sustainable basis. What is common to
the motley group of businessmen in the Estrada camp is that they
principally depend on their close personal connection to Estrada to
advance their business interests. Mark Jimenez, who has to face
criminal charges in the US but whom Estrada calls a “corporate genius,”
arguably symbolizes the breed of businessmen that Estrada favors. Being
adept at wheeling and dealing is now synonymous with being a corporate
genius. Another symbol is Lucio Tan, the kapitan notorious for
allegedly being a big-time tax evader.

Yet, we must concede-and this is an objective fact-that reformers
occupy strategic positions in government. Some of these reformers are
liberals such as Felipe Medalla (Economic Planning Secretary) and
Benjamin Diokno (Budget Secretary). The liberals do play a progressive
role, for they are allies in the fight against the rent-seekers. The
progressives such as Boy Morales, Karina David, and Liling Briones, are
a significant force, if only they would consciously work in unison. We
can also include as reserves in the struggle for reforms two more
categories, namely: a) the ex-radicals like Orly Mercado and Gemma
Cruz-Araneta and b) the honest bureaucrats (a term used by Dean Raul V.
Fabella) like Brother Andrew Gonzalez.

Unfortunately, the liberals, progressives, and other allies have not
cohered. In fact, not one among them has taken the lead to craft and
push forward the reform agenda. At least, in Ramos’s administration,
the ideological Almonte-Carpio team orchestrated the reform agenda
through means fair and foul, which nonetheless resulted in weakening
the monopolies in telecommunications and transportation.

The lack of activism or intervention on the part of the reformers has
cleared the way for the political attack of rent-seekers and cronies.
Public policy is being redesigned to tilt the “division of the produce”
in the latter’s favor. On the other hand, the efforts of reformers and
honest bureaucrats have largely been confined to defensive action.