APEC: An organization whose time has passed
It has been nearly 20 years since the APEC Summit that was held in Subic in 1996. APEC then was one of the spearheads of globalization. It was one of the fountainheads of neoliberal ideology. The Subic Summit took place amidst triumphalist rhetoric about how corporate-driven globalization would sweep everything before it. The Ramos administration boasted of the neoliberal transformation that would make the Philippines a “Newly Industrializing Country” by the year 2000.
Against this triumphalism, the Manila People’s Forum on APEC, which united many civil society organizations across the country, had a different message. It said that neoliberal globalization would drag our economy into even greater crisis, that the promise of prosperity was a mirage.
Nearly 20 years after Subic, the promise of corporate-driven globalization has withered throughout the globe.
In 1997, just one year after the Subic Summit, the Asian economies, including the Philippines, were devastated by the Asian Financial Crisis. In December 1998, the resistance of developing country governments and global civil society brought about the collapse of the third ministerial meeting of the World Trade Organization, the so-called crown jewel of globalization, in Seattle. In 2007-08, the global financial crisis broke out, bringing about the near collapse of the global financial system and recession and stagnation in the US, Europe, and throughout the world. Today, the global economy remains mired in crisis.
Two decades of neoliberalism have crippled the Philippine economy. The elimination of import quotas led to the severe destabilization of vast sectors of our agriculture, including the corn, meat and poultry, and vegetable sectors. Bringing down tariffs to 5% and below severely deindustrialized the economy, with our garment, textile, footwear, and other once vibrant industries now a shadow of their former selves. Only 20 of the 200 textile and garment firms we had 40 years ago are still in existence. One needs only go to Marikina to see how our once dynamic world-class shoe industry has been nearly destroyed by free trade.
Growth's fragile base
Neoliberalism promised prosperity. In other growing economies, growth in inequality has been mitigated by a reduction in poverty. This has not happened in the Philippines.
The percentage of people living in poverty is 28%, the same proportion as 20 years ago, and the rate inequality also remains unchanged, with the country’s gini coefficient of 44 being one of the worst in East Asia. Yes, there has been growth, but that growth has a fragile base. It has been cornered by a few and thus led to greater inequality. It has not been felt at all by the vast majority of the Filipino people.
Much like 20 years ago, close to 35% of the national budget goes into the pockets of the banks as interest payments on a debt load that is, for all intents and purposes, unpayable, while education, health, and other public services deteriorate owing to lack of funds.
Not surprisingly, many of our people have departed as economic refugees, leading to a situation where 10 million Filipinos, some 10% of the population, are either migrants or residents of other countries.
This is the grim reality that surrounds this glitzy summit of leaders that's taking place in Manila.
Its time has passed
Once trumpeted as ushering in a new world, APEC is an organization whose time has passed, whose neoliberal premises have been left behind by reality. What we are witnessing in Manila is a time warp, the enactment of the diplomatic rituals that mask the fact that APEC now simply lurches from one summit to the next, with no clear direction.
Likewise, the economics of the Aquino administration belongs to the past. Nobody seriously believes anymore that the rate of growth of GDP and the increase in foreign investments are serious measures of the well-being of the people. As was the case with the Ramos administration two decades ago, the discredited doctrine of trickle down economics remains the policy paradigm of the Aquino presidency.
What the people demand, what they are waiting for are not empty boasts and false promises but an economic program that places the elimination of poverty and inequality and the resurrection of our agriculture and industry at the center of things. What the Philippines needs is a program of economic resurrection from the devastation of 35 years of neoliberal economics.
Over these last three decades, there has been much collective work done globally to articulate an alternative to neoliberal economics. The time of this new paradigm has arrived. The principles and prescriptions of this alternative economics provide the pillars for the economic resurrection of countries like the Philippines.
What are the principles of what one might call the New Economics? There are 11 of them:
- Production for the domestic market must again become the center of gravity of the economy rather than production for export markets.
- The principle of subsidiarity should be enshrined in economic life by encouraging production of goods at the level of the community and at the national level if this can be done at reasonable cost in order to preserve community.
- Trade policy – that is, quotas and tariffs – should be used to protect the local economy from destruction by corporate-subsidized commodities with artificially low prices.
- Industrial policy – including subsidies, tariffs, and trade – should be used to revitalize and strengthen the manufacturing sector.
- Long-postponed measures of equitable income redistribution and land redistribution (including urban land reform) can create a vibrant internal market that would serve as the anchor of the economy and produce local financial resources for investment.
- Deemphasizing growth, emphasizing upgrading the quality of life, and maximizing equity will reduce environmental disequilibrium.
- The development and diffusion of environmentally congenial technology in both agriculture and industry should be encouraged.
- Strategic economic decisions cannot be left to the market or to technocrats. Instead, the scope of democratic decision-making in the economy should be expanded so that all vital questions — such as which industries to develop or phase out, what proportion of the government budget to devote to agriculture, etc. — become subject to democratic discussion and choice.
- Civil society must constantly monitor and supervise the private sector and the state, a process that should be institutionalized.
- The property complex should be transformed into a “mixed economy” that includes community cooperatives, private enterprises, and state enterprises, and excludes transnational corporations.
- Centralized global institutions like the IMF and the World Bank should be replaced with regional institutions built not on free trade and capital mobility but on principles of cooperation.
This is a paradigm that is very different from that of corporate-driven globalization promoted by the APEC elites.
Unlike the neoliberal economy, the New Economy is not driven by market forces and profits but is strategically geared to realize fundamental social values, those of cooperation, justice, solidarity, and democracy. To borrow Karl Polanyi’s words, the New Economy is a system where the market is not disembedded from society but is embedded in society.
The neoliberal economy promoted by APEC is driven by the pursuit of narrow efficiency, that is, the motive force is the drive to attain the lowest unit cost for a product, even at the cost of disrupting society. The New Economics is driven not by narrow efficiency but sees the aim of economic strategy and policy as the strengthening of social solidarity.
Today, nearly 20 years after the first APEC Summit hosted by the Philippines, it is time to end our subordination to APEC’s neoliberal paradigm. It is time to embark on a new path, that of the New Economics. – Rappler.com
Walden Bello is a former member of the House of Representatives whose latest book is Capitalism’s Last Stand: Deglobalization in the Age of Austerity (London: Zed, 2013)