THE POLICY OF "NEOLIBERAL" GLOBALIZATION
AND WORSENING ECONOMIC CRISIS IN THE PHILIPPINES
By Prof. Jose Maria Sison
Founding Chairman, Kabataang Makabayan
September 11, 2008
Thank you for inviting me to speak on the policy of "neoliberal" globalization
and the worsening economic crisis in the Philippines on the occasion of the 31st
anniversary of the founding of the League of Filipino Students (LFS). I congratulate
the LFS in Baguio City for its achievements. I appreciate the cooperation of the
LFS with the Anakbayan, UP Baguio-University Student Council, the Nationalist
Corps and the Politically Inclined Students in bringing about this important forum.
First of all, let me explain what the policy of "neoliberal" globalization is all about.
It is a policy of deception, misrepresenting monopoly capitalism as "free market"
capitalism. It has been adopted since 1980 supposedly to solve the problem of
stagflation, the phenomenon of stagnation and inflation going together and the
vicious cycle whereby the attempt to solve either one of them aggravates the
In pushing the policy, Reagan and Thatcher identified Keynesian and social
democratic state intervention as the root cause of stagflation for generating
wage inflation and "excessive" social spending. They therefore espoused giving
full play to the "free market" and giving the monopoly bourgeoisie and the giant
corporations all the opportunities to raise capital resources, make profits without
restrictions and get big tax cuts supposedly to develop the economy, generate
jobs and make the working people less "dependent" on government.
To achieve the "neoliberal" or "free market" objective, the imperialist states
headed by the US have launched an unrelenting attack on the hard won rights
of the working class to job security, trade union organization and social benefits.
Wage levels have been pushed down. Full-time regular jobs have been replaced
to a great extent by part-time jobs. Indirect wages as may be in the form of
social insurance, medical insurance, educational benefits and social services have
been cut back or cut off. The real incomes of the working class have relentlessly
However, the "neoliberal" policy has given the multinational banks and firms of
the monopoly bourgeoisie all the opportunities to accumulate capital and reap
profits through the liberalization of investments and trade, the privatization of
state functions and assets, the deregulation at the expense of the working
people, women, children and the environment and the denationalization of
the economies of underdeveloped countries.
According to the "neoliberals" or "free marketeers", it is wrong to use the
direct hand of the state for pursuing economic development and ensuring
social welfare. But it is perfectly correct to hand out state resources, state
contracts, subsidies, investment insurance and tax exemptions to the giant
corporations and likewise to engage in accelerated military spending. No to
social welfare but yes to corporate welfare. No to social spending but yes to
The "neoliberals" have missed the essential point about the problem of stagflation.
When it arose in the 1970s, it was because Germany and Japan, which had been
ruined in World War II, had reconstructed under the Marshall plan and all imperialist
powers were once more caught up in a serious crisis of overproduction as a result
of competition and profit-making at the expense of the workers. All capitalist
economies were pressing down the wage levels in order to maximize profits
and counter the falling rate of profits in the course of expanding production.
At the same time, the US led the way in undertaking inflationary activities,
including the profuse flow of US dollars abroad, the global deployment of US
military forces and the war of aggression in Indochina.
The crisis of overproduction is consistently at the base of the crisis of the US
and world capitalist system. By pushing down wages to maximize profits, the
monopoly bourgeoisie unwittingly contracts the market for the products of
expanding production. The crisis of overproduction becomes conspicuous
when large stocks of goods cannot be sold, production has to be cut down
and workers are laid off.
From decade to decade, since the late 1960s, the crisis of overproduction
has become worse, with the problems of unemployment and inflation becoming
more sticky and the growth rates actually stagnant. But since the official adoption
of the "neoliberal" policy, the trick to conceal the economic problems has been
to increase the money supply and make credit easy for the giant corporations
and for the consumers in the huge American market. As a result, we now see
a gigantic financial crisis generated by the US.
The US has lived off the people of the world by abusing confidence in the US
dollar as global currency. It has gone into industrial decline by heavily importing
consumer goods from East Asia. It has incurred trade deficits and has become
the world's biggest debtor. It has also gone into heavy budgetary deficits and
domestic debt by rapidly increasing expenditures for military production contracts
and global deployment of military forces, especially in Iraq and Afghanistan.
It is not only the US federal government that is heavily indebted but also the
giant corporations and households. All of them are unable to pay their debts
and are the major factor in the current financial crisis afflicting not only the US
economy but the entire world economy. Twice have the US households been
victimized in a big way since 1995 through credit and financial manipulations.
First, fund managers invested the pension funds of US workers on the hightech
bubble which lasted until it burst in 2000. US households were enticed to purchase
stocks on margin. At least 40 per cent of them did so. Subsequently, in a more
sweeping way, US households were encouraged to buy on credit into the housing
bubble which began to burst in 2006. The "neoliberal" policy makers and managers
of the US economy had devised the housing bubble to provide US households an
artificial source of further credit for consumption, keeping up their role as the biggest
consumer market of the world despite the decline of industry and regular employment
in the US.
But the US mortgage meltdown, which has become conspicuous since last year, has
exposed not only the wobbly US financial system but also the financial plague the US
had spread all over the world. The US banks and hedge funds, in concert with the
Fannie May (Federal National Mortgage Association) and Freddie Mac (Federal Home
Loan Mortgage Association), the two biggest state-backed mortgage banks, had
repackaged the bad mortgages into collateralized mortgage debts and asset-backed
securities and sold them to the biggest banks in various countries. Not only is the
mortgage meltdown exposed but the whole range of economic and financial crisis
in the US and in the world.
The current financial crisis, which is the worst since the Great Depression, has
resulted in the tightening of credit, economic recession in the imperialist countries
and depression on a world scale. The underdeveloped countries are victimized by
the tightening of credit and decreased orders from the imperialist countries for raw
materials and semi-manufactures.
Despite global economic depression, some sectors in imperialist countries have found
ways of raking in superprofits and conjuring the illusion of positive growth rates in
imperialist countries and even on a global scale. They are the giant corporations in
fuel and food, which are the most basic necessities of all countries. They are inflicting
terrible and intolerable suffering on the people of the world, especially those in the
Impact on the Philippines
As a semi-colonial and semi-feudal country, under foreign and feudal domination, the
Philippines has an inherently and chronically crisis-stricken economy and society. The
only way it can end the underdeveloped, agrarian, pre-industrial and semifeudal
character of the economy is to undertake national industrialization and land reform.
These were previously prevented by the World Bank-sponsored Keynesian fiscal
policy of promoting infrastructure-building to serve raw material production and
The current "neoliberal" globalization policy of denationalization, liberalization,
privatization and deregulation has been far more aggressive in preventing industrial
development and land reform. Under this policy, the Philippine economy has become
more deeply underdeveloped and more rotten than before and become more
vulnerable to the worsening crisis of the world capitalist system.
The "neoliberal" policy is imposed on the Philippines by the US through its puppets.
It expressly prohibits the leaders of the reactionary government from upholding the
key role of the state in mobilizing the people and economic resources for national
industrialization and land reform. These twin objectives are supposed to be decided
by the market rather than by the state and the people. Under the influence of
"neoliberalism", puppet leaders in the Philippines talk more often about the "free
market" than "development" as state-supported industrial development.
The expression "free market" is actually used to mean leveling the field of
competition with the bulldozers of the foreign monopolies and flattening the
people to the ground. The expression "development" is limited to mean
infrastructure-building with the use of onerous foreign loans and foreign
supplies as in the time of the Marcos regime. None of the succeeding regimes
since that of Aquino, which hyped trade liberalization, have paid even the
slightest lip service to a well-founded and comprehensive industrial development,
through the cooperation of the state and the Filipino entrepreneurs.
The 1987 constitution of the reactionary state has reduced land reform to a
"free market" transaction, with the landlord selling his land voluntarily, demanding
current market value or offering the stock distribution option. The principle of
state intervention in order to realize social justice, such as the expropriation of
landlord estates for affordable redistribution to the tenants, has been laid aside.
The landless tillers are given the cynical advice that if they wish to own land they
are free to buy even a piece of Forbes Park or buy stocks from Hacienda Luisita
of Cory Aquino or from any of the many agricultural corporations of her cousin
Under the Ramos regime, the so-called medium term development program
did not provide for national industrialization and land reform. But it pushed
for the denationalization of the economy to benefit the foreign monopolies
and big compradors. It violated the principles of economic sovereignty and
conservation of the national patrimony. It removed the restrictions on foreign
investors in banking, mining, agriculture, domestic trade and other types of
enterprises. It allowed the unrestricted flow of foreign capital in and out of
the country and the big comprador exporters of raw materials to stash away
foreign exchange abroad. It ran far ahead of the schedule set by the WTO
for lowering the tariff on all types of products.
The reactionary government incurred huge local public debt and foreign debt
for infrastructure, especially in graft-ridden power generation projects conceded
to foreign companies. It went into a privatization spree, selling off state assets
and prime public land to foreign investors in order to cover trade and fiscal
deficits. It created a boom in the private construction of office and residential
towers and golf courses with the use of foreign commercial loans and favored
the expansion of low value-added semimanufacturing of consumer goods
under the auspices of giant corporations and big comprador firms, whose
foreign debts are guaranteed by the state.
The financial crisis of 1997 brought down the Ramos regime's claims to
economic success. By the time Estrada became president, the reactionary
government had gone bankrupt and foreign credit dried up to the extent
that he was compelled to serve his corrupt appetite by taking payoffs from
jueteng and using social security funds of government and private employees
for the shadiest of deals. He was reduced to begging for infrastructure loans
from Japan, which wanted to extract excessive trade and investment privileges.
When the turn of Arroyo came, she renewed the orgy of local and foreign
borrowing and the frenzy of implementing the "neoliberal" economic policy
which she had strongly pushed as a senator. The imperialists were pushing
another wave of easy credit in accordance with the "neoliberal" dictum that
economic and financial problems are solved by scooping money from the
central bank into helicopters for these to pour out on the problem.
Under the "neoliberal" economic policy, the semicolonial and semifeudal
character of the Philippines has been aggravated and deepened due to
the absence of national industrialization and land reform, the unrestricted
freedom of the foreign monopolies to dump their surplus products and to
extract superprofits, the ceaseless landlord and corporate accumulation of
land, bureaucratic corruption, the limitation on the country to produce for
export only raw materials and slightly processed goods, the ever growing
trade and fiscal deficits and the ever mounting foreign debt.
Like the Ramos regime, the Arroyo regime has been strenuously insistent
on the denationalization of the economy. It has made so many attempts
to have the 1987 constitution amended so that nationality requirements
and restrictions on foreign investors can be removed from the economic
provisions. At any rate, it has pushed further legislation as well as multilateral
and bilateral treaties and executive agreements to promote investment and
trade liberalization in favor of foreign investors to the detriment of economic
sovereignty, the national patrimony, the working people and the environment.
It has allowed the dumping of foreign surplus manufactures and agricultural
products on the country and has thereby undermined and destroyed the
domestic production of these. It has continued the privatization of state
assets and public lands. These have been sold to foreign corporations and
to cronies. Laws seeking to protect the workers, women, children and the
environment have been eroded or circumvented in the "neoliberal" spirit
of deregulation for the profit-taking purposes of foreign monopolies and
the big compradors.
The Arroyo regime has gone into unbridled deficit spending and foreign
and local borrowing, mainly for the purpose of profit-taking by the imperialists
and the big compradors, bureaucratic corruption and upper class consumption.
Statistics of these go into the absurd game of conjuring the illusion of an
annual economic growth rate. Counterproductive activities and borrowings
which bankrupt the state and the economy are misrepresented as factors
of development. Even as the economy is bankrupt and depressed, the
Arroyo regime is giving top priority to servicing the foreign debt and is
raising the tax burden on the people.
The Arroyo regime is overbrimming with loyalty to its imperialist masters.
But now it is faced with the severe problems generated by the crisis of
the US and world capitalist system. International credit has tightened.
Foreign orders for raw materials and consumer semi-manufactures have
decreased. To make matters worse, the prices of fuel and food imports
are soaring. The giant oil and food companies have fabricated the media
tales of fuel and food shortages in order to make a big killing in the "free
The regime does nothing to restrain the foreign monopolies from ceaselessly
hiking the oil price and inflating the prices of all basic commodities. For so
ong under the policy of trade liberalization, it has allowed the dumping of
rice from abroad and has thus destroyed local rice production. It has made
the Philippines the No. 1 rice importer of the world. It has also been utterly
stupid in failing to build its reserve rice stocks and thus in having to buy rice
from the world market when the prices are soaring.
Tasks of Filipino Students
The Philippine economy and society are plunging from one level of crisis
and depression to another. The Filipino students are suffering the rapidly
rising costs of study and living and need to cope with so many problems
arising from the oppression and exploitation of the entire people by foreign
monopoly capitalism, domestic feudalism and bureaucrat capitalism.
It is of urgent and great importance for the League of Filipino Students and
all other patriotic and progressive youth organizations to arouse, organize
and mobilize the student masses in their millions. You must unite and fight
against "neoliberal" globalization and all other inimical policies of imperialism
and local reaction. These are detrimental to you as students and youth
because you now face not only the current rising costs of study and living
but also the dire prospects of unemployment in an increasingly crisis-stricken
and rotten ruling system.
You must also fight the US-instigated war of terror. This has taken the
form of state terrorism and direct US military intervention in the Philippines
and the US wars of aggression in Iraq, Afghanistan and elsewhere. The
violence that the US has unleashed all over the world is aimed at forcing
the people to submit themselves to exploitation. It is the complement to
"neoliberal" globalization. US imperialism is behind the gross and systematic
violation of human rights by the Arroyo regime and its armed minions. We
can expect the escalation of exploitation and oppression, under the
US-instigated policy of "free market" globalization and the US global
war of terror.
You must conjoin with the broad masses of the Filipino people in the
struggle for national liberation and democracy against US imperialism and
the local exploiting classes. You must carry out all possible and necessary
forms of struggle to advance the revolutionary cause. We can prepare
for and proceed to the socialist revolution only by completing the new
democratic revolution, by victoriously finishing the unfinished Philippine
revolution initiated by our revolutionary forefathers. The people have
high hopes in the Filipino youth as a resolute and militant force for