Atelier N°.18, Article 8

Kim Scipes :
Monthly Review, December 1999)

                            Global Economic Crisis, Neoliberal Solutions, and the Philippines
                                                                                 by Kim Scipes

                            The economic crisis that has been affecting the global economy for the
                            last two and a half years started in East Asia. We've heard story after
                            story about the problems in Thailand, South Korea, Indonesia, Malaysia,
                            China, and even Japan—but we've heard almost nothing about the
                            situation in the Philippines. Is there something that the U.S. government,
                            the International Monetary Fund (IMF), and the World Bank don't want
                            us to know about the situation there?

                            The IMF has acted as the mean cop for the global financial system for a
                            long time, but its role in this crisis has brought it new notoriety. In every
                            case in which it has gotten involved, its prescription has been the same:
                            reduce or end any restrictions on global flow of capital; don't defend the
                            domestic currency by purchasing it with foreign reserves—let it fall until it
                            stabilizes in the market; and raise interest rates as high as necessary to
                            keep capital in or attract capital to invest. (These prescriptions benefit
                            multinational corporations and foreign investors, who are largely—but not
                            exclusively—based in the United States.) And do not worry about the
                            social consequences of adopting such an economic program.

                            In every case, the result has been the same: each economy that has
                            followed IMF prescriptions has seen widespread social dislocation.
                            Hundreds of thousands of jobs have been lost, and standards of living
                            have plunged drastically, even for those who still have jobs. The cost of
                            internationally traded goods and services has increased, due to local
                            currency devaluation against the U.S. dollar (the denomination in which
                            most goods are traded on global markets). Poverty and malnutrition have
                            increased, as have the number of related deaths. However, foreign
                            investors have been able to purchase goods and services, raw materials,
                            and even entire corporations more cheaply since the onset of the crisis
                            than before.

                            The crisis has spread beyond East Asia. It has hit Russia hard—and a
                            bunch of hedge funds in the so-called developed countries—and its latest
                            major victim has been Brazil. The shock to Brazil has already spread to
                            Argentina. And while it appears that many of the worst economic effects
                            have attenuated in the last few months, the global economy is still being

                            The global crisis has also hit the U.S. economy in some sectors, although
                            the impact has been masked overall by strong stock markets, low
                            inflation, and low unemployment rates. Tourism in Hawaii, on which the
                            state is largely dependent, has been devastated; agriculture (particularly
                            corn) and agricultural machinery manufacturing have been hit hard in the
                            Midwest; and so much steel has been dumped in the United States that
                            the United Steel Workers have joined the steel companies in demanding
                            import protection. In addition, the U.S. balance of trade—which
                            measures the difference between exports of goods and services and
                            imports of goods and services—was -118.1 billion dollars between
                            January and June 1999; this exceeds all of 1997 (-104.7 billion
                            dollars—itself a record at the time), and will certainly exceed the 164.3
                            billion dollar deficit of 1998.

                            Yet, as bad as all of this has been—the United States and Western
                            Europe have largely been sheltered because of the way their officials have
                            set up the global system—the countries that have garnered the most
                            attention have a considerable amount of industrial development. What
                            about the economies that don't have this industrial development, but are
                            trying to industrialize on the basis of their cheap labor? What has the crisis
                            meant to them?

                            I want to address the situation of these countries, but instead of perhaps
                            another litany of the horror of the crisis—by the summer of 1998,
                            Business Week was already referring to the situation on the ground in
                            Asia as a "depression"—I want to focus on the general solution as
                            proposed by the IMF. To do this, it is necessary to look at the situation in
                            the Philippines.

                            The Philippines is, in some ways, a special case: while its economic
                            development program has been based on neoliberal principles promoted
                            by the IMF and the World Bank, it did not begin as a response to the
                            recent crisis; the Philippines has been carrying out a neoliberal
                            development program since 1962. An examination of these experiences,
                            therefore, should give some idea of the quality of "advice" being given to
                            economically less-developed countries by the global watchdogs. And
                            while I don't excuse the Philippine elite for their role in this, I want to
                            focus on what a neoliberal program has meant to a country that has been
                            following its prescriptions for the past thirty-seven years.

                            Philippine Economic Development from Independence to
                            Deregulation, 1946-1962

                            Like any country that had been colonized, the Philippine social order was
                            organized to benefit people in the colonizing country and not Filipinos. An
                            extractive agricultural economy (sugar, tobacco, hemp, coconuts) and a
                            political system dominated by members of the various regional elites were
                            the product of 381 years of Spanish, and then U.S., colonization.

                            When the Philippines was granted "independence" by the United States in
                            1946, it had been devastated by the Second World War; the United
                            States used this to set up a neocolonial relationship with the now-ruling
                            elites. Economic relief was made dependent on political and economic
                            concessions to U.S. investors, establishment of U.S. military bases across
                            the country, and a currency whose value in relationship to the U.S. dollar
                            could not be changed without the explicit permission of the U.S.
                            President. These impositions, in addition to the extractive economy and
                            corrupt political system, were all "grants" to the newly freed nation.

                            An economic crisis in the late 1940s, when luxury imports by the elites
                            threatened to bankrupt the country (in addition to a peasant revolt in
                            Central Luzon and a newly emerging radical labor movement), forced the
                            ruling elites to try a new economic program, with U.S. permission.
                            Unwilling to implement a genuine land reform program, the elites tried
                            industrializing as a way of restoring the economy, pacifying the peasants
                            and workers, and maintaining their land-based power. Although I don't
                            want to ignore the repression directed against peasants and workers (or
                            the direct involvement of the CIA), I'm going to limit my focus here to the
                            economic policies implemented.

                            To implement their new industrialization program, the Philippine
                            government initiated foreign exchange and import controls. The controls
                            provided multiple economic benefits to the state: they limited both general
                            imports (such as consumer goods for the rich) and repatriation of capital
                            outside the country, and allowed the state to select imports to assist the
                            industrialization process and to protect industry established in the country.
                            This import substitution industrialization (ISI) program was a serious effort
                            to industrialize.

                            While this program did not benefit the majority of the population at the
                            time, it was a success as an industrialization program by 1960. A
                            moderate industrial base had been established: the country had food,
                            wood, pharmaceutical, cement, flour, textile, paint, pulp, paper, glass,
                            chemical, fertilizer, telecommunications, appliance, electronic, plastic,
                            refined fuel, intermediate steel, shipbuilding, motor vehicle, machine parts,
                            engineering, and other industries. From 3 percent in 1949, almost 18
                            percent of the total national income was derived from manufacturing in
                            1960. And it was largely built by Filipinos: from 1949 to 1961, Filipinos
                            had invested fourteen hundred million pesos in new activities, as
                            compared to 425 million by the Chinese (mostly Chinese-Filipinos) and
                            only thirty-one million by U.S. investors. The Philippines was then
                            considered to be the next Japan of Asia.

                            But this industrial progress came at a cost: the state maintained the peso
                            at the incredibly overvalued rate of two pesos to the U.S. dollar
                            (established by the U.S. government before "independence,") and this
                            made it increasingly difficult for agricultural exporters to find markets for
                            their products, though it aided the industrialization program. (To make it
                            easier to follow below, one dollar would buy 2 pesos, or U.S. one dollar:
                            P2). Since the agricultural elites were funding much of the industrialization
                            program, they were in the driver's seat when they pressed the state to
                            agree to end controls and effectively devalue the peso. Ultimately, in
                            1959, an agreement was made that the foreign exchange and export
                            controls would be ended in 1964, and it was these controls that had kept
                            the peso so strong. This five-year interval was intended to make the
                            transition less painful than an immediate termination of controls.

                            Implementing Deregulation

                            However, Diosdado Macapagal was elected President of the country,
                            and one of his first acts after assuming the presidency in January 1962
                            was to terminate all controls immediately. This was supported by U.S.
                            President Kennedy, who arranged for the Philippines to receive an
                            immediate three hundred million dollar loan from the IMF to cover the
                            repatriation of three hundred million dollars of U.S. corporate profits. This
                            was the beginning of the Philippines' debt dependence.

                            Ending these controls—deregulation in today's terminology, and a major
                            component of the neoliberal program—devastated the Philippine
                            economy. The peso began weakening immediately, and was formally
                            devalued from U.S. one dollar: P2.00 to U.S. one dollar: P3.9 in 1965.
                            (A simple example: if you borrowed one million dollars at the old rate,
                            you had to repay it with two million pesos before devaluation, and 3.9
                            million pesos at the new rate.) This resulted in the bankruptcy and
                            collapse of many businesses. The balance of payments situation
                            worsened: imports increased 68 percent between 1963 and 1967, while
                            exports only increased seven percent. The foreign debt doubled from 275
                            million dollars in 1962 to approximately six hundred million dollars in
                            1965. And the manufacturing share of Gross National Product (GNP)
                            decreased from 17.9 percent in 1962 to 7.1 percent in 1965.

                            To the Rescue: An Export-Industrialization Strategy

                            So, by the mid-1960s, the economy that had looked so promising going
                            into the decade was a shambles. Different forces with a belief in neoliberal
                            economics—including Filipino economists like Gerardo Sicat, and the
                            IMF and World Bank—encouraged the government to launch an
                            export-oriented industrialization program to solve the crisis, which was
                            caused by neoliberal deregulation in the first place. Their argument was
                            that by using low Filipino wage rates to attract foreign capital, and then
                            basing manufacturing operations on cheap and controlled labor, the
                            Philippines could export enough manufactured products (such as
                            garments and electronic components) into the world economy to improve
                            its balance of payments and employment opportunities. Consequently,
                            poverty and income inequality would be reduced, ultimately enabling the
                            state to "modernize" Philippine society.

                            Ferdinand Marcos, who was elected to the presidency as a "reformer" in
                            1965, decided to begin focusing the economy along such lines. Marcos
                            was able to lay some important groundwork in that direction in the late
                            1960s but because of substantial opposition—both within Congress and
                            larger society—he was unable to operationalize it at that time.

                            Martial Law

                            It was only when Marcos declared martial law on September 21, 1972,
                            that the export-oriented industrialization strategy (EOI) could be
                            implemented. Key to the EOI strategy was the establishment of the
                            export processing zone at Mariveles, Bataan. Two months after the
                            implementation of martial law, Marcos issued Presidential Decree 66 (PD
                            66) to facilitate the development of the Bataan Export Processing Zone
                            (BEPZ), providing incentives specifically for export production.
                            According to Walden Bello, David Kinley, and Elaine Elinson, PD 66
                            gave firms that exported at least 70 percent of their products "permission
                            for 100 percent foreign ownership; permission to impose a lower
                            minimum wage than in Manila; tax exemption privileges, including tax
                            credits on domestic capital equipment, tax exemptions on imported raw
                            materials and equipment, exemption from the export tax and from
                            municipal and provincial taxes; priority to Central Bank foreign exchange
                            allocations for exports; low rents for land and water; government
                            financing of infrastructure and factory buildings, which could then be
                            rented out or purchased by companies at a low price; and accelerated
                            depreciation of fixed assets." The incentives worked: "By 1980, the
                            Bataan EPZ had attracted 57 enterprises, the great majority foreign
                            owned, employing some 28,000 workers."

                            By the early 1970s, the World Bank's role in the industrialization strategy
                            had become crucial. While it had provided the Philippines with only 326
                            million dollars in loans between 1950 and 1972, it gave the Philippines
                            more than 2.6 billion dollars between 1973 and 1981. In addition to the
                            money provided, the Bank legitimized the country's economic plan to
                            international financial institutions. Not coincidentally, the Marcos
                            government decided to follow Bank strategy for development, focusing
                            on "industrializing efforts emphasizing the manufacture of labor-intensive
                            exports with the strong participation of foreign capital," again according to
                            Bello, Kinley, and Elinson.

                            Export production in BEPZ grew steadily for the first ten years, but then
                            significantly declined throughout the rest of the dictatorship. Researcher
                            Peter Warr presents data that shows huge increases in non-traditional
                            exports: from .4 million dollars in 1972 to 73.1 million dollars in 1978 to
                            159.6 million dollars in 1982. However, exports from BEPZ decreased
                            after 1982, falling to a low point of 57.6 million dollars in 1986, according
                            to a 1994 report from the International Labor Organization.

                            But are there other indicators of the EOI program's success or failure?
                            James Boyce provides considerable data that covers the years 1962 to
                            1986—the period after controls were ended until the end of the Marcos
                            dictatorship. During this period, Philippine external debt grew from 275
                            million dollars in 1962 to 27.2 billion dollars in 1986. At the end of 1986,
                            the country had a debt-to-GNP ratio of .90, and a debt per capita of 485

                            The impact on wages for urban workers for the period 1962 to 1986 was
                            disastrous. Boyce computed the impact of changes in wages in
                            metropolitan Manila over this period: "In real (1986) U.S. dollars, the
                            daily wage of an unskilled worker fell from $4.37 in 1962 to $1.12 in
                            1986, while that of a skilled worker fell from $6.18 to $1.72." In other
                            words, daily wage rates for a unskilled worker in 1986 were 74.3
                            percent less than in 1962, while daily wages rates for a skilled worker in
                            1986 were 72.2 percent less! In fact, in 1986, the daily wage of an
                            unskilled urban worker was substantially below that of an agricultural
                            worker. Boyce concludes: "wage laborers in Metro Manila experienced a
                            collapse in real wages in the 1970s and 1980s on a magnitude with few
                            precedents in modern economic history."

                            A key to this deterioration of workers' salaries was the drastic cheapening
                            of the Philippine peso. In January 1962, before foreign exchange and
                            import controls were lifted, one U.S. dollar bought two pesos; in
                            February 1986, just before Marcos was driven out of the country, one
                            dollar could buy 19 pesos. Thus, imported goods—especially oil, which
                            is sold internationally in dollars, and which is used for everything from
                            powering automobiles to transporting rice, the staple food—became
                            much more expensive to Filipino consumers.

                            There is another indicator that can be used to evaluate Philippine
                            development: GNP per capita, one of the World Bank's favorite
                            comparative statistics. In 1962, the Philippines GNP per capita
                            (measured in 1986 U.S. dollars) was 495 dollars, and the only country
                            with a higher GNP per capita in Southeast Asia that year was Malaysia
                            (820 dollars). By 1986, Philippine GNP per capita was 540
                            dollars—barely above Indonesia (490 dollars), and falling increasingly
                            behind the other economically significant countries in the region. The gap
                            in GNP per capita between the Philippines and Japan had widened from
                            1510 dollars in 1962 to 15,660 dollars in 1986. In fact, between 1962
                            and 1986, the annual average growth rate of Philippine GNP (of 3.1
                            percent) and the GNP per capita (.4 percent) were each behind those of
                            China, Indonesia, Japan, South Korea, Malaysia, Singapore, Taiwan, and

                            To give one more specific example: South Korea had a GNP per capita
                            of 330 dollars in 1962, which was 165 dollars per person behind the
                            Philippines; by 1986, South Korea had a GNP per capita of 2345
                            dollars, or 1805 dollars per person ahead of the Philippines! The
                            neoliberal program of the Philippines compared poorly to state-led
                            industrial development of South Korea (and both countries were ruled by
                            dictators over most of this period).


                            But what has happened since the overthrow of the dictator? Marcos'
                            successors—Corazon Aquino (1986-1992), Fidel Ramos (1992-1998),
                            and Joseph Estrada (1998-2004)—have continued to follow an EOI
                            strategy. Aquino committed her government to repaying all foreign debts,
                            including the ones that only benefited Marcos and/or his "cronies," and
                            Ramos and Estrada have followed suit.

                            One Filipino researcher, Pedro Salgado, put the debt into perspective
                            early in Aquino's administration. He pointed out that the 28.2 billion dollar
                            debt in 1987 was equal to about P564 billion, 4.4 times the national
                            budget (or 81 percent of the projected GNP for the entire year). He then
                            goes on to say, "If a person were to drop a P100 bill into a pit every
                            second, it will take 179 years to drop P564 billion worth of bills into the

                            Researchers have detailed how recent presidents have gone along with
                            the World Bank and the IMF machinations in exchange for loans. This
                            was true under Marcos, and it has remained true since. Why? I think
                            Temario Rivera is correct when he suggests that there is a larger reason:
                            the ability to obtain foreign loans, no matter how bad for the country,
                            allows political "leaders" to ignore the key issue in the country—political
                            power based on land ownership. And, courtesy of the World Bank and
                            the IMF, foreign loans have been available. Philippine national debt
                            (which was 275 million dollars in 1962 and was approximately 27.2
                            billion dollars in 1986), was 35.5 billion dollars in 1993, and 45.5 billion
                            dollars in 1997, according to data from the Central Bank of the

                            At the same time, the shift from traditional agricultural exports to
                            nontraditional, labor-intensive manufacturing exports, particularly in
                            garments and electronics, has continued. By the early 1990s, over 70
                            percent of total exports were in these nontraditional manufacturers.
                            However, despite this shift (supposedly the key to Philippine economic
                            development), the balance of trade worsened between 1987 and 1996.
                            The trade balance in goods was -1.017 billion dollars in 1987, -8.160
                            billion dollars in November 1995, and -11.342 billion dollars at the end
                            of 1996. Note that these figures are all from before the crisis.

                            The GNP of the country has generally grown, albeit unevenly: it grew 5.9
                            percent in 1987, 6.6 percent in 1988, 5.7 percent in 1989, and 3.0
                            percent in 1990. It declined .05 percent in 1991. The GNP increased
                            1.56 percent in 1992, 2.02 percent in 1993, 5.1 percent in 1994, 5.7
                            percent in 1995, 5.8 percent in 1996, and 5.2 percent in 1997.

                            The neoliberal economic program has made things worse for the large
                            majority of Filipinos. By November 1992, while evaluating President
                            Ramos' first one hundred days in office, IBON Databank, a
                            Non-Governmental Organization (NGO) that focuses on the economy,
                            estimated that the number of Filipinos living under the Filipino poverty line
                            had increased from 70 percent to 75 percent, and noted that a peso in
                            1992 "could only buy 60 centavos of what it could have bought in 1988."
                            The numbers in poverty are likely to have been somewhat reduced
                            between 1994 and 1997, when the GNP of the country grew over 5
                            percent each year.

                            Roger Daenekindt, using Department of Labor and Employment figures
                            from September 1995, reported that 62 percent of the
                            29.2-million-member labor force was either unemployed or
                            underemployed. Furthermore, only 10 percent of the labor force received
                            at least the minimum wage, but even this was insufficient, as the minimum
                            wage itself resulted in income below the poverty line. In 1994, according
                            to the government, the daily cost of living was P237.57 (approximately
                            9.50 U.S. dollars), while the mandated daily minimum wage was only
                            P145 (approximately 5.80 U.S. dollars). Additionally, while nominal
                            wages increased by more than two hundred percent between 1983 and
                            1993, real wages for all workers (based on 1978 prices) actually
                            decreased by 14 percent, and despite nominal wages increasing 32
                            percent between 1990 and 1993, real wages fell 4 percent.

                            Daenekindt further noted definite changes in the workplace, toward a
                            more flexible labor regime. And "flexibility" of the labor market means that
                            workers have even fewer chances for regular employment, as workers
                            are forced to compete at an even greater rate than before for the
                            relatively small number of available jobs. This also makes it much more
                            difficult to organize and maintain unions, which means that workers will
                            have even less power in workplaces where they do obtain employment,
                            and that their working conditions will get worse. And that is for those
                            lucky enough to have regular jobs!

                            At the same time that the economy is not providing a sufficient number of
                            jobs for people, and their wages are already horribly insufficient, inflation
                            is eating at the value of the money they do earn. As mentioned above, the
                            real value of wages for urban workers decreased by about 75 percent
                            between 1962 and 1986. But between 1988 and 1994, the purchasing
                            power of the peso declined another 49 percent. The inflation rate was 7.6
                            percent in 1993, and 9.0 percent in 1994.

                            But the Philippine State has never failed to keep coming up with grand
                            plans designed to solve all of the country's problems in one fell swoop: the
                            latest, initiated under President Fidel Ramos, was "Philippines 2000." Key
                            to Ramos' vision was the Medium Term Development Plan for 1993 to
                            1998. Ramos stated his goals for the end of his presidency in June 1998:
                            to raise per capita income to 1000 U.S. dollars; for the economy to grow
                            by at least 6 to 8 percent, and for the poverty rate to decline to at least
                            50 percent. He missed all three.

                            Ramos' larger goal was to make the Philippines a Newly Industrializing
                            Country (NIC) by the year 2000. And was this to be accomplished? In
                            January 1995, at President Ramos' urging, the Philippines joined the
                            World Trade Organization (WTO), which meant it had to open its
                            borders to even more international trade. Roger Daenekindt commented:
                            "We are ... told to be outward-looking and accept liberalization. But ... in
                            the case of textile and garments, we enter in a stiff world of competition of
                            cheap labor. Chinese labor is at 25 cents an hour, Vietnamese at 15 cents
                            an hour, Philippines [at] 90 cents an hour, and there are still the countries
                            like India, Bangladesh, Pakistan, etc." Additionally, according to former
                            president Ramos, "Export orientation shall `enlarge the pie.'"

                            And then the global economic crisis hit.


                            The Philippines was hit by the global crisis, becoming one of the Asian
                            Development Bank's "Crisis-Affected Countries." Philippine GDP, which
                            grew 5.2 percent in 1997, fell 0.5 percent in 1998, according to the IMF.
                            The peso, which had been trading at approximately U.S. 1.00 dollar: P25
                            throughout most of the 1990s, lost over 40 percent of its value, falling to a
                            rate of 1.00 dollar: P45, although by the spring of 1999, had recovered
                            somewhat to trade around 1.00 dollar: P40.

                            IBON Databank reports that official unemployment jumped from 10.4
                            percent in April 1997 to 13.3 percent in April 1998—and yet these
                            figures severely undercount real unemployment and don't mention
                            underemployment. However, a 1995 government report from the
                            Department of Labor and Employment said that unemployment and
                            underemployment affected 62 percent of the workforce, and this was
                            when the economy was growing strongly. But IBON also reports that
                            there was 128 percent increase in firms closing between January and May
                            1998, as compared to a year earlier, and an 88 percent increase in the
                            number of workers being affected by these difficulties.

                            And yet, the Philippines has been hurt much less than Indonesia,
                            Malaysia, South Korea, or Thailand. Stanley Fischer, first Deputy
                            Director of the IMF, claimed in a June 1999 speech that, of the countries
                            at the heart of the crisis, "the Philippines' economy performed
                            exceptionally." He suggested that this was because the country was in an
                            IMF program at the beginning of the crisis, and that the IMF increased
                            financing for the country once trouble hit, enabling it to avoid the worst of
                            the crisis.

                            However, if we consider that the country has been in a crisis since it
                            began following a neoliberal program in 1962, it's clear that the global
                            crisis has, for the Philippines, been simply a continuation of "business as
                            usual." Since 1962, the Philippines has never achieved the advances won
                            by these other countries, and so it was spared the intensity of the drastic
                            fall that the others suffered. And yet, it still suffered more than a 40
                            percent fall in its currency exchange rates.

                            But while Fischer suggests that Philippine performance was not as bad as
                            the rest because of IMF advice and money, he inadvertently let the cat
                            out of the bag, especially in light of the overall performance of the U.S.
                            economy during this time: "The country benefited from the composition of
                            its trade, which is more heavily weighted towards the United States than
                            of the more severely affected countries." The Philippines has done as well
                            as it has not because of the IMF, but because its major trading partner
                            has kept the door open to its further-devalued products despite a drastic
                            reduction in the Philippine market for U.S. exports.

                            No Real Solution

                            An EOI program was begun in the late 1960s, designed to save a
                            financial deregulation program that had devastated the economy. The EOI
                            strategy was operationalized in 1972 after the declaration of martial law
                            by Ferdinand Marcos; it continues today.

                            Because billions of dollars of economic and military aid have been
                            provided to the Philippines by the U.S. government, the World Bank, the
                            IMF, and commercial banks from around the world, the agrarian system
                            and its accompanying political system has survived. In return, the
                            Philippines has had its industry incorporated into global capitalist
                            political-economic networks.

                            The neoliberal program has been a failure on its own terms, even before
                            the onset of the global economic crisis. The peso's value fell from 1.00
                            dollar: P2 in 1962 to approximately 1.00 dollar: P25 in the mid-1990s.
                            Although exports shifted from traditional ones to nontraditional
                            manufacturers, the balance of trade had deteriorated to -11.3 billion
                            dollars at the end of 1996. GNP has generally increased, albeit very
                            erratically. However, foreign debt has exploded: from a national debt of
                            275 million dollars in 1962, it ballooned to 45.5 billion dollars in 1997. In
                            short, this program has failed to provide any type of sustainable economic
                            development for the country.

                            The cost to the people of the Philippines has been astronomical. Fourteen
                            years of dictatorship was only the beginning. Neoliberalism has led to a
                            social situation where approximately 75 percent of the population lived
                            below the poverty line in the early 1990s and, while somewhat reduced
                            since then, it is not known by how much. Urban workers had lost almost
                            75 percent of their 1962 wages by 1986, and things have only gotten
                            worse since then. Conditions among the peasantry and agricultural
                            workers have also deteriorated, to the extent that they have joined and
                            maintained a revolutionary army for over thirty years (albeit considerably
                            weakened since 1986—and particularly since 1993—by internal
                            problems). Accordingly, this type of development, when viewed from the
                            perspective of the large majority of the population, deserves to be called
                            "detrimental development."

                            It is within this larger context of detrimental development—maintained at
                            all times by armed force and a determination to use it to defeat any
                            challenges—that Philippine economic development since 1962 has been

                            A neoliberal approach to development, as advocated by the World Bank
                            and the IMF, has only benefited the global capitalist political-economic
                            networks (including certain Filipino partners), and the Philippine state; and
                            these benefits all come at the direct cost of the large majority of Filipinos.
                            This program has failed on its own terms and been a social disaster as

(*)KIM SCIPES is the author of KMU: Building Genuine Trade Unionism in the Philippines, 1980-1984 (Quezon City, Metro Manila: New Day Publishers, 1996; also available from Sulu Arts and Books in San Francisco), and a PhD. student    in Sociology at the University of Illinois at Chicago.