Neoliberal Governance in the Philippines: Ideational Policy Reform in the Ramos Administration 1992-1998

2012

151NEOLIBERAL GOVERNANCE IN THE PHILIPPINESPhilippine Journal of Public Administration, Vol. LVI No. 2 (July-December 2012)

151

Neoliberal Governance in

the Philippines: Ideational Policy

Reform in the Ramos Administration,

1992-1998

ROBIN MICHAEL U. GARCIA*

Neoliberalism in the Philippines came at a time when the

country was considered the “Sick Man of Asia” and during the

immediate decade of the post-Cold War. This article provides a

partial explanation why more neoliberal forms of governance

were adopted during the Ramos Administration. Using an

ideational approach in the political economy of public policy

and governance reforms, the article traces how neoliberal

governance gained acceptance in the Philippines. It argues that

through a three-level reform process, the confluence of

exogenous and endogenous factors, as well as the “epistemic

privileged” status of neoliberalism during that time led to the

demise of the Keynesian state-led governance model and the

eventual acceptance of the market-led neoliberal governance

model.

Keywords: governance, neoliberalism, ideational framework, Ramos

administration, Keynesian governance, epistemic privilege

Introduction

The years 1978-1980 saw the rise of neoliberal governance thought

and practice in China, the United States and the United Kingdom. This

ushered dramatic changes in the global political economy that enabled a

marked increase in the process and outputs of economic globalization.

China’s “opening-up” through Deng Xiao Ping in 1978, the policy against

labor unions of U.K.’s Margaret H. Thatcher in 1979 and the United

States’ policy of fixing inflation rather than full employment by Ronald W.

*Master of Public Administration candidate, major in public policy, at the National

College of Public Administration and Governance, University of the Philippines Diliman.

The author acknowledges Dr. Maria Faina L. Diola for her scholarly support for this

article, which was partially investigated and originally written under her PA 208 class in

2010; Ms. Janina Nadene Vergel de Dios Jalandoni for her editorial assistance; and Mr.

Salvador Santino Regilme for the numerous personal correspondences that have inspired

the author to locate the idea of policy and political reforms not just from the domestic sphere

but also from the global political economy.

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PHILIPPINE JOURNAL OF PUBLIC ADMINISTRATION152

Reagan in 1980 saw ideological renaissance of neoliberalism at the worldstage (Harvey, 2005). Reforms towards neoliberal policy in manydeveloping countries, are manifested through structural adjustmentprograms (SAPs) imposed by the World Bank that precipitated aneconomic crisis (Bello, 2009).

This “revolt against big government” also meant the demise of whatis broadly considered as Keynesian state-led model where the state has aheavy and substantial role in governance. This revolt culminated a littlelater in developing countries. The trammels of great power politics duringthe Cold War pushed the United States to support semi-market-ledauthoritarian regimes like Marcos’ martial rule in the Philippines at thebehest of libertarian fundamentalist. Keynesian governance of course wasincredibly attractive because it provided the ever-elusive cushion for the“ups and downs of the business cycle.” But the problem that besetcountries was “stagflation” which Keynesianism could not solve (Mehta,2011).

In 1991, just a year before General Fidel V. Ramos assumed thepresidency in the Philippines, the world saw another dramaticdevelopment – the end of the Cold War. This marked the “triumph” ofWestern capitalist neoliberalism and the demise of centrally-plannedeconomic socialism of Eastern Europe. Neoliberalism spread like wildfireyielding a dramatic but varied temporal acceptance all over the world. In ashort time, it became the defining pillar of the late twentieth century(Simmons, Dobbin & Garrett, 2006).

Figure 1. Worldwide Political and Economic Liberalization since 1980

Source: Simmons, Dobbin and Garett, 2006

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153NEOLIBERAL GOVERNANCE IN THE PHILIPPINES

Figure 1 shows the increase in economic as well as politicalliberalization or marketization and democratization that started in the1980s. This ushered policy prescriptions in the dimensions of privatization,financial openness and democratization. An increase in marketization anddemocratization can be observed at the end of the Cold War in the 1990s.

The Philippines was pejoratively tagged as “The Sick Man of Asia,” atitle ascribed to China in the late 19th to 20th century, sometime withinthe decade before Ramos assumed the presidency in 1992. Despite thecrisis that struck the developing world in the 1980s from the structuraladjustment programs imposed by the World Bank, the Philippines sawneoliberal governance still commanding the policy prescriptions inCorazon Aquino’s administration and culminating during the Ramosadministration (Bello, 2009).

A total of 273 reform measures were passed during the Ramosadministration (Araral, 2006). Despite the long history of economicliberalism since the Payne-Aldrich Act of 1909, when the obligatorypractice of importing boundless goods from the United States wasinstitutionalized, neoliberalism was only fully realized during the Ramosadministration through his “Philippines 2000” blueprint to give thePhilippines a newly industrialized country (NIC) status by the year 2000.

The fact that the crisis caused by neoclassical economics coincidedwith the clamor in the Philippines for liberal politics in the 1980s raisesthe question: “why did a full-fledged liberal economic and political regimeconsolidate in the Philippines?”

Yet, while the figure shows an increase in the acceptance ofneoliberal governance, it can be gleaned that not all countries embracedit. It is a slow and painful process that deserves attention. It can beobserved that even if countries have the same historical, institutional,cultural and political make-ups that are subjected to the same worldwidetrends and exogenous shocks, they might still not follow the samegovernance strategies in the long run. Cox (2001) echoes this conundrumin his comparative study of Denmark, the Netherlands and Germany thatrevealed that the three countries with great similarities did not adopt thesame governance trajectories in the face of the same exogenous shocksand events in their respective political systems. In the 1990s, Denmarkand Netherlands implemented a wide-range of welfare reforms butGermany did not. The variation is not limited to the substantivedifferences in the acceptance of the same ideology. The temporal orchronological order of the acceptance should also be considered as can begleaned from the order of policy reform acceptance by China, the UnitedStates and the United Kingdom.

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In demonstrating how ideas influence public policy, two variations—

the substantive and the temporal—in the transnational acceptance of an

ideology point to domestic or endogenous differences and factors, which

should be taken into account alongside external or exogenous factors in

the state.

While it is understood that domestic or endogenous factors matter,

governance reforms do not occur in a vacuum. The 1648 Peace of

Westphalia, which formally gave birth to the central principle of statehood

or the exclusive control of a government over its territory, has been

contested in theory and practice especially in the advent of what we now

refer to as globalization. Public affairs is, more than ever, beset with the

realities of transborder stream of goods, people, and capital on the one

hand, and discourses on ideas, norms and practices about how to manage

their respective affairs on the other (Heywood, 2007).

While there are many factors and variables that can potentially explain

these reforms, it would be a remiss if governance scholarship and policy

discourse are inflicted with methodological nationalism. We have to look

outside to find answers. Independent variables and factors external to the

nation-state system are essential components in studying reforms especially

in public administration (Regilme, personal communication, 2012; 2013

[forthcoming]). This does not mean ignoring domestic variables. Indeed, in

the study of how ideas influence policy, domestic variables are indispensable

as argued earlier.

References to “governance” in this article use the traditional

theoretical treatment of governance in the Anglo-American tradition. As

Rhodes (1996) points out, the term refers to the institutions and

instrumentalities of the government that in other words may refer to

bureaucracy and the monopoly of coercive uses of power by those

institutions. Thus in this article, governance is more than documenting

the creation of new managerial and administrative technologies or novel

bureaucratic innovations. The uses of governance here reflect the

increasing social scientific interest in the changing arrangements of

managing the state. In this way governance is a “change in the meaning of

government, referring to the new process of governing; or a changed

condition of orderly rule; or the new method by which society is

governed� (Rhodes, 1996, pp. 652-653).

Moreover, Rhodes (1996) and Stoker (1997) note that governance,

within a review of related literature of the term, has many meanings

used in a variety of ways and that its usage is “eclectic and relatively

disjointed” (Jessop, 1995). A survey of its theoretical and conceptual roots

would trace to various fields in the social sciences including institutional

economics, international relations, organizational studies, development

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studies, political science, public administration and studies that involvedFoucauldian-inspired theories (Stoker, 1998).

Koiman and Van Vliet (cited in Stoker, 1998) argue that there is awide consensus that governance refers broadly to the increasinglyindistinct nature of public and private domains. Thus, as the private sectoror the market is increasingly transnational, the literature of governancecalls for “post-sovereign governance” (Heywood, 2007) or for “post-nationalgovernance” (Gilpin, 2001).

The article argues that through a three-step reform process, theconfluence of exogenous and endogenous factors, as well as the epistemicprivileged status of neoliberalism during that time, led to the demise ofthe Keynesian state-led governance model and the eventual acceptance ofthe market-led neoliberal governance model. The aims of the article are:(1) to shed light on the governance reform process during the Ramosadministration; (2) to exhibit how international and domestic factorsintertwine in the reform process; (3) to demonstrate how policy reformsare influenced by ideas and not just interests and institutions; and (4) toprovide a normative organizing framework for discussing governance andpublic administration theory in general.

The Rise of the Neoliberal Idea

and the Fall of Others in Governance

The rise of neoliberal theory traces its intellectual roots to the MontPerlin Society led by Austrian Nobel Prize winning economist FredrichVon Hayek. It is a group of historians, philosophers and economists, whichincludes some big-names like Ludwig von Mises, Karl Popper, MiltonFriedman, who subscribed to the fundamental liberal idea of freedom inthe original European sense. Named after the Swiss spa where the firstmeeting was held in 1947, they sought to revive liberal ideas notably atthe time when Keynesian ideas were popular. They extend the invisiblehand principle of Smith and proclaim that state intervention disruptssocial life ascribed to “embedded liberalism” during that time (Harvey,2005). Their founding statement reads:

The central values of civilization are in danger. Over largestretches of the earth’s surface the essential conditions ofhuman dignity and freedom have already disappeared. In othersthey are under constant menace from the development ofcurrent tendencies of policy. The positions of the individual andthe voluntary group are progressively undermined by extensionsof arbitrary power. Even that most precious possession ofWestern Man, freedom of thought and expression, is threatenedby the spread of creeds which, claiming the privilege of tolerance

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when in the position of a minority, seek only to establish aposition of power in which they can suppress and obliterate allviews but their own. The group holds that these developmentshave been fostered by the growth of a view of history whichdenies all absolute moral standards and by the growth oftheories which question the desirability of the rule of law. Itholds further that they have been fostered by a decline of beliefin private property and the competitive market; for without thediûused power and initiative associated with these institutions itis diûcult to imagine a society in which freedom may beeûectively preserved (Harvey, 2005, p. 20).

Furthermore, Harvey (2005) notes that eventually, the groupgarnered financial and political support particularly in the United Statesand the United Kingdom. The Heritage Foundation in the United States,the Institute of Economic Affairs in London, and the Department ofEconomics of the University of Chicago became huge supporters of thegroup and its ideas. Neoliberal ideas became even more respected whenHayek and Friedman won the Nobel Prize for Economics in 1974 and 1976respectively.

Neoliberalism, however, had to be constructed in a way that it wouldfit popular culture to democratically enable it to pervade the macro-political levels and, eventually, the governance structures and policies.These events were just the prelude. Harvey (2005) demonstrates that theconstruction of neoliberal democratic consent included processes thatascribed evil to any form of government intervention. Indeed, as will bedemonstrated later, this is the case that can be seen in the Philippines.

Disaggregating the Neoliberal Governance Principles

The first order of business is defining neoliberalism. Perhaps thebest definition of neoliberalism is provided by David Harvey. He assertsthat “neoliberalism is in the ûrst instance a theory of political economicpractices that proposes that human well-being can best be advanced byliberating individual entrepreneurial freedoms and skills within aninstitutional framework characterized by strong private property rights,free markets, and free trade” (Harvey, 2005, p. 2). At the risk ofoversimplification, a useful way to understand neoliberalism is through ademarcation between market-led rather than state-led governance, withneoliberalism being regarded as the former.

As with classical economics, neoliberalism is a paradigm that adheresto the belief that development and social well-being can be achievedthrough laissez-faire economics or the market mechanism. It has twomutually reinforcing central pillars: economism and marketism (Scholte,

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2005). George Soros (as cited in Somers & Block, 2005) called thisreligious support on the supremacy of Anglo-American capitalism asmarket fundamentalism.

Scholte (2005) defines economism as a development narrative whichadvances the social construction that development policy should beinformed primarily by economics, while all other social considerations aresubordinate or inferior to economic considerations. Scholte further arguesthat the nature of neo-classical economics as a neutral and apoliticalendeavour devoid of any prescriptive and normative dimensions creates ade-politicization of economic policies. The epistemological implications,therefore, are to render the study of economics as primus inter pares

among all policy-relevant social scientific fields that may inform publicpolicy. Thus, the on-going debates between the empirical-positivists andnormative post-positivists account for much of the critique of an emphasison markets and particularly economism. The apolitical pursuit towardseconomic management is, therefore, a direct implication with the neutraland apolitical nature of neoliberalism, or so they claim, puts neoliberalgovernance at a leverage (Scholte, 2005).

On the other hand, Scholte (2005) notes the pillar of marketism ismore specific because it does not only prescribe the primacy of economicsbut also a particular strand of economic thought: neoclassical economics asopposed to Keynesian, social-democratic, developmental, andredistributive justice strands of economic thought. It should be understoodthat it is under the banner of marketism that deregulation, liberalizationand privatization hold water. Government intervention is seen to bedetrimental to the effectiveness of the market in improving the quality oflives of all. Governance and globalization, which are both neoliberal incharacter, have to be primarily understood and propagated in an economicsense. Political, social, cultural and psychosocial underpinnings aremerely subsumed or not considered at all. Where they represent mostlysubjective and value-laden assumptions, the principal pursuit of socialjustice and equity is placed at the altar of efficiency.

While the policy frameworks of privatization, liberalization andderegulation are premised along the undying faith in the market, theirunderpinnings are different in some significant dimensions.

Privatization is essentially the transfer of public or governmentassets and property rights to the private sphere. The transfer process caninclude auctions, offerings of shares, buyouts of employee andmanagement or gifts given outrightly. The documentation of the transferof public assets to private hands reveals a worldwide yield of $304 billionfrom 1988 to 1994. Privatization also included the delegation of policy

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implementation to the private sphere of education, security, developmentcooperation among others (Scholte, 2005).

The diffusion of neoliberal ideas has also permeated publicadministrative thought particularly through the New Public Management(NPM) and governance theories. The NPM is an administrative reformagenda that seeks to adopt private organizational practices to publicbureaucratic practices and to insert private practice to technocraticpractice and thought. The NPM also emphasizes the role of market inservice delivery (Shields & Evans, 1998).

Liberalization on the other hand is the abolishment of quantitativeand qualitative restrictions on the transnational movement of goods,money, services, capital and labor. An operationalization of liberalizationis the existence of export processing zones (EPZs) (Scholte, 2005). TheUNDP (1999) documented about 850 EPZs worldwide. Finally, deregulationemphasizes the removal of rules that disable markets from working.

To accommodate privatization and liberalization, the policy ofderegulation should be in order. Deregulation is not the absence ofregulation. It is rather a regulatory paradigm that posits that governanceshould regulate according to market-enabling and market-facilitative linesrather than a Keynesian conception where there is heavy governmentintervention in the market. In this sense it is not deregulation but “re-regulation.” Western capitalist models of growth facilitate legal regimes,inter alia, in the enforcement of property rights and the provision ofstrong judicial institutions for formal commercial redress.

Production and Reproduction of the Neoliberal Idea

Neoliberalism is a not just a policy or a set of policies. The Merriam-Webster dictionary offers about four definitions of ideology but the themethat stands out is that it is “systematic” and “integrated”. As such, it hasto subscribe to a certain epistemological fulcrum to allow it to be defendedagainst all odds. Neoliberalism is properly hinged on positivism or, in anapplied sense, the neoliberal idea has a “scientific” standing.

The early 20th century saw the widespread acceptance of logicalpositivism or the narrative that paradigms with scientific standing havereplaced other knowledge paradigms that do not have scientific standingeven in the field of governance and development. This has created aprivileging of scientific ideas over non-scientific ideas. That “all ideas arenot created equal” suggests that only some ideas will have world-changingeffects. This is called by Somers and Block (2005) as “epistemic privilege.”

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Some ideas win because they have weathered the positivist challengesover time.

At the onset, it is important to point out that neoliberalism haspolitico-epistemological dimensions. Its first political manifestation is inits pursuit of legitimacy that begins with the knowledge productionprocess. Its rhetoric is borrowed from the belief that it is primarily ascientific pursuit of efficiency hinged on value-neutral, positivist andrational epistemological infrastructures.

As such, neoliberalism appeals to the logic of everyday life and thesocial Darwinian beliefs for upward social mobility in most of us.Neoliberalism appears as “common sense,” meaning it is cognitively andbehaviorally embedded in political and cultural practices of everyday life,creating a broad consensus in many places.

On the other hand, the production and reproduction of the rhetoric ofneoliberalism are concomitantly accompanied, on the one hand, by theconstruction and reconstruction of pursuits such as social-justice and statistand developmental arrangements as “anti-development,” and the continualpolitical and social construction of market-enabling governance mechanism atthe supranational, national and subnational levels on the other.

Looking back, Darrot and Laval (cited in Wacquant, 2012) remarkedthat neoliberalism has not just gained ideological status but also a“‘generalized normativity,’ a ‘global rationality’ that ‘tends to structureand organize, not only the actions of the governing, but also the conduct ofthe governed themselves’ and even their self-conception according toprinciples of competition, efficiency and utility” (p. 70). It is imbibed byindividuals so as to reproduce its narratives on other political, social andcultural units.

Goldstein and Keohane (1993) argued that world views such asideologies are large enough to accommodate inconsistencies and makethem look as if there were none. Just as principled beliefs can change,opposing principled beliefs can still be subsumed under one world view.Peck and Tickell (2002) echo this position somewhat more specifically.They remark that neoliberalism is accompanied by an aggressive pursuitto extend its reach, to manage its internal theoretical and practicalinconsistencies and to protect its hegemonic legitimacy with the use ofpositivist classical economic assumptions. In addition, neoliberalismfosters ahistorical and apolitical treatment of economic policy.

The stature of the idea of neoliberalism empowers the carriers ofneoliberal ideas, in the form of epistemic communities, in the policy

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process. Epistemic communities include an array of professionals withscientific training who have greater participation in bureaucratic decision-making and in the policy process (Haas, 1992). The production andlegitimacy of neoliberalism depend, in part, on the policy actorsthemselves. As mentioned, the neoliberal project was honed first andforemost at the Department of Economics of the University of Chicago,which spread to economics departments of educational institutions inmany parts of the world.

It has to be mentioned that the conception of an objective truth is asocial and mostly political construction that reflects power asymmetriesand deeply serves political ends (Foucault, 1970).

Ideational Explanations of Policy Change and Reforms

Because of the inadequacy of other perspectives in explaining changeor continuity, a number of scholars are now turning into explaining policyreform using the causal power of ideas or ideations in influencing politicaland policy outcomes (Beland & Orenstein, 2010; including but not limitedto: Abdelal, 2007; Barnett & Fennimore, 2004; Berman, 1998; Bleich, 2002;Campbell, 2004; Campbell & Pedersen, 2001; Chwieroth, 2007; Cox, 2001;Epstein, 2008; Finnemore, 1993; Genieys & Smyrl, 2008; Goldstein &Keohane, 1993; Hansen & King, 2001; Jacoby, 2008; Johnson, 2008;Kelley, 2004; Lieberman, 2002; Mintrom, 1997; Moreno and Palier, 2009;Parsons, 2002).

Perhaps this rise of the use of the ideational dimension in politicaland policy analysis is best argued by Daniel Beland (2010). First, ideashelp construct the issues that would merit a problem and eventually usherthem into the policy agenda. Second, ideas help convince policy actors andsociety at large that change is needed. Finally, as ideas have cause-effectassumptions, they help challenge existing institutions and practices.

It cannot be denied that structural (i.e. Marxist class-based analysis,systems theory) and interest-based (i.e. group theory, public-choice theory)theories of public policy and political change are compelling frames toexplain policy change. But regardless if these forms of explanations areinsufficient or not, analytical techniques using ideational reform arecompelling in their own right. So the debate now is not “whether” ideasinfluence policy but, “how” ideas influence policy (Mehta, 2011).

The policy process is not as straight forward as it is. This complexityis exhibited by the existence of many different kinds of ideas and how theyrelate to the policy change or continuity. Jal Mehta (2011) provides three

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different analytic categories of ideas: ideas as policy solutions, ideas asproblem definitions and ideas as public philosophy or zeitgeist. Publicphilosophies encompass all the two categories before it. They serve assolutions to problems as well as ways to define a problem. As mentioned,it is not hard to see why neoliberalism can be considered as publicphilosophy.

Governance reform ideas or ideas for that matter do not get acceptedin a vacuum. They exist and “win” only in certain conditions. Why do someideas “win” over other ideas in the process? Why do some ideas getimplemented and why are some ideas abandoned? What kinds of ideas getaccepted?

These questions assume Sheri Berman’s (2011) three dimensions thatwhen present, ideational policy change can transpire. At the onset,political space has to open up and this occurs when there is a widespreaddissatisfaction over the current ideas. This subsequent opening up ofpolitical space is the phase where a demand for new ideas is created.Dissatisfaction generally occurs when current policy ideas do not providethe answer to current problems. In turn, actors supply the ideas to fill inthe political space.

Lastly, the ideas that “win” or get accepted are the ideas that areperceived to be the best alternative to an existing problem. This lastdimension obviously depends on a large part on the nature of the ideasthemselves. This dimension owes to the possibility that even when someideas are supplied, there is still a question on why they get implementedat all. The functional perspective asserts that some ideas win because theyfit in a given socio-political configuration. For example certain ideas aremore fit in developed rather than developing countries. Also, certain ideaswin because they “make-sense” in a given problem or situation (Berman,2001). In any case, the very nature of the ideas themselves is important.

In the last two crucial steps, the nature of the idea itself has a bigimpact on displacing other reform ideas and on implementing reform.Some ideas are generally plausible while some are not. Structuralarguments, therefore, may be dependent upon the nature of the ideasthemselves.

The Rise of Neoliberalism in the Philippines

The vision is distinctly neoliberal. Ramos set up the three-prongedneoliberal economic plan. First, an unwavering commitment toliberalization was put in place to attract foreign investments and foster

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international competitiveness in the face of worldwide economicliberalism. Second, privatization was accelerated. And third, thederegulation of power, shipping, domestic air transportation, banking, oilindustries and most notably telecommunications through the breaking upof cartels and monopolies were put in place (Abinales & Amoroso, 2005). Itcan be observed that Ramos aligned his development policy objectives withthe on-going neoliberal reconstructions transpiring at the internationalpolitical economic sphere.

The liberalization of trade and industry under the Ramosadministration included the significant lowering and/or removal ofprotectionist policies including tariffs, quantitative restrictions on importon about a hundred of goods except rice, capital controls to usherunprecedented flows of capital, and restrictions on foreign ownership ofmany industries (Abinales & Amoroso, 2005)

The Ramos administration started with fresh and complete neoliberalpolicy reforms of liberalization through aggressive participation inregional multilateral neoliberal economic arrangements and groups mostnotably the Asia-Pacific Economic Cooperation (APEC), the GeneralAgreement on Tariffs and Trade (GATT) of the World Trade Organization(WTO), the Association of Southeast Asian Nations’ (ASEAN’s) Free TradeAgreement (AFTA) (Hutchcroft, 1998, p. 244; Bello, Docena, de Guzman, &Malig, 2004; Abinales & Amoroso, 2005). Incumbent with the“multilateralization” of Philippine neoliberal economic policies (Bello,Docena, de Guzman, & Malig, 2004), a series of complementary andpromise-fulfilling neoliberal economic policies were launched: theliberalization of foreign exchange and foreign investment. Chief of thesebarriers are nationality restrictions on foreign investments. The RamosAdministration prodded the congress to pass yet the most liberalinvestment code among its neighbours through the removal of prohibitionsthereby allowing for the 100 percent foreign equity in almost all sectorsand the passage of Republic Act 8179 allowing foreign firms to enter evenin places where there exist “adequately served domestic firms” (Bello,Docena, de Guzman, & Malig, 2004).

Another core tenet of the neoliberal policy reform program duringthe Ramos administration is the privatization of a host of major firms. TheRamos administration inherited remnants of almost a thousand publiclyowned enterprises from the Aquino and Marcos administrations combined.During the Marcos Administration, there were about 300 publicly ownedcompanies and during the Aquino government, 500 more were publicowned (Abinales & Amoroso, 2005). Among the most notable in theseprivatization schemes were the privatization of Petron (an oil-refiningcorporation), Philippine Airlines and Metropolitan Water and Sewerage

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System (MWSS) – the largest privatization project in the world (Bello,Docena, de Guzman, & Malig, 2004)

To complete the reform package, the deregulation of monopolisticand cartel infested major industries including shipping, airlines and mostprominently the telephone industry, which was virtually only thePhilippine Long Distance Telephone (PLDT), was carried out.

The resulting “gains” according to neoliberal economic yardstick arethe following: annual GNP grew from 5.1 percent in 1994 to about sevenpercent in 1996 (Hutchcroft, 1998); flow of foreign credit grew from 27percent in 1992 to 70 percent in 1997; foreign private investments jumpedfrom $1.6 billion during the time of Marcos, $4.8 billion during Aquino’s to$14.5 billion during Ramos’ time (Araral, 2006); inflation declined from 8.9percent as he assumed office to just around five percent a year before hestepped down (Araral, 2006); unemployment decreased from 10.5 percentto 7.5 percent in 1992 to 1996 respectively particularly because of theinvestments in special economic zones; and, lastly, poverty incidencedecreased from 40 percent in 1991 to 31 percent in 1997 (Araral, 2006.).Privatization, which accelerated mostly under Ramos’ watch, yielded thePhilippines Php300 billion or $12 billion from 1987 to 1998. Liberalizationushered improvements in infrastructure particularly in electricity(Abinales & Amoroso, 2005).

Neoliberalism was also institutionalized into state structures. Themultilateralization of Philippine neoliberalism was pronounced especiallyin Ramos’ reform agenda. Ramos endorsed APEC’s Bogor Declaration of1994 which involved the commitment of members to full set neoliberalreforms (Bello, Docena, de Guzman, & Malig, 2004).

Recognizing that East Asia can attribute its economic success to thedevelopmental state, Ramos’ National Security Adviser Jose Almonte(cited in Araral, 2006) remarked in 1996 that the “Philippine developmentshall have to rely – much more than the East Asian tigers did – on theplay of market forces, with stronger emphasis on [market] incentivesrather than command…” (p.271).

If the success of East Asia’s economic development had to rely onsome heavy state intervention, why did the Philippines have a neoliberalturn in governance?

At that time, neoliberalism had started to rise as a solution for theeconomic woes of individual countries. As mentioned, this was thedominant reform banner in China, the United Kingdom and the UnitedStates in the late 1970s to early 1980s. The demographic mood of the

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“need” for reforms in fact contributed to the end of the Cold War, whichwas dramatically demonstrated in the Fall of the Berlin Wall in which theformer communist-leaning Eastern Germany was forced to liberalize. Thisculminated in the rise of this ideology in the world stage as reforms wereushered in post-communist states immediately after the Cold War.

The following domestic-international mood for reforms provided thestrong currents that created the political space for the entry of new ideasin the Philippine context. Even in this case, the stature of the idea ofneoliberalism had to do with opening up the political space. But how didneoliberal governance reforms latch on to the political space?

Why did fixing economies have to entail the adoption of neoliberalideas? The consensus among those in the government and in civil societyproved to be instrumental in the espousal of neoliberal ideational policyreforms as they latched on and influenced the policy outcomes at thattime.

Policy reforms during the Ramos administration were premised on a“strong state” that in fact would lead some analysts to argue that duringRamos’ time as president, the Philippines was a developmental state(Araral, 2006). The breaking up of cartels previously existing under theambit of regulatory capture exemplifies this point. Further, reformstowards neoliberalism are technocratic in nature. Deregulation,privatization and liberalization are policies that ascribe to specialistknowledge rather than street-level policymaking (Hall, 1989). Both theseconditions would point to a high level of control by the state in the pursuitof reform.

Social forces were in confluence towards the neoliberal restructuring.If there were any opposition exerting its influence in the policy process,they were minimal (Bello, Docena, de Guzman, & Malig, 2004).

Analysing Ramos’ Neoliberal Ideational Policy Reform

As mentioned, ideas enable policy reforms through three phases: thedemise of a prevailing idea and therefore a demand for idea, then thesupply of these ideas from policy actors and lastly its acceptance whichowes to the quality and substance of the ideas themselves.

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Figure 2. Ideational Change in Governance Paradigms

Demand-Side Analysis

In the Philippines the demise of the “Keynesian state” is not becauseof its inability to solve stagflation. The politically illiberal Marcos regime,known for its “crony capitalism” in which most of the economic gains weregiven as “rents” to perpetuate the regime, provided the impetus inreconsidering the role of the state in economics. The prevailing nationalmood towards and discourse on the ineffectual state began domesticallyduring the first Aquino administration as a response to the post-Marcospublic experience. Despite the clear sentiment of many scholars andobservers from the political left that the economic crisis that struck theregion was the fault of liberal economic policies imposed by the WorldBank, the outpouring of dissent that followed the assassination ofopposition leader Benigno Aquino paved way to the legitimization of theadoption of liberal ideas on all fronts (Bello, 2009).

The collapse of the state-planned economy of the Soviet Unionprovided even more impetus at the international level for the decline ofstate-led development. This event gave rise to the widespread publicperception that liberal economics is the best way to go and the observerswho blamed the crisis on it were wrong. On the other hand, the seemingsuccess of the market-prescribing governance prior to the end of the ColdWar, which pitted the record of the United States and the United Kingdomas the two leading powers, made a good case for policy borrowing.

Endogenous or domestic factors are complemented by the exogenousor external factors in discrediting the idea of Keynesian governance, whichin turn provided the opening of the political space of ideas.

Three-Level Ideational Reform

1 Demand

2 Supply

3 Acceptance

Political Change

Fall of State-Led Keynesian Governance

The Rise of Market-Led Neoliberal Governance

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Supply-Side Analysis

The sponsors of these ideas are a domestic epistemic community ofnotable economics- and business-trained scholars and experts who wereschooled in the United States at the time when liberal economics wasgaining ground. Many of them were housed at the University of thePhilippines and in economic management departments of the Ramosadministration.

Thus, the neoliberal-leaning domestic epistemic communitypermeated in many of the important executive positions in key economicagencies. These include among many others, Harvard-trained advisers likeCielito Habito as the secretary of the government’s socio-economicplanning agency, the National Economic and Development Authority(NEDA) (Bello, Docena, de Guzman, & Malig, 2004). Others but not limitedto, include Rizalino Navarro as the secretary of the Department of Tradeand Industry who was replaced by his classmate at Harvard, Ramon DelRosario, and former World Bank (WB) staff Roberto de Ocampo wasappointed as the Secretary of Finance.

Likewise, a confluence of neoliberal supporters and lobbyistspermeated civil society and the legislative branches. The academe—theUniversity of the Philippines School of Economics and the University ofAsia and the Pacific (formerly Center for Research and Communication)—housed these thought leaders. The likes of Dr. Bernardo Villegas, inter

alia, earning both master’s and doctoral degrees in economics at Harvardafter finishing at De La Salle proved instrumental. Then PhilippineSenator Gloria Macapagal Arroyo was herself a prominent neoliberal.Additionally, the University of the Philippines School of Economicsreleased a prominent anti-Marcos white paper that was warmly receivedby many (Bello, 2009). While this is the case, Bello (2009) notes that theleft-wing players who advocated a state-led governance were out of thepicture. The Left was preoccupied with their regrouping, an outcome oftheir failure to participate in the last leg of the ousting of the Marcosdictatorship. Because of this, they were unable to match the positionalpower of right-wing scholars and economic managers.

Certainly, those who supported the neoliberalism had two options: tobask in the glory of winning the Cold War and let “res ipsa loquitur” or “letthe thing speak for itself;” or to use this as an opportunity for policyborrowing and policy learning as a case for neoliberalism.

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Policy Acceptance

The neoliberal idea is not just the ability to co-opt anti-statistsentiments, but since neoliberalism is ahistorical and apolitical, they caneither deny that the structural adjustment programs were the cause of thecrisis or opine that policy should not be based on historical learning. Bothare based on the positivistic orientation of neoliberalism. As mentioned,this gives neoliberalism its “epistemic privilege”.

Figure 3 summarizes the analytical position this article postulates.

Figure 3. Schematic Representation of Ideational Reform

in the Ramos Administration

Three-Level

Ideational Reform

1 Demand

2 Supply

3 Acceptance

Political Change

Fall of KeynesianState-Led

Governance

The Rise ofNeoliberal Market-

Led Governance

Endogenous

Anti-State Post-Marcos National

Mood

Power of Right-wing "ScholarActivists" and

failure of left-wingscholars

Exogenous

Collapse of the SovietUnion and the end of

the Cold War

Policy Borrowing andLearning: Market-led

reforms in the U.S.and the U.K.

Independent Variables of Policy Change

Epistemic Privilege of Neoliberalism

Conclusions

The article argued that the neoliberal turn in governance during theRamos administration was influenced by both domestic and internationalideational factors through a three-step reform process. At theinternational level, the collapse of the Soviet Union’s planned economyand the end of the Cold War gave rise to the demand of new ideas andlegitimacy to those who proposed neoliberalism as the governance modelthat states should adopt. This coincided with the general post-Marcos anti-state sentiments that engendered the Philippines at the time of Ramos aswell as the inability of those who are against neoliberalism to consolidatetheir power and influence policy. These two dimensions are supplementedby the fact that neoliberalism in itself garnered an “epistemic privileged”status both internationally and domestically.

July-December


Governance theory, in general and in many writings in the field ofpublic administration including the New Public Management andgovernance theories, was influenced by neoliberalism as an ideology. Inthis sense, neoliberalism is an organizing framework that informs theoriesof public administration and governance. Furthermore, the reform processusing ideas may be a guiding analytic device for thinking about publicpolicy theory, as many have argued before.

The ideational framework of analysis can help map continuity andchange in public administrative and programmatic thought as well and notjust in policy and political analysis. The continuum of administrativethought and practice from traditional public administrative on one hand togovernance on the other can undoubtedly be illuminated with ideationalanalysis. In terms of policy analysis, the dominance of the use ofeconomistic rather than a Rawlsian analytic method can also beinvestigated. Furthermore, highlighted in this article are an interestingmix of international and domestic analyses – a mix that should not beignored. Too many times, the international dimension is ignored and ifmentioned, not properly theorized. This article provided some examplesfor future research using ideas as an analytic tool.

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Documents

Neoliberal Governance in the Philippines: Ideational Policy Reform in the Ramos Administration 1992-1998