As we noted in our last post, there is a far more charitable account of the Marcos dictatorship after 1972 in the Philippines than brought to mind by Imelda’s 3,000 pairs of shoes.
Marcos himself argued that the move to autocracy was needed to discipline the oligarchs and discipline them he did.
The Lopez family was one of these. Before martial law Marcos had Fernando Lopez as his vice president as part of a strategy to co-opt the oligarchs. But after 1972 Marcos discarded him and expropriated his assets, sugar estates, media empire and power generating plants. He cowed the rest of the sugar oligarchs into submission. He also centralized the state and embarked on an attempt to promote industrial exports.
In these strategies and aspirations Marcos was quite similar to Park Chung-Hee in South Korea. Park rose to power in a coup in 1961 and one of his first acts was to arrest and lock up business oligarchs on the grounds that they were “illicit profiteers”. Park similarly abandoned the attempt to keep himself in power through elections in 1972, just as Marcos did. He also famously launched an ambitious export-driven industrialization plan.
The difference between the Marcos and the Park experiences, however, is that while the latter was a huge economic success, the first collapsed into an orgy of rent seeking and looting of the state. Why the difference?
This takes us back to the history and in particular the history of the construction of the state. As we saw in our previous post, the state in the Philippines was built from the bottom up in a way which facilitated its capture by the oligarchy. This captured state was highly patrimonial, largely lacking meritocratic recruitment and promotion of the bureaucracy for example. Appointments were made on the basis of political criteria, for example, ability to help win elections.
The history of the state in South Korea was very different. As Peter Evans pointed out in his seminal book on comparative economic development, Embedded Autonomy, the Korean state developed by Park was able to tap into a rich history of meritocracy dating back to an examination system which the pre-colonial Korean state had adopted from imperial China. Both Park and Marcos tried to build the state, but they worked in the context of very different historical legacies and contemporary politics. In Korea, land reform had obliterated much of the traditional elites.
Ultimately, both Park and Marcos attempted to launch what we call “extractive growth” in Why Nations Fail. This was a success in Korea but not in the Philippines because Marcos did not have the type of state that was capable for generating economic growth from above. In Korea, Park was able to create hard budget constraints, and credible rewards and punishments for economic success and failure. Marcos had no such option with his captured patrimonial state. Perhaps the looting started because he realized that Korean style industrialization was not an option in the Philippines (though in fact there is evidence that it dates back to the 1960s).
All that being said, as we also point out in Why Nations Fail, even Korean growth could not have been sustained without the transition to inclusive political institutions and away from Park’s authoritarian regime.
But equally importantly, the Philippines experience also suggests that extractive growth is not even a transitory option for countries lacking the type of centralized state that Park inherited and strengthened.