Constructivist Reflections on the Philippine Political Economy

(This piece was written primarily as a reaction to my International Political Economy professor's, Prof. Amado Mendoza, opinion piece on his Interaksyon opinion column, entitled "How did the PH economy grow despite the messy political situation? Since then, I have realized it is not a reaction piece, but a reflection. I found that I could not disagree with the critical mind of my Professor... at least regarding this article.)

Photo adopted from the article

Organized around the title question of the opinion piece, the author, Professor Amado Mendoza, makes two thesis statements—first, the policy lag in time from the first point of implementation to the point of the policy fully taking effect makes the results of past economic reforms impervious to the present’s political instability.

Second, the perception of good governance effectively hides and trumps the material reality of incompetence of the current administration. Both hypotheses are with merit. Indeed, macroeconomic policy is as much as getting the correct policy as implementing it at the right time.

Economists and policymakers recognize the difficulty of timing in pursuing certain policies because of lags. The complexity of both the legislative and administrative process creates a temporal disjunction between problems and solutions; the problem and its situational context may change while the solution is still being legislated or implemented.

Macroeconomic policies, therefore, may see its impact only beyond the tenure of the administration that proposed it. The author recognizes this and gives credit to the Ramos administration, three administrations before the current Aquino one, for today’s economic growth. The policy lag effect is common knowledge and already reaches the awareness of Filipinos as part of the mainstream discourse.

The author’s more innovative analysis lies in his argument of “perceptions become material force.” Owing much to the constructivist school, the author recognizes the disconnection between ideational perceptions and material reality. Constructivism, founded on an ontology of subjectivity, argues that reality is not an exogenous and natural fact of life; rather it is constructed by the beliefs, values and norms of society.

In other words, what is real is what is in the heads of the people. President Aquino owes much to his campaign managers who concocted the idea of running under the image of good governance and anti-corruption.

The image is a powerful and resilient one simply because it is consistent with the larger Asian norm structure. Experiences with corrupt authoritarian AND democratic leaders created a strong desire in the Philippines for good governance and anti-corruption.

Indeed, the genius of this presidency, if there is any at all, is the campaign slogan that sticks.

The author relates this to the resilience of economic growth in the face of political instability by describing the nature of today’s economy. Indeed, the economy today is characterized by activities that largely care about perception. The speculative nature of the stock market and other short-term investments like real estate are the current drivers of the Philippine economy, with the Philippine Stock Exchange reaching all-time highs and the real estate market expanding to unforeseen levels.

Noticeably absent are long-term investments in the manufacturing sector that are particularly sensitive to material realities and fundamentals. Considering this fact, it is scary to imagine what will happen to the Philippine economy when perceptions finally catch up with reality.