Crisis of the Semifeudal Economy - Lectures on Phillippine Crisis and Revolution

Crisis of the Semifeudal Economy
By Jose Maria Sison
Second in a Series of Lectures
on Philippine Crisis and Revolution
April 18, 1986

U.S. monopoly capitalism has impacted on the Philippine economy
to shape it into a semifeudal one, and put it firmly within the
orbit of the world capitalist system. The commodity system has
prevailed over the natural economy of self-sufficiency. But
domestic feudalism has merely subordinated itself to an external
industrial power.

The distinctness of the Philippine mode of production is due
mainly to its deepseated prior feudal character in the 19th
century, the persistence of feudalism and the evolvement of
semifeudal relations that mediate U.S. monopoly capitalism and
domestic feudalism.

Let us describe first the current forces and relations of
production that comprise the semifeudal mode of production in the
Philippines. Then we can discuss the ever worsening economic
crisis due to foreign monopoly capitalism, domestic feudalism,
and bureaucratic corruption.

The Productive Forces

The forces of production are mainly agrarian and nonindustrial.
They are generally of a low level of technology. They are
backward or underdeveloped.

Agricultural land totaling 12 million hectares in 1980 is the
principal means of production. It produces the food staples for
domestic consumption; the overwhelming bulk of surplus products
for export and some amount of raw materials for local processing.

There is negligible use of modern farm technology beyond peasant
brawn, hand tools, plow and work animals on lands devoted to
rice, corn and coconut, all of which comprise 90.4 percent of
total agricultural land. The promotion of costly imported farm
inputs and equipment during the 70s affected only a few hundred
thousands of hectares. Estimates range from 500,000 to 800,000
hectares.

Even on land devoted to sugarcane, banana, pineapple and other
new crops for export, which comprises no more that 7 percent of
total agricultural land, and where there is relatively more
impressive use of tractors and chemicals, reliance on sheer brawn
and traditional peasant tools is still widespread. No more than 4
percent of total agricultural land is worked by tractors and
other farm machinery.

Every piece of modern equipment in the agricultural, industrial
and service sectors of the economy is imported. It is paid for
with foreign exchange earned on raw material exports, mostly
agricultural. Deficits incurred in foreign trade are covered by
foreign loans and earnings on the export of labor.

Even hand tools are imported to the extent of 85 percent. And of
course, the remaining 15 percent are fabricated locally from
imported metals. There are no well-established industries which
produce from the available local raw material basic metals, basic
chemicals, capital goods and the like.

What is passed off as the industrial sector consists of mining
and quarrying, construction, utilities and light manufacturing
which are all dependent on imported equipment, basically
processed materials, semi-processed materials and raw materials,
especially fuel.

And of course, the service sector which consists of transport,
communications and storage, trading and banking and other
services, including government, entertainment and the like, is
also dependent on imported equipment.

The People in Production

According to NEDA figures, there were nine million peasants and
farm workers, accounting for 52 percent of employment; 2.5
million industrial workers, 14 percent; and six million service
workers, 34 percent, in 1979, which was a year of economic growth
still bloated by excessive foreign borrowing.

These figures indicate, therefore, that peasants and farm workers
comprise 78 percent of the direct producers of goods and
industrial workers 22 percent. There are four peasants for every
industrial worker.

Most peasants (poor and middle peasants) have the following means
of supplementary livelihood: farm work for others, fishing,
forestry and animal husbandry, handicrafts, construction or
carpentry, hauling and petty peddling. Seasonal farm work is the
most common sideline occupation, and is the main recourse for
surplus labor in the countryside.

Only 74 percent of industrial workers are in manufacturing; and
in turn 70 percent of workers in manufacturing are employed in
small fabricating and repair shops, each employing less than ten
workers and therefore hardly qualifying as truly manufacturing
enterprises.

The figure for employment in the service sector is bloated by
decreases of employment in the agricultural and industrial
sectors during the 70s. Agricultural employment went down from 59
percent in 1970 to 52 percent in 1979; and industrial employment
from 17.6 percent in 1970 to 14 percent in 1979. The employment
rate of the real producers of goods has decreased from year to
year since 1979.

Only a minority of service workers-possibly not more than 30
percent-are regular wage earners. In the main, these regular wage
earners are employed by the government and by the multinational,
big comprador and middle bourgeois firms. Most of the so-called
service workers are actually underemployed or have no regular
employment or are even unemployed but are misrepresented by
government statistics as fully employed.

Productive Relations

The comprador big bourgeoisie is the dominant class in the
relations of production. It determines the semifeudal character
of the economy. As the chief trading and financial agent of U.S.
monopoly capitalism, it lords over the commodity system and
decides the system of production and distribution.

The big compradors own the highest concentration of capital
(merchant capital) involved in the unequal exchange of
raw-materials exports and manufactured imports. They amass
commercial profits through import-export operations and domestic
wholesale; and interest through banks and quasi-banks.

In most or many cases, they are big landlords because their
landed estates are their reliable sources of export crops. They
also invest heavily in mining and other extractive enterprises;
service enterprises other than banking and trading and
import-dependent enterprises.

Upon the behest of U.S. monopoly capitalism and in accordance
with their own class interest, the comprador big bourgeoisie
opposes and prevents the comprehensive industrialization of the
Philippines and shares with the landlord class the fear of land
reform.

The landlord class remains a distinct class. It now runs second
to the comprador big bourgeoisie as the exploiting class. It owns
the largest tracts of land and amasses land rent from the
tenants. It also engages in other forms of exploitation such as
the hiring of farm workers, usury, unfair trading of crops and
farm inputs, renting out of farm equipment and animals at
excessive rates, and so on.

The landlord class is far more widespread than the comprador big
bourgeoisie based in the cities. At the first instance, it
collects the largest amount of surplus products in the country,
not only from the tenants and farm workers, but from all the
peasant masses.

From this surplus product, the landlord class yields to the
comprador big bourgeoisie payments for imported goods for high
consumption, as well as for the productive needs of agriculture.
The foreign monopolies extract their superprofits through the big
compradors or through direct subsidiaries.

The landlords own most of the best agricultural land and continue
to accumulate land. They take away the surplus product not only
from the greatest number of real producers, but also from the
course of national industrialization.

The big bureaucrat capitalists are big compradors and big
landlords who have stood out as such by using their public
offices, privileges issued by the state, state banks and state
enterprises to amass private capital and land. In Philippine
history, the most outstanding example of bureaucrat capitalism
would be that of the fallen Marcos regime.

Using his autocratic power, Marcos was able to manipulate
government firms and projects, foreign loans, export earnings,
state funds and privileges to make his family and his cronies the
wealthiest and most exploitative clique of big comprador and
landlords, surpassing the long-established super-rich like the
Roxases, Ayalas, Zobels and Sorianos. The problem now of the
fallen Marcos clique is how to retain most of its assets in the
face of the Commission of Good Government.

National entrepreneurs who are mainly in light manufacturing and
own the means of production, belong to the middle bourgeoisie.
They use local and imported components in varying degrees. They
have a desire to push national industrialization forward and
assume the prime position in the economy, but are pressed down by
the foreign monopolies, the big compradors and the landlords.

The entrepreneurial middle bourgeoisie is directly engaged in the
management of its productive enterprises. It engages in the
exploitation of workers through the extraction of surplus value,
and often gives wages that are lower than those given by foreign
and big comprador firms. But these firms actually reap a higher
rate of profit; and worse, they take out their superprofits from
the country or divert these from the course of national
industrialization.

The urban petty bourgeoisie in general undergoes increasing
exploitation in time of ever worsening crisis, tends to side with
the working class and peasantry, and influences the national
bourgeoisie to oppose modern imperialism, domestic feudalism, and
bureaucratic corruption.

The industrial proletariat is the most progressive productive
force in the country today. It sells its labor power to the
owners of capital. It suffers from low wage that are further
eroded by the ever-soaring prices of prime commodities. Mass
layoffs and lack of new job opportunities are always threatening
the workers in the current crisis.

The industrial proletariat comprises some 15 percent of the
people. It is desirous of national industrialization so as to
enlarge its number and strength, and thus is exceedingly eager to
struggle against foreign and feudal domination.

The peasant is the most numerous and exploited class in the
semifeudal economy. It consists of some 75 percent of the people.
It suffers from feudal and semifeudal exactions, and struggles
for land reform.

The peasantry is vehemently opposed to the rapid accumulation of
land by Filipino landlords and foreign agricorporations. The
displacement of peasants from the land is rapidly increasing the
ranks of farm workers and peasant revolutionaries.

Ever Worsening Economic Crisis

Being an appendage of U.S. monopoly capitalism, the Philippine
agrarian semifeudal economy suffers from U.S. trade and
investment policies, which are dictated to Philippine authorities
directly by U.S. authorities, multinational firms and banks; and
through multilateral agencies like the IMF and the World Bank.

The U.S. does not wish the Philippines to undertake national
industrialization and genuine land reform because it wants to
perpetuate the unequal exchange of its surplus manufactured goods
and cheap Philippine raw materials. It also wants to dump its
surplus agricultural products on the Philippines.

The U.S. is pushing import liberalization hard because it wants
to pursue a trade offensive to reduce its huge trade deficits.
Import liberalization will certainly smash the small number of
Filipino industries, which are dependent on imported equipment,
basically processed components, semi-processed components, and
raw materials, especially fuel.

The U.S. is always demanding the free flow of foreign direct
investments into the country and the most excessive privileges
for these, including the most blatant violation of economic
sovereignty, tax exemption, accelerated depreciation allowances,
unrestricted capital repatriation and profit remittances, and so
on.

But in fact U.S. direct investments have moved into the country
unevenly and into quick profit areas. A small amount of
investment fetches huge amounts of superprofits. The U.S. has
always made sure that it controls strategic lines of business but
makes its investments in such a way that these do not result in
the fundamental and comprehensive industrialization of the
country and in a balanced economy.

The Philippine economy is now required to concentrate on
agriculture after a period of being overloaded with foreign loans
for infrastructure projects, agricultural and mining mills,
five-star hotels and other grandiose tourism facilities, and
other unproductive or remotely productive projects.

With agricultural exports as the mainstay for earning foreign
exchange, the Philippines suffered an accumulated total trade
deficit of $16 billion from 1972 to 1983. There is not any number
of agricultural products which can earn enough foreign exchange,
even only to reduce the foreign trade deficits. The method being
used lately to reduce foreign trade deficits is to reduce
imports, including the most essential goods for local industries.
Thus, the entire economy is depressed both by a failure to sell
Philippine raw-material exports in sufficient volume and at a
good price and by the idling of Philippine industries.

The Philippines is overloaded with foreign loans that it can
never really pay back from its agrarian economy. The accumulated
foreign debt is now $20 billion. The Philippines will continue to
sink deeper into the debt trap. Even only to keep up with debt
service payments, now about $3 billion a year, the Philippines
will have to incur new foreign debts. The Philippine foreign debt
crisis will be further aggravated by the reduction of foreign
exchange earnings for labor export.

The U.S. wants to press down wages and increase the tax burden
even as local industries and agriculture are depressed. And yet
the inflation rate is high because of both demand-pull due to the
scarcity of goods and cost-push due to the heavier tax burden,
budgetary deficits, high interest rates and debt service
payments.

U.S. monopoly capitalism is objectively and unwittingly killing
the Philippine economic system. This phenomenon of murder emerged
clearly when the U.S. pushed its pseudodevelopment and
anti-industrialization program through the Marcos fascist
dictatorship which was supported by an avalanche of foreign
loans, encouraged to aggravate and deepen the agrarian and
semifeudal character of the economy, and which was given all the
leeway to undertake the most unbridled bureaucratic corruption
and build up the coercive apparatuses of the state.

The political downfall of Marcos and his cronies does not
necessarily solve the ever worsening economic crisis. A major
portion of their assets in capital and land, which includes at
least $10 billion stashed away abroad, may be successfully
confiscated by the state. But this will eventually fall into the
hands of another faction of the same big comprador and landlord
class.

What is an obvious fact is that the economy has been bled white.
And what is developing is a more violent struggle for economic
and political power among factions of the exploiting classes. At
least two factions, the Aquino and Marcos factions, are girding
and maneuvering for a battle royale under conditions of an ever
worsening socioeconomic crisis.

The national bourgeoisie is agitated by the threat of being wiped
out economically by import liberalization and other antinational
and anti-industrial policies, and tends to make stronger demands
for protection.

The urban petty bourgeoisie continues to suffer a worsening life
of misery and want. It does not cease to swing towards the
direction of revolutionary politics and conjoin with the toiling
masses in a common struggle. The intelligentsia is most revolted
by the fact that its professional and technical skills are
ill-remunerated or are being wasted in a depressed semifeudal
economy.

The working class is incensed by rampant unemployment, low wages
and ceaseless inflation. This class is continuously turning the
trade union movement into a school of revolution. Many of the
disemployed workers have given up job-hunting and are turning in
the direction of social revolution.

The continued thrust of the U.S. and reactionary economic policy
to promote plantation projects is absurd in the face of a
depressed world market for agricultural commodities, and yet if
it succeeds it is bound to exacerbate the land problem and incite
further peasant unrest and armed revolution in the countryside.

It is the rapid accumulation of land by old and new-style
landlords, sweeping over old settlements and overtaking new
settlements in the frontier areas, which has made fertile the
ground for a peasant-based and proletarian-led armed revolution
in a semicolonial and semifeudal country bereft of an
industrialization program to absorb displaced peasants.

Every major policy and course of action being undertaken within
the parameters of the semifeudal economy is coming to a dead end.
The contradictions within the mode of production are leading to
social revolution.#

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