Booty Capitalism: The Politics of Banking in the Philippines

Booty Capitalism: The Politics of Banking in the Philippines

Booty Capitalism: The Politics of Banking in the Philippines

Booty Capitalism: The Politics of Banking in the Philippines


In the early postwar years, the Philippines seemed poised for long-term economic success; within the region, only Japan had a higher standard of living. By the early 1990s, however, the country was dismissed as a perennial aspirant to the ranks of newly industrializing economies, unable to convert its substantial developmental assets into developmental success. Major reforms of the mid-1990s bring new hope, explains Paul D. Hutchcroft, but accompanying economic gains remain relatively modest and short-lived.

What has gone wrong? The Philippines should have all the ingredients for developmental success: tremendous entrepreneurial talents; a well-educated and anglophone workforce; a rich endowment of natural resources; a vibrant community of economists and development specialists; and abundant overseas assistance. Hutchcroft attributes the laggard economic performance to long-standing deficiencies in the Philippine political sphere. The country's experience, he asserts, illuminates the relationship between political and economic development in the modern Third World. Through careful examination of interactions between the state and the major families of the oligarchy in the banking sector since 1960, Hutchcroft shows the political obstacles to Philippine development.

"Booty capitalism", he explains, emerged from relations between a patrimonial state and a predatory oligarchy. Hutchcroft concludes by examining the capacity of recent reform efforts to encourage transformation toward a political, economic order more responsive to the developmental needs of the Philippine nation as a whole.


The end of the Cold War has focused increasing attention on variation among capitalist systems. Now that the struggle between communism and capitalism has given way to continual shifts in intra-capitalist rivalry and cooperation, the diversity among "free-market" economies has become more apparent than at any time in the last half century. Nowhere can one find greater variation than in the so-called developing world or Third World (both terms, in their own way, of distinctly Cold War vintage); the astounding growth of newly industrialized countries in East Asia, it is often observed, offers an especially dramatic contrast with the stagnation of much of sub-Saharan Africa.

Unfortunately, modern political economy often provides little guidance in analyzing this variation. Amid today's widespread praise for the "magic of the marketplace," it is not always clear why the tricks of capitalist sorcery vary so enormously from one political setting to another: some states are clearly obstacles to sustained development, while others very successfully guide their economies through the most challenging of externally imposed obstacles. Careful examination of the Philippine political economy, this book demonstrates, offers valuable insights into the relationship between political and economic development in the Third World as a whole. Most of all, analysis of the Philippine experience highlights the centrality of sound political foundations to successful economic development.

My interest in the Philippines significantly predates any particular concern with intra-capitalist variation, government-business relations, or the politics of banking. This work emerges out of a long journey, tracing its origins to my first arrival in the Philippines over fifteen years ago. As part of a church-based program concerned with human rights and development issues, I traveled throughout the archipelago and learned firsthand of the political commitments of a broad range of Filipino society. My ties to the . . .

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