Elites and Economic Development

“Elites and Economic Development in Underdeveloped Countries” was the complete title of Antonio S. Araneta, Jr’s (my husband) thesis for a Bachelor of Arts degree at the Notre Dame University (Indiana, USA) in 1959. Since then, terminologies have changed even as most concepts have remained ineluctable. Tonypet (his nickname) could have used “developing countries”, even “Third World” (Tier Monde) which was how, in 1952, French anthropologist Alfred Sauvy described countries that played a minimal role in world affairs. Perhaps, Notre Dame University did not subscribe to “L’Observateur” where Sauvy first used “Third World”. In 1974, Chairman Mao Zedong launched the “Three World “ concept and during a UN General Assembly 6th Special Session, Deng Xiaoping applied Mao’s Three Worlds to the New International Economic Order.

Going back to Tonypet’s thesis, it had five parts– (1) The Problem, (2) Impediments, (3) Anti-Americanism, Filipinism and Pro-Communism, (4) Attitudes, (5) Summary and Conclusions. I have space only for the first two in this column.

The Problem: The elites affect the economic development of society in a negative way. However, that does not mean that by their very nature the elites are against economic development. Liquidating them as a class, “if ever possible”, will not accelerate the process of economic development. The elites in an underdeveloped country could become “economic entrepreneurs of productive enterprises and hence lead the way to the economic and social advancement of the nation.” Strangely enough, Tonypet did not use Filipino examples, like his father, Anntonio, and entrepreneurial uncles, Salvador and Vicente. Instead, he used a Mexican, Francisco I. Madero, “a member of one of the wealthiest families in Mexico, who was a major figure in the Mexican revolution in 1910.” Señor Madero, a businessman and revolutionary, became the 37th president of Mexico in 1911, but was deposed in a coup d’etat in 1913, and assassinated.

In the Philippines, argued Tonypet, the elites are a “relatively small number of persons who hold directly or indirectly powerful positions of decision-making and thus greatly influence the economy, society and government.” He also said the elites and the masses cannot be considered as two distinct groups inevitably opposed to each other, and that the relation of the former to the rest of the population can best be described as a continuum. In Southeast Asia, members of the elite descended from the colonizers of this region. (He must have had his family in mind.) There is a preponderance of foreigners and foreign-oriented nationals in the ranks of the elite.

Impediments: The land problem caused mainly by the elites is “the most obvious obstacle to economic development” and the reason why the tenant farmer suffers grinding poverty. A peasant’s low output cannot cover consumption needs, so he recurs to loan sharks. “The peasant is not provided with any tool to break the chain of indebtedness,” wrote Tonypet, “ However, the history of peonage antedates Spanish colonization. It arose in the first instance from the kasama sharecropper system which was widespread in Malay society.” He consulted books by foreign authors like Douglas F. Dowd and Bruno Lasker as he has no personal knowledge of this matter.

During the Commonwealth, most of the framers of the 1935 Constitution were landed elite who had their privileges in mind. As a result, in conflicts between landlords and tenants, or between landlords and the State in cases of expropriation, the question of constitutionality was always raised by land owners.

The land problem is an impediment to industrialization; Tonypet used Mexico’s ejido system as an example of how agrarian reform could stem unrest. After the Mexican social revolution, the State gave peasant communities land grants with usufruct rights, not ownership. ( Lamentably, that ended in 1991 when Mexico entered the North American Free Trade Agreement. )

Free trade was a festering impediment to economic development via industrialization because of the unrestricted entry of duty-free American products. In the long run, it prevented the growth of a self-sufficient and stable economy that could support a population expanding at a very rapid rate. At the time of writing his thesis, Tonypet observed that: “A nation’s income rises as it develops its industries. “ He also said that aliens control the Philippine economy as well as production and the distribution of wealth. “ The higher the level of industrialization, the more the income. It is from processing raw materials extracted from the land, rather than drawing direct income from the land that brings about a high standard of living…We do not process our raw materials so opportunities for employment are lost… Instead of engaging in production, people who have the ability to accumulate wealth by producing what the nation needs, direct their efforts towards devising get-rich schemes, or become agents of foreign interests.” Glaringly, the problems and impediments Tonypet pointed out in his 1959 undergrad thesis remain unresolved.