The Economic Consequences of Dictatorship

One of the many myths peddled by Marcos apologists and martial law fans is that the Marcos dictatorial rule brought about a booming economy and the country was enjoying its halcyon days contrary to what economic experts tell us. They also claim that the declaration of martial law was a historical necessity, a matter of survival for the nation.

In his essay entitled “The political economy under martial law” which is now part of the compilation of writings Not On Our Watch by former members of the League of Editors for a Democratic Society (LEADS), Calixto V. Chikiamco, former editor in chief of The Lasallian and a member of the Samahang Demokratikong Kabataan (SDK)-La Salle Chapter during his activist days, dispelled one of the persistent fallacies about the declaration of martial law, ie. that it was declared to stamp out Communist rebellion. For him, martial law was not a historical accident but merely a logical extension of a politico-economic system based on rent-seeking elite in order to monopolize the economic favors emanating from the State. It represented the response of a faction of the rent-seeking elite to the grave political and economic crisis into which the country was plunged after the presidential election of 1969, he added.

Under a compliant Central Bank, which was not institutionally independent from the Executive at that time, Marcos printed money. The inevitable result after the election was rampant inflation and another foreign exchange crisis. The resulting economic crisis produced tremendous hardship.

Monopolies, which dominated the economy, simply passed on the crisis to the public by way of even higher prices. Unemployment and inflation reached more than 20 percent. In the Philippines, the 1970s became known as the era of “debt-driven growth.” Marcos style crony capitalism became the dominant feature of the economy. The internal dynamics of a rent-seeking system, where control of the State produced enormous economic privilege, led him to that decision.

Martial law eliminated political competition and expanded the monopolistic privileges of his faction, Chikiamco wrote. According to him, the “law of motion” then of the country’s rent seeking system led to the imposition of martial law. Martial law did not just “fall from the skies,” according to him. It represented the logical development of the historical forces that had birthed and shaped the country’s rent-seeking system.

One other interesting aspect of the Marcos rule is presented by Victor Manarang in his essay “Marcos’s Dark Legacy to the Nation” where he recounts his experiences as a long-time executive of Ayala Corporation, one of the preeminent conglomerates in the country then and now. Well researched and documented treatises have been published on how the regime and its allies concentrated control of the Philippine’s major export products, such as sugar and coconut, in their own hands then manipulated the prices of those commodities to levels that encouraged other countries to produce them (or their substitutes) more efficiently, and eventually displace us in the world markets, leading to the irreparable collapse of entire Philippine industries, he wrote.

Manarang worked with the Ayala Group for a long time, initially at corporate planning at Ayala Corporation and later at project management. He learned a lot about business management, but also snippets about corporate survival and opportunism in the crisis atmosphere of martial law.  According to him executive lunchroom talk included how members of the owning family sought to protect themselves as they realized that Marcos and his cronies were grabbing Philippine business groups left and right. They brought in very influential strategic partners as stockholders. The strategy must have worked because neither of the Ayala flagships was threatened during the Marcos regime. Some after Marcos was ousted in 1986, President Corazon Aquino sequestered the television and radio stations. Maranang became part of a small team of volunteers who temporarily took over the management of these broadcast networks. He was designated comptroller.

As is shown, different people reacted differently to the ferment of those days. While many accepted their lot with a sense of fatalism and surrender, others still who benefited politically or economically, embraced the regime with eagerness, impelled as they were with the desire to take advantage of the regime’s largesse; many more, like the contributors in this book, engaged in silent or active protests against the Marcos tyrannical rule and the injustices of his regime. These are the patriots who love their country more than themselves; who would rather put their lives on the line rather than accept their fate sitting down, like lambs to the slaughter.

In his essay, Chikiamco quoted a passage from Karl Marx’s “The eighteenth Brumier of Napolen Bonaparte” on why the memories of the past still matter even up to the present. Thus, he quotes “Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like a nightmare on the brains of the living.”


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