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In Session: Implementing Dictatorship: The Establishment of Marcos' Martial Law Regime in the Philippines in the Early 1970s
4: Marcosian Capital: Credit Creation and the Economics of Martial Law
Friday, March 26, 2021
12:00pm – 1:30pm EDT
University of California, Berkeley, United States
US imperialism in the Philippines embedded a preference for austere macroeconomic policy: a strong currency that mimicked the “stability” of the gold standard, credit restriction, and low inflation. Because of this American legacy, financial thinking in the immediate postwar period was severely circumscribed. For example, unlike Japanese policymakers who studied in Germany and learned inflationary Schumpeterian economics, Filipino economic managers had a limited toolkit for credit creation. Ferdinand Marcos was the first president to be open to policies of currency depreciation and inflationary spending as a tool to transition the economy toward export-oriented industrialization. This was largely because Marcos tapped a generation of economic technocrats who were willing to depart from the shibboleths of the early twentieth century.
This paper is an intellectual history of these economic thinkers, with a specific emphasis on economic planning director Gerardo Sicat and finance minister Cesar Virata. It looks at how the thinking of these individuals departed from the austere orthodoxies of the immediate postwar period. Building on the work of Caroline Hau, it argues that, although the Marcosian developmental project had failed by the early 1980s, this failure was not preordained. It also contends that the corruption and violence of the Marcos regime tainted the strategies of aggressive credit generation that Sicat and Virata had advocated, causing Filipino policymakers in the post-Marcos period to revert to the American-era orthodoxy of credit restriction.