Juan Paolo B. Ignacio

In honor of the former dictator’s birthday last September 11, President Ferdinand Marcos Jr. emphasized that the path to a new Philippines is towards a “more equitable, sustainable, and resilient one.” He did not stop in praising the former by saying that Marcos Sr. fought for peace and order as well as being proud of the “dreams that he left in the hearts of many.” Behind the heroic and praiseworthy image, Marcos Sr. in truth, is the opposite. Because it was during the Martial Law period when the dark grip of crony capitalism spilled the dictator’s true legacy of corruption that scarred our economy and devastated the Filipino society.

Cartoon by Juliana Octavia

The term “crony capitalism” was coined by George Taber of the Times magazine during the 1980s to describe the distorted economic system in the Philippines that only benefited the few while having amicable relationships with those in the government at the expense of the masses. At the time, Marcos Sr. blessed his family and friends with funds and exceptions in their businesses to the point of creating a generation of oligarchs that scaled up the corruption in the government. In other words, he kept the wolves fed and full, but their greedy cups are bottomless.

Among the notable cronies is Eduardo Cojuangco of the coconut industry. This is one of the largest monopolies during the Marcos regime and was favored as a source of profits for the regime. Around the coconut industry, for example, the United Coconut Planters Bank headed by Cojuangco was supposed to aid the investment in improving the coconut research and productivity using the coconut levy funds. But by strategically creating new entities such as the United Coconut Oil Mills (UNICOM), which Cojuangco also headed, they managed to circulate the levy funds into their pockets!

While Marcos and the cronies bathed in the plundered wealth, they used and made UNICOM the only buyer of coconuts due for exporting. The economic concept of monopsony will explain that UNICOM - the sole buyer - bought coconuts at very low prices, which decreased the incomes and worsened the living of the farmers who produced them. The sugar industry of Roberto Benedicto also experienced these consternations. For the reader to learn more about the Marcos cronies, look into Ricardo Silverio, Rodolfo Cuenca, and Herminio Disini.

And it does not stop there, “behest loans” are made by the Central Bank, by the Marcosian authority, for the cronies to “borrow” money for their businesses. However, instead of the loans being used to further investments and make businesses profitable in the long run, it went into their pockets. These continued until the banks bankrupted. According to economist Dr. Jan Carlo Punongbayan in his book, False Nostalgia, the elite few savored the concentration of wealth and power and these factors gave rise to severe income inequality between the 1960s and 1980s. It is also from his book where I learned about the corrupted doings within the coconut industry.

With the distorted free market in favor of cronies, farmers at a loss, loans for investment wasted in unprotected uses, crony capitalism came at a huge cost to the Philippine economy at the time. 

The country suffered a decrease in GDP per capita or the average income per person from around Php 94,102.00 down to below Php 80,000, in 2018 prices, between 1982 and 1985, a period of political and economic crisis. Comparing this to other Asian countries’ GDP per capita, we lagged behind Thailand, North Korea, Sri Lanka, and Indonesia after 1965. This decrease in GDP per capita shows that the amount of money every Filipino earns was reduced, thus the declining economic well-being. GDP per capita shows us how much every person gets equally from the big pie.

The IBON Foundation added that the country’s GDP growth rate, in 2018 prices, decreased to  negative 7% in 1984, and continued to do so at negative 6.9% the following year. Alongside GDP per capita, the country’s GDP or gross domestic product shows the overall health of economy. Also, a negative GDP growth rate means that the overall productivity of the country declined, which would translate to higher unemployment, reduced incomes, and increased poverty levels. Due to cronyism and the various inefficiencies caused by the government to our economy, we experienced two decades of lost development post-1985. 

Allowing crony capitalism to thrive is a good example of how a ship sinks when it has not left the shore. 

Moving forward to the present, is crony capitalism still present? A report from The Economist last 2014 recorded the Philippines as 6th in the world for the prevalence of crony capitalism, taking into account the sectors of oil, construction, mining, telecommunication services, and others. Today, the Manila Bay Reclamation projects meant for the development of businesses such as the San Miguel Corporation harmed the marine environment and barred the fishermen, which affected their livelihoods. In the Congress, the Maharlika Investment Fund passed into law and will soon use the selected banks’ money to a very risky and uneconomical use. Putting these together, it is evident that crony capitalism still exists as it continues under the care of the former dictator’s son and the family’s friends.

Opposite of Marcos Jr.’s praise for his father, Marcos Sr. and his cronies left a legacy of inequality and corruption in our country. As the government manipulated the free market towards the interests of the elite few, they basked in their riches while the masses continue to bear the economic struggles up until today.

It is the dark grip of crony capitalism that choked our economy, and we are left to pay for the costs.


Juan Paolo B. Ignacio is a BS Economics Student at UP Diliman School of Economics, and joined Explained PH as part of its volunteer program.