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No oligarchy where there is no collusion

"Success does not make a businessman an oligarch."

The economy of any modern-day country may be said to be composed of two parts.

The first part is composed of the largest business establishments—those with the highest net worth, the greatest sales revenue, the largest workforces, the highest number of branches, etc.

The other part is the rest of the economy—what in policymaking circles is conveniently referred to as the MSMEs or micro, small and medium enterprises.

The regulator of corporations in this country, the Securities and Exchange Commission, maintains a list of the Top 1,000 Philippine corporations. Years ago, the first-rate but now-defunct business newspaper Business Day annually published a similar listing. For economic analysts and historians of the Philippine economy, such lists are extremely useful because they make easier the job of tracking the character and direction of the Philippine economy’s development.

Unfortunately, such lists have a downside to then. In the hands of untrained and undiscerning people, they can be used to produce unwarranted and perverse conclusions. The corporations at the top of such lists come to be, in such hands, characterized as controllers and manipulators of the Philippine economy—in short, as oligarchs. Thus, the Top 10 corporations in the list become the nation’s ten oligarchs, the Top 50 emerge as its 50 oligarchs, and so on.

This, of course, is absurd. Success in business in not synonymous with membership in an oligarchy, and being successful does not make a businessman an oligarch. There is no automatic connection between oligarchy and business success. The majority of business enterprises achieve success not because they are oligarchs but because they set out with a good business plan, were well-financed and increasingly observed good management practices.

The essence of oligarchic behavior is collusion. To be able to achieve what President Duterte has charged this country’s leading business establishments of doing—control and manipulation of the Philippine economy—there has to be collusion. Oligarchs are colluders; away from the public gaze, they divide markets, set prices, and agree on directions that they want government policy to take. There appears to be no evidence of that kind of activity on the art of the corporations that Mr. Duterte has tagged as oligarchs.

The opposite of collusion is lawful and transparent cooperation. A prime example of the latter is the decision of seven of this country’s largest business establishments to get together and agree on a joint proposal to the government for the renovation and expansion of the nation’s premier international gateway, Ninoy Aquino International Airport The seven corporations made the offer to ease the pressure on the government’s infrastructure budget. And there have been numerous other instances where the nation’s largest businesses have banded together to help the government cope with disaster or an emergency.

The foregoing discussion is by no means intended to suggest that a country’s top business establishments never behave in oligarchic fashion. Some of them have been known to collude in an effort to control or manipulate the national economy through market diversion in the manner of the Mafia—price-rigging, supply limitation and related practices. This kind of corporate behavior is difficult to arrange and is fraught with danger. In what is perhaps the most celebrated case of an oligarchic maneuver gone wrong, US government agents swooped down, in the 1950s, on a clandestine meeting of the executives of the top American electrical equipment manufacturers and charged their companies wth conspiring to rig the prices of electrical equipment.

The essence of economic conspiracy—assuming, for the sake of argument, that one exists in this country—is acting in concert. To be able to control or manipulate the Philippine economy, the oligarchs must collude, conspire and confabulate. No Philippine corporation, no matter how large, can single-handedly do the job of controlling or manipulating this country’s economy. Thus far, there is no showing that the corporations tagged by President Duterte as oligarchs have acted in concert or have aspired to control or manipulate the Philippine economy.

Topics: Rudy Romero , oligarchy , MSMEs , micro small and medium enterprises , Philippine economy
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