Booty Capitalism: The Politics of Banking in the Philippines by Paul D. Hutchcroft

CHAPTER ONE 
The Political Foundations of 
Booty Capitalism in the Philippines 
States are not standardized commodities. They come in a wide array of sizes, shapes, and 
styles. That incumbents sometimes use the state apparatus to extract and distribute 
unproductive rents is undeniable. That all states perform certain functions indispensable to 
economic transformation is equally so. That both characteristics are randomly distributed 
across states is very unlikely, yet we have only a hazy sense of the range of variation, to 
say nothing of its causes. 
-Peter Evans, "Predatory, Developmental, and Other Apparatuses: A Com-

parative Political Economy Perspective on the Third World State," 1989 
In the reality of political systems, patrimonial and legal elements are mixed, though all 
societies have patrimonial traces while some have only a few legal ones. 
-Daniel S. Lev, "Judicial Authority and the 
Struggle for an Indonesian Rechtsstaat," 1978 
A scholar of the Philippines once noted that "business is born, and 
flourishes or fails, not so much in the market place as in the halls of the 
legislature or in the administrative offices of the government. " Although 
this observation was made in 1959, it could have been repeated with equal 
validity in subsequent decades. Whether in the pre-martial law years 
( 1946-1972), martial law years ( 1972-1986), or post-Marcos years (after 
1986), one finds remarkable continuity in basic patterns of interaction 
between the Philippine state and dominant economic interests. Even as it 
is often incapable of meeting even the most basic infrastructural needs of 
the economy, the Philippine state is nonetheless central to any compre-

hensive analysis of the country's political economy. Access to the state 
apparatus has been the major avenue to private accumulation, as the quest 
for "rent-seeking" opportunities brings a stampede of favored elites and 
would-be favored elites to the gates of Malacaiiang Palace. The state appa-

ratus has repeatedly been choked by an anarchy of particularistic demands 
from, and particularistic actions on behalf of, those oligarchs and cronies 

who are currently most favored by its top officials: one will obtain a highly 
coveted loan or import license, another will enjoy a stake in a cartelized 
industry protected by highly discretionary state regulations. 
Because of the weak institutionalization of the state, the personal favor 
and disfavor of those currently in power is a critical determinant of busi-

ness success and failure. Political administration in the Philippines is often 
treated as a personal affair, and one can find many parallels between the 
modern Philippine polity and Weber's description of patrimonial states: 
"In general, the notion of an objectively defined official duty is unknown to 
the office that is based purely upon personal relations of subordina-

tion .... Instead of bureaucratic impartiality and of the ideal-based on 
the abstract validity of one objective law for all-of administrating without 
respect of persons, the opposite principle prevails. Practically everything 
depends explicitly upon the personal considerations: upon the attitude 
toward the concrete applicant and his concrete request and upon purely 
personal connections, favors, promises, and privileges. " It is not enough 
to say that the state lacks significant autonomy and capacity; in fact, to 
paraphrase Weber, the conceptual separation of the state from all personal 
authority of individuals is often remote from Philippine "structures of 
authority. " 
While all states possess patrimonial features to some degree, it is clear 
that there is a particularly large gap between the Philippine state and the 
archetypal bureaucratic state. The patrimonial framework helps us to 

Booty Capitalism: The Politics of Banking in the Philippines by Paul D. Hutchcroft