Failures – exposed, reflected, considered

Singapore, Rousseau and the social contract

with 3 comments

In 1965, less than two years after joining Malaysia, Singapore was forced to leave the bigger country and declare its own independence.

Then its economy was in tatters. Lawlessness reigned. High levels of unemployment, lack of sanitation, short supply of potable water, and ethnic conflict were conditions that marred Singapore. About three million people, half of who were unemployed, occupied an island that was sandwiched between two large and unfriendly states: Malaysia and Indonesia. Ethnic Chinese and Malays were divided by race and language and often fought street battles.

Both economy and political situation were dire and mutually reinforcing.

1960s conventional wisdom in economics held that every nation, especially a small one, needed a hinterland to succeed. Singapore had none. The status-quo wisdom of development economists was that multinational corporations were great exploiters of cheap land, labor and raw material.

Forced to by all means to find work for their people, the leaders of Singapore engaged in promoting “globalization” before it became fashionable to do so.  The reason why Singapore embraced globalization one generation earlier than other third world countries was because it had no choice but go against the dependency theory that was the predominate economic thinking of then.

But globalization was but one sign of manifestation of a bigger picture. At the heart of the Singapore model is the social contract that was articulated between the ruling People’s Action Party (PAP) run government and the people of Singapore. In essence, it said that while the people were willing to accept more government control, give up some individual rights, and work hard, the government would create the environment that would deliver prosperity and a better quality of life.

The idea of social contract is not new.  Rousseau was among one of the most prominent theorists of social contract. In his view, the larger the bureaucracy, the more power required for government discipline. Normally, this relationship requires the state to be an aristocracy or monarchy (as far as he is concerned, both could be elected). Rousseau argues that the political authority (with which people are in social contract) will have two parts, sovereign (generic, legislative, representing the general will, which he defines as the rule of law) and government (particular, administrative day-to-day).

The autocratic dominance of the ruling PAP also provided confidence that national policies based on the social contract would remain stable in the short run, while continued efforts would be made to plan for Singapore’s long-term challenges.  And they did.

In the period of 1960-1999, Singapore had been able to achieve an average annual economic growth of 8%.  Singapore became one of the fastest-growing countries from 1970 to 2000, and the country has been classified as a ‘Growth Miracle’ and as an ‘Asian Tiger Economy’. As a result, World Bank officially classified Singapore as a “developed economy.”

The Singapore story is a thorn in the side of development specialists from the school of thought that Samuel Huntington has labeled as ‘convergence’ theorists, who believe that all desirable characteristics of national development (democracy, free markets, higher standards of living, etc.) reinforce one another. While democracy in Indonesia after Suharto and in the Philippines after Marcos has caused even more economic uncertainty and overall poverty, it has been the reign of an autocratic regime in Singapore that delivered economic development.

1. As the democratization of third world countries in Eastern Europe, Latin America and East Asia has shown over the last decade, being elected to office by the general populace provides no guarantee that national leaders will be free of corruption, effective, or dedicated to the national interest. In the case of even President Salinas of Mexico, a moderately respected elected president by Latin American standards, the national interest came second to his personal interest to keep the instability of the Mexican economy brewing while he changed jobs to become the head of the World Trade Organization (WTO). Contrary to the unanimous pushing by his economic advisors who were convinced that Mexican currency and financial markets could be saved from imminent collapse if an immediate devaluation of the currency was made before his retirement, Salinas did not act for fear of blotting his reputation. Like the Mexican example, the financial collapse of democratic Thailand and Russia in 1997 showed that elected leaders who come to power with substantial expectations on their shoulders after intense campaigning in which they promised significant national (social and economic) development, can never be immune from mortgaging the future of their people to finance grandiose if imprudent national projects that among other things, serve to enrich the cronies that helped in the outcome of the election in the first place.

2. Apart from effective governance, Singapore government exercises considerable discipline in managing its economic affairs. While PAP ran on a socialist platform to get elected, it was careful of which industries the government nationalized. Usually, the government did not intervene in markets it felt the private sector was doing a good job of meeting Singapore’s economical interests. This policy was outlined in a speech called “Survival” that former foreign minister, S. Rajaratnam, delivered in the early 1970s. In the speech, Rajaratnam told that the government supported state-run corporations like Singapore Airlines and Neptune Ocean Lines because the private sector did not have the ambition nor the financial backing to start such essential organizations that would make possible trade with the developed countries.

3. Importance that the government has attached to Singapore’s human resources development and the investments it has made in its own people. While the PAP ruthlessly crashed all independent labor unions and consolidated what remained into a union umbrella group called the National Trade Union Congress (NTUC), which it directly controlled, it did set up technical schools as well as paid foreign corporations to train unskilled workers for higher paying jobs in electronics, ship repair, and petrochemicals. For those who still could not get industrial jobs, the government enrolled the participation of the NTUC in creating labor intensive, “un-tradable” services, mostly for the purposes of tourism and transportation.

Written by Hayk

March 10, 2013 at 9:53 am

3 Responses

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  1. Mr Hayk,
    Those who think that the role of government is to speed up economic growth for economic growth’s sake are mistaken, the ultimate end of all economic growth is POWER. The power of prestige from a sense of material security. IF a culture views material security as sine qua non, then a government’s job (as some apologists for the so-called “Asian way” would say) is NOT to create a democracy, but to create jobs, employment, security, and luxury. Who cares about civil liberties when life is good?
    This is the reason why democracy has rather failed to take root in Asian societies thus far, because Asians in the late 20th century were content with the (apparent) sensation of growing richer and getting wealthier. My parents have never heard of Rousseau before, and my dad would’ve dismissed Rousseau’s idea of state and society being superior to the institution of marriage and the household as absurd if NOT inimical to his views. The concept of Chinese communism – a hierarchy of ordered consumption – was far more palatable to the Chinese, as opposed to the final liberation and dissolution of the family and of property relations which Marx so vainly hoped for. The PAP was wise enough to know this: actions such as Operation Coldstore and the creation of a generally conformist and docile Singapore were seen to be insignificant. However, things may now change -with Singapore now a high-income nation outsourcing jobs overseas, it may now well be that it could result in unrest amongst those “unsatisfactorily employed” who feel that the government isn’t doing enough – there is only so much that gay rights, regulated brothels and promotion of a sense of affluence can do towards sublimating a sense of despondency, frustration and betrayal.

    Velvet Claw

    February 11, 2015 at 11:06 am

    • Hi Velvet, sorry for the belated response!

      You pretty succinctly formulated what many in the West would not and will not understand. Freedom and democracy for sake of itself is just as vain/useless as economic development for its own sake.

      Of course the bottom line – and as you said, PAP know this well – was to increase wealth/well-being of population. And that is what happened over the course of one generation.

      However, now the current generation of 20-smthings and 30-smthings is facing a double dilemma:

      1) How to detach from the rather high life-standards of Singapore, which would allow them to be less indulgent, more proactive and thus better adapted to the 21st century of VUCA world

      2) How to help grow the country as much or close to what its growth has been last 30 years or so, a task many – my guess is even the current PM – consider impossible. It is easier to go from 0 to 1, a quantum leap Singapore took from being a backwater of Malaysia to a modern state, than to go from 1 to 2, an seemingly incremental leap. And modern Singaporeans arent necessarily happy or satisfied with the latter, having grown up and seen and thus used to the former.

      How it will play out for Singapore in the next 50 years remains to be seen!

      Hayk

      February 27, 2015 at 10:33 am

      • If you want a solution I am afraid I have none – the only answer I can provide is this: mass politics have failed. The answers and solutions humanity needs now needs to come from within us, not from mass politics or organised religion. But the problem is that both of these are convenient fictions to disguise the fact that we as a society are more decadent and less observant of ourselves and the role we play in the world.

        Velvet Claw

        February 27, 2015 at 2:10 pm


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