The Political Economy of Myanmar’s Transition By: LEE Jones

Paper Break Down Section 1: Analytical Approach Section 2: Shift to State Mediated Capitalism Section 3: Ceasefire Capitalism : Transformation of Central-Periphery relations Section 4: Possible Legacies of Transitioning

Analytical Approach: Murdoch School of Thought What it is: The Murdoch school is based in branch of Marxist theory the examines how social conflict and control over resources shape the formation and power in a state. It underscores the social power relations and struggles between key social groups deciding direction of reforms and the luxuries associated with it. Why in this context? This is a common scope for developing and transitioning East Asian countries, so it’s helpful in contrasting Myanmar with counties that have recently been under reform and transitions, such as Indonesia and Cambodia. Further, the Murdoch school helps show the trend with-in developing and transitioning East Asian Countries, that those who benefit the most in an old system don’t change in a new system, due to the balance social powers.

Shift to mediated Capitalism: From Socialism to Mediated Capitalism The shift from state socialism to state mediated capitalism was caused by the Myanmar state fostering conditions to create a "layer of crony capitalist. Under the Socialist Military State Brumes Socialist Program Party (BSPP) state led import-substitution industrialization failed leaving the country bankrupt. This led to the collapse of the BSPP and the rise of the military controlled State Law and Order Restoration Council (SLORC).

Shift to mediated Capitalism: The Rise of Crony Capitalism The SLORC adopted pro-market reforms opening up Myanmar to the world after BSPP had led it to bankruptcy. However pro-market efforts lead to little positive effects on the political economy for two reason: Most private firms were lead by other Asian immigrants, that employed few workers. Slow entrepreneurial growth among nationals. This stemmed from the State’s fear of Asset stripping State Economic Enterprises (SEE)s due to a lack of a "fluent, responsible middle class" This lead to the state push on building up the middle class, resulting a slow moving shift towards privatization, and large scale push for nationalist entrepreneurs. But because further power struggles with in the regime, the push for nationalist entrepreneurs lead conservative leaders tied to SEEs scared of losing revenue, rents, and employment, to push SEEs and military linked firms to absorb most foreign investment in the 1990s and to cultivate national entrepreneurs incentivizing close ties to state Officials.

Shift to Mediated Capitalism: Complex Relationship Between Businesses and Governement Business elites relied heavily on state patronage because of the State's ability to manipulate rents and arbitrarily regulate in favor of those it did business with. Businesses with government ties would fourth be pitted against one and other by the State to establish further loyalty. This Kind of action was not just reckless management by the State, but rather a device way of keeping a hegemonic social power over the country.

Shift to mediated Capitalism: Complex Relations Continued The relationship between the business elite and the government was not one side but “symbiotic”. The State was rather poor at raising revenue and national spending. This lead private business to pick up much of the slack. Private business involvement ranged from small task such as transporting merchants and merchandise, to more serious matters such as “…the Western arm embargoes and brokering ceasefire among insurgents…”. Private business was also importantly tasked with dealing in areas that SEEs were incapable of such a big infer structure projects.

Cease fire capitalism Historically ravaged with insurgent uprisings, since shifting to mandated capitalism combined with an increasingly strong national army, the boarder lands of Myanmar began to calm down. Jones calls this phenomena “Ceasefire Capitalism”. “Ceasefire Capitalism” stems from insurgent forces and their controlled areas striking development deals with the state and private business connected to the state. The state has increasingly cut insurgent forces economic ability/ social power by cutting avenues of trade that run through insurgent territory leading them to rely more on the central government.

Possible Legacies of Transition: The Optimistic Outlook Hardliners will stay sidelined lending to further democratic institutions. The further structuring of democratic institutions will help stabilize and disperse power and continue positive reforms. Due to reforms and strengthened reformers Crony Capitalism will be suppressed.

Possible Legacies of Transition: Mixed Outcomes Managed Transition: Because the military has played such a large role in setting the course for democratization and has “contoured” the lines in which reform has taken place, it would be logical to assume that transitions will still be heavily guided by the military . Further, with the military regime still in place the lines that have shaped the reform would most likely lead to continued crony capitalism.