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The Political Economy of Transition in Laos: from Peripheral Socialism to the Margins of Global Capital

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The Political Economy of Transition in Laos: from Peripheral Socialism to the Margins of Global Capital THE POLITICAL ECONOMY OF TRANSITION IN LAOS: FROM PERIPHERAL SOCIALISM TO THE MARGINS OF GLOBAL CAPITAL A Dissertation Presented to the Faculty of the Graduate School of Cornell University in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy by Bounlonh J. Soukamneuth August 2006 © 2006 Bounlonh James Soukamneuth THE POLITICAL ECONOMY OF TRANSITION IN LAOS: FROM PERIPHERAL SOCIALISM TO THE MARGINS OF GLOBAL CAPITAL Bounlonh J. Soukamneuth, Ph.D. Cornell University 2006 Remarkably, in the view of some observers, a poor and relatively weak government in Laos survives as a one-party state, even as it transforms the country’s political economy in response to declining communist fortunes in the early 1990s and the onslaught of economic globalization. How has the Lao government managed the socialist transformation and capitalist incorporation, while maintaining some semblance of external sovereignty and internal legitimacy? Through the broad lens of political economy and sociology, my research addresses this question, in exploring three areas of Lao state capacity: (1) political structure, (2) public administration, and (3) fiscal management. I rely on several sources: a set of observations during my time on research assignment in Laos (May 2004-April 2005); an examination of governance-related, donor-funded development projects; an exhaustive survey of government laws, regulations, and documents since the reform period; and a review of literature on the political economy of development, market transition, and globalization. To assess different points of view on contemporary Laos, I conducted open-ended interviews with selected Lao officials, townspeople, expatriates, international consultants, and members of the diplomatic and donor communities. From my research, evidence suggests that the Lao government actively promotes political, administrative, and economic centralization over regionally dispersed and fiscally independent provinces. In the transition process, a strong central government capable of regulating and enforcing economic governance has gradually eroded traditional autonomy of Lao provincial authority. The recent history reveals a party apparatus pragmatically adjusting to economic constraints, while consolidating its power base, unifying the country, and exerting its centralizing influence on an ideologically indifferent countryside. Laos is not an isolated case. For many developing countries struggling to build a unitary state and a national economic space of private exchange, centralized control over regionally autonomous regions constitutes one of the major governance challenges of nationally guided development. Contrary to the general global trend of public decentralization in the transition process, Laos provides a stark contrast, offering a valuable insight into the important role of governments in structuring economic relations. BIOGRAPHICAL SKETCH Bounlonh J. Soukamneuth was born in Vientiane, Laos, grew up in Providence, Rhode Island, and has called Ithaca home since 1992. After graduating from Cornell with a degree in Electrical Engineering (in 1996), he returned briefly to work in information systems in Manhattan, where he interned in 1994-95. Unsatisfied with this career move, he quickly left to apply his academic training in communities that could benefit from his technical expertise. In 1997, he joined the Peace Corps as a starry-eyed, young immigrant American living out his American Dream (imagined or otherwise) and wanting to give something back to his adopted country. Two years later, he returned to the U.S. more introspective about charity and with a greater appreciation of the limits to aid. In 2000, he came back to Cornell for graduate studies in international planning and development. Having prolonged his graduate studies at Cornell beyond his initial expectations, Bounlonh looks forward to the near future when he will continue with his international development work, with more skills and resources to contribute to sensible change in an integrating world of unequal development. iii ACKNOWLEDGEMENTS This dissertation would not have been possible without the financial and intellectual support of the Southeast Asia Program (SEAP) at Cornell University. Travel grants from the Einaudi Center for International Development, along with SEAP funding, provided the opportunity to conduct pre-dissertation fieldwork in Laos. In addition, a National Science Foundation Graduate Research Fellowship has allowed me to pursue my intellectual interests without the need to work or teach. My advisors, William W. Goldsmith, Philip D. McMichael, and Iwan J. Azis, provided helpful feedback throughout the evolution of this dissertation. From Iwan, I learned the quantitative methods and macroeconomics that grounded my study of political economy. Phil’s broad insights on globalization and markets have greatly expanded my understanding of development. To Bill, my worst critic, best editor, academic mentor, colleague and friend, I owe a debt of gratitude for his patience and unending professional support of my wide-ranging academic interests and evolving scholarship. To my friends and family, I owe more than words can express. In such a fanatical world, the love and affection of such good people provide an easy impetus to roll out of bed and work hard for one’s causes. iv TABLE OF CONTENTS Chapter page I LAOS AND THE SEARCH FOR THE END OF HISTORY............................1 The Collapse of Communism and Expectations of Democracy.........................3 Socio-economic Underdevelopment in Laos....................................................10 Global Integration and Post-socialism..............................................................15 Dialectics of Globalization...........................................................................15 Economic Internationalization......................................................................17 Socialist Transformations.............................................................................21 Methods of Inquiry...........................................................................................25 Regime-centered Organizational Perspective...............................................25 Ethnography .................................................................................................29 Data Collection.............................................................................................31 Organization of Dissertation.............................................................................31 II THE ANATOMY OF PERIPHERAL SOCIALISM IN THE LAO PEOPLE’S DEMOCRATIC REPUBLIC............................33 Communism in Asia and the Limits of the European Experience ...................35 Revolutionary Socialism and the End of History.........................................35 Social Syncretism and the Classical System ................................................38 Market Reforms and Post-socialism.............................................................42 Peripheral Socialism in the Lao PDR...............................................................47 The Central March towards Socialism .........................................................48 The Local Retreat towards Capitalism .........................................................50 Domestic Restructuring and Market Reforms under State Guidance ..............52 Structure of the Lao People’s Revolutionary Party......................................53 Constitutional Reforms and Political Consolidation ....................................59 Political Culture and Regional Networks of Patronage................................62 Legitimacy and Lao Traditions ....................................................................64 Territorial Organization of Laos...................................................................66 Peripheral States and the Centralist Ethos of Government Power ...................69 III ADMINISTRATIVE REFORMS AND STATE RESTRUCTURING IN LAOS...................................................73 Bureaucracy and the Socialist Transformation.................................................73 Peripheral States and Centralization.................................................................76 Communism and Central Planning, Lao Style .................................................78 v Public Administration in Contemporary Laos..................................................82 Organization of the Prime Minister’s Office................................................85 Organization of Government Ministries.......................................................86 The Enduring Strength of Provincial Authority...........................................88 Centralizing and Rationalizing the Public Administration...............................89 Tensions in Central-local Relations..............................................................90 Organizational Dysfunctions........................................................................93 Human Resource Constraints .......................................................................94 Corruption in Laos..........................................................................................101 Corruption and the Lao Bureaucracy .........................................................102 Corrupting Development............................................................................103 The Push for Decentralization of Development in Laos ................................107
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