Myth of the Asian Tigers
And Imperialist Realities
Revolutionary Worker #936, December 14, 1997
For years now, the "Asian Tigers"--Thailand, Indonesia, South Korea, Malaysia, Singapore, Taiwan, and Hong Kong--have been put forward by the imperialists as the model for "developing nations." For the last 25 years their economies have grown more than twice as fast as the average rate for the rest of the world. And poor countries in Asia, Africa, South America and countries of the former Soviet empire have all been told: It's possible to go from rags to riches--just follow the example of these "miracle economies" in East Asia.
There were endless stories of glittering success: Asian families moving in one generation from an ox cart to a Mercedes-Benz. Peasants turning overnight into businessmen. The number of Asian companies, excluding those based in Japan, listed on the NY Stock Exchange went from two in 1988 to 30 in 1997. American money in Asian funds grew 18-fold in five years.
But then, suddenly, the Asian Tigers were hit by severe crisis.
It started in Thailand. For 10 years huge amounts of foreign investment had poured into Thailand's economy, making it one of the hottest in the world--with an annual growth rate at more than 8 percent. Then last year exports began to fall, bad debts piled up, and lenders began to cut off credit.
International financiers speculated that the Thai currency would be devalued. They started borrowing the currency--called the baht--and selling it for U.S. dollars or other currencies. They hoped to make a big profit later by repurchasing the baht for less. Then in July, the Thai government devalued the baht. This made Thai exports cheaper and the government hoped this would spur the sale of more Thai goods. Other East Asian countries, worried that their exports wouldn't be competitive, then also devalued their currencies. International investors started pulling their money out of these countries, leading to a big drop in the Asian stock market and a major crisis that rippled throughout the world economy.
This whole crisis in East Asia has revealed even more clearly the
imperialist reality behind the myths that have been promoted about the Asian Tigers.MYTH: The rapid growth of the Asian Tiger economies has been due to the "special characteristics" and "mindset" in Asia. Hard work, diligence, encouraging entrepreneurship, putting a premium on education, commitment to growth and foreign investment have been the keys to success here, and other Third World countries should learn from these examples and "pull themselves up by their own bootstraps."
REALITY: The rise of the Asian Tigers has everything to do with the geo-strategic and geo-economic interests of U.S. imperialism.
After World War 2, the U.S. needed Japan as a junior imperialist partner in Asia. The U.S. set out to dominate East Asia in order to ensure its political and military strength in the whole region and to make huge profits. It developed a Cold War strategy to "contain communism" and national liberation movements in the region. Taiwan was built up in opposition to Maoist China. And South Korea was supported by U.S. imperialism as a bulwark against North Korea. It has been these imperialist goals that led to countries in East Asia being targeted for huge amounts of investment, aid and access to U.S. and Japanese markets. This is why they were able to develop their economies at a rapid rate.
MYTH: The Asian Tiger countries have become more independent partners in the global economy. They have been successful because they have embraced the free market and steadily moved toward becoming more democratic.
REALITY: The whole development of the Asian Tiger economies has been about becoming more dominated, exploited and controlled by imperialism, especially U.S. and Japanese imperialism. And by and large, these countries have been brutal, authoritarian dictatorships.
Maoist economist Raymond Lotta has pointed out: "The imperialist countries are strategically dependent on the Third World as a source of cheap labor, markets, and low-cost raw materials. The oppressed nations are structurally dependent on imperialism. Their economic structures are determined by their subordination to imperialism... Unless and until they make a revolutionary transformation, they occupy a subordinate position in the international division of labor, and their economic growth depends on infusions of capital and the demand for their products from the imperialist countries."
What has this meant in East Asia? Every dime of foreign investment has been based on super-exploitation and the capitalist development this investment has brought about has resulted in further misery for the masses of people. Sure, foreign capital in these countries has stimulated growth. But the question is, what kind of growth and for whom? The whole development of the Asian Tiger economies has been dictated by the needs of imperialism. This has led to economic development geared toward export instead of domestic needs. It has led to development that is completely dependent on imperialist countries. It has meant the further penetration and domination of foreign banks and corporations. It has meant the removal of protections from workers and relaxing environmental regulations. It has meant workers and farmers being forced to meet the threat of ever-lower wages and ever-more oppressive working conditions.
From the 1950s through the 1970s, South Korea's rapid economic growth was achieved on the basis of low wages, severe controls over labor, harsh repression and disastrous ecological damage. And it became dependent on imperialism, especially Japan, for machines and technology.
And there is no correlation between democracy and economic growth in these countries. The Asian Tiger economies have developed under the rule of brutal and repressive dictatorial governments. For example, Indonesia's rapid growth only took off after 1965, after the rise of the U.S.-backed Suharto regime which was ushered in with the massacre of hundreds of thousands of people.
MYTH: Foreign money poured into the Asian Tigers, but these countries squandered their new wealth through inefficiency, self-indulgence, corruption, and mismanagement. This is what led to the current crisis.
REALITY: The anarchic workings of capitalism led to the crisis in Southeast Asia.
The operation of the free market is what drew tremendous amounts of imperialist capital into these countries--into both production, as well as property and financial speculation. And the endless pursuit of greater profits is what brought about the short-term, speculative spending, investment, and selling of stocks--that led to the crisis.
The free market didn't put a check on "get-rich-quick" spending and corruption in these countries. It fostered it. And now that these economies are in trouble, capital is fleeing, leading to more crisis.
This is a world where parasitism has reached gross proportions. Where capitalists invest in money--trading $1 trillion to $2 trillion a day in currencies. And it was exactly this kind of speculation that played a huge role in the Asian crisis.
As Raymond Lotta has pointed out, "This is the era of `fast and faster capitalism,' in which capital must respond quickly to profit opportunities. Huge amounts of short-term capital flow from one country to another in search of quick profits; funds flow in and out of Third World financial and stock markets... Globalization is about greater geographic capital mobility, about the ability of capital to switch resources from one low-cost location to another, and to use the threat of relocation as a club over workers. It is about the ability to combine up-to-date technology with the cheapest labor and worldwide marketing connections."
MYTH: The U.S. and the IMF are rescuing the Asian Tigers from their economic troubles and mismanagement.
REALITY: The imperialists are orchestrating a bailout of the Asian Tigers that will result in these countries becoming more economically and politically dominated by imperialism, especially U.S. and Japanese imperialism.
After the crisis hit South Korea, there were a hurried series of back-channel consultations by American, European and Japanese officials. The South Korean government initially resisted an IMF bailout. But then two senior U.S. officials were dispatched to Seoul to meet with the country's new Finance Minister, Lim Chang Yuel. And within hours of his appointment, Mr. Lim said he would seek help from the central banks of the U.S. and Japan.
In early December, South Korea agreed to terms for the largest international economic rescue ever--a $55 billion loan package. This is larger than the $17 billion offered to Thailand, the nearly $40 billion promised Indonesia, and the $48 billion in IMF aid committed to Mexico in 1994.
President Clinton has stressed that U.S. economic fortunes are tied to economic growth in East Asia. And opening world markets have been a centerpiece of U.S. foreign policy. In 1996 U.S. trade with Asia (excluding Japan) was just shy of $300 billion.
The U.S. has also made clear that its interest in "helping" the Asian Tigers get out of their crisis goes beyond their role as trading partners. Treasury Secretary Robert E. Rubin announced, "These countries are not only key markets for U.S. exporters, but are also crucial to our efforts to promote growth, peace and prosperity throughout the world"--which in imperialist-speak means the U.S. wants to protect its right to politically and militarily dominate the region. When the crisis hit South Korea, a big U.S. concern was ensuring stability in a country where more than 37,000 U.S. troops are based near the demilitarized border with North Korea.
Behind the scenes of the South Korean bailout, the U.S. and Japanese imperialists have been jockeying for advantage and position. And U.S. government officials have also said that a major concern in this crisis is making sure that "Asians know that the U.S. is engaged in the region's economic stability"--in other words, who's the boss in the world economy.
The IMF deal that's been offered to South Korea shows how this U.S.-orchestrated bailout is geared toward strengthening imperialist domination. In return for the money Seoul will have to cut public spending, open its market more to foreign goods and investors, and take measures to curb the ability of its conglomerates to expand. South Korea also had to agree to take steps to attract more foreign investment and drop some of its trade barriers. And U.S. officials have already announced they are hopeful that U.S. and other foreign banks will be interested in acquiring South Korean banks. The Korean stock market rallied after reports that the IMF agreement would raise the percentage of a Korean company's stock that could be owned by foreigners to 50 percent from 26 percent immediately and 55 percent next year. An announcer on the state-owned Korean Broadcasting System described the situation: "With the complete opening of Korea's financial markets, foreign capital will virtually be in control of the profits and management of Korean companies."
MYTH: If the Asian Tigers follow the U.S./IMF plan they will emerge from this crisis economically stronger.
REALITY: The IMF-imposed measures could lead to even deeper economic crisis and political instability. And for the masses, there will be tremendous suffering and hardship.
Suddenly the story of the Mexico crisis is being rewritten as a lesson on how Third World countries must go through "short-term pain" to achieve "long-term gain." But reality for Mexico--and the Asian Tigers--is that, under imperialist domination, "short-term pain leads to even more pain."
In Mexico, the IMF-dictated austerity program the Mexican government put in place resulted in tremendous suffering by the masses of people. Two years into the crisis, people's standard of living had already fallen by 20 percent, industrial workers had suffered huge losses of wages, peasants lost land and even the middle classes saw their standard of living plummet.
Now, in South Korea, there are predictions that severe cuts in public spending and other austerity moves will cause unemployment to double or even triple. Bankruptcies, already running at a high rate, are expected to skyrocket. In a nationally televised speech Korean President Kim Young Sam told people that they must now endure some "bone-carving pain."
Meanwhile, Thailand, Indonesia, and the Philippines are also committed to "financial reforms" in return for a $100 billion-plus IMF-led bailout. And the only way these countries will be able to repay these debts is by imposing extreme austerity measures. There are predictions that 120,000 Thai workers could be laid off by the end of this year--and that as many as two or even three million of that country's workforce of 25 million could ultimately lose their jobs. Asian analysts are now worrying that all this could lead to new upsurges of resistance among the people.
***** There is a deep lesson in the meltdown of the East Asian economies. It shows that the Asian Tiger model doesn't represent a solution to the problem of underdevelopment and dependency in the oppressed nations. Nor does it provide any answer to the suffering of the broad masses of people in the Third World.
For information on the role of the World Bank and the IMF, see World Bank and IMF: Banking on Misery.
This article is posted in English and Spanish on Revolutionary Worker Online
http://rwor.org
Write: Box 3486, Merchandise Mart, Chicago, IL 60654
Phone: 773-227-4066 Fax: 773-227-4497
(The RW Online does not currently communicate via email.)