It's Not an Asian Crisis, it’s a Capitalist Crisis [March 1998]

The current so-called "Asian Contagion" is pictured much like the "Asian Invasion" as some disease that originates in Asia and spreads around the world. This racist picture of Asian "Values" becomes the convenient scapegoat for international capitalism to hide behind and to justify draconian IMF medicine at the expense of Asian workers and poor peasants. Class Struggle argues that the so-called Asian "crisis" is not the result of anything unique to Asia, but the necessary outcome of imperialist Globalisation, and should be opposed by workers and poor peasants everywhere.

The Asian Tiger "cubs" Grow Up.

The Asian Tiger "cubs", South Korea, Thailand, Malaysia and Indonesia, are experiencing big economic problems. The standard Western view has been to wheel-out racist arguments about "Asian values", corruption and cronyism. A version of this view is that held by the `Economist' and Paul Krugman, a prominent economist at MIT. They say that the Asian `crisis' was caused by short-term, high-risk speculation in assets such as company shares and land by local and foreign banks which assumed that their loans were backed by governments, something like the "soft credit" in the former Soviet Union. According to the Economist this creates a "moral hazard" as bankers do not have to risk losses from bad investments, since they can rely on getting bailed out by the state.

If correct, this is a supreme irony. It seems that the "moral hazard" can’t really be blamed on Asian values at all. It was the large multinational banks, which are the international arm of finance capital, that allowed themselves to speculate for super-profits in countries where there were no effective checks on company profitability! Something to do with "western values" perhaps? Not really. Speculation is endemic under late 20^th century capitalism as excess finance capital scours the globe for the biggest bucks. So it is with state intervention! This is not some nasty Asian family nepotism after all, but the state of the art. Despite the protests of some extreme right-wingers like Milton Friedman who wants the IMF junked, the imperialist states are using the IMF to protect their investments in the "tigers". So it is the Western banks and not the Tiger companies that are being baled out by the IMF. Not only will the IMF loan billions to cover the most immediate debt to Western banks, on the pretext that they are bankrupt, the Tiger economies will be radically restructured so their devalued assets can be bought up cheap by US, Japanese and EU multinationals. Who’s bailing out who?

How cynical can you get? It seems that the Asian crisis, far from something originating in Asia, or even the Pacific, is part of the process of global concentration of financial and industrial assets into the hands of the major imperialists powers. This in itself is a process which has been going on for the whole 20th century as the world's economic resources have been increasingly concentrated and centralised into the hands of a group of giant Trans-National Corporations -TNC’s. So it is the height of hypocrisy for the IMF to come to the "rescue" of the Tigers when its purpose is to oversee a bonanza of takeovers by imperialist powers. But then this is nothing new, in the march of imperialism the super-exploitation of the colonies and semi-colonies has always been justified ideologically as "saving them" from barbarism and for the cause of civilisation!

History of colonialism.

All of these countries started off as colonies. South Korea was a colony of Japan. Thailand and Malaysia were colonies of Britain, and Indonesia a colony of the Dutch. They were raw material colonies where the mother countries extracted rubber, timber, minerals and so on by super-exploiting cheap labour. When they gained their political independence they had to insulate their economies to achieve any economic independence. This meant putting up barriers to foreign ownership and foreign goods so as local industry could get off the ground. Otherwise they would have remained just like colonies with their raw materials extracted and shipped off to the mother country.

This wasn't something unique to Asia. It is something that all new capitalists states have to do. The US did it when it became independent from Britain. Japan did it by rejecting all attempted imperialist takeovers. So in Korea a group of wealthy merchant banking families diversified into all sorts of industry to form the chaebols after the model of the Japanese cartels. In Thailand and Malaysia a group of prominent families ran the economies and the military. In Indonesia the ruling family of General Suharto, pretty much came to dominate the economy.

Protectionism creates a national capitalist class which owns and controls most of the economy and runs the state including the military machine. While production is for the local market, it doesn't matter a lot that production is inefficient based on cheap labour and inferior technology. The political ideology which accompanies protectionism is called "economic nationalism". The national capitalists get rich, but rising living standards also creates a middle class and a strong working class which become committed to a "national consensus" around the policies of economic nationalism. Dissent is eliminated by appealing to nationalism, as was the case when Suharto killed millions of communists in 1965.

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From Class Struggle, no 20 Feb/March, 1998