List Folk;
I am no expert on either SE Asia or high finance, but I do have some
knowledge of basic economics. As Jackson Browne once wrote:
"I've been waiting for something to happen,
For a week or a month or a year...
You might ask what it takes to remember,
When you know that you've seen it before..."
Samir Amin pointed out in 1976 ("Accumulation on a World Scale") that
inflows of foriegn investment produce temporary high growth rates for the
recipient country, but those growth rates collapse once the investment matures
(e.g--stops purchasing local contractors for constructing the local factories)
and assumes its intended function of exporting products to the intended
markets of the core. Remember the "Brazilian Miracle"? The "Japanese
Miracle"? Granted, there were important differences in the roles that the
Asian states played in handling the distribution of the incoming capital, and
there is no doubt that the cold war encouraged the US govt to provide grants
and loans to Japan and S. Korea that were on terms far easier than would have
been imaginable elsewhere. But the bottom line for upward mobility in the
world-system applies equally harshly to all: WITHOUT THE DEVELOPMENT OF AN
INTERNAL MARKET (local effective demand), EXPORT-LED DEVELOPMENT IS DEPENDENT
ON CORE MARKETS. Hence down-turns in the core translate into free-falls for
the exporters.
The collapse of the banks, currencies, and stock markets are
epiphenomena, SYMPTOMS of the real problem. Failures by influential debtors
to make good on their loan payments is--however distantly--attached to their
failure to sell real products, whether locally or abroad. They are caught in
a double-bind: successful export promotion depends not only on the presence
of markets in the core (read high wages for the core working classes), but on
suppression of high wages at home. Yet, at the same time, true upward
mobility in the world-economy depends precisely on the development of a
vibrant home market that in turn requires high local wages. Clearly there is
a contradiction here: one cannot have both. For a time, both Japan and Korea
seemed to evade this contradiction by the erection of trade barriers. It
allowed them the luxury of permitting some real democracy and consequent hikes
in wages. But this could only be a transient solution, at best. In the Brave
New World of the WTO, this protection is becoming increasingly non-viable.
Now that they are becoming increasingly exposed to the harsh glare of genuine
competition from imports, the demand for locally produced commodities is
dwindling, capitalists must therefore default on their loans, banks must fail,
and currency devaluation is the only way to fight back.
One final note. The defeat of labor in the core has compelled that
outlet for exports from Asia shrink, while the difference between the
shrinking core wages and their continued willingness to purchase is made up
entirely by consumer credit-card debt. In essence the effective demand of the
core is constructed entirely of credit-card debt with interest rates near 20%.
This cannot last forever. Pending some form of income re-distribution, I am
reminded of the words of Marx in Vol III: "The real barrier to the expansion
of Capital is Capital itself". --Peter Grimes