Dear Peter and all colleagues -
this is a most interesting argument. As always, Samir Amin has something
fundamental to offer. I think, on this point, our friend Samir is right,
and our friend Andre Gunder is wrong - the semi-periphery is under a
constant threat of a long-run current account deficit.
I agree with you Peter on your diagnosis about South Korea, but not on
Japan. Japan will recover, and Japan is a centre.
However - folks, this is not a melt-down either, but the beginning of
either a Jugar or Kuznets-cycle low, and, according to my calculations, not
at any rate connected with a Kondratieff (the last one was from 1932 to
around 1982). Chris put up my empirical recent stuff at the archive for you
all to read - I think the evidence is clear on this point.
Kind regards from Warsaw
Arno Tausch
----------
> From: Peter Grimes <p34d3611@jhu.edu>
> To: WORLD SYSTEMS NETWORK <wsn@csf.colorado.edu>
> Subject: Asian Miracle Meltdown
> Date: Dienstag, 25. November 1997 10:20
>
> 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
>