On Fri, 13 Feb 1998, Gunder Frank wrote:
> As I recall, i already posted something to wsn on this some time ago
> the gist of which was [in ws terms] that this is the first time in recent
> memory that a world recession STARTS in Asia and spreads elsewhere from
> THERE, and that this implies that the WS 'center' has shifted form west to
> east. the fact that there is a financial crisis and/or a real recession
> does NOT mean that this is the end of the process in Asia. more lilkely
> it is only the BEGINNING, and in addition it will spur the East
> ASians on to 'regionalize' if not nationalize their trade and financial
> circuits more to get out from under the IMF etc. and THEY -real economy
> wise- probably CAN do that, which the Africans, Latin Ameriocans and
> East Europeans have NOT been able to do.
Yes, the Asian situation is complex. On the one hand, Indonesia, Thailand
and perhaps Malaysia are being thrown to the wolves, bespeaking a new,
vicious kind of neo-colonialism in the making. On the other hand, South
Korea, Taiwan, Singapore and Hong Kong are doing their damndest to plug
the holes in the fiscal dike -- Singapore is propping up Malaysia,
Taiwan and Hong Kong are running air cover for China, while South Korea
is being bailed out by Japanese and European banks (which own 75% of S.
Korea's external debt). And this is merely in the initial, financial
stages of the crisis -- compare this to the Latin American regimes in
the 1980s, which never even came close to showing multinational solidarity
for one another (there was talk of a "debtor's cartel", but nothing came
of it). You have to conclude that, if things really get tough -- and they
may -- then we're going to see even more state intervention in the Pacific
Rim, not less.
As for the previous question on this list, as to why Asia melted down,
this isn't hard to see: foreign multinationals have been
relocating/investing in the place like there's no
tomorrow, jacking up production and keeping wages low. As long as Asian
exports to First World (mostly American) markets were tiny, the
strategy worked just fine; all that investment stimulated local economies,
and jumpstarted local accumulation. Since 1985, however, the
strategy started breaking down, due to the sheer volume of imports. In
response, the US devalued the dollar and began going deep into debt on its
international credit position (i.e. borrowing from Japan and Central
Europe). This kept the export machine running for another ten years, but
sooner or later, the overbuilding of Asian factories was going to collide
with the inability of American consumers to buy all those products.
So who's going to buy all those products? Japan, that's who. Their
multinationals are the ones investing in SE Asian production, and their
keiretsu have been raking in the dough on the export boom. Japan is a
global creditor, to the tune of some $800 billion or so; what this means
is that Japan (and that other global creditor, namely Central Europe) are
going to have to create effective demand -- either by letting their
currencies appreciate vis-a-vis the dollar, or by multinational
Keynesianism, or by huge debt bailouts of their South Korean/Czech
semi-peripheries or some combination thereof. So far, Japan is talking
about applying a $50 billion stimulus package, and seems to have agreed to
roll over South Korea's debts, so there's some initial, scanty evidence
that East Asia will resist the Wall Street influenza. But we'll know more
in a couple months or so, once the banking bigwigs from Europe make up
their minds about what to do.
-- Dennis