The Evil "Crony Capitalism" of Russia and Asia

Dear Comrades,
            It is problematic that so many western Marxists keep on making 
references to the "the crony capitalism" of Russia and Asian countries as 
being responsible for their own crisies, and therefore the global financial 
and economic troubles of the last two years. "Cronyism" is integrally bound 
up with capital itself and is most rampant in its two main power centres of 
Wall Street and London.
            Unfortunately many of these ‘Marxists’ are not going to easily 
stop their echoing of the western bosses chauvinism - as doing this would 
require  a much higher committment to militant class struggle than most of 
them are prepared to give at the moment - a radical transformation in their 
lifestyle.
            It would mean they stop seeing the world through 
western-centred 
‘Marxist’ tinted glasses. It would mean they listen attentively to Marxists 
outside the west.  And, outside of a crash or slump in western economies, 
and 
the loss of their own relative economic privileges (or pre-revolutionary 
situations developing in the west), they will continue to represent within 
the world marxist movement the most lethal carriers, the concentrated 
essence 
of that most deadly disease: the penetration of bourgeois ideology and of 
alienation within our diffuse and confused world Marxist ‘movement’.
            Below is a straight forward Asian, even bourgeois, view from 
Chalmers Johnson in the Los Angeles Times . It also points out that even 
non-Marxist students across Asia, "from Seoul to Kuala Lumpur to Beijing", 
see clearer than many western Marxists when it comes to the source of crony 
capitalism.

Regards, Steve Myers.
_______________________________


 LA Times  -  Friday, June 25, 1999

Let's Revisit Asia's 'Crony Capitalism' Economy: America's free-trade 
proselytizing is the true root of what is now a global crisis.

              By CHALMERS JOHNSON

After all the endless mouthing off in the pages of the English-language 
business press about East Asia's "crony capitalism," the lack of 
"transparency" in Asian stock exchanges, the "no pain, no gain" logic of 
the 
International Monetary Fund and how the Asian economic challenge to Anglo 
American capitalism had fizzled, we now know that none of these things had 
anything to do with the Asian--now global--economic crisis.

Addressing what did cause the crisis is the main business of the leaders of 
the countries of East Asia as they reflect on what has happened to them 
over 
the past two years. If they ignore this question and pretend that the road 
is 
still open to "globalization" in the Pacific, they risk being repudiated by 
their own people.

Here's the new explanation as it is developing in seminar rooms from Seoul 
to 
Kuala Lumpur to Beijing.

With the end of the Cold War, the United States decided it had to launch a 
rollback operation in East Asia if it was to maintain its global hegemony. 
The high-growth economies of East Asia had become the main challengers to 
American power in the region, and it was time they were brought to heel.

The campaign worked in two phases. First, a major ideological barrage was 
launched to soften up the Asians. The Americans  mobilized famous 
professors 
of economics from their universities, who never once faced a "market force" 
in their own lives, to preach the beauties of globalization; in this case 
meaning American economic institutions. These include total laissez faire, 
destruction of unions and social safety nets, staffing of regulatory 
agencies 
with retired financiers, indifference to the pay differentials between CEOs 
and the ordinary labor force, moving manufacturing to low-wage areas 
regardless of the social costs and totally unregulated flows of capital in 
and out of any and all economies. Ever since the Asia  Pacific Economic 
Cooperation summit in 1993, the Americans hammered home to the Asians that 
they needed to "open up" their economies in these ways.

Then came phase two. Once the Asian economies had begun to "deregulate" and 
were standing in the world marketplace more or less naked, the "hedge 
funds" 
were let loose on them. These funds are actually huge concentrations of 
capital owned by very wealthy Western white men, who manipulate 
bewilderingly 
complex financial instruments called "derivatives."

They usually locate their offices in offshore tax havens like the Cayman 
Islands and do everything in their power to avoid regulators or tax 
collectors in the so-called free market democracies. The funds easily raped 
Thailand, Indonesia and South Korea and then turned the shivering survivors 
over to the IMF, not to help the victims but to ensure that no Western bank 
was stuck with "nonperforming" loans in the devastated countries. The IMF 
is 
also the U.S. government's chosen instrument for "reforming" these 
countries 
to make them look more like New York.

The Americans suspected that all this might cause some trouble. On March 4, 
1998, Adm. Joseph Prueher, then commander in chief of American military 
forces located in East Asia and today the U.S. ambassador-designate to 
China, 
testified before Congress that the U.S. military was on alert for "early 
signs of instability" in East Asia, including "labor disputes." The 
Indonesian armed forces, whom Prueher's special forces had been training 
for 
years, got rid of Suharto when it seemed necessary.

The Indonesian troops killed about 1,200 shopkeepers and raped more than 
150 
Chinese women doing so.

But then it all got a bit out of hand. One of the biggest hedge funds 
proved 
to be so greedy that the U.S. government had to organize a bailout for it, 
which brought the scheme out into the open. David Mullins, a former deputy 
to 
Federal Reserve Chairman Alan Greenspan, had gone straight to work for the 
Long-Term Capital Management fund after he left the Fed in 1994. Had this 
not 
been the case, it's unlikely that the Federal Reserve Bank of New York 
would 
have arranged a $3.5-billion rescue package for the hedge fund. The 
incestuous relationship between Washington and Wall Street—what Columbia 
University economist Jagdish Bhagwati calls the Wall Street-Treasury 
complex--made East Asia's crony capitalism look tame.

The weakened economies of East Asia also could not continue to buy the 
weapons the Pentagon wanted to sell them, and some began to have second 
thoughts about paying to keep U.S. Marines (a.k.a. the Hedge Fund 
Protective 
Corps) in their countries. Globalization was discredited as a crooked 
financier's scam. The Chinese never looked so clever as they did in keeping 
out of the World Trade Organization as did the Japanese when they more or 
less ignored the pleas for "reform" from Washington.

These issues came to a head in Kuala Lumpur in November 1998. The U.S. 
trade 
representative, Charlene Barshefsky, accused the Japanese of offering $30 
billion in aid to the stricken countries of East Asia as a way of buying 
their votes against further market-opening measures. The Japanese foreign 
ministry responded that the U.S. government was possessed by "an evil 
spirit," a phrase painfully close to the evil empire epithet that former 
President Reagan used against the Soviet Union. Vice President Al Gore then 
gave a speech in the Malaysian capital, denouncing its head of state for 
trying to protect his country from international speculators and calling on 
the people of Malaysia to overthrow him. After that, APEC no longer had a 
future worth speaking of.

The Americans do not seem to understand that their message of free trade 
and 
market economics is in serious disrepute. Wall Street itself now looks like 
the ancestral home of crony capitalism.
_____________________________________________

Chalmers Johnson Is President of the Japan Policy Research Institute in San 
Diego. His Forthcoming Book Is "Blowback: the Costs of the American Empire"