Can someone find me an economist who knows what's going on?
- Ali Atlas, Indonesia's foreign minister
What a difference a year makes. As recently as last summer, economic pundits and global investors were singing the praises of the "Asian tigers." The World Bank basked in the glow of its 1993 report, The Asian Miracle. Throughout ruling circles, the "Asian model" was touted as proof that open markets and the free flow of capital would be the salvation of humankind.
Today, more than a year into the region's devastating economic crisis, the World Bank is preparing a new report. Rethinking Asia's Miracle it is to be called. Small wonder some rethinking is in order. Every day, 10,000 South Korean workers receive layoff notices - 300,000 per month. The Indonesian economy is in a state of near-total collapse, merely 22 of the 282 companies on the Jakarta stock exchange still viable. Japan is mired in its deepest recession in twenty-five years. Malaysia and Thailand remain in financial shock. Overall, more than $600 billion has been wiped off the balance sheets of the region's stock markets. With national budgets and public policy increasingly dictated by the International Monetary Fund (IMF), East Asia's increased integration into the world market now looks like the route to a new form of dependency.
The hyde about "globalization" that has dominated economic analysis even on much of the left now stands severely shaken. True, capital's relentless drive to restructure - downsizing and "leaning" of production, outsourcing, casualization of much work, the creation of new capital markets, establishment of new trade and investment pacts - has reshaped the terrain of struggle and resistance. But rather than altering capital's essential dynamics and contradictions, the crisis in Asia reveals just how explosive those contradictions can be. In fact, the Asian crisis tells us much about two fundamental contradictions of capitalism in the age of "globalization." First, it reveals the severe problem of overaccumulation and overcapacity that plagues globalizing capital today. And, secondly, it illustrates how accelerated capital accumulation can give rise to powerful new working classes capable of fighting back against capital's dictates.
Globalization on Trial
If any region is a test case for establishment claims about globalization it is East Asia and its newly industrializing countries - South Korea, Thailand, Indonesia, Malaysia, and Taiwan in particular. Look at much of the world and claims for economic globalization seem laughable. After all, despite all the hype about globally-mobile capital, international capital continues to concentrate production and trade in the industrially developed nations. With a few exceptions, only parts of Asia have been more systematically incorporated into the global circuits of capital. Between 1980 and 1991, for instance, the share of world trade for which Asia (excluding Japan) accounted rose from 9 to 15 percent while the developed nations' share slipped from 72 to 63 percent. But the rest of the world economy - the "less developed countries" of Africa, Latin America, and the Caribbean in particular - experienced a catastrophic drop from 28 to 13 percent of international trade (United Nations, World Economic Survey, 1993). By 1994 East Asia was the destination of more than half of all investment flows to developing countries.
Take Asia away, therefore, and there was no globalization thesis; it was the sole success story. And East Asia's crisis now puts that at risk. More than that, events in Asia pose a serious threat to the world capitalist economy as a whole, "the biggest threat to global prosperity" since the 1970s as Business Week puts it (January 26, 1998).
Contrary to the facile descriptions of the business press, however, the collapse in East Asia is not fundamentally about corruption, crony capitalism, or overly regulated markets. Rather, it is about the classic problem of capitalist overaccumulation (and the profit squeeze that accompanies it). …