Tuesday, July 1, 2003

A Must Read for those interested in the 'Asian Miracle'

First posted as a book review on Amazon.com
The Rise and Decline of the Asian Century: False Starts on the Path to the Global Millennium by Christopher Lingle

The reason that this book should rank as one of the most important books that is seldom heard of and rarely read, is simple. Its predictions turned out to be devastatingly accurate within no time at all. Christopher Lingle, while a senior fellow at the National University of Singapore, wrote an article in the International Herald Tribune, which angered the Singaporean government. Faced with the threat of imprisonment, Lingle fled the country and began working on this book in the USA. The book was published in 1997 - a few months before the catastrophic collapse of the East Asian economies.

Lingle talks about the mountains of literature being churned out in praise of the 'Asian miracle' and the phenomenal economic progress of the Asian and other Asia-Pacific nations, which displayed double-digit growth rates through most of the 80s and 90s. The author contends that the highest-growth industry seems to be the one publishing books about the 'Asian century'.

Lingle attributes the over-enthusiastic optimism for Asia's 'miracle economies' to the classic faux pas of extrapolating short-term observations. While no one can deny the fact that there has been rapid growth of these economies, he points out that, historically, several regimes with fundamentally flawed institutional arrangements have produced relatively long periods of high growth. Spain under Franco in the 50s and 60s, apartheid South Africa, Soviet Russia and even communist North Korea have all shown periods of sustained economic 'progress' until their inherent weaknesses led to an inevitable collapse.

The inherent contradiction is that true economic advance is a direct function of the human spirit and entrepreneurship, both of which are repressed under regimes, which practice collectivist repression in order to maintain the single-party political status quo. The capitalistic tenets of contract law and property rights are fundamentally individualistic in nature and fly in the face of the policies of East Asian regimes.

Lingle takes the bull by the horns in analyzing how the world reached the consensus that indeed the economies of East Asia were 'miracle' economies. It all began when the Japanese Ministry of International Trade and Industry (MITI) buoyed by the success of the Japanese model at the time decided that it was time for some economic evangelism. The extensively bureaucratic and interventionist model championed by the Japanese was at sharp odds with the World Bank endorsed neo-classical view.

In order to showcase their approach as a theoretical model, which could be successfully adopted by other countries in the region, the Japanese government commissioned the World Bank to produce a report that was published in 1993 under the title 'The East Asian Miracle.' So what were the conclusions of this (at the time, enshrined in economic folklore) report? The most important conclusions of this report were that the 'miraculous' growth experienced by the region was a result of macroeconomic stability achieved by pursuance of prudent fiscal and monetary policy. Much to the liking of its Japanese masters, the report admitted that the large-scale market interventions carried out by these governments had contributed to the 'miracle'

Lingle talks about Max Weber's nineteenth century view that Confucianism would retard the modernization of Asia and how that particular contention seemed to be far from the truth when the Asian ascent began in the 1970s. It soon became widely accepted that neo-Confucianism was a source of East Asian dynamism. This neo-Confucianism, created by selective picking and choosing of tenets from the original belief system and transforming them into a distinct political ideology, justifies the pre-eminence of the rights of the community over the rights of the individual. The 'virtuous rulers' theory, (rather than the choice of the citizenry) advocated by neo-Confucians fitted perfectly in the scheme of things for authoritarian patriarchal governments.

Thus extensive market interventions, rejection of the notion of the self-regulating economy and the ability to enforce stability, resulted in the creation of the myth that East Asia's dynamic yet traditional rulers were responsible for the great ascendancy to economic power. This neo-Confucian inspired set of Asian values is championed by what it commonly called the 'Singapore School', which aggressively promotes its own model of development as uniquely Asian, indisputably successful and easily transplantable.

The distinctive neo-Confucian concepts of 'filial piety' and subservience to authority neatly lend themselves to the one-party authoritarian style of rule of leaders like Lee Kuan Yew of Singapore and Mahathir Mohamad of Malaysia. The venerated Confucian tradition of strong family bonds, in a modern context translates into what Lingle calls 'dynastic succession and an entrenched policy of nepotism.'

Examples of course, are numerous. From Sukarno and Suharto in Indonesia to the Gandhis and Bandaranaikes in India and Sri Lanka respectively; from the Korean Kims and Cambodian royalty to the Marcoses and the Acquinos of the Philippines, Asia has a long 'tradition' of dynastic democracies. Lingle points out that such nepotism is in direct conflict with modernizing forces such as marketization. They seem to be more compatible with imperial colonialism than modern democracy.