-Caveat Lector- ------- Forwarded Message Follows ------- Here is today's ZNet Commentary Delivery from Robin Hahnel. Here then is today's ZNet Commentary... ------------------------------------------ THE QUESTION OF IMPERIAL INTENT By Robin Hahnel Not so long ago the United States was widely viewed as having lost its global economic hegemony. As far back as the early 1970s President Nixon commissioned Peter Gary Peterson to head up a special commission to evaluate why the US position in the global economy was deteriorating. The commission's two-volume report published by the Government Printing Office in 1971 contained a long list of ways in which the US was losing its competitive edge to Europe and Japan. But most significantly, Peterson was so impressed with the Japanese economic model that he added a special appendix to the report titled "The Japanese Economic Miracle" in which Peterson literally salivated over what he described as the competitive advantages of different aspects of the Japanese economic system. He explained how their lifetime employment system, their business conglomerates, or Keritsu, (that included vertically integrated manufacturing companies, a large commercial bank and an export trading company,) their financial system (that permitted Japanese companies to operate with much higher debt/equity ratios yet less risk of bankruptcy than similar US companies,) and a highly efficient collaborative relationship between Japanese businesses, the Ministry of International Trade and Industry and the Bank of Japan (that facilitated long run international economic planning to penetrate and capture important world markets,) all provided Japanese companies with significant advantages over their US counterparts. In 1974 the British economist Andrew Schonfield published Modern Capitalism (Oxford University Press), a major intellectual tour de force in which he explained that there had always been two, not one, model of "capitalism." Besides the laissez faire model favored in Great Britain and the US in which the government was viewed as a policeman mediating conflicts between private parties, Schonfield convincingly demonstrated that there had always been a corporatist model favored, for example, in France and Germany, where the government was viewed as a major player responsible for coordinating the economy and shaping its pattern of industrial evolution. Schonfield went on to provide credible evidence for why he believed the corporatist model would prove better suited than the laissez faire model to the challenges of global competition in the late 20th and early 21st centuries. In the 1980s and 1990s South Korea, Taiwan, and other Asian countries imitated the Japanese version of corporatist capitalism with great success, producing the highly touted Asian economic miracle. And despite the fact that IMF, World Bank, and US officials labored tirelessly to perpetuate the myth that the Asian "tigers" were laissez faire success stories, the evidence is overwhelming that successful Asian economies during this period in fact pursued a corporatist, not a laissez faire strategy. [See Robert Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton University Press, 1990), and Alice Amsden, Asian's Next Giant: South Korea and Late Industrialization (Oxford University Press, 1989)] There is no denying that the Asian economic crisis has taken the wind out of the sails not only of "Japan Inc.," but of other Asian "tigers" as well, which prior to 1997 posed strong challenges to US and European global economic supremacy. And the corporatist model is clearly in retreat in Germany and France as well. Whereas the collapse of the Soviet Union changed the world from a bipolar to a unipolar system of military power, the Asian financial crisis has changed the world from a tripolar into an increasingly unipolar system of economic power. It is interesting to ask if US/IMF sponsored policies leading up to the crisis, and policies imposed on stricken economies by the US and IMF after the crisis struck were: (1) part of a conscious strategy to clip the wings of increasingly troublesome economic competitors, (2) the accidental result of myopic ideological zealotry and opportunistic greed, or, (3) indeed, the best policies to strengthen East Asian economies that were really only "paper tigers" and transform them into more formidable global competitors. I will not bother here to present the case against the Wall Street/Washington consensus that liberalization followed by austerity was all about strengthening our East Asian competitors. Instead, let's consider whether US imperial competition as the millenium approaches is (1) relatively self-aware, or (2) merely unconsciously self-serving. Chalmers Johnson is President of the Japan Policy Research Institute in San Diego. He offered a blunt assessment titled "America's Free Trade Proselytizing is the True Root of What is Now a Global Crisis" in the Los Angeles Times (6/25/99). "After all the endless mouthing off in the pages of the English-language business press about East Asian's 'crony capitalism,' the lack of 'transparency' in Asian stock exchanges, the 'no pain, no gain' logic of the IMF 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. 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 work 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 Asian 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." Obviously Chalmers Johnson is inclined toward a straightforward conspiracy theory. Muthiah Alagappa, a Malaysian scholar at the East-West Center in Honolulu is a little more polite: "The Asian crisis obviously strengthens the position of American companies in Asia." Jusuf Wanandi, head of a research institute in Jakarta is more alarmed: "All our stocks and companies are dirt-cheap. Foreigners may take over everything." While Prime Minister Mahathir Mohamad of Malaysia sounded the alarm in a televised address: "If we are not careful we will be recolonized." Nicholas Kristof who covered the Asian crisis for the New York Times is more agnostic but does not dismiss the conspiracy theory outright: "Many experts believe that one of the most far-reaching consequences of the Asian financial crisis will be a greatly expanded American business presence in Asia. The United States insists that the main beneficiaries of open markets will be local residents, and the US is not a predatory beast forcing its companies on Asia. But not everyone agrees. There is a growing backlash against what some nations regard as an American model of laissez faire capitalism, which rescues Connecticut hedge funds but sacrifices Indonesian children." Jeffrey Garten, now dean of the Yale School of Management, leaves no doubt that the conditions that gave rise to American business ascendance in Asia were not themselves, unplanned or accidental. He recalled that when he was a high ranking official in the Commerce Department and key member of the neoliberal "attack" team: "We pushed full steam ahead on all areas of liberalization, including financial. I never went on a trip when my brief didn't include either advice or congratulations on liberalization. Wall Street was delighted that the broad trade agenda now included financial services. There wasn't a fiber in the bodies of Mr. Rubin, Mr. Kantor, and the late Commerce Secretary Ron Brown - or in mine - that didn't want to press as a matter of policy for more open markets wherever you could make it happen." In many respects it matters little if the likes of Robert Rubin, Lawrence Summers, Stanley Fischer, and Alan Greenspan really know and understand what the effects will be of what they are doing. Nor does it matter much if mouthpieces like Bill Clinton, Tony Blair and Gerhard Schroeder believe their own rhetoric that liberalization and austerity is necessary to strengthen Asian economies, or know full well that the international economic policies they peddle weaken Asian competitors. The only thing that really matters is that we who oppose US corporate sponsored globalization understand that it not only is damaging the environment and aggravating global inequalities, it has also dealt US corporations most dangerous competitors in Asia a stunning body blow while handing US financial institutions and investors a gargantuan windfall gain. But just as the Pentagon Papers revealed a greater degree of self-awareness than most had suspected on the part of those who planned and carried out the US war against Vietnam, I believe as evidence trickles in from leaked Treasury Department and IMF memos we will also discover a greater degree of self-awareness on the part of those who orchestrated neoliberal globalization than most suspect at present. Speaking for myself, I am more convinced than I was a year ago that top policy makers believe very little of their own rhetoric about liberalization strengthening all economies and globalization raising the living standards of all, and are keenly aware of how their international economic policies have weakened international rivals of US business as well as aggravated global inequalities. A<>E<>R ~~~~~~~~~~~~~~~ The only real voyage of discovery consists not in seeking new landscapes but in having new eyes. -Marcel Proust + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your common sense." --Buddha + + + + + + + + + + + + + + + + + + + + + + + + + + + + A merely fallen enemy may rise again, but the reconciled one is truly vanquished. -Johann Christoph Schiller, German Writer (1759-1805) + + + + + + + + + + + + + + + + + + + + + + + + + + + + It is preoccupation with possessions, more than anything else, that prevents us from living freely and nobly. -Bertrand Russell + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Everyone has the right...to seek, receive and impart information and ideas through any media and regardless of frontiers." 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