Sorry if this is a second posting. I am having some trouble with my connection and do not think this made it to the list. Marty ---------- Forwarded message ---------- Date: Sun, 22 Aug 1999 14:50:19 -0700 (PDT) From: Martin Hart-Landsberg <[EMAIL PROTECTED]> To: [EMAIL PROTECTED] Subject: Re: [PEN-L:10286] Re: Re: Asian recovery... To add to the discussion of the Asian crisis, I would say that the so-called recovery in East Asia is very weak. It is largely the result of two things. First, the IMF and US government, worried about the political implications of the austerity policies imposed on the East Asian countries, especially after the political uprising in Indonesia, changed direction. They now encourage fairly large government deficit spending. Thus, Indonesia and South Korea, for example, are running government deficits equal to some 7 or 8 percent of GDP. Second, the collapse meant that most East Asian companies ran down their inventories rather than maintain production; some of what is taking place now is production to restock inventories. There has been little in the way of new investment or domestic consumption supporting recovery. Even export growth is fairly weak; predictions have East Asian countries increasing exports in the range of 5-8% this year. That is not much given past growth rates and recent declines. At the same time, the large companies in South Korea have managed to weather the storm and even increase their relative position in the economy, largely by buying up smaller competitors and increasing their hold on credit markets. In Thailand and Indonesia, it seems that Japanese companies have increased their control over their joint ventures, buying out local partners. Moreover, the overall export focus of East Asia remains largely unchanged. Thus, basic economic structures remain remarkably intact, although with greater foreign domination of key sectors. Most importantly, even if the recovery is sustained (and this will largely depend on how long the US economy can continue to absorb imports), there is little sign that the great majority of workers will gain anything from it. Business Week, in describing the "recovery" in South Korea called it a jobless and joyless recovery. That is pretty accurate. Thus, working people in Asia face a very difficult period ahead. In that sense, it is I think important to organize around the failure of capitalism and to build long-term support for more fundamental social change. As for causes of the crisis, corruption was not the main factor. The crisis was generated by contradictions rooted in the regional production process that led to growing trade and current account deficits (the result of ever greater dependence on foreign imports, capital, and technology; ever greater exploitation of labor; and regional competition and overproduction). Corruption in fact played an important role in sustaining growth and attracting capital (at least up until financial markets were further deregulated). It was the corruption that kept ruling elites unified, ensured pro-US regimes remained in power, promoted attractive investment possibilities for US and Japanese capital, etc. Marty Hart-Landsberg
