One morning when I was last in Hong Kong I asked my friend Miss Lim, who always cleans my room at the University's guest house, what she did with the money she earned as a Hong Kong chambermaid. "Have you ever been to Petra?" she replied. Having arrived in the colony penniless twenty-three years ago, she had just returned from a tour of the Nabatean, Roman, and Greek ruins of the eastern Mediterranean.
In 1960 Hong Kong was just above Malta in per capita GNP; today it has overtaken Israel, and is soon expected to surpass the United Kingdom. At the close of the Korean War, 75 percent of Korea's adults were illiterate; now a teenager there has a greater chance of going to university than his counterpart in Japan.
A 1960 World Bank study proclaimed Singapore "unviable" as a country, should it separate from Malaysia. Thereupon the city-state began a period in which it sustained for over three decades the fastest growth rate the world has ever seen. This former "opium den" and "basket case" now has the world's busiest container port, the third largest oil refining facility, and the second highest per capita GNP in Asia, second only to Japan.
Thirty years ago Brazil's per capita GNP was double that of Taiwan; today Taiwan's is six times Brazil's. Indeed, the combined merchandise exports of East Asia's four Little Dragons--South Korea, Taiwan, Hong Kong, and Singapore--are twice the total of the entire Latin American continent, which has six times their population and sits on the doorstep of the world's richest and most open market. Astonishingly too, in transforming themselves at this astounding rate, all four dragons have avoided a severe income gap between rich citizens and poor.
In 1988 I began to examine the non-economic factors that have contributed to the Little Dragons' remarkable achievements. Of the many journalistic pieces done on their success, few have been written by cultural anthropologists and virtually none has considered all four side by side. I have focused mainly on businessmen, government officials, and factory workers who were active players during the decisive years from the early 1950s, up to 1980. Prominent public figures such as Lee Kuan Yew and Dr. Goh Keng Swee in Singapore, and K.T. Lee in Taiwan, were among the eight hundred who participated in the research, as were the CEOs of various large East Asian firms and of Japanese and Western multinationals' regional headquarters. Contrary to the warnings I received from U.S. businessmen, most of their Little Dragon counterparts seemed delighted to discuss the questions that interested me: What is the meaning of life? Where are the ancestors? Can you explain the concept of "China" or "Korea" to me? Who should rule? Many of them considered such questions more pertinent to their societies' economic success than those usually posed by Western interviewers concerning production and sales statistics, export figures, labor costs, and the like.
One evening I was sitting with one of Korea's industrial magnates in a restaurant overlooking Seoul's $800 million Lotte shopping mall, a structure larger than the Houston Astrodome. The complex houses several athletic clubs, eight wedding halls, several hundred boutiques, as well as an Old Cornish Tea Room, a Wild West bar, a North African casbah, a medieval French castle, and a roller coaster along a facsimile Great Wall of China. My host brought me to the window and pointed to the mall's glittering entrance: "I grew up right there . . . in a bamboo hut, no electricity, no toilet, no road. This vast commercial world you look down upon was built by the boys who tended oxen in that swampland. And who is spending all that money? Their chums who sloshed around in the paddy mud with me, collecting half a bucket of snails for family dinner. Our kids now come here to eat steaks from Omaha and Haagen Dazs ice cream."
So, how did the Little Dragons pull off--in less than one generation--the transformation that Europe, the United States, and Japan required one hundred and fifty years to achieve? One thing is certain: They did it their way.
While many aspects of these societies superficially look like our own, beneath the surface the Dragons defy virtually all the basic Western theories about how capitalist development takes place, and what its requirements are. Indeed, my research indicates that an integral set of cultural factors--ones that Max Weber, perhaps our leading theorist of capitalist development, pinpointed as preventing capitalism from taking root--in fact substantially accounts for its rapid burgeoning in the Little Dragons.
Even at first glance these societies present our theories of development with difficulties. Two of them--Hong Kong and Singapore--are not even countries, and both are so poor in resources that they have to import their water. Nor could development spring from natural resources in any of the four, for such resources were, and are, few. Again, contrary to the 1994 Cairo Population Conference claims, these, the only four societies to launch themselves from poverty to affluence since World War II, are among the most densely populated places on earth. Like many poor countries and regions in the world--Honduras during the Sandinista regime in Nicaragua, Rwanda's neighbors now, and in some respects, southern California--several of the Dragons were the "victims" of enormous influxes of unskilled refugees: between mid-1945 and late 1949 tiny Hong Kong had to absorb seven thousand refugees per month, and throughout the following decade, over one hundred thousand per year. Somehow they saw human beings as wealth, not burden, turning these "dregs", such as my chambermaid, into productive and prosperous citizens.
The Dragons pose difficulties for political scientists, too. During the period of their most spectacular growth none supported the theory that capitalism needs a free press, democracy, and the substantive rule of law to curb the arbitrary powers of a dictator. At least two of the four--South Korea and Taiwan--have had highly intrusive governments that challenge the free market model. Korea, Taiwan, and Singapore have had scores of state-owned companies, and in Hong Kong the government controls the entire land market--the colony's scarcest factor of production. Even today the notion of a self-conscious civil society remains a foreign concept in these modern cultures. There has been no Magna Carta here to lay the foundations of an "open" or transparent social order, and none is to be expected anytime soon.
Culturally, these four societies reverse many basic tenets of the common traditional Western understanding of capitalism. These include the following: that individuals defined in terms of a single functional role and economic resources considered apart from their social context constitute modern society's primary units of interaction and exchange; that the value of all assets, inputs, and outputs of economic production and even of government administration--including all workers and managers--can be expressed in monetary terms, thereby made mutually fungible; that since rational management is linear it cannot deal with factors (including goals and values) that have equal weighting, and hence it must formulate all organization and all choices in terms of ranked priorities; that business and government transactions have to be open to all legitimate players, whether they know one another or are total strangers (indeed, their being strangers makes them more objective); and that mathematics and formal laws provide the model for how society should organize its public life according to impersonal logic, purified of all subjective or social elements. In short, they refute our insistence that "predictability" requires transactions that are formally rational and publicly visible, leaving no room for discretion or ambiguity.
The Little Dragons are characterized by cultural combinations that Western theory finds irreconcilable. Thus, colorful rags-to-riches entrepreneurs at every level of society--whose eccentric individualism constitutes the essence of the Dragon self-image--attribute their own successes to group bonding on a high moral plane, which to our mind precludes individual identity and initiative. Again, cut-throat competition and exuberant materialism thrive in the Dragons through self-sacrifice. Or again: While the Dragons wholeheartedly embrace modern technology, speed, the constant turnover of markets and new products, and the incessant drive to streamline production, their organizational efficiency is based on ritual and a deep respect for traditional authority.
Let us examine in greater detail five of the Little Dragons' challenges to the Western paradigm of capitalist development. First, the classical paradigm maintains that in capitalism businessmen and government officials must deal with each other impersonally. Capitalism and bureaucratic efficiency require standardization; in official transactions individuals should only convey the facts, and all resources should be reducible more or less to monetary terms. Any trace of sentimental or subjective interchange obfuscates efficiency.
The Little Dragons turn this fundamental principle on its head. In them a prerequisite for long-term business or business/government dealings is personal bonding, usually in a very primal sense, with each individual exposing his "raw person" to the other. For Koreans, this usually involves getting drunk together; for the Chinese, perhaps drinking but certainly lavish meals. Conversation on these occasions should range over non-utilitarian topics such as hobbies and family. The point of getting drunk is not, as suspicious Westerners believe, to get the other person to reveal important business information, but rather to lay bare each one's real character and to experience trust in an intensely physical or mutually precarious situation. Would-be business partners need to establish an intricately textured personal context prior to any serious dealings: the greater the risk, the thicker the interpersonal meshing required.
The West's utilitarian strictures are expressed in office decor, the environment that the businessman or government official creates for carrying out his work. Consistent with the strictly functional criteria of the market and of Western law, the office furniture of Westerners whom I interviewed manifested little variation from what one would find in their company offices worldwide: simple, straight-lined desks and chairs suitably designed for work but uniform and boring. Windows look out onto the skyline, demanding an extroverted and objective mental orientation. Views of the city and its streets establish that what will happen in the office belongs to the public world accessible to all comers, whomever they are. After a handshake, one gets right down to business.
While some of the Little Dragon CEO offices also gave onto skylines, many were parsimonious with windows or had curtains that closed off the view, so that attention turned inward to the personal interaction at hand. Upon entering, one is always offered tea, dissipating the strictly utilitarian atmosphere and replacing it with the moral relation of host and guest. Instead of functional reminders setting the tone, the East Asian CEO almost always used office decor to present himself visually, welcoming the visitor into his personal world. Religious images or portraits of ancestors had a place in more than 60 percent of the offices (several had pictures of Jesus!). Holy icons stared down on meetings, as silent participants. In sharp contrast, a Western businessman keeps only small desk photos of the family, meant to be noticed by him alone. Enormous golf trophies, oil paintings the CEO had done himself, tiger pelts, or a highly idiosyncratic collection of Chinese porcelain disclose what the Asian executive is like as a whole person. I came home with dozens of books the Little Dragon businessmen and officials had written on Confucian philosophy, Chinese linguistics, the history of advertising since the fourteenth century in Asia, and the like. The head of one of the most successful fast-food franchises in East Asia discoursed for half an hour on Jacques Maritain's aesthetics. A Korean tycoon gave me a tape of himself singing Verdi arias. In the Far East, how a gentleman spends his leisure time is key to sizing up his character, which is more essential than law for securing reliable business relations.
Such details announce at the outset that, though enormously successful financially, a businessman or official is not exclusively interested in economic or administrative efficiency, but rather is ready to treat the other person with social and moral sensitivity. While Westerners in the workplace tend to standardize themselves and their contexts, their Little Dragon counterparts particularize people and setting--always blurring the boundary between work and the rest of one's life. They consider that nothing standardized can be permanent or predictable.
Waiting for my appointment in the reception area, in a Western firm I would find a few photos of the company's factories, or of the CEO handing out employee awards for top performance or long service. Functional criteria again. In contrast, as you enter a Little Dragon firm you are apt to see pictures of the CEO at employees' weddings and birth celebrations, or of executives and workers at a party in a park surrounded by nature. In more than one Chinese firm, the wife of the company founder holds a party for all employees--not on society-wide holidays but on the highly personalized occasion of the boss' return from a trip abroad, as though to welcome Dad home.
A second tenet of classical Western theory about the cultural requirements of capitalism that the Little Dragons dispute is our insistence on universalism. Capitalist investment is said to require that all factors of production--land, labor, and capital, as well as information--be able to move wherever they can most efficiently be put to use. Our economic system opposes any social or political obstacle to a totally free-market allocation of resources--what economists call "segmentation." In the personal recruitment process common to business management, as well as in the administration of public bureaucracies, this Western requirement takes the form of "meritocracy."
Such an understanding of how capitalism works and what defines market efficiency is foreign to the Little Dragons and to their extraordinary success. There, virtually all markets are segmented--one might say "privatized"--and inaccessible to the public at large. One executive said to me, "We don't have a yellow pages economy." Employment positions, even of the lowest level workers, are not usually filled through newspaper advertisements but through personal networks. Nor does capital flow mainly through public channels: 45 percent of the business loans made in Taiwan in 1993 were transacted in the informal (interpersonal) sector, mainly among family members. Within the past decade, when Thailand was trying to attract investment from Little Dragon Chinese, it invited delegations of businessmen, not according to their industry or even according to their country, but according to their clan. From Taiwan or Hong Kong, all prominent members of a particular family line who traced their ancestry to a particular village or valley in China were invited to Bangkok as a group (there to meet their "cousins" as it were, presumably to make business partnerships). According to some estimates, over 85 percent of all overseas investment in China's southern provinces is allocated through such personal networks.
The insider/outsider distinction dominates all Little Dragon government and business transactions--indeed, it dominates all Little Dragon social organization. There is no universal free market in which every business is open to all comers and anyone can bid on any deal. All political and economic transactions, and thus the system of business ethics, are structured around this same insider/outsider distinction. I often probed those whom I interviewed for their attitudes about the most internationally publicized cases of Little Dragon fraud. One of Hong Kong's most brilliant tycoons, a graduate of a prestigious U.S. college, summarized each of four recent scandals in the same fashion: "George Tan didn't do anything wrong. The only people he ripped off were Westerners, Indonesians, and the like, almost no one from our community. . . . Well, one Hong Kong banker has lost a lot, but he's a British lackey." Little Dragon morality is localized or segmented, not universalist. It distinguishes between many degrees of social--and hence ethical--closeness and distance. That does not make Little Dragon businessmen less ethical; to the contrary, they impose stronger moral sanctions on themselves than most Westerners seem to do, albeit sanctions that are applied with refined differentiation.
The third common Western assumption about capitalism from which the Little Dragons deviate is that the mindset of a scientific culture must permeate a capitalist society, because economic efficiency and the government that promotes it require a high degree of rationality. Indeed, in our view of our own history the development of capitalism's efficient allocation of resources was inseparable from the scientific revolution. Science-based instruments, industrial technology's domination of the workplace, and scientific management principles are simply incompatible with superstition and religious fanaticism.
But here again Little Dragon culture challenges what seems to us to be irrefutable logic. South Korea, the world's seventeenth largest industrial power, annually imports over four thousand pounds of male tiger bones and eight metric tons of deer velvet for aphrodisiacs--at prices that suggest a highly educated, executive clientele. In Hong Kong, those same billionaires who so successfully built up the capitalist economy pay hundreds of thousands of dollars for an automobile license plate number with a particularly auspicious numerical combination. Two-thirds of all Chinese executives and officials I interviewed in Hong Kong consult geomancers for critical business or professional decisions. And as for religious fanaticism, within the past decade we have seen more than a handful of Korean university students, normally among the best in the class, immolate themselves in protest against some government policy about which they felt passionately. (During the heyday of Japanese economic prowess in the 1970s and 1980s, various leading Japanese CEOs committed ritual suicide because of the guilt they bore, for such things as the mechanical malfunctioning in a company airplane that resulted in deaths, or industrial accidents with which they had not the remotest personal contact.)
The fourth way in which the Little Dragons spell out their distinctive conditions for capitalism pertains to the radically different way they perceive the role of law in economic development. Flying directly in the face of our insistence that capitalism requires "transparency" and "the rule of law", Little Dragon businessmen and officials almost unanimously consider formal law the downfall of Western society, certainly the downfall of Western morality. Contrary to the Western lawyers' ideal of very precisely crafted laws that leave no room for the bureaucrats' personal interpretation, in all four Little Dragons--including British Hong Kong--laws are considered best written and most useful when they are vague. They should state purposes but not details and conditions, so that as much as possible is left to the discretion of individuals in each particular situation and case. In Korea, senior officials in important finance and trade-related ministries stressed that the ministry itself should make regulations or new directives, then get them firmly in place, understood, and habitually used by all the technocrats before proposing them as laws to Parliament for its approval. "We know what is best and what will work", they explained. "The purpose of law is to ritualize the correct procedures."
As for contract, so sacred to Western theories of the free market's foundations, nothing seems more counterproductive to Little Dragon businessmen than our slavish adherence to written agreements. One of East Asia's large ship-owners said to me, "If you and I are discussing a point of disagreement, the moment I pull out a contract that we drew up--as proof that I am right--and show you what you signed, then at that moment all moral obligation between us terminates. We can probably never do business with each other again."
Whatever we Americans think of the importance of law, it cannot be disputed that the Little Dragons--and Japan--have industrialized with exceptional flexibility and unprecedented speed in large part because of their implacable mistrust of formal law. I often inquired, citing some particularly notorious crook, how the local business or government community punished wrongdoers, if recourse to formal law is to be avoided. Typical of my host's response would be something along these lines: "See that man sitting alone? [say in a posh luncheon club]. He was one of our crowd. Now we will greet him, even converse with him, but our wives no longer socialize with his, and he has to read the newspaper to know what's going on. We call him a street-sweeper--all he has is public information." In such a culture, ostracism is far more painful than the sanctions of law. "Hwang there has lost his social context. Without that, no business", the head of a prominent Hong Kong bank commented. "He'd give anything to trade that punishment for a lawsuit." The president of one of the Hyundai firms explained to me, "You can't imagine the pain of loneliness out there."
Finally, what about our fondest piece of Weberian folk theory: that capitalist development springs from the Puritan ethic? The Dragons have among the highest domestic savings rates in the world and are renowned for their hard work. On some counts their societies do share some of the values of our Puritan forefathers. But then the question arises, which "Puritan" values? America's Jewish, Irish, Italian, and more recently Salvadoran and Mexican immigrants have all been committed to hard work and savings, as well as to strong, patriarchally-governed families. Puritans had no monopoly on these cultural traits.
Several years ago, Korea had its own Watergate, which found former President Chun Doo Hwan guilty of serious corruption. The high tribunal sentenced him not to jail, but to years of penitential rigor in a monastery deep within a mountain fastness. Not exactly the Puritan way of handling things, but rather in the same spirit. Imagine the U.S. Congress sending Richard Nixon to repent of his deeds in a Trappist monastery!
But then what would the Puritans have made of the vibrant animal energies that pervade the Little Dragons' culture? The flood of Taiwan's morning-commuter motorcycles that turns Taipei's sidewalks into superhighways. Business lunches and dinners that barely fall short of Roman gluttony. The inveterate Chinese passion for gambling in every form conceivable to man. As for women, Hong Kong and Taiwanese housewives, secretaries, and even executive assistants abandon their work responsibilities to play the stock market like roulette, day after day. What would Cotton Mather have made of the correlation between sexual license and economic prosperity in these cultures, the successful businessmen's incurable love for their concubines? Or, indeed, of government corruption, rampant at various times even among the British administration in Hong Kong--particularly in the police force and in the highest judicial tribunals?
In short, the more we learn about these fabulously plucky societies, the more we appreciate the diversity of capitalism and how it may thrive in a variety of cultural contexts. The more questions we raise about ourselves and our own history--how we got to where we are now--the more humble should we become about the correspondence between our theories and the way the world really works. Human society is wonderfully variable. As Confucius so wisely said, "There is more than one way to skin a cat."Essay Types: Essay