In Asia's Mirror: From Commodore Perry to the IMF

In Asia's Mirror: From Commodore Perry to the IMF

Mini Teaser: Asia has, in its moments of crisis, been forced to open up to the West before. These openings have been attended by an interesting kaleidoscope of moods, their usual pattern neatly captured in the life of just one man, both hero and anti-hero of t

by Author(s): Sebastian Mallaby

On the face of it, the Asian crisis gives Fukuyama an opportunity to
lay the doubts of this footnote to rest--to build on his earlier
confidence, which reflected the collapse of communism, with new
pronouncements taking in the humbling of Asia. If the memory of
Kojeve's uncertainty were not enough to drive him to this, then
contemporary uncertainty about the end of history thesis surely
should have been sufficient. For, having enjoyed instantaneous
acclaim, Fukuyama's confidence in the triumph of the West was soon
challenged by Samuel Huntington's opposing anticipation of a clash of
civilizations, an anticipation that drew explicitly on Asia's
economic boom. By 2020, Huntington pointed out, Asia would contain
four of the world's five largest economies, and would account for
more than 40 percent of the world's GDP. This shift of gravity toward
Asia would mean, in a geo-intellectual sense, a shift away from
Western laisser-faire and toward the Asian model.

Curiously, Fukuyama shows no appetite for exploiting Asia's troubles
to re-open his argument with Huntington. He is prepared to attack
Asian triumphalism, but he attacks American triumphalism as well.
Writing in Commentary, he deflates the "Asian values" school,
recalling that a century ago Confucianism was blamed for Asia's
economic sloth, and that Asian growth only became possible after Asia
rejected deeply embedded values such as the mandarin disdain for
commerce. In equally robust terms, he clobbers the Asian claim that
authoritarian government promotes growth, pointing out that it can
equally well underpin kleptocracies like Indonesia's. The Asian
crisis "will puncture the idea of Asian exceptionalism", Fukuyama
writes. It will serve to remind the world that the laws of economics
apply in Asia as they do elsewhere, that Asian values do not
represent some magic formula for overcoming them.

This is perfectly lucid stuff. But nowhere does Fukuyama take the
next step: he breathes not a word about the "unabashed victory of
economic and political liberalism" that he celebrated in his end of
history article. Instead, he sympathizes with those proponents of
Asian values who focused on "the effects of excessive individualism
in Western societies, and particularly in the United States."
Individual freedom breeds innovation and entrepreneurship, to be
sure. But it also brings bad things, Fukuyama says, like crime and
illegitimacy. Asked why Asia's financial crisis does not prompt him
to restate his old confidence in Westernization, Fukuyama speaks with
clear distaste of "chest-thumping in America." Nine years ago he was
hailed for his clear declaration of faith in the idea of the West.
Today, not even Fukuyama is prepared to defend Fukuyama.

One can only marvel at Feldstein and Fukuyama, and at the general
reluctance of American conservatives to celebrate the latest evidence
from Asia for the superiority of their Western system. For the
careers of Takamori Saigo and General MacArthur permit a far more
expansive conception of the Western idea, and no amount of historical
revisionism should be allowed to conceal this. It is true, certainly,
that Japan's openings to the outside world have been followed by
nationalist backlash, and Indonesia's bucking of the first two IMF
plans suggests that one should not rule out the possibility of
backlash this time either. But neither in 1877 nor after 1945 did the
nationalist backlash prove lasting. After Saigo's brief rebellion was
put down, Japan Westernized and modernized for four glorious decades,
falling back into virulent anti-Western nationalism only in the
1930s. Similarly, although MacArthur failed to implement all his
reforms, Japan nonetheless dropped emperor-worship, hosted (and later
paid for) large American bases on its soil, and replaced military
rule with imperfect democracy. Whatever the undertow of nationalism
in Japan, it is difficult to argue that the current of the past
century and a half has run in anything other than a westerly

There is every reason to believe that the same will prove true in
Asia now. For all the bucking, and despite violent student riots,
Indonesia is still working with the IMF, while Thailand and South
Korea are starting to liberalize their financial systems in keeping
with the IMF's prescriptions. In all these countries, the IMF reforms
will not be swallowed whole; there will be much foot-dragging and a
few outright reversals. But it is probable that quite a number of its
ideas will stick, making Asian economies less state-directed, more
transparent, and more open to foreigners: in short, more Western.
This is likely not just because the IMF reforms are sensible, though
this is largely true. It is likely because, even before the Asian
crisis arrived, some of the region's leaders were thinking of
Westernizing anyway, and because others who spoke out against
Westernization have since softened their tunes tellingly.

Two Blunted Challenges

To appreciate this point, it is necessary to distinguish between two
types of Asian challenge to the liberal-capitalist model. The first
comes primarily from Northeast Asia--from South Korea and Japan--and
consists of an economic style that differs markedly from Western
laisser-faire. The second comes primarily from Southeast
Asia--notably from Malaysia and Singapore--and consists of a
rhetorical assertion of non-Western social values. The first
challenge centers on issues like the usefulness of industrial policy,
of state-directed lending, and of policies to induce high savings
rates. The second challenge is about respect for the group rather
than the individual, for state authority as opposed to citizens'
rights and freedoms.

It is the first challenge, the one presented by Northeast Asia's
economic model, that had started to unravel even before Asia's
currencies plunged in 1997. In Japan's case, this was not surprising,
for it had already undergone the collapse of its equity and property
markets at the start of the decade. As a result of this shock,
Japan's technocrats were confronted with the limits of their own
competence, and public opinion began to favor greater economic
freedoms. For most of this decade, a shifting cast of coalition
governments has proposed deregulation plans for retailing, for
distribution, and most recently, for financial services. Vested
interests have delayed some of these reforms, but the argument in
Japan is no longer about whether to dismantle UN-Western controls on
the economy--it is about how quickly to do so. Intellectually,
Japan's economic model is dead.

Less obviously, but more remarkably given the absence of pre-1997
financial shocks, South Korea has also spent much of this decade
reconsidering its economic model. Until the market for semiconductors
collapsed in 1996, Korea's economy was performing splendidly. Even
so, it was impossible to spend half an hour talking to a Korean
economist in or out of government without hearing about the need to
deregulate, to break up the conglomerates known as chaebol, to create
a more Western style of corporate governance by fostering
sophisticated banks and equity investors. In the 1990s foreigners
were allowed for the first time to buy shares in Korean companies, a
handful of Korean firms were allowed to raise capital offshore, and
plans were drawn up to reduce the anti-competitive power of the
chaebol. In 1996 Korea abolished the Economic Planning Board, which
had masterminded the government's industrial policy. When Feldstein
argues that Korea's original economic model may still suit the
country well, he is expressing a view shared by few Korean
economists. The Northeast Asian challenge to the liberal-capitalist
model is no longer taken seriously even by the supposed challengers.

This leaves the second Asian challenge to Western confidence in its
ideas: the challenge from Southeast Asia. Unlike South Korea and
Japan, the economies of this region are not markedly UN-Western. They
are wide open to foreign investment rather than being hostile to it,
and they have no particular faith in industrial policy. It has
therefore been hard to cite the region's economic success as a
challenge to the laisser-faire ideas of Western economists. Their
success has been used to tweak the West in a different way, for that
success has been attributed to Southeast Asia's UN-Western respect
for authority. Firm government, ready to silence bumptious critics,
has ensured political and social stability, focusing national
resources on growth. Firm parents, ready to discipline their
children, have preserved the traditional Confucian respect for
education. To be sure, this discipline may have dulled the
free-thinking and open criticism that keeps centers of authority
honest and accountable. But, according to the proponents of Asian
values, this cost was trivial when set against the gains ensured by

So long as Southeast Asia continued to grow spectacularly, it was
difficult to refute these ideas. Now things are a bit different. The
dangers inherent in the repression of criticism, secrecy, and lack of
accountability have become rather obvious: unaccountable officials
have funneled cash into hopeless schemes that lined the pockets of
their families and friends; secrecy has damaged investor confidence,
exacerbating the flight of foreign capital. To their considerable
credit, most advocates of the Asian way acknowledge these problems.
The most telling examples of this candor come fromthe countries whose
leaders once spoke most forcefully on behalf of Asian values.

At the start of the financial crisis last year, Malaysia's
nationalist prime minister, Mahathir Mohamad, responded in his usual
form by denouncing Westerners (particularly Jewish ones) for his
country's troubles. But by October he had changed tack, dismissing
the contention that the twenty-first century would be the Asian
century as "a mirage mired in an incredible swamp of arrogance" (New
Straits Times, 10/23/97). Although Mahathir still shrinks from saying
that Asians should import Western systems, his putative successor is
more forthright. In February Anwar Ibrahim, Malaysia's deputy prime
minister, declared that the way out of Asia's economic malaise lay in
deregulation, competition, and transparency. "You have to dismantle
monopolies . . . of your cronies and family members . . . because
they go against the grain of transparency, accountability and good
governance,'' he declared; and he went on to denounce the idea that
democracy, freedom, honesty, and accountability are merely "luxuries
of the West", incompatible with Asian values (Bangkok Post, 2/8/98).

Essay Types: Essay