Statement by the Democratic Socialist Party (Australia)
The economic crisis in Asia has exposed the myth that the so-called "New Industrialising Countries" (NICs) of the region provided a model for a capitalist road out of neo-colonial subjugation. Once again the division of the world into exploiter and exploited nations has been underlined (and reinforced) as a handful of Asian nations which were said to be escaping "underdevelopment" have been stopped at the gate by the imperialists.
While nobody can predict the scale of the economic fallout, both big and small economies in the South Pacific have already been affected. Fiji has been forced to devalue its currency so its manufacturing exports remain competitive with its Asian competitors. Australia's trade outlook looks bleak and once the full impact of the currency and banking crises work their way through Asian economies, the world economy could be seriously affected.
Nature of the crisis
Imperialist propaganda that seeks to blame the crisis on corruption and cronyism in Asia begs the question: How come the imperialists were so keen to lend to and invest in these economies for the last three decades, knowing full well that most of the regimes in these countries were blatantly corrupt and repressive?
Another myth being peddled by the imperialists is that the Asian crisis is a result of too much government interference in the Asian economies. On the contrary, the Asian NICs and "Tiger" economies have some of the most pro-capitalist and foreign investor-friendly governments in the world. The considerable government intervention in these economies has been to help capitalists make a bigger profit.
On the other hand, those like Malaysian PM Mahathir, who blamed international foreign exchange speculators like George Soros for the crisis, are also wrong. Speculative capital contributed to the rapidity of the growth of foreign debt and also to the timing of the panic in 1997, but it was not the fundamental cause.
The Asian financial crisis did not arise fundamentally out of poor management practices in Asia or the irrationality of world financial markets but because even the partial industrialisation of a few selected nations from the Third World has now produced more than world capitalist markets can absorb (See Chow Wei Cheng, "Behind the Asian economic crisis", Links #10). This does not mean there is no need anywhere in the world for these products but that that need is not matched by the ability to pay for these products.
The Asian financial crisis is only the latest expression of a protracted world capitalist crisis of overproduction, which began to manifest itself in the mid-1970s. This resulted in increasing competition between the imperialist economies and a ruthless drive by all capitalist firms to lower their costs.
The neo-liberal drive by all capitalist governments over the last two and a half decades was a response to this need. All the imperialist powers also stepped up their drive to break into each other's markets and world market share. It was not enough for them to protect their own markets. To survive as imperialist powers they had to act like imperialists, i.e. as predators.
A number of Asian economies initially benefited from the neo-liberal drive in the imperialist countries as large imperialist firms transferred some of their more labour-intensive operations to the region and a handful of other countries in the Third World, in an attempt to reduce their costs. The place of the original four NICs (South Korea, Taiwan, Hong Kong and Singapore), which were allowed to industrialise by the imperialists to help "contain Communism" in Asia, was increasingly filled by Malaysia, Thailand, Indonesia and the Philippines (the "Tiger" economies of Southeast Asia) as the NICs tried to move up the ladder, replacing their labour-intensive industries with more capital-intensive, higher technology industries. Their larger capitalists even began to export some of their capital to less developed countries.
The rise and fall of the "NIC model"
While the "Asian miracle" was hailed, the rest of the Third World suffered a serious setback. The 1980s Third World debt crisis resulted in most of the debtor nations coming under the direct supervision of the International Monetary Fund (IMF). The IMF dispensed severe austerity and facilitated greater imperialist domination of these economies, supposedly as "medicine". This resulted in the "lost decade" for most of Latin America and Africa. The reluctant "patients" were told to imitate the NICs, and hope to join their ranks some day.
This wave of intensified exploitation of the Third World (accompanied by intensified exploitation of workers in the imperialist countries) accumulated even greater surpluses for the imperialist capitalists, fuelling an ever growing mass of speculative capital roaming the world in search of an opportunity to make quick profits. After the 1980s debt crisis, Asian economies became even more attractive to imperialist investors and in the early 1990s accounted for more than 50% of real world GDP growth.
However by the mid-1990s, the much-praised NICs and ASEAN "Tiger" economies became victims of the global cost-cutting drive as imperialist companies looked to even cheaper (and larger) sources of labour in China and Vietnam. In addition, in the wake of the end of the Cold War, the imperialist governments -- particularly the US and Japan — began to wind back the NICs' preferential access to their domestic markets and technology.
The Southeast Asian "Tiger" economies' response to the opening up of new sources of cheap industrial labour was to try to reposition themselves on a higher level in the international industrial division of labour, following the example of the NICs. But this required large investment in infrastructure. This was, according to the "experts", the next step in the march to fully developed economy status. This fuelled Southeast Asia's growing foreign borrowing and enticed speculation by both domestic and imperialist capitalists.
The very same Western economists and governments who today piously posture about "speculation" in land and buildings and "grandiose national projects" in Southeast Asia were, only a year ago, egging on these countries to borrow big to develop their infrastructure. In 1995 the World Bank estimated that the basic infrastructure needs of Indonesia, South Korea, Malaysia, Philippines and Thailand were worth US$704 billion of investment, a projection which set imperialist investors salivating for a piece of this action. Australian imperialism, for example, banked on major infrastructure developments for its drive into Asia.
The growth of Asia's (mainly private) foreign debts would not have necessarily led to a financial crisis if these economies had not been facing difficulties keeping up their high rates of export growth. After growing at an average of 15% between 1988 and 1995, the original four NICs' export growth suddenly fell to 4.8% in 1996. ASEAN's export growth slowed to 5.6% from 22.8%. Correspondingly, there was a huge overcapacity in the production of cars, steel, chemicals and computer chips in Asia, reflecting the global overproduction crises.
When imperialist investors panicked last year and triggered severe currency crises in Southeast Asia, this only served to make these countries' large foreign debts even bigger and thus harder to service. But the currency crises in the Southeast Asian Tigers revealed the broader Asian economic crisis, one that now engulfs three tiers of Asian economies: Japan (the region's biggest imperialist economy), the original NICs and the Southeast Asian "Tigers".
Since the Asian economic crisis began to manifest itself in July 1997, Thailand, South Korea and Indonesia have gone to the IMF for emergency loans and help in renegotiating their foreign debts. Malaysia may yet have to seek IMF help. The Philippines is already under IMF supervision following its debt crisis in the 1970s.
The various IMF "solutions" to the Asian crisis — all of which involve accelerated neo-liberal "reform" of the affected economies — do not address the real problem: the crisis of overproduction and overcapacity. Indeed, the Asian economic crisis was probably brought on all the sooner and in such a sudden way as a direct result of the global wave of economic deregulation.
Just as the IMF, a body controlled by the imperialist states, advanced the imperialists' interests in Latin America and the Third World in the 1980s, it will do the same in Asia in the 1990s.
The IMF emergency loans were supposed to quickly stabilise Asian currencies, but have yet to succeed. What the IMF solutions will do is place the most troubled NIC economies under austerity regimes that are similar to those imposed on all other Third World countries in the wake of the 1980s debt crisis. This is despite the fact that the NICs and the ASEAN "Tigers" have been following the very policies advocated for other Third World countries by the IMF in the 1980s.
Ultimately it is the imperialist creditors with bad loans to Asia who are being rescued. A former very senior official at the World Bank admitted: "For the most part, the pressures on the IMF to continue to lend money are driven by the fact that the absence of lending could jeopardise institutions in the industrial countries. For the IMF, the need to protect Western banks is the driving force." (Sydney Morning Herald March 21, 1998)
The IMF loans seek to contain the NICs crisis and stop it from sending the imperialist countries into recession. Thus it addresses the main point of potential contagion by underwriting the bad loans made by the imperialists.
To service these billions of dollars of emergency loans and their pre-existing debt, the IMF demands that the governments of debtor countries practice severe austerity and deregulate and privatise their economies.
The largely private nature of the big surge in the ASEAN economies' overseas borrowing to fund this next stage of development excludes the traditional neo-liberal argument which blame "governments trying to pick winners" as the cause for bad investment. However, ultimately much of this private debt is going to be socialised. The IMF austerity regime will then make sure that the workers and small farmers of Asia will pay for these private debts.
The IMF is also demanding the dismantling of local monopolies and conglomerates like South Korea's chaebols and part of Suharto's crony capitalist empires in Indonesia, opening them up to imperialist competition and ownership. But while the imperialist conglomerates want to be able to pick the eyes out of Asia's most developed economies, they also need to preserve political stability in the region so as not to risk sparking popular uprisings.
Like other IMF-supervised countries, the troubled NICs are expected to pay off their foreign debt through prioritising exports (which they have been doing for three decades, anyway) and their lower exchange rates will give their exports a competitive edge — in theory. But there are two major problems:
1. The imperialist countries are already protecting their markets against "excessive" Asian exports.
2. As Lester Thurow pointed out in his February 5 New York Review article, only a few countries can expect to play this game and keep winning, and since China joined the game it has become all the more harder.
A global problem
The IMF packages won't tackle the systemic problem of overproduction in capitalism (except to the extent that IMF austerity destroys productive assets in Asia) or the inability of "markets" to direct capital to where it is really needed. It is a global capitalist problem. That is why the gap between rich and poor nations is widening. That is why on the eve of the 21st century, the great majority of nations are condemned to "underdevelopment" despite all the technological advances that have been made.
A real solution to these problems would require the radical redistribution of productive wealth and income on a world scale — something that cannot be carried out under capitalism. Only then could real social need be met by productive capacity, and in a way that doesn't destroy the global environment.
Capitalism's "solution" to the Asian economic crisis will simply shift the burden of the system's crisis on to the backs of the ordinary people of Asia while opening up the most lucrative parts of the Asian economies to being bought up at bargain prices by imperialist capital. Thus the Western financial press boasts about the great opportunities to be snapped up in Asia even while worrying openly about the possibility of the crisis developing into a world-wide recession.
Even when Asia emerges from the current crisis, the region's economies will be more owned, dominated and exploited by the imperialist powers.
To justify the intensified, IMF-supervised robbery of Asia, we are now sold the image of Asia as the corrupt, bad debtor. Western "experts" have resorted to racist hypocrisy, claiming good management styles, "good governance" and prudent banking practices as traditional Western or even Anglo-Saxon values. Their audiences are expected to have forgotten the Western financial scandals of the late 1980s.
All the imperialists' pious statements about "transparency" and "accountability" will be dropped once choice parts of Asia's economies are integrated into various imperialist multinational empires. Then the only real accountability will be to their biggest shareholders.
We are expected to accept the IMF's moral authority as global administrator of bankrupt states when the IMF's main "shareholder", the US, is the world's biggest debtor. Indonesia has a foreign debt of about US$120 billion and it is supposed to do what the IMF says. The US owes US$1 trillion (Japan is its biggest foreign creditor), but it gets to dictate IMF terms to Indonesia and other debtor countries. <
APEC and inter-imperialist competition
The irrelevance of APEC in the midst of the current crisis in Asia reveals its real nature. It is part of the problem not part of the solution.
APEC, an initiative of the Australian government, is not a trade bloc like the North American Free Trade Agreement (NAFTA) and the European Union (EU). It currently does not formally offer any preferential trade or investment access to member states.
The presence of the US, Australia, New Zealand and Canada in APEC is to ensure that it doesn't become a bloc against NAFTA. However, in 1997, the US made some unsuccessful moves to have APEC grant preferential access to members. If this had been successful, the US would have succeeded in using APEC against the European imperialists.
A proposal by the Malaysian government to set up an Asian trade bloc centred on Japan, the East Asian Economic Caucus, did not take off primarily because the Japanese government wasn't interested. While Japan has become the biggest imperialist investor in Asia, like the rest of the region, it remains highly dependent on US markets for its exports.
There is a small and embryonic trade block among ASEAN countries, AFTA. But intra-ASEAN trade is only about 22% of that region's total trade, and ASEAN countries depend heavily on access to US markets. ASEAN governments have also created a separate body for economic negotiations with the EU. Australia, supported by the Suharto regime, is trying to force its way into this body.
At present APEC's primary function is to fast track the trade and investment deregulation negotiations in the region. This process does not promote "free trade" in general but seeks to break down protective measures taken by the Third World. Imperialist states continue to engage in protectionist measures and the US does not hesitate to use its superior military might to get its way in trade and investment negotiations.
APEC has also become the focus of US economic manoeuvring against Japanese imperialism. Smaller imperialist powers, like Canada, Australia and New Zealand hope to profit in the wake of the US. All four are major agricultural exporters, so while they are competitors they share an interest in the removal of protection of Asian agriculture and manufacturing and the further liberalisation of access by imperialist corporations.
Australian imperialism's role in the region
Australia's status as a small imperialist power is also demonstrated in its appeals to the IMF and the US not to put too much pressure on the Suharto regime. Australian imperialism hitched its wagon to Suharto, and by cultivating a special relationship with this repressive regime still hopes to gain economic advantages in Indonesia over other imperialist powers. The Australian government is prepared to commit $1.5 billion, nearly half the value of total Australian investment in Indonesia to keep the Suharto regime afloat.
The Australian government has pleaded with the IMF and the US to help prop up the Suharto regime and crony capitalist empire, fearing a popular movement to overthrow this dictatorship. In this it has the full support of the Labor Party in Australia. Former Labor Prime Minister Paul Keating has joined the Australian Liberal-National government in begging for more "flexibility" in the IMF "structural adjustment" program for Indonesia.
Australia's support for the Suharto dictatorship extends to military and intelligence aid, diplomatic and military support for Indonesia's bloody occupation of East Timor (which has directly benefited Australian corporations through the Timor Gap oil deal with Jakarta) and growing economic collusion with the worst of Indonesia's crony capitalists.
The relationship between the Australian government and the Suharto dictatorship has ugly precedents in its military interventions alongside other imperialist powers in Korea, Malaysia and Vietnam. Australia also hosts key joint military facilities with the US. These facilities, among them Pine Gap, Northwest Cape and Nurrungar, play a critical role in the US nuclear military command and surveillance systems.
Australian governments have also given military and diplomatic support to US imperialism in the Middle East and supported French imperialism in the Pacific. Even while world-wide protests erupted around French nuclear tests in the Pacific in 1996, Australia continued to export uranium to France.
Australia's role in the South Pacific, where together with New Zealand it inherited the dominant imperialist role from British colonialism, illustrates its imperialist nature. South Pacific nations have long suffered the racism and paternalism of Australian and New Zealand imperialism. Australia has a shocking record as the former colonial power in Papua New Guinea and it still plays a reactionary and dominant role: facilitating the pillage of this resource-rich country by Australian and other imperialist multinationals, propping up corrupt governments and supplying military aid to repress popular uprisings in Bougainville.
In 1997, Australian imperialism's reactionary role in the Pacific was summed up in a heads of government meeting of the South Pacific Forum where Australia blocked this regional body from adopting a position on the reduction of greenhouse gas emissions. The Howard government (acting in the interest of the large Australian energy corporations) has one of the most reactionary positions in the world on this important global issue (as seen in the Kyoto climate change conference). It favours increasing greenhouse gas emissions even though one of the risks of this is the inundation of several small island states in the Pacific. Australia's reactionary stance at the SPF meeting was matched by the arrogant and insulting behaviour of its PM at that conference.
The racist role of Australia in the Asia Pacific region goes hand in hand with its racist treatment of the indigenous inhabitants of Australia. After more than 200 years of genocide, dispossession and discrimination, the Australian government still refuses to accept responsibility for the oppression of the indigenous peoples of this continent. They are the most oppressed sector of the population and suffer health, income, housing and education conditions that are worse than in many Third World countries. This, in the second richest country in the region!
Currently the Australian government is moving to restrict even the limited and belated recognition of "native title" by the High Court of Australia. For most of white Australian history the courts upheld the myth that Australia was an "empty continent" when it was colonised by the Europeans in the 18th century. The Australian government has encouraged a new wave of racism against indigenous people and recent Asian immigrants, resurrecting aspects of the infamous white Australia policy.
The DSP's response to the Asian crisis
The DSP opposes the austerity, deregulation and privatisation measures demanded in the region by the imperialist powers (through the IMF) because these measures will make the workers and small farmers of Asia suffer for the crisis of the capitalist system and deepen imperialist plunder of Asia. We also oppose those who claim to stand for democratisation in Asia but seek to tie their calls for democratisation with the IMF programs to deepen imperialist exploitation of the region.
We call for unconditional humanitarian aid to be given by the imperialist countries directly to the poor in all countries in the region instead of public funds being used to bail out the imperialist creditors and prop up dictatorships like the Suharto regime. We oppose military aid to all repressive regimes.
We call for a cancellation of all Third World debt. The imperialists have already extracted in repayments, interest and super profits many times more than they have lent to the Third World.
We oppose colonialism and neo-colonialism, and support the struggle for self-determination of all oppressed nations. We also recognise that the final elimination of imperialism — "actually existing capitalism" -- is not possible without the replacement of the world capitalist economic system.
We support the formation of alliances of all exploited nations in the region to present an economic united front against the imperialist states. The governments of the US, Japan, Australia, Canada and New Zealand should be kept out of any such blocs. However, the capitalist governments of Asia cannot be trusted to build such regional solidarity. Each seeks to cut a deal for itself with the imperialists, as the governments in the ASEAN countries are now showing.
Most importantly, the DSP builds solidarity between the working class in imperialist Australia and the workers and small farmers in Asia. This is why we strongly support the Asia Pacific Solidarity Conference and seek to build links and work together in struggle with left parties and national liberation forces in the region.
The DSP recognises that in Australia and other imperialist countries, the biggest challenge in the struggle for international solidarity is to win the working class away from the racist, nationalist ideology that still binds many workers to their imperialist bosses. Workers in the imperialist countries won't be able to offer real solidarity until they realise that they have more in common with the workers and small farmers of Asia than they have with Australian bosses and their government. With each crisis of the world capitalist economy and with each brutal escalation of the neo-liberal offensive in the imperialist countries and the Third World, this common interest will become clearer.