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ASIA
MAY 31, 1999 VOL. 153 NO. 21
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It is impossible for our non-Asian foreign detractors to believe that Asian government leaders can be honest at all. If Asian leaders do anything at all for the good of their countries, it must be because they are corrupt and want to help their cronies and their families. Such prejudiced and stereotyped views will, I fear, persist for a long time to come. The people who espouse such views, it must be remembered, are the descendants of the old white-supremacist colonialists. We simply cannot expect justice and fair play for Asians and Africans; we have had to ignore all the prejudice and get on with rebuilding our economies.
Rebuilding, however, cannot be done in isolation; creating a better, more livable and humane world for the coming millennium requires soul-searching, which is just as global and intense as the flows of electronic capital searching for profits. Rebuilding East Asia may provide a much-needed opportunity to redesign the world's financial architecture. The International Monetary Fund, rightfully proud of its role in rebuilding a postwar world of sovereign trading nations, is clearly incapable of dealing with a global financial crisis such as the one that has ravaged the East Asian economies. It is no exaggeration to say that the IMF demands on Indonesia were largely responsible for the riots and uprisings that led to the downfall of President Suharto. Fortunately, Malaysia did not take the IMF's bitter medicine; we considered the medicine more dangerous than the disease and were stubborn enough to refuse it. Had we acquiesced, we might very well have found ourselves in an even more dire situation than we are in today, deprived not only of money but also of our ability to govern ourselves within our own borders. The pressing question today is not whether, or how, we can fine-tune the mechanisms applied by the IMF; bluntly stated, the real issue is whether we will willingly allow our economies to be governed by a "doctor with only one pill for every illness" and by a bunch of yuppies with no sense of history or human responsibility. My answer to that question would have to be a resounding: No!
So, what will work? A Malay proverb says, "If you lose your way, go back to the beginning." To invent new ways of doing anything, it is worthwhile to reexamine the old ways to identify their strengths and their faults, and then to modify them or invent totally new methods. This is exactly what Malaysia did in September 1998 [by imposing currency controls]. It must be admitted, though, that what Malaysia is doing is not guaranteed to succeed. Like all strategies, there are weaknesses and flaws and even the possibility that we ourselves will undermine what we are doing. Of course, the West will try to break us, to find fault lines which can be widened and prised apart. We must be prepared for this, to protect ourselves and our strategies and to innovate. We have to continuously adjust to the situation and take whatever measures are required. We must not gloat just because some people have already admitted that we have done the right thing. We cannot afford to pat our backs too soon. We still have not managed to gain a wider acceptance for our call to regulate speculation worldwide.
To rebuild East Asia and the global economy, we now urgently need to engage in a sincere discussion about what constitutes sound governance in the contemporary world. When we used to talk about governance, we generally meant the exercise of political, economic and administrative authority to manage a nation's affairs. Current conditions, however, have shown that governance is no longer the exclusive domain of the state. Various bodies, almost all self-appointed, now claim a right to have a role in the governance of a country, including both the so-called "non-governmental organizations," which tend to act in concert with counterparts in other countries, and an array of international organizations. The exact role and rights of these different organizations have never been clearly defined. Although there are many serious and hardworking NGOs, many also tend to take the law in their own hands, exerting dubious influence through highly undemocratic ways. The supranational bodies controlled by the Western nations all tend to impose their own world view and methods on the rest of the world, totally disregarding the principles of "national sovereignty" which they so proudly claim were championed by their very forefathers.
A new and powerful claimant has now entered the field of governance. In a world that is more and more preoccupied with economic wealth to the exclusion of political and social well-being, "market forces" have laid claim to a dominant role in governance. Unabashedly, "market forces" refusing to recognize national borders now assume that they have a right even to discipline national governments. Not surprisingly, the only concern of market forces is the maximization of profits, regardless of the harm this may cause for people other than the immediate beneficiaries.
Who or what are the market forces? Strictly speaking, all consumers and everyone involved in businesses, big and small, should be considered part of the forces of the market. But, of late, the market forces that really matter--and that play a significant role in any discussion about global governance--are primarily the capitalists and the funds that invest in shares and trade in currencies. They have become the definitive market forces simply because they can exert tremendous influence over the performance of the economies of countries. Market forces have advocated the free flow of unlimited capital across borders so that they can invest without restriction and maximize their profits. They insist that this is the essence of free trade; without the free flow of capital across borders there can be no free trade.
Some vehemently argue that the global economy is and should be totally self-organizing, the only way, they say, to maximize efficiency, which in turn leads to increased wealth and better living standards. Unfortunately, this is expecting too much of mere mortals. Besides, it is not possible for everyone to determine what is right and what is wrong; what feels right to one person may appear to be wrong to another. Without a player with the power to decide, to arbitrate and to enforce, a self-regulating society or self-organizing global economy is doomed to perpetual conflict and turmoil, if not outright anarchy. Society thus requires a regulatory institution possessing the required authority. Current wisdom says that, at least within a nation, only an institution chosen by a majority can govern fairly. But when other forces who have never been given the authority to act on behalf of the people are also admitted into the process of governance, then we move far beyond the relatively clear boundaries of established political science. We do not yet know what form of governance would function best in a global economy with such diverse players, new and old. What we do know, however, is that when some of the most powerful actors act in their own narrow interests and according to their own self-serving perceptions, then society is threatened by a backlash of anarchy and injustice. Certainly when the so-called "market forces" decided to discipline the governments of East Asia by impoverishing them and millions of their people, the causes of justice, human rights and democracy were clearly not served.
If the situation in East Asia should continue to deteriorate, there is a very real danger of unrest, uprisings, the overthrow of democratically elected governments and even small-scale guerrilla wars. I doubt that we will ever see outright wars sparked by the present crisis, but urban guerrillas and saboteurs and modem terrorists with a bewildering variety of motives may very well flourish as a result of the tensions created within and between societies. The recipe to avoid such a situation is not all that complicated: allow us to revive our economies. Do not try to undermine our efforts and do not sabotage us. Do not ruthlessly devalue our currencies. We are quite capable of reviving our economies and could do so in a matter of months if allowed to go about the task free from destructive interference.
The key players in overcoming the present economic malaise are not, as often suggested, Japan or other East Asian countries. Rather, it is the Western countries that have real leverage over the global economy. Most likely, it is only the United States that has the combined political, economic and military clout to bring about structural changes in the present system of global finance and global economic transactions. The American government could even outlaw speculative currency trading, if it so desired.
If we hope to manage the Asian financial crisis and prevent recurrences, we have to deal with currency speculation and manipulation. Ideally, currency trading that is purely for speculative purposes should be completely banned. If that cannot be achieved, such transactions must at least be heavily taxed and regulated. Currency trading must be forced out into the open. It must be registered and licensed in the countries where traders operate, and taxes must be paid to the countries whose currencies are being used to generate profits. Furthermore, the amount that can be traded per day should be limited and any currency should be allowed only to fluctuate within a certain margin before trading is stopped. Such rules and laws would obviously prevent the traders and funds from making the kind of profits they have become accustomed to making. But why should we feel the least bit obliged to protect the excessive profitability of currency trading?
We must always be willing to ask ourselves openly and frankly if the actions taking place on the economic stage are serving a greater good or merely enriching a few capitalists. We must not simply discard higher ideals and blindly worship the utopian free markets, which claim that the freedom of money movements ranks higher than the welfare of people.
Excerpted from A New Deal for Asia (Pelanduk; 155 pages)
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