The past two decades or so has witnessed the increasing dominance of neoliberal perspectives within international political, social and economic thinking. This has particularly been the case since the end of the Cold War, which seems to have triggered a decline of alternative social and economic perspectives. The fall of the Soviet Union was viewed as the triumph of individualist market systems over collectivist state-managed systems of economic organisation, at the same time sweeping away all alternative perspectives which may have lain somewhere in between these polarities.
An equally triumphalist neoliberal tenor was also to be heard at the outset of the East Asian economic crisis. Once again, the superiority of individualism and 'free markets' were proclaimed over the perceived deficiencies of Asian cultural collectivism and state-assisted economic development. State participation and the apparent 'collusive' relationship between state and capital within the economies of East Asia is viewed by many in the West as being at the 'root' of the recent economic crisis.
The financial collapse in East Asia in 1997 and 1998 has allegedly challenged the role of the state in development strategy. The crisis is seen to be the logical consequence of the Northeast Asian 'developmental state' or Southeast Asian 'crony capitalism'. It is argued that because the East Asian developmental state was so successful, it led to over-production and sharp competition and price-cutting, undermining the ability to repay loans, which had been made recklessly. Other Western economists add to this patterns of state-capital collusion, the existence of industrial policy, and excessive government interference in the economy. This, in essence, typifies the neoliberal perspective on the causes of the East Asian crisis.
This essay shall attempt outline some of the cultural assumptions which appear to underlie the Western neoliberal assessments of East Asia and the crisis. Whilst there are many non-neoliberal perspectives on the crisis and its causes, it is the neoliberal view of the world that has completely dominated in the international media, financial institutions and governments. Like all perspectives, there is a cultural and historical basis that underlies it, and I shall give a brief description of this before moving on to describe the perspectives and contrasts that are encountered in the East Asian countries themselves.
The neoliberal view of the world emphasises the role of market forces in guiding economic activity, and more often than not, the role of the state is viewed as antagonistic to the interests of the market, and as an evil necessity for the provision of the minimal political requirements for the secure operation business, trade and finance. A principal assumption is that whenever markets are left to their own devices without interference from state or particularist actors, equilibrium will be achieved and returns thus maximised. The role of the individual within the economy, and the choices that individual makes, are given a prominent place within this perspective.
The neoliberal perspective is not value neutral; neither is it 'cultureless'. It has a deep-rooted basis within the foundations of what is now known as Western culture. Values associated with Protestantism, industrialisation, and modernism have over the centuries developed into the various cultural, social and economic perspectives nowadays found within the contemporary West. The neoliberal worldview has in recent decades overwhelmed all others, most importantly those perspectives with their roots in the Western Left. Socialists, social democrats and reformist liberals have for the most part been exposed as being ideologically bankrupt, and a creeping reductionism has nowadays made them hard to distinguish from their neoliberal counterparts. The neoliberal discourse now so dominates social and economic thinking that, in the absence of credible alternatives, the remnants of the Western Left have now absorbed the language of liberal capitalism.
The fall of the Soviet Union saw the defeat of capitalism's competing universalism. Although other communist nation-states continue to exist, for instance China, they have in general not attempted to internationalise their ideology in competition with the dominant and now triumphant capitalist worldview. In the years after the Second World War there existed a choice of 'universalist' ideologies; newly independent 'Third World' nations in particular became testing grounds for the would-be hegemonies. The often-tragic failure of socialist experiments in Asia and Africa in particular only served to reinforce the apparent superiority of the market system and its associated political and cultural baggage.
The rise of East Asia as a major economic region over the period of the decline and fall of the Soviet Block can be seen as a key part of a process of capitalist expansion, or using more recent terminology, globalisation. Without the rise of East Asia, globalisation as a recent recognisable phenomenon could definitely not have occurred. In addition, the existence of a competing ideological universalism in the form of the Soviet Union and its satellites would also have prevented this latest spurt of capitalist expansion. The disintegration of the Soviet Union and the emergence of the East Asian economies were essential elements in the drive towards globalisation and the ascendancy of the neoliberal perspective. The process of globalisation itself is inextricably linked to the requirements of a developing capitalist system of economic activity, and inseparable from the neoliberal project.
Internationally, neoliberal perspectives have dominated the views of the major economic powers and the organisations that represent them. The World Bank and the IMF in particular have developed into major international players in their own right. The cultural roots of these organisations are firmly planted within the soil of Western neoliberalism. As such, nations requesting monetary aid are naturally obliged to interface with these organisations using the same cultural protocols and conventions.
International business increasingly demands 'standardization' in the way that business is conducted across national borders, and a great part of this standardization has significant cultural implications. Neoliberalism is not merely a particular capitalist perspective, but rather a complete and dynamic worldview, arguably now almost identical with contemporary Western cultural values and worldview.
The effect of financial globalisation upon the state has been to force change upon this institution as a precondition for investment. International organisations such as the IMF and World Bank have been at the forefront of this ideological push, compelling not only developing countries, but also developed industrial states to adopt the orthodoxy or suffer the consequences.
More than at any time in the short history of capitalism, it is the international financial market that now largely determines the economic policies of national governments. This market is driven by neoliberal ideology, which, amongst other things, emphasises the `free market', deregulation of the economic sector, dismantlement of the welfare state, and the disengagement of government from the provision of goods and services. Conformity to the demands of this ideology has now become critical for the economic survival of nations. A paragraph from the Washington Post concerning the Asian currency crisis unambiguously expresses the position that states are expected to adopt in relation to international capital:
The critical difference between the capitalism of the contemporary West and that of the Asian East is fundamentally grounded in culture; the individualism of the West versus the collectivism of the East. The hyper-individualistic culture of the American vanguard of neoliberalism has developed as a consequence of a specific set historical conditions (as yet) without parallel in Asia. The Industrial Revolution heralded the slow but systematic atomisation of social structures in the West, seeing the breakdown of the extended family and the development of the nuclear family as the basic consumptive-productive unit within society. Post-industrial societies have seen still further atomisation in which the basic consumption-production unit has increasingly focussed upon the individual, even those already aggregated within a nuclear grouping, including children. Family relationships have become increasingly transient and tenuous in nature reflecting the increasing focus upon the individual and upon individual self-fulfilment within Western societies. Consumerism, feminism, and Hollywood, to name just a few factors, have made significant contributions to this social fragmentation over the past few decades and have probably contributed much to the success and acceptance of the neoliberal model and its associated hyper-individualism and supremacism.
East Asian cultures, by contrast, are still very much characterised by collectivist values and by systems of patronage. Collectivism and patronage together stress the vertical axes of human relationships, in contrast to individualism and egalitarianism, which stress the horizontal axes. East Asian patronage networks form the basis of virtually all social, political and economic relationships. Power distances between levels in the network are great, and flexibility of movement within the network restricted by obligation and responsibility to patrons and clients.
Given these fundamental differences in outlook, it should come as no surprise therefore that the systems and protocols of trade, business and finance devised in the West should be very different to those developed in the East. Quite simply, they do not interact naturally or comfortably together. The cold, clinical separation of private-public, personal-business realms within the West contrasts sharply with the often (for Westerners) claustrophobic interconnectedness and webs of obligation of the East. In the East, roles and relationships in one social realm (the workplace, for example) are transferred to all other social realms. Authority relations in the West are limited in their scope and usually cannot be transferred to other contexts.
The relationship between patron and client is not contractual in its nature; they are not buyers and sellers. The comparative worth of the resources being exchanged may never be explicitly measured, and a contribution by one party does not mean that an immediate and equivalent contribution has to be made by the other party. There is thus a wide 'grey area' in the relationship that is open to constant renegotiation.
The cold, contractual, legalistic nature of Western business transactions make clear distinctions between the personal and business realms, not withstanding that there is, more often that not, an element of mutual trust between the parties. In the West, the attitude 'a deal is a deal' means that once an agreement has been reached and signed, it is then generally closed for further renegotiation. The West tends to emphasise textual agreements using the language of law where rights and responsibilities are -- to the Westerner -- clearly laid out in writing and binding no matter what the circumstances. It has been observed that after a contract has been signed in Japan, the Japanese may immediately request further changes. Contracts and agreements in the East tend to be much less detailed, and contain much more 'unwritten text' relying upon the context upon which the agreement was made. Much more emphasis is placed upon flexibility; the contracts are 'softer', and rely upon mutual understanding of the discourse that has occurred between the parties over a period of time, and the trust and interdependency that has built up between them.
The relative lack of a 'rules-based' system of business in the East means that business relationships are often perceived by those in the West -- and in particular by those who view the world through the neoliberal perspective -- to be nepotistic, anti-meritocratic, collusive, non-transparent and corrupt. And by these standards they almost certainly are. Even within the East, the 'modernist creep' of individualism amongst the emerging middle and educated classes has meant a change in the way that some aspects of Eastern cultural collectivism are now perceived. However, to give undue emphasis to the views of this relative minority is to belittle the overwhelming majority of people who still hold strongly to collectivist values and who only perceive 'corruption' to be bad on those occasions when it happens to disadvantage them. 'Corruption' does have its positive aspects, a point I shall not develop here except to say that life in many countries in East Asia is made considerably easier when bureaucracy is short-circuited or neutralised with the payment of an additional 'fee'. 'Rules-based' systems when they are sometimes applied in East Asia tend to be much more expensive, inflexible and -- to the average person -- less than human.
So, with these considerable cultural differences in mind, attention can now be given to the proposition -- rooted in the neoliberal perspective -- that the principal cause of the recent economic crisis in East Asia was due to the collusive nature of capital and the state. Of course, East Asia is by no means an homogenous entity; culturally, economically, and socially East Asia is extremely diverse. The only real point of cultural convergence between the nations of East Asia is its relative collectivism when compared to the West.
The effects of the East Asian economic crisis were also by no means evenly spread. In fact, the crisis had only four main casualties: Thailand, South Korea, Indonesia, and Malaysia. The effects of the crisis in the rest of Asia could be described as 'collateral', with countries such as Japan, Taiwan, Singapore and Australia taking 'shocks' rather than 'knockout blows' to their respective economies. The Philippines was in a bad economic condition even before the onset of the crisis, its economy falling from an already low base, thus the impact of the crisis was not profound.
It has been the Western neoliberal perspective that has been the most influential in placing blame for the crisis upon the collusiveness between state and capital. Frankel (1998), among many others, points the finger at excessive borrowings and "a banking system based excessively on directed lending, connected lending and other collusive personal relationships." In other words, Frankel directly attacks the very basis of Asian finance and its collectivist cultural foundations. He contrasts this state of affairs with what he calls the 'US financial model', or alternately, the 'Anglo-American model', which emphasises "arms-length market relationships". Frankel draws the conclusion that the lesson of the Asian crisis is the superiority of the Anglo-American financial model. Frankel explains: "The Asian model of corporate governance tends in the direction of empire building, that is, the maximising of market share, rather than what neoliberal economic theory says firms should maximise, namely profitability." Further, in the 'I-told-you-so' tones that seem to permeate his thinking on this matter, he proclaims that "the rules of economics turn out to apply to East Asia similarly to elsewhere".
Other neoliberal economists such as Krugman give a more unemotive account of the causes of the East Asian crisis, once again identifying the collusive nature of the Asian capitalist system as a cause, but then going on to identity the true roots of the Asian crisis:
More than anything else, the Asian crisis was less about economics and more about confidence. For years the East Asian economic machines ran not on the logic of the market, but upon faith. And like religion, belief was required. East Asian economic growth became an article of faith; something that was believed in rather than logically analysed. Indeed, there was probably even an element of 'orientalism' on the part of economic players in the West, perhaps believing that some 'other' logic prevailed in the operation of East Asian economies, as Frankel sneeringly pointed out.
This same orientalism was probably responsible for Western markets treating East Asia as if it were one homogenous economic unit, with little regard to radical differences in the structure of the numerous national economies of the region. There is not a lot to compare between, for example, the South Korean economy with that of Thailand, Malaysia or Indonesia. To conclude that the developmental model of Northeast Asia is somehow invalidated by the crisis upon the basis of South Korea's near-collapse is to exaggerate the impact of this one factor. If the developmental state was to blame, why did not Taiwan and Japan follow in South Korea's footsteps down the path of financial crisis? Further, what interconnection exists between the economies of Southeast Asia and that of South Korea?
In fact, the commonality of experience among the Southeast Asian economies with South Korea is small indeed, apart from the fact that they export some similar products. South Korea is both far away from Southeast Asia, and structurally quite different, having long since graduated from the highly labour-intensive products that still dominate Southeast Asian exports. Krugman asks the same question, "How, then, did Southeast Asia's crisis infect Korea - indeed, how did 'bahtulism' apparently mutate into an even more virulent strain by the time it reached Northeast Asia? "
Of all the economists, Krugman seems puts forward the most convincing reason at the root of the East Asian crisis: panic. What happened in East Asia in 1997-98 was a 'self-fulfilling crisis'. The East Asian economic miracle seemed to have no end, but intelligent investors would know that such high growth rates cannot be sustained indefinitely. For them, it was simply a matter of waiting for the sign that the bubble was about to burst before they would quietly move their money elsewhere. When the first relatively inconsequential 'signs' came in 1997, an old-fashioned financial panic was -- with the benefit of hindsight -- probably inevitable. Sachs and Wing (1999) also consider the Asian financial crisis to be simply another example of financial panic involving international creditors.
Krugman also goes on to explain the depth of the panic as being a consequence of an international financial system that has become 'dangerously efficient'. Unregulated computer-led currency trading more often than not has an increased negative effect when arbitrary 'trigger points' are passed in the value of a particular currency. 'Trading bands' set by national central banks, that are meant to even-out sudden shifts in currency value, become ineffective once panic sets in, and in some cases may even aggravate the sense of panic as investors clamour to move their money out.
To blame the 'collusive' nature of East Asian capitalism as being at the root of the crisis is far too simplistic. The roots of the crisis lay more in the West, within the perceptions and understandings of key Western economic players about the way the world economy works, and the manner in which East Asia conducts its business within that world economy. On the one hand, misunderstanding or ignorance of cultural factors led to normal financial prudential policies being suspended in a kind of oriental zero-gravity, where an inscrutable 'other' logic applied. Thus, occasional 'checks' to the various Asian economies by Western investors and creditors did not occur as often as they would have in the West. On the other hand, when the first cracks did appear, the international market (in particular Western creditors) reacted irrationally, displaying a sudden and disproportionate loss of faith in the East Asian economies. This crisis of belief, combined with ignorance, caused Western markets to consider the entire East Asian region as if it were an integrated cultural and economic whole.
Western neoliberalism, with its universalist-hegemonic agenda, attempts to paper over differences in worldview and culture as if they did not matter in the unitary realm of economics. The self-focussed, self-interested individual is exalted as the principal and smallest unit of capitalist production and consumption. Collectivist worldviews are invalidated as mere pathways on the road to individualism. Thus it should not be surprising that Western capital interests should view Eastern state-capital cooperation ('collusion') with a deal of suspicion, and attempt to retrospectively blame such 'collusion' as being at the root of the crisis.
 Ben Stavis (1999), The background to the Asian financial crisis, Asian Studies Program, Political Science Department, Temple University, Philadelphia (Early draft version)
 Jeffery Frankel (1998), 'The Asian Model, The Miracle, The Crisis and the Fund'. Paper delivered at the US International Trade Commission, April. Available at http://www.stern.nyu.edu/~nroubini/asia/AsiaHomepage.html.
 D. Jary and J. Jary (1991), Collins Dictionary of Sociology, HarperCollins, Glasgow
 Dierks, RG (1997?) Sovereignty at risk: International Financial Markets, The State, and The Global City, at http://www.amacad.org/sp95rel.html
 Glassman, JK (1998) `Cool It', The Washington Post, 6 October: pg A23
 Feminism is very much a sub-discourse of Western individualist culture. It has completely failed to engage women in collectivist societies.
 Richard Mead (1998), International Management: cross-cultural dimensions (2nd edition), Malden, Blackwell Publishers: pg 262
 Mead (1998): pg 262
 Mead (1998): pg 256
 Mead (1998): pg 256
 One example of this is the port and customs services in Indonesia, which were 'privatised' by contracting out these services to a European firm in an effort to wipe out corruption and pilfering on the docks. Indeed, corruption and pilfering have been eliminated, however importers are now forced to pay exorbitant prices to receival agents to get their goods off the wharf; all very legal, of course.
 Various tables from Jeffery Sachs & Steven Radelet (1998), 'The Onset of the East Asian Financial Crisis' (draft) at http://www.stern.nyu.edu/~nroubini/asia/AsiaHomepage.html
 Frankel (1998)
 Frankel (1998)
 Frankel (1998). This, despite somewhat disingenuous pronouncements in the same speech about the dangers of American triumphalism.
 Paul Krugman (Mar, 1998), 'Paradigms of Panic: Asia goes back to the future.' at http://web.mit.edu/krugman/www/panic.html
 Paul Krugman (Jan, 1998), 'What happened to Asia?' at http://web.mit.edu/krugman/www/disinter.html
 Krugman (Mar, 1998)
 Krugman (Jan, 1998)
 Jeffrey D. Sachs and Wing Thye Woo (1999), 'The Asian Financial Crisis: What Happened, and What is to be Done', Harvard Institute for International Development and University of California, Davis, 21 January
 Krugman (Mar, 1998)