The Nation-State Confronted with Globalisation:
Southern Perspectives
by Nicola Bullard*
The background paper for this conference speaks of a crisis of the state, 'revealed by its incapacity to alleviate poverty, ensure economic prosperity, or protect the natural environment'. This may be the true in some places, but it is not true - or at least only partly so - in South East Asia where the State is alive and well.
In spite of predictions about the nation state being overwhelmed by the forces of globalisation, there is no indication that Indonesia's President Suharto, Prime Minister Mahatir of Malaysia, let alone the generals of Myanmar's State Law and Order Restoration Committee (SLORC), are about to share their power with anyone - whether it's Western capitalists or local communities.
In this paper, we look at how the State in South East Asia has attempted to resist external pressures for market liberalisation and internal pressures for political reform in pursuit of their own economic and political interests.
In particular, we argue that 'Asian values' have been used to support the interests of the powerful, suppress domestic dissent and provide a protective shield against so-called Western ideas of democracy and the free market.
Further Asian states, through mechanisms such as the Association of South East Asian Nations (ASEAN) and Asian Pacific Economic Cooperation (APEC), have resisted efforts to be drawn into the US free trade agenda and have in fact mounted a counter-attack of their own (notwithstanding the strong bilateral trade, investment and security links which bind many countries of South East Asia to the US, Europe and Japan).
Finally, we propose that the current model of export-oriented industrialisation has reached its environmental, social and market limits. Instead, Asian governments need to embark on a State-led policy of redistribution, market regulation and natural resource management, linked to greater opportunities for participation and local control as the only viable option for slower, more equitable and sustainable growth and broad-based democracy.
The Economic State
Many of the authoritarian states in East and South East Asia have attempted to define their role, and therefore legitimacy, in terms of economic performance and narrowly-defined development objectives.
The ‘Asian tigers’ apparent success in achieving economic gains without political reform has inspired many countries to follow their example. Contrary to current neo-liberal orthodoxy, the ‘economic miracles’ of South Korea, Taiwan and Singapore -- which have provided the model for Indonesia, Vietnam, Malaysia and the rest -- were not the result of free market liberalisation, but largely due to massive infusions of Japanese capital and high levels of state intervention and selective protectionism.
The extent to which this economic and political formula has achieved its ends varies: Singapore -- a unique island-city-state -- has successfully fashioned itself as the ideal, albeit authoritarian, economic unit, whereas in South Korea fantastic economic performance did not prove a sufficient sop to demands for democracy. Ironically Thailand, which has the most deregulated economy in the region and an astonishing average annual growth rate of eight per cent between 1960 - 94, is presently undergoing a financial shakedown triggered, amongst other factors, by unregulated lending into non-productive sectors (such as property). The crisis has shown that all bubbles eventually burst and may well force the Thai Government to take a more active role in market regulation and investment policy.
But, the circumstances which allowed the tigers to roar have changed. Given the increasingly rapid rate of economic liberalisation, international flows of capital and information - the key elements of globalisation - these relatively protected economies and authoritarian regimes are feeling the pinch.
There is external pressure to open their economies to the West, in particular from the US, and there is internal pressure for economic and political democracy -- what Richard Falk calls 'globalisation from above', and 'globalisation from below'. Following the trend of other countries in the region, such as South Korea, Taiwan, Thailand and the Philippines, these pressures will surely mount as rural communities, workers and an ever-growing middle class press their claims for a greater role in economic and political life.
In addition the inevitability of becoming part of a global trade regime, through the GATT and WTO, will force these states to open their markets to external players and this too will undermine economic sovereignty.
Growth at any price
In fact, governments in East and South East Asia have been able to deliver minimal benefits of economic growth, in some countries more successfully and equitably than others. Over the past thirty years there has been an overall reduction in poverty (although with increasingly sharp divisions between rich and poor), widespread improvements in health and education, and record levels of growth.
For instance, Malaysia reduced poverty from 60 per cent of its population to 14 per cent by 1993 and Indonesia cut its poverty incidence from 60 per cent of the population in the 1970s to 15 per cent two years ago. Vietnam has reduced income poverty by 35 per cent in the last decade, though half of its people still are classified as poor. In the past decade, growth rates in East and South East Asia have averaged about eight per cent.
The social and environmental cost of that growth, however, is high while claims for democracy have been deferred or frozen in the name of economic development.
Throughout the region there are also widening gaps between rich and poor, and between urban and rural communities. According to the 1997 Social Watch Report, in Malaysia, the bottom 20 per cent income group receive 4.6 per cent of total income, while the top 20 per cent corners 53.7 per cent. In Thailand, the lowest 20 per cent gets only 6.1 per cent of income, and the richest 20 per cent get 50.7 per cent share.
Environmental devastation is widespread. In Bangkok, children have among the highest levels of lead in their blood, largely attributable to air pollution while in Malaysia, a government report rated only 27 per cent of 116 surveyed rivers in Peninsular Malaysia as "pollution free" -- the others are either "biologically dead" or "dying."
Deforestation is rampant. Between 1981-90 mainland South East Asia had the highest deforestation rate in the world. In 1950, fifty per cent of the Philippines was forested, now it is less than 25 per cent. Seventy per cent of Thailand was virgin forest in 1932 yet by 1990 this had been savagely cut to 17 per cent. Throughout the region vast tracts of agricultural land have been degraded by chemical intensive agro-technology, lost to erosion or indiscriminately converted into urban real estate. The situation is probably worst in China, where between 20 to 30 per cent (50 million to 100 million acres) of farm land has been lost since the 1950s.
Not only is the natural and human capital of the region being plundered, but the economic gains are being squandered by an increasingly corrupt and self-interested alliance between those with economic and political power. While extraordinary corruption scandals involving South Korea’s former prime minister have come to light in this more democratic era, officials and business in Indonesia – presently rated 45 out of 54 in Transparency International’s corruption stakes – enjoy the protection of a state with its own interests to maintain.
The political utility of Asian values
Nation building in East and South East Asia, based on national unity, sovereignty and prosperity, has often been violent and chauvinistic, with little room for dissent and pluralism. In recent years, this chauvinism has found new expression in the notion that there is a mode of governance peculiar to Asians -- so-called Asian values or the Asian way.
Asians, like good Confucians, says Singapore's senior minister and former prime minister Lee Kwan Yew, value order over change, hierarchy over equality, and cooperation and mutual respect over competition between the elite and the masses. Asians, we are told, fear that too much democracy will undermine the economic miracle.
Walden Bello describes this phenomenon as a 'counteroffensive by alarmed elites against the great wave of democracy sweeping Asia, which has claimed the lives of authoritarian dictatorships in the Philippines in 1986, Korea in 1987 and Thailand in May 1992'.
The Asia Pacific NGO Congress, held in Delhi in December last year and attended by delegates from twenty eight countries, was equally dismissive of the concept of Asian values, reminding governments of their responsibility 'regardless of their political, economic and cultural systems, to promote and protect all human rights and fundamental freedoms'.
While authoritarian regimes cling to their arguments about Asian values to ensure domestic stability and to retain an ideological distance from the West, the debate is not entirely one-sided.
The US, for all its apparent concern about human rights, routinely uses this issue and the domestic support it engenders as a bargaining chip in trade negotiations or to stake its claim as the guardian of moral rightness. And the effect is not always positive. For example, domestic lobby groups in the US may applaud the essentially symbolic decision to impose sanctions on Burma (given the US's relatively minor economic interests) but in doing so Clinton has not only marginalised the US from the debate over Burma, but may have helped push ASEAN into accepting Burma as a member if only to prove their independence from the US.
On the other hand, some authoritarian regimes are perfectly acceptable -- provided they are willing to do business on the terms preferred by US trade ambassadors and lobbyists.
Resisting the free trade agenda
ASEAN, too, has been carefully constructed to create a shield of solidarity against anything and anyone who threatens the national interests and sovereignty of its members.
The proposed ASEAN Free Trade Area (AFTA) is the latest attempt to protect economic interests. On the surface the AFTA is a fast-track to bringing down barriers in line with the Uruguay Round of the GATT, but in effect it is a strategy to strengthen ASEAN's competitive edge in the global market by taking advantage of inter-regional differences in the price of labour, resources and market access -- no doubt to the overall advantage of the already strong economies. Laos has water, Thailand needs power; Cambodia has forests, Malaysia has plenty of timber companies; Burma has cheap labour, and Thailand wants it. So far AFTA remains a pipe-dream, constantly hi-jacked by strategic imperatives, national interests and the sheer practicalities of accommodating the vastly different levels of development of its seven (and soon to be ten) members.
Asian states have also strongly resisted the US free trade agenda being pushed through the APEC grouping by refusing to be drawn into any commitments on a schedule for trade liberalisation. These states, backed by Japan (which has its own regional economic interests to protect) have promoted APEC as a forum for technical cooperation and discussion, whereas the US, backed by Australia and Canada, sees APEC as a way of pushing their way into the ever-growing Asian market. At present, there appears to be a stand-off, with no signs that APEC is anything more than talk-shop or springboard to get issues onto the WTO agenda.
Finally, in mid-May on this year, banks throughout South East Asia united forces to resist attacks on the Thai baht. Their willingness to intervene so decisively in the free play of the market shows clearly that the governments in the region are prepared to use their power to push back or manipulate market forces in the interests of economic sovereignty and regional solidarity.
Crisis - what crisis?
The State in South East Asia is not in crisis - or at least not if you happen to be part of the elite benefiting from the current economic system.
Asian leaders argue their success in terms of political stability, growing prosperity, maintenance of cultural and social values and overall improvements in human development. While some of these claims are true, they rarely mention the price paid in terms of the widening gap between rich and poor, urban and rural communities and massive environmental destruction.
The growing Asian middle-class may also argue the success of authoritarian regimes in terms of economic gains, but at the same time they are calling for democratic reforms, less state intervention, greater civil and political freedoms and more equitable distribution of the gains of economic development. Some even argue for better environmental protection.
And against the odds the poor, industrial and migrant workers, and the farmers unable to make a living competing against agri-business and golf courses, are making their voices heard. Their concerns have been expressed in many ways: by the thousands of rural folk who make up the Forum of the Poor which gathered for three months outside the Thai Parliament pressing their claims for land, water, fair prices and protection of the environment; in the Declaration of the Manila People's Forum on APEC in 1996 and the 1993 Bangkok NGO Declaration on Human Rights; by Indonesian factory workers who literally risk their lives, and in countless gatherings of people's organisations and NGOs.
The growing opposition to the Suharto regime in Indonesia and the struggle of ethic and democracy groups in Burma, shows that there is no shortage of people willing to be part of the political process. And the tremendous gains for democracy in South Korea, Thailand and the Philippines, both under authoritarian regimes until the early 1990s, show that there is also cause for optimism.
It could be argued that authoritarian regimes have survived due to performance credibility in delivering economic results or at least to the extent that they have defined their role in terms of economic (as opposed to social and political) development. However, as the pressure mounts for states to reduce levels of protection and open their markets, it will become more difficult for them to control, let alone guarantee, economic performance. The old model of export-oriented industrialisation is no longer viable when everyone, including China and India, is competing for the same export markets. And, in social and environmental terms, it ran out of steam a long time ago.
Economic and political democracy
The only solution is for states to expand both political and economic participation. By engaging in an active process of wealth redistribution, governments will increase domestic markets, reduce their dependency on exports and thus ensure continuing growth, albeit at a lower level. This must be linked to a development strategy which does not rely on natural resource extraction, cheap labour and political repression.
Governments must also respond to the demands for participation and democracy, as this is the only basis on which people will accept lower rates of growth.
In Asia, the state still has a tremendously important role to play in social and economic development. It's simply that people want it to be more honest, more accountable, fairer and more open, and to reclaim legitimacy by ensuring economic and political democracy.
The challenge, then, is for these governments is to manage the transition from authoritarian state-assisted capitalism to a more open, democratic and equitable society. If they fail to do this and renege on their responsibilities for redistribution and regulation, they will stoke an increasingly ungovernable situation that could sweep them away.