Page 1 of 2 Asia looks for consensuses
By Scott B MacDonald
NEW YORK - Asia has reached an interesting point in its development. For a long
period behind the West in economic terms, Asia is now in the process of
convergence. Although there remains considerable ground to be traversed before
Asian economies are at the same average level of most European or North
American economies, the gap is closing and, in some
cases, they have bypassed much of the West.
At the heart this is what strategy is right. This carries considerable
political implications, as Asian countries are hardly homogeneous in their
approach to mixing political and economic development. Indeed, there are stark
contrasts between India's democratic capitalism and China's soft
authoritarianism. Both countries offer a certain consensus as to development
that is a departure from the earlier Washington Consensus.
During the 1990s, the officially promoted path to better development,
supportive of globalization, was the Washington Consensus. John Williamson, as
a World Bank economist in 1990, initially articulated what he regarded as the
virtues to which developing countries should aspire if they wanted to become
developed. Although Williamson's comments were oriented to Latin America, they
gained influence throughout the developing world and in the ranks of officials
dealing with development issues.
The key elements of the Washington Consensus were fiscal discipline, removal of
tax subsidiaries, tax reform, competitive exchange rates, deregulation,
measures to secure property rights, transparency and disclosure, privatization
(shrink the role of the state), and liberalization of trade regimes and
financial systems. Equally important was the view that capital flows should be
liberalized - set free of government controls.
In 1997-98, the Washington Consensus suffered a major setback as many of the
countries that most opened their capital flows, such as Argentina and
Indonesia, were whipsawed by explosive volatility from short-term capital
flows. The herd-like behavior of investors was blamed for the shock waves that
rippled from Thailand in July 1997 to encompass ever-widening circles,
engulfing Malaysia, Indonesia, South Korea, Russia and Brazil.
The simplistic answer was that liberalization of capital flows (and the level
of globalization that it implies) was bad. One critic stated: "Mixed with
mismanagement and corrupt governance, the Washington Consensus managed to
undermine a dozen economies in a decade. Countries such as Argentina and
Indonesia found that the speed and greed of modern finance [were] a pipeline
for every sort of instability." [1]
One of the so-called lessons of the Asian financial crisis was that the
countries that did not follow the Washington Consensus avoided the worst
aspects of the 1997-98 Asian financial crisis. Chief of these were China and
India. Instead of the fulsome embrace of globalization, these nations followed
(and still do to a degree) what Joshua Cooper Ramo, the former editor of Time
magazine, calls the "Beijing Consensus". He argues that the main thrust of the
Beijing Consensus is driven by the rush for equitable, high-quality growth.
The key elements of the Beijing Consensus are:
Ideas such as privatization and free trade must be approached with caution
(both China and India still have large state-owned companies).
There should be a ruthless willingness to innovate and experiment (ie, China's
special economic zones).
There should a lively defense of national borders and interests (as with China
vis-a-vis Taiwan and Hong Kong).
The government should follow the increasingly thoughtful accumulation of US
currency reserves.
Policymakers should have "a focus not simply on gross domestic product growth,
the sine qua non of the Washington Consensus success, but also on growth
that is both environmentally friendly and corruption-free". [2]
In many regards, the Beijing Consensus is an updated version of "Asian values",
ie, the view that Asia has a unique history and developmental path. As much as
European exceptionalism in the rise of capitalism is inaccurate, so too is the
view that Asia is entirely unique. Yes, cultures vary, but there are
commonalities in how societies respond to globalization.
Indeed, the argument emerged in the early 1990s that Asian values were
providing a different foundation for the region - one based on a more
traditional political culture, emphasizing thrift, hard work, hierarchy, the
placing of the community above the individual, and stability versus the
freewheeling, individualistic-oriented and chaotic Western liberalism. It also
reflected an authoritarian tendency. Attached to these values is another -
economic-development rights have a priority over political and civil rights.
Ramo's Beijing Consensus certainly dovetails with the older argument about
Asian values.
Underlying the idea of a Beijing Consensus is an important point: for many
Asians, globalization still is observed as something that is driven by the
United States, functioning in both an economic and political dimension, which
has clear-cut societal implications. Globalization has also resulted in
scandals that have left a bad taste associated with greed and excesses pitting
global capitalism against traditional Asian work ethics. One Japanese executive
stated: "Globalization in the minds of the Japanese people is associated with
such phenomena as hostile takeovers, layoffs, widening of economic divides
between the rich and the poor, surge of money-worshipping values - ie,
everything that leads to instability."
All of this points to another important question: Who is steering or
controlling the process of globalization? For example, do those who gather at
Davos or Aspen function as the guiding forces?
Certainly US power has been a dominant factor in shaping globalization, taking
into account the balance of population growth, competition over natural
resources, pollution and climate change, but in a manner that is in US national
interest. With the rise of Asia, that is beginning to change. The post-Cold War
era is still not fully formed, and appears to be making a shift into a more
multipolar world where Asia's powers increasingly matter. And China, Japan and
India are increasingly demanding more say in global affairs. Equally important,
voices within those countries are also demanding more say in who benefits and
who does not.
It is important to underscore the Asian desire for order, in particular as to
how it forms a perceptual lens through which to observe and interact with the
rest of the world. As one of the strong points of Asia is the enduring strength
of families and societies, providing a solid foundation for thrift, work, and
educational success, Asia's public institutions have often been among its
greatest weaknesses.
According to political scientist Lucian Pye, the most serious risk in Asia has
not been too much government, but too little. Weak governmental institutions
have often failed to stop disorder, banditry and anarchy. [3] The consecutive
breakdown of imperial power and the rise of anarchy are certainly a constant
theme of dynastic China, but extend through the warlord, republican, and
communist eras. This is where the Beijing Consensus comes in - the perceived
need in China's case for the political center, ie the
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