Globalisation in East Asia - A View from Europe
György Széll *
Abstract
Since more than twenty years, when Japan absorbed the so-called oil crisis much
better than the West, and when Japan developed Lean management it has become
a sort of model for the rest of the world. With its transnationals in Europe and the US
it set new standards in regard to quality and efficiency. Following this example during
the last 15 years the four or five little Tigers in South-East Asia seemed even to
overtake their masters. Finally the reform policies in mainland China over the last ten
years gave another example of taking the bull at the horn and putting globalisation,
on which the West has set all hope to its advantage, to its own profit. The Pacific
century was announced by many so-called experts and self-named prophets. It
seemed inevitably so, until 2 years ago, when suddenly the bubble burst, and the
whole of South East Asia and then Japan fell into a deep economic crisis - though by
the way Japan still has the biggest trade surplus of all nations. So, crisis is
apparently a relative phenomenon.
Europe regards this crisis with mixed feelings and great interest. On the one hand it
may be relieved that a dangerous competitor for its own well-being and welfare state
is in trouble, on the other hand it lost billions of Euro and has to take into charge
most of the IMF and World Bank rescue actions.
Globalisation means for the US as the driving force of it, first of all liberalisation of
markets (the case of Japan is one of the most outstanding in this regard). Not to
suffer of the American hegemony, European integration - which by the way was very
much promoted by the US in its beginnings - is the answer now. The Euro is the
most pronounced symbol of becoming more independent from the US or even to
control better the world markets. Some - especially Japanese - blame the Europeans
to create a fortress.
Everybody speaks of globalisation, but what does it actually mean? For some it is the
benchmarking for economic activities. Especially the standards in profitmaking
decide over, which activity is to pursued or not. Until recently we were at 15 % profit
of the turnover as the goal. Today in many sectors the target is already 20, 25 % or
even more. And at the first place it is the financial sector, which dictates the rules of
this game. And here it is again the US Dollar and the NYSE, which set the marks.
Shareholder Value is the new magic word.
So we may arrive at my first thesis: Finance capital is the driving and the deciding
force in this process. And here the Pension funds - and there again Japanese ones play a central role: already today more than half of the global financial investment - if
not speculation - is managed by them.
*Invited
Professor, Chuo University, Institute of Social Research; University of Osnabrück/Germany,
Japan Research Centre
György Széll - Globalisation in East Asia - A View from Europe
2
And now I am trespassing the scope of the conference: not only the past and present
should interest us, but above all the Future. Who is going decide about it? The
governments? The famous and most successful Hungarian-American finance
speculator, George Soros, published last December his book “The Crisis of global
Capitalism”. Though he is the one, who profited probably most of the Asian Crises,
he is warning against this financial anarchy, which is called globalisation. And
democracy becomes a fake within it. He thinks that this global system is for an Open
Society worse than Stalinism - from which he fled at the end of the forties from
Hungary. He is arguing for rules to be established on a world level, which the nation
states cannot control anymore. So, he is pleading also for globalisation - to control
the anarchy of global markets, but another kind of globalisation.
We in Europe are also very much concerned, because if economy is not an end for
itself, but has to serve the well being of individuals and society - my second thesis -,
we have to fight for a “Europe in the face of globalisation with a human face”. This is
an initiative which started in the European Parliament last December with the
presence of former heads of government like Mikhail Gorbatchev, Felipe Gonzalez,
Michel Rocard, Franz Vranitzky - supported by many more also from the Third World
- and a number of scientists, socially and politically concerned. The fundamental
question therefore is, if there is an alternative to the dominant form of globalisation,
i.e. only for profit. The answer is stakeholder democracy instead of shareholder
dictatorship. This is a point, where hopefully East Asians and Europeans may unite
in a common effort, to give globalisation not only a past and present but even a
bright future.
György Széll - Globalisation in East Asia - A View from Europe
3
Twenty-five theses
1.
2.
Globalisation is a process, which is meant to integrate all societies and
economies on a world-wide scale into the same way of production and
reproduction. Its driving force is modern capitalism. Already some 150 years
ago Karl Marx and Friedrich Engels predicted this, namely in their “Communist
Manifesto”. But what does globalisation actually mean? For some it is the
benchmarking for economic activities. Especially the standards in profitmaking
decide over, which activity is to be pursued or not. Until recently we were at 15
% profit of the turnover as the goal. Today in many sectors the target is
already 20, 25 % or even more. And at the first place it is the financial sector,
which dictates the rules of this game. And here it is again the US Dollar and
the New York Stock Exchange, which set the marks. Shareholder Value is the
new magic word.
The past Globalisation in East Asia has been dominated by imperialist
relations as dominating powers the US and European nations. The opening of
Japan and China for trade and exploitation of its resources led to change of
political regimes and relations of production. The US took over the Philippines
and some more islands in the Pacific. Japan as a good disciple followed the
example of the West to become an imperial power of its own. At least it had
really an Emperor. China was torn between the European powers, the US and
Japan. Though it had the oldest culture, a huge territory and the biggest
population its political and economic system could not resist or adapt itself.
Figure 1
Globalisation in East Asia - Past (19th Century)
Imperialism
Europe
USA
Philippines
China
Japan
Taiwan Korea
3.
The twentieth century saw develop after the creation of the Soviet Union, the
civil war in China and finally the Second World War in East Asia a double
structure:
on the one hand the establishment of a Soviet type politico-economic
structure, i.e. dictatorship of the Communist Party, but in reality the military,
György Széll - Globalisation in East Asia - A View from Europe
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and a planned economy (though with different variants);
on the other hand the introduction of the market economy linked with
so-called liberal democracy, dominated by the US and partly the British. Both the market and the political system - developed in a peculiar way due to the
historical and cultural heritage of each nation.
Figure 2
Globalisation in East Asia - Present (20th Century)
Capitalism
Europe
USA
Philippines
China
Japan
Hongkong
Taiwan
4.
5.
Korea
The Cold War in East Asia took specific forms after the break-up of the SovietChinese relations at the end of the Fifties. This stopped Globalisation of the
Soviet type for about a generation.
Globalisation took a new turn in East Asia, when Japan became a real
competitor on the world market for industrial products. This performance has
been realised thanks to an original adaptation of the Western Taylorist
production system to its own structures and cultures. A process which China
has not been able to realise so far. This production technology became to be
known as Lean Management, the system to replace the Fordism as
“Toyotism”. (It is not the place here, to develop in detail the structural
elements of this new system.) It gave the big Japanese conglomerates grouped around traditional banks and trading houses - an edge in regard to
quality and prices.
On the other hand some authors - like Kenrick - speak of Japan, “where
communism really works” of its “Competitive Communism”. Globalisation as a
“one-way strategy” for Japan Inc.?
György Széll - Globalisation in East Asia - A View from Europe
6.
7.
8.
9.
5
Nearly at the same time Taiwan, massively supported for many years by the
American government and capital as a cornerstone to reconquer mainland
China, had a specific integration into the world market: on the one hand being
a Japanese colony until the end of World War II, it has special links since then
to Japan; on the other hand the American influence in general in East Asia
and specifically in Taiwan. The economic and technological infrastructure
made it, that the Taiwanese economy became one of the main supplier in
electronics. Until a couple of years ago, one could not even speak of the
slightest idea of democracy on this island, as the old Kuomintang continued its
role based on its military power without any elections. The American nexus of
market economy and liberal democracy failed completely - as in many other
third world countries, if it fits American hegemonic interests. Is the Taiwanese
model of “Supplier globalisation” a long-term strategy? What will happen if
the Two-State theory is implemented? Taiwanese businessmen just declared,
if Mainland China is retaliating, then they are just expatriate their headquarters
from Taiwan to other places in Asia. As Marx rightly said, capital has no home
country.
Hongkong would need a special treatment in regard to the topic, because it
was and probably still is a cornerstone for the globalisation of East Asia in
economic and especially financial terms. Long before it was reintegrated into
China, Hongkong was the window and the platform for the PR China to trade
globally, without endangering its own inner structures. Globalisation as a
“limited strategy”?
The Chinese integration and disintegration into the world market and its
political system has been characterised by even more radical up- and
downswings than in the case of Japan. On the one hand China was more
radically subdued by imperial powers - including Japan - than apparently
Japan itself, on the other hand the Maoist revolution led even partially to a
complete delinking from the world market. But the model of autonomous
capital accumulation based on self-reliance was not successful - for whatever
reasons. Now the question stands, if Globalisation and “Socialist market
economy” really fit together in the long run?
From the four of five so-called Asian tigers I will only treat besides Taiwan
here South Korea as the most populated and for many years regarded as
most promising threshold economy. Here again first the integration into world
market happened in the first half of the century indirectly as a Japanese
colony. Then after the Korean War the United States took care of the
Southern part of the divided country.
South Korea was until recently marked by a lack of democracy as a military
regime and its economic structure dominated by big conglomerates, known as
Chaebol. These began to break down with the most recent Asian economic
crisis. Apparently the system was not well enough prepared for difficult times.
The strength of a system is proved in times of difficulties and not of “good
weather”, as the Japanese case demonstrated so well until recently. So is this
the end of the model of “Chaebol globalisation”?
What will happen if unification like in the case of Germany will take place in
Korea? In Germany this unification under better conditions still costs since 10
years every year a social transfer of 100 billion US $ from West Germany to
East Germany. What with a much weaker economy on both sides of the only
still existing Iron Curtain?
György Széll - Globalisation in East Asia - A View from Europe
10.
11.
12.
13.
6
The end of the Bubble economy in the case of Japan and the crises in the
Asian countries is the sign of normalisation and means the full integration into
the world markets. No special conditions are valid anymore. Europe regards
this crisis with mixed feelings and great interest. On the one hand it may be
relieved that a dangerous competitor for its own well-being and welfare state is
in trouble, on the other hand it lost billions of Euro and has to take into charge
most of the IMF and World Bank rescue actions.
But is this the end of the “Asian miracle” and with it the dream of the “Pacific
century”? Perhaps not yet, because since the beginning of this year the
different Stock exchanges and the currencies have been revigorated,
especially the Yen climbed up again to his highest position since long. Well
first of all the crisis has been a crisis of the financial sector. Japan has still
difficulties to adapt its financial system to global competition. The mega
merger these days to form the world’s biggest bank is certainly a sign of
fundamental reorganisation and globalisation. And other banks are going to
follow. But I may just remind you that some ten years ago nine of the ten
biggest banks in the world were Japanese, and that Saving and Loan Banks
disaster in the US did cost the tax-payer 500 billion US $. So, is all this not a
confirmation of Marx’ thesis of the productive destruction cycle?
I will turn now my eye to the other actors in the process of globalisation, as
globalisation in East Asia cannot be understood, if they are not taken into
account. Otherwise it would not be globalisation. The main global actors as
nation-states are united in the former G7 now G8 group, though it may be
doubtful, if Russia is a global actor under the same terms as the other seven
nations. And certainly the real global actor, capital, is acting according to its
own rule - profit-making. It seems that the US government - whatever its
president - has no other function than to optimise the conditions of
profitmaking for American capital.
First of all we have to discuss the role of the US as the number one economic
and not to forget military power. They are the driving forces in the globalisation
of the economy, as it may be seen in the WTO, IMF, World Bank etc.
Globalisation means for the US as the driving force of it, first of all
liberalisation of markets (the case of Japan is one of the most outstanding in
this regard). But they still are protecting themselves wherever they can with
their own market access restrictions and the NAFTA as a regional market,
where they clearly dominate again. So it seems that in regard to the role of the
US and globalisation the saying of George Orwell in his “Animal farm” holds
true: “Some are more equal than others”.
The other main actor in globalisation and with it the triad competition is the
European Union, though it largely felt long-time to be just - as Orwell said in
his book “1984” - the aircraft carrier of the Atlantic super-power overseas. And
the conflicts in the last couple of years in former Yugoslavia demonstrated via
NATO, who really dictates the action. The creation of the EURO from the
beginning of this year is a counter-strategy of the Europeans to get more
independence from the US and its $. (Some observers argued that the
Kosovo-war was also an attack by the US against the new-born EURO.) From
autumn of this year the EU will for the first have some sort of Foreign Minister.
It will be the former Secretary General of the NATO, the Spaniard, Javier
Solana. Some outsiders - also East Asians - regard the EU as an economic
fortress, i.e. hindering free trade and global exchange. What Europeans try to
György Széll - Globalisation in East Asia - A View from Europe
14.
15.
16.
17.
18.
7
defend is a specific cultural and social heritage, which is partly expressed in
the idea and reality of the welfare state. So, is there an alternative to the
American way of globalisation - with a human face?
To speak of Russia - the former other super power and essentially a European
country, though reaching up to East Asia - as global actor today is only partly
true. Certainly Russia managed to be included into the G7 group to make it
G8, but the economy is nearer to the Third World than to the first. With one
exception. When as a Mafia boss was asked about the future prospects of the
Russian economy in 1993, he answered: Well, we will never be able to
compete with the West and Japan in the industrial sector, normal services and
science and technology, but we will be Number One in drugs, arms delivery,
and prostitution. Apparently these fields generate more profit than all other
sectors - some one trillion US $ per year. And the Mafia already controls about
half of the Russian economy. Is Russia’s answer to globalisation “Mafia
globalisation”?
For the rest of the world, i.e. the Third World the same holds unfortunately as
for Russia. In general you cannot really speak of being actors, but more being
victims of globalisation. There may be partly an exception with the most
important countries of Latin America uniting them in the Mercosur to be
competitive with the rest of the world. South Africa is leading the SADEC-zone
with the hope of a single currency. Politically South Africa is also after the end
of Apartheid one of the few examples of successful democratisation. ASEAN
may transform itself also in the long run with a single currency to an actor in
global politics. But this will take at least one generation. And the other actors especially the US - are not sleeping. Drugs Aids
Where does globalisation happen besides that? The biggest economic sectors
today are finance, tourism, health, construction, communication, transport and
entertainment. But still even of the formal sector of the world economy only
about 5 % is globalised. Not to speak of the informal sector which in many
countries of the world reach 90 % and even in the US and Europe covers
some 20 to 30 % of economic activities.
So, what is the future of globalisation? Is it only a myth? And if not, what
kind of globalisation?
As mentioned earlier, the driving force of globalisation is capital, but first of all
the financial capital. Already at the beginning of this century Rosa
Luxemburg, Rudolf Hilferding and in their wake W.I. Lenin predicted the
increasing role of finance capital in the globalisation process. And here today
the Pension funds - and there again Japanese ones - play a central role:
already today more than half of the global financial investment - if not
speculation - is managed by them. Who is going decide about it? The
governments? The famous and most successful Hungarian-American finance
speculator, George Soros, published last December his book “The Crisis of
global Capitalism”. Though he is the one, who profited probably most of the
Asian Crises, he is warning against this financial anarchy, which is called
globalisation. And democracy becomes a fake within it. He thinks that this
global system is for an Open Society worse than Stalinism - from which he
fled at the end of the forties from Hungary. He is arguing for rules to be
established on a world level, which the nation states cannot control anymore.
So, he is pleading also for globalisation - to control the anarchy of global
markets, but another kind of globalisation.
György Széll - Globalisation in East Asia - A View from Europe
19.
20.
21.
22.
23.
24.
8
Science and technology are by their very nature universal, i.e. global. The
subsumtion under capital; interests makes them private. The MBA has
become the dominant so-called scientific method and most-wide spread,
rather homogenous training.
The dominant form of globalisation destroys culture variety and replaces it
with a kind of surrogate, produced by a global entertainment industry. elites
The dominant form of globalisation destroys democracy and means the end of
the nation state, because he has no real power anymore. We see this
phenomenon already at work in the case of the European integration.
The dominant form of globalisation destroys solidarity. Trade unions do not
seem to have a future in this world. Hedonism and egotism are individually
and collectively the symptoms of this “new brave world”.
The dominant form of globalisation destroys nature.
The alternative to the dominant form of globalisation is international cooperation instead of economic warfare and political, social, cultural and
ecological destruction.
Figure 3
Globalisation in East Asia - Future (21st Century)
International Co-operation
Europe
USA
Philippines
China
Japan
Hongkong
Taiwan
25.
Korea
We in Europe are very much concerned, because if economy is not an end for
itself, but has to serve the well-being of individuals and society - my second
thesis -, we have to fight for a “Europe and a world in the face of
globalisation with a human face”. This is an initiative which started in the
European Parliament last December with the presence of former heads of
government like Mikhail Gorbatchev, Felipe Gonzalez, Michel Rocard, Franz
Vranitzky - supported by many more also from the Third World - and a number
György Széll - Globalisation in East Asia - A View from Europe
of scientists, socially and politically concerned. The fundamental question
therefore is, if there is an alternative to the dominant form of globalisation, i.e.
only for profit. The answer is stakeholder democracy instead of shareholder
dictatorship. This is a point, where hopefully East Asians and Europeans may
unite in a common effort, to make it more human and by that to give
globalisation not only a dark past and a mixed present but even a bright
future.
9
György Széll - Globalisation in East Asia - A View from Europe
10
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