In search of Asian capitalism<\/p>\n
By Harry Bhaskara<\/p>\n
JAKARTA (JP): How will Asian businesspeople fare in the era of
\nglobalization? Given their habits in business relations, where
\ncollective rather than individual initiative rules, will they
\nfare well?<\/p>\n
This was one question that came up during the recent
\nPanglaykim memorial lecture here featuring Dr. Soogil Young, a
\nsenior fellow with the Institute for Global Economics.<\/p>\n
To start with, there is no one particular model of capitalism
\nin the world, Young said. \"They are not all bad.\"<\/p>\n
The world of capitalism, as talked about by classical
\neconomists, suggests impersonal relationships, he said. It exists
\nin the United States where cut-throat competition is possible due
\nto its unique cultural and historical background.<\/p>\n
But this is not the case in Asia or Europe, said Young in his
\nlecture at the Centre for Strategic and International Studies on
\nJuly 27. He said he himself would not really be able to compete
\nwith his fellow South Koreans, as he virtually knew \"about half
\nof the population\" of the country.<\/p>\n
\"If a man treated me unfairly I wouldn't be able to take him
\nto court because he is either my friend, or a friend of a
\nrelative's relative.\"<\/p>\n
South Korea, like other Asian countries, he said, is a society
\nwhere compassion rules, making impossible \"impersonal\"
\ncapitalism. In Asia, capitalism must be tempered with compassion,
\nYoung said.<\/p>\n
Young, who studied economics in the United States and once
\nserved as the South Korean envoy to the Organization for Economic
\nCooperation and Development (OECD) in Paris, said Asia had many
\nsimilarities with Europe; their populations had shared the same
\nland for hundreds of years. This resulted in very close
\nrelationships, which hampered competition, he said.<\/p>\n
\"That is why Europeans have social democracy,\" Young said,
\nadding that elements of this social democracy were present in
\nAsian societies.<\/p>\n
\"In a sense Asians are probably more susceptible to the
\nEuropean kind of capitalism than the American kind,\" he said.
\nAsians, including Indonesians and Koreans, will eventually
\ndevelop their own version of capitalism, Young said.<\/p>\n
An appropriate form of capitalism in such countries would
\ndepend on society and the market forces.<\/p>\n
Nevertheless, he said, there are elements that drive all
\nversions of capitalism to look much more like each other over
\ntime. This reflects globalization, the coming down of national
\nborders. South Korea, he cited, which has a reputation for
\nxenophobia, now has more and more firms with foreigners in their
\nmanagement.<\/p>\n
He also said antiglobalists had legitimate concerns. \"They are
\nright in identifying and presenting the problems ....
\nGlobalization is not all good. It offers opportunities. It also
\noffers risks, but as ruled by the existing international
\nbureaucracies.<\/p>\n
\"I don't think we are dealing adequately and comprehensively
\nenough with all the problems of governance. So the new form of
\ninternational or global governance has to evolve ....\"<\/p>\n
The antiglobalization movement will be \"an element of force to
\ndrive the development of global governance into a more
\nappropriate form\" of capitalism, Young said.<\/p>\n
He related South Korea's attempt to combine democracy and the
\nmarket economy; while in democracy the majority rules, in a
\nmarket economy the competition rules. Combining the two is not an
\neasy feat. Often the result is, he observed, that competition
\nbecomes the rule in the political system and the majority rules
\nin the market system.<\/p>\n
This is a mix-up that developing countries should avoid, Young
\nsaid. The OECD countries have succeeded in putting majority rule
\nin the political system and competition in the market economy, he
\nsaid, while South Korea has not.<\/p>\n
\"In the worst scenario, the market principle becomes
\nadulterated and the political system becomes divided and
\ndisintegrated as a result,\" Young said.<\/p>\n
This is a common problem faced not only by South Korea but by
\nall East Asian countries, including Indonesia and China.<\/p>\n
\"Here, I think, we all have sympathy for each other, Korea for
\nIndonesia, Indonesia for China and so on, and I think this is one
\ngreat area where we have to work together,\" he said.<\/p>\n
Young said the parallel development of democracy and the
\nmarket economy in Asian countries was inevitable, and not one of
\nchoice.<\/p>\n
A participant of the lecture said South Korea had fared better
\nthan Indonesia, which had to grapple with so many issues like
\ndisintegration, decentralization, a weak legal system, a
\ndisoriented government and a domestic security problem.<\/p>\n
Yet South Korea has never been as divided as it is today,
\nYoung replied. Politically, the southwest and the southeast
\nregions of the country have always been divided, while Seoul has
\nignored the agricultural region of the southwest for decades.
\nMost political leaders and generals come from the southeast,
\nwhile President Kim Dae-jung comes from the southwest, which has
\nupset the traditional political balance.<\/p>\n
\"All the traditional differences have suddenly come out into
\nthe open,\" he said, which has caused numerous problems in all
\nsectors.<\/p>\n
Young said South Koreans disagreed on numerous issues such as
\nhow to handle the press, the large business groups, or chaebols,
\nand the medical profession.<\/p>\n
\"Today, the pharmacists are fighting with the doctors and both
\nof these groups are fighting against the government,\" he said.<\/p>\n
On security problems, Young said, many South Koreans still
\nregarded their northern neighbor as an enemy. He acknowledged
\nthat South Korea's judiciary might be better than Indonesia's,
\nbut it still had many loopholes.<\/p>\n
\"Korea and Indonesia have more similarities than differences,\"
\nhe said, \"And this provides room for future cooperation.\"<\/p>\n
In dealing with the challenge of globalization, Young said
\nSouth Korea should abandon its old paradigm of development, which
\nworked well from the 1960s to the 1980s.<\/p>\n
This paradigm comprised four pillars: a government-managed
\neconomy, a national firms-based economy, a resource-based economy
\nand a corporate welfare system.<\/p>\n
\"All the structural problems which are still inflicting the
\nKorean economy may be seen as originating from this paradigm. It
\nis easy to see that such attributes as nontransparency, moral
\nhazards and corruption should arise as essential aspects of this
\nparadigm.<\/p>\n
\"This may be considered as a variant of capitalism, but one
\nadulterated with bad governance. In this sense, Korea's old
\ndevelopment paradigm was an adulterated version of capitalism,\"
\nYoung said.<\/p>\n
Such capitalism worked in the past with an authoritarian
\ngovernment and a relatively less sophisticated economy with a
\nheavy reliance on cheap labor, he said, while the global economy
\nwas still in the stage of shallow integration.<\/p>\n
In the mid-1980s globalization arrived full throttle in South
\nKorea, forcing a need for the country to change its old
\ndevelopment paradigm.<\/p>\n
Young said the new development paradigm that South Korea
\nshould evolve comprised a different set of four pillars: a
\nmarket-led economy, an international firms-based economy, a
\nknowledge-based economy and a welfare-state economy.<\/p>\n
He stressed that the new paradigm would not work unless good
\ngovernance took root.<\/p>\n
\"As the shift to this new development paradigm takes place,
\nthe development regime becomes one spontaneous development which
\nderives its dynamism from the quality and creativity of its
\nindividual constituents, rather than from firms,\" Young said.<\/p>\n
Therefore, the government's economic policy, he said, should
\nbe focused on investment in human capital, as well as adapting to
\nmarket discipline and global competition.<\/p>\n
The writer is a journalist with The Jakarta Post. The
\nPanglaykim public lecture series began in 1987, a year after the
\ndeath of the noted economist and educator.<\/p>",
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