Neutered tigers (1998)

Editorial from the May 1998 issue of the Socialist Standard

The Asian “Crisis” goes from bad to worse. The entire region is economically paralysed and Japan—the local Superpower—is itself on the “brink of collapse”, according to the chairman of the Sony Corporation. It only remains to be seen how badly the world economy will be affected.

The real context of this crisis is what we have previously called the “casino” economy. Much of the Asian “tiger” success has been due to vast amounts of speculative capital being invested into property and equities creating rising asset prices which do not correspond to the real productive economy. Subsequently when the “paper bubble” bursts we see the “miracle” for what it really is—a false dawn!

This has not previously been the view of most economic commentators. Initially, when the crisis broke out in Thailand it was put down to a “liquidity crisis” (investors withdrawing their money) as the crisis deepened and Japan started to rock with its banking system about to implode, we were told that the cause of the problem was “corruption” combined with the fact that Japan’s financial sector needed to be “deregulated” and “restructured”. The most popular solution to the region’s problems (aside from the IMF bail-outs) has been for Japan to re-slate its economy by cutting taxes and increasing public spending—thereby creating a motorforce for the region. The extent of a possible world recession therefore depends upon the domestic economic management of the Japanese government. That this view is superficial in the extreme only demonstrates the poverty of bourgeois economics when faced with a crisis of capitalism.

Already we have seen one tiger after another come off the dollar “peg”, setting in motion a round of competitive devaluations. This will probably boost exports relative to imports and in Japan’s case (with a week yen and strong dollar) increase their trade surplus with America.

And this is where the problems may start. Imperialist tensions could well sharpen and a potential trade war complete with protective blocs and further attacks on the working class may be the portent of things to come. Yet again the instability inherent to capitalism hits those least able to protect themselves.