Setback for Asian Values

(NZZ Online)

The Challenges of Globalization and Economic Crisis

Manfred Rist

“Asian values,” highly praised and sometimes naively used to explain Asian economic miracles up until 1997, seem these days to have paled. They have not withstood the tests of recession and globalization. Throughout Asia, in both economic and political matters, there is a growing demand for more transparency, greater accountability and democratic controls.

The gentlemen of Singapore’s United Overseas Bank (UOB) were not exactly gentle or gentlemanly when it came to their personnel cutbacks in December. Early one morning, the e-mail addresses of the affected people were blocked, after which the 435 workers were given until noon to clear out their offices. It was highly reminiscent of American management methods. There was consternation in the tiny republic. But Confucius was left in the dust; his doctrine, according to which the individual should act as a gentleman (“junzi”), remained just theory in this case. Economic reality appeared to be stronger.

Recessions Shatter Myths

“Asian values,” which up until 1997 were sometimes naively used to explain the Asian economic miracle, now seem to have paled elsewhere in Asia too. For the second time after the “Asian crisis,” economic activity has slackened along the geographic arc between Japan and Indonesia. This has not been good for the self-confidence of people or nations. Social relations, the very scaffolding of Confucian values, are also taking a beating. With 45 million unemployed, and 100 million people living at or below the poverty line, Indonesia provides the worst example. The consequences C decay, violence, corruption, legal uncertainty, prostitution and vigilante justice C are ubiquitous there.

The “Asian model” C to the extent that such a thing ever existed C has also come up against limits in Malaysia and Thailand. Both countries are now on the verge of recession and are seeking new ways to reduce their dependence on international economic cycles C with little success thus far. In politics, too, there are widespread ethical deficits and disorientation. The prominent politician Anwar Ibrahim, Malaysia’s former finance minister and erstwhile crown prince who had been picked to succeed long-time Prime Minister Mahathir, was humiliated and stripped of all dignity in an unparalleled manner. Thailand’s government is headed by a prime minister who cannot shake the suspicion of corruption and whom the king painfully and publicly declared to be inept and dishonest. In Brunei, the monarch’s brother shamelessly plundered the public treasury, and went unpunished. For years now in Burma, where Confucius and Buddha were jointly at work, so to speak, a regime has been in control whose disregard for human rights deters even development banks. Against this background, the alleged Asian virtues of dignity, care, respect and thrift do not seem terribly credible.

Western Ills, Eastern Shortcomings

There has been much less talk about “Asian values” since the slow decline of the Japanese economy and the outbreak of the Asian crisis nearly five years ago. Even their best-known advocates, Malaysia’s Prime Minister Mahathir Mohammad and Singapore’s Senior Minister Lee Kuan Yew, rarely speak of them these days.

Instead, they concentrate on what they do not want: such “Western ills” as drugs, crime, firearms, speculation, slums, and the general excesses that accompany the individualizing of societies. However, with the exception of Singapore, all these things are to be found everywhere in Asia C plus corruption, an almost stereotypical Asian problem. Asian values are regarded more skeptically today than they were five years ago. Education in most Asian countries, while essentially highly prized, is still based on such old Confucian values as obedience, discipline, respect and hierarchy. Rigid curricula and teaching plans are the rule, and there is little demand for creativity or flexibility. Students are world champions at rote learning, but develop little initiative of their own.

For some time now, Singapore has had campaigns to stimulate creativity, aimed at increasing the innovative abilities of business, industry, and young potential entrepreneurs. But the “liberation” from constraints is strictly limited. If a university student, for example, returns from school break with dyed hair, he is suspended until he restores his original (black) hair color.

Performing the balancing act between unremitting hard work and creative chaos, between socially accepted constraints and individual freedom, and between state dirigism and a free market economy, is no easier in Asia than in “the West.” Not long ago, Lee Kuan Yew, a renowned advocate of Confucian thinking, issued a plea for changes to the value system. Ossified structures that block risk-readiness, innovation and creativity, he said, must be revamped. One cannot command someone to have an innovative mind, the former prime minister noted, but one can eliminate bureaucratic obstacles to innovation and limit government influence. The state, once regarded as the engineer of growth in Asia, is apparently meant to take a back seat in the wake of privatization C but to what extent still remains to be seen. And whether the “Asian Tigers” enjoyed such rapid economic development in the 1980s and ’90s because of, or in spite of, the influence of the public sector remains a matter of controversy.

Despite (or because of) Lee’s statements, Singapore’s government has not yet become a mere night-watchman, but there is an evident desire on the part of the authorities to gradually deregulate and privatize. And areas of freedom in economic and social matters are being increasingly tolerated. But there has been no retreat from the principle of creating strategic industrial clusters. The latest instance is Singapore’s attempt to become a center for private banking and biotechnology. In neighboring Malaysia, to cite another example, the government is trying by dint of mergers to establish “anchor banks” which will one day be able to withstand the liberalization of the financial sector under the WTO regime.

The End of Confucian Capitalists?

Since their demystification, the boundaries of the areas in which “Asian values” are even being applied today have become as vague and diffuse as the values themselves. The Confucian capitalist, who links his extended family, clan and friends together in opaque business transactions and relies more on personal trust than on contractual clauses, has been in retreat since the Asian crisis. His operations are being hampered by globalization, modern management methods, the fight to recruit talent, and C in the case of Indonesia C conditions laid down by the IMF. Suddenly, with homegrown banks gone bankrupt, there is again demand for foreign financiers. The need for foreign investment, and with it the calls for transparency, legal security and reliable institutions, have shaken old structures over which “Asian values” have long lain like a protective, cosmetic covering.

In Indonesia, for example, where the entire national economy was controlled for years by Dictator Suharto’s clan and close associates, the present government has staked its existence on a privatization program designed to lure foreign investors back into the country. The engagement of Standard Chartered in Indonesia may serve as an example of the tug of war between old and new: In 1999, the British bank failed in its takeover bid for Bank of Bali. Now it is trying again with the Bank of Central Asia, which is to be sold by the government and privatized. In sum: Indonesia is clearly an Asian nation, a country in which, as its name suggests, Indian influence is coupled with that of Buddha and Confucius. But if you scratch just beneath the surface, its values are becoming increasingly westernized.

Enlightenment in Politics Too

The economic changes and calls for more transparency and accountability which have been in evidence since the Asian crisis have a parallel in the political realm. In some Asian countries, there have been democratic changes since 1998 which have caused old, deeply rooted social structures between the governing and the governed to collapse. They have led to the rise of grass-roots movements and the beginnings of civil societies. Since then, political leaders have been chosen, controlled and (when necessary) deposed differently. The way leaders are brought down has also changed. In this context, no one speaks any longer about “Asian values,” which in the past were often misused as a means to maintain and legitimize power structures.

This process has been most blatant and loudest in Indonesia, where since the end of the Suharto era there have been three presidents, chosen by increasingly democratic procedures. The sprawling country is still far removed from being a functioning democracy, but at least it has recently acquired the necessary openness and public arena. And the changing of the guard in the Philippines was spectacular. There, thanks to functioning institutions and critical media, the populace and the business community were able to put an abrupt end to the cronyism of President Estrada. In Malaysia, the ruling coalition has survived, but in the wake of Anwar Ibrahim’s public humiliation the regime of Prime Minister Mahathir now sees itself faced by a serious political opposition calling for transparency, the rule of law, democratization and a reduction in graft and corruption.

Finally, in Japan, Thailand, Taiwan and South Korea there have been landslide democratic changes in government which have a common denominator: dissatisfaction with the old systems and hope of renewal. And in violation of Asian tradition, these changes at the top came about not harmoniously, but rather were accompanied by election campaigns as rhetorically mean and wild as anything ever seen in the West. The new governing teams find themselves confronted with a new challenge: more careful public scrutiny, without regard for “Asian values.”

January 23, 2002

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