Chapter 17. Southeast Asian Development, an Accident of History

The current development of China and Southeast Asia due to being given access to technology and markets is accidental: they were only brought within the alliance of wealthy nations to prevent the further spread of socialism. Without a threat there is no basis in capitalism’s free trade philosophy to give anything to anybody (and that is Adam Smith, not just a neo-mercantilist interpretation of him). Instead, the stated tenet is pay the lowest possible price, charge all the market will bear, and give nothing to anybody: a great philosophy for powerbrokers with a monopoly on land (resources), capital, technology, markets, and military might. Membership rights to monopolies were expanded to others only by the need for allies to stop fast expanding socialism and suppress the world’s break for economic freedom.

China and Southeast Asia’s industrialization, considering that Japan was destroyed in WWII and then tied to the West, was the first major accumulation of capital by cultures not tied ethnically and religiously to Europe. If this accident of history continues to succeed, and only war can prevent it, 50% of the world’s population will be provided with adequate industrial capital, up from the traditional 15% (and 80% of that 50% will be other than descendants of European race and culture). This is a historic moment and Social Darwinists will be viewing their minority role in the industrialized world as a very serious security threat.

The post-WWII plan was for German economic power to be submerged in the European common market with its 350-million consumers. The neo-mercantilist threat of this historically powerful imperial-center-of-capital was to be eliminated through the removal of all trade barriers between Europe, Japan, and the United States, essentially maintaining one imperial-center-of-capital. (As it was necessary to prevent fast expanding socialism, Japan was permitted to structure its economy as a sustainable empire within that larger empire.)

This was a sensible plan for the already developed world but, because their security was not a consideration, unworkable as a development plan for developing nations. It was unworkable because the historic, and still operational, pattern of siphoning wealth from the weak to the strong dictates that there must be a countryside to furnish cheap commodities to both the developed and developing imperial-centers-of-capital.

Will Developing Nations Oppose, or Ally With, the Imperial-Centers?

With the collapse of the Soviet center of capital, claims that the one worldwide imperial-center-of-capital is now threatening to fragment into three imperial-centers are likely misplaced. The record of neo-mercantilist wars over trade (between Britain and Holland, Britain and Spain, and Britain and the Allies against Germany and Japan) has been to avoid subsequent battles between themselves by sharing the monopolization of world trade and allying against other emerging-centers-of-capital. For example, the entire developed world cooperated in the assaults against the emerging Soviet-center-of-capital. Due to losing trade battles (wars) in previous centuries, Portugal and Spain were left out of earlier sharing in world trade but have been brought into Europe’s latest federated trade alliance.

Because a large bloc of industrial capital had been donated by the former Soviet federation, China had the basic industries with which to begin industrialization. Initially, corporate imperialists had no choice but to permit Southeast Asia and China to develop under that same protective umbrella spread over Japan, Taiwan, and South Korea. Having accommodated to that reality, managers-of-state were unable to make a quick paradigm shift to contain China when the Soviets collapsed, nor could they control industrial capital now broadly diffused throughout the periphery of empire. However, with the Soviet collapse there was now little need for allies. Thus there was little need to protect Japan’s or Southeast Asia’s accumulations of capital or access to resources and markets.

But a quick paradigm shift to openly withdraw protection from China and Southeast Asia would have exposed the fiction of neo-mercantilist free trade and widely diffused capital fleeing high-priced labor to the cheap labor nations of Asia now made embargoing and containment of any country within the former unacknowledged alliance a difficult task. Those currently prosperous nations of Southeast Asia may still develop, into an opposing imperial-center-of-capital with all the risks of trade wars, covert wars, and hot wars that entails. The 14-year stagnation of Japan and the 1997-98 financial meltdown of Southeast Asia after protection was withdrawn have increased that potential.1

It is evidence of the historically illiteracy of western opinion that it expects that economic convulsions in east Asia on a scale that Western countries have not known since the thirties should occur without shifts in government and regime comparable to those experienced by Europe during those inter-war years. … Far from signifying the universal triumph of the free market, the Asian crisis is a prelude to a time of major dislocation for global capitalism. … Asia’s economies … are not on a phase of decline that terminates with the embracing of free markets. … If history is our guide [most of Europe went Fascist during that crisis], we can be sure that Asian capitalism will emerge from the current crisis altered unpredictably rather than remade on any western model.2

If economic collapse can be avoided and labor’s race to the bottom (the law of wages) can be reversed, the equalization of labor values will substantially expand rights and increase living standards. But there is no assurance that the race to the bottom can be halted. The world is yet locked within the jaws of that centuries-old policy of the countryside providing cheap resources and markets for developed imperial-centers-of-capital. It remains to be seen whether the contradictions of lowering the buying power of labor in the developed world, the collapse of buying power on the periphery of empire due to the abandoning of supports (protections) for Southeast Asian countries, and the massive accumulations of capital cannibalizing each other will again create a worldwide economic crisis.

No matter how sincere managers-of-state are, to negotiate honestly for world development is not possible under the current rules of neo-mercantilist free trade. Virtually every nation that developed did so while protecting their industries and internal markets. Trade between the developed world and the latest successfully developing countries was carefully managed and to develop the remaining countries requires even more careful management. That, without massive economic restructuring within the developed world, is an extreme contradiction. Historically some societies had to provide those cheap resources. The one best hope for the world is to share those resources and the wealth produced through democratic-cooperative-(superefficient)-capitalism.

Asian countries have thought about protecting their markets and currencies by forming a regional monetary fund. Grand Strategy philosophers are speaking of the yen as the primary currency. But true freedom with full and equal rights can be only when each country shares in the enormous productivity of created money and this requires a regional (or world) currency specifically guaranteeing each nation, each region, and each community rights to their share of both created money and investment capital. (The subchapters “A Money Commons structured to protect the Rights of All” and “Accumulation of Capital through Democratic-Cooperative-[Superefficient]-Capitalism” in Chapter 26 outlines establishing a banking system with such rights for all regions and communities.) Recognizing that it must first happen regionally and then expand to a world system by sincere designers of a peaceful prosperous world, once a world banking system with equal rights for all is established investing each central bank’s reserve funds in a broad basket of commodities, as outlined in “Inflation, Deflation, and Constant Value: Creating Honest Money,” Chapter 26, guarantees the stability of money.

To understand the need for a world/regional banking system for full and equal rights it is necessary to understand the simplicity of the creation of money as addressed in Chapter 26 which we will summarize as it applies to world trade: The dollar as the world’s trading currency means, over the past 60 years, America, as an imperial-center-of-capital, has printed trillions of dollars which did far more than finance world trade; it financed the suppression of the world’s breaks for freedom and maintained control of resources and the wealth-producing-process.

Though that 60-year battle was enormously complex, financing it was simple. Those trillions of dollars of printed (created) money is easily understood when one thinks if it in terms of America writing trillions of dollars in checks which, instead of being cashed, were used as the world’s trading currency. A $100 bill is simply another name for a $100 check. Millions of dollars sitting in overseas reserve accounts are simply millions of dollars in checks created by a few strokes on a computer keyboard. Those checks (dollars) originally bought trillions of dollars worth of resources, products, and services. A share of those dollars (checks) then finance other nations’ trade as opposed to being spent purchasing from the U.S. and are, as far as America is concerned, essentially uncashed.

Not only does America end up with the free use of money, those dollars move between banking systems through debits and credits at the Fed. Any time the U.S. wishes to sanction a bank or a nation, those funds can be frozen.

The insistence of the developing world on freedom with full and equal rights, the world’s industrial production now in place in formerly impoverished nations once necessary as allies to stop fast expanding socialism, the wealth produced by those industries still going primarily to the wealthy world rather than to the producers of that wealth, and the potential of cashing those checks destabilizing the world economy are at the heart of the building world crisis.

Endnotes

1. Tabb, The Amoral Elephant, 2001, pp. 106, 114; Gowan, The Global Gamble, Chapter 6. Back to text
2. John Gray, False Dawn (New York: The Free Press, 1998), pp. 220-21. Back to text

This is a chapter from the book, Economic Democracy; The Political Struggle for the 21st Century. Visit that link for more information about the book.