Democracy and the East Asian Economic Crisis
by Piyaporn Hawiset
Openness, participation and accountability can become the new "Asian values"
For Amartya Sen, the 1998 Nobel Prize winner in economics, it beats two world wars, the atom bomb, computers, cloning, even man on the moon.
"The most important thing that has happened in the 20th century," he told his rapt audience of Thai national and business leaders, top economists and academics, "is the rise of democracy." While acknowledging that liberal politics has been centuries in the making, the India-born master of Trinity College, Cambridge, argued: "In the 20th Century, democracy was established as the 'normal' form of government to which any nation is entitled. We do not have to establish afresh each time whether such and such country is 'ready' for democracy; we now take that for granted."
No one took issue with Sen about his choice of the top 20th century event or the supposedly worldwide norm for governance. It was not just because he was preaching to freedom's faithful at the World Bank Conference on Democracy, Market Economy and Development in Seoul in late February 1999, the global lender's first foray into political issues. In fact, the Asian Economic Crisis muted the voices that once praised East Asian authoritarianism - including the Bank. It once extolled competent technocracies unencumbered by elections or interest groups. But in Seoul, the Bank's boss James Wolfensohn joined South Korean President Kim Dae Jung in declaring: "It is only through the simultaneous establishment of open governance and markets that genuine social development can be achieved."
Plainly, those who favor strong governments largely free from critics' carping would not have been popular at the forum. Fidel Ramos of the Philippines was invited, but another leader with a sterling record was not: Singapore's Lee Kuan Yew. Reflecting the prevailing international view, ex-dissident Kim stressed in his opening speech: "By channeling scarce resources into a few targeted areas, and suppressing social conflicts, authoritarian rule can appear very effective in the short run. . .
. . . But behind the facade of rapid growth are moral hazard, bureaucratic rigidity and political cronyism. The problem of inequality - between regions, classes and industries - also becomes more serious."
So is the so-called Asian way of prosperity before freedom, the cause of the Crisis? Are democracy and free markets the solution? And - a related question also debated in Seoul - are Asian values incompatible with democracy? Former Japanese Prime Minister Nakasone Yasuhiro blamed the Crisis on factors outside Asia: "Much was due to the activities of hedge funds, and they must be monitored to prevent recurrence." But most saw things as Sen did: "The recent problems of East and Southeast Asia bring out the penalty of undemocratic governance." The ills are often said to include cronyism, graft and lack of transparency, even though some democracies are corrupt, like India, while there are authoritarian places like Singapore that are honest and efficient.
More solid is Sen's argument that "political and civil rights give people the opportunity to draw attention forcefully to general needs and demand public action." For that reason, "no substantial famine has ever occurred in any independent and democratic country with a relatively free press." In sum, the Nobel laureate explains: "When things go fine, this instrumental role of democracy may not be particularly missed. But it comes into its own when things get fouled up." Nowhere is this truism more evident than in Indonesia, where decades of suppressing unrest and even discussions about economic inequity and ethnic animosity set the stage for the anarchy that ousted Soeharto in May 1998 and that continues to bleed the nation.
Nakasone cautioned against too drastic a swing toward freedom. "Overemphasis on democracy has the danger of causing disorder," he said, "and overemphasis on market economy may destroy a nation's culture while stressing efficiency." Sen shared the latter concern over profit-oriented free enterprise with no sense of social responsibility. But Nakasone did concur with the general belief that greater freedom and openness is the direction Asia is headed, even in countries where strong government has worked. "Once development is accomplished, democracy should replace authoritarianism," said the ex-PM. "Korea and Taiwan are two examples where middle-class citizens played main roles in leading the shift."
Real Asian "Values" - Lack of Fair Play, Cronyism, Corruption, Dishonesty - Not Conducive to True Economic Stability
American political scientist Francis Fukuyama also thinks Asia will go the way of the West, adopting democracy and open markets. His most famous book, The End of History and the Last Man, declared Western liberalism, with its tenets of representative democracy, the rule of law, human rights and free enterprise, triumphant after the Cold War. Besides the global tide toward freedom, the Crisis is also driving Asia toward convergence with the West, says Fukuyama, for it "has led to the unconditional defeat of the Japanese economic model of state-led development." Asian authoritarianism too has suffered setbacks, with Soeharto's fall and the troubles of Malaysia's Mahathir Mohamad. Even in China, where autocracy remains entrenched, citizens enriched or impoverished by economic reform are increasingly asserting themselves.
In the Asian values debate, Fukuyama reiterated the common position that there are different cultures in the region and no single continent-wide set of values to speak of. Moreover, he argued, values were manifested through institutions. For example, even if American forces imposed Western-style democracy on occupied Japan, the country did not evolve a political landscape with two or more parties frequently alternating in power. Instead, the Japanese tendency to strive for consensus helped elevate and keep a single party in power for most of democracy's half-century in Japan. The key point is, whatever a nation or region's values may be, they could well find expression in institutions borrowed from very different cultures.
You Jong Keun, a top Kim aide, went further and argued that Asian values did jibe with democracy. The concept of the mandate of heaven, enunciated by the Chinese philosopher Mencius, conferred on rulers both legitimacy and the duty to govern well. Otherwise, they could be overthrown. Confucian civil-service tests, You noted, were democratic - open to anyone, regardless of family and wealth. Confucian good governance stressed the authority of a well-cultivated elite, "the rule of superior man." And that, You argued, was one reason why Asian societies "failed to realize their ideals. They did not understand the rule of law, without which accountability, fair competition and transparency can be easily violated." This is what happens. Leaders work for vested interests and force the people to "forget" what their true Asian values are through fear, coercion and extortion.
One highly objective voice among democracy's discussants in Seoul, if only for his heavy use of statistics, was China-born Pei Minxin, a former Princeton professor of politics. He used regression analysis of data on dozens of countries to gauge the effect of democratization, rising incomes and economic liberalization on one another and on governance. Mirroring other studies, Pei found no clear evidence that democratic governments promote development better than authoritarian ones. Nor does greater political freedom improve governance appreciably; indeed, corruption tends to rise in new democracies, particularly less affluent ones.
Does wealth enhance political freedom? To a small degree. What does pay off in both governance and democracy is economic reform, especially the ones that protect property rights, promote free enterprise and enhance macroeconomic management. "A unit increase in economic freedom has about three times the effect on governance as a unit increase in political freedom," Pei reported. For one thing, shrinking state control of business limits chances for graft. Economic reform also makes people richer and more assertive. For democracies, rising affluence tends to make them more likely to stay free longer: eight years on average when per-capita income hits $1,000 in purchasing-power parity terms (as in Cambodia); and 26 years at $2,000-$3,000 PPP (Philippines). At $6,000 (Thailand), democracy becomes immortal.
Pei concluded that democracy advocates ought to put the priority on economic reform - against the fashion in the West of pushing political rights first, often with economic sanctions, which could harm private enterprise. Besides improving governance and, in the long run, promoting democracy, economic liberalization is less likely to be suppressed, since it poses no political threat to regimes. Unfortunately, says Pei, "it is harder to educate U.S. congressmen on these points than to find reformers in non-democratic countries."
During his presidency, Fidel Ramos also grappled with the practicalities of promoting both democracy and development - a double-barreled agenda Lee Kuan Yew cautioned against. In an hour-long talk with Asiaweek, he explained how he liberalized major industries to promote growth, improve services and liberate people and businesses from corrupt, abusive officials and "the overpowering political influence of the elite." On the political front, he built on the democratic foundations laid by his predecessor, Corazon Aquino, implementing electoral and judicial reform and forging peace accords with rebel groups threatening the fledgling Philippine democracy.
"People empowerment" was his overarching label for the program. In effect, Ramos tried to make democracy really work for ordinary citizens. Summing up his thinking, he explained: "While economic growth may begin without democracy, democracy is possible only under the market economy, which helps create the private realm - called civil society - that enables political and social freedom to flourish. In turn, democracy consolidates development. The self-worth that it nurtures in people sustains civil society and liberates the entrepreneurial spirit."
Kim and Sen also referred to the need for new values as nations embraced democracy. Sen said greater public involvement can give people a deeper sense of justice and the common good. Kim called for a spirit of "universal globalism." If the Crisis does help create a new soul for Asians, it may just be worth all the agony.