Can Asia Save Global Capitalism?

By Reihana Mohideen

The ADB has just held its annual board meeting in Manila accompanied by much publicity and fanfare about ‘sustainable and socially inclusive development’. A key framework document presented is entitled How Can Asia Respond to Global Economic Crisis and Transformation. The paper was prepared by a team of ADB technocrats and other leading gurus of neoliberal economic dogma such as Jeffrey Sachs. There are some key underlying themes that ran through the document, reflected in the major conference sessions:

(i)                  How can Asia continue to buffer itself from the economic crisis in the Eurozone and the US, the impact of which it has (admittedly) weathered to-date, but whose future prospects are extremely unpredictable?

(ii)                The decline of the European and US economies also provide ‘opportunities’ for Asia to take advantage of, i.e. to save global capitalism and become the leading force in ‘a global economic architecture that has been dramatically altered by the global financial crisis of 2008’.

(iii)               The need to ‘mitigate’ political ‘instability’, due to rising inequality, i.e. to have the bulk of Asia’s population, the working class and poor, ‘buy in’ to this Asian-capitalist renaissance, through socially ‘inclusive’ and environmentally sustainable development.

The essential proposition is that there is an opportunity for Asia to lead a newly reconstructed system of global capitalism, with some provisos: if Asia doesn’t also go down with the US and Europe in what the document describes as a “‘perfect storm collapse”, if the environmental crisis doesn’t upset the grand plan and if the struggle of the masses suffering under the exploitation of neoliberalism’s ‘deepened and accelerated’ structural reforms (that the document calls for) is held in check. And how do they get the ‘buy in’ of the masses for this new capitalist world led by Asia? Through some vague notion of ‘social inclusion’ that has now become the latest fad in the neoliberal capitalist development agenda.

The paper presents three possible scenarios for 2012:

(i)                   a recession confined to the eurozone, with the economy contracting

3.9% for 2012, with US economic growth slowing to 1.6% in 2012,

(ii)                a deep recession in the eurozone that drags the US economy into

technical recession, contracting 0.1% in 2012,

(iii)               a renewed global crisis where output in both the eurozone and US fall

to 2009 troughs.

According to the document in any of the three scenarios Asia’s economic growth will fall, ranging from a drop of 0.2 to 3.7 percentage points. The contributors admit that the impact could be far worse, as the past four episodes of US and Eurozone recessions show an increasing impact on Asia, including on China’s growth where GDP declined to 8.9% in the fourth quarter of 2011. And they also admit that they haven’t looked at the possibility of the ‘worst case’ scenario, to which their model simulations don’t apply – the collapse of global financial institutions much worse than the case of the Lehman Brothers collapse, a tumble of the Euro, a rise in Japan’s yen borrowing rates, a big drop in China’s GDP and a ‘dramatic credit squeeze’.

So how should Asia respond and prepare itself? The prescriptions include ‘crisis prevention mechanisms’, to complement the IMF’s ‘liquidity support facilities’. These are the IMF bail-out schemes that are wreaking havoc in Europe and which are being used as monstrous weapons of neoliberalism to cudgel the working classes in Greece, Spain, Portugal and the UK (to name but a few examples) and to strip them and the welfare state bare of the last remnants of protective cover. Is this an example of the ‘inclusive growth’ that these Asian leaders of global capitalism envisage for us? A mechanism for ‘accelerated and deepened structural adjustment’ is not a recipe for inclusive growth, on the contrary it’s a menacing plan for the ‘accelerated and deepened’ exploitation of the Asian masses.

One of the prescriptions for going beyond economic risk mitigation and in pursuit of the renaissance of a global capitalism led by Asia is what the document describes as ‘rebalancing and changing trade patterns’. The big push is to massively increase Asian investments in Africa. Africa, we are told (in box highlights), is the new frontier, ‘a main source of global growth in the future’, with a ‘huge potential in minerals, agriculture, and hydrocarbon development’ and potential for investment in infrastructure, with a population of around 1 billion people. According to Jeffrey Sachs Africa could absorb around  $100 billion annually in infrastructure investments and Asian investments to date (around $29 billion in 2010, according to ADB figures) should be ratcheted up in the coming years to around $50 billion. What is essentially being proposed here, it seems, is a renewed colonisation of poor Africa, this time, by Asian capitalism.  To become a global capitalist power, after all, cannot be achieved without the economic exploitation of the ‘peripheries’ based on that age-old formula of exploitation of natural resources and cheap labor  – in this instance that of Africa’s.

And what are the prescriptions for socially ‘inclusive growth’? Apart from vague formulations for developing ‘human capital’, ‘financial inclusiveness’ , and the need to ‘comprehensively reassess the entire development paradigm’, there’s nothing especially prescriptive in the recommendations on how to lift hundreds of millions of poor Asians out of poverty. Even more scant are the proposals on achieving environmentally sustainable development, although ‘natural’ disasters are identified as a significant risk in the risk and vulnerabilities analysis of the Asian region.

Ultimately these Asian leaders of global capitalism and their ‘experts’ continue to peddle more of the same medicine of neoliberalism, ‘accelerated and deepened’ in the years to come. The paucity of ideas is astonishing.  This great Asian-led capitalist renaissance will be built on the blood, sweat and tears of the Asian masses as it has been to-date, who continue to be some of the poorest and most brutally exploited and oppressed women and men in the world today.

Marx predicted over 150 years ago that the bourgeoisie was no longer revolutionary.  This is the greatest challenge faced by those attempting to renew capitalism today, Asian style, with a socially inclusive and environmentally sustainable ‘face’. There is no revolutionary or even reforming bourgeoisie whose interests coincide with ‘socially inclusive and sustainable development’ or which can ‘comprehensively reassess’ let alone implement, an alternative ‘development paradigm’. The bourgeoisie in Asia is thoroughly subservient to the existing global capitalist order. In many Asian countries its interests are completely tied to the most backward and even semi-feudal vestiges of under-developed capitalism with its most exploitative and oppressive features, such as the tenancy-system linked to land ownership, and usury. It’s intent on clawing its way to the top, to some rarefied space where the imperialist rulers reside, at the expense of destroying its own society. To paraphrase Arundathi Roy, like a tiger that has begun to eat its own limbs.

In any case not all Asian countries are in the same boat. There’s no Asian ‘level playing field’. The prospect of an Asian-led global capitalism clearly entices sections in China and India, and possibly the stronger economies in ASEAN, who might be able to better protect themselves from the economic storms coming in from the West. But the bourgeoisie in countries such as the Philippines are completely tied to the interests of the US and are terrified by this new ‘global economic architecture’. Their response has been to cling even more frantically to the coat tails of their ‘big brother’ the US, as seen by the tensions between the Philippines and China around the disputed Spratly Islands. While China and India may have arrived at that stage of exporting capital to the African continent, there is little or no possibility of capitalists from the Philippines investing in African infrastructure any time in the foreseeable future.

A fleeting look at Asian society shows how far removed we are from this ‘socially inclusive’ capitalist nirvana. Young Asians today are beggared by mass unemployment. According to latest ILO figures one in five young people in the labour force are unemployed in Indonesia and Sri Lanka and around one in six in the Philippines. Young women tend to be particularly disadvantaged. The gender gap in youth unemployment was 1.1 percentage points higher for females than males in Pakistan, 1.8 percentage points in Indonesia, 2.8 percentage points in the Philippines and an alarming 11.7 percentage points in Sri Lanka. And youth unemployment could continue to rise in 2012. As for those working, an estimated 666 million workers in Asia and the Pacific (or two in five of the region’s workers) are estimated to be living on less than US$2 per day. The highest working poverty rates were in South Asia at more than 67 per cent. The situation could continue to deteriorate in 2012.

The only agency that is capable of ‘comprehensively reassessing’ the existing capitalist economic ‘architecture’ and re-imagining and reconstructing a new ‘socially inclusive and sustainable’ alternative system are the working and poor masses of Asia, who struggle to rise up to this challenge as they continue to fight in their millions, every day, against the neoliberal destruction of their lives and communities.