Date: Thu, 22 Jan 98 16:08:17 CST|
From: "Workers World" <email@example.com>
Organization: WW Publishers
Subject: Asia Convulsed: Where is Crisis Going?
Via Workers World News Service
Reprinted from the January 29, 1998
issue of Workers World newspaper
As capitalist Asia convulses: Is crisis regional or general?
By Fred Goldstein, in Workers World
29 January 1998
After a week of intense pressuring and threatening in
Seoul, south Korea, and Jakarta, Indonesia, high officials
of the Clinton administration and the International Monetary
Fund are returning to Washington, agreements in hand.
But the crisis remains. Indeed, it shows signs of
spreading. And mass resistance is on the rise.
Deputy Treasury Secretary Lawrence Summers, Defense
Secretary William Cohen and IMF President Michel Camdessus
were all in Indonesia to force President Suharto to break up
his family-owned businesses so they could be swallowed up by
the multinationals or removed as competitors. But having
attained this in writing, they still can't explain how
hundreds of Indonesian corporations and the Indonesian
government are going to repay $133 billion--some estimates
run as high as $200 billion--in loans from imperialist
INDONESIAN CRISIS WORSENS
Consequently, as Camdessus was flying out of Jakarta with
a signed agreement containing Suharto's pledge, the rupiah
was dropping to new lows of over 8,000 to the dollar. The
police were called out in cities throughout Java to suppress
people rioting for food.
The Jan. 17 Wall Street Journal described the Tangerang
"For years this industrialized zone has been an engine for
Indonesia's 7 percent annual economic growth and employed
hundreds of thousands of migrant laborers. Korean,
Taiwanese, Japanese and American companies sought out the
area's cheap labor to spin out textiles, shoes, zippers and
scores of other low-end products.
"But in Tangerang now, tens of thousands have been laid
off. Those who haven't grumble that their salaries can't
keep up with living expenses. Mr. Agus, who like many
Indonesians goes by just one name, says that the cost of 50
kilograms of rice has jumped 36 percent since the currency
crisis hit Indonesia in August. Electricity prices have
tripled; milk is up 50 percent; and cooking oil 40 percent."
One worker told the Journal: "Things were bad in 1974 and
1975, but this is the worst I can remember. It's like we're
heading back to the Dutch times when we had to learn to live
on just one meal a day."
Said another: "Rioting is sometimes the only means to make
sure there aren't price increases. Sometimes it's the only
way to be noticed."
SOUTH KOREAN RESISTANCE BEGINS
Shortly after Camdessus left Seoul, having met with labor
union leaders and gotten an agreement to discuss the
question of mass layoffs through a tripartite government
commission, the Korean Confederation of Trade Unions
organized demonstrations in six cities against the IMF and
Agence France Presse reported Jan. 17: "Thousands of trade
unionists, waving red banners and shouting slogans against
an International Monetary Fund demand for mass labor layoffs
in South Korea, marched through central Seoul Saturday,
"Police stood by as the more than 2,500 demonstrators,
most of them members of the militant Korean Confederation of
Trade Unions (KCTU), headed down the central Chongno street
towards Myongdong Cathedral. `No layoffs. Fight layoff
system,' shouted the unionists as students joined them in
the march in drizzling rain."
The KCTU, an umbrella union that claims half a million
members, brought the country to a standstill last winter
over an unpopular labor law that would have allowed layoffs.
Simultaneous marches and rallies were staged in several
other main cities around the country, including Ulsan,
Pohang, Taegu, Taejon, Pusan and the tourist island of
Cheju, Yonhap News Agency said.
RUMBLINGS IN INDIA
On Jan. 18 the Indian Central Bank raised interest rates
from 9 percent to 11 percent after the rupee broke the 40-
to-the-dollar mark. The bank has been protecting the
currency, even though there are restrictions on trading.
According to the Jan. 19 Wall Street Journal, the Indian
economy "reported 5 percent industrial growth in the seven
months ended Oct. 31, about half the growth rate in the same
period a year earlier. Growth slowed despite sliding
interest rates and ready availability of funds. `It is
obvious that the turbulence in the Southeast Asian markets
is spilling over into the Indian market,' Finance Minister
P. Chidambaram said in a statement."
This decline in the currency is a clear indication that
the crisis of overproduction in the region hit India as
early as last year, in the same way it hit Thailand,
Malaysia, Indonesia and south Korea. It heralds a widening
of the crisis and could mean layoffs and suffering among
SOLIDARITY IS CRUCIAL
Whether or not the crisis widens, it is important for
advanced workers in the United States to focus on the plight
of workers in Asia, who are already on the verge of a
It is essential to bring the message of solidarity and
support in this crisis. The IMF is just a front for giant
banks and multinational corporations that are demanding
their pound of flesh from the workers of Asia. These are the
same corporate powers that carried out downsizing, union
busting, and wage-lowering campaigns against workers in the
They are also the forces behind NAFTA and "fast track"
trade legislation. Their aim is to drive down wages
internationally, making the globe one great sweatshop for
But in addition to carrying out their internationalist
duty to the workers in Asia, advanced workers in the United
States must pay careful attention to this crisis from the
viewpoint of preparing to meet it should it cross the
Pacific to U.S. shores. This is already happening, on the
West Coast in particular.
WHAT COMES NEXT?
The ruling class is now deeply anxious about the nature of
the crisis. On the one hand they are desperately looking
around for signs that it will remain regional.
The financiers and economic experts are trying their best
to find analogies with the Latin American debt crisis of the
1980s and the Mexican bailout of 1994. After all, they were
able to limit those crises through financial manipulation,
bailouts and, above all, austerity programs that shifted the
crisis onto the Latin American masses.
They are hoping to get away with the same in Asia. Never
mind that half a billion people will suffer economic
devastation. Wall Street will get its super-profits and the
multinationals will be able to continue their operations
They are especially fond of pointing to the Latin American
debt crisis. It involved a bigger bailout--over $200
billion--than in Asia so far. They also like to cite
statistics that minimize the effects of losing trade with
the countries now in crisis. Above all, they point to the
great size and strength of the U.S. capitalist economy,
which keeps them impregnable.
But for every hopeful forecast, you can find another that
shows how Japan is the biggest lender to the Asian
neocolonies and how south Korea is heavily at risk in
Indonesia. If Indonesian companies cannot pay south Korean
banks, then the south Korean banks cannot pay the Japanese
banks--which are already in a crisis and need government
If Japanese capitalism takes a further downturn, that
could drag down the entire capitalist economy worldwide.
This and similar doomsday scenarios abound side-by-side
with the more optimistic views about a limited crisis. Which
proves that not one bourgeois economist, academician or
financial official--including Alan Greenspan and Robert
Rubin--has any genuine overview on the ultimate course of
When the crisis broke out in Thailand, they thought they
had settled it with a $16 billion IMF bailout. They failed
to anticipate the Indonesian crisis.
When they thought they had that under control, the south
Korean crisis flared up. Then it shifted back to Indonesia.
The best they can do is describe what is going on under
their noses. Some catch on earlier than others. But the
anarchy of their system prevents them from anticipating
events once the contradictions of capitalism begin rapidly
So far, this crisis is out of control. Their only
"strategy" is to hold on to their profits, come what may, by
shifting the burden onto the masses and hoping for the best.
The advanced workers and communists in the United States,
however, must have a very sober and clear-headed approach to
the situation. Armed with Marxist theory and historical
experience, they must try to understand the character of the
crisis--in order, if necessary, to meet it head on.
IS CRISIS REGIONAL OR GENERAL?
One scenario is that the crisis is regional, not a general
capitalist crisis, and will be contained.
But another scenario is that the great capitalist
expansion, led by the United States and fueled for seven
years by the collapse of the USSR, is coming up against the
stone wall of capitalist overproduction worldwide.
The capitalist press admits there is overproduction in
certain products: automobiles, microchips, electronics,
steel, chemicals, paper. The prices of oil and other
commodities are down.
The discussion in bourgeois financial circles has shifted
to concerns of deflation--a drop in prices. This signals a
sharpening of price competition among the monopolies and
capitalists, which leads to a drop in profits. And this in
turn could herald a sharp economic contraction, layoffs and
Marxism is not a crystal ball. But it would be the height
of folly for the workers not to consider the very real
possibility that the post-Soviet capitalist boom is running
The monopolies, in fighting each other for profits, have
acted in accordance with the laws of capitalist development
as discovered by Karl Marx: They have expanded production
and services into every corner of the globe, creating a glut
in the markets so that, increasingly, commodities cannot be
sold at a profit.
That is clearly what has happened in Asia.
The question for the world working class becomes: Has a
steady, quantitative, worldwide increase in capitalist
overproduction reached a crucial point, a qualitative shift,
first expressed in Asia with the sudden eruption of this
If this is the case, the labor unions and the leaders of
the working class and the oppressed in general must know
that the suffering and devastation being pushed on to the
workers and the middle classes of Asia are the same thing
the bankers and bosses have in store here.
In Asia, the only thing that can stop them is for workers,
students, and all the progressive forces to unite and resist
the IMF/capitalist offensive. The same thing will surely be
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