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 banks.

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 factory belt:

"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 layoffs.

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, witnesses said.

"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 Indian workers.

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 depression.

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 United States.

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 the profiteers.

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 unhindered.

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 bailouts.

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 this crisis.

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 unraveling.

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 unemployment.

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 its course.

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 financial crisis?

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 true here.

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