After three months of turmoil, the currencies and markets of the Southeast Asian "tigers" are still in a crisis. And there are no signs of a let-up.
On Oct. 7, the Philippine peso hit an all-time low, forcing a suspension of the currency's trading. The Singapore dollar dropped to its lowest level in three and a half years.
The Malaysian ringgit, Indonesian rupiah and Thai baht were also hammered down.
All these currencies pulled up a bit later that day, but only because of what was described as a "technical glitch." The week before, the Jakarta, Indonesia, stock market had fallen 6.3 percent as the rupiah continued a decline begun in July. On Oct. 3, "panic selling began to grip the market" as 437.4 million shares changed hands, reported the French Press Agency.
What is going on? The "tigers" are countries that have registered strong economic growth over the last decade as export-oriented industries were built with large infusions of foreign investment capital.
This capitalist business media everywhere hailed this as bringing a new era of prosperity to these populous Southeast Asian nations. But the wealth has reached only a thin layer at the top.
The plight of the workers and peasants has in many areas become worse as giant sweatshops have replaced smaller village industries and farmers are forced off the land to make way for agribusiness.
Now, a huge runup in debt servicing has begun to seriously drain these countries' economies for the benefit of the big imperialist world banks. This and the weakening of global markets underlie the present crisis.
Until July, there was nothing but praise in the capitalist press here for the entrepreneurs, managers and political leaders in Southeast Asia who were willing to work with the imperialist banks of the United States, Japan and Europe to restructure their economies around the "global market." This has meant building up industries--like sneaker assembling-- whose products have a very limited market in the producing country.
Few Indonesians, for example, can afford or would even want to wear Nikes, given the hot, humid climate. But labor in Indonesia is very cheap, largely because of the repressive military regime installed there through a bloody coup with U.S. backing in 1965. So labor-intensive industries find it profitable to invest there, even though their main markets might be on the other side of the globe. Much of Southeast Asia is now suffering an unprecedented ecological disaster because of massive forest fires in Indonesia. The Indonesian government has admitted that the fires were set by giant corporations preparing to plant palm trees and harvest palm oil--for the global market.
Wall Street has praised the "tigers" for overcoming nationalist objections to opening up their economies. This "modernization" would eventually lead to overall development, it was said.
All the countries involved are woefully underdeveloped-- not for lack of talent or desire or resources, but because they were colonized by Britain, France, Holland, and Portugal over centuries, and later by Japan and the United States.
It was the riches stolen from Asia, as well as the resources of Africa and Latin America, that paid for early capitalist development in Europe.
Now the imperialists say that opening up to foreign investment is the true road to development. The economic development of the recent period, however, is of a special type that makes Southeast Asia terribly dependent on banks and markets out of its control.
For months, the Wall Street Journal, the New York Times, and other voices of high finance have been warning of a developing glut on the world market for everything from cars and airplanes to real estate and electronics. This didn't stop them, however, from telling the developing nations to keep building and keep borrowing.
What happened in July? First, the Thai baht began to fall. The government was "pressured" to let the baht slide, according to the Aug. 21 Far Eastern Economic Review, and finally devalued its currency.
Then on Aug. 11, the International Monetary Fund agreed to lend Thailand $16 billion to pay on its debt and stabilize the baht. In return, Thailand promised to raise taxes and cut the budget.
Thai capitalists feeling "withdrawal symptoms induced by the IMF" must now pay 15 percent and more to borrow money. Other currencies had begun to falter. The kyat of Myanmar went into a nosedive. The Philippine peso fell almost 10 percent on July 11. Malaysia's ringgit joined the plunge, as did the Indonesian rupiah.
A whirlpool was sucking everything down. Then in late August, Southeast Asian stock markets began to fall. The Malaysian market lost 29 percent of its value.
Malaysian Prime Minister Mahathir Mohamad angered U.S. big business when he blamed currency speculator George Soros for the plunge of the ringgit. Soros, a billionaire originally from Hungary, has worked closely with the U.S. CIA in Eastern Europe.
His specialty was setting up foundations to finance "democratic" news media friendly to the new capitalists. Soros' money is supposed to come from currency trading. But there is another dimension to this crisis. The imperialist bankers see it as an opportunity to accelerate the merciless restructuring of these economies while raising their own profits. They are demanding that governments raise taxes, cut their budgets and sell off even more state assets. All this puts the burden of the crisis on the masses.
The World Trade Organization, dominated by Western capital, wants the Philippines to "open up" and allow 60-percent foreign ownership of local banks--a major restructuring of its financial apparatus. The imperialists are also telling private companies to hang tough against workers' demands for higher wages--or they'll move their capital elsewhere.
The growing industrialization of countries like Indonesia and Thailand has led to a surge in worker militancy. Despite the repressive governments, workers are organizing and fighting for better pay and conditions.
While foreign bankers don't dirty their hands with beating strikers over the head, they force local governments to play that role by threatening to pull out.
These demands aren't conveyed just in private conversations. They are trumpeted in the financial newspapers and magazines. For example, an editorial in Far Eastern Economic Review said that the plunge in Malaysia's currency should be "a warning shot [for it] to restore economic discipline and recognize that the days of cheap foreign capital are over.
"Malaysia won't be able to rely on foreign investment this year to finance its current-account deficit," said the magazine, explaining that "capital is fleeing from Southeast Asia." The advice to Mahathir is to "liberalize more rapidly to regain the confidence of international investors." Liberalize is the buzzword for allowing imperialist investors to buy out the store.
Is this currency and stock market crisis in Southeast Asia the harbinger of a generalized world capitalist crisis of overproduction? Sooner or later, one will come. And generally, the later it is, the more severe it will be. While the financial commentators in the imperialist countries want to fix the blame for the current crisis on "mismanagement" in these underdeveloped and historically oppressed countries, the roots of the problem lie elsewhere. Asian export growth has slowed in the past 18 months. This shows that world markets are drying up as productive capacity builds under the impetus of the capitalist boom. Karl Marx wrote about the causes of capitalist crisis a century and a half ago. Capital has grown enormously since then, but the basics haven't changed.
Capital still exploits workers--with a vengeance. It draws its profits from unpaid labor, and intensifies exploitation by forcing workers to produce more for less pay.
Capitalism concentrates the ownership of wealth in fewer and fewer hands, even as it revolutionizes technology so that production itself becomes ever more social--a single commodity can now contain the labor of thousands of workers spread over several continents.
For a century, control over the financial arteries of the world has been in the hands of a few giant banks in the imperialist countries. That's truer than ever today. As the crunch of overproduction and falling profits grows more serious, they use their financial leverage to push the effects of the crisis onto the poorer, oppressed countries. But eventually the capitalist crisis comes home.
(Copyright Workers World Service: Permission to reprint granted if source is cited. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: firstname.lastname@example.org. For subscription info send message to: email@example.com. Web: http://workers.org)