East Asian “Tigers” Democratized to Keep the US Invested in Their Fate After Washington Made Nice With Red China

As I have argued in the past, Maoism was a disaster in economic terms – at the end of it, China had a lower GDP per capita than India, despite their human capital disparity. This is not so surprising when one learns that you had a greater chance of dying on the job than getting fired in late Maoist China (cf. “THE CHINESE ECONOMY” by Barry Naughton). It made the Soviet Gosplan look like a paragon of technocratic efficiency. So no wonder that on Mao’s death, the Politburo decided to adopt the proven East Asian developmental state model instead (based on land reform, export manufacturing, and financial repression).

But Chinese practice differed from Japanese and Korean in two key respects.

First, the state played an even more paramount role, with China relying much more on State-Owned Enterprises (SOEs). In contrast, most Japanese banks and corporations were private, and while many of Korea’s banks were state-owned, the chaebols were generally private; interesting, the most state-dominated economy was Taiwan’s, where all the banks were (and still are) state-owned, and many companies were owned by the state or Guomindang (though these were mostly privatized in the 1980s to early 1990s).

Second, foreign direct investment (FDI) played a much greater role. Counter-intuitively, this was because of the East Asian tigers’ security integration with the US. In exchange, the US “tacitly allowed to run mercantilist economies, shutting out foreign companies from their markets even as their own companies enjoyed easy access to the US market.” As Kroeber argues, this was a deal that China was never going to get – “as the price of admission to the US-dominated world trading system, China would need to give foreign companies substantial market access.”

Incidentally, one corollary of this, that I was not previously aware of, is that the East Asian democratic transitions – far from conferring to “end of history” eschatology – were to a significant extent forced by local elites’ need to keep the US invested in their security after its restoration of ties with the PRC.

In Taiwan, the move to representative democracy was a strategic choice made by leader Chiang Ching-kuo in the 1980s in response to the US decision to normalize relations with Beijing (and hence sever formal diplomatic ties with Taipei).

Chiang believed that in order for Taiwan to retain its autonomy in a region increasingly influenced by a fast-growing China, it had no choice but to align itself as fully as possible with American political and ideological values.

Similarly, South Korea’s military dictatorship was tolerated by Washington during the Cold War [Technically the dictatorship was not only tolerated by Washington, it was propped up by it including against domestic pro-Democracy dissidents.], but would not likely have outlasted the fall of the Berlin Wall by very long, even had it not crumbled in the face of embarrassing student-worker protests ahead of the 1988 Summer Olympics in Seoul.

By contrast, China’s position outside the US alliance structure means that it has no need to accept the liberal-democratic framework.

Would they have happened otherwise? And, more importantly – with China conceivably approaching military superiority in the West Pacific within another 1-2 decades and forcing the US to cede control over the region – will Japan, Korea, and Taiwan remain democracies?

Source: The Unz Review