Two Asias: The Emerging Postcrisis Divide

Two Asias The Emerging Postcrisis Divide

Editors:      Steven Rosefielde, Masaaki Kubinowa, Satoshi Mizobata

ISBN:           978-9814366267

Publisher: World Scientific Publishing Company

Year:           2012

Price:          $150.00


Reviewed by Stig Lindberg, Kyoto University, Japan

Two Asias: The Emerging Postcrisis Divide (World Scientific, 2012) edited by Rosefielde, Kuboniwa and Mizobata is the outcome of a series of symposia which studied the asymmetrical impacts of the 2008 global financial crisis on Asia. As the title suggests, the book posits the idea of a bifurcation within Asia along the lines of the region’s varied methods of dealing with global financial crisis—one leading to relative success and the other to relative decline. For reasons such as delinking, dollar reserve hoarding, cultural considerations, and residual comparative advantages, certain Asian countries came out relatively unscathed, while others felt the impacts more keenly. The idea of a bifurcated Asia—“two Asias”—is not novel (e.g., “Economic Asia” vs. “Security Asia”), though the particular framing this book utilizes is unique in how it defines economic winners and losers within today’s most dynamic region.

The project was funded by the Japan Foundation’s Center for Global Partnership, with cooperation from the Bank of Finland and universities in Sweden, the U.S., Japan, France and Italy. Though a compendium, the editors envisioned this project to read more like a monograph in order “to highlight the project’s central mission.” (vii) That mission is to gauge Asia’s economic future on the basis of how it as a region weathered the deep global recession of 2008. The editors’ conclusion is that there was no “epochal change” in the region, and that the status quo continues, albeit in a much weaker economic environment. They also suggest that Asia may continue to approach the West in living standard, but that the region will remain highly stratified and, barring adoption of “western liberalism,” will never be able to sustain parity with the West. The biggest question in their eyes is whether the floundering Japanese economy will become the fate of similarly structured economies of Taiwan and South Korea. The book is comprised of 440 pages, with an index and ample charts and tables dispersed throughout the chapters. The hardback edition is priced at $150 on Amazon.

Two Asias traces Asia’s historical economic status vis-à-vis the West and identifies a “rebirth period” (after a 400-year protracted slump: 1500-1900) punctuated by Japan’s mid-late 19th century modernization program. In particular, the book identifies various cultural underpinnings of the region as being determinative of any given community’s ability to advance to the level of the “liberal West.” Such underpinnings include the Confucian Nationalist systems of South Korea, Taiwan, Hong Kong, and Singapore; the Buddhist Constitutional Monarchy of Thailand; the Communalism of Japan; and the Market Communism of China, Vietnam, Laos, and Cambodia.

Another cultural consideration affecting Asia’s economic resilience is the region’s pronounced orientation toward “adversarial satisficing” (sic) (20): a system in which the strong control the weak, but in which neither group maximizes its potential. The authors pinpoint this phenomenon as being an important determinant in Asia’s developmental prospects vis-à-vis the West. Beside the cultural issues, the authors identify “diminishing catch-up effects” which, when exhausted, leave an economy more pronouncedly dependent on its intrinsic “systems potential.”

After summarizing key points of the global crisis, the book turns its attention to a country-specific analysis of the crisis’ repercussions. Japan, China and Russia are considered individually, while the BRIC countries and the Eurozone receive collective coverage. Recurrent themes include reserve hoarding, trade-led expansion/development, decoupling, harmonizing (i.e., conformity with neoliberal western economic practices), and restructuring—typically a euphemism for privatization of public goods, a system adept at privatizing the profits while socializing the negative externalities.

At times the analysis seems shallow. For example, while the book pays ample attention to Japan’s “lost decades” and its commonly hashed causes, it fails to look at the elephant in the room which is the country’s subservience to western FINANCE—specifically to the Bank of International Settlements (the central bank of central banks)—which allegedly tied Japan’s hands in the throes of its slump by increasing the fractional reserve requirements of its central bank, thus committing the country to extended and exacerbated hardships. Though this specific example is not so clearly one of “predatory capitalism,” it does underline the structural vulnerabilities of subservient capitalism which dominates the overwhelming majority of global commerce. Predatory capitalism, which is indeed commonplace in the neoliberal economic order of global capitalism, is ever so briefly touched upon in this book and deserves much more weight and consideration.

It is common knowledge that currency speculation by market predator(s) triggered the Asian financial crisis of 1997-1998, which itself serves as a recurring baseline for comparative analysis vis-à-vis Asia’s response to the global crisis of 2008. This aspect of market capitalism receives insufficient coverage in mainstream academia and media, and indeed leads to the equally undesirable practice of foreign reserve hoarding—a tactic explicitly criticized in the book. However, clearly the onus lies first not with the hoarders, but with the opportunistic predators. More attention to the realities of this important dynamic would lend credibility to any study of neoclassical economics.

A final word of caution about Two Asias regards a set of assumptions and an egregious oversight that are in no way unique to this particular study. In benchmarking U.S. living standards (or PPP) as goals for growth economies, scholars betray a certain cavalierness in implying that western-style pathological consumerism is healthy for sound economic growth and worthy of emulation. The oversight lies in the fact that the American living standard is artificially inflated due to a steady stream of debt FINANCING by foreign investors. In other words, it is not American’s actual economic worth, tied to productivity, that enables this privileged standard of living but seemingly endless access to cheap credit. Most Americans, and perhaps westerns in general, are simply living far beyond their actual worth. According to one report, total U.S. debt stands at a staggering 59 trillion dollars, with public debt at 17 trillion dollars. I would think that just about any nation could sustain an enviable standard of living provided virtually unlimited access to debt. The reckoning, however, will come. This facet of the U.S. living standard miracle is typically not mentioned, though immensely relevant.

Above criticisms notwithstanding, by dint of the novel framing of this study and the breadth of perspectives, together with its reams of hard data, the book represents an important analysis of the globe’s most dynamic economic region. It further distinguishes itself through the serious attention it pays to the soft variable of cultural and to its generally balanced analysis. Thus does it commend itself to the scholar of Asian and developmental economics.

Suggested citation:

Stig Lindberg (2015), Review of  ” Two Asias: The Emerging Postcrisis Divide “, byRosefielde,  Steven (ed.), Kuboniwa, Masaaki (ed.) and Mizobata, Satoshi (ed.), East Asian Integration Studies, Vol. 8, no. 3.