‘Eyes wide shut’: reconceptualizing the Asian crisis

Abstract

Rather than seeing the spectacular collapse of stock and currency markets in East and Southeast Asia in 1997-98 as a financial crisis caused by imprudent banking practices and ‘crony capitalism,’ this article argues that the economic meltdown was a symptom of the collapse of the social coalitions underpinning the developmental states. The first section charts the contours of these social alliances between the late 1940s and the mid 1980s. The second section demonstrates that though the creation of a regional division of labor had enabled these economies to withstand the debt crisis, the progressive trans-border expansion of corporate production and procurement networks rendered national industrial policies increasingly incoherent. It charts how governments were able to paper over cracks in their domestic social alliances through debt-financed industrial expansion till the mid-1990s. Finally, the last section highlights emerging tensions in the different national constellations of power and privilege.