Globalization, Governance, and the Political-Economy of ...11302/beesongov.pdf · Globalization,...

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Globalization, Governance, and the Political-Economy of Public Policy Reform in East Asia MARK BEESON* In the wake of the crisis that developed in East Asia during 1997, percep- tions of the region have been transformed. Critics claim that East Asian political practices and economic structures must be reformed if the region is to prosper in an era of globalization. In short, the region must adopt a differ- ent sort of public policy, one associated with an influential agenda of “good governance.” This paper critically assesses this discourse and the predomi- nately “Western” assumptions that underpin it. It is argued that, not only is this reformist agenda likely to be resisted by powerful vested interests, but the institutional infrastructure to support such a style of governance is inadequately developed in East Asia. Prior to the crisis that engulfed East Asia 1 in the latter part of 1997, the countries of the region were noted for the distinctiveness of their public policies and for the unprecedented speed of their economic development. In the wake of the crisis, political practices and economic structures that had formerly been sources of admiration and wonder rapidly became objects of criticism, if not derision. This transformation in popular percep- tions is remarkable and revealing enough in itself. Of greater significance for the purposes of this paper is the fact that such revisionist interpreta- tions of the former “miracles” were accompanied by detailed critiques of the supposed shortcomings of Asian-style capitalism and various sugges- tions about what was required to rectify them (for an influential example, see Camdessus). Amongst the most frequently cited criticisms was that Asian business practices were not only often corrupt, but also fundamen- tally unsuited to an era characterized by relentless and increasingly pervasive processes of “globalization.” In short, the East Asian crisis was caused by—and revealed glaring flaws in—the region’s structures of governance. “Globalization” and “governance” have the dubious distinction of being two of the most widely and loosely invoked signifiers in recent political and economic discourse. Consequently, the first part of this paper will attempt to bring a little definitional clarity to these concepts before placing them in the context of important unfolding debates about *Griffith University Governance: An International Journal of Policy and Administration, Vol. 14, No. 4, October 2001 (pp. 481–502). © 2001 Blackwell Publishers, 350 Main St., Malden, MA 02148, USA, and 108 Cowley Road, Oxford, OX4 1JF, UK. ISSN 0952-1895

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Globalization, Governance, and thePolitical-Economy of Public Policy Reformin East Asia

MARK BEESON*

In the wake of the crisis that developed in East Asia during 1997, percep-tions of the region have been transformed. Critics claim that East Asianpolitical practices and economic structures must be reformed if the region isto prosper in an era of globalization. In short, the region must adopt a differ-ent sort of public policy, one associated with an influential agenda of “goodgovernance.” This paper critically assesses this discourse and the predomi-nately “Western” assumptions that underpin it. It is argued that, not onlyis this reformist agenda likely to be resisted by powerful vested interests, butthe institutional infrastructure to support such a style of governance isinadequately developed in East Asia.

Prior to the crisis that engulfed East Asia1 in the latter part of 1997, thecountries of the region were noted for the distinctiveness of their publicpolicies and for the unprecedented speed of their economic development.In the wake of the crisis, political practices and economic structures thathad formerly been sources of admiration and wonder rapidly becameobjects of criticism, if not derision. This transformation in popular percep-tions is remarkable and revealing enough in itself. Of greater significancefor the purposes of this paper is the fact that such revisionist interpreta-tions of the former “miracles” were accompanied by detailed critiques ofthe supposed shortcomings of Asian-style capitalism and various sugges-tions about what was required to rectify them (for an influential example,see Camdessus). Amongst the most frequently cited criticisms was thatAsian business practices were not only often corrupt, but also fundamen-tally unsuited to an era characterized by relentless and increasinglypervasive processes of “globalization.” In short, the East Asian crisis wascaused by—and revealed glaring flaws in—the region’s structures ofgovernance.

“Globalization” and “governance” have the dubious distinction ofbeing two of the most widely and loosely invoked signifiers in recentpolitical and economic discourse. Consequently, the first part of thispaper will attempt to bring a little definitional clarity to these conceptsbefore placing them in the context of important unfolding debates about

*Griffith University

Governance: An International Journal of Policy and Administration, Vol. 14, No. 4, October 2001(pp. 481–502). © 2001 Blackwell Publishers, 350 Main St., Malden, MA 02148, USA, and 108Cowley Road, Oxford, OX4 1JF, UK. ISSN 0952-1895

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the most appropriate forms of public policy for the contemporary era. Therest of the paper is dedicated to developing a number of arguments: First,I suggest that, in the context of debates about reforming postcrisis Asia,the concept of governance often serves as little more than a normativelyloaded shorthand for market-oriented reforms designed to fundamen-tally reconfigure East Asia’s distinctive political-economies. Second, Iargue that if, by contrast, we think about the concept of governance as ananalytical tool that helps unpack the complex way in which political, eco-nomic, and social activities are organized, then it seems likely that themarket-oriented reform agenda that emerges from the normative dis-course of “good” governance will be resisted by adversely affected stake-holders. Indeed, when seen in this more analytical light, it is not evenclear that the reforms being advocated are necessarily any better than thepractices they are intended to supplant. It needs to be remembered that,until recently, many East Asian countries were considered to have func-tionally superior “state capacities” that seemed to accelerate economicdevelopment and generate specific advantages for indigenous corpora-tions. At the very least, these debates merit revisiting. Therefore, the bulkof the paper is taken up with a consideration of East Asian modes of gov-ernance and the potential implications that a predominately “Western”reformist discourse might have for them. The third and final argument Idevelop as a consequence of this discussion is that, whatever the merits ofthe emergent reform agenda might be, the majority of East Asian coun-tries simply do not have the requisite political structures—especiallya well-developed, institutionally diverse, and independent civil society—with which to implement neoliberal forms of governance, even if theywished to do so.

GLOBALIZATION AND GOVERNANCE

In the first section of this paper, I briefly indicate the different ways inwhich the concepts of globalization and governance have been employed.The central contention here is that both of these notions are not only essen-tially contested concepts but—particularly in the case of governance—areutilized as part of reformist discourse, which, if implemented, will haveprofound implications for existent political and economic practices in EastAsia.

Globalization

These days, it is difficult to read a piece of academic or journalistic writ-ing that does not invoke the idea of globalization. The concept’s veryubiquity suggests that it captures some particular and important qualityof the contemporary era. However, I do not intend to attempt to reviewthis voluminous literature here.2 Rather, I simply point out that global-ization is a notion with multiple and often competing meanings and

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emphases. Despite this ambiguity, it is important to recognize that theidea of globalization may be utilized to legitimate particular policy initia-tives as the only possible responses to apparently ubiquitous and impla-cable challenges to governments and business. As Philip Cerny (1997,258) has pointed out, whatever the specifics of globalization may be, oneof its most important qualities in terms of public policy is as a powerfuldiscourse that shapes domestic and international debates, a processwhich may change the state’s role to one of an “enforcer of decisionsand/or outcomes which emerge from world markets.”

A good deal of debate exists between those observers who see pro-cesses of globalization as irrevocably reducing the authority and powerof states (Ohmae; Strange 1996) and those who claim that, not only isthere nothing especially new about globalization (Hirst and Thompson),but the idea that it has reduced state capacities is a “myth” (Weiss). Yeteven those observers who remain skeptical about the implications of glo-balization generally acknowledge important secular changes in both theorganization and the sheer scale of contemporary patterns of economicactivity. Whether it is increasingly internationalized production struc-tures (Dicken) or the unprecedented historical integration and massiveexpansion of global financial markets (Strange 1994), governmentsaround the world find themselves confronted with a rapidly evolvingand challenging environment in which to try and construct public policy.

For the nations of East Asia, globalization—understood here as thereconfiguration of global production structures and the intensificationof flows of capital—presented a series of potential opportunities andunforeseen dangers, as the crisis itself demonstrates. On the one hand,East Asian nations—especially the second- and third-tier industrializingeconomies that followed in Japan’s pioneering wake—were able to takeadvantage of increased flows of foreign direct investment and the reorga-nization of global production to accelerate domestic economic develop-ment (Gangopadhyay; Ruigrok and van Tulder). On the other hand, it hasbecome painfully apparent that the increased flows of indirect or port-folio investment that built up particularly during the 1990s are capable offlowing rapidly into or out of economies, with potentially devastatingresults (Beeson 1998; Winters). The transformation of global financialstructures is not simply emblematic of the new world economic order; itpresents particular challenges for states that have benefited from theirability to control and direct capital flows. However, before examiningthese questions in any detail, it is important to consider the other key ele-ment of the postcrisis reformist agenda: governance.

Governance

Like globalization, the notion of governance is elusive and contested. Par-adoxically enough, as Marie-Claude Smouts (81) points out, “the moreseriously governance is taken, the less content it has.” Nevertheless, it has

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been utilized by a number of influential agencies and actors to promote aparticular reform agenda that has major implications for the governmentsof East Asia. It is important, therefore, to briefly trace its emergence andattempt to isolate its central assumptions. Although definitions of gover-nance may often have more to do with contingent political and economicrealities than they do with any timeless or essential qualities of optimalpolitical management, this does not make them any the less interesting orimportant. Not only do such conceptions open a revealing window on thecontemporary zeitgeist, but they also direct our attention to importantquestions of public management.

Given the World Bank’s importance as one of the most influentialadvocates of “good” governance, a brief consideration of its evolvingposition highlights some important aspects of this debate. The WorldBank has developed one of the most influential formulations of gover-nance, particularly the “good” variety. As the key intergovernmentalbody charged with promoting economic development in the postwar era,the Bank was in an especially powerful position to influence the policydecisions of governments seeking its financial assistance. Bank officialsused financial leverage to force “structural adjustment” packages on bor-rowers designed to encourage specific economic, political, and evensocial reforms in line with what it considered to be appropriate policy(George and Sabelli). It is important to recognize how transformativesuch reform programs were designed to be, and how reflective they wereof an essentially ideological position toward economic development. Inshort, the Bank was intent on fundamentally transforming the establishedsocial order in parts of Africa and Asia, which was taken as an anachro-nistic obstacle to effective governance and economic efficiency, andimposing a form of global liberalism in its place (Young).

Before considering some of the assumptions that underpin thesereform packages, a couple of points are worth emphasizing. First, theBank’s own ideas about development have evolved and reflect widerchanges in the international system, especially the overall security settingin which postwar development occurred (Berger and Beeson). As strate-gic imperatives have receded following the end of the Cold War, a lessideologically constrained debate has developed about the content ofeconomic policy in the contemporary era. This leads to a second point: ithas become increasingly clear that there is no single, unambiguously“correct” form of good governance or public policy in the contemporaryera. The disagreement that emerged between the Bank and the Inter-national Monetary Fund (IMF) about the best way of responding to theAsian crisis clearly demonstrates that even those charged with managingthe evolving international economy were uncertain how to proceed. Thismarks a significant and revealing departure from the unanimity andone-size-fits-all prescriptive approach that has hitherto characterized thepolicy prescriptions of such powerful institutions.

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Nevertheless, until relatively recently the World Bank utilized the con-cept of governance in such a way as to suggest that there was a self-evident agenda of reform centered on the free operation of marketsembedded in a supportive political and legal framework. Almost adecade ago, the Bank (1991, ii) suggested that “good” governance primar-ily involved providing key public goods, namely “the rules to make mar-kets work efficiently, and . . . correcting for market failure.” At that time,good governance meant establishing markets free of government interfer-ence. The state’s role was simply to establish a secure legal and institu-tional environment in which markets could flourish, and to do thosethings that markets could not. In an East Asian context, this meant dis-couraging the sorts of “interventionist” policies that had been associatedwith the region’s rapid rise.

However, the Bank’s conception of governance was clearly at oddswith historical reality, as even its own landmark report into East Asiandevelopment implicitly acknowledged (World Bank 1993).3 Whatevercurrent difficulties countries like Japan may be experiencing, there isclearly no doubt that the so-called developmental state which it pio-neered, and which proved such an influential role model through muchof the rest of East Asia, has been a central component of the region’sremarkable transformation. In a rather unfortunate piece of timing, theBank’s (1997, 46) annual assessment of world development, subtitled TheState in a Changing World, clearly acknowledged this, suggesting that “theEast Asian miracle [sic] shows how government and the private sectorcan cooperate to achieve rapid growth and shared development.” Indeed,just prior to the crisis, the report’s authors were arguing that “for humanwelfare to be advanced, a state’s capability—defined as the ability to under-take and promote collective actions efficiently—must be increased” (WorldBank 1997, 3; emphasis in original).

Global Governance

Yet, despite this belated recognition of the state’s importance in theregion, one of the most important questions to emerge in the wake of thecrisis is whether East Asian states will be able to maintain their formerlevels of competence and capacity, let alone increase them. One of the keyfactors that will influence this outcome occurs at the intersection of theglobalization and governance discourses. A major aspect of the globaliza-tion phenomenon, over and above the more “economic” changes notedabove, has been the transformation of authority relations and politicalpractices within and across national jurisdictions. It is at this point thatthe notions of globalization and governance coincide. Simply put, if gov-ernance is broadly understood as “all those activities of social politicaland administrative actors that can be seen as purposeful efforts to guide,steer, control, or manage (sectors or facets of) societies” (Kooiman, 2),then the basis upon which this is occurring appears to be in the process of

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fundamental transformation. Governance is no longer something thatstates acting in isolation can hope to achieve (Rosenau 1995).

Globalization is systematically changing the way governance occurs.On the one hand, key regulatory processes are increasingly being under-taken by private sector actors, particularly in areas requiring specialistknowledge.4 Even where governments may be the nominal architects ofor signatories to key international agreements, policy is often shaped byinfluential private sector actors (Sell). These new organizations and actorsare in addition to existing intergovernmental agencies such as the WorldBank, the World Trade Organization, the Bank of International Settle-ments, and the IMF, which have already circumscribed the autonomyof individual states. At the same time as these generally supranationalbodies have emerged, the position and authority of the nation-statehas been further undermined by forces from “below.” The emergence oftransnationally organized nongovernmental organizations (NGOs) hasplaced further pressure on states and led some commentators to claimthat such forces presage the emergence of a global civil society that willforce states to be more responsive to a number of other, formerlymarginalized, actors (Wapner).

Whether this proves to be the case or not, such ideas are already on thedeclaratory agendas of key international organizations. The UnitedNations (UN) is now at the forefront of debates about forms of gover-nance that might be more appropriate for an era characterized by pro-cesses of globalization. “Global governance,” the UN’s Commission onGlobal Governance (2) suggests, is

the sum of the many ways individuals and institutions, public and private, man-age their common affairs. It is the continuing process through which conflictingor diverse interests may be accommodated and cooperative action may be taken.It includes formal institutions and regimes empowered to enforce compliance,as well as informal arrangements that people and institutions either have agreedto or perceive to be in their interests.

Significantly, this perspective involves much less emphasis on states, andmuch more on the variety of “institutions and regimes” associated withcontemporary forms of political organization and rule. In short, it is thesort of political system that Rosenau (1992) has described as “governancewithout government.” In an era characterized by multiple centers ofauthority and influence, in which states are simply one—albeit anextremely powerful—actor engaged in a continuing attempt to maintainor encourage an order that reflects and furthers its perceived interests, theprocess of governance cannot be understood simply as a function of stateactions. Indeed, just defining the interests of “the state,” when “domes-tic” political space is penetrated by cross-cutting internal and externalinfluences and when even indigenous actors may have widely competinginterests that reflect their own integration into the international system, isa highly problematic exercise (Beeson 2000a; Picciotto).

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Such theoretical caveats have proved no barrier to the developmentand increasing influence of the evolving discourse of good governance.One of the discourse’s most significant elements is an increasing focus onthe role of civil society. Kanishka Jayasuriya and Andrew Rosser (16)argue that the increasing preoccupation with civil society displayed byinfluential institutions such as the World Bank is a central element of anemerging “post-Washington consensus.”5 The new consensus seeks toextend and complement the former emphasis on market reform by devel-oping a “political counterpart,” centered on the expansion and consolida-tion of civil society. However, despite this overt recognition of theimportance of politics, Richard Higgott (34) argues that the new gover-nance agenda emerging from the post-Washington consensus has“largely stripped questions of power, domination, resistance, andaccountability from the debate. . . . There are no problems that gover-nance cannot contain or ‘govern away.’” In other words, the idea of gov-ernance promoted by organizations like the World Bank, while becomingincreasingly sophisticated and less narrowly economic, continues to becouched in a highly technocratic register that appears fundamentally atodds with wider social, political, and economic realities.

Contingent Governance

The notion of governance, then, seems to have two quite distinctive func-tions. On the one hand, it can be seen as a continuation of a normativelyloaded agenda that has long been associated with the promotion of“development” in what used to be known as the Third World. It is anagenda that, critics argue, is at best reflective of an especially influentialNorth American brand of rational choice theory (Leys), at worst a deeplyideological template for a specific sort of political and economic transfor-mation modeled on the market economies of the Anglo-American nations(Cooper and Packard). On the other hand, the sorts of issues that the gov-ernance discourse raises do have some “technical” aspects. Clearly, somearrangements for achieving particular goals may be functionally superiorto others. This is not to suggest, however, that there is a universal form ofgovernance that will be equally applicable or efficacious in all circum-stances. On the contrary, governance in this “analytical” sense has themerit of providing a conceptual framework within which diverse formsof political and economic organization can be compared and contrasted.6

One of the striking qualities of even the most sophisticated—indeed,especially the most sophisticated—discussions of governance is that theyinvariably spring from the experiences of the “developed” or industrial-ized West. The complexities of governing in an era characterized by pro-cesses of globalization has led a number of observers to focus on theimpact of new forces above and below the state, and to consider the effectof such influences on the structure and operation of national govern-ments. For example, R. A. W. Rhodes (14) has argued that contemporary

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forms of governance amount to a completely new process of governing,one that involves “self-organizing, interorganizational networks charac-terized by interdependence, resource exchange, rules of the game, andsignificant autonomy from the state” (emphasis added). While this may pro-vide an important and appropriate basis for theorizing about change inEuropean structures of governance, particularly at a time when authorityand responsibility are being intentionally transferred from individualstates to supranational bodies, it is not clear how relevant this model isoutside of a specific European context.

Rhodes (7) argues that a sort of “differentiated polity,” characterized bythe “functional and institutional specialization and the fragmentation ofpolicies and politics,” is coming to define government in countries like Brit-ain. Yet for such a polity to exist, let alone operate successfully, it must beembedded in an appropriate matrix of supportive institutions that caneither fulfill new roles associated with the transnationalization of economicactivity or perform functions formerly undertaken by individual govern-ments. In the context of the European Union (EU), such a reconfigurationof the state and the way it operates is clearly possible. New forms of “indi-rect” government that rely on a “new breed of specialized agencies andcommissions operating at arms’ length from central government” are notonly possible, they are being actively encouraged by member states(Majone, 152). In an East Asian context, this sort of institutional infrastruc-ture and requisite degree of autonomy from the state simply does not existin the same way (Beeson and Jayasuriya). Contemporary patterns of gover-nance in East Asia are significantly different from their European counter-parts as a result. Consequently, the variety of possible future patterns ofgovernance and the prospects for implementing the sorts of policies advo-cated by the likes of the World Bank are constrained.

To understand the precise obstacles to future reform and the currentdeterminants of East Asian governance structures, it is important tounpack the institutional framework within which such practices material-ize. For all the attention the globalization phenomenon receives, one ofthe most striking paradoxes it highlights is the persistence of highly dis-tinctive forms of economic organization, despite apparently ubiquitous“external” competitive pressures. In short, there is a good deal of evi-dence to suggest that, not only do major differences endure at varioussocial, political, and economic levels, but such differences remain signifi-cant determinants of comparative economic outcomes (Beeson 1999a;Berger and Dore).

To understand the bases of these differences—and important caveatsabout the continuing theoretical utility of “national economies”notwithstanding7—it is useful to isolate the various institutions thatdistinguish one national political space from another. In an importantstatement of this approach, J. R. Hollingsworth and R. Boyer (2) suggestthat what they call a “social system of production” contains a number ofkey social, economic, and political institutions, from business structures

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and financial markets to the norms and values that provide “recipes foraction.” This formulation aids in understanding the various components ofa national production system that remain distinctive and thus account forthe continuation of different forms of capitalist organization. It also sug-gests that the elements of a social system likely either to prove to be obsta-cles to reform or to make the imposition of new, encompassing systems ofgovernance highly problematic may be discerned by examining such insti-tutions in specific national or even regional settings. The second half of thisessay undertakes such an examination in the East Asian region.8

GOVERNANCE IN EAST ASIA

Political economists have long argued that attempting to neatly separatethe political from the economic and the state from the market, is an inher-ently artificial exercise. From a political-economy perspective, the unify-ing insight is that “markets and political authorities [are] part of the same,integrated ensemble of governance, not . . . contrasting principles of socialorganization” (Underhill 2000, 4). If this is a useful orienting frameworkin general, in an East Asian context it is quite simply essential. East Asia’sstructures of governance and distinctive social systems of productionhave emerged in such a way as to make any attempt to compartmentalizeeconomic and political processes highly problematic, if not futile. There-fore, a political-economy perspective is especially useful in the context ofthis essay, for two reasons. First, it highlights possible points of resistanceto a specifically market-centered or neoliberal discourse of governance.Second, it lends weight to the overall argument I am trying to develophere: that the highly distinctive, politically and economically integratedstructures of East Asian governance systems will not only make themresistant to change, but may render them incapable of operating alongneoliberal lines even if there is a strong desire to do so.

The East Asian developmental experience illustrates two key proper-ties of institutional development. First, national institutions grow out oftheir specific environments, with all the contingent pressures and incen-tives that implies. As a consequence, institutions—and, more generally,patterns of economic and social development—assume a degree of “pathdependency” that not only reflects past struggles and accommodations,but also delimits the contours of future possibilities (Hall; North). Second,there is nothing inevitable about the sorts of institutions that emerge as aconsequence of such historical processes, or about their demise in favor ofsome more “efficient” model. Particular institutions survive because theyfulfill the needs or further the interests of the most powerful actors withinany social milieu (Murphy, 25). Furthermore, institutions may continue tobe influential even when they are clearly no longer appropriate or effec-tive when judged by the (admittedly subjective and elusive) notion of thecollective public good. They do so because “[e]xisting institutions cangenerate powerful pressures for governments to persist with policies that

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are favored by the constellation of interests that initially supported theirascent to power, even if the power of these interests has declined, andeven if this has deleterious consequences for macroeconomic perfor-mance” (Garrett and Lange, 54).

This is clearly the situation that many observers, particularly the IMFand supporters of neoliberal-style reform more generally, would claimexists in East Asia. Whatever the merits of East Asian modes of develop-ment may have been, the suggestion is they are clearly outmoded and inneed of reform, as they are contributing to, rather than alleviating, theregion’s problems. Even if this analysis is correct, which is in itself debat-able, a closer examination of the region’s institutions suggests suchreforms will not be easily achieved.

The East Asian Developmental State

Japan is both the most important economic actor in East Asia and theoriginator of one of the region’s most celebrated and analyzed innova-tions: the developmental state. While the history of the developmentalstate is by now well enough known to need little elaboration here,9 anumber of its features are worth briefly highlighting, as they have beenwidely imitated throughout the region, and the establishment of newpatterns of governance will inevitably necessitate some reform of theinstitutionalized relationships that are associated with East Asia’s politi-cal economies.

The first point to emphasize is that economic activity in Japan hashistorically been coordinated or planned, rather than simply left to mar-ket forces or the uncoordinated actions of private sector actors, as hasgenerally been the case in the Anglo-American economies. Japan’s rulingelites believed that the disadvantages of “late” development were bestovercome by systematically guiding the course of indigenous industrial-ization. Famously, this process was overseen by a technocratically com-petent bureaucracy, which enjoyed a degree of “embedded autonomy”(Evans), something that allowed them to promote targeted industries inthe long-term “national interest,” free from the danger of capture byvested interests. On the one hand, the bureaucracy had elaborate linkageswith well-organized business groups, which allowed for the effectiveimplementation of various industry development plans. On the other, ithad key policy tools—particularly access to cheap capital—that gave itsufficient leverage over business to get its way. Whatever current prob-lems Japan may be experiencing, this model of East Asian governance,centered on state-led development, was clearly brilliantly successful, notjust in Japan but in important acolytes like South Korea and Taiwan.

A number of important qualifications should be added to this highlystylized and truncated sketch of the developmental state. First, the Japa-nese model has never been reproduced in precisely the same way any-where else in the region. The recent crisis graphically highlighted the

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difference between what might be broadly described as Northeast andSoutheast Asian patterns of governance (Beeson and Robison). Generally,the degree of bureaucratic competence and independence has not beennearly as great in the south as it has in the north. The other point toemphasize is that, even within Japan, the vision of infallible bureaucratsselflessly working in the national interest was always something ofa myth (Calder). Yet it is equally important to re-emphasize that, despiteits current difficulties, the particular institutional configuration associ-ated with the developmental state, especially its ability to coordinate eco-nomic activity, appeared to give Japan—or, more accurately, Japanesecompanies—a significant edge in an era of relentless international compe-tition. The key questions are whether what observers like Weiss and Hob-son describe as Japan’s superior “state capacity” is either sustainable oruseful in a globalized economy, or whether Japanese public officialswould willingly relinquish the relationships and practices associatedwith this model even if it is not.

While these are clearly difficult questions to answer definitively, anumber of pertinent points that may influence the success of theneoliberal reformist agenda can be made. Although the effectiveness ofsome key policy tools has been steadily undermined by processes of glob-alization, especially the integration of international financial structuresand the concomitant availability of capital (Leyshon), this has not dis-solved the close links between bureaucrats and business. As Japan’s noto-riously corrupt construction industry demonstrates, massive amounts ofpublic funding continue to be channeled into projects of dubious benefitbecause of entrenched politico-business relationships (McCormack).

This is not a uniquely Japanese phenomenon. Korea is an example of aNortheast Asian country where even a government seemingly intentupon market-centered reform in the wake of the crisis—partly as a conse-quence of significant external pressure—has found it extremely difficultto reform its Japanese-inspired industrial conglomerates, the chaebols(Lee). Not only are the chaebols key parts of the domestic economy, argu-ably making them too big to fail (Woo-Cummings 1997, 64), but they arealso fundamental elements of Korea’s brittle accommodation betweencapital and labor. In other words, even if the distinctive relations betweengovernment and business that characterized the developmental state inKorea and Japan are no longer appropriate, as critics claim (Moon andRhyu), it is entirely possible that they will continue because they are sodeeply institutionalized. Moreover, even when they do change, there isno reason to expect that they will necessarily converge on the sort ofneoliberal model that is at the center of the reformist governance dis-course (Beeson 1996).

The same conclusions may be drawn in Southeast Asia. Although allthe countries of Southeast Asia have felt the direct effect of Japanese cor-porate investment, and some, like Malaysia, have self-consciously emu-lated the developmental state paradigm, these are not the only potential

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points of resistance for would-be reformers. In addition to the embeddedinfluence of the Japanese government and private sector (Hatch andYamamura), a form of Chinese capitalism has become a crucial compo-nent of Southeast Asia’s indigenous patterns of governance (Whitley).Primarily associated with the 50 million or so “overseas Chinese” dis-persed throughout Southeast Asia, this distinctive form of economicorganization is heavily dependant on family and personal relationships(gaunxi), rather than the sorts of “transparent” commercial practices thatare routinely associated with “good” governance. Given the uncertaintiesconfronting businesses of any sort in Southeast Asia, Chinese capitalistshave gained a distinct competitive advantage by using personal relation-ships to overcome the difficulties posed by a potentially unreliable oreven hostile operating environment (Woo-Cummings 1998). These sortsof localized, highly distinctive institutional responses to collective actiondilemmas are potentially formidable obstacles to the establishment of atransparent, market-based economic order. Further complicating thereform process is the fact that successful Chinese businesspeople, espe-cially in Malaysia and Indonesia, have protected their positions by secur-ing the political patronage of indigenous elites (Robison; Searle).

The general point to emphasize about East Asia’s distinctive businesssystems is that they are contingent, responses to the challenge of organiz-ing economic activity that are institutionalized and socially embedded.Moreover, as Marco Orrù, Nicole Biggart, and Gary Hamilton (363) pointout, such distinctive and diverse patterns of economic coordination “arenot corruptions of technically ideal organizational forms, but representqualitatively distinct conceptualizations of what constitutes appropriateeconomic activity . . . To be ‘technically efficient,’ firms must consider andcomply with the institutional setting in which they are embedded.”

Political Obstacles to Reform in East Asia

If the organizational logic of business in East Asia is an imposing obstacleto reform, more overtly political factors present even greater challenges.Although, as I have suggested, the political and the economic are insepa-rable, especially in East Asia, it is ultimately political actors who establishthe regulatory framework within which economic activity occurs. Someof East Asia’s political structures and practices make achieving reformextremely problematic. At one level, this is because the ruling politicalelites and many of the most important economic actors may—as in thecase of Malaysia—be one and the same (Searle). In such circumstances,the temptation for power-holders to construct and defend economic rulesof the game that favor their own interests is often irresistible. The sortsof political clientelism that tend to emerge in such relationship-basedsystems effectively “impede . . . the emergence of the kind of hands-off institutional separation which underpins the relationship betweenstate and civil society in more advanced forms of democratic polity . . .”

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(White, 214). Consequently, patterns of political activity in the regionoften not only make reform difficult, but make the establishment of “dif-ferentiated polities” and governance through arms-length, independentagencies of a sort that occurs in Europe well-nigh impossible (Rhodes,7–8).

Simply put, neither the existent institutional infrastructure nor theregion’s indigenous political traditions make such practices either feasi-ble or universally welcome. It needs to be remembered that the process ofnation-building is a relatively new and often incompletely realizedproject, especially in the southern part of the region. Moreover, East Asiahas had to cope with the often traumatic and—particularly for China—humiliating penetration of Western capitalism, followed by the evenmore abrupt decolonization process. Exacerbating this sense of vulnera-bility and insecurity was East Asia’s role as a crucial site of Cold Warcontestation, something that, as Richard Stubbs points out, profoundlyinfluenced the development strategies and strategic outlook of the emerg-ing economies of Southeast Asia in particular. East Asian perceptions ofsecurity embrace economic issues as well as narrower strategic questions,and they emphasize the continuing importance of the state in securingsuch a stable environment as a consequence (Beeson 1999b). Not only didmercantilism become a central component of state-led development inthese circumstances, but so too did authoritarianism—something thatwas tolerated, if not actively encouraged, by the United States because ofits overarching strategic concerns.

Authoritarian rule in East Asia is not simply a historical curiosity.While not as widespread or uncompromising as it once was, the institu-tionalized legacy of authoritarianism places constraints on the possibleforms of political order that may emerge in the region, and presents amajor obstacle to patterns of governance that are predicated upon theexistence of a fully functioning and independent civil society. One of thedistinguishing qualities of political rule throughout East Asia is that it hasgenerally been much closer to a corporatist than a pluralist model(Schmitter 1997). Schmitter (1979, 22) argues that what he calls “statecorporatism” has been “ a defining element of, if not a structural necessityfor, the antiliberal, delayed capitalist, authoritarian, neomercantiliststate.” In such a system various interest groups are subordinated to statebureaucratic power, elections are nonexistent or plebiscitary, and ideo-logical contestation is nonexistent. In some parts of the region—China isthe most important and obvious example—this sort of description isclearly still valid. China has simply not had a history that encourageseither political contestation or the emergence of a civil society independ-ent of state control (Wakeman). Even in Japan, which is an establishedindustrial power and a nominal democracy of some standing, a form of“soft” authoritarianism has been closely associated with economic devel-opment (Johnson 1987), and the country has experienced virtually unbro-ken one-party rule in the postwar period.

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It might be objected that, while these may be legitimate historical points,such political practices will prove unsustainable in the face of an irresistiblewave of democratization (Huntington). Not only is the democratic transi-tion process looking increasingly fragile of late, particularly in SoutheastAsia (Vatikiotis), but even where political reform is occurring, it is not nec-essarily leading to the expansion or consolidation of independent civil soci-eties of a sort associated with liberal forms of governance. As Garry Rodan(95) points out, even a country as economically developed as Singapore hasseen an expansion in the “realm of the state through the extension andrefinement of the mechanisms of political co-optation.” This is importantfor two reasons. First, it suggests that simple teleological extrapolationsfrom “Western” experiences should be treated with caution. Second, thecontinuing control of—or intrusion into—all areas of national politicalspace by a number of East Asian states means that, not only do alternativecenters of power find it difficult to establish themselves, but there is littlescope for nonstate organizations or agencies like trade unions to developeffectively or independently of state control (Deyo). This is a potentiallycrucial absence and obstacle to the development of new modes of gover-nance, as “the organized working class [has] appeared as a key actor in thedevelopment of full democracy almost everywhere” (Rueschemeyer,Stephens, and Stephens, 270).

The Persistence of Difference

Despite all the attention that is paid to the emergence of global civil societyand the possible internationalization of political processes (Wapner), itshould be emphasized that this remains, at best, a rudimentary developmentin an East Asian context. NGOs—widely considered to be a central compo-nent and dynamic of civil society of any form—are not only frequentlyco-opted by governments, but may actually be controlled by them, generat-ing the oxymoronic curiosity of government-organized NGOs (GONGOs)(Riker). Not only should we not assume that NGOs are necessarily “progres-sive” political forces (Morris-Suzuki), but we also need to remember thattheir political effectiveness is largely dependent upon a state-defined regula-tory framework (Clarke). Importantly, in an East Asian context, the institu-tional infrastructure that might permit alternative modes of governance,particularly in the form of independent policy networks that exist outside ofstate control, simply do not exist in the same way that they do in places likeWestern Europe (Beeson and Jayasuriya). In other words, because states inEast Asia still generally jealously guard their independence and seek tomaintain control of political structures and processes that may impingeon their autonomy, they resist any notion of “pooling” sovereignty. Thishelps to explain not only the “Asian way” of consensus, limited directcooperation, and noninterference in domestic affairs, that continues to char-acterize transnational organizations like ASEAN and even the more broadlybased Asia Pacific Economic Cooperation (APEC) forum (Acharya), but also

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why someone like Malaysian Prime Minister Datuk Seri Dr MahathirMohamad would attempt to resist the impact of globalization processes byimposing capital controls (see Beeson 2000b).

Although it is not possible to explore the political dynamics of its eco-nomic policies here, the Malaysian experience highlights a couple of moregeneral points that are worth emphasizing. First, the divergence of opin-ion expressed about the wisdom of these policies serves as another pow-erful reminder that there is no consensus about “best practice” publicpolicy in an era of globalization. The apparently universal imperatives ofglobalization are mediated differently in specific national institutionalcontexts, producing significantly different outcomes. This suggests thatgovernments may retain more policy discretion and autonomy than someobservers would claim, and that, as a consequence, differential statecapacities still matter. Despite the problems currently afflicting a numberof East Asian nations, therefore, there may still be powerful incentives notto completely dismantle the distinctive structures of governance thathave underpinned the region’s economic expansion.

Second, it should be stressed that even phenomena that superficiallyseem imbued with universal, abstract qualities—and that may be centralto any putative reformist agenda—may be transmuted by contingentpolitical forces. What Jayasuriya calls “statist,” as opposed to liberal,legalism is closely associated with the sorts of corporatist political struc-tures that continue to distinguish many East Asian societies. In such cir-cumstances, Jayasuriya (180) argues that “statist legal architecture leadsto the building of legal institutions that fuse the civil society and the state.Within the statist perspective, judicial independence is a matter of auton-omy within rather than from the executive” (emphasis in original). In otherwords, the political space and supporting legal institutional infrastruc-ture that is the assumed ontological bedrock of much “Western” politicaltheory, and that informs so much of the reformist agenda that externalagencies are seeking to impose on East Asia, is either not present or oper-ates in a manner that serves and is dependent upon the state, rather thanon civil society.

A final point to note is that, despite the widely held expectations aboutthe inexorable spread of democracy that accompanies economic reform inthe good governance discourse, such a process may be undermined bythe very global processes such initiatives seek to encourage. One of thegreat ironies of the globalization phenomenon is that, at precisely thesame moment that East Asia is being encouraged to embrace democrati-zation and political liberalism, globalization itself appears to be funda-mentally undermining democratic structures of governance and thecapacity of national governments to represent the interests of the peoplewithin the political space over which they claim authority (Cerny 1999;Rodrik). Given that one of the central arguments of the promoters of“Asian values” before the crisis was that they were the basis of function-ally superior social systems to those of the supposedly disintegrating

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“West” (Mahbubani), such debates may be heard again. Indeed, it needsto be recognized that even one of the principal targets of the reformagenda—corruption—may, in some circumstances, continue to servea functional purpose and actually be integrally connected to economicdevelopment (Hutchcroft, 639). This is not to condone or defend suchpractices, simply to point out that there may be powerful forces resistingreform above and beyond narrow self-interest, especially where alterna-tive structures of economic governance are poorly established.

CONCLUDING REMARKS

Establishing good governance in East Asia will not be easy. Local politicaland economic elites often have powerful incentives to resist reforms thatmay directly threaten existing privileges. Even without overt politicalresistance, patterns of economic coordination that have become institu-tionalized over long periods, are deeply socially embedded, have provedeffective, and may often still enjoy a degree of legitimacy are also likely toprove resistant to change.

There is, however, an even more fundamental reason for remainingskeptical about the embrace of good governance in much of East Asia: it isstill an open question whether Anglo-American forms of capitalism andmarket-centered patterns of governance are necessarily superior in thelong-term to their East Asian counterparts. Even during the economicboom of the late 90s in the U.S., fundamental doubts were expressedabout its sustainability. (The Economist), breathless accounts of the “new”economy notwithstanding. Even if U.S. dynamism rests on somethingmore substantial than a stock market bubble, the benefits of economicexpansion have been accompanied by major disparities of incomes andlife chances. Such a potentially divisive form of capitalism has few admir-ers in East Asia. Moreover, it needs to be remembered that, before the cri-sis, there was almost universal praise for the seemingly superiorperformance and organization of East Asian economies—factors thatsome observers contend remain potentially significant and enduringsources of international competitive advantage (Lazonick; Weiss). If, asseems likely, East Asian economies recover their former dynamism, it ishard to imagine that the potentially divisive agenda of reform associatedwith neoliberal governance, which is intended to systematically undercutEast Asia’s competitive advantages and establish a liberal, market-basedcapitalism (Bello), will not be more vigorously resisted.

This is not to suggest that there are not significant pressures that willcontinue to encourage such reforms. Clearly, these exist. Whether it is theovert political leverage and opportunism of the IMF or the U.S. or the sub-tler but equally telling reconfiguration of economic activity in an increas-ingly integrated world economy, powerful forces are redefining nationalpolitical economies. What we need to recognize is that whatever form suchnew structures of governance take in East Asia, they will reflect existent,

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contingent realities. This means that not only will regional political andeconomic forces impart a degree of path-dependency, but they will alsofundamentally delimit the sort of governance that is possible. An inde-pendent, functional civil society, replete with autonomous NGOs anddynamic social movements operating independently of the state, cannotsimply be imposed or wished upon the region. Even if such social forma-tions do emerge, it is not at all obvious that a form of Anglo-American,neoliberal governance will be the inevitable consequence. On the contrary,if the history of East Asia suggests anything, it is that the style of regionaldevelopment will continue to be powerfully shaped by East Asians, andthat East Asian responses to globalization may continue to be very differ-ent from those found elsewhere.

ACKNOWLEDGMENTS

I would like to thank Governance’s anonymous reviewers for their percep-tive comments and Phil Kimmet for research assistance.

NOTES

1. By “East Asia,” I mean Japan, China, South Korea, Taiwan, and the coun-tries of the Association of South East Asian Nations (ASEAN).

2. For a comprehensive and insightful overview of the literature, see Held et al.3. The acknowledgement of the positive role of state intervention might have

been more fully recognized if the sponsors of the report—the Japanese gov-ernment—had had their way. As Robert Wade demonstrates in his analysisof the Bank’s report on East Asia’s development experience, interpretingeconomic “reality” is a highly political exercise, which mirrors the distribu-tion of power in the wider international system.

4. See, for example, Geoffrey Underhill’s (1997) examination of the regulationof the securities industry in Europe.

5. The original Washington consensus was outlined by John Williamson, whosuggested that “good” policies were based on: fiscal discipline, privatiza-tion, financial and trade liberalization, openness to investment, deregula-tion, and a general concern with increasing the “transparency” of economicand political processes.

6. I am indebted to one of Governance’s anonymous referees for emphasizingthe importance of this distinction.

7. A number of authors have questioned whether discrete national economiesare any longer meaningful representations of reality or theoretically usefulin an era characterized by greater transnationalization and an erosion ofnational boundaries. See Bryan and Beeson (2000a).

8. Again, I am conscious that by employing catchall expressions like “the EastAsian region” I may be guilty of imposing or assuming a unity that does notexist. Conscious of the force of such critiques (see Dirlik, for example), I shallattempt to use nationally specific illustrations of my arguments whereverpossible.

9. The seminal work is by Chalmers Johnson (1982), but see also Beeson (1999a,chapter 3).

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