Putting Capitalist Economies in their Place
Drawing on the analysis in the previous chapter, we now revisit phase two of exportism with special reference to the Asian crisis. This is often said to have started when Thailand’s central bank devalued the baht by 15–20 percent in July 1997. It then spread to Indonesia, Malaysia, Hong Kong and South Korea. There are many different accounts of this crisis. We start with interpretations couched in terms of the state- and market-failure debate, which continues the state versus market debate concerning the ‘Asian miracle’ (for a more general discussion of market and state failure, see Chapter 8). We then critique this debate and develop a regulationist explanation by relating the crisis to global and regional changes in production and ﬁnancial forms since the 1980s. We conclude with some remarks on how the regulation approach can re-orient the debates on the Asian crisis. TWO LEADING EXPLANATIONS OF THE ASIAN CRISIS: STATE FAILURE V. MARKET FAILURE Chapter 5 noted that the study of EANICs has long been dominated by the state versus market debate. Unsurprisingly, this dichotomy is reproduced in contrasting explanations of the Asian crisis in terms of state versus market failure. Krugman (1997, 1998a, 1998b) and Corsetti et al. (1998) propose a (developmental) state failure account. They suggest a domestic view of the crisis that is characterized by close relationship between states, banks and businesses; for example, business loans were underwritten by state policies and assured bailouts in times of problems. This led to moral hazards, or worse,...
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