As the US bull market draws to a close, Western papers are full of analyses on how the Asian economic crisis is affecting the US domestic economy. Of course this was predictable, as both consumer and industrial markets in South East Asia, South Korea and Japan fall dramatically in purchasing power due to both currency devaluations, other economic malaise, political instability in at least a few Asian countries, and a general lack of confidence.
Western business had also taken for granted the increasing wealth of Asian business and consumers, and the latest economic shocks first in ASEAN, and then Korea and ultimately Japan, has meant a dramatic slowdown in a market previously taken for granted.
Prime minister of Malaysia Dato Seri Dr Mahathir Mohamad is also back on the warpath once again, following up his earlier disaffection for the free market with speeches on the weekend focusing on the “evils” of globalization.
In a free and global market, argues Mahathir, there is more room for exploitation of the strong by the weak, and the rich of the poor.
Both sides are of course talking about the same thing. While Mahathir calls attention to the excesses of globalization, he does not refer to the fact that globalization and “unrestrained market forces” has been responsible for much of the growth in Asia in the past 10 years as well. But what must frustrate Mahathir the most of course is the loss of control that this meta-shift from the era of the nation states to the era of globalization incurs to those who previously had enormous control over their domestic economies.
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Political leaders in all countries have to face the fact that the power of the nation state, within which many have built powerful economies, is becoming less relevant as global forces start to prevail. For those leaders who exerted strong government control over business, as in many Asian countries, the shift is particularly painful. The loss of domestic influence and power, the “food” of the modern nation state politician, suddenly sees traditional leaders stymied. As Mahathir himself has said, he is afraid to open his mouth now.. for fear of the reaction of the global market.. (A promise that didn’t last too long!)
The move to globalization is bigger than any nation state politician, and multinational organizations like the IMF, World Bank, ADB, ASEAN, and APEC is increasing. Mahathir realizes this of course, as evidenced by his spirited patronage of ASEAN. Of course this was all foreseen by the sage Kenichi Ohmae several years ago in his book “The decline of the nation state” where he correctly predicted that the future of Asia, as well as the West, will rely less on national power and more on trading partnership agreements and economic zones.