Anglo-American Triumph
The argument between left and right is settled because no one can argue that Pyongyang has done better than Seoul. But in the wake of the Asian flu, many people in India think that the clash of ideas in Korea and elsewhere is between globalisation and anti-globalism (or economic nationalism of the kind favoured by the BJP). The Koreans, fired by the historical experience of Japanese colonialism, are even greater nationalists than Indians. But that has not come in the way of Seoul deciding that being even more a part of the world economy is entirely in the Koreans interest.
The issue, then, is not globalisation because Thailand has come to the same answer. So will others. Li Lanqing, the Chinese vice-premier, declared in Davos that China too would be integrating more with the world economy, and promised an average tariff of 10 per cent by 2005. What then is the ideological question in Korea, or elsewhere in East Asia? Perhaps it is this: which brand of capitalism best serves an economy?
For many years, the Japanese and European models have been a counterpoint to the Anglo-American model, and at times they have even been considered superior variants. Remember that American bookstores used to be flooded with books on the Japanese way to do business. And German prosperity stood in contrast to the decline of Britain. Even Italy pulled ahead of Britain.
But in the wake of the Asian flu, the seemingly limitless dynamism of the American economy, the recovery achieved by Britain, and the problems that dog European economies, the conclusions of the 1980s beg questioning.
It used to be said, for instance, that a system which focused attention on quarterly results prevented managements from focusing on the long-term health of companies; that hostile takeovers, junk bonds and asset stripping were all part of a deviant and even barbaric Anglo-American variation of capitalism fortunately unknown on the European continent and in Asia; that the close understanding between government and industry helped create national champions who went on to become world champions; that cheap, long-term capital was a wonderful source of strength, and so on.
And all of these pointed to the strength of the European and Japanese models, which therefore helped explain the success of these economies. South Korea, of course, was a junior Japan which decided that anything Japan did, it could do better.
That may be why South Korea has shown up the dreadful weaknesses of this particular model, so obvious in the wake of the raging flu. And suddenly, the strengths of the Anglo-American system become evident. The lack of collusion between government and business forces companies to stand on their own feet without official crutches (in the form of protected markets, or hidden subsidies). Aggressive shareholder behaviour keeps management on its toes or throws it in the dust-bin. The market for companies established through takeovers and unbundling of businesses (which is the other way of looking at asset-stripping) forces managements to focus on shareholder returns. That process is encouraged by the fact that fund managers themselves have to focus on rates of return, which at the end of the day is the real issue, and not size of business, not diversification, not status as national champion, not any of the other extraneous factors.
Even though the Korean chaebol are not saying it very loudly, or willingly, companies must focus not on turnover but on profits. In other words, it is not the manager of the company but the shareholder who is king. This is the ideological issue that has been settled in Korea, and which signifies (for the time being, at least) the triumph of the Anglo-American model of financial capitalism, and the decline of the more nationalist, corporatist variant.