By Araya Kebede Araya *
Hybridization of Local and foreign norms for Development and stability: the East Asian Experience
I believe that there are several ways of doing things. One straight jacket can sometimes fit all; but also does not necessarily mean it always works. It is much better to put persons in jackets that exactly fit them.
If there are well established local mechanisms of doing business – governing a country, developing an economy, etc – these accepted values are much more preferred to other imported ones as they are compatible with other interrelated local values. What is best in one area may not necessarily be the best throughout other areas. Here in our case, we cannot authoritatively say that democracy and only democracy exclusively is the best instrument to run a country and thereby develop an economy. As we will see it shortly below, countries used to be run/ are run by other systems other than democracy and are seen to have (a better) social stability and equal or better with the democratic countries’ economic performance, esp. when compared to those in the process of democratization which is considered a dangerous process.
Put differently, regardless of the fact that democratic countries economically grow fast and have good social stability; we cannot conversely conclude that other systems, here of East Asia, cannot achieve similar result. There could be other even equally important values or norms that can work effectively for the economic performance and social stability of a given country/region.
China
The Chinese, arguably Confucian origin, informal institution of Guanxi – ‘capitalism without contracts’ – that originates back to pre-communist Confucian concepts of family and relationships, as an expression of part of Confucian culture can be cited as an example. (Carolyn L. Hsu, Capitalism without contracts …) Although it can have side effects, the informal Guanxi system in China does not impede the market to function properly in its realm. However, undeniably, it has negative effects as well (see Carolyn L. Hsu (p.8). Some scholars focus on Guanxi’s negative effects, arguing that it either encourages corruption or impedes social actors’ ability to make genuinely rational, market-based decision. By encouraging the combination of the public with the private, and of business with gifts, Guanxi practice may devolve into rent-seeking and bribery (Wu, 2001). Guanxi practice may lead Chinese proprietors to hire according to personalistic considerations, rather than seeking out the best possible candidate (Hui and Graen, 1997). Potential employees may also avoid working for strangers. Hobbled by Guanxi, managers may select their suppliers and clients on the basis of reciprocity, rather than on rational, economic criteria (Guthrie, 1999).
The real part of the story is, however, presented like this (P.9): the biggest argument against the scholars who claim that Guanxi practice impedes marketization is that capitalism has flourished in societies rife with Guanxi practice, including the PRC, Hong Kong, Taiwan, Singapore, and other destinations of the Chinese Diaspora. Indeed, if one were to generate the short list of all the states which have managed to move from so-called ‘‘Third World’’ to ‘‘First World’’ economic conditions in the latter half of the 20th century, a significant number of them would be Chinese Guanxi-practicing societies. There is a substantial scholarship from non-PRC Chinese groups which argues that Guanxi practice, far from impeding capitalist development, instead has enabled the development of an alternative form of capitalism which may be just as viable as the bureaucratic, rationalized capitalism of the West (Hamilton, 2000; Redding, 1990, 2000; Tong and Yong, 1998; Yeung and Olds, 2000).
This case of the PRC, if not also other parts of East Asia (as Confucian values extend to) in less or non democratic countries; local institutions embedded in their own cultural norms can be more effective to do business i.e. economic development and social stability. For the end result of economic development and/or social stability; an effectively tested system in one society does not necessarily mean the same can also work in other societies. Conversely put, it cannot be said that a society must adopt that system (e.g., democracy) so as to be effective in its way of economic growth or social stability. Let’s exemplify this analysis.
It is true that the way democracy operates mirrors the logic of a liberal market economy. As can be learned from Tianjian Shi article Cultural Values and Democracy in the PRC, democratic governance is compatible with the development of the capitalist market economy. (P. 3) Democracy made possible continuous political reform, so that capitalist economic development and the evolution of democracy naturally became intertwined. (Juan J. Linz and Alfred Stepan. P16) Democracy is associated with private property, capitalism and a bourgeoisie. (Barrington Moore, Jr, Social Origins …) But how are the Chinese growing? Is that because they follow the liberal free market economy, free trade systems? China is a country with amongst the stable and peaceful societies. Is it because they embrace the tenets of liberal democracy? The Confucian norm embedded within the Chinese political system is a good example to show how a local norm can help the economy grow, stability secured in an unexpected manner if seen from the traditionally known democratic or open systems.
An obvious limitation of the system is that the socialist/communist ideology has to borrow some thinking related to market from outside without which present China could not have been created. Hence, we cannot either say that only local values were the reason for the economic development.
Japan
There are other several causes/reasons amongst which Western technology is to be mentioned for key economic growth. This is a good example of the Japanese 19th and early 20th century. It is a little bit different case in the sense that it is a typical phenomenon that demonstrates how a country can be successful by adopting foreign systems in place of local values. As compared to the Chinese, the Japanese were ‘smart’ enough to adopt the Western thinking especially for economic development ahead of their neighbours. Hence, the first developed and early industrialized nation in the Eastern hemisphere of the globe.
However, hypocrisy, another contributing factor, was also in place at that time. The then Japanese authorities were smart enough to use national values, Meiji restoration, as cover so as to proceed with the modernization process in which otherwise was not possible to go a single step ahead. We can take this as a limitation. How about the Chinese of that Qing dynasty? No! The local value Confucianism could not offer much help.
Korea
There is another example. David Kang’s article, Bad loans to Good Friends, shows us how Korea developed under undemocratic system where money politics was high – the business persons and politicians were mutually arrested due to balance of influence. Not due to democracy!
In addition to David Kang’s article, another article entitled The Transition to Export-led Growth in South Korea: 1954 -1966 by STEPHAN HAGGARD, et al (p.1) identifies two key positions (as argued by some scholars mentioned in the article) for the growth of Korea. One being the neoclassical position that traces South Korea's take-off to a set of policy reforms in 1964 and 1965 that launched the country on the path toward export-led growth; the other is the "statists that detail the pervasive intervention of the Korean government in the economy. In anyway, analysts in both of these camps make reference to the importance of the institutional context in South Korea's economic development.
In conclusion, although it is argued that democracy and economic development are positively related, the phenomenon, a common knowledge, observed in China disproves the correlation from being the only possible combination. Growth is possible under different systems.
Nevertheless I would like to opine that notwithstanding political institutions embedded in their own cultural norms can be more effective to achieve national goals; the reality is a little bit tilting towards a mixed one. Many western values were used in relation to local ones esp. for the economic development of one country. Example, Socialism with Chinese characteristics shows that while it is possible to have a relatively free market in socialist country, no free market country can go without planning. Hence, a fusion of planned economy and free market! To wrap up once more, the Japanese use of local values as a cover while employing Western ideas; the Korean miraculous growth with the help of some externalities; the Chinese Guanxi system; etc are other examples. Finally, the effectiveness of the East Asian political system is undeniable but with the limitation that it could not last independently without the influence of the Western values.
Araya Kebede Araya, LL B., MA, LL. M (PROLAW)
Lecturer in Law, Mekelle University, College of Law and Governance
Ethiopia, Mekelle - Adi Haqi Campus
Cell phone: +39 3896872473 (Rome, Italy), +251 923 771883 (Ethiopia)
E-mail: araya57k@gmail.com, aaraya@luc.edu
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