Locating Neoliberalism in East Asia

Neoliberalizing Spaces in Developmental States

Bae-Gyoon Park, Richard Child Hill, Asato Saito, Bae-Gyoon Park, Richard Child Hill, Asato Saito

• Publisher: Wiley-Blackwell
• Year: 2012
• Print ISBN: 9781405192798, 9781405192804
• eBook ISBN: 9781444346633
• Edition: 1
• Topic: Social Sciences
• Subtopic: Urban Sociology
• Index: Social Sciences

Locating Neoliberalism in East Asia: Neoliberalizing Spaces in Developmental States examines the influence of neo-liberal ideologies on urban and regional policies and practices in several Asian Pacific nations.

• Represents one of the few studies of neoliberal changes in East Asia, one of the most important topics in social science research over the past two decades
• Considers the Asian perspective by focusing on readings from Asian experts
• Pays special attention to the 'spatial' dimension of the East Asian neoliberalization
• Examines the influence of neo-liberal ideologies on urban and regional policies and practices in several Asian Pacific nations
• Explores the evolving relationship between the two political economies

1

Introduction: Locating Neoliberalism in East Asia

Richard Child Hill, Bae-Gyoon Park, and Asato Saito

The Questions

The political-economic turn toward neoliberalism, commencing in the Anglophone countries in the late 1970s, has traversed most of the globe. States have recast their relations to economic markets, expanded the scope of their civil societies, and devolved power from their central to local governments. While geographically uneven, the direction of political-economic change has been unmistakable. Nation-states have given freer reign to their financial markets, granted more autonomy to their central banks, privatized more public enterprises, and localized more control over taxes and public services. Urban and regional policies have played a particularly salient part in the neoliberalization process. Cities around the world are competing for capital investment, forming public-private partnerships, relaxing land use regulations, and promoting commercial mega-projects.

The neoliberal political project was slow to take hold in East Asia. The East Asian states treated in this volume – Japan, South Korea, Taiwan, Hong Kong (PRC), Singapore, Malaysia, and Thailand – are late developers compared to the established Western powers: they industrialized under different circumstances, and the agents promoting their industrial revolutions were influenced by different ideologies, motives, and institutions. Japan, the first in Asia to join the club of developed nations, achieved rapid economic growth through state-led developmentalism. Japan’s path to success established a rough road map that other East Asian nations could follow. In Japan’s footsteps came a second postwar group of “East Asian tigers” – South Korea, Taiwan, Hong Kong, and Singapore. A third tier of “newly industrializing” Asian countries lined up behind the East Asian tigers in the 1980s, including Malaysia, Thailand, China, and Viet Nam.

While the success of developmentalism helps explain East Asia’s resistance to neoliberalization, the neoliberal political project has gained traction in the region over the past two decades. How much traction is a matter for debate. Some analysts argue that East Asian restructuring portends the triumph of neoliberalism over state-led developmentalism. Chang (1998), for example, postulates the “demise of developmental states” in East Asia and their wholesale replacement by neoliberal states. Pirie (2005: 26) argues that some Asian states (most particularly, South Korea) have gone beyond selectively adopting neoliberal policies to “consolidating a whole new and unambiguously neoliberal mode of regulation.” Others stress East Asian continuity amidst change. Vogel (2005: 51–2), for example, argues that Japan’s economic reformers have mainly modified existing institutions, rather than replacing them, in an effort to reinforce the nation’s comparative institutional advantages. In a similar vein, Schaede and Grimes (2003: 8) conclude that Japanese officials responded to global and domestic challenges in the 1990s, not by adopting neoliberal ideology, but by pragmatically using new rules and changed circumstances to continue industrial policies in a postdevelopmental direction.

This debate has taken on added significance since the global financial crisis in 2008. The financial collapse, which triggered the deepest slump in the world economy since the Great Depression of the 1930s, brought the neoliberal worldview sharply into question. While the economic crisis has weakened the forces promoting the neoliberal political project, and strengthened those in opposition, the neoliberal outlook is still influential in most Western and East Asian policy circles and is embedded in a wide variety of national and local institutions and government programs.

The evolving relationship between neoliberalism and state-led developmentalism is the central question addressed in this book. East Asian elites have become more receptive to neoliberal ideology in recent years. And East Asian states have implemented neoliberal policies both in response to Western pressures and to combat homegrown economic dilemmas. Yet there are sizeable gaps between what neoliberal theory postulates and what has actually materialized in East Asia. Existing developmental institutions both constrain the scope and channel the trajectory of neoliberal restructuring. State officials have promoted neoliberal reforms under the developmental rationale that freer markets are necessary for upgrading the national economy. And politicians have been known to laud neoliberal axioms about market efficiency and small government to justify economic and political reforms that are hardly neoliberal in inspiration or in substance. Markets do not operate in a vacuum or according to immutable laws. Economic practices are embedded in human societies, which is to say they are imprinted by history, geography, culture, and politics (North 1990). Contributors to this volume examine the ways in which neoliberal ideology has been used to justify reform projects and the match-up between neoliberal premises and actual political-economic processes and outcomes.

This book focuses on the spatial dimensions of neoliberalization, and especially on how neoliberal discourse has reshaped East Asian urban and regional policies over the past two decades. In a pioneering edited book, Spaces of Neoliberalism, Brenner and Theodore (2002) reveal the strategic role Western cities have played in the neoliberal political project: as loci for neoliberal policy experiments, institutional innovations, and ideological fermentation. With the North Atlantic experience in mind, contributors to this volume examine how East Asian urban and regional spaces serve as strategic sites for neoliberal restructuring and to what consequence. The reference point for restructuring in East Asia differs from North America, the United Kingdom, and Western Europe. In the North Atlantic, neoliberal reformers have targeted institutions and social structures legitimated by Keynesian liberalism. In East Asia, neoliberal reformers have targeted institutions and social structures legitimated by state-led developmentalism. There is every reason to expect concomitant differences between the two world regions in the roles that cities play in the neoliberal political project and in the impact of neoliberalization on patterns of urban and regional development.

East Asian developmental states have experienced a significant shift in their urban and regional policy principles over the past two decades. Previously emphasized policy axioms, such as centrally planned and balanced urban and regional development, have incrementally given way to new values emphasizing global competitiveness, urban entrepreneurialism, and private financial initiatives. How and to what extent are these changes related to processes of neoliberalization?

The title, Locating Neoliberalism in East Asia: Neoliberalized Spaces in Asian Developmental States, conveys the three main purposes of this book. ¹

The first aim is to “locate” instances of urban neoliberalization for investigation as a step toward assessing the breadth and depth of the neoliberal political project in East Asia. To what extent do the studies in this collection indicate East Asian policies and institutions are converging toward Western urban and regional patterns? Are there salient differences in urban neoliberalization processes between East Asia and the North Atlantic as well as among states in the East Asian region itself?

The second aim is to “locate” neoliberal political projects in space. Neoliberalization operates at various geographical scales – global, national, regional, and local – but is typically analyzed at the national level without reference to the spatiality of the process. Contributors to this volume investigate cities and regions as spatial loci for neoliberal regulatory change.

The third aim is to “locate” the meaning of neoliberalism in the East Asian context. The neoliberal worldview is indigenous in the West but exogenously induced in East Asia, be it through imposition or emulation. Is neoliberalism a universal project with uniform meanings and applicability around the globe, as is invariably assumed by its Western adherents? Or does the creed carry different ideological connotations and political weight among neoliberal reform advocates in non-Western parts of the world? In short, does neoliberalism mean the same thing when viewed from an East Asian vantage point as it does when viewed from the North Atlantic?

Defining Neoliberalism and Developmentalism

To investigate neoliberalization in the East Asian developmental states, we need an analytical basis for drawing comparisons between neoliberalism and developmentalism and for thinking about the various ways in which they might interact with one another. We need to identify the class of phenomena to which the two belong, and specify the characteristics which distinguish one from the other. Neoliberalism and developmentalism are multifaceted; it is difficult to pin them down in their entirety. But here is an attempt at an overarching definition.

Neoliberalism and developmentalism are economic ideologies that legitimize relations of power and resource distribution. Following Gramsci (1971), ideology refers to shared ideas and beliefs which serve to justify the interests of dominant groups. In this definition, ideology cannot be separated from power relations and political projects since ideology legitimizes the differential power and material resources that groups hold. A power structure cannot be sustained by brute force alone (“domination” in Gramsci’s terms); it also requires an intellectual and moral discourse that attracts popular support and legitimacy (“hegemony” in Gramsci’s lexicon). Hegemonic leadership over a society occurs when people unite around the material interest and cultural outlook of a dominant group in such a way that the advance of the dominant group is perceived as the advance of the society as a whole.

Power relations are formed, sustained, and altered through political projects. The political projects are organized by alliances among socioeconomic groups, with one or a few groups wielding disproportionate influence in the alliance. These groups ally because their members believe in the ideology and have material interests that are legitimated by the belief system. The alliance mobilizes people and resources in an effort to influence state action and establish a political regime. Political regimes wield state power through public policies, governance institutions, and a regulatory framework. The ultimate aim is to create and sustain a type of political economy (a distinctive set of relations among state, economy, and society) that accords with the project’s economic ideology.

As ideologically imbued political projects, neoliberalism and developmentalism embody a number of interdependent elements: economic ideology, socioeconomic alliance, political movement, political regime, public policies, governance institutions, regulatory framework, type of state, and variety of capitalism. Specific analyses of neoliberalism or developmentalism tend to focus on a subset of these elements (on neoliberal policies, for example, or on the developmental state) but rarely encompass them all, nor do they typically anchor the particular elements under study to an inclusive, generic definition. As a consequence, the meaning of the two terms, and especially the more widely discussed neoliberalism, can seem chaotic.

With the genus in mind, we can now discuss the two species of ideologically imbued political project. We begin with ideology because, while neoliberalism and developmentalism are multifaceted phenomena, it is the ideas and beliefs expressed in the ideology that ultimately allow one to distinguish any given facet (alliance, policy, institution, etc.) as neoliberal, developmental, or something else entirely. In other words, ideology provides the anchoring point for the definition, the feature that all elements belonging to the species share in common.

Neoliberalism is an ideology holding that economic progress is best achieved by liberating individuals to pursue their own initiatives. Individual initiative is best secured by private property rights and competitive markets.

The neoliberal state provides the requisite governance institutions and regulatory policies – legal system, sound money, public order, and national defense – to secure private property and economic competition; but the state refrains from direct intervention in markets to achieve substantive economic goals because public involvement is believed to distort prices and benefit powerful interest groups (Harvey 2005: 2).

Neoliberal ideology serves to legitimate a political project to reestablish the conditions for capital accumulation and restore the power of economic elites (Harvey 2005: 19). Neoliberals seek to undo the class compromise between business and labor, embodied in collective bargaining and the welfare state, which underpinned Keynesian liberalism in the West from the 1930s to the 1970s. Finance capital, particularly institutional investors, is the leading force in the neoliberal socioeconomic alliance and political regime. The political project seeks to resuscitate classical economic liberalism while modifying the laissez-faire creed in two main ways: first, in recognizing that competitive markets are neither inherent in nature nor naturally self-regulating, but must be socially constructed and attended to by the state; and, second, in extending the market model beyond the economy to government and society (Lemke 2001; Brown 2006; Peck and Tickell 2002).

Developmentalism is an ideology holding that economic progress is best achieved when the state leads the nation in promoting economic change. Public ownership, planning, and goal setting are institutional means to achieving national economic development. Public and private sectors cooperate under the overall guidance of a pilot planning agency. The state further encourages cooperation among businesses and between business and labor to speed the adoption of new technology, reduce production costs, and expand the nation’s share of global markets (Johnson 1982: 18, 318; Hatch and Yamamura 1996: 220; Schneider 1999: 283).

Industrialization is the developmental state’s highest priority, and industrial policies are the state’s primary means for achieving economic goals. The government uses industrial policies and its powers over capital allocation to protect domestic industries, develop strategic industries, and adjust the economic structure to changes in the world economy. The developmental state attempts to combine industrial policies with competition among private firms through the use of market-conforming methods of economic intervention. Bureaucrats have sufficient talent and autonomy to take initiative, make effective decisions, and deter the claims of interest groups that would undermine economic growth (Johnson 1982: 26–9, 315–19).

A political-bureaucratic elite is the leading force in the developmental socioeconomic alliance and political regime. Developmentalism emerged in late-industrializing countries as a reaction against economic liberalism. Developmentalists consider the laissez-faire creed to be an ideological rationale for Western imperialism (Gao 1997). Economic policy making is dominated by nationalist public officials who reject the free market model of the international economy and the individualism embedded in neoliberal economic ideology.

Measuring

Neoliberalism and developmentalism are utopian projects in that neither can be fully realized in practice; they are inevitably compromised by negotiations with opposing forces and by the weight of institutional legacies. In this sense, the conceptions of neoliberalism and developmentalism outlined above are ideal types or models that can only find concrete expression in modified or “actually existing” form (Brenner and Theodore 2002). ² Each project has met wi...

Table of contents

• Cover
• Series page
• Title page
• Copyright page
• List of Contributors
• Series Editors’ Preface
• 1 Introduction: Locating Neoliberalism in East Asia
• 2 Industry Clusters and Transnational Networks: Japan’s New Directions in Regional Policy
• 3 State-Space Relations in Transition: Urban and Regional Policy in Japan
• 4 Developmental Neoliberalism and Hybridity of the Urban Policy of South Korea
• 5 Spatially Selective Liberalization in South Korea and Malaysia: Neoliberalization in Asian Developmental States
• 6 Clusters as a Policy Panacea? Critical Reflections on the Cluster Policies of South Korea
• 7 Moving toward Neoliberalization? The Restructuring of the Developmental State and Spatial Planning in Taiwan
• 8 Neoliberalism, the Developmental State, and Housing Policy in Taiwan
• 9 Reforming Health: Contrasting Trajectories of Neoliberal Restructuring in the City-States
• 10 “Detroit of the East”: A Multiscalar Case Study of Regional Development Policy in Thailand
• 11 Concluding Remarks
• Index