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New Left Review I/231, September-October 1998

Bruce Cumings

The Korean Crisis and the End of ‘Late’ Development

The Asian economic crisis has created a watershed in contemporary history, where questions long buried by the demise of Western communism and a militant Left in the democratic countries amid an appallingly self-congratulatory liberal triumphalism, now come sharply to the fore. A systematic failure of capitalism has struck precisely those economies long held up as models of industrial efficiency—the Asian ‘tigers’—and no one is quite sure what to do about it, or where it will end. Looming behind the travails of the smaller afflicted countries is a more ominous phenomenon: the shaky financial condition and political immobilism of the world’s second largest economy, Japan, which has more than $600 billion in bad loans and—for a country long praised for its efficient ‘administrative guidance’—a breathtaking crisis of governance. A sober and influential American economist wrote recently that this turmoil ‘produced financial contagion on a scale unprecedented since the collapse of the Creditanstalt in 1931’, and he could not be sure that the ministrations of the International Monetary Fund (imf) had halted its progress. [1] David Hale, ‘Developing Country Financial Crises During the 1990s’, Zurich Group, June 1998, p. 1. I am indebted to Mr. Hale for sending me this paper. Nothing to date has come close to the Asian crisis as constituting a defining moment that tells us what the post-Cold War world will really look like, and the problems it will present.

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