It puzzles me that with respect to this discussion on Asian cronyism, there has been
no mention of "Family Circles." Family circles have a long history among the more
successful ethnic groups in the U.S. They are very visible in Asian ethnic
neighborhoods in New York City and San Francisco and Los Agneles. Large family circles
can have thousands of members and are managed by a very formal administrative
structure. I once knew a Jewish fellow whose family was part of a family circle. They
elected a board of directors and a president. That family circle made decisions about
a broad range of family affairs, including investing in businesses, purchasing houses,
and mentoring the youth. It was decided by the family circle that my friend would
become an MD, so he was apprenticed from the age of ten to an uncle who was a
Pyschiatrist. That person is a Pyschiatrist today.
The least successful ethnic groups in the U.S. never created family circles. If you
have the cultural orientation of a family circle, it is not much of a transition to
expand that kinship, tribal or self-interst network. I think there is much to be said
for crony capitalism. For one thing, it encourages people to work as teams, leverage
resources, and care about each other's interests. I think oneof the great
disadvantages of capitalism as practiced in the U.S. is that it emphasizes
individualism to the point of isolating people to the point of complete solitude. it
is the elite eocnomic strata, through "old boy networks," that use a form of crony
capitalism. Who do you think is hired by the major law firms, or get the jobs in
corporations that mentor one for higher level management positions?
I think we have to look at this issue of cronyism from a perspective that is broader
than economic. On another thread, someone offered definitions of rationality from the
perspective of economics, sociology, anthropology, psychology, etc. I thing we need to
look at this issue from these other perspectives.
If the U.S. is successful in reducing social relations throughout the world to
complete isolation, I fear the violence and the almosat psychotic disconnection that
that will produce among people who lose their former kinship bonds with the community.
The Protestant Reformation, while it may have accelerated the economics of capitalism,
also destroyed the social safety net that had been informally built throughout the
Middle Ages.
I think this is a much more important and complex issue than we have discussed to this
point.
Hugh McGuire
On 08/16/98 09:42:01 you wrote:
>
>
>Jay Hanson:
>>
>>>>Lee that Asia's crisis was fundamentally a banking crisis with its
>>>>roots in "crony capitalism", leading to excessive borrowing which
>>>
>>>"crony capitalism" -- it fits! But what other kind is there?
>
>
>Ed Weick:
>>
>>I interpret crony capitalism to mean that transactions are not at
>>arm's-length. It involves giving special deals to your buddies and your
>>family - deals that people who are not your buddies or your family cannot
>>access.
>
>Surely, the whole point about Asian crony capitalism was not cronyism per
>se. Cronyism -- known over here as "The Old Pals Act" or "The Old Boy
>Network" -- has always existed the whole world over and always will.
>
>What happened in Asia (and still does, no doubt) is that their cronyism ran
>seamlessly through government, banks, business, academe, regulatory
>agencies (if they exist at all) and whatever else that was important. They
>still have hierarchical societies and there is hardly any separation of
>functions (something that only began to struggle into life during the
>course of this century in the West).
>
>
>>It would appear that obligations among friends and families are of
>>much greater importance in SE Asia and Japan than in the west.
>
>I really don't think there's any essential difference. If there is a
>difference, it's mainly due to the fact that families are much smaller in
>the West than in S-E Asia and are thus less important within the cronyism
>network.
>
>
>>It is also
>>probable that laws governing transactions are less rigorous. What appears
>>to have happened in Asia is that too many buddies asked for too many favours
>>from too many banks, resulting in too many bad investments and bad debts. A
>>considerable proportion of this debt was based on foreign borrowings.
>>Anyone who could, got their money out - fast. Those who did not, or could
>>not, lost a great deal of money as currencies became devalued against the US
>>dollar.
>>
>>One should not lay all of this on crony capitalism. Wherever capitalism has
>>existed, it has had elements of cronyism. Other than unfairness, there is
>>probably not too much wrong with cronyism if it leads to sound investment
>>and increased productivity. It does not appear to have done so in Asia, and
>>it therefore proved unsustainable.
>
>Yes, cronyism is benign as well as malign. (Many critical jobs are filled
>on the basis of honest private opinion that could not be expressed publicly
>for fear of libel or embarrassment.) But cronyism can only exist if favours
>are returned. You could say that cronysim is only a pejorative way of
>saying that all transactions need to be balanced -- that is, transparent
>free trade.
>
>What happened in S-E Asia is that, in their precipitate rush to get into
>the glamorous exporting industries (rather than, say, the domestic retail
>sector), cronyism sunsequently needed to stretch into non-national
>businesspeople in the West. However, if the latter were prevented from
>investing in the glamour industries of Asian countries, or if their
>investments produced too low a return, or if private backhanders were
>likely to be exposed by the Western media, then the network could not
>extend further.
>
>Thus, with hindsight, we can see that there was no Asian "miracle" in the
>last few decades and that their particular form of Asian cronyism could
>only have a limited lifetime within a limited number of sectors. This has
>now been reached. I think it's going to take Japan most of a generation to
>extend benign cronyism into the general population (that is, efficient free
>trade in all sectors from which all get benefits), and a generation more in
>the case of countries like Thailand, Burma, China, etc. It would be nice to
>imagine that the latter could do this peacefully, but I fear that most of
>them are going to experience many more bloody civil wars and revolutions
>before they finally throw of the yoke of their heirarchies.
>
>With luck, we've had our fill of these, though there's always the danger of
>backsliding into Asian-type cronyism such as Clinton's election subsidies
>from Asian sources, Blair's friendship with Murdoch, etc. We should not be
>complacent and have not yet fully learned that once governments get
>involved in matters that should not concern them, then there's danger of
>economic deterioration.
>_______________________________________________________________________
>
>Keith Hudson,6 Upper Camden Place, Bath BA1 5HX, England
>Tel:01225 312622/444881; Fax:01225 447727; E-mail:[EMAIL PROTECTED]
>________________________________________________________________________
>
>
