Globalist, localist or middle way

30 December 1998

In the early stages of the crisis, over a year ago, many felt the crisis would bring a major turning point in modern Thai history. But there were two opposing opinions on which way to turn. The globalisers, Thai and foreign, believed the crisis would force Thailand to integrate more closely with the outside world. Barriers would come down. Assets would change hands. Banking, law and bureaucracy would have to be reformed. On the other side, localists argued that the crisis signalled how dangerous globalisation is for a small country. Their solution was self-reliance, self-sufficiency and a new society built from the community upwards rather than the world downwards.

Where has this debate gone?

A year ago, the prime minister asked Anand Panyarachun to convene a think-tank to brainstorm reforms across the spectrum of business, government and society. In mid-December, this think-tank reported back at the annual TDRI conference. From the start, Anand had made it clear he stood for the globalising solution. The origin of the crisis, he said, was not globalisation but the mess Thailand had made of it. Thailand has always prospered by being relatively open to the world. Now Thailand must radically reform its business, law, government and social institutions up to world standard in order to reap the future benefits of openness.

The think-tank reports at the TDRI conference fell some way short of this vision of sweeping and radical reform. The think-tanks have run into some difficulties. Many of their members have been submerged in the business of day-to-day crisis management. Some have been hi-jacked to big new jobs. Besides, the need to carry out radical surgery has become less urgent. The crisis has eased from a year ago. At the same time, political agitations (rich-vs-poor, business nationalism) have shown that radical globalist reforms cannot be implemented without a fight.

The overall impression from the TDRI session is that the globalist mainstream thinks Thailand can squeeze through this crisis by just overhauling the financial system and making some advances in the rule of law. On the structure and management of the economy, the think-tank offered no substantial new vision. On the overhaul of the bureaucracy, everyone admits the need but nobody knows how to start. On the advance of "good governance", the principles are clear, the programme is fuzzy.

In sum, the globalist position now seems to be: we accept the foreign advice about the need for reform, but we also must accept local realities. We will do enough to get by, and we will do it in our own way. But don’t expect a revolution.

The localists believe the crisis resulted from Thailand’s export-oriented development strategy. They want to seize the chance to challenge that strategy. By striving to export at any cost, they argue, Thailand has devastated the environment, neglected agriculture, broken up local communities, sacrificed local culture, and increased social stress. The globalist solution of reform will simply mean more of the same, and recurrent crises. Communities must become more self-reliant to reduce the risk of dependence on the market. The concept of self-sufficiency, at the heart of Buddhist economics, must replace the capitalist urge to produce more and consume more without concern for social, economic or cultural consequences. These self-self ideas are not just a way to survive the crisis, but the basis for an alternative development strategy which is kinder to people and nature. Over this past year, there has been a surge of local barter networks, micro-credit schemes, and small-scale integrated farms, and an exchange of ideas and experience on a large scale.

But at two recent meetings (a conference on thammarat, and the Assembly of the Poor third anniversary), this localist movement confronted a critical problem. The movement is scattered and fragmented. It always finds itself up against the centralised and well-organised power of government, business and bureaucracy. Does the movement need a central organisation, maybe even a political party, in order to fight and survive in today’s world? At both meetings, some people raised this question. But at both meetings, the issue was quietly rejected. Yet the proposal highlighted a key problem: is the localist agenda condemned to failure for the simple reason that it is local?

With the globalist vision of reform fading, and the localist vision fighting for survival, many have begun to look for a third way. The globalists, they feel, are right to see globalisation as simply too powerful to be ignored. But the globalists have no answer to the problem that open economics leads to social division and environmental devastation. The localists, they feel, offer an attractive alternative to the inhuman face of free-market capitalism. But the localist agenda is all micro and no macro. It has no strategy for managing the economy above the level of the community. And no political strategy for its own defence.

The response of some third-way thinkers is to switch the solution from the real world to the mind. Suvinai Pornavilai believes there is a "crisis of mentality" which has come with the triumph of the capitalist ethic of dog-eats-dog on a world scale. The impact is on the scale of a world war. People can survive only by learning again how to value human (non-capitalist) relationships between individual and individual, individual and nature, individual and society.

Others want to stay in the real world, but to expand the meaning of "self-reliance" beyond its current application to the community. Realistically, they say, Thailand will have to become more self-reliant on a macro scale because the age of export-led growth is probably over. Besides, Thailand has a better chance than most countries to be more self-reliant because it has a relatively large population and a good mix of both agriculture and industry. What is needed is a shift in the mentality of macro policy.

First, why should Thailand (in the long term) be so desperate for foreign capital when it can save over 35 percent of GDP, and when it overheats if it invests more? The answer is that Thailand still needs foreign investment to get technology, and to help good foreign relations. External finance should be managed with those objectives rather than with blind adherence to theory.

Second, why should agriculture be seen as a sun-set sector whose main contribution is to disgorge cheap workers into industry? An alternative view sees developing agriculture as a way both to grow the economy and minimise social division.

Third, why do we still try to keep the poor people poor because that makes exports cheap? Instead we should try to make the poor people rich so that they become a consumer market more reliable than world export markets. This does not require any policy of redistribution. It simply needs an effort to strengthen the asset base of the left-out half of society by some land-to-the-tiller reform, decentralisation, and community rights.

The crisis is far from over. But fantasies that the crisis would lead to a quantum shift, either towards globalism or away from it, have begun to fade. Mainstream globalists seem to think Thailand will scrape through with a renovated banking sector but little else. But others still hope for some shift of direction which will halt the trend towards greater social division, more environmental devastation, and deeper mental stress.