ABSTRACT
Malaysia, like the other countries in East and Southeast Asia, experienced an economic meltdown beginning from mid-1997. The meltdown was immediately caused by the sharp devaluation of the region’s currencies principally due to speculation by hedge-fund investors. It also exposed the weaknesses of many of these economies that had become overly dependent on international finance capital and on so-called ‘directly unproductive’ profit-seeking activities, specifically state-created rent. Deregulation of the region’s economies and privatization polices during the 1990s facilitated this dependence. However, it has been argued that the costs of seeking, capturing and transferring rent, under conditions of uneven influence or control over the state (as was the case in most of these authoritarian or quasi-democratic countries), may not have been completely dissipated by unproductive activity. They may have contributed to capital accumulation besides inducing desirable productive investments (Gomez and Jomo 1997: 6–7). Hence, in spite of over-dependence on finance capital and rent-based activities, the region’s economies still experienced rapid growth during the 1990s. Whatever the case, patronage characterized these economies. Consequently, as bankruptcies became widespread, privatized projects halted, and bail-outs were attempted after mid-1997, the collusion between the political and economic elites was revealed. In the midst of the economic meltdown, the people, hitherto relatively docile because of repression, called for the removal of their erstwhile leaders and for an end to ‘corruption, nepotism and cronyism’. In Thailand, South Korea and Indonesia reform-minded leaders have since replaced the authoritarian ones tainted by cronyism and nepotism.
