What’s in a name?

What’s in a name?

Harrison George

06 June 2008

Alien Thoughts

“That which we call a rose, by any other name would smell as much”


(William Shakesomething)

It all depends on what you call something.


Somebody white and Jewish, building on occupied territory in the West Bank, in violation of international law and just about any of the Arab-Israeli peace deals, is called a ‘settler’.


Somebody black and working class, whose grandparents were ‘invited’ to move from the Caribbean in the 1950’s to solve London Transport’s recruitment problems, can still be called an ‘immigrant’.


The choice of vocabulary sort of puts you in a certain frame of mind. In fact, that’s what this is called – framing.


So let us look carefully at a subtle shift in the names that have been used to describe agriculture in Thailand.


When the negative effects of the World Bank-inspired ‘modernization’ of Thai agriculture started to become apparent, there was already some non-government development work going on in rural areas.


The buzz word at the time was ‘sustainable development’. And people were beginning to see unsustainable consequences of a form of agriculture based on high levels of chemical inputs, targeted at the market (including the export market) rather than subsistence, and attempting as far as possible to simulate production practices that were better suited to a factory floor than a rice field.


Put brutally, Thai farmers were getting shafted. Growing rice was becoming one of the easiest ways of losing money in this country. It was felt that Thai agriculture needed to be ‘sustained’. Hence the term ‘sustainable agriculture’ was used to describe agriculture that was different from the one the government was pushing.


Note what the word ‘sustainable’ focussed on – the farmer and the farming environment of land, water, forest and seeds.


But the people behind sustainable agriculture, well-meaning souls all, were not agriculturalists themselves. So they needed to look around for what sustainable agriculture might actually look like. One source was found among the farmer ‘gurus’, individuals who had never bought the Department of Agriculture Extension’s ideas and who had either figured out their own system or kept alive traditional systems that ‘modern’ agriculture had jettisoned.


Another source of ideas came from overseas. Fukuoka’s One Straw Revolution was translated into Thai and no-till agriculture attracted its adherents. Mollison was invited from Australia to peddle permaculture.


There wasn’t one form of sustainable agriculture’; there were many. So you started seeing the term ‘alternative agriculture’ gaining currency.


But note that the ‘frame’ is now not so much about the farmer, but about the method of production.


And as far as production methods were concerned, things went pretty well. Any Thai farmer who wanted to switch to alternative, sustainable agriculture had any number of working examples to go and see and copy. Many wanted to switch, but, for a variety of reasons perhaps debt being the most intractable, they couldn’t see how they could get off the chemical treadmill.


But where farmers were successful, they started looking for markets. And this meant they had to convince consumers that their produce was superior, so superior that it was worth paying a premium for. Efforts were also made to look for markets for their rice in European markets.


But ‘sustainable’ and ‘alternative’ weren’t understood in Europe. The word they were using, and had used all along, was ‘organic’.


And if you want to sell your stuff as ‘organic’, somebody has to certify you. Without this, the consumer has no way of knowing what’s fake and what’s not.


The farmers had little enough power all along. They had the government telling them and training them and, in the form of cheap credit, bribing them to use artificial pesticides and fertilizers and ‘improved’ varieties, something that the agro-chemical companies were happy to support. In the market they were normally price-takers, having to accept whatever the middleman offered when he came to buy at the farm-gate.


Now an extra agency was muscling in with the power to determine if a farmer could charge premium prices or not.


At this point, you should be able to see how use of the term ‘organic’ changes the frame. We’ve lost sight of the farmer and are no longer looking at the production method as much as the product itself.


For ‘organic’ agriculture, the concern is on the safety of what the consumer puts in his or her mouth. And to the average consumer, it’s not important whether this comes from a local smallholder, carefully nurturing the land and holding it in stewardship for generations to come; or from corporate-owned acres of polytunnels, worked by low-paid labour, possibly migrant, possibly illegal, on land that could be miles and miles away.


So the next time you look at the expanding shelves labelled ‘organic’ in your (corporate) supermarket, don’t kid yourself that your premium prices are necessarily benefiting the small farmer. You could once again just be lining the pockets of corporate shareholders.


Source :www.prachatai.com

The very rich are different from you and me

“The very rich are different from you and me.” “Yes, they have more money.”

Harrison George

30 May 2008

Alien Thoughts

I really had no idea how difficult it was to be rich in Thailand.

M L Nattakorn Devakula, in his last column for the Bangkok Post before a ‘semi-political’ break, relates his experiences in pretending to be an elected politician (or perhaps that should be ‘rehearsing’?) and trying to file a declaration of assets.

It took him all week.

And I have to admit, from my non-rich background, that this is a lot longer than I spend with my hand down the back of the sofa looking for loose change to pay the (up and down again) bus fare. I always assumed that the rich never needed to grope. Or at least paid someone to do their groping for them. It was a shock to discover how time-consuming wealth can be.

First of all, M L Nattakorn had to locate the passbooks for all his bank accounts, ‘even ones with very little money in them’. Now many of us will have some sympathy with that. Bank accounts with very little in them are all too common these days. But it’s clear that M L Nattakorn’s problem isn’t the small amounts, it’s the large number of accounts, and some, obviously, have more than a little in them.

And it was ‘fun’, he says, to get them updated. And discover just how much unearned income he’d just, er, un-earned. But there the ‘fun’ ended. He next had to list all the plots of land that he owns. Including those that have been given to him and he doesn’t know about!

Imagine the distress this causes. You may own property that you don’t know about! How can the nasty NCCC then expect you to declare what you don’t know? What a ridiculous bureaucratic attitude this betrays, expecting people to know what land they own.

But you are supposed to pay tax on this land, no? I mean, couldn’t you just collect the tax receipts? But that’s by the way.

The headaches don’t end there. He’s now got to list his share-holdings. And again, he can’t be sure of what he owns. ‘Just the other week,’ he writes, ‘I found a shares-ownership certificate in an old drawer.’

Now, on the ‘old drawer’ bit of that I’m with him. I mean, T-shirts with ‘UN Fun Run 1993’ on them, yes, I admit I’ve probably got things like that lurking in the bottom of my old drawers. Together with my old drawers. But forgetting that you have shares in a business?

And this is where I begin to sense that we’re not maybe singing from the same hymn sheet. M L Nattakorn talks of ‘the real world, where the ownership of shares is a very normal and mundane practice’.

Now we know it’s normal and mundane for people like ex-PM Thaksin Shinawatra and his family. And even for his maid and driver and gardener, of course. But I still think that this is a rather small ‘real world’. The vast majority of people in this country don’t own shares. And of the tiny minority that do, I would guess that the biggest number do know what they own.

And M L Nattakorn’s worries still aren’t over. He has to get his ‘house and car re-valued’. And that really is a shock. Only one of each? And then his bottles of fine wine, his watches, his jewelry, - is there no end to this?

And then an MP or Senator would have to go through it all over again for the spouse and any dependent children. (Mercifully M L Nattakorn seems to have managed to keep count of how many of these he has.)

Invasion of privacy, he cries. Well, yes. Except that by choosing to be a representative of the people it sort of goes with the turf. You want to keep the number of your shares, houses, Rolexes and wives secret, then just don’t stand for office.

Ineffective, he claims. What corrupt politician is dumb enough to stash his ill-gotten gains in a bank account the NCCC already knows about? Well, there’s a Deputy Prime Minister who was dumb enough to make a duff declaration for which he paid the price, and some of us are still not convinced about that share-out of shares among the Shinawatra domestics.

And a public declaration is exactly the point. How do the fruits of corruption get hidden in a non-transparent system? Very easily. And in the system we have now? Much harder. Everyone who thinks they know about something you own can check what you’ve listed and if it’s not there, you’re shopped.

But the exercise is obviously far too stressful for a semi-politician-to-be like M L Nattakorn. Even if it has been a dry run, it’s clearly been too much for him, it’s even affected his reasoning.

So, in a magnanimous sacrifice on my part, I am prepared to solve his problems.

Dear Khun Pluem (I can call you that, can’t I?), any time you need this burden lifted from your shoulders, just transfer all your assets to me. And I will suffer in your place.

As much of it as you know about, of course.

Source : www.prachatai.com

Thailand : high rice prices and the future of the farmer

High rice prices, CP-nomics, and the future of the farmer


By Chang Noi

The Nation,12 May 2008


The surge in the prices of rice and other crops is cause for celebration in the villages. For thirty years, the trend of agricultural prices has been down, down, down. Now there’s a buzz. In the north, people are planting maize on abandoned hillsides, on the riverbanks, in front gardens, on the roadsides. In the central plain, people are slipping away from the factories to plant the second crop.

In the short term, this looks great for the farmer. In the medium term, it looks great for business.

Over the last thirty years of sliding prices, Thai agriculture has undergone a quiet revolution. In the drier regions, many areas planted in the crop boom of the 1960s and 1970s lapsed back to fallow. Crops like cotton, jute, and soyabean dwindled away. More and more land was put under fruit trees, rubber, sugarcane, and oil-palm, often owned or controlled by corporations.


In the wet paddy areas, the trend was different. Young members of the family drifted away to the city. Farmers invested in more machinery, or retreated to simpler methods like broadcasting. Experts predicted that land would be consolidated into larger holdings, but surprisingly this never happened. Across the paddy zone, small holdings still prevail. But one telling fact suggests this situation is ripe for change: the average age of the paddy farmer is now 53.


Rising crop prices have caught the eye of big capital. The current price levels are a bubble, boosted by speculation. There will be a bump downwards in the near future. But in the medium term the trend is going to be upwards because of rising food consumption in India and China, rising demand for agri-fuels, and global warming. This promise of a long-term trend makes investment worthwhile. For the last generation, Thailand’s agri-business firms have been putting their spare cash into Bangkok shopping malls, luxury hotels, mobile phone ventures – anything but farming. Now the trend will tilt the other way.


Charoen Sirivadhanabhakdi of Mekong and Beer Chang is already ahead of the game. He began investing in agricultue to secure supplies for his liquor manufacture, and seems to have an appetite for land like an elephant for tender banana plants. He now owns over 100,000 rai of agricultural land, planted with sugarcane, rubber, oil-palm and cassava. He also controls another 120,000 rai under sugarcane and oil-palm in Cambodia. Charoen is Thailand’s first latifundist.


A few weeks ago, Dhanin Chearavanont, head of the CP empire, gave an address at the National Economic and Social Development Board on “Directions for Thai Economic Development.” Dhanin is usually rather quiet. Over a long and massively successful business career, he has very, very rarely spoken in public about the economy. After this speech, he repeated the contents in interviews with newspaper and television programmes. Dhanin clearly felt this was a moment when he had something big to say.


To set the scene, Dhanin explained the two-part formula behind CP’s massive success in chicken, pork, and prawn. First, CP takes the risk away from the farmer. A smallholder is very vulnerable to risks. Two bad years and he’s dead. But a big company can shoulder the risks because of capital reserves and scale. Second, CP invests in technology, both better feedstocks and more efficient chain management similar to the just-in-time systems of auto manufacture. The result: higher productivity and higher profits, shared between CP and the farmer.


Suppose the same formula could be applied to crop production? Dhanin did the maths. Thailand has 62 million rai under paddy including 25 million rai of irrigated land. Concentrate on the irrigated part. At present the yield is only 400 kilogrammes per rai. But suppose the production was modernized “in the same way that we modernized chicken production” by leveling the land properly, making the irrigation secure for two or three crops, and improving the seed Dhanin reckoned the same land could yield 800 kilogrammes, three times a year.


Next, turn the other 40-odd million rai of non-irrigated paddy land over to something else. Plant 30 million with rubber, and 12 million with oil palm.


Next, firm up the rubber cartel with Malaysia to double the price, and talk with India and Vietnam for a cartel on rice.


After this magic maths, Dhanin summarized, “With just this 62 million rai, if we planned well, we could make 2.367 trillion baht.” Total export earnings would be almost 3 trillion, over five times the current level. “Agricultural products are our oil, our gold.”


Dhanin knows that the threat to this vision is the mentality of price control. Because high rice prices affect consumers, government feels pressured to keep them low. Dhanin argued that Thailand should think about crop prices in the same way that OPEC countries think about oil prices. High is good. Instead of controlling prices, government should jack up salaries, starting with government officials. Dhanin offered this “double high” strategy as the key to future growth.


We need not expect the technocrats to revise the national development plan in line with Dhanin’s vision. What is interesting about the speech is what it suggests about CP. The low productivity of Thai agriculture is a business opportunity. The promise of rising prices makes it a big opportunity. CP has been experimenting with integrated paddy production for years. It claims to have developed a super-yielding strain. Dhanin wants government to help, or at least not get in the way.


These moves by Dhanin and Charoen point to a very different future for Thai agriculture. In this vision, it is very difficult to see the role of the self-reliant small farmer idealized in the King’s vision of a sufficiency economy. A newspaper challenged Dhanin on this point. He replied that if he had a billion to invest then he would invest a billion and no more, so for him that was sufficiency. Well, at last we know what sufficiency economics really mean.

Books,Articles : Thaksin's populism in Thailand

Thaksin's populism


Thaksin Shinawatra achieved massive personal popularity, as demonstrated by scenes of public acclaim and high endorsement at the general elections in 2005 and 2006. No previous Thai elected political leader had courted or achieved such popularity. His support was strongest in rural areas of the north, north-east, and central regions, and among rural migrants in the capital. During Thaksin's time in office, the term "populism" was applied to Thai politics for the first time, and rendered into Thai for the first time, to describe this novel cultivation of popular support and the mechanisms that lay behind it. Fear that populism would enhance the power of the mass in Thai politics at the expense of established elite interests was a major factor in assembling the coalition of forces behind the coup of September 2006. Among the four reasons which the junta gave for staging the coup was that Thaksin had "caused an unprecedented rift in society," meaning the rift that ran between the Bangkok middle class on one extreme, and Thaksin's largely rural support base on the other. Some key figures in the middle-class opposition to Thaksin pinpointed his populism as a major reason for rejecting his leadership. In the final lines of a book written on the eve of the 2006 coup, the political scientist Anek Laothamatas (2006: 202) wrote, "We must deal quickly with Thaksin-style populism before another economic crisis arises and destroys the nation completely." Shortly after the coup, Sondhi Limthongkul, a media entrepreneur who led public demonstrations against Thaksin, told an audience in the USA that in future he would "work only with the middle class who have sufficient education to truly understand how populist politicians can abuse power" (cited in Keyes, 2006).
Thaksin's populism is often equated with his policies, especially the three-point electoral platform of 2001 (cheap health care, agrarian debt relief, village funds). It can quite properly be argued that such policies are the everyday stuff of electoral politics and do not deserve the label of populism. The equation of Thaksin's populism with this programme also gives the impression that Thaksin's populism was present at least from the time of his rise to power.
In this article, we argue that Thaksin's populism was more complex than his policy offering; that it developed over time in response to social demand; that it has strong affinities with political trends elsewhere in the world owing to a common political economy; and that it helped provoke the urban middle-class rejection of Thaksin, which was background to the coup.
The first part of the article plots the growth of Thaksin's populism, showing that it became by stages a much more important part of Thaksin's public politics. The second part argues that a policy platform was only one aspect of Thaksin's populism, and that two others were the projection of a relationship between political leader and supporters that was dramatically new in the Thai context, and an explicit attack on the form of liberal democracy which has been the template for Thailand's constitutional development. The third part argues that Thaksin's embrace of populism was not mere opportunism but the response to social demand. To put it another way, Thaksin may indeed have been opportunistic, but there would have been no opportunity if there had not been a social demand. This demand was a function of social forces created by Thailand's pattern of development in the era of outward-orientation and neo-liberalism.
The fourth section compares Thaksin with other examples of modern populism, especially in Latin America. There is often resistance to such comparison on grounds that the histories and social profiles of Latin America and South-east Asia are so different. But the similarities between the Thaksin regime and certain examples in Latin America, especially Fujimori's Peru, are so striking that it is worth looking at the extensive analysis of Latin American populism for help in understanding Thaksin. One key message of this comparison is that populism mutates and matures. Another is that populist regimes which lack mass organisation easily fall victim to elite attack. The final section looks at the role of Thaksin's populism in the crisis of 2006.
Although in the past there have been attempts to define populism in terms of ideology or organisational form, scholars nowadays tend to accept the term as a broad description. Kenneth Roberts (2006) summarised "the essential core of populism" as "the political mobilization of mass constituencies by personalistic leaders who challenge established elites." He argued that such movements encompass many shades of ideology, and various types of organisation. (1) We use the term in this broad sense.
Becoming a Populist
When Thaksin formed the Thai Rak Thai (TRT) party in July 1998, there was little sign of his later populism. Thaksin was a spectacularly successful businessman from a prominent business family in Chiang Mai. On founding the party, he explained that its principal mission was to rescue Thai businessmen from the 1997 financial crisis and to restore economic growth (The Nation, 15 July 1998).
He later broadened his political mission to include reforms that would modernise Thailand, especially the bureaucracy and the political system, and hence prevent the recurrence of financial crises in the future. The slogan chosen for his party "Think new, act new for every Thai"--reflected the image he projected as a modernist and reformer. In the statement of his political ideas at this time, there is no social agenda except for one brief general commitment "to bring happiness to the majority of the country." The single-minded focus is on "enabling Thailand to keep up and be competitive with other countries" (Walaya, 1999: 211).
The 23 founding members of the party, and the 44 members of a kind of shadow cabinet publicised a year later included only one figure identified with rural or mass issues. Thaksin's speeches of this era do not make use of the term "the people" and do not imagine any social change other than the triumph of business over bureaucracy. For the 2001 elections, the initial party platform focused on measures to help small and medium businesses, and the centrepiece of the media campaign was a dramatisation of Thaksin's own life in which he was cast as a poor boy who made good as a rich businessman--a distillation of the lives and legends of Thailand's urban society of Thai-Chinese migrant families, not of its rural society of frontier rice farmers. As signals of his modernism, Thaksin appeared in public in a suit, the uniform of business, and littered his speeches with English words and references to the sayings of Bill Gates (Pasuk and Baker, 2004: Ch. 3).
To put together a broader campaign platform, Thaksin drew on the services of a group of former student radicals from the 1970s era. The key contact was Phumtham Vejjayachai, who had met Thaksin in 1975-76 when Thaksin worked as an aide to a minister who had to negotiate with leaders of the student movement. In response to a call for policy ideas, another 1970s student leader turned orchard farmer, Praphat Panyachatrak, contributed a scheme of agrarian debt relief. This subsequently became the first item in a platform designed for rural appeal (The Nation, 28 March 2000, 23 March 2001).
Subsequently, the TRT policy team adopted ideas for a universal health scheme which had been developed over some time within health-orientated NGOs. The scheme was based initially on an insurance model with a low annual premium, but was subsequently changed to a retail model with a low price per visit (Viroj and Anchana, 2006). This mass platform was rounded off by a scheme of village funds essentially similar to a scheme which Kukrit Pramoj and Boonchu Rojanasatian had launched in 1975 (Bangkok Post, 17 August 2000).
This three-point platform figured in the campaign material that TRT distributed, especially in rural areas, in the two months before the election. But the agrarian debt scheme and village funds were not evidence of any special tilt towards rural issues on the part of Thaksin and TRT. The policy team also contacted activists working with urban labour, and put together a programme appealing to this interest (Brown and Hewison, 2005). In the same way, TRT attempted to appeal to businessmen, environmental groups, the moral reform lobby and various other sectional interests. It was trying to please everyone.
At the polls in January 2001, TRT won two seats less than an absolute majority. Thaksin's policy platform was strikingly new and will have contributed to the result, but it would be wrong to imagine, with the benefit of hindsight, that this was a populist victory. Many factors contributed to this result (see especially McCargo and Ukrist, 2005: Ch. 3; Nelson, 2002; Ockey, 2003): the opposition Democrats were damned by their association with the IMF's disastrous crisis recovery programme; other parties and politicians were still suffering financially from the crisis; Thaksin was successful in persuading many established politicians to join his party; and the electoral system introduced under the 1997 Constitution was designed to deliver fewer but larger parties than in the past. Thaksin drew attention because of his platform, but even more because of his novelty as a leader and because of his wealth. Opinion polls run after the election found that many voters believed the TRT platform was simply "too good to be true" (Bangkok Post, 12 February 2001).
While in the international context populism is an old term with many meanings, it is important to understand that in the Thai context it was a totally new word and wholly defined by its usage with reference to Thaksin. Anek (2006: 78) showed that "prior to 2001 and Thaksin's election victory, the terms populism and populist were used by almost nobody in academic circles, the media, or the society at large."
Just two weeks after the election, Kasian Tejapira (2001a; 2001b) wrote articles in Matichon, applying the term populism to Thaksin and TRT, and explaining to his audience what the word meant. (2) At first, however, he used a Thai transliteration, poppiwlit. The term was so new and unfamiliar that no translation was in common usage. In the same week, two Thai academics translated the term as prachaniyom during a seminar in Thammasat University. Kasian switched to this term in his article on 3 February and Anek (2006: 79) suspected this was the first time this Thai word was used in print.
Bidding for Popular Support
Thaksin's embrace of populism had two main stages, both when he found himself under attack. In December 2000, Thaksin was indicted by the National Counter Corruption Commission for failing to report his assets accurately in three statutory declarations made when he served briefly as a minister in the mid-1990s. (3) If found guilty, Thaksin faced a five-year ban on participation in politics. He fought the case with legal arguments and with attempts to suborn the judges, but also deployed two other strategies.
First, he manufactured a public presence significantly greater than that attempted by any previous Thai prime minister, primarily by using state-owned media now under his control. He launched a weekly radio show in which he talked to the nation for an hour about his activities and his thoughts on issues of the day. He dominated the daily television news and also appeared in several special programmes, including an evening chat show in which he lamented his predecessors' handling of the economy. In the final climactic sessions of the assets case, he walked the final stretch to the court through an avenue of supporters, pressing the flesh like an American electoral candidate. In an extraordinary innovation, the final summaries by plaintiff and defence in the assets case were run live as a television special.
Secondly, his government implemented the three-point electoral programme with extraordinary speed. For the health scheme, a workshop was held in February, a pilot scheme launched in April, and the roll-out (except in Bangkok) completed in October (Viroj and Anchana, 2006). The agrarian debt relief scheme was made available to 2.3 million debtors by the same month (Bangkok Post, 18 October 2001), while by September the scheme of village funds (4) was extended to most of the country's 75,000 villages and 5.3 million loans approved (Worawan, 2003). The three schemes were immediately popular.
Thaksin's personal popularity, measured by a monthly poll, rose from around 30% in December 2000 before the election to a peak of 70% in May 2001 as the asset case decision approached (The Nation, 7 January 2002).
With this change in public presence and popularity went a change of rhetoric. In direct reaction to the assets charge, Thaksin announced a new and leading feature of his political mission: "Nothing will stand in my way. I am determined to devote myself to politics in order to lead the Thai people out of poverty" (The Nation, 23 December 2000). He and his aides portrayed the assets case as a conspiracy by Thailand's old elite to remove someone who had been elected "by the people" and was dedicated to work "for the people." Thaksin said on the eve of the verdict, "The people want me to stay and the people know what's right for Thailand. And who should ! be more loyal to? The people? Or to the Court? I love people. I want to work for them" (Time, Asia edition, 13 August 2001: 19).
In rhetoric, over the nine months of the asset case, Thaksin went from modernist reformer championing businessmen in the face of economic crisis, to populist championing the poor against an old elite. By late 2001, academics and journalists, both Thai and foreign, used the term populist more regularly in reference to Thaksin. But most analysts still pictured Thaksin primarily as a business politician who had adopted populist policies as a strategy to win popular acquiescence for reforms designed primarily in the interests of capital. Kevin Hewison (2004) dubbed this formula a "new social contract." (5)
Going to the People
The second stage of Thaksin's development as a populist began in late March 2004. Thaksin came under increasing attack in the press and on public platforms, especially over his management of the upsurge of violence in the far south, but more generally over a range of issues including corruption, government aid for Shinawatra businesses, the privatisation of state enterprises, and the government's handling of avian influenza. With an election approaching in early 2005, Thaksin reacted quickly to secure his electoral support in the countryside. He launched a series of tours covering every region of the country. His motorcade swept into villages and district centres, where provincial officials and local leaders had been gathered. Flanked by other ministers and high officials from the capital, Thaksin listened to reports on local problems and petitions for budget assistance. In many cases, he then gave instant approval for projects, using a vastly expanded central fund under his own control which he had created by reforms in the budget process. In a seven-day swing through the north-east in April 2004, he pledged approval of projects totalling 100 billion baht (The Nation, 28 April 2004). In a six-day swing through the north in July, he pledged approval of projects totalling six billion baht (The Nation, 23 July 2004). He visited the central provinces in several shorter trips, and the south in August. In Chiang Mai he promised to rid the city of poverty within three years. In Nakhon Pathom, he told students, "Come and tell me if you don't have a notebook [computer] yet and I will buy one for you out of my own pocket" (The Nation, 14 May 2004). Thaksin also invited all Bangkok's taxi drivers to Government House for lunch (The Nation, 16 May 2004).
In the month prior to the election in February 2005, Thaksin made further tours, mainly in rural areas of the north and north-east. Election law forbade any instant handouts in this period, but Thaksin announced a much more elaborate programme of election promises than in 2001, including an extension of the village funds, land deeds for every landholder, a government pond dug for anyone prepared to pay a small fuel cost, four new cheap loan schemes, free distribution of cows, training schemes for the poor, cheaper school fees, special payments for children forced to drop out of school because of poverty, an educational gift bag for every new mother, care centres for the elderly, more sports facilities in urban areas, cheaper phone calls, an end to eviction from slums, more cheap housing, lower taxes, more investment in the universal health scheme, a nationwide scheme of irrigation, and a deadline for the end to poverty--"Four years ahead, there will be no poor people. Won't that be neat?" (Thaksin, 2005; see also The Nation, 18, 19 October 2004; Bangkok Post, 7 November 2004). For this election, the modernist "Think new, act new" slogan of 2001 was replaced by the intensely populist, "The heart of TRT is the people."
After the 2005 election, Thaksin toured less but made increasing use of a practice, begun in 2001, of holding occasional "mobile Cabinet meetings" in an upcountry location. These events similarly created occasions for local people and officials to present petitions to Thaksin, and for Thaksin to pledge local budget spending, all in full view of the public media. This strategy climaxed in January 2006 when Thaksin led a troop of ministers and senior officials to spend a week in At Samat in Roi-et province, one of Thailand's poorest districts, supposedly to devise systems for eradicating poverty which could then be replicated elsewhere.
These events dramatised Thaksin bringing government to the people, and were rewarded by increased popularity. Even though very little concrete action resulted from the At Samat poverty experiment, popular support for Thaksin in this area increased dramatically from an already high level. (6) Although the motorcades, mobile Cabinet meetings and the poverty experiment reached only a small sample of places, the events were magnified by display on television. The poverty experiment ran all day on live television as a form of "reality show." The upcountry tours provided opportunities for Thaksin to be photographed in homely situations emerging from a village bath-house in a pakoma (common man's lower cloth); transported on a village tractor (i-taen); riding a motorbike down a dusty village street; accepting flowers from toothless old ladies.
In this period, Thaksin changed his public appearance and speech. He shed his business suit in favour of shirtsleeves with buttons open at the neck, sometimes all down to his waist, and his hair lightly tousled. He stopped littering his speeches with English to denote internationalism and modernity, and instead used dialect and earthy humour. He stopped quoting Bill Gates, and instead often mentioned his own family and sex life. The format of his weekly radio show underwent a subtle change: instead of commenting on current issues, Thaksin related the events of his week like a diary, allowing listeners into his life.
By the end of this period, Thaksin's populism had expanded beyond a policy platform into a distinctly new form of politics which can be portrayed as three messages to his supporters. Thaksin's Three Messages
I Give to All of You
Thaksin's government had launched three major schemes of social provision, and promised many more. The distinctive characteristic of most of these schemes was that they were available to all. Previous governments had provided cheap or free health care for the poor by distributing cards. However, through corruption and inefficiency, these cards reached only a minority of the families that deserved and needed them. Using these cards carried a stigma, and often subjected the holder to poor treatment. Thaksin's health scheme was available to all as a right, and significantly extended access to health care. According to the Thailand Development Research Institute (TDRI), which was generally critical of Thaksin, the scheme lifted more people out of poverty than any other single government measure. While there remained a service differential between the 30 baht scheme and private treatment, participation in the scheme conveyed no stigma and the treatment was mostly judged to be good (Viroj and Anchana, 2006). In polls, the health scheme regularly rated as the TRT government's most popular measure (e.g. The Nation, 26 September 2004). This popularity outstripped actual experience of the scheme. People who had not used the scheme liked the idea of it.
In the same way, the debt relief scheme was available to all indebted farmers, and the village funds extended to every village. The slew of schemes floated in the 2005 election campaign offered provisions for everyone through every stage of life--from birth through education and employment to old age.
As Pitch (2004) has argued, people felt empowered by the TRT schemes, partly through the very real impact of the programmes, partly through the impression that Thaksin and his party were responsive to their demands, and partly because the schemes positioned each citizen in an equal and direct relationship with the state. From interviews and observation in Mahasarakham in 2005, Charles Keyes (pers. comm., February 2007) concluded,
The relationship with the rural populace was clearly symbiotic and
grew over time. As villagers benefited from Thaksin's populist
programs, they felt empowered because they were responsible for
putting him in power.... In one interview, a middle-aged villager
said that in the past people in Bangkok controlled politics, but
today we villagers do.

I Belong to You
Thaksin transformed himself into a public property over which people felt they had some ownership. He used the media and public appearances to convey an image of constant and dominating presence in public space. He re-crafted the presentation of himself to become much less distant from the ordinary person. He distinguished himself from previous political leaders and from other figures in the political arena including officials, academics and journalists. He delighted in provoking criticism from such figures and then boasting about such criticism on his radio shows, upcountry tours and election appearances. He understood that presenting himself as an enemy of Thailand's political elite conveyed an appealing message to his mass audience.
Deft use of the media is, of course, commonplace in modern politics in any country. But, in Thailand, Thaksin's development of a powerful public image was new and broke many local conventions. On public appearances, he was received in scenes normally reserved for rock stars and certainly never before seen around a Thai political leader.
I am the Mechanism which can Translate the Will of the People into State Action
In many of his public statements from 2004 onwards, the government was reduced to the first person singular. For example, in his last speech before the 2005 poll, Thaksin spoke as follows:
I will make the Thai economy improve. I have already raised the GDP
from 4.8 to 6.5, and now I will take it from 6.5 to 9 trillion
[baht]. I will increase exports. I will expand the markets ... I will
fix the economy by fixing the problem of poverty ... I ended the IMF
loan. I changed the status of the country from one which chases
around borrowing money to one which lends ... I will take care of
kids by developing their brains ... I will change the way of giving
financial support to universities ... I will build more sport
stadiums and more parks ... I already gave officials a salary
adjustment in 2002, and I will give another ... I will provide
opportunities for people to study at university level without their
parents having to open their wallets (Thaksin, 2005).
At this and other campaign meetings, he dispensed with the usual ritual of introducing the local party candidate, and instead launched into his speech as if the election were a presidential poll. His domination of television news became so overwhelming that other ministers spent ministry budgets to buy billboard space to display their face and achievements. In a specially televised Cabinet meeting, Thaksin presented himself as a traditional taokae (Chinese boss) commanding and instructing a group of passive subordinates. He told NGOs that they no longer had any role because there was no need for intermediaries between the leader and the people. After the landslide 2005 election victory, Thaksin constantly repeated, "I have the votes of 19 million of the people."
In his speeches before the 2005 election, Thaksin offered himself as the vehicle through which the wishes of the people could be translated into action on the part of government.
These past four years, this kind of change was not by chance or
fluke [in English], but because of the power of your belief in me.
I work hard, don't I? If I work hard, but you don't believe in me,
there could be no trust. But when you believe in me, then people
listen when I speak, and bureaucrats are not stubborn, because they
listen to the people. This is democracy ... I have the same power as
prime minister as every person who is prime minister. But I have
special power more than the others because I do what I say I will
do. People put faith and belief in me, don't they? (Thaksin, 2005).

Thaksin devalued the importance of parliament, neutralised the check-and-balance bodies of the 1997 constitution, micro-managed the electronic media and said in public that law, the rule-of-law, democracy and human rights were not important because they often got in the way of "working for the people." In his 2005 election speeches, he suggested to his audience that the bundle of liberal democracy-rule of law, freedom of criticism, human rights, oversight by parliamentary opposition, checks and balances on the executive had done little for them in the past, and that making him into a powerful executive would deliver them greater benefit. He described criticism by press or opposition as "destructive" and exhorted his audience, "We want politics with meaning, don't we? We want politics which have something for the people, don't we? And this politics which is just destructive, can we get rid of it yet?" (Thaksin, 2005). In his public criticism of opponents, he focused especially on people associated with Thailand's history of democratic development (Thirayuth Boonmi) or with the reform pressure of the 1990s (Prawase Wasi, Anand Panyarachun). On several occasions, he encouraged people to draw parallels between himself and authoritarian military leaders in the past, especially Sarit Thanarat, whose memory had become associated with direct and decisive action (e.g. Matichon Raiwan, 30 September 2003).
Thaksin's authoritarian tendency was clear from the beginning of his premiership. It stemmed from his enormous self-confidence, his need to conceal the massive conflict-of-interest over his family business, and perhaps his police training and experience as an old-fashioned taokae of a family-based business. But Thaksin's embrace of populism gave him a means to justify this authoritarianism as an alternative to the liberal model of democracy.
The Social Context of Populism
Thaksin's populism was a response to social demand, with roots in the social structure moulded by Thailand's strategy of outward-orientated economic development. With the development policies adopted by governments since the 1950s, Thailand became significantly more industrialised and urbanised. But Thailand's decision to develop with a relatively open economy and high reliance on external sources of capital, technology, expertise and even labour resulted in a social structure that differs significantly from the classic pattern of the West, and that of the early Asian industrialisers such as Japan, Taiwan and Korea. Figure 1 is an attempt to sketch this social structure using labour force data (the 2004 Labour Force Survey, February round and the 2002 Industrial Survey).
The formal working class is small, accounting for around 8% of the workforce. By "formal" working class we mean those with relatively permanent employment in sizeable establishments. As a proxy, we use the numbers employed in manufacturing in establishments with more than ten workers, as recorded in the Ministry of Industry's (2002) Industrial Survey. This is not "the working class" as a whole, which would be far larger. This formal working class is small because the multinational firms that dominate manufacturing tend to employ technology which is more capital-intensive than Thai conditions would merit. (7) It is weak in bargaining power because of labour competition on a global scale, and suffers from the legacy of the Cold War when Thai governments devoted considerable care to controlling labour organisation through legal measures, political co-option and outright suppression (Brown, 2004).
The white-collar middle class is relatively large, at around 15% of the workforce. This figure is calculated from those with higher education and a professional, managerial or clerical job, as recorded in the Labour Force Survey. This class developed very rapidly over little more than a single generation because of the rapidly rising demand for skills to service the expanding modern economy.
The numbers remaining in agriculture have fallen, especially over the 1985-95 economic boom, yet still two-fifths of the workforce returns their major occupation as agriculture. However, for most nominally agrarian families, agriculture is no longer the sole source of income, and for many it is only a minor contributor. Because of low public investment directed towards the agricultural sector, a long-term trend of decline in international prices and environmental destruction, returns to agriculture have declined. Agrarian households rely on transfers from the urban economy to supplement their incomes.
There is a steady seepage of people from agriculture into the urban informal sector, which has ballooned to around a quarter of the workforce. This sector includes the whole "shophouse" sub-sector of "morn-and-pop" stores, and other family and micro-scale enterprises; vendors; the self-employed; many illegal or semi-legal enterprises; and a large workforce that floats between construction, seasonal agricultural work, sweatshops, legal and illegal services industries, and other forms of casual employment (Endo, n.d.).
The agricultural and urban informal sectors are linked closely through flows of people and remittance. For shorthand we will refer to these two combined as the informal mass. Together they account for around two-thirds of the workforce and roughly the same proportion of the electorate. As electoral democracy has developed in Thailand, the potential importance of this informal mass in politics has advanced in parallel. But numbers are only part of the story.
Those who depend for a living on the informal economy also tend to be involved in informal systems of social organisation and political regulation. As they are not directly affected by the taxation, budgetary spending or regulatory action of government, they have low motivation to invest in the organisation needed to make their weight felt in national politics. At the same time they are bound by informal linkages into clientelist politics (Anek, 2006; Khan, 2005). In Thailand, they were recruited into politics mainly through the hua khanaen (vote bank) systems of electoral organisation, in which candidates rely on village heads and other locally influential people to deliver the people's votes (see the discussion in Walker, 2008, this issue).
However, the politics of the informal mass has changed markedly over the past two decades. Over the 1980s, the controls through which the military suppressed grassroots political organisation by intimidation and force during the Cold War were eased. From the late 1980s onwards, civil society movements raised political consciousness over issues concerning rights, environment, livelihood and equity. Then, in 1997, the financial crisis hit very hard on the informal mass. The two million who were immediately made unemployed by the crisis came mostly from this segment. Returns to agriculture were initially improved by the currency movements, but then sharply depressed. Numbers below the poverty line rose by three million (World Bank, 2001). Declining remittances from urban work knocked through into rising levels of agrarian debt. This severe and sudden impact had a politicising effect.
The two years following the crisis saw the biggest upsurge in rural protest since the early 1970s. The chief demands were for agricultural price support, agrarian debt relief, and land for the landless (Pasuk and Baker, 2000: Ch. 5). Thaksin and his advisers adopted exactly these demands. Agrarian debt relief was the first measure that Thaksin's ex-activist advisors inserted into his rural electoral platform; Thaksin frequently distributed land deeds during his rural tours; and government support for rice prices became a key policy through which Thaksin consolidated rural support. (8)
Thaksin connected with the emerging political demands and aspirations of the informal mass. Although he was not an obvious candidate to become a populist leader, and although he had shown no interest in "the people" before 2000, he was drawn into this position by the mechanisms of electoral politics. As his political career was threatened, first by legal process, later by growing urban opposition, he discovered a new and powerful base of support in the growing political involvement of the informal mass. He gave them a form of leadership that brought their demands and aspirations to bear in national politics. At the same time, Thaksin's programme, leadership style and political message were shaped by the aspirations and insecurities of this support base. As Nithi Eoseewong observed, '"Think new, act new' is just somebody taking the dreams of Thai society and making them into policy" (in Matichon Raiwan, 26 May 2003).
The universalism of his policies had immediate appeal to people who lived and worked within informal rather than formal structures, and who often missed out on government schemes that were designed and delivered within a formal institutional frame. The failure of previous targeted schemes of subsidised health care are a good case in point. Similarly, his leadership style was a targeted appeal to the informal mass. He approximated the style of the local boss with a strong streak of personalism ("I do this for you"), a promise of generosity in return for loyal support, and a cavalier, tough-guy, dismissive attitude towards enemies. Finally, his promise to act as the mechanism through which popular demands would be translated into state action carried an implicit message that old-style politics, and the whole liberal-democratic bundle, had done little for the mass of the people.
Thaksin's populism thus went far beyond a transactional relationship in which he appealed for support in return for a menu of policies. He tapped the aspirations, insecurities and sense of exclusion of this major segment of the population, and was rewarded with support that was both emotional and rational.
Brothers and sisters, look at me! My ribs are all cracked, because
when they hug me, they hug me tight, solid, humph! Today, I was
hugged a bit too heavily. My arms are starting to be different
lengths. Today, I was pinched all over. But I'm happy because people
have the feeling that I care for them. I want to see them escape
poverty. They have placed their hope in me. I know that I'm taking
heavy burdens on my shoulders with the things I'm saying here. But
I'm confident I can do them. Someone born in the year of the ox in
the middle of the day likes working hard--has to plough the field
before he can eat the straw
(Thaksin, 2005).

Latin American Parallels
Leaders with many similarities to Thaksin have appeared in many other countries in recent years. In Turkey in 2004, for example, a new prime minister whose party's base of support comprises small-scale producers and the informal sector, launched a slew of populist schemes, and stood aggressively against the country's political tradition going back to Ataturk in the 1920s (Carroll, 2004). However, the region where this political tradition has the longest history and the most extensive academic analysis is Latin America. Several scholars detected a change in Latin American populism which began in the 1980s and continued into the following decade. In the prior era from the 1950s onwards, the dominant trend had been movements that built on organised labour and social movements to form mass parties delivering policies of protectionism, import substitution industrialisation, and redistribution through controls on prices and wages. The movements that emerged in the 1980s, and were dubbed neopopulism, were substantially different. They were detached from labour unions or other civil society organisations. They had little permanent organisation, only ad hoc electoral campaigns. The policies through which they courted popularity were mostly forms of welfare provision, while their macroeconomic management largely accepted the neo-liberal framework advocated by the US (Conniff, 1999; Roberts, 1995; Weyland, 1996).
Two main schools of thought emerged to explain this shift in Latin American populism. The first concentrated on the political economy. Labour movements had declined with the rise of multinational capital and the development of an internationalised labour market, while the decay of agriculture had swelled numbers in the informal sector, creating a "disorganised mass." This mass was mobilised as a political force by a "critical juncture," such as a severe cyclical economic crisis, or the delegitimation of an old ruling elite. The second explanation, coming from the rational choice tendency in political science, argued that the rise of mass media had supplanted the need for political entrepreneurs to use "labour intensive" techniques of mass mobilisation (Roberts, 2006). These two arguments are not mutually exclusive, though it is difficult to see how the rational choice version can work without some political economy underpinning.
The most striking example of this era of neo-populism was Alberto Fujimori's Peru. As an ethnic Japanese former professor of agronomy, Fujimori was a total outsider to the old political elite and enjoyed very limited support only a few months before his rise to power in 1990. He was swept to the presidency on a wave of emotional reaction against the old political elite in the aftermath of an economic crisis. He consolidated his support with a raft of welfare schemes, which included universal health care and other mainly universal schemes. He systematically undermined the parliament, media and judiciary by bribery on a massive scale, while simultaneously telling his supporters that democratic institutions were a hindrance to his efforts on their behalf (Ellner, 2003; McMillan and Zoido, 2004; Roberts, 2006).
Fujimori was far from alone. Menem in Argentina and de Mello in Brazil followed similar patterns in the early 1990s. Kurt Weyland (1996: 10) summarised the populist leaders of Latin America in this era as follows: "They ... appeal to unorganized, largely poor people in the informal sector, have an adversarial relation to many organized groups in civil society, and attack the established 'political class' as their main enemy." They rely on "a strongly top-down approach and ... strengthening the apex of the state in order to effect profound economic reform and to boost the position of the personal leader." They have tended "to ally with the army, sideline or destroy existing political institutions (unions, parties), and manipulate the media." They also tended to align with the USA, acquiesce in neo-liberalism and pursue rapid economic growth to win the support of local business elites. The similarities to Thaksin are obvious.
In short, Thaksin's populism is far from unique but follows in broad outline a pattern that was dominant in Latin America a decade or so earlier. But the Latin American case has a second important learning. Populist politics are not static. Just as neo-liberal neo-populism supplanted an earlier "classic" era, so neo-populism has already been supplanted by distinctly new trends in Latin America. In the last few years, movements embracing leftist ideologies of varying degrees have won power through the ballot box in Venezuela, Brazil, Uruguay and Chile, while mass movements have toppled conservative or centrist presidents in Ecuador, Argentina and Bolivia.
This shift appears to have many elements, which operate in greater or lesser degrees in different countries. First, there is a growing popular reaction against neoliberal policies which can be tapped in electoral campaigns, particularly through promises to roll back the penetration of multinational capital in these economies. Secondly, there is a rise in anti-Americanism--or at least a drop in deference to the USA--which is probably attributable to the international rejection of the George W. Bush presidency. Thirdly, there is some mobilisation of class interests on ethnic lines, most obvious in the election of Evo Morales in Bolivia in 2005.
The point is that populism evolves and mutates in response to ideological development, shifts in the political economy and changes in the international environment.
Organisation and Party
In the neo-populism phase, Latin American populism moved away from mobilisation based on structured parties and social movements towards looser organisations and "electoral populism" in which the party existed only for the purpose of election campaigning. Fujimori is again a primary example. He formed a new party on each of the three occasions that he stood for election and promptly abandoned or disbanded the party in the aftermath of his victory. The lack of any institutional form to bind Fujimori to his electoral promises gave him the freedom to woo local business and make his settlement with the USA (Ellner, 2003; Roberts, 2006).
Roberts argued that change in the degree of organisation by Latin American populists is not a trend over time but a function of the fierceness of opposition. Populist leaders who face no serious response from an old elite can afford to operate without any organised base of support, but those that provoke opposition need defences.

Populist leaders are often polarizing figures who generate fervent
loyalties and intense opposition, particularly among elites who
feel threatened by populist reforms, rhetoric, redistributive
measures, or mobilizational tactics. The more radical the discourse
and behavior of populist leaders, the more intense the opposition,
and the more likely that socio-political conflict will be
channelled into extra-electoral arenas. These conflicts create
incentives for populist figures to organize and empower their
followers for political combat. Followers not only vote, but they
may be called upon to mobilize for rallies and demonstrations,
participate in strikes and occupations, or even take up arms to
defend their leader in times of peril (Roberts, 2006).

Fujimori's lack of organised support eventually became "a congenital defect of Fujimorismo." When the extent of the organised corruption that underpinned the regime became public in 2000, the government collapsed and Fujimori had to flee into exile (McMillan and Zoido, 2004). Roberts cites the contrasting example of Hugo Chavez in Venezuela. He also began with no substantial party organisation, and came to power through a clandestine movement in the military, and spontaneous acclaim at the ballot box. However, as his radical policies alienated the USA and large sections of elite and middle-class opinion in Venezuela, Chavez responded by founding a network of grassroots organisations called "Bolivarian circles." When his enemies ousted Chavez by coup in April 2001, he was able to regain power through his remaining influence in the army, and his ability to organise people on the streets and at the polling stations. He subsequently founded a more conventional party organisation that claimed 20,000 base units by 2003 (Roberts, 2006).
Thaksin's TRT party closely resembled the loose form of electoral populism in Latin America. It differed little from other Thai parties except in the scale of its funding (McCargo and Ukrist, 2005, Ch. 3). Its prime function was to orchestrate election campaigns. It held an annual conference, and occasional regional meetings, principally as rituals to celebrate the party leader. The party claimed to have signed up eight million members before the 2001 election (The Nation, 18 December 2000) and extended that to 14 million by the 2005 poll (The Nation, 21 February 2005). But these members paid no party dues, engaged in no party activities and had no part in selecting the party executive. There was no formal channel for party members to influence policy. Thaksin's aides used market research techniques to help formulate policies. The party membership list served principally as a database for election campaigning.
TRT organised for the 2001 election by the classic tactic of persuading factions of sitting MPs to join the party on the expectation that TRT would form the next government and be in a position to reward them (Ockey, 2003). Thaksin thus attached the existing clientelist networks, which extended down from the MPs into the localities, to his new party. He continued this strategy after the election by persuading two surviving parties to merge into TRT. At the 2005 poll, the influence of TRT as a party, Thaksin as a leader and the clientelist networks of individual MPs are impossible to disentangle. The MPs were bound to the party by constitutional barriers against splitting away, and by the continued expectation that TRT would again win. TRT as a party thus continued to draw on their clientelist networks.
Prior to the 2001 election, Thaksin and his aides toyed with schemes to ally civil society groups to his party. In particular, Thaksin appeared in public with the Assembly of the Poor, the most prominent activist coalition of the 1990s. He promised to act on their agenda of complaints and won their endorsement for his election campaign (Bangkok Post, 19 December 2000). Similarly, TRT met with representatives of organised labour, resulting in a nine-point policy document, and endorsement of TRT's election campaign by labour organisations (Brown and Hewison, 2005). But Thaksin reneged on both these promises. When the party's labour policy was submitted to parliament in the month after the election, four of the nine points had already disappeared, including those considered the most important--ratifying the ILO conventions on freedom of association and collective bargaining, and establishing an occupational health and safety institute. Organised labour's support for Thaksin dwindled and turned to outright opposition over privatisation in 2003 (Brown and Hewison, 2005). The Assembly of the Poor's major demand was decommissioning the Pak Mun dam which disrupted the ecology of a major river and the livelihoods of people depending on it. Thaksin visited the dam and called for research on the issue, but then personally made a summary decision to retain the dam before the studies were even completed. The Assembly of the Poor turned hostile (Bangkok Post, 8, 9 January 2003).
Subsequently Thaksin avoided arrangements with civil society groups which might place him under some obligation to deliver against his promises. Once in power, with a virtual monopoly control over the electronic media, he relied on his ability to dominate public space to secure public support. However, as opposition increased from 2004, Thaksin not only intensified his efforts to win public support by populist strategies, but also began to consider strengthening the party as an organisation. In campaign speeches before the 2005 poll, he promised that TRT would soon introduce a system to allow local party members to select the TRT candidate on the model of the US primaries (Thaksin, 2005). In July 2005, the TRT party moved into massive new offices in two buildings (of 8 and 14 storeys) previously occupied by a state bank, and Thaksin announced his aim to "institutionalise" the party (The Nation, 15 July 2005). Nothing concrete had emerged, however, before the 2006 coup.
Instead, he tried to mobilise support through informal means. His lieutenant for this task was Newin Chidchob. Before the 2005 poll, Newin was sent to the south in an apparent attempt to disrupt the Democrat Party's support base through wholesale vote-buying delivered through the bureaucratic apparatus. The scheme was exposed and had to be abandoned. As opposition to Thaksin accumulated over 2005 and early 2006, Newin was involved in organising support among Bangkok taxi drivers and among farmers' groups from the north-east. The taxi drivers were occasionally assembled for shows of support for Thaksin in the capital. In 2006, groups of north-eastern farmers travelled to Bangkok and set up camp in a city park to serve as a counter to the demonstrations organised by Sondhi Limthongkul and the People's Alliance for Democracy, and to demonstrate against newspapers that opposed Thaksin (Kasian, 2006: 8-10). Thaksin's aides threatened to bring a million farmers to the city.
As with Fujimori, the lack of any strong organisational base proved to be a "congenital defect." Thaksin and TRT crumbled when confronted by opposition from the palace, the military and a hostile middle class.
Populism and the Coup
What is the significance of Thaksin's populism for analysing the coup of 19 September 2006? As Hewison argues (2008, this issue), the coup was very much a royalist event. Yet it depended also on urban middle-class support in the public space of the media and public platforms. The army's planning for the coup appears to have begun after an attempt by a Thaksin ally to buy up the Matichon press group in September 2005 turned the press and intellectuals openly hostile, and after the Shinawatra family's tax-free sale of Shin Corp in January 2006 provoked a gut reaction in the tax-paying middle class.
Royalist opposition to Thaksin was evident from the beginning of his first government in 2001 and thus predates the development of his populism, though that opposition undoubtedly increased as the implications of Thaksin's populist leadership became clearer.
The evolution of Thaksin's populism and the growth of middle-class opposition were interrelated in a kind of dialectic: as Thaksin lost urban middle-class support, he intensified his populist appeal to the informal mass; as Thaksin's populism became more strident, the middle class felt more alienated. (9) Thaksin's threat to bring millions of rural supporters into the capital was the logical conclusion to this spiral, and a key trigger for staging the coup. Beneath this interplay lay the massive gap in incomes between city and village, and a long-standing middle-class fear of empowerment of the rural mass. The threat which the middle class perceived in Thaksin's populism was partly fear that they would be obliged to pay for his redistributive schemes, (10) but more fear that they would no longer have a privileged position to influence the state agenda. Sondhi Limthongkul, who set out to channel middle-class aspirations, stated explicitly that Thaksin had to be overthrown in order to restore political influence to the middle class. In talks given in the USA following the coup, Sondhi was reported as follows:
He [Sondhi] argued that there cannot be electoral democracy in
Thailand such as is found in the West because most people outside
the middle class lack sufficient knowledge to understand how power
can be abused. The rural people only vote, he claimed, for those
who pay them either directly through party organizers (hua khanaen)
or indirectly through the populist programs. He compared the
populist programs of Thaksin to those of Peron in Argentina. Khun
Sondhi said that in the future he himself will work only with the
middle class who have sufficient education to truly understand how
populist politicians can abuse power (Keyes, 2006).

A more detailed rejection appeared in a book Thaksina-prachaniyom [Thaksin-style populism] completed in mid-2006 in parallel with the countdown to the coup. Anek Laothamatas is a prominent political scientist who entered politics in the late 1990s, became an MP under the Democrat Party in 2001, and switched to lead the Mahachon Party which was annihilated at the 2005 poll. Anek (2006) argued that the rural electorate supported Thaksin because his populist policies were in their self-interest, but these "irresponsible" policies had made people dependent on handout welfare, politicised the bureaucracy and would result in fiscal crises of the sort endemic to Latin American populist regimes. Anek suggested alternative policy offerings, including a version of TRT's policies cleansed of their intrinsic irresponsibility and dishonesty, and an adaptation of the third-way welfarism of Anthony Giddens. But ultimately Anek seemed to doubt that these policy offerings would sway the Thai electorate, and instead offered a political solution.
Anek argued that populism would outlast Thaksin because it was founded on the surviving vertical linkages in rural society. Thailand's rural voters were not free agents but bound by patron-client ties. Where they had once been clients of a local boss, they had now been transformed into clients of a national boss and his party (Anek, 2006: 123-4). In this social setting a "pure democracy" was bound to lead to de Tocqueville's "tyranny of the majority" and irresponsible populism. Anek's answer was that, "A better democracy is a balanced compromise between three elements: the representatives of the lower classes who are the majority in the country, the middle class, and the upper class" (Anek, 2006:177). In this democracy, the only time when everybody would have equal rights would be when they dropped their ballot paper in the box. After that "the importance of each person will depend on knowledge, ability, experience, and status," so that the wishes of the majority would not be able to replace "what is correct according to ethics and academic principles" (Anek, 2006: 178-9). (11)
The "tyranny of the majority" would be avoided by ensuring that the opinions of two groups had special weight. The first, Anek called ekaburut and translated as "monarchy," but glossed that this was not simply equivalent to royalty, but comprised "a small number of upper class people who are leaders or governors of the country at the highest level, who are prominent by their office and by themselves, and who command the trust of the majority." The second group, Anek called apichon and translated this as "'aristocrats." This included "the middle and upper classes, especially the leaders with wisdom and experience in politics and administration," including senior bureaucrats, top intellectuals, and senior journalists (Anek, 2006: 178, 179, 181). He cited examples of samurai and medieval knights as apichon who "had won acceptance of state and people through leadership on the battlefield" (Anek, 2006: 181), and this is perhaps a metaphor for the military. Anek claimed that such a "mixed system" had in fact been in operation in Thailand "ever since October 1973" (Anek, 2006: 183). A major duty of this leadership would be to educate the lower classes so that they "upgraded their needs and demands" to be less self-interested, and more aware of the interests of society and nation.
For the longer term, it would be necessary to transform rural society through education, welfare and employment "to make rural people stronger and more self-reliant so they do not remain clients of state policy." This would "benefit the middle class and those in the city as the rural people would no longer be the foundation for populist-style democracy" (Anek, 2006: 198).
Both Anek and Sondhi argued that Thaksin's populism mobilised popular support for change, and that more power had to be given to the elite and middle class to prevent this. The rise of Thaksin's populism was a crucial part of the background against which the assault on Matichon and the Shin Corp sale could bring the middle class onto the streets. Conclusion
Thaksin Shinawatra was an unlikely candidate to become a populist leader. Prior to his arraignment for false asset disclosure in December 2000, he had shown little interest in rural society and made no reference to "the people" in his rhetoric. He made a bid for popular support, but thereby became the instrument of popular aspirations. He was swept along by social forces shaped by Thailand's strategy of outward-orientated development and subjection to neo-liberalism. The content of his populism began with a simple raft of redistributive policies which responded to the needs and aspirations of the informal mass that constituted around two-thirds of the workforce and the electorate. Thaksin subsequently went much further by responding not only to this constituency's demand for political goods, but also for a leader they felt they could own. People supported Thaksin because he gave them cheap health care and accessible credit, but also because he gave them a feeling of empowerment. Thaksin appealed to people by setting himself up as the enemy of the "old politics" represented by the bureaucracy and the Democrat Party; by adopting the familiar style of the local boss inflated to the national scale; and by arguing that his personal leadership would deliver more than the old liberal-democratic model, which had failed to prevent massive inequality in economy and society. Thaksin's populism was thus not just a policy platform, but matches the three key points of Roberts' definition, namely mass mobilisation, personalised leadership and a challenge to established elites.
In the old model of "development," based on the historical experience of the West, industrialisation creates a domestic capitalism, urban working class, and white-collar middle class; these new social forces sweep away old social and political elites, and support liberal democracy as the best means to resolve the conflicts among themselves. This model was replicated in the post-Second World War transformation of Japan, Korea and Taiwan but has since become irrelevant. Since the collapse of the Cold War, the West has lost interest in nurturing domestic capitalism in developing countries and sees the outside world solely as a field of expansion for Western capitalism. Countries like Thailand find the barriers against independent industrialisation are now too high, and choose instead to adopt outward-orientated development strategies and become dependent links in the global production chains of multinational capital. This strategy results in a very different social evolution. The domestic capitalist class is weak and embattled; the formal working class is small and politically marginal; the white-collar working class is conscious of its dependence on global forces; and a high proportion of the population remains in declining agriculture or in a swelling urban informal sector. Thaksin's populist politics echoed themes visible elsewhere in South-east Asia, in Latin America, and in Eastern Europe because the political economy underpinnings and neo-liberal framework are similar.
Latin America offers the most interesting parallels because of the long history of populism in the region, and the consequent subtlety of its academic analysis and debate on the topic. Thaksin's populism had strong affinities with a phase of Latin American populism in the 1980s and 1990s, in which the most striking example was Fujimori's Peru. These populist regimes tapped the support of the informal mass by offering universalist schemes of welfare and redistribution, and by posing as enemies of an old political elite. These regimes was careful to direct their fire against the political and social elite, while simultaneously co-operating with US neo-liberalism in external policies, and supporting domestic business. Fujimori undermined the parliamentary system, media and judiciary with corrupt money flows, while promoting an alternative model of personal, authoritarian rule. In order to avoid incurring obligations to their support constituency and to retain their freedom of action to negotiate with other social forces, populist leaders of this era dispensed with mass party structures and close links with civil society organisation, and relied instead on modern media and mass communication to mobilise electoral support. The cost of this strategy was insecurity, especially in the face of elite counter-attack. Most of these regimes lasted between two and five years. Fujimori was the exception, surviving for a decade, but ultimately falling just as precipitately.
This phase of populism in Latin America has since been superseded. The new wave of leaders, exemplified by Chavez, Lula da Silva and Morales, has seen a return to more explicit leftist ideology, mobilisation of ethnic divisions, and new types of mass organisation. We are not implying that Thailand's populism strain will move in the same direction, only that the Latin American story shows that populism evolves in response to social change, the external environment and local history.
Thaksin's populist leadership challenged the monarchy's claim to be the sole focus of political loyalty. It threatened the ability of key sections of the middle class to influence politics businessmen through money, bureaucrats through position and tradition, and media and intellectuals through command of public space. It promised to replace Thailand's plural, managed democracy with something akin to a personalised one-party regime. Thaksin's populism was thus a key factor in assembling the support that persuaded the military to undertake a manoeuvre which had generally been counter-productive for its own interests over the prior quarter-century.
Acknowledgement
This article began as a keynote speech at the International Conference of Thai Studies in de Kalb, April 2005. Thanks to the Center of Southeast Asian Studies, University of Kyoto, where it was originally written, and to the Institute of Social Science, University of Tokyo, where it was finalised. For comments and advice, thanks to audiences at both those institutions, Kevin Hewison, Charles Keyes, and an anonymous reviewer.

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Brown, A. and K. Hewison (2005) "'Economics is the Deciding Factor': Labour Politics in Thaksin's Thailand," Pacific Affairs, 78, 3, pp. 353-75.
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Crispin, S. and R. Tasker (2001) "Thailand Incorporated," Far Eastern Economic Review, 18 January.
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Hewison Kevin (2008) "A Book, the King and the 2006 Coup," Journal of Contemporary Asia, 38, 1, pp. 190-211.
Kasian Tejapira (2001a) "Pisat poppiwlisam [The Spectre of Populism]," Matichon Raiwan, 20 January.
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Pasuk Phongpaichit and C. Baker (2000) Thailand's Crisis, Chiang Mai: Silkworm Books.
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Roberts, K.M. (1995) "Neoliberalism and the Transformation of Populism in Latin America: The Peruvian Case," Worm Politics, 48, 1, pp. 82-116.
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Notes
(1) According to another definition, populism is any movement that "mobilises those who feel themselves to be disadvantaged by socioeconomic and political dislocation, as well as a leadership style that draws on a sense of disaffection from the established political system and elites" (Sabatini and Farnsworth, 2006: 63, note 2).
(2) The first use of the term "populist" to describe Thaksin in English appeared two days earlier in the Far Eastern Economic Review, but in an offhand way, expressing the view that the TRT election platform was not meant to be taken seriously: "In reality, stripped of its populist sheen, Thaksin's government will be one of big money and big-business interests, reflecting its leader's pedigree" (Crispin and Tasker, 2001). The Review did not regularly apply the adjective to Thaksin until one year later.
(3) Large volumes of shares in the Shinawatra companies had been filed under the names of the family's housekeeper, maid, driver and security guard, making them figure among the stock market's largest shareholders.
(4) "Village" here is an official territorial unit used in both urban and rural areas. The funds were available to both urban and rural communities.
(5) The first drafts of this argument by Hewison appeared in early 2002, as did our similar analysis of the double-headed nature of Thaksin's populism (Pasuk and Baker, 2002).
(6) This can be seen by comparison of the vote for TRT in the February 2005 and April 2006 polls, before and after the At Samat event. Votes cast for TRT increased by 11.5% in Roi-et (and by 13.2% and 17.9% in the neighbouring provinces of Yasothon and Kalasin which were also peripherally involved in the event), while falling 8.6% nationwide. Our calculation using unofficial results for the 2006 poll (there are no official results as the poll was rescinded).
(7) Thai industrialisation is also very much part of global production chains, with many manufactured goods assembled using imported parts and inputs produced elsewhere.
(8) From 2003, the Thaksin government set rice procurement prices above the market price. The coup government estimated this policy had cost 101.76 billion baht (The Nation, 14 October 2006).
(9) As a crude index of the middle-class interest in populism, these are the total mentions of populism or populist in The Nation, using their web cache of past issues. 2001: 66; 2002: 150; 2003: 265; 2004: 280; 2005: 206; 2006: 307.
(10) A graphic created by an anonymous academic and circulated in March 2006 purported to show a "Thaksin model" in which taxes levied on the middle class (25% of the population) paid for populist policies lavished on the poor (70%) to keep Thaksin in power to boost the wealth of the rich (5%). It concluded, "The middle class has to support the whole country." The graphic appeared in several newspapers including The Nation, 20 March 2006.
(11) Anek initially argued that people are rational to support Thaksin's populism, and should not be pictured as stupid and fooled (pp. 164-5). But later he compared populism to a mantra that can stupefy (sakot) people and to a whirlpool that can suck them down (pp. 166, 186); he dismissed TRT's election victory as illegitimate because of the use of money (pp. 179, 182); and argued that people need education to "upgrade their needs" (pp. 167, 185, 189-91).

PASUK PHONGPAICHIT, Faculty of Economics, Chulalongkorn University, Bangkok, Thailand
CHRIS BAKER, 98/2 Soi Nualnoi. Sukumwit 63, Bangkok 10110. Thailand

Correspondence Address: Pasuk Phongpaichit, Faculty of Economics, Chulalongkorn University, Bangkok, Thailand. Email: chrispasuk@gmail.com
Figure 1. Distribution of labor force, 2004


Informal 26%
White collar 15%
Industry 8%
Other 10%
Agrarian 41%


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Making serious money

How Thailand's wealthiest are making serious money

By Chang Noi

24 march 2008

Who is making money, serious money? And how? A few weeks ago, Forbes published its list of Thailand’s forty richest for 2007. Who are they, and how did they make their fortunes?

The best way to make money today is by manufacturing something to pour down people’s throats. Top came Chaleo Yoovidhya, maker of Kratingdaeng/Red Bull, with 126 billion baht, narrowly edging out Charoen Sirivadhanabhakdi, maker of Mekong Whisky and Chang Beer, with 114 billion. The Singha beer family appeared lower down the list.

Chaleo’s wealth is based on one single product—the extraordinary international success of Red Bull. Charoen is very different. He is the big success story of the 1997 financial crisis. He was not ruined by foreign debt because much of his business was still based on cash, and because foreign banks were wary of his non-transparent methods. His cashflow held up because crisis-hit consumers downtraded to his cheap products. Other businessmen, bankrupted by falling sales and the rising weight of dollar debt, were desperate to sell spare assets. Charoen had the cash to buy at very favorable prices.

Mostly he bought property—lots of it. In Chiang Mai alone he acquired the Kalae shopping centre, Chiang In Plaza, Anusan market, Suriwong Hotel, Imperial group’s hotels, and a prime plot of riverside land belonging to the Chutima family. By the aftermath of the crisis, Charoen’s property company TCC Land was “one of the largest landlords in Thailand.” Charoen has also become Thailand’s first latifundist, with 100,000 rai of agricultural land across 54 provinces, mostly under plantation crops of sugar, oil palm, tapioca, and rubber.

How else to make money? There are three agribusiness corporations in the Forbes Thai top forty, including Charoen Phokphand in 3rd place with 97 billion baht, and two sugar firms.
Among other industrialists, the most successful are auto parts firms. Before the crisis there were several hundred Thai parts makers. All but a handful were wiped out by the crisis and by the inflow of foreign capital. The few who survived have done very well indeed. Thai Summit of the Juangroongruangkit family (remember Suriya) and the Summit Group of the Jurangkool family come 5th and 7th on the list, while the Sitthiphon group is lower down.

Other industrialists include Mahagitsiri, Sahaviriya steel, TUF fish canning, and Osotsopha consumer goods. But the striking thing is that two-thirds of these top billionaires are in service businesses. Central and King Power in retail. Channel 3, Channel 7, Thai Rath, and Major Cineplex in entertainment. Land & House, Preuksa, and Amata in property. Italthai in construction. Bangkok Airways and Precious Shipping in transport. Heineke in hotels and retail; Shinawatra and Benchararongkul from mobile phones.

Like Charoen and the auto-parts makers, many of these service entrepreneurs are very new arrivals in the upper ranks of the Thai plutocracy. They are prospering because Thai consumers are spending more on services as incomes rise. Top Thai entrepreneurs are focusing on services because they have been competed out of manufacturing by multinationals, and because ownership laws relating to land, media, and so on still give some protectionin this sector.
These new families have also been boosted up the rankings by a landslide of the formerly rich since the 1997 crisis.

A first ranking of top Thai business families was made in 1979 and another in 1997. In both years, the most prominent group was bankers. But now Sophonphanich, Wanglee, Lamsam, Phatraprasit, Chakkaphak, and Uachukiat have slid away. Only the Ratanarak family of Bank of Ayudhya and Chaiyawan family of Thai Life Insurance remain.

Gone too are many families who pioneered industrialization, often by teaming up with US or Japanese capital. Phonprapha, Asadathon, Bulasuk, Laohathai, Techaphaibun, and Liaophairat no longer make the charts.

What old money has survived? Of the top 40 in 1979, only eight have survived in the same ranks today: CP, Bank of Ayudhya, Singha, Osothsopha, Italthai, Sitthiphol, Central, and Mitrphol sugar. From the 1997 list, there are a few more survivors including Shinawatra, Ucom, Sahaviriya, and Land & House.

Over half of the families in the top forty are new arrivals on such a list, and still very unfamiliar compared to names like Sophonphanich, Techaphaibun, or Lamsam. They have often come up very fast in the aftermath of the 1997 crisis. One of the most intriguing is Vichai Raksriaksorn, head of the King Power duty free empire. Try googling his name. You get little except that he sometimes plays polo with Prince Charles.

Vichai started with a shop in Hong Kong airport in the early 1980s. He could not get into Don Muang airport because of a ring allegedly controlled by ACM Sombun Rahong. He opened the in-town duty-free shop at Ploenchit in 1989, and launched ventures in Cambodia, China, and Macao. After Sombun Rahong’s political career faded in the mid 1990s, Vichai secured the necessary air force contacts. He started a shop in Don Muang in 1995. In 2006, he got an extraordinary exclusive contract for handling duty free and other retail at Suvarnabhumi Airport. He has bought 384 rai from the Chan Issara family near the airport where he is making a polo field, golf course, and upscale housing development. He has also developed a 31-rai plot near Victory Monument with an office building, duty free mall, and hotel.

In 1997, Forbes reckoned Thailand had ten families over the billion dollar mark. Now there are only three. Some of that decline is illusory. The Shinawatra family is now attributed only US$ 300 million by Forbes, but that’s because the rest of their wealth is now well hidden. But the overall decline is real.

Compared to neighboring countries, Thailand’s billionaires are modest. In China there are ten entrepreneurs with more than Chaleo or Charoen. In Malaysia there are five, and in Indonesia two. From India, the steel magnate Lakshmi Mittal could theoretically buy all Thailand’s top forty twice over, and still have a lot of change.

Source : The Nation

Ten Years after the Asian Financial Crisis

All Fall Down: Ten Years after the Asian Financial Crisis


By Walden Bello*

Ten years after the Asian financial cataclysm of 1997, the economies of the Western Pacific Rim are growing, though not at the rates they enjoyed before the crisis. There is no doubt that the region has been indelibly scarred by the crisis, the key indices being greater poverty, inequality, and social destabilization than existed before the crisis. South Korea’s painful labor market reforms, for instance, have produced the quiet desperation that is resulting in one of the highest suicide rates among developed countries.

What Global Financial Architecture?

Meantime, despite all the talk about a “new global financial architecture,” there is little in place to regulate the massive movements of capital shooting through global financial networks at cyberspeed.

Leave-it-to-the-market enthusiasts tell us not to worry and confidently point out that there’s been no major crisis since the Argentine bankruptcy in 2002, but people who know better, like Wall Street insider Robert Rubin, who served as Bill Clinton’s Secretary of the Treasury, are very worried even as they resist regulation: “Future financial crises are almost surely inevitable and could be even more severe. The markets are getting bigger, information is moving faster, flows are larger, and trade and capital markets have continued to integrate…It’s also important to point out that no one can predict in what area—real estate, emerging markets, or whatever else—the next crisis will occur.” A recent study by the Brookings Institution confirms Rubin’s fears: there have been over a hundred financial crises over the last thirty years.

The Reign of Finance Capital

The amounts of speculative capital sloshing around in global financial circuits are truly mind-boggling. According to McKinsey Global Institute, the global stock of “core financial assets” stood at $140 trillion in 2005. Traditional commercial banks held a significant amount of global financial assets, but non-bank financial operators, which have become important intermediaries between savers and investors, accounted for $46 trillion in 2005, hedge funds for $1.6 trillion, and private equity investors about $600 billion. These figures and other data on the stupefying rise and scale of global finance capital were presented by economist C.P. Chandrasekhar at the conference “A Decade After: Recovery and Adjustment since the East Asian Crisis” organized by the International Development Economics Associates (IDEAS) in Bangkok, the epicenter of the 1997 financial earthquake, on July 12-14.

The explosive growth of finance capital is seen by some analysts as stemming from the overcapacity that is plaguing the global economy. This has resulted in a marked slowdown in investment in major parts of the global economy, with notable exceptions like China and the US. With stagnation, capitalists are less motivated to invest in more productive capacity and have more incentive to move their money to speculative activity, that is, to try to squeeze more value out of already created value. This is indicated by the fact that the ratio of global financial assets has risen from 109 per cent in 1980 to 316 per cent in 2005, according figures from the McKinsey Instituted cited by Financial Times columnist Martin Wolf.

Speculative activity as a mode of profit-making has also outran trade, with the daily volume of foreign exchange transactions in international markets standing at $1.9 trillion daily, compared to an annual value of $9.1 trillion of trade in goods and services—that is, speculative activity in a single day amounted to 20 per cent of the annual value of global trade! Martin Wolf, one of the cheerleaders of globalization, captures today’s power relations among the fractions of global capital when he writes: “The new financial capitalism represents the triumph of the trader in assets over the long-term producer.”

Ten years after the IMF and the US put the blame for the crisis on the alleged non-transparency of financial transactions in Asian countries, opaqueness is the order of the day when it comes to global finance, as the movements and mutations of speculative capital have outrun the capacity of national and multilateral regulatory authorities. In addition to traditional credit, stocks, and bonds, new, esoteric financial instruments such as derivatives have exploded on the financial scene. Derivatives represent the financialization or the buying or selling of risk of an underlying asset without trading the asset itself. Today risk on everything can be financialized and traded, from the pace of carbon trading to the rate of internet broadband connections to weather predictions.

Paralleling the emergence of more complex instruments has been the rise of hedge funds and private equity funds as the most dynamic players in the global casino. Hedge funds, said to be key villains in the Asian financial crisis, are even more freewheeling now. Now numbering over 9500, hedge funds take short and long positions on a variety of investments, with a view to minimizing overall risk and maximizing profits. Private equity funds target firms with the end in view of controlling them, restructuring them, then selling them for a profit.
Accumulating Reserves as a Defensive Strategy
With the absence of global financial regulation to tame the whirlwind of global finance, the Asian countries have taken measures to defend themselves from the volatile global speculators that brought down their economies by pulling $100 billion in panic from the region in a few fateful weeks during the summer of 1997. The ASEAN countries have banded with China, South Korea, and Japan to form the “ASEAN Plus Three” financial grouping that will enable member countries to swap reserves in the event their currencies are targeted by speculators, as they were in 1997.

Even more important, they have built up massive financial reserves by running massive trade surpluses, an objective they have achieved by keeping their currencies undervalued. Between 2001 and 2005, according to Nobel laureate Joseph Stiglitz, eight East Asian countries—Japan, China, South Korea, Singapore, Malaysia, Thailand, Indonesia, and the Philippines—more than doubled their total reserves, from roughly $1 trillion to $2.3 trillion. China, the leader of the pack, is estimated to now have over $900 billion in reserves, followed by Japan.

This has resulted in a highly paradoxical situation. In a global economy marked by strong tendencies toward stagnation, China as producer and the US as consumer are the twin engines that keep the world economy afloat. Yet keeping US economy going necessitates a constant flow of credit from China and the other East Asian countries to the US to finance the middle classes’ consumption of goods from China and Asia. In the meantime, countries that really need the capital from East Asia, such as countries in Africa, get very little of these reserves since they are not considered creditworthy.

The Demise of the IMF

The building up of massive reserves on the part of the Asian countries is directly related to their bitter experience with the International Monetary Fund. Governments recall the crisis as the result of a one-two-three punch delivered by the IMF. First, the Fund, along with the US Treasury Department, pushed them to liberalize their capital accounts, which resulted in the easy exit of foreign capital that brought down their currencies. Then, the IMF provided them with multibillion dollar loans, not to rescue their economies but to rescue foreign creditors. Then, as their economies wobbled, the Fund told them to adopt pro-cyclical expenditure-cutting policies that accelerated their plunge into deep recession.

“Never again” became the slogan of a number of the affected governments. The Thaksin government in Thailand declared its “financial independence” from the IMF after paying off its debts in 2003, vowing never to return to the Fund. Indonesia has said it will pay off all its debts to the IMF by 2008. The Philippines has refrained from contracting new loans from the Fund, while Malaysia defied it by imposing capital controls at the height of the crisis.

Ironically, then, the IMF has become one of the key victims of the 1997 debacle. This arrogant institution of some 1000 elite economists never recovered from the severe crisis of legitimacy and credibility that overtook it--a crisis that was deepened by the bankruptcy of its star pupil Argentina in 2002. In 2006, Brazil and Argentina, following Thailand’s example, paid off all their debts to the Fund in order to achieve financial independence. Then Hugo Chavez let the other shoe drop by announcing that Venezuela would leave the IMF and the World Bank.

What is, in effect, a boycott by its biggest borrowers is translating into a budget crisis for the IMF. Over the last two decades, the IMF's operations have been largely funded from the loan repayments of its developing country clients rather than from the contributions of wealthy Northern governments. But with the biggest borrowers refusing to borrow, debt repayments are being to be reduced to a trickle. The upshot of these developments is that payments of charges and interests, according to Fund projections, would be cut by more than half, from $3.19 billion in 2005 to $1.39 billion in 2006 and again by half, to $635 million in 2009. These reductions have created what Ngaire Woods, an Oxford University specialist on the Fund, describes as “a huge squeeze on the budget of the organization.”

This succession of events has left the IMF with scarcely any influence among the big developing countries and groping for a new role. But the unraveling of the authority and power of the IMF is due not only to the resistance to further Fund intervention by developing countries. The Bush administration itself contributed to eroding the Fund’s search for a meaningful role in global finance when it vetoed a move by the conservative American deputy director of the Fund, Ann Krueger, to create an IMF-supervised “Sovereign Debt Restructuring Mechanism” (SDRM) which would have allowed developing countries a standstill in their debt repayments while negotiating new terms with their creditors. Many developing countries regarded the proposed SDRM weak, and what Washington’s veto showed was that the Bush people were not going to tolerate even the slightest controls on the international operations of US finance institutions.

Neoliberalism Rejected: Thailand

It is not only the IMF but neoliberalism, the dominant ideology of the nineties, that came crashing down in the aftermath of the crisis. Malaysia imposed capital controls and stabilized the economy, allowing it to weather the recession in 1998-2000 better than other afflicted countries. It was, however, Thailand that most dramatically broke with neoliberalism. After three stagnant years under governments faithfully complying with the IMF’s neoliberal prescriptions, the newly elected government of Thaksin Shinawatra propelled countercyclical, demand-stimulating neo-Keynesian policies to get the economy back on track. Rural debt was frozen, government-financed universal health care was instituted, and each village was given one million baht to spend on a special project. Despite dire predictions from neoliberal economists, these measures contributed to propelling the economy into a moderate growth path, one that has since been sustained by export growth stimulated by China’s red-hot economy.

The 1997 financial crisis, which saw one million Thais drop below the poverty line in a few short weeks, turned Thais against neoliberal globalization. Even as the government refocused on stimulating domestic demand through income-support for the lower classes in the countryside and the city, popular sentiment went against free trade. On Jan 8, 2006, several thousand Thais tried to storm the building in Chiang Mai, Thailand, where negotiations for an FTA (free trade agreement) were taking place between the US and Thailand. The negotiations were frozen; indeed, Prime Ministet Thaksin’s advocacy of the FTA became one of the factors that contributed to his loss of legitimacy and eventually his ouster from power in September 2006.

The souring on globalization has been paralleled by the rise in popularity of an economic paradigm promoted by the country’s popular monarch, King Bhumibol. Dubbed “sufficiency economics,” it is an inward-looking strategy that stresses self-reliance at the grassroots and the creation of stronger ties among domestic economic networks. Taking advantage of the King’s popularity, the military-supported government that overthrew Thaksin is said by critics to be invoking the sufficiency economy to legitimize its rule. Whatever the case, globalization is an unpopular word in Thailand today.

Neoliberalism Imposed: Korea

While Thailand broke with neoliberalism and the IMF, Korea followed almost to a “t” the neoliberal reforms forced on the government by the Fund: undertaking radical labor market restructuring, trade liberalization, and investment liberalization. According to sociologist Chang Kyung Sup, “labor shedding was the most crucial measure for rescuing South Korean firms. Even after the breathtaking moments were over, most of the major firms continued to undertake organizational and technological restructuring in an employment minimizing manner, and thereby got reborn as globally competitive exporters.”

Regarded as the classic activist developmental state that a report of the US Trade Representative once characterized as the “most difficult place in the world” for US enterprises to do business in, Korea under IMF management has become a much more liberal economy than Japan. Denationalization of Korea’s financial and industrial firms has taken place with “appalling speed,” Chang told the Bangkok conference, with foreign ownership now accounting for over 40 per cent of the shares of Korea’s top financial and industrial conglomerates or chaebol. Samsung now has 47 per cent foreign ownership, Posco, the steel company, over 50 per cent, Hyundai Motors 42 per cent, and LG Electronics 35 per cent.

The IMF has touted Korea as a “success story.” However, Koreans hate the Fund and point to the high social costs of the so-called success. Poverty has increased sharply, from 3 per cent of the population in 1996 to 11.6 per cent in 2006, and the Gini coefficient that measures inequality jumped from 0.27 to 0.34. Social solidarity is unraveling, with emigration, family desertion, and divorce rising alarmingly, along with the skyrocketing suicide rate. “We have one big unhappy society that looks back to the pre-crisis period as the Golden Age,” says Chang.

All Fall Down

In retrospect, the Asian financial crisis of 1997 may have brought about the downfall of the IMF, but, as economist Jayati Ghosh pointed out at the Bangkok meeting, it also marked the demise of the East Asian developmental state that had aggressively and carefully managed the integration of the national economy into the world economy so that it would be strengthened, not marginalized by global economic forces. Despite their different pathways from the crisis since 1997, all the economies of East Asia have been irrevocably scarred and weakened. The crisis marked the end of their being at the forefront of development, as models to be emulated. The 21st century that was supposed to be their century slipped away. The cataclysm marked the passing of the torch to China, and indeed, in their weakened state, the smaller East and Southeast Asian economies have now become increasingly dependent on the dynamism imparted by their giant neighbor.


*Walden Bello is professor of sociology at the University of the Philippines at Diliman and a senior analyst at the Bangkok-based research and advocacy institute Focus on the Global South.