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Living with market and democracy

 

PARIS -- Jean-Paul Fitoussi, the president of the Observatoire Francais des Conjonctures Economiques, has been focusing his research into market and democracy, two prevailing yet paradoxical forces that try to co-exist. ''In the market, you have a one-dollar one-vote situation. But in democracy, you have one man, one vote,'' he says.

Ironically, market, which looks after its narrow self-interest, needs a stable government and democracy to ensure that it works. It is the nature of market to chase after profits and growth, disregarding any human emotions. Yet democracy also means that all people are equally treated, a guarantee that is irrelevant to the market's interest. The general assumption now is that just let the market works its way, so that its trickle-down effect will benefit the general populace in the society. ''The point is that how market and democracy can co-exist, so that finally social justice can be achieved,'' Fitoussi says.

The crisis in Asia is a rude awakening, exemplifying how brutal and uncompromising market force is if it does not have its own way and how the constraints of having to nurture democracy is putting Asian governments under tremendous pressure. The once laudable Asian value, no matter what it means, is losing ground to the Western-style market force.

''I don't believe there is such a thing as Asian value,'' says a strategic planner at France's Foreign Ministry. What he is trying to say is that, you either get it right or get it wrong.

For now Asian value is a dirty word, evoking negative connotations such as nepotism, cronyism, cosy business and government relationships and corruption. This inherent weakness in the system of the Asian countries has amplified the crisis when the trouble starts. The strive to put market and democracy back to work has also complicated by a threat of growing social unrest.

Look at what is happening in Indonesia. It has received a US$40 billion rescue package from the International Monetary Fund, whose primary objective is to ensure that market force works again in the wrecked economy. But by introducing the the tough medicines to stabilise the economy by ending the subsidies or levying higher taxes, the IMF has been accused of triggering social unrest. Democracy in Indonesia just cannot keep up with the discipline of market at this juncture. Calls for more democracy by dismantling the Suharto's legacy of nepotism and cronyism entails that there must also be food on the table for the 200 million people. This is not an easy task.

Prime Minister Chuan Leekpai is widely accepted in the international community. He is more appreciated by the foreigners than by his compatriot Thais. Look at what he has done so far during more than his six months in office, during which time Thailand has won recognition as a good student of the IMF. ''The international community has recognised what the Thai government has done so far in fulfilling the tough requirements of the IMF. Speaking from the creditors' side, they would like to make sure that the IMF programme is successful and they have a chance of getting their money back,'' said a senior official of the French Foreign Ministry.

Any measures the Chuan government have introduced are market-friendly or aimed at ensuring that market works again in Thailand. In a speech last month in a Hong Kong conference, organised by Credit Lyonnais, Chuan sent a message across that the priorities of his government are to stabilise the baht exchange rate, roll over the foreign debts and embark on the banking system restructuring. Then in the middle of his speech, he began to touch on the social programme, supported mainly by the World Bank and by a looser fiscal policy struck with the IMF.

Social critics at home so far have not given Chuan a good time, accusing his government of bailing out the rich at the expenses of the poor. This is true. The cost of bailing out the financial system has been estimated at Bt500 billion, an amount that will have to be equally shared by all Thais through the budget process. But from the leadership's point of view, the system or the country, increasingly being governed and dominated by internal and global market forces, must be saved first otherwise any subsequent social programmes will be rendered obsolete. It is difficult for Chuan to sell this theme at a time of growing unemployment and social disruptions.

In his more recent speech in Bangkok, Chuan pledged to pursue the market-oriented policy. ''We remain firmly committed to the liberalisation process, one with transparent rules of the game and appropriate regulatory oversight,'' he said. ''We recognise that the past and future success of Thailand depends upon our ability to absorb the best of international influences, yet at the same time allow Thai industries to prosper along with their foreign partners and investors.'' What a soothing speech to the market ears!

Lee Kuan Yew, Singapore's statesman who has had some earlier big fights against the Western leaders over Asian-style democracy and Western-style democracy, has come out with some harshest comments against the Asean leadership in the midst of the crisis. He charged that former Thai prime minister Gen Chavalit Yongchaiyudh, Malaysian Prime Minister Mahathir Mohamad, and former Indonesian president Suharto did not understand the market, sticking to policies that amplified the crisis that could have been alleviated. Yew was angry that fundamentally sound as the Singaporean economy is, it is hit hard by the contagion crisis, made even worse by the ignorant Asean leaders of the market force.

Mahathir could not care less. He went on venting his anger against what appears to be Western conspiracy against the Eastern countries. ''They [foreign powers] are trying to destroy all that we have built, the developments we have achieved and the corporate figures we have nurtured. Their intention is to enslave the Malays,'' he said in a speech on Friday. In an interview with the latest edition of Time magazine, Mahathir also made it clear that he was not a champion of the market force. ''I am not saying that I am an expert about the market economy. I feel that no everything about the market economy is right. And I think people are pushing the market economy in order to get the best advantage for themselves.''

With this Mahathir's comment, the battle for to achieve a balance between market and democracy continues and it won't unravel easily, even after the financial and foreign exchange crises have been laid to rest.

BY THANONG KHANTHONG

 

 

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