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Asian Values and the Current Crisis

By Francis Fukuyama

Are cultural values responsible for Asia’s remarkable postwar economic success? A decade ago many observers, including proponents of “Asian values” like Singapore’s former Prime Minister Lee Kwan Yew, would have answered affirmatively. Now, in light of the recent crisis that has struck the Asia region, it is useful to revisit the role of cultural values. Many observers today claim that Asian values, far from explaining economic success, are themselves the prime cause of the cronyism that afflicts the Asian countries.

There is no scholarly disagreement on the proposition that Asian cultural values are more hospitable to paternalistic authoritarianism than to Western-style democracy. Confucianism entails an ethical world in which people are born not with rights but with duties to hierarchically arranged authorities, beginning with the family and extending all the way up to the state and the emperor. Westerners sometimes forget the key role of Judeo-Christian transcendent monotheism in their political and social lives. The idea that there is an eternal realm of divine law superior to positive law gives the individual grounds for revolt against all forms of secular authority.

In the Asian religions there is no concept of individual rights. On the other hand, there are a number of values characteristic of Asian societies, which, while having separate roots from their Western counterparts, are quite supportive both of a modern economy and of democratic politics. Asian religions and ethical systems are remarkably tolerant in a way that monotheistic traditions like Judaism, Christianity, and Islam are not. And Confucianism opens up prospects for social mobility, being highly meritocratic. It is a rational ethical system with an emphasis on education, and thus responsive to the needs of a modern technological economy. Moreover, the Confucian family system provides a certain protected sphere of private life that is relatively free of state intrusion. Like all complex value systems, it is to some extent possible to separate political Confucianism from the Confucianism of everyday life, rejecting the former while practicing the latter.

Weaknesses in the argument

The first and most important problem with the Asian values argument is that it fails to see Asia as a diverse place, where values vary considerably from country to country. Confucianism is interpreted very differently in Japan, Korea, and China, and kinship ties vary in importance throughout Asia-they play a minimal role in Japan and a very important one in southern China. The second weakness of the Asian values argument is the emphasis it places on the direct impact of values on behavior. In fact, values must be mediated through a variety of institutions to make themselves manifest. Asian cultural values existed in their present form long before Asian societies began their periods of explosive economic growth. The causes for that growth are much more likely to be found in the institutions that were created in the process, like stable governments, systems of property rights and commercial law, as well as in the macro- and sometimes microeconomic policies.

With regard to political institutions, it is not at all clear that Asian values constitute any kind of insuperable obstacle to modern democracy. The empirical record in Asia is relatively supportive of the democracy/development correlation, where wealthier societies tend to expand political participation. The First three Asian countries to become industrialized, Japan, South Korea, and Taiwan, now have functioning democracies. On the other hand, two of the highest per capita income entities, Singapore and Hong Kong, are not democratic, while the Philippines has been a democracy while remaining one of the region’s poorer countries. These anomalies can be explained by other factors.

As for the economic institutions, some are unique to the region and could not have been created in any other cultural settings. These include the so-called Japanese development model in which a technocratic elite overseas sectoral transitions through control over credit; Japan’s system of lifetime employment among large corporations and their keiretsu networks; the chaebol in Korea; and the family-based networks of overseas Chinese businesses in southern China and Southeast Asia. While many of these institutions are clearly dysfunctional today, it is difficult to know in retrospect the degree to which they either contributed to or constrained development during Asia’s high-growth period. The most basic explanation for Asian economic development lies in conventional factors, like inputs of capital and labor, combined with political stability and reasonably good government. The least we can say is that those institutions were not as harmful to economic growth, as many Western economists asserted, but have clearly become obstacles to growth now.

Why the current crisis?

Just as explanations for Asian growth lie in the realm of conventional economics rather than culture, so too do explanations for Asia’s current crisis. It is impossible for a cultural factor, which changes very slowly, to account for rapid and unexpected developments, such as the loss of foreign currency reserves or the sudden buildup of short-term credit. There is, however, one cultural theme that runs through current analyses of the crisis, the tendency of many Western observers to lump all countries in Asia together under the broad heading of “crony capitalism,” and to blame the latter for a serious misallocation of resources.

Throughout East Asia business relations are conducted on a more personalistic basis than in North America or Europe, and there are cultural practices such as reciprocal gift-giving, that often shade over into what many Westerners would label corruption. But it is impossible to generalize and say that Asian societies are somehow more corrupt or more given to cronyism than their Western counterparts. In fact, cultural factors contributed to a relatively low rate of corruption in Northeast Asia. One of the interesting features of industrial policy in Japan, Korea, and Taiwan is precisely the low level of corruption during the high-growth period in light of the enormous powers given to planning bureaucrats, and the opportunities for corrupt or rent-seeking behavior. The problem in these countries was therefore not a cultural proclivity towards personalism and corrupt dealings, rather a lack of institutional checks which over time could serve to control corrupt behavior.

While Asian values have produced distinct economic and political institutions, their most notable impact is social. Western social patterns have no counterparts anywhere in Asia, including the region’s most highly developed societies. Japan and Korea, in particular, look quite distinct from Western countries at a similar level of development. Here, crime rates are very low relative to Europe and particularly the United States, and invalidate any general theory that urbanization and industrialization inevitably encourage higher levels of criminal behavior.

Asian exceptionalism is also apparent in data on family structure. Modernization had very different effects on family structure in Asia than in Europe and North America. In the Western countries, family breakdown was accompanied by soaring rates of illegitimacy, from the American rate of 32 percent currently to rates well over 50 percent in Scandinavia. While divorce rates have been rising slightly in Japan, they remain low in other OECD countries, and the problem of poor, mother-headed families, that is so pronounced in the United States, is all but unknown in either Korea or Japan. The reason for this difference has a great deal to do with the role of women in Western as opposed to Asian societies. Just as in the case of Asia’s distinctive economic institutions, it is likely that there will be a convergence with Western practices over the next two generations in the social sphere as well. Due to its sharply declining fertility rate, Japan faces a shrinking labor pool. This may lead to encouraging women to enter the workforce, not just prior to marriage but throughout their working lives. If that happens, many of the social problems, like family instability that have plagued Western countries, may come to affect Japan as well.

Future perceptions

In conclusion, Asian values in all their diversity have played a role in shaping the economic and political institutions of East Asia, and in giving Asian societies a social order that is different from that of the West. The impact of these factors can be easily overstated, however, both in terms of the degree to which they facilitated Asia’s postwar economic growth, and of the extent to which they are responsible for the region’s current troubles. However, in all three areas-economic, political, and social-there are good reasons for thinking that the distinctive institutions and practices fostered by Asia’s cultural systems will converge over time with the patterns seen in the West. Far from reinforcing Asian exceptionalism, the current economic crisis will accelerate the homogenization of trends.

This article is excerpted from a presentation on “Asian Values in the Wake of the Asian Crisis,” delivered at the Conference on Democracy, Market Economy and Development in Seoul, Korea, February 1999.

Francis Fukuyama is Hirst Professor of Public Policy, Institute of Public Policy, George Mason University, and the author of The Great Disruption (Free Press)

  1. 20 Oktober 2008 pukul 12:07 pm

    I am surprised Hong Kong still listed as 11th world’s most secure banking system.

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