Asian Capitalists in the European Mirror

Citation

Huat Tan, C. (1998), "Asian Capitalists in the European Mirror", International Journal of Social Economics, Vol. 25 No. 1, pp. 90-91. https://doi.org/10.1108/ijse.1998.25.1.90.1

During the past two decades, a new generation of entrepreneurs has emerged in Asia, especially in South and Southeast Asia.

Numerous researchers have studied the activities of this new capitalism and compared them with those of the old European capitalism. The studies on South Asia include: Bhaduri, 1973; Chandra, 1974; Sau, 1975; Sen Gupta, 1977; Lin, 1980; Harriss, 1981; Van der Veen, 1976; and Streefkerk, 1985. Those on Southeast Asia include Fegan, 1981; Robison, 1986; Jomo, 1988; and Yoshihara, 1988 (p. 3).

Rutten’s book provides an insightful overview of these studies and gives a critique of the works of these scholars in their comparative attempts.

Chapter 2 gives an overview of how Asian capitalists have been characterized in these studies. For example, the author has noted that the researchers have branded the types of capitalism as bureaucratic capitalism, rent capitalism, statist capitalism, comprador capitalism, ersatz capitalism and such like. These characterizations reflect a common disapproval of the behaviour of the present day rich farmers, traders and industrialists in South and Southeast Asia. Their capitalist nature is considered as deformed, pseudo and non‐genuine.

Based on the development of capitalism in Western Europe, the author observes that most studies have revealed the shortcomings of the Asian types of capitalism in comparison with the European model.

Underlying this comparison is the assumption that there is a class of pure, genuine and true capitalists which serves as a model for comparison. The early European capitalists during the Industrial Revolution had the characteristics of genuine capitalists while those in Asia have fallen short of the criteria.

Chapter 3 provides details of the assumptions about early European industrial capitalism. For example, those industrial capitalists developed from peasant and artisan backgrounds. They concentrated their funds on narrow areas of activities and production was their main activity. Their main focus was investment and reinvestment. They adhered to strong work ethic.

In comparison, Asian capitalists are more diversified in their economic interests. Many have invested in real estate and non‐manufacturing instead of concentrating on industrial production. For example, the study by Yoshihara Kunio has suggested that the rent capitalists in Southeast Asia have a short‐term horizon and go after quick profits (p. 4).

The study by Harris argues that the merchant capitalists in South Asia (especially in India), do not involve themselves directly in the production process, but operate through investments in trade, usury and speculation. Their profits are to a large extent obtained by appropriating surplus labour from indebted household producers; they are based on the existence of non‐capitalist relations of production, such as debt relationships of wage labourers to the firm and ties of debt between traders and peasants (p. 6).

Closely linked with these characteristics, Asian capitalists are dependent on government finance and protection and on foreign capital and technology. Their profits are not based on production, but are in essence rent incomes that are the result of distorted market mechanisms following a high level of state intervention and regulations. These capitalists make use of the difference between the market value of a government “favour” and what the recipient pays to the government and/or privately to their benefactors in the state bureaucracy (pp. 8‐9).

Chapter 4 challenges these assumptions and beliefs about European industrialization and industrialists. The author suggests that there was no single European path to industrialization. Instead, the economic and social diversity in Europe had resulted in a gradual industrialization process. In Chapter 5, the author asks why scholars of Asian capitalism do not challenge the basic assumptions. The assumption that the emergence of a a capitalist class in South or Southeast Asia would be an exact duplicate of the rise of the class of industrialists in eighteenth or nineteenth century Europe is ridiculous and should be rejected outright (p. 46).

Rutten’s book is a useful contribution to the ideological and theoretical discussion on capitalism in South and Southeast Asia. It is a critical review of studies which try to compare the development of Asian and European capitalism. This comparison may be interesting as many Asian countries under European colonial rule in the nineteenth and early twentieth centuries. The author suggests that it is the lack of historical perspective regarding the roots of European capitalist development that has enabled scholars studying Asian society to conclude that South and Southeast industrialization seems to merit a terminology specific to the region (p. 48).

The book deals only with capitalism in South and Southeast Asia. It would be interesting if it had included studies on East Asian capitalists who have played a significant role in the industrialization in Japan, Korea and Taiwan. The book is concise and comprises only 65 pages. It includes a useful list of major research studies on capitalism in Europe, South and Southeast Asia.