HANNS W. MAULL Crisis in Asia: Origins and Implications T he crisis in Asia is complex: it started out as a financial crisis in Thailand in June 1997 . Since then, it has since spread throughout much of East Asia 1 , and has begun to trigger severe economic adjustments in the countries affected. It has thus spilled over into the real world of economic out­put, employment and income. As a result, massive social tensions have built up throughout the region, and with the abdication of Indonesien President Suharto we have witnessed what may turn out to be the first in a series of political typhoons, scattering both domestic politics and interstate relations throughout East Asia and beyond. Mahathir Mohamad’s Malaysia may be next. While the financial crisis seems far from over, it will presumably come to an end first. 2 The eco­nomic crisis may take longer – conventional wisdom among economists in the region now holds that it will take East Asian countries hit by the crisis about five years before moderate econo­mic growth rates will become attainable 3 . And the political reverberations of the crisis have just begun to affect the region. It would be well to remember that the Great Depression began in 1929 in the USA with the crash of the stock market, and exploded in Europe with the failure of Austrian and Ger­man banks in 1931 . By 1933 , the economic crisis had helped Hitler to take power in Germany, and six years later Europe was at war. All historical ana­logies have their shortcoming, but the comparison seems justified both by the severity of the crisis and its origins: the Great Depression in the 1930 s also ultimately was caused by systemic weaknesses in international monetary and financial arrange­ments. »A crisis of global capitalism« The crisis in Asia is an Asian crisis, but it is also a »crisis of global capitalism«. 4 Its origins lie in a mismatch between the magnitudes of international capital flows and real economic activity. Problems caused by huge and rapidly growing flows of private capital originate with both the supply and the demand side, and they have been exacerbated by institutional and regulatory deficiencies at both the national and the international level. A confluence of two models of capitalism at the root of the crisis: America vs. Japan On the supply side of international money, the origins of the crisis in Asia(as those of the earlier 1. The term»East Asia« here and throughout in line with common practice denotes the region comprising both North and South East Asia. 2. The definitive source for economic analysis(though much less so on the political dimensions) of the crisis is the web page of Nouriel Roubini and his colleagues at New York University. http: // www.stern.nyu.edu / ~nrou­bini / asia / AsiaHomepage.html#intro. 3. Dr. Chia Siow Yue, presentation at the ASEAN Round Table, Kuala Lumpur, June 1 st, 1998 ; cf.also the analysis by, e.g., World Bank, East Asia: The Road to Recovery, Washington, DC 1998 ; UNCTAD , Trade and Develop­ment Report 1998 , New York, NY 1998 ; and C. Fred Bergsten, A New Strategy for the Global Crisis, in: Inter­national Trade Policy Research Center, Newsletter, Lincoln, New Zealand, Oct. 1998 . 4. This view has been expressed perhaps most promi­nently by Eisuke Sakakibara, Vice-Minister of the Japanese Ministry of Finance and known as»Mr.Yen«. While clearly self-serving from MoFs point of view, the characterisation nevertheless seems valid. A similar position remarkably is taken by George Soros; see his Toward a Global Open Society, in: The Atlantic Monthly, Jan. 1998 , here taken from http: /// www.theat­lantic.com / issues / 9 8 jan / opensoc.htm. For a powerful intellectual argument supporting this view, see John Gray, False Dawn, Oxford 1997. IPG 1/99 Crisis in Asia: Origins and Implications 57