The Nationalisation of Private Corporate Debt in Asia

[AMRC <amrc@HK.Super.NET>]

The Economic Crisis in Asia: Towards Nationalisation ... of private sector
debt?


Gerard Greenfield


Given the experience of hierarchical state bureaucracies which flourished
under authoritarian Communist regimes and Social Democratic states, it is
not surprising that 'nationalisation' is off the agenda for most Left
movements. As important as it was for anti-imperialist and national
liberation struggles, 'nationalisation' usually meant replacing their
capitalists with our capitalists, substituting new forms of domination for
old. Once workplaces were nationalised, the project of workers' ownership
and control - goals which underpinned popular struggle - suddenly melted
away as bureaucrats ordered workers back to work and went about managing
things from above. Sadly, the failure of nationalisation in the past is
now used to justify the abandonment of socialisation in the present. This
is despite the fact that the failure of nationalisation, and the popular
resistance to the bureaucracies this sustained, reinforces the argument
for the socialisation of production all the more. Overcoming inequality,
hierarchy, exploitation, and the social and ecological destruction wrought
by capitalism requires the establishment of genuine ownership and control
by workers . In this sense, socialisation is a necessary step in creating
the conditions for collective self-determination. Nonetheless, it seems
that socialisation is off the agenda too.... Or is it?


Having tried 'corporatisation', 'commercialisation' and 'equitisation',
neoliberals and apologists for capitalism on the Left have reinvented
'socialisation' as another name for privatisation. The idea is that when
water, electricity, mines, railways, hospitals and schools are sold off to
private corporate interests, there is a shift from the state to 'society',
that is, 'socialisation'. This obscures the fact that real ownership is
concentrated in the hands of a few capitalists, taking us further away
from the possibility of popular democratic control from below. However, by
presenting it as a fair and equitable process involving society as a
whole, neoliberals  hope to overcome popular opposition to privatisation.
Undermining popular opposition through these more subtle forms of coercion
is precisely what underlies the World Bank's new model of an "effective
state" and the IMF's "third hand of social solidarity".(1)


The effectiveness of this strategy is borne out by the lack of opposition
to - and in some cases open support for - privatisation by most Left
political parties, trade unions, and non-governmental organisations (NGOs)
which have become disarticulated from the mass movements that created
them.. Of course, this failure to oppose privatisation cannot simply be
attributed to its redefinition. Apologists for Communist regimes were in
disarray after the collapse of the Soviet Union and could not conceive of
the need for democratic reform of state-owned industry based on genuine
workers' control precisely because they always said there was workers'
control in the 'socialist' countries. More importantly, centrist trade
unions, under the direction of Labour, Democratic and Social Democratic
parties, accepted the 'logic' of the market and competitiveness, forcing
their public sector affiliates to agree to their own self-destruction and
exposing working class people to even greater hardship and uncertainty. In
some cases privatisation was supported as a means of breaking the power of
militant public sector unions. Support for privatisation was one of ways
in which the Japan Private Sector Trade Union Confederation (JPTUC-Rengo)
finally forced the dissolution of the General Council of Trade Unions
(Sohyo) in 1989, incorporating public sector unions into its own
structures, and forming a new national centre, the Japan Trade Union
Confederation (JTUC-Rengo). This consolidated the power of pro-business
unionism and took the 'movement' out of organised labour in the public
sector.


The disintegration of organised opposition to privatisation in advanced
capitalist countries is exacerbated by proponents of  'market socialism'
and 'socialised markets' on the Left, who see share-holding and stock
markets (vacuum packed and sealed to keep out the material interests of
political power-holders, relations of domination and exploitation, and
other realities) as a process of socialisation. Under 'actually existing
market socialism' (capitalism) in China and Vietnam, Communist Party
leaders also describe the privatisation of factories, public housing,
schools, hospitals, land, transport, and workers' pensions as a process of
socialisation - shifting ownership and control,  and the 'burden of
costs', from the state to society. Here 'society' has a double meaning. In
the context of the concentration of ownership and the accumulation of
wealth, 'society' means a handful Party-state bureaucrats and their
relatives, in partnership with local and foreign capitalists. In terms of
freeing the state from the cost of public services and utilities,
including housing, education and health, 'society' means the mass of
workers, peasants and street traders who will have to pay for it, and pay
dearly.


The costs for workers around the world for having this so-called
'socialisation' back on the agenda are immense: mass lay-offs, the
destruction of job and income security, dramatic increases in living
costs, the exclusion of  low-income and unemployed workers and their
communities from access to basic services, and further subordination of
our lives to private profit and the social violence of the market. On top
of all this the financial crisis in East and Southeast Asia has seen the
collapse of massively over-lent banks and even more massively indebted
companies, leading to wage cuts, more mass lay-offs, and rises in the cost
of living, with only the promise of further social destruction by the IMF
at the end of it all. From the thousands of workers being laid-off by
firms in Hong Kong, to the four million workers laid-off in Indonesia
since July 1997, it is clear that working people will be paying for this
capitalist crisis for a long time to come. By the end of 1998 there will
be 2.8 million unemployed workers in Thailand, 12 million in Indonesia,
1.5 million in South Korea, and one million unemployed in Malaysia with up
to 1.2 million migrant workers facing expulsion. But the bill has not yet
been totalled, for at the height of this crisis nationalisation is back on
the agenda ... the nationalisation of private sector debt!


Although IMF loans to Asian governments guarantee the recovery of most of
the losses suffered by finance capitalists, transnational banks and
international securities firms are already calling for "the radical
restructuring of Asia's debt - where you nationalise it and secure it". In
order to recover from this crisis, they argue, "debts of individual
companies need to be nationalised".(2)


In fact it is precisely the accumulation of extraordinary debts by
companies that contributed to this crisis. By the end of 1997, the Korean
chaebol had accumulated US$35 billion in bad debts, with the debt level of
individual companies like Kia Motors and Hanbo Iron and Steel reaching
US$9.4 billion and US$6.5 billion respectively.(3) Debt-to-equity ratios
average 400 per cent in the Korean chaebol and 250 per cent in Japanese
conglomerates. Much of this debt is hidden offshore in tax-free havens, as
well as being hidden internally within large business groups. The reason
that many large Japanese banks have refused orders by the government to
bail out other firms is that they have a better idea of how much more
hidden debt there really is. Besides, banks have also been over-lending.
Japanese banks, for example, have over-lent between 200 to 400 per cent of
deposits, exceeding legal limits. In January 1998, the Japanese finance
minister estimated that the 'problem debts' of banks reached US$590
billion!(4) A large proportion of the bad debt of Korean banks and chaebol
was borrowed from Japanese banks, and close to 50 per cent of all of
Thailand's private overseas bank debt is held in Japan.(5) In the hope of
hiding the extent of their illegal over-lending, they panicked and started
calling in their loans to Korean firms and other companies in East and
Southeast Asia, exacerbating the crisis. As this house of cards continues
to tumble, the demand for governments to bail out private conglomerates -
passing on the costs of their mismanagement and greed to the people - is
getting stronger. The Japanese government has already announced that it
will bail-out major Japanese banks using taxpayers' money, while cutting
public spending in other areas.


Rather than opposing this nationalisation of private sector debt most
trade unions in the region have joined the call for government bail-outs
of private firms in order to secure their members' jobs. The International
Confederation of Free Trade Unions (ICFTU) and most of its affiliates in
Asia have taken this a step further, demanding increased funding for the
IMF and World Bank!(6) In their self-limiting strategy of protecting their
members' interests, unions have again failed to advance the interests of
the working class as a whole, leaving the mass of the working population
to pay off these debts for generations to come. Should any organised
resistance emerge, it is likely that the nationalisation of private sector
debt will be re-conceptualised as 'socialisation' - the equal sharing of
this debt among society as a whole.


Yet it is the rejection of the way in which we must constantly pay the
costs of capitalists' greed and mismanagement, while subordinating more
and more of our lives to private corporate profit, which inspires mass
protests against privatisation around the world today.  From mass
demonstrations in Brazil and Puerto Rico, to public sector workers'
strikes in France, Canada, India and Pakistan, to the struggle of the
South African Municipal Workers Union (SAMWU), we are reminded of the
absolute necessity of strengthening democratic popular control through
existing public ownership, while at the same time demanding fundamental
reform to establish workers' control. In China, mass protests by tens of
thousands of workers laid-off from state-owned enterprises are demanding
'the right to work' while challenging the corruption and mismanagement
which led to their dismissal. Rather than supporting this struggle, the
state-controlled All China Federation of Trade Unions (ACFTU) supports the
government's privatisation programme (devised by the World Bank) which has
already seen 12 million workers laid off in as many months. Not
surprisingly, the leaders of national union centres helping to legitimate
the ACFTU through 'international exchanges' and training - such as leaders
of the Australian Confederation of Trade Unions (ACTU) and JTUC-Rengo in
Japan - have their own history of convincing militant public sector unions
to accept privatisation. In fact, the absence of any organised protest
from postal workers to the Japanese government's current privatisation of
the postal system is testimony to JTUC-Rengo's effectiveness in destroying
workers' capacity for collective struggle. There can be no doubt about
what sort of 'training' the leaders of JTUC-Rengo and the ACFTU are
talking about.


Clearly, our own lessons should come from the mass protest movements
against privatisation. Moreover, the partnership of interests between
governments and capitalists that underlies the move to nationalise private
sector debt in Asia reminds us of the danger of false solutions to real
problems. As the financial crisis in Asia ravages the livelihood of
millions of workers and threatens future generations with more
impoverishment and unpayable debts, we need to revive the demand for
greater workers' control over their workplaces and rethink strategies for
achieving collective self-determination - and making it work. If this is
the case, then it seems that we need the kind of socialisation associated
with socialism back on the agenda.



Hong Kong, February 22, 1998



Notes


1. On the concept of the "social solidarity" used by the IMF, see the
speech by Michel Camdessus, managing director of the IMF to the 16th World
Congress of the International Confederation of Free Trade Unions (ICFTU),
Brussels, June 126, 1996. For a critique of the World Bank's 'effective
state' see Gerard Greenfield, "The World Bank and the State", Third World
Resurgence, 85, September 1997, pp.25-26.

2. International Herald Tribune, December 27, 1997.

3. Financial Times, December 4, 1997.

4. Info Inter, No.92, January 16, 1998.

5.Sunanda Sen, "Asia: Myth of a Miracle", Economic and Political Weekly,
January 17, 1998, p.113.

6. Statement by the Forum on the Asian Economic Turmoil held by the
ICFTU-APRO, Singapore, February 10-11, 1998.