Andre Gunder Frank

Foreword to the Korean Edition of ReOrient

Precisely because I am neither a historian of only one tree nor a centrist' who focuses only on the West or on Northeastern or another part of Asia for that matter, I can venture to examine for the fist time the global economy as a whole before 1800 and to discover the central' place and role of Asia within it, which previously nobody had ever taken the trouble even to consider. However, I must confess to the Korean reader that in so doing the Korean 'trees' received less attention than should have been due to them in my examination of the world and Asian economic 'forest" up to 1800.

But this historical argument also has contemporary relevance; for if Asia and especially East Asian including Korea was and was able to be predominant until in historical terms quite recently in the world economy , then it is also plausible to expect that it may soon be so again. Plausible I say, but not certain. And I say so soon after virtually all observers in the West and alas also some in Asia itself were mis-led to think that the post 1997 East Asian financial and economic crisis is enough to dismiss the rise of East Asia and especially of Korea as a mirage or at best a flash in the pan. In this preface below I will examine and concretely rebut these arguments that I believe to be false. Indeed, there are important reasons to regard this recent crisis to be evidence for the underlying and continuing strength of East Asia and particularly of Korea in the world economy.

To begin with however, I wish here to confine myself to some more general propositions derived from my deeper and wider historical perspective on the world and Asian economic 'forest":

1. It has been quite normal' for predominance in the world economy to shift from one region and sector to another over time. Why not again?
2. A relatively short economic crisis need not be an impediment but often has given an impulse and been a take-off for a subsequent economic boom. Some examples are the economic crisis of 1762 to 1790 in the West which made way for its industrial revolution, the crises that preceded the bursts of industrialization in Japan, and indeed the crisis of the 1920s-1940s that led to the post-war world economic boom in the West and in many parts of Asia including Korea.

Yet for over a century and a half, everybody in the West and alas many people elsewhere have simply assumed that all these events were only internally generated within and by the West , which allegedly was central to the world economy and the origin and motor force of capitalist development since at least 1500, which only later and again in the recent period was 'exported' from the "West"to the "East." Many Westerners even claim its alleged superiority since AD 1000 and earlier, alleging that some exceptional' qualities and capacities of Europeans made this development possible, indeed even certain because of their Judeo-Christian values' that supposedly emerged already before the birth of Christ. Post-war Japanese economic success posed a serious contradiction to this theory, and we return to examine below how this was handled. Suffice it to note here that this alleged European exceptionalism is no more than a triumphalist and quite racist myth, which has absolutely no basis in historical fact and whose dis-proof has been demonstrated several times already by other authors and is reviewed and extended in chapters 1 and 4 of this book.

However, this book also tries to go far beyond that. It maps out and analyzes the structure and development of the world economy between 1400 and 1800 in Chapter 2. There it can be seen that East Asia and within it Middle Kingdom China was predominant if not central to the world economy as a whole. One of the manifestations of this position and role of China in the world economy was that it attracted and absorbed about half of the world's , including almost all of Japan's, production of silver/money, as per my estimates in Chapter 3; which also seeks to show how this silver served to fuel the rapid expansion and growth of the Ming and Qing economy and population in the sixteenth, seventeenth and eighteenth centuries. These chapters also document that contrary to mythology Tokugawa Japan or of Korea was never closed off from the world economy, and that the denomination of Japan or Korea as "feudal" is non-sense. Chapter 4 argues that the exceptionally great and still growing productive capacity, technology, productivity, competitiveness, and exports on the world market of the Asian and particularly Chinese economy and people exceeded that of all others.. Contrary to much historical mythology, Europeans never had or controlled more than 10 percent of the maritime trade anywhere in Asia including the Indian Ocean, less than that in the South China Sea, and none at all in the also important Korean region and surroounding North China/Japanese Sea. Evidently therefore, it can also not have been the case, as so many still falsely allege, that Korean, Japanese and other Asian private and public/state institutions were somehow inferior' to those of Europe. The "Asiatic Mode of Production" is a myth invented by Europeans, significantly among them by Karl Marx, to demonstrate' their non-existent exceptionalism."

Any objective examination of the world economy immediately reveals not only the predominance a millennium ago of Song China, which is nothing new. But the analysis in this book that is new demonstrates the also continued predominance of Asia and especially of China in the world economy until at least 1800. Only AFTER that is there any notable decline in Asia, except India, and any Western rise to dominance. Indeed in now working on a sequel to this book that examines developments since then, I increasingly find that the changeover in world economic dominance probably did not ocurr until about 1850 or perhaps even 1870. That reduces the period of Western dominance even more to about only one century or perhaps one and one half centuries; since apparently the world is again already RE-orienting, with Asia again preparing to occupy the predominant if not central' place in the world economy that it traditionally' occupied until after 1800 or later, that is in historical terms only quite recently. So now that the world itself is re-orienting, it is high time for those of us who wish to look and see also to ReORIENT our historiography and social theory, indeed our world view. Hence the title of this book, which is intended to make my small contribution to this important end.

Recent decades' developments in the world economy, and then especially the post 1997 financial and economic crisis in parts of East Asia, have shaped and re-shaped but also misled perceptions of this world historical process and the place of this or that region within it. First, Japan demonstrated its economic, technological and competitive capacity and in many respects became a ". So the Japan came to be regarded by many as part of the "West", and Japanese were accorded the status of honorary whites' in Apartheid South Africa. Some Americans tried to explain Japanese success by a Japanese equivalent of what this century's most important sociologist, Max Weber, had called the "Protestant Ethic;" while Chinese and others in East Asia were regarded as incompetent due to their age old Confucianism. This alleged "explanation" was abandoned when the Four Tigers' or "Little Dragons' of South Korea, Singapore [which is half Chinese], Taiwan Province, and Hong Kong also made themselves felt on the world market. Then came the next tigers in Thailand, Malaysia and Indonesia, and looming behind them the Big Dragon of China itself, which began really to threaten Western confidence and dominance. So Confucianism or Asian values' now ceased to be the insuperable obstacle to progress' and instead became the supposed engine and equally false ideological explanation of success instead. As note in Chapter 1 below, books began to appear in the West that refer to the return of Confucian East Asia onto the world stage, but after a presumed interval of a whole millennium of alleged Western dominance, and without ever noting that in reality Asia and China had ceded that place for only about 150 years, or some six generations. Moreover, two and a half millennia of Confucian values can hardly account for or explain up and down changes in economic success or failure from one year, or decade or even century to the next.

The latest notable change is the financial and economic crisis that erupted in East Asia in 1997 and which brought evident relief to many observers in the West. As a result and mis-led by day-to-day press media reports and short term business and government analysis and policy, even informed' public opinion in the West changed again. Now the "East Asian Miracle" is said to have been no more than a mirage, a dream for some and a nightmare for others. The previously supposed explanations' and sure-fire strategies of success are being abandoned again as quickly as they had come into fashion. We hear less about "Asian values' or guarantees from the magic of the market,' and no more security from state capitalism . So much the better I would say, since these supposed explanations' and correct policies' were never more than ideological shams anyway.

The historical evidence presented in this book shows that no one particular institutional form or political economic policy offers or accounts for success [nor failure!] in the competitive and ever changing world market. The contemporary evidence shows the same. In that respect, Deng Xiaoping's famous aphorism is correct. The question is not whether cats are institutionally, let alone ideologically, black or white; the real world issue is whether or not they catch economic mice in competition with others in the world market. And that depends much less on the institutional color of the cat than it does on its opportune position in the world economy at each particular place and time. And since the obstacles and opportunities in the competitive world market change over time and in place, to succeed the economic cat, no matter what its color, must adapt to these changes or fail to catch any mice at all. Among these different institutional forms including relations among state-finance- productive and sales organizations, perhaps the most attention and positive evaluation has been devoted abroad to those of Korea and then of Japan but also of "Greater China" including its vast network of overseas Chinese. But the very fact that they differ, and in Taiwan, Singapore, Malaysia, Indonesia and elsewhere as well, should already forewarn us against privileging one institutional form over all others. At best and that is already very much, the evidence is that none of these institutional forms is necessarily an impediment or unsurmountable obstacle to success on the domestic, regional and world market. Most noteworthy perhaps in view of the widespread Western propaganda about its own alleged virtues is the demonstrated fact that no 'Western model' need or should be followed by Asians in Asia or even elsewhere.

The significance of position and flexible response in the world economy is particularly important during periods of economic crisis. The historical evidence presented in this book shows that no one particular institutional form or political economic policy offers or accounts for success [nor failure!] in the competitive and ever changing world market. The contemporary evidence shows the same. In that respect, that is in Chinese of [negative] danger and [positive] opportunity. In the present economic crisis so far, the focus has been far too predominantly on its undoubtedly serious negative consequences. But the opportunities it poses have received insufficient attention, except perhaps in the United States and China, both of which are seeking to reap competitive advantages from the political economic problems and alleged meltdown' of Japan, Korea, and Southeast Asia. But the dismissal of East Asian and particularly Chinese economic strengths and prospects may be premature and certainly is based on a shortsighted neglect of the historical evidence as presented in this book and on a serious misreading of the contemporary evidence. I believe that this latest quick dismissal of Asia is mistaken for the following reasons among others:

1. Since Asia and especially China was economically powerful in the world until relatively recently, it is quite possible that it soon be so again. Contrary to the Western mythology of the past century, Asian dominance in the world has so far been interrupted by an only relatively short period of only a century or a century and a half.
2. Chinese and other Asian economic success in the past was not based on Western ways; and much recent Asian economic success was not based on the Western model. Therefore, there is also no good reason why Koreans or other Asians need or should copy any Western or other model.' You can manage your own ways and have no good reason to now replace them by Western ones as the alleged only way to get out of the present economic crisis. On the contrary, Korean and other Asian reliance on other ways is a strength and not a weakness.
3. The fact that the present crisis visibly spread from the financial sector to the productive one does not mean that the latter is fundamentally weak. On the contrary, the present crisis of overproduction and excess capacity is evidence of the underlying strength of the productive sector, which can recover. I Korea productive and expoet capacity seems to have leap-frogged over various others since then to the cutting edge of new high technology in various sectors. Indeed, it was excess capacity and productivity leading to over-production for the world market that initiated the financial crisis to begin with when Asian foreign exchange earnings on commercial account were no longer able to finance its service of the speculative short run debt.
4. Not that economic recessions will or can be prevented in the future Deng Xiaoping's famous aphorism is correct. The question is not whether cats are institutionally, let alone ideologically, black or white; the real world issue is whether or not they catch economic mice in competition with others in the world market. And that depends much less on whether they never have been in the past even under state planning' in China or the Soviet Union. More significant is that this is the first time in over a century that a world recession did not started in the West and then moved eastward but that instead it started in the East and then moved around the world from there. And that was precisely because as per # 3 East Asian and particularly Korean productive and export capacity had grown so MUCH. This recessioon can theefore be read as evidence not so much of the temporary weakness as of the growing basic economic strength of East Asia to which the center of gravity of the world economy is now shifting back to where it had been before the Rise of the West.
5. The recession in the productive sector was short, especially in Korea. But it was also severe, especially in Indonesia. And the shock-waves from the financial sector to the productive, consumer and political ones were visibly - and to all but the totally blind, intentionally - exacerbated by the economic shock policies imposed on Asian governments by the IMF as usual following the dictates of the U.S. Treasury, which systematically represents American financial interests at the expense of popular ones elsewhere around the world. That also permitted Western interests to take advantage of declines in productive and financial strength in Korea and elsewhere to buy up assets at bargain-basement fire-sale prices. Even so the underlying strength of the Korean economy was such that the foreigners were even then unable to alter the financial, productive, ownership and state structure significantly to their favor. The Korean productive and financial machine soon recovered again to forge ahead institutional color of the cat than it does on its opportune position in the world economy at each particular place and time. And since the obstacles and opportunities in the competitive world market change over time and in place, to succeed the economic cat, no matter what its color, must adapt to these changes or fail to catch any mice at all. Among these different institutional forms including relations among but now with a costly lesson well learned. The lesson must have been learned elsewhere as well by comparing how relatively unscathed China and Malaysia [and as already mentioned for different reasons Korea] emerged from the financial crisis by maintaining controls over capital exports, compared to those countries that succumbed to the IMF and its lethal medicine by permitting a speculative capital outflow that also destroyed their productive apparatus and multiplied unemployment into an unbearable economic, social, and political problem, especially in Indonesia.
6. That underlying political economic strength also puts East Asia, and especially China, Japan and Korea in a much more favorable position than the rest of the Third World' and even Russia and Eastern Europe to resist Western blackmail as it is now exercised by the U.S. Treasury Department through the International Monetary Fund, the World Bank, the World Trade Organization, Wall Street and other instruments.
7. The very act and cost of East Asian concessions to this Western pressure during the past recession makes it politically more likely, since it is economically possible, that East Asia will take measures, including especially a new financial bloc and banking institutions, that can prevent a recurrence of the present situation in the future by escaping from the strangle-hold of Western controlled capital markets. The recent Nobel Prize laureate in Economics and dissenting former World Bank official, Joseph Stiglitz observes such efforts already in his recent private discussions with Asian officuals as reported in his 2002 book GLOBALIZATION AND ITS DISCONTENTS.
8. Indeed, one of the present battles, first by the Japanese and now also by the Chinese, is to remodel the world financial and trade institutions that were designed by the United States to work in its favor. Thus, Japan wanted to establish an Asian monetary fund to prevent the East Asian recession from deepening as it has thanks to the International Monetary Fund based in and subservient to Washington. And China wishes to join the World Trade Organization but also seeks to have this Western dominated institution reformed to its advantage.
9. A related political economic struggle is the competition between the United States and China to displace Japan, Korea and Southeast Asia in the market by taking advantage of their bankruptcies. American capital is buying up some East Asian productive facilities at bargain basement prices, while China is waiting for them either to be squeezed out of the competitive market altogether, and if not to engage in joint operations. Indeed it had been the devaluation of the Chinese currency before 1997 that reduced the world market share of other Asian economies and helped generate the financial crisis itself. Only time will tell which strategy will be more successful, but the Chinese and perhaps also some Southeast Asians seem like the better bet over the long term. Moreover, no matter how deep the recession in Japan; it is not for that eliminated as an economic power, especially in Asia.
10. Equally significant is that India and to recently to a lesser extent China have remained substantially immune from the present recession, thanks in part to the inconvertibility of their remin ribao and rupee currencies and the valve in their capital markets that permits the inflow but controls the outflow of capital. The currency devaluations of China's competitors elsewhere in East Asia and the reduced inflow into China of Overseas Chinese and Japanese capital that is negatively affected by the recession in East Asia may oblige China to devalue again as well to remain competitive. Nonetheless and despite their serious economic problems, the Chinese and Japanese economies appear already to have and to continue to be able to become sufficiently productively and competitively strong to resist and overcome these problems. In Southeast Asia, Malaysia has successfully followed the Chinese model of opening its capital market to inflows but restricting especially speculative capital outflows from the same. Relatively lower earlier reliance on capital imports seem to have delayed and reduced the ''necessity'' of such emergency measures regarding capital flows - although it seems also not to have imposed the kind of restrictions on capital outflows that Malaysia has successfully pioneered.
11. It is noteworthy that the economically most dynamic regions of East Asia today are also still or again exactly Guangzhou corridor, 2. Fujian, still centered on Amoy/Xiamen and focusing on the Taiwan straits and all of Southeast Asia in the South China Sea; and between them, 3. the Yangtze Valley, centered on Shanghai and trade with Japan that is already taking the lead away again from the southern and northern regions. 4. But already then there was also a fourth economic region around the North China Sea, the quadrangular trade relations among Manchuria and elsewhere in Northeast China, Siberia/Russian Far East, [northern?] Japan, and Korea, but also including Mongolia.. Although the first three above-named regions are already again undergoing tremendous economic growth [and political power?] in the absolute sense, the fourth one around Korea seems to enjoy the greatest relative boom, and within it that of Korean capital as well. It is helping to develop resources in the Russian Far East and as far west as Central Asian Khazhakstan. The Chinese population on the Russian side of the Amur River has been estimated already to exceed 5 million people as a pool of cheap labor. Probable political change in the DRNK may well add a new source of cheap labor for this growing pool of labor in the Northeast Asian Region and for its Far East Russian also cheap base of ample metallurgical, forestry, agricultural and even petroleum resources. Korean and Japanese capital could make that a very attractive regional growth pole in itself and a highly competitive region on the world market. It may not have been politically correct then or now, but my observation already a decade and a half ago among official representatives of enighboring states elicited official interests among some of them, including eventually the Chinese when I repeated it for the second time in Beijing, that Northeast Asia offers a ''natural economic'' opportunity for world competitive interaction to develop Russia's Siberian and Far Eastern resources with abundant cheap Chinese labor and Japanese and then also Korean capital, and I added certain suggestions on how to eliminate or overcome the still existing political obstacles to such a venture for the world market.

All four if these natural economic regions were already important segments of the global economy in 1800, and they can be so again in th 21st century. In that sense also and although its story ends in 1800, the examination of the world economy and of the predominant place in it of the East Asian including Korean economies points to the most fundamental bases of contemporary economic developments in the region and also presages important world economic ones for the foreseeable future.

Therefore and although this book it was written in and addresses primarily the West, the author hopes that it may enjoy the critical acceptance also of Korean readers. One reason this book may appeal to Korean readers is that it pulls the historical rug out from under the essentially racist ideological allegations of innate Western superiority. Another reason may be that this book lends support to the central' place and role of Asia in the world economy of the past and therefore perhaps also in the future. It is not true however, as some of my Western critics have charged, that I simply replace a Eurocentric ideology or perspective by an Asia- or Sino centric one. The author would be disappointed indeed if Asian readers accept this book for such reasons. For on the contrary, a central "scientific" thesis of this book is that there is and was a global economy, which had NO real center during the period it examines in the past and also is NOT likely to have one in the foreseeable future. On the evidence supplied in this book, it is certain that Europe and the West in no sense were the center of the world economy until 1800 or probably later, and insofar as the idea of such a center' is applicable at all, not the marginal Europe but objectively China had the best claim to it. But even that kind of centrality' can only be legitimately asserted or even suggested by examining the global economy as a whole. The principal "ideological" message is not really centric' at all, unless it is humanocentric ,or still better ecocentric.

Therefore, the author wishes that Korean like any other readers will be attracted to and find some use in this book because it offers a more holistic global forest' framework for economic and social scientific analysis of global reality and [as in the more empirical chapters in the book of the whole world economy before 1800. Thus, this book offers at least some beginnings of an alternative to Western triumphalist ideological admiration of particular European trees' and/or of the alleged abstract magic of the market' But it also offers an alternative to the equally ideological invention and then blind acceptance and use of Marxist categories of an Asiatic Mode of Production' or even of a feudalism' that never existed anywhere. The book offers a challenge and an alternative to the Western inheritance of a MISreading of real world economic developments that occurred in Europe for the development of a capitalist' mode of production by Europe. And hopefully as well the global framework and political economic/ demographic analysis in this book can also interest and serve the Korean reader who wishes to examine the same ones as before 1800: 1. In the South, Lingnan centered on the Hong Kong state-finance- productive and sales organizations, perhaps the most attention and positive evaluation has been devoted abroad to those of and even to promote Korea and then of Japan but also of "Greater China" including its vast network of overseas Chinese. But the very fact that they differ, and in Taiwan, Singapore, Malaysia, Indonesia and elsewhere as well, should already forewarn us against privileging one institutional form over all others. At best and that is already very much, the evidence is that none of these institutional forms is necessarily an impediment or unsurmountable obstacle to success on the domestic, regional and world market. Most noteworthy perhaps in view of the widespread Western propaganda about its own alleged virtues is the demonstrated fact that no 'Western model' need or should be followed by Asians in Asia or even elsewhere.

In the present economic crisis so far, the focus here has been Korea's and the reader's own place in the real-world-economy. The author will be grateful, and the writing of his book and its translation into Korean will have been worthwhile, if this book succeeds in helping even a few Korean readers in this common human[ocentric] venture, which I like to summarize as UNITY IN DIVERSITY