In Search of East Asian Economic Growth Model

1. In Search of East Asian Economic Growth Model J.D. Han

2. In search of East Asian Economic Growth Model • Not only Institution but also Culture and Religion • Neo-Confucian Hypothesis Neo-Confucianism helped economic growth • It is a revival of Max Weber’s “The Protestant Ethics and Spirits of Capitalism (in western Europe)”

3. Great Review by Peter L. Berger • IN SEARCH OF AN EAST ASIANDEVELOPMENT MODEL fu , Edited by Peter L. Berger AND Hsin-Huang Michael Hsiao

4. “ …..Now, no one is likely to question that these social and cultural features are also, somehow, part of the" East Asian model" (economists, somewhat awkwardly, often refer to these features, often in a footnote, under the vague category of' 'human capital"). The question is to what extent the economic and the sociocultural features are causally linked. I think it is fair to say that at this point we don't know the answer to this, and that it would be very important indeed to 'get closer to an answer…..”

5. Ezra Vogel • Four institutions and cultural practices rooted in (Neo-)Confucian tradition but adapted to the needs of an industrial society have helped East Asia make use of their special situation advantage and new worldwide opportunities: (1)meritocratic elite (2) an entrance exam (3) importance of group (4) the goal of self-improvement

6. Essence of East Asian Economic Growth Model • Not Market Oriented • Not Democratic in the Western sense -> Neo-ConfucianLeadership Model

7. Leadership • It is more efficient than Democracy and thus beneficial for ‘catching up’ with developed countries • Model: • Parallel in the West: Plato’s Republic Philosopher King

8. *Value System as a ‘Foundation’ Institution for Economic Growth: • Max Weber arguned that “Protestant Work Ethic” sanctioned hard work, frugality and wise investment. • Rodney Stark is one of the most highly regarded sociology of religion scholars alive today. He recently published The Victory of Reason: How Christianity Led to Freedom, Capitalism, and Western Success. • Professor Tu Wei-Ming at Harvard University said that Neo-Confucianism of the Far East is similar to protestant ethic. - refer to the essence of his idea

9. Structure:Neo-Confucian Leadership(Government; Officials; Households) • Not democratic • Ethical = Self Purifying • ‘Noblesse Oblige’ = Responsible for Welfare of the General Public • Scholarly= Sapient =Philosophical “Philosopher King” in Plato; Mandarin Scholars as Officials

10. Tu Weiming says “The central government is expected to have a holistic vision of the well-being of the nation and a long-term plan to help people maintain adequate livelihood so that they can attain their aspirations of human flourishing.”

11. This Neo-Confucian Leadership filters down to lower levels of society, such as Business Firms, Schools, and Households. • At the business level, there are in fact 2 different Asian models: Japanese-Korean: Mega Firms or Conglomerates Overseas Chinese-Taiwanese: family-run small-medium firms

12. Modus Operandi:Harmonious Relationship(Nation-Public; Employers-Employees) • Orderly = Rules of Behaviours • Benevolence = not the same as Love(Ai) • Respect

13. Rushang(Neo-Confucian Entrepreneurs) = Samurai Merchants • No Needs for Labor Unions • Lifetime Employment System • Profit-Sharing/Participatory Management (Gong sheng: Live and Let-Live)

14. Emphasis on Ethics and Education

15. Innovative Society • Respect for Knowledge not the same as Skills • Emphasis on Spontaneous Learning to get it not the same as Schooling

16. Incentive for learning/education social mobility through Keju

17. * Reflect on Individual’s Motivation for Education in East Asian History • Neo-Confucian Concept of Social Class • Social Class Structure • Social Mobility and Education Click here for an interesting paper on the social mobility of China

18. You can move up by means of education. Note that in this system the inheritance or property was not the only basis for ‘status’. And it is not necessarily ‘hereditary’

19. Encyclopaedia Britannica says • Ch’ing (Qing) dynasty Socialmobility increased during the early Ch'ing, supported by a pervasive belief that it was possible for a peasant boy to become the first scholar in the land. An ethic that stressed education and hard work motivated many households to invest their surplus in the arduous preparation of sons for the civil service examinations. Although the most prestigious career in Ch'ing society remained... • Ming dynasty ...the Ming civil service, that influential families did not monopolize or dominate the service, and that men regularly rose from obscurity to posts of great esteem and power on the basis of merit. Socialmobility, as reflected in the Ming civil service, was very possibly greater than in Sung times and was clearly greater than in the succeeding Ch'ing era. • T’ang dynasty ...examination system had facilitated the recruitment into the higher ranks of the bureaucracy of persons from lesser aristocratic families, most officials continued to come from the established elite. Socialmobility increased after the An Lu-shan rebellion: provincial governments emerged, their staffs in many cases recruited from soldiers of very lowly social origins, and specialized finance...

20. This has been the case with the traditional Chinese society, Korea, and Japan. • The contemporary China (1949-present) is hard to assess: Theoretically it should be, but we should take into consideration that the communist China has been waging ideological war within China, and it is barely getting out of it with some legacy left over.

21. ** Contemporary China before Take-off • X.Wu, Institutional structures and social mobility in China: 1949-1996 Научный руководитель, edited by D.J.Treiman, 2001 • Results show that (1)receiving education or obtaining political credentials are two major channels for individuals to achieve upward socialmobility in the hierarchical status system of socialist China; (2)there exist high rates of inter-generational inheritance in terms of status as defined in the Chinese institutional context; (3)although one can overcome disadvantages in family background by acquiring educational and political credentials, access to these two fundamental currencies of mobility is highly constrained by one's hukou origin and first work unit affiliation. The analysis reveals an intertwined relationship among hukou status, work unit status, and employment status. The temporal trend of socialmobility, especially the impact of economic reform, is also addressed. Economic reform, especially during its late stage, has yielded limited consequences for the Chinese stratification system. The research contributes to understanding of how the Communist party-state controlled and allocated life chances and status, which in Western societies is allocated mainly through competition in labor markets. • What does this mean? • Fully paper is at http://72.14.205.104/search?q=cache:bSx1y9NxpFoJ:www.ecsocman.edu.ru/db/msg/24362.html+social+mobility+in+china&hl=en&ct=clnk&cd=7

22. Limitations of East Asian Economic Growth Model based on Neo-Confucianism. 1) Self-Purifying? (Cons)– No check and balance (Pros) It still works at the core in an extreme Confucian society • Penalty for ethical failure is very high in Japan (Harakiri) - Korean President Rho Moo Hyun’s suicide in 2009

23. 2) Sustainability? :Cultures and Institutions change over time • “…..And the distinctive cultural patterns of Confucian civilization may be highly functional in post-World War II period, producing the East Asian "economic miracle." There is no guarantee that this comparative advantage will continue in the future. On the other hand, cultural traits also change (although some anthropologists don't like to think so); they usually change spontaneously in response to new circumstances, but they occasionally change as a result of deliberate interventions by government (especially, of course, in educational policies). Therefore, I'm very much persuaded that it is an error to think of culture as a static, invariant reality……”

24. Michio Morishima (森嶋通夫,1923 –2004) at LSE “Why Did I Predict Japan to Collapse?”

25. *Is the Neo-Confucian Leadership for a limited period? • The Neo-Confucian Leadership is a state-run development strategy of ‘capitalism from above’. • Is this for the initial stage of Economic Development? Would it be replaced with ‘mature’ capitalism?

26. Not all agree with the ‘Recent Moral Decay’ of ‘Young’ East Asians • Hugh Patrick Why I Expect Japan to Prevail (Disagreeing with Morishima) -It is applicable to all economies which have achieved economic growth through Neo-Confucian model

27. Quotation from Hugh Patrick • Morishima interprets Japanese modern economic development and growth from Meiji until the 1980s as due to state-led and elite-led capitalism, capitalism from above. Government policy certainly has been important and supportive, but in my view the real source of Japanese development and growth has been in the myriads of entrepreneurs and workers in smaller-scale enterprises. They have provided the major source of output and employment throughout the modern period. • Thus, I differ from Morishima in that, in my view, modern Japanese economic development has always combined capitalism from above and capitalism from below. • The value system of the postwar generation has changed in important respects – it is more individualistic, less ideological, perhaps more secular. But I see far greater continuity in values than Morishima does. Like its forebearers, the postwar generation is pragmatic, flexible, realistic, ambitious, this-worldly. It values education, and not simply because it is the route to economic and social success. The dynamism, vigor, and entrepreneurial spirit that has long characterized small businesses persists: it is quintessentially Japanese.

28. 3)Some Elements of New Colonialism implied in East Asian Economic Growth Model However, we should watch out for

29. Spread of East Asian Growth Model There is a theory by the Japanese government: ‘Flying Geese Model’ Predicts that East Asian economic growth model will naturally(?) spread from Japan, to Korea and Taiwan, and finally to China.

30. Not so natual Problems of Flying Geese Model • This is not just the order of economic development across countries over time, but the East Asian Supply Chain that U.S. and Japan have in mind. T: U.S. -> Japan -> Korea / Taiwan -> China K: China -> U.S. -> Japan/Korea/Taiwan -> China

31. *U.S. Supply Chain in East Asia • China has huge trade deficits with Korea, and Taiwan, which have perennial trade deficits with Japan. Japan gets some fundamental technology from U.S. • Trade surplus China gets from U.S. flows back to U.S. for financial investment. • U.S. invests on Korean companies which invest in China. • The producing country at the bottom gets all the blame for environmental degradation.

32. It may describe the current reality. • However, it is not what it should be, and it should not justify or perpetuate the current situation. • It may spread to other countries: The bottom producing country always looks for a younger goose to dump all on.