Confederacy of zombies: Understanding Thailand's business culture of favouritism and privilege
By Jon Fernquest |
Kevin Hewison, a noted Australian scholar specializing in the political economy of Thailand, published a review of the pathbreaking volume of academic studies Thai Capital: After the 1997 Crisis in the Bangkok Post. [Read a New Mandala interview of Kevin Hewison: part 1, part 2]
This book is full of essential information on the political economy of Thailand and business culture. Essential reading for anyone who wants to know what is really going on.
Thai Capital After the 1997 Crisis
by Pasuk Phongpaichit and Chris Baker (eds)
Silkworm Books, 650 baht
Book Review by Kevin Hewison
Watching the outcome of the 2007 elections brought to mind the plot of the classic zombie movie Night of the Living Dead, which tells of the dead returning from the grave to feed on the flesh of the living.
Prior to the September 2006 coup, the liberal-monarchist 1997 Constitution and the capitalist-dominated Thaksin Shinawatra government seemed to have ushered in a new period in Thai politics. There were big changes in the economy and bureaucracy. Importantly, for the first time, the votes of the majority seemed to matter as the Thai Rak Thai Party developed and implemented policies that courted the masses.
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The rhetoric of the past - about national unity, order, selfless service to the nation and loyalty to the crown - is also enjoying a new lease of life. Archaic legislation like the internal security act has been engraved on the statute book.
What makes this spectacle of the living dead striding the political stage even more depressing is that a similar message emerges from this new book.
The editors, Chulalongkorn University economist Pasuk Phongpaichit and independent writer and analyst Chris Baker, are responsible for some of the best books available on Thailand. Their contributions on history, politics and economics are amongst the best known, most widely cited and most influential. Thai Capital After the 1997 Crisis is essential - if somewhat depressing - reading.
The collection brings together 16 authors in 12 chapters that assess the impact of the economic crisis on Thailand's business class. Each of the studies is based on substantial research, and in some cases represents the first academic study published on their chosen topic.
For example, Porphant Ouyyanont's study of the Crown Property Bureau is the first attempt to accurately assess the royal family's institutional wealth. Likewise, Nualnoi Treerat's account of the rise of Charoen Sirivadhanabhakdi to become one of Thailand's wealthiest businessmen is a remarkable story about a publicity-shy tycoon. Veerayooth Kanboochat's account of the rapid expansion of hypermarkets is another important story told for the first time.
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The economic boom of roughly 1986 to 1996 had expanded and diversified the business class in Thailand. The Sino-Thai families that controlled the bank-centred conglomerates that had dominated business since World War Two seemed to be waning in influence. The stock market and financial liberalisation offered new opportunities to fund businesses free of old-style personal relationship banking. The exuberance of the boom seemed to create opportunities for a new generation of business people, many of them sporting MBAs from the best business schools in the US and Europe.
When the crisis struck, outsiders such as consultants to the IMF and World Bank saw an opportunity for "creative destruction", getting rid of flawed, influence-based, family-dominated capitalism, leaving modern firms stronger and, finally, dominant.
There was some of this. For example, much of the auto industry was essentially sold off to foreign investors during the crisis, and this led to the rapid expansion of exports. Likewise, the rapidly-developing hypermarket sector in retailing was also offloaded to foreign investors who, taking advantage of a devalued baht and reduced property prices, expanded exponentially.
But when it comes to the sectors where domestic business remained, this collection shows that the big winners in the recovery were those who best managed political relationships. Liquor and telecommunications are two examples that show how cash flow and political and bureaucratic connections were absolutely critical to business success.
If managing these relationships was too complicated, then taking over the government - a la Thaksin - certainly worked. In fact, liquor and telecoms are examples of the effective use of state power to maintain and even increase monopoly positions and profits. These two sectors spawned the richest business families in post-crisis Thailand.
Most disturbing is the description of the linking of political and economic powers. In provincial areas, the use of murder for political and economic ends continues to be a "last option".
Where "primitive accumulation" remains a significant element of business - fishing, provincial land development and construction, agro-industry, resorts and so on - access to political power provides the insurance cover that permits this use of deadly force.
Where business has moved beyond this violent stage of accumulation, the principal business model remains relationship-based. Thailand's capitalism remains mired in opaque exchanges, privileged political access and predatory business practices. Political influence and economic power simply cannot be separated.
The economic crisis certainly resulted in a re-ordering of Thai capitalists. However, the evidence of this collection is that the market zealots' hope that the crisis would mean an end to influence-based, family-dominated business has not been realised. Rather, the business people who have flourished since the crisis appear to remain embedded in these kinds of relationships.
Remarkably, these relationship-based business actors have been given a new lease of life in post-coup political arrangements that encourage weak coalition government. These kinds of governments not only surrender considerable power to the bureaucracy and military, but encourage particularistic policy-making, influence, favouritism in government business, horse-trading and pork-barreling.
For anyone who has watched recent Thai political events with the same skin-crawling, horror-struck fascination as that evoked by a zombie film, this book is essential reading.
The collusion of business and politics is the source of the transfusions that allow the living dead to continue to haunt Thailand's political and economic landscapes.
Kevin Hewison is affiliated with the Carolina Asia Centre, The University of North Carolina at Chapel Hill.
(Source: Bangkok Post, Outlook section, 05-01-08, my italics)
Vocabulary:
a study - a published article describing reasearch done on a subject
a confederacy - a united group of people (or zombies) all trying to achieve the same thing
zombies - a reanimated corpse, undead corpses brought back from the dead by supernatural or scientific means, rarely under anyone's direct control and therefore dangerous, typically have very limited intelligence and hunger for the flesh of the living (See photos on right and Wikipedia)
a business culture - the customs and traditions, the way that business is done either within a country or even within a company
favouritism - when one group or person is given unfair help or favour
privilege - the power that a small group of people has because of their wealth or high social status
a scholar - a person who studies an academic subject in great depth and who becomes an expert and quite knowledgeable about it
political economy - the study of how political factors influence the functioning of an economic system (See Wikipedia)
pathbreaking - new and innovative, done for the first time
a classic - a very famous movie or book (that has become the standard to judge all later works against)
Night of the Living Dead - an old black and white movie about people who get attacked by dead people from the graveyard who have come back to life (See Wikipedia)
ushered in a new period - began a new period
the votes seemed to matter - the votes were accepted as important in choosing the goverment, in the past they weren't
implemented policies - turned planned policies into reality
the masses - the great numbers of ordinary people in a society
courted the masses - tried to get the masses to like him
rhetoric - used mainly to persuade and control people (and for this reason not completely sincere)
selfless service - serving without thinking about benefiting yourself
X is enjoying a new lease of life - X is much more lively and successful than X used to be in the past
archaic - old fashioned
engraved on - cut into the surface of metal or stone (here meaning write permanently and cannot be erased)
statute book - book of laws
a spectacle - a strange and very interesting thing to see
the living dead - See "zombie" above
striding - walking with quick long steps
most widely cited - people refer to this book or writing the more than any other book
influential - having the power to make people agree with you and do what you want
assess the impact of Y - determining whether the effect of Y has been little or great
the business class - the group of wealthy business people in society
publicity-shy - does not like media attention, does not like to have things written about him or have his photo displayed
hypermarkets - very large stores like Lotus, Big-C, and Carrefour
multinationals - companies that do business outside their country of origin
rounding out the collection - completing the collection, making it perfect
rent-seeking - making money by manipulating the legal and economic rules of the game rather than through competing as equals in trade and production of wealth (See Wikipedia on rent-seeking)
conglomerates - a large company that owns several smaller companies doing different kinds of businesses
waning in influence - losing influence, growing less and less influential
financial liberalisation - removing or reducing restrictions on investment money flowing into and out of a country
old-style personal relationship banking - using a bank to give loans to close friends and cronies, like people did in the past
exuberance - being energetic, excited, and cheerful
sporting clothes - wearing fashionable clothes in a way that everyone can see you
sporting MBAs - have fashionable MBAs
outsiders - people who are not acccepted into a group of friends
creative destruction - a term created by the economist Schumpeter to mean that the old must be destroyed before an innovative new improvements have a chance of taking root
flawed - has a mistake or imperfection in it that makes it invalid
offloaded - get rid of by selling to someone else
devalued baht - when the baht decreases in value, which means the normally quoted baht per dollar rises (for example, when the baht rose from 25 to over 50 per dollar)
expanded exponentially - increased at a faster and faster "exponential" rate
a la Y - in the manner of Y
spawned - gave birth to
predatory - when animals live by killing other animals for food
predatory business practices - profiting from other peoples' weakness or suffering (for example, shoot the competition to get rid of them)
primitive accumulation - the part of market expansion and gradual increase in commercial trade over the centuries that is not peaceful, but rather uses predatory means such as violence and conquest, piracy and plunder, theft and robbery, to separate the worker, the original producer (small farmer, craftsman) from the means of production (farm, workshop), from the original natural economy (See Wikipedia on primitive accumulation of capital)
agro-industry - large companies that produce agricultural crops as a business
provides the insurance cover for Y - protection for Y if project does not succeed as planned
mired in - stuck in mud, in a problem difficult to solve and overcome
opaque exchanges - business deals that are not transparent, that are hidden to the public (selling illegal Lao logs to a businessman who knows this is illegal but believes it is ok because it is a common business practice)
zealots - extreme followers of a belief
embedded in - become fixed there deeply and permanently
coalition government - a government formed from several different political parties
particularistic policy-making - making policy on a problem to problem basis, rather than thinking of what is best for the whole country
horse-trading - negotiating and bargaining that is too forceful and clever (just like they were two farmers trading horses)
pork-barreling - spending money on local projects to win the votes of local people
skin-crawling - very frightening
collusion - secret and illegal cooperation
transfusions - putting new blood into a body to replace the old
