The rise of red-shirt capitalism-Newsweek

April 25, 2009

The Rise of Red-Shirt Capitalism
Michael Hirsh
Newsweek: April 13, 2009

Watching the protests in Thailand over the weekend brought back some distant memories for me—of covering the pro-democracy protests in that country nearly 17 years ago, in May of 1992. Then, as now, the country was paralyzed, but the story line was a lot simpler in those days. Then it was a nascent middle class clamoring for Thailand’s emergence from military autocracy, making use of technologies like fax machines and cell phones to spread the word and undermining official state TV. It was all part of that simplistic “end-of-history” model we were enthralled with back then. Once people got a taste of prosperity, they wanted open political expression. And boy, were they becoming prosperous in the ‘90s, or so we thought. Western-style open-market economies had dominated in the great cold war contest of alternative ideologies. Even Vietnam found itself surrounded by Asian Tigers — the cold war dominoes had fallen the other way. The end of the cold war was nigh, as was the collapse of the Soviet Union (that would take place six months later). The ultimate victor, we all knew, would be freedom. And not some abstract concept of freedom — instead, we all were coming to the belief that the freedom to think and vote and act freely was intrinsically linked to the freedom to invent some hot new technology or to start up your own business. It was a moment of history when the truth really did seem simple.

Now we know better. And nothing demonstrates how complex things have become than the travails of Thailand. The latest protests, after all, are not just a story of brave freedom-seeking demonstrators versus evil authoritarians. Yes, the target of their immediate ire is the latest military coup, the one that toppled Prime Minister Thaksin Shinawatra in 2006. But Thaksin was also corrupt, and the economic inequalities he did little to ameliorate during his increasingly authoritarian tenure have become acute with the latest economic crisis. And as Thaksin faces charges at home, the former telecom magnate has been funneling money to the protesters, known as Red Shirts, who have their own satellite TV channel. Many Thais genuinely want a return to democracy, but Thaksin is hardly the hero of the future.

The deeper problem is the flaws in that rapidly obsolescing old globalization model—free-markets produce democracy which in turn produces general happiness—still need to be addressed. The model is long overdue for rethinking and rejiggering. In the wake of the subprime mortgage fallout, we have realized that simply letting capital flow freely—the global financial system we have depended on—isn’t working. We’ve also known for years that while free trade is generally good, the world is not flat, that globalization has deepened income inequalities rather than narrowed them. Overall globalization is still the way to go: No country, not even would-be rogues like Iran and Russia, has found a way around the iron law of the post-cold war global order: in order to be influential or powerful, a nation must be prosperous; and in order to be prosperous, its economy must take part in the international system. But simply coasting on those verities won’t cut it any more. I’m not sure what the answer is exactly, but to try to find out I’ve begun reading a book by Joseph Stiglitz that for too long I’ve ignored: “Making Globalization Work.”

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