459s13 lecture2 3

POLS 459
POLITICS OF EAST ASIA
Session 1 topic: Introduction to the course
Session 2 topic: From poverty to prosperity
Professor Timothy C. Lim
California State University, Los Angeles

how to study change and continuity

a question: how do we go about identifying, understanding !
and explaining those forces or factors most important to the !
processes of change and continuity in East Asia?

this is not a simple question, nor is it a question that we should take lightly, or
gloss over by making a few cursory comments and then moving on to the more
“important stuff” ... indeed, the question of “how to study” change and
continuity in East Asia is the essential starting point for this course

introduction to the course


to explain and understand economic, social, and political phenomena, !
we need a plan—a coherent and systematic way of organizing and
supporting our ideas and arguments

this requires us to deal head-on with two fundamental elements in any social
scientiﬁc analysis, which are ...

theory

method&


ﬁrst, a few words about theory
theory cannot be avoided. this is because, no matter pragmatic or
commonsensical we think we are, any time we make a claim or argument
about a social, political or economic phenomenon we are engaged in a
process of theorizing. consider, for a moment, the question we discussed
earlier, “What are the reasons for East Asia’s economic success?”

any answer you or anyone else advances is premised on a slew
of theoretical assumptions, propositions, and principles


these assumptions, propositions, and principles revolve around questions
of “agency” and “structure” (e.g., are individuals mostly responsible for
strong economic growth, or is economic growth premised on factors
beyond an individual’s control?); they are premised on identifying the key
forces or processes of change (economic, political, cultural, social); they
are premised on assumptions about human nature (are we rational
actors?); and so on ... we will address all these issues in more detail as we
proceed throughout the quarter

any answer you or anyone else advances is premised on a slew
of theoretical assumptions, propositions, and principles


second, we need to know what theory (in general) is ...
theory can be defined in a number of ways. For our purposes, we define
theory as a simplified representation of reality, and a framework of
analysis within which facts are not only selected but also interpreted,
organized, and fitted together so that they create a coherent whole

embedded in this definition are the following key points (some of
you may remember these from POLS 373) ...


§  theory necessarily simpliﬁes reality
§  theory helps us to determine what facts are important, "
meaningful, and relevant
§  theory guides our interpretation of the facts (what do the facts mean?)
§  fheory tells us how to organize the facts—how do different facts relate to
one another? Which are primary and which are secondary?
§  theory allows us to develop “whole arguments”


third, we need to learn and understand speciﬁc theoretical "

models or approaches"

our main reading and this class is partly organized !
around a “competing perspectives” approach: simply !
put, this means that we will examine contrasting  
arguments about major issues in East Asia: economic !
growth and industrialization, political continuity and !
change (i.e., democratization), and the dynamics of !
migration/immigration


the competing perspectives approach

this course assumes that each provides indispensable !
insights into a proper understanding of continuity and !
change in East Asia, and thus each needs to be taken !
seriously. Moreover, we believe that the systematic !
juxtaposition of these competing viewpoints will !
allow for a more enriching and multidimensional !
understanding than any single perspective


the competing perspectives approach—a caveat

at the same time, a competing perspectives approach!
is potentially very confusing: after all, why should !
there be so much disagreement? even more, how !
are students supposed to ﬁgure out which perspective!
is “right” and which are “wrong”?
in this course, we will try to cut through the
confusion by providing a path toward synthesis
or integration ...


an integrative approach

the path we use will be based on the constructed actor model
the “constructed actor” is shorthand for a more!
elaborate notion articulated by Daniel Little, who !
used the phase, “the structured circumstances !
of choice of socially constructed actors”


an integrative approach—the basics

the constructed actor model is partly premised on a micro-level
approach—i.e., a focus on individual actors
at the same time, actors are understood to be!
“socially constituted,” which means that they are !
shaped by a larger current of social facts, such as!
value systems, social structures, extended social!
networks, and the like: this also means that the!
constructed actor model is a multi-level approach

alittlemoreonlevels-of-analysis


In the CAM, it is individuals who make decisions or choices and it is
through these choices that certain outcomes are produced (such as rapid
economic growth); yet, these choices are always !
conditioned or constrained by an array of other!
factors, some of which are extremely powerful
in the CAM, we need to identify and explain how "
individual choices interact with social, political, "
geostrategic, institutional, cultural, economic contexts


What does all this mean at a more down-to-earth or practical !
level? It means, ﬁrst and most simply, that ‘people matter.’ Thus,
we always need to stay focused on individual actors: again, it
matters what choices they make and what actions they take ....Yet,
it also means that we must take a step back from the actors; we
cannot, in other words, ignore all those factors and forces that go
into shaping an individual’s attitudes, perceptions, values, and
beliefs. The cultural and social milieu in which people interact also
matters. Nor can we ignore the institutional and structural context
within which individual decisions are made.


we will have much more to say about the constructed actor model as we
proceed throughout the quarter

for now, simply keep in mind that it an essential element of"
the heuristic approach we will use in this course;"
it is also a model that you must endeavor to master,"
as you will be required to “apply” the constructed"
actor model in your own analyses


methodological issues
explaining change and continuity require more than just a discussion and
application of theory—we also need to be cognizant of what researchers
refer to as method or methodology

method is vital

method is vital, in part, because it provides the means for supporting !
(and evaluating) theoretical claims and arguments, which also !
means that it provides a basis for evaluating competing !
theoretical perspectives as a whole
simple deﬁnition: method refers to the manner in which evidence is
gathered, analyzed, and interpreted in order to test a hypothesis or
theory. in the social sciences there are numerous methods, including
the statistical method and the comparative method

there are many ways to discuss and analyze method; for now, keep this
simple point in mind: method is a tool

as tools, some methods are clearly better suited to certain "
tasks or objectives than others, but there are "
also basic tools (and techniques) that can be "
used effectively for a wide variety of tasks; "
in our class, we will primarily use three "
types of methodological tools ...

methodological tools

§  descriptive statistics and other quantitative data
§  case-oriented comparisons
§  historical analysis
we will talk about each of these methods
shortly, but ﬁrst a few cautionary
words about “bad method”


bad method
too often, researchers may serious mistakes because the fail to consider
even the most basic methodological principles
the example used in the reading is a “direct comparison” of Japan, South
Korea, and Taiwan (like comparing three oranges) wherein "
the researchers ﬁrst notes that all three countries achieved "
comparable economic success, and then ﬁnds another "
similarity among the three cases and concludes, “Aha! "
I have found the common reason for their economic success!”


bad method

but what’s wrong with the foregoing example? what’s !

wrong with comparing three “oranges”?
basic problem: when comparing three
essentially similar cases, where there are
no signiﬁcant differences, there is no way to
control for a range of variables // consider
the following table ...

ﬂawed MSS design: comparing Japan, South Korea, and Taiwan

ﬂawed MSS design: comparing Japan, South Korea, and Taiwan
Questions: based on the information in the table, how are the countries similar? "
what conclusions, if any, can we draw from the similarities?


bad method: ahistorical analysis

another example of “bad method” is !

ahistorical analysis: what does this mean, !
and why is it a problem?
hint: consider the example of Confucianism
cited in the readings

back to methodological tools

§  descriptive statistics and other quantitative data
§  case-oriented comparisons
§  historical analysis

methodological tools: descriptive statistics

descriptive statistics are typically statistics or ﬁgures that
summarize a data set for an entire population of subjects—
e.g. GDP, per capita GDP, export growth, fertility rate,
educational level, infant mortality, and so on: descriptive
statistics allow us to make broad and relative !
comparisons about countries, industries, !
whole societies, and so on

methodological tools: descriptive statistics

descriptive statistics are very useful, but they are also very
limited—they can allow us, as noted in the previous slide, to
make relative comparisons between subjects, and they can
also allow us to see basic correlations. but they do not allow!
for causal conclusions to be drawn; in addition,!
descriptive statistics are reductionist and!
can be easily misused or misinterpreted

methodological tools: case-oriented comparisons

case-oriented analyses are holistic comparisons of events,
decisions, institutions, policies, outcomes and the like; in a
case-oriented analysis, the researcher examines myriad
factors and their interactions in detail and depth. this is tool!
that allows researchers to deal with complex!
causality

methodological tools: case-oriented comparisons

case-oriented comparisons add a comparative element:
this means that we examine our cases in relation to other
cases as way for us to better assess our arguments,
conclusions, or claims

methodological tools: historical analysis

historical analysis begins with the premise that what
happened in the past continues to affect what happens
today. Even more, how and when things happened in the
past are often key to explaining contemporary outcomes and
processes. historical analysis is an important!
part of case-oriented analysis.


summing up
the ﬁrst chapter covers a lot of fairly abstract material, !
but it is also foundational material and an essential basis !
for the rest of this course—for now, though, just try to !
keep the basic theoretical and methodological issues !
in mind as we proceed

SESSION 2
From Poverty to Prosperity in One Generation:
Explaining the East Asian “Miracle”

explaining the East Asian miracle

in our ﬁrst class meeting, we discussed the reasons for rapid
economic growth and industrialization in East Asia—we will
continue that discussion today, except now !
the focus will be on the dominant theoretical !
arguments (i.e., the competing !
perspectives) that have been !
advanced: the best place to !
begin, perhaps, is with liberal  
explanations
from poverty to prosperity

liberal explanations

all liberal explanations begin with a focus on individuals !
and on the ________________

some questions
what is the free market and what makes is"
so special? how does the market explain"
East Asia’s phenomenal record of "
economic growth? (just consider these"
questions for now)
free market

Consider this defense of the free market by Milton Friedman, one of the strongest"
advocates of free markets until his death in 2006


from the foregoing video, it is clear that the free market is a market
in which there is minimal interference by non-market !
actors, especially the state
a free market is premised on voluntary and unrestricted "
exchanges between buyers and sellers; when this "
happens, there is always mutual gain (that is, both "
buyers and sellers beneﬁt), and in an economy in"
which a free market prevails, there is always"
strong and consistent economic growth


thus, for East Asia, the basic liberal explanation is very clear, and
very simple: East Asian productivity is primarily product !
of market forces and, at most, very limited  
government intervention (designed to improve!
the macro-economic environment

to buttress this argument, liberal economists point"
to the former Soviet Union, and to all economies"
that relied on central (state) planning, including "
North Korea and China prior to 1979 ...


what is the story with centrally planned economies?

consider the following table ...

questions"

what does this
table tell us about
the nature of
economic growth
in planned
economies? why
did the Soviet
Union do so well
for a while, and"
then suddenly
drop off? (we also
similar patterns in
other CPEs)

PaulKrugman


interestingly, a one famous liberal economist, Paul Krugman, argued
that the East Asian miracle was no miracle at all. instead, !
he argued that Japan, South Korea, Taiwan (as well as !
Singapore and Hong Kong) were basically following !
the Soviet Model—his argument centered on the issue !
of total factor productivity (TFP), which refers to the !
portion of output or production in an economy not !
caused by inputs (such as labor, land, and capital)
Krugman was skeptical because states in
East Asia were highly interventionist ...


Krugman was, it turned out, wrong but his reasoning was impeccably
liberal, which brings us back to a key point: whatever their liberal stripe,
liberal economists agree that free markets and private enterprise—and
not non-market actors, such as the state—are the fulcrum of a growing
and dynamic economy

More speciﬁcally, the liberal view would posit that East Asia’s economic rise
was the product of a basic set of interconnected economic policies, including:

summary of key factors

§  Integration of the domestic economies into international markets
§  Lowering or elimination of trade barriers "
and other forms of protectionism

§  Relatively limited state or government "
intervention in economic affairs)
§  Elimination of reduction of barriers to market entry
§  The creation of stable macroeconomic environment


despite broad agreement, is it the case "
that liberal economists agree on everything?

the short answer, of course, is “no”: but"
this raises the question ...


on what [major] points do liberal disagree?
disagreements center on two issues: (1) whether
markets are self-correcting, and (2) whether
market failures exist

liberal disagreements: self-correction

for our purposes, self-correction is the less important of the two
disagreements, but it is still important to understand the issue

the basic issue revolves around the question: “what happens when a market
experiences difﬁculties, such as a downturn in consumption or investment?”
Don’t do anything!
Just let the work
work on its own. In
time, equilibrium will
be restored
That’s not always the
case.—the market
sometimes needs a push
to restore equilibrium
more efﬁciently

the self-correction debate is represented in the debate between "
free marketers, such as Friedman, and followers of John Maynard"
Keynes. This video (indirectly) addresses the issue of "
self-correction

liberal disagreements: market failure

the more important issue is market failure: among economists, there is
some agreement that the free operation of the market cannot always
produce efﬁcient outcomes; this is especially true in economies that are in
the early stages of capitalist industrialization

Types and examples of market failures: (1) negative externalities"
(pollution); (2) positive externalities (public education); (3)"
imperfect information/information asymmetry; (4) public"
goods; (5) monopolistic conditions; and (6) factor "
immobility


the important is this: if market failures exist, then government or state
intervention in the economy is theoretically justiﬁed: this has led to the
emergence of what might be called “market-friendly” liberal arguments
interestingly, one of these market-friendly arguments comes from a bastion of
liberal economic theory, the World Bank • the Bank has recognized,"
in particular, that states can and do play important, even"
essential roles, in complementing markets in situations"
where the market alone is insufﬁcient to create"
optimal results—the example used in the reading"
focuses on “information asymmetry”



the Bank not only argued that states can step in to!
help correct market failures, but also that states!
could, to a limited (but important) extent, substitute!
for the invisible hand of the market by, for example,!
“creating contests”

in East Asia, states developed “institutional structures "
in which ﬁrms competed for valued economic prizes, "
such as access to credit”; the state also prohibited "
monopolies, and set up relatively transparent criteria "
for “winning”—such as meeting export targets.

this short video provides an explanation of the invisible hand, which is strongly linked
to competition (competition in the market, in others words, creates the incentive for
producers to constantly improve their products and to sell them at relatively low costs


the World Bank’s argument was almost heresy to!
many (all?) staunch free-marketers, but in a sense,!
the Bank had no choice: the facts on the ground—!
the reality of state intervention combined with!
fantastic economic growth rates—made a mockery!
of the “aggressively deductive” free market (or !
“market-only) explanations

a method-check: what’s the methodological
problem with “market-only” explanations?

liberal disagreements: export-led growth

one more point: all liberal explanations put !
a great deal of emphasis on East Asia’s !
strategy of export-oriented industrialization!
(EOI) policy

but what’s the signiﬁcance of an export-"
oriented industrialization policy? that is, why"
do liberals think EOI is so important?


summing up: lessons learned

so what have we learned from our admittedly cursory "
discussion of the liberal argument?

one clear lesson ...

markets matter


summing up: lessons learned

so what have we learned from our admittedly cursory "
discussion of the liberal argument?

we also learned that, to some liberals, the "
market and the state are not always in "
opposition, but can work in tandem with "
one another: this offers a nice segue to a"
discussion of our next competing"
perspective ...


next up ...

statist or institutionalist "

arguments


the state and economic growth

ﬁrst, a quick note on terminology ...

when we discuss approaches that focus on the state, the
shorthand term “statist perspective” is used; in addition, scholars will
also refer to “institutionalism” or “rational institutionalism”; these are
not the same terms, but for our purposes, we can use them more or less
interchangeably (the latter two are more general—keep in mind that the
state is a type of institution)



and now a question ...

how does the statist and liberal perspectives overlap,"

and how do they differ from one another?


points of agreement between liberal and statist approaches

§  markets are essential to sustained and dynamic economic growth
§  integration into international markets (i.e., export-oriented "

Industrialization) is important
§  economic autarchy, central planning, ISI (by itself) are all"

prescriptions for economic failure


points of disagreement between liberal and statist
approaches

§  economics and politics are inseparable
§  state action is important even in fully industrialized economies
§  not all states are equally capable: the nature of states "

is a critical variable
§  understanding the nature of states requires "

historical analysis


to get a more concrete sense of the statist argument, let’s !
take a video detour ...
the following documentary was produced in 1991 at the height of
Japan’s economic rise: it examines Japan’s state-led strategy of
economic development and argues that it has been the key to that
country’s success
things, of course, have changed "
since 1991, but the video’s main "
message remains instructive …


losing the war with Japan

viewing questions

§  what assumptions does the film make !
about Japan’s economic success?
§  how does the film reflect the!
statist perspective?
§  with 20-20 hindsight, what can we say !
about the accuracy of the documentary?


a basic point

just as the liberal perspective shows us that markets matter, we can
begin our examination of the state by asserting, quite simply, that ...

states matter*
* but not all states are created equal or are equally capable

liberal

developmental

authoritarian

Keynesian


the basic point from the preceding slide, !
raises another question ...

what type of state matters?

this is a key question, and one that
differentiates the statist from the
liberal view ... how so?

liberal

developmental

authoritarian

Keynesian


what type of state matters?

for now, let’s just say that, in the statist"
perspective, differences among states"
are a focal point of analysis and"
theoretical attention



to better understand statist arguments—particularly in terms
of how they differ from more “ﬂexible” liberal arguments—it is
important to look to deep causes, rather than only proximate
and intermediate causes
what are the distinctions among these "
three types of causes?


459s13 lecture2 3

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