by Lean Ka-Min

Penang, 11 Jan 2000 -- The Malaysian Prime Minister has attacked globalization as an attempt by rich nations to set up worldwide monopolies by their giant corporations to take over small and medium-sized companies.

"Today, without the challenge of communism, the true ugliness of capitalism has revealed itself. This time it will not permit any opposition or restriction," said Dr Mahathir Mohamad in an article published by Japan's leading newspaper, "Mainichi Daily News", and republished in the Malaysia-based "New Straits Times."

"Democracy, the rule of the majority and the concern for the poor and the small must not stand in the way of world-girdling unbridled capitalism. Through the IMF, the WTO (World Trade Organization), the international media and the power of the most powerful and richest country on earth, capitalism will assert its power," said Dr Mahathir.

"Before this juggernaut all must fall. The question is: Do we resist now before it is too late or do we wait until, like communism, millions have been sacrificed before we rise in rebellion?"

While Malaysia may be a "small weak country with its many problems", Dr Mahathir said, the nation's recent bout with currency traders has made it suspicious and wary of new ideas and promises held out by others.

He saw happening today as a result of globalization, an attempt to establish worldwide monopolies in certain businesses by a few giant corporations, mainly from the West.

"In the future, there will be at the most five banks, five automotive companies, five hypermarkets, five hotel chains, five restaurant chains and so on, all operating worldwide.

"All the small and medium-sized companies in these fields and maybe others too will be absorbed by these Western-owned international giants. These monopolies would, it is claimed, bring about efficiency and thus lower cost through economies of scale."

In this vision of the globalization-induced future, said Mahathir, "the raw materials the world needs will also be produced by giant mining and plantation companies operating in poor countries, and will be carried by air and sea freighters belonging to giant transportation companies, to be processed and resold throughout the world."

"Some, of course, will use cheap labour in the poor countries in order to reduce cost."

The Malaysian premier considered this scenario a dream come true for the "super capitalists", under whom others would work, earning more in the process but owning nothing to call their own.

"Quite obviously, the great capitalists will wield immeasurable power. And they will become corrupted as they manipulate Governments and international agencies so as to enable them to make more and more money for themselves."

Dr Mahathir contended that it was not democracy but "capitalism with a big capital C" which emerged triumphant with the end of the Cold War and the defeat of communism. Indeed, capitalism had been forced by the advent of communism and socialism in the early 20th century to assume a more human face, and monopolies were broken up and curbed.

Today, however, without the counterweight provided by communism, "the true ugliness of capitalism has revealed itself. This time it will not permit any opposition or restriction." Referring to the attempt by the Association of Southeast Asian Nations (Asean) to become a more integrated grouping, the Malaysian Prime Minister said unfortunately membership of the Asia-Pacific Economic Cooperation (APEC) has undermined Asean solidarity.

"Each Asean country seems to have an independent stand as a member of APEC. In fact commitment to APEC seems to supersede commitment to Asean.

"Perhaps APEC is more glamorous, as the world's most powerful and richest country is a member and is represented by its top leaders."

Dr Mahathir said APEC's principal interest lies in opening up the markets of member countries, the market potential of some of which, such as China, South Korea and the Southeast Asian countries, is huge.

However, he noted, Southeast Asian countries and Korea have since learnt that opening markets poses serious threats. Doubts about the benefits of market-opening, globalization and the borderless world have been raised as a result of the attacks by mainly American speculators on currencies and stock markets.

Dr Mahathir also pointed to the inability of the IMF to handle the effects of such attacks. Not only did the countries attacked suffer economic recession, but the whole world suffered from a recession. "Clearly the IMF cannot be regarded as an effective guardian of the world's finances."

He cautioned that the present financial regime is also unable to guarantee against future attacks on countries' economies by currency traders out to make handsome profits.

In fact, the exchange rates of many currencies are still experiencing damaging fluctuations brought about by the currency traders, said Dr Mahathir, who pointed out that the Japanese yen has appreciated by 20%, causing difficulties for countries buying Japanese goods or paying off yen loans.

Although currency trading is said to be 20 times bigger than world trade, Dr Mahathir said, there is nothing to show that it, unlike the latter, has produced any benefits for anyone else apart from the traders and the shareholders of the hedge funds. Instead, currency trading has severely impoverished countries and regions, bringing in its wake job losses for millions, riots and strikes, and political and social instability.

Dr Mahathir called for a rethink of the international financial regime. "Must we allow currency traders to determine the exchange rates of our money or should we find a new mechanism to determine exchange rates?"

Noting that central bank interventions have been shown to be costly and ineffective, he said, "may be we should go back to the fixed exchange rate." In the early years of the Bretton Woods system, he added, exchange rates were fixed and recovery from the war was rapid. "Why is it that we are not allowed to even think about fixed exchange rates at all now? Why must we protect the rights of currency traders to abuse the exchange rate mechanism?"

Dr Mahathir also advised Japan not to give up its own economic model by adopting Western business practices. He said Malaysia had decided to "look East" because it admired the way Japan was able to recover from the ravages of war. Now, however, Japan seems unable to overcome its economic problems, a difficulty that could be due to the country's "too strong" commitment to the Western system, including the floating exchange rates strongly supported by the US.

Dr Mahathir noted how Japan's system of business - including lifetime employment and strong linkages and cooperation between Government and business - had contributed to the nation's rapid recovery and growth. When Japan suddenly discarded these systems in favour of Western systems, the outcome was a prolonged recession from which Japan is only just recovering, he said.

The Malaysian premier related how, during his last visit to Japan, he had been appalled by the sight of "unemployed people living in makeshift shelters of blue plastic sheets in the cities." He attributed this phenomenon to Japan's doing away with the practice of lifetime employment as foreigners buying over the country's corporations dismiss workers and close down factories in the name of improving efficiency.

"Perhaps you can do better with Western systems. But there is no doubt that by adopting Western practices your (Japan's) economy is not doing so well and so many of your people are unemployed.

"If you must adopt Western practices shouldn't it be done slowly so as to minimize damage to your economy? It seems to me that you feel guilty about your system that you have to throw it out overnight.

"Sudden change like this must be destructive even if the change is for the better." (SUNS4582)