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Tiger Economies in Crisis

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the 1997–98 Asian financial crisis was not a failure of free-market capitalism but its logical outcome. The "Asian miracle" was a myth: the Tiger economies were never examples of laissez-faire success but rather state-directed, monopoly capitalist systems built on cheap labour, dictatorship, and Western military backing. Their collapse came precisely when they were forced to open their markets to foreign capital and abandon state controls under pressure from the imperialist powers. The crisis exposed the underlying contradictions of capitalist accumulation in the region — overinvestment in speculative assets, dependence on foreign debt, and vulnerability to the US dollar's fluctuations — and foreshadowed a broader global downturn.

Theoretical Grounding

The analysis is rooted in the Marxist theory of capitalist crisis, particularly the distinction between the real economy (production, profits, investment) and the financial superstructure (stock markets, currency speculation, fictitious capital). Roberts draws on Marx's concept of the fetishism of commodities and the illusion that financial markets operate independently of production. The article explicitly rejects the neoclassical and Keynesian explanations of the crisis — whether the "Asian values" thesis or the "speculator as villain" narrative — and instead locates the cause in the falling rate of profit and the overaccumulation of capital in the region. The argument also deploys Lenin's theory of imperialism, framing the IMF's intervention and the opening of Asian markets as a mechanism for Western capital to devalue and absorb surplus from the periphery.

Conjunctural Relevance

The article was written in July 1997, at the height of the initial currency collapses but before the full contagion to Russia and Brazil. It correctly predicts that the crisis would not remain contained to Asia, despite the region's small share of global output, because the stock market valuations in the US and Europe were inflated far beyond real profit growth. Roberts identifies the US stock market as the next potential epicentre, noting that Alan Greenspan had already warned of "excessive exuberance." The piece also anticipates the limits of state intervention: interest rates were already near zero in Japan, and European governments were bound by Maastricht deficit rules, leaving little room for the kind of stimulus that had stabilised markets after 1987. The article thus situates the Asian crisis as the first tremor of a global capitalist downturn that would arrive within a few years — a prediction borne out by the 2001 recession and the dot-com crash.

Where the Argument Continues

The article leaves several threads open. First, it does not develop a detailed analysis of the Chinese economy's role, beyond noting Hong Kong's exposure to the mainland. This is taken up in later IDOM articles on China's integration into global capitalism and the 2008 crisis. Second, the political consequences for the region's regimes are sketched but not theorised — the fall of Suharto in 1998 and the rise of reformist movements in Korea and Thailand are treated as likely but not analysed in depth. Third, the article's prediction of a global recession within "a few years" is left as a general claim; the mechanism by which the Asian crisis would transmit to the West is underdeveloped. These questions are addressed in subsequent works by Michael Roberts, particularly The Great Recession: A Marxist View (2009) and his ongoing blog The Next Recession, as well as in IDOM articles on the 2008 crash and the Eurozone crisis.

Connections

This article should be read alongside:

  • Marx, Capital Vol. 3, Part 3 — on the tendency of the rate of profit to fall and the role of credit in crisis.
  • Lenin, Imperialism, the Highest Stage of Capitalism — for the framework of finance capital and the export of capital to the periphery.
  • Michael Roberts, The Long Depression (2016) — for the updated Marxist analysis of the 2008 crisis and its roots in the same contradictions identified here.
  • IDOM articles on the 1997–98 crisis — particularly those on the IMF's role in Indonesia and the political fallout in Korea.
  • Against the Stream episodes on financial crises — for contemporary discussions of the 2008 crash and the COVID-19 recession, which revisit many of the same theoretical points.

Key Quotes

  1. "Far from most Asian economies being examples of free market capitalism, they were really testaments to state-directed monopoly capitalist planning, complete with national five-year plans and products of military-backed finance from the west, and examples of cheap labour exploited under the boot of dictatorship."

  2. "The irony was that once the ruling class in these countries were finally persuaded to break with trade protectionism and lower taxes on foreign imports, were persuaded to open up their markets to foreign capital, and to drop planning and controls by the state, as they were in the 1990s by the proponents of globalisation, they started to flounder."

  3. "Share prices cannot keep going up with no relation to the real economy, and in particular, with no relation to profitability of the companies being bet on. And the great boom on US corporate profits is coming to an end."

  4. "The danger for capitalism is that if people's wealth is drastically reduced by a stock market collapse, or that people begin to worry about their prosperity, they will stop spending. And as companies see their share capital fall and profits slow down, then they will stop investing in production. The result is a slowdown, then a recession and even full-scale slump."

  5. "The stock market crash may just be a blip on the trading screen this time, or it could be the signal of the coming economic crash. But what is certain is that the Asian bubble has burst. The Tigers have entered an era of austerity and social collision."

  6. "The Asian miracle was based on the idea that these handful of countries could continue expand at 8-10% a year, as their populations saved and invested 35-40% of their national income, and foreign capital, attracted by their success, delivered extra capital for investment worth another 5-7% of national income in the region. When the world went into recession in 1990, East Asia did not follow. It seemed impregnable to vagaries of the capitalist cycle of boom and slump."