East Asia after the Crisis: Human Rights, Constitutionalism, and State Reform

East Asia after the Crisis: Human Rights, Constitutionalism, and State ReformAuthor(s): Michael C. DavisSource: Human Rights Quarterly, Vol. 26, No. 1 (Feb., 2004), pp. 126-151Published by: The Johns Hopkins University PressStable URL: http://www.jstor.org/stable/20069719 .

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HUMAN RIGHTS QUARTERLY

East Asia After the Crisis: Human Rights, Constitutionalism, and State Reform

Michael C. Davis*

ABSTRACT

Much recent analysis of the political economy of development in East Asia

focuses on questions of market liberalization and the adequacy of the

international institutions involved in the economic crisis of the 1990s.

Focusing on political institutions, this article urges an emphasis on liberal

constitutionalism as a long-term strategy. Authoritarian regimes with

markets and currencies that were protected fared reasonably well. Democ

racies with liberal institutions were resilient. The combination of authori

tarian developmental ism and market liberalization fared the worse. But

authoritarian developmental ism is not sustainable. Constitutionalism, if

properly conceived, may provide the institutional reliability and account

ability upon which sustained development depends.

I. INTRODUCTION

East Asia has in recent years offered up two major economic challenges to

liberal democracy and its associated constitutional values. The classic East

Asian economic challenge centered on the so-called "East Asian miracle"

* Michael C. Davis is a Professor of Law and Director of the Graduate Program in Law and

Public Affairs at the Chinese University of Hong Kong. He has served as the Schell Senior

Fellow at the Orville Schell, Jr. Center for International Human Rights at Yale Law School

(1994-1995), the Frederick K. Cox Visiting Professor of Human Rights Law at Case Western

Reserve University Law School (Fall, 2000) and as a Visiting Scholar at Harvard Law School

(2000-2001). He is the Chair of both the Human Rights Research Committee of the

International Political Science Association and the Pacific Rim Interest Croup of the

American Society of International Law.

Human Rights Quarterly 26 (2004) 126-151 ? 2004 by The Johns Hopkins University Press



2004 East Asia After the Crisis 127

and its authoritarian developmental model. This developmental thesis, asserted by some East Asian authoritarian leaders, argues that Western style

democracy and human rights are dispensable and may be positively harmful in the economic development effort.1 Problems of crime, disorder, and lack of social discipline are associated with liberal democracy. Authoritarian development is thought to be more efficient, disciplined, and

capable.2 In spite of this claim, by the early 1990s several East Asian

countries had, largely as a consequence of their rapid economic develop ment, undergone substantial democratization. However, these efforts gener

ally involved a weak commitment to constitutionalism and continued

commitment to the style of developmental economics associated with the

East Asian miracle.

The late 1990s economic crisis offered a new challenge. Was the crisis

evidence of the failure of authoritarian developmental ism, or of political and market liberalization? For authoritarian leaders and their supporters,

democracy and political liberalization had laid the foundation for this

disaster. At the same time liberal currency markets were clearly easier prey for outside speculators.3 This article proposes that market liberalization in

conjunction with authoritarian developmentalism or its remnants, and not

market liberalization, was the likely culprit. Asian countries had not gone far enough in constitutional reform, in reforming political and developmen tal institutions.

At the time the crisis struck, the political economy of the region was

divergent and the crisis produced a varied effect. Several countries had

undergone substantial democratization while retaining the developmental political economy of the past. Others were still authoritarian, though many of these had embraced market and investment liberalization. Some authori tarian regimes, such as China, were authoritarian and had also not fully liberalized their markets or currencies. The latter were largely protected from the currency dimension of the crisis. In these circumstances the

protected economies suffered less and unprotected democracies bounced back more quickly.4 Market liberalization with hard authoritarianism

1. See Bilahari Kausikan, Governance that Works, 8 J. Democracy 24, 31 (1997). 2. As addressed in classic works in the field, early economic development in Japan, South

Korea, Taiwan, and, to some extent, Singapore have provided the model of such authoritarian development. See Chalmers Johnson, MITI and the Japanese Miracle: The

Growth of Industrial Policy 1925-75 (1982); The Developmental State (Meredith Woo

Cumings ed., 1999); Robert Wade, Governing and the Market: Economic Theory and the Role of Government in East Asian Industrialization (1990); Stephan Haggard, Pathways from the

Periphery: The Politics of Growth in the Newly Industrializing Countries (1990). 3. See Joseph E. Stiglitz, Globalization and Its Discontents (2002). 4. This was most evident in Indonesia where regime collapse quickly followed the

onslaught of the crisis, while Malaysia experienced a similar difficulty to which it



128 HUMAN RIGHTS QUARTERLY Vol. 26

appeared to produce the worst result.5 But if the conjunction of market

liberalization and authoritarian developmental ism was the culprit, then this

has implications for countries like China, which appear to be embracing

precisely the choice of economic without political liberalization.

This paper challenges the authoritarian developmental claim and

affirmatively suggests liberal constitutionalism, with a strong human rights component, as the avenue for East Asia to best address its developmental concerns. Said liberal constitutionalism, however, must be better conceptu alized to fully appreciate what constitutionalism and human rights achieve.

East Asia must look beyond the mere structure of formal institutions to

appreciate the dynamic processes of representation and empowerment. The

fundamentals of constitutionalism are generally thought to include three core institutional components: democratic elections with free and fair

multiparty contests; human rights and freedom of expression; and the rule of

law, including adherence to principles of legality.6 This article argues that, in

addition to these core components, constitutionalism must take on indig enous institutional elements and practices that better attach it to local social

conditions and concerns. It is not enough to simply copy liberal institutions.

For a society to make constitutionalism work, the society must understand

how these institutions work in the local condition and how they may contribute to economic development and its consolidation.

This inquiry assesses, in formal institutional terms and in the East Asian

context, the differing capacities of the authoritarian and democratic state to

address essential concerns associated with economic development.7 This

argument consists of two main parts. The first part stresses the likely

ascendancy in the long term of liberal democracy over authoritarianism and

the continued economic developmental importance of the state and its

institutions. The second part argues that constitutionalism offers the institu

tional basis to confront the economic and social challenges East Asian

countries now face.8 Under the circumstances of rapid development, if

managed to respond successfully by reversing its early market and currency liberaliza

tion. See Andrew Maclntyre, Institution and Investors: The Politics of the Economic Crisis

in Southeast Asia, 55 Int'l Org. 81 (Winter 2002); Donald Emmerson, Americanizing Asia? 77 For. Aff. 46, 52 (May/June 1998).

5. See The Politics of the Asian Economic Crisis (T.J. Pempel ed., 1999); The Asian Financial Crisis and the Architecture of Global Finance (Gregory W. Noble & John Ravenhill eds., 2000).

6. Note that democracy does not always incorporate constitutionalism. Other forms of

democracy might include direct democracy, plebiscitar?an democracy (elections without

constitutional norms), illiberal democracy, or even some forms of corporatist democracy. 7. David Kang predicts this kind of inquiry in his 1995 review article on the new

institutional economics. 5ee David C. Kang, South Korean and Taiwanese Development and the New Institutional Economics, 49 Int'l Org. 555, 566 (1995).

8. This paper focuses on formal institutions in the constitutional state, leaving it to the

existing broad political economy literature to examine the webs of informal institutions

and other mechanisms of development. The current level of development in East Asia




transparent government and formal channels for interest representation are

not available and fully functional, cronyism, corruption, and social disorder are likely to occur. Corruption becomes a functional, though costly, substitute for good government. Important questions concerning market

liberalization and the role of international economic institutions are not

addressed. Isolating the explanatory role of domestic political institutions

from such macro-economic choices seems important in a region where

such political reform is much discussed.

II. EAST ASIAN ECONOMIC DEVELOPMENT: AUTHORITARIANISM VERSUS DEMOCRACY

The East Asian authoritarian developmental model is familiar and need not

be addressed at great length here. First chronicled in a 1992 World Bank

report as the "East Asian miracle,"9 the developmental achievement that the

term connotes was fairly evident in the economic growth of the 1970s and

1980s.10 This model was best characterized by the earlier Japanese

developmental model, which was said to combine soft political author

itarianism with economic liberalization in a planned capitalist economy. Under this model, economic guidance was offered by an autonomous

bureaucracy led by the Japanese Ministry of International Trade and Industry (MITI).11 In his 1982 book Chalmers Johnson emphasized the importance of

a developmentally oriented elite, organized under a tripartite coalition,

composed of the Liberal Democratic Party, the bureaucracy, and big business.12 Johnson differentiates between a "market-rational" (regulatory) and a "plan-rational" (developmental) capitalist system.13

The Japanese model, with varied modifications, was seized upon as the

paradigm for Asian economic development and was sometimes used as

tends to prioritize this concern with constitutionalism. By emphasizing the instrumental

role of constitutionalism the author does not aim to depreciate the importance of many constitutional values as ends in themselves.

9. World Bank, The East Asian Miracle: Economic Growth and Public Policy (1992). 10. See Paul Krugman, The Myth of Asia's Miracle, 73 For. Aff. 62 (Nov./Dec. 1994). 11. See Johnson, Mm and the Japanese Miracle, supra note 2.

12. Id. at 51-52. With substantial state capacity these three worked together to insure the coherent targeting of certain industries for production of exports under a system of Export Led Growth (ELG). 5ee Chalmers Johnson, Political Institutions and Economic Perform ance: The Government-Business Relationship in Japan, South Korea, and Taiwan, in The

Political Economy of the New Asian Industrialism 136 (Frederic C. Deyo ed., 1987). ELG is

distinguished from an import substitution (ISI) strategy, which aims to substitute local

goods for imports, though both usually coexist.

13. Johnson, supra note 2, at 19. Politically, a "plan-rational" system will be marked by bureaucratic disputes and factional infighting while a "market-rational" system will tend toward parliamentary contest. See id. at 22-23.




a justification for continued authoritarian practices by subsequent

developmental aspirants in the region.14 Japan, it seems, also offered a

paradigm for a brand of democratic developmentalism that often followed

the overthrow of authoritarianism in the region. Notwithstanding Johnson's soft authoritarianism characterizations, Japan had enjoyed for decades a

degree of democracy, with a functioning electoral process, a moderately free press, and independent courts. The Japanese economic crisis of the

1990s, of course, gave much more cause to question its developmental model. It also highlighted the inadequacies of the Japanese brand of

democracy in assertively coming to grips with Japan's continuing economic

problems.15 A system based on a tradition of bureaucratic planning appears to have difficulty producing politicians and institutions willing to take

political responsibility. With economic success the developmental state may become its own

gravedigger.16 The circumstances that seem to have been favorable to

authoritarian development are more likely to be present in the early stages of development.17 At an early stage, proper economic policy may some

times be more important than regime type.18 But at a latter stage problems may arise. Several tendencies may operate at once. As the economic elite

become more successful and compete on a global scale, they may become

less compliant and more corrupt. They may seek official assistance in

assuring a compliant labor force, in securing loans, and in otherwise gaining

14. See The Developmental State, supra note 2; Wade, supra note 2; Haggard, supra note 2. Atul

Kohli traces the role that Japanese colonialism played in facilitating this model. See Atul

Kohli, Where do High Growth Political Economies Come From? The Japanese Lineage of

Korea's "Developmental State/' in The Developmental State, id., at 13.

15. William H. Overholt, Japan's Economy, at War With Itself, 81 For. Aff. 134 (Jan./Feb. 2002).

16. There are several recent accounts of this problem. William W. Grimes, Unmaking the Japanese

Miracle, Macroeconomic Politics, 1985-2000 (2001); Meredith Woo-Cumings, The State,

Democracy, and the Reform of the Corporate Sector in Korea, in The Politics of the Asian

Financial Crisis, supra note 5, at 116-42; Gregory W. Noble & John Ravenhill, The Good, the Bad and the Ugly? Korea, Taiwan and the Asian Financial Crisis, in The Asian Financial

Crisis and the Architecture of Global Finance 80-107 (Gregory W. Noble & John Ravenhill

eds., 2000). 17. In defining economic development, in addition to the GDP, economists have paid

attention to a range of social welfare indicators such as education, health, gender

equality, life expectancy, working conditions, and infrastructure. See Amartya Sen,

Development: Which Way Now?, in The Political Economy of Development and Underdevel

opment 7 (Kenneth P. Jameson & Charles K. Wilbur eds., 1996); Sakiko Fukuda-Parr, United Nations Human Development Report 2002, available at www.hdr.undp.org/reports/

global/2002/en/. 18. Adam Przeworski & Fernando Limongi, Political Regimes and Economic Growth, 7

J. Econ. Persp. 51 (1993). They conclude "that social scientists know surprisingly little: our

guess is that political institutions do matter for growth, but thinking in terms of regimes does not seem to capture the relevant differences." Id. at 51.




business-friendly policies. David Kang describes the transformation of

corruption under the East Asian developmental paradigm as an evolution

from a top-down predatory state, with a weak business sector under early authoritarianism to a strong business sector with bottom-up rent-seeking vis

?-vis a fractured state in the early democratic period, both of which involve

large amounts of corruption.19 Corruption becomes a substitute for dysfunc tional government institutions. With increased wealth and education in the

society, ordinary citizens may also demand greater participation and

accountability. This requires political and legal institutional reforms. Be

cause of these developments, the trend of the 1990s in the East Asian Newly

Industrializing Countries (NICs), long before the economic crisis set in, was

toward both political reform and integration into world markets.

Unfortunately, as the crisis has served to illustrate, even with democra

tization or substantial reforms these problems often persist, as reform may be insufficient. Political reformers, such as Japan and South Korea, clung to

developmental economic policies of interference in market decisions in the

1990s, even while pursuing political reform.20 Others states have excluded

democratization or have severely limited political reform. China, one of the

newest entries in the East Asian developmental agenda, has to date pursued

policies of economic liberalization without fundamental political reform.21

Many Southeast Asian countries in the early stages of economic development still cling to authoritarian strategies.22 Arguments for authoritarianism with

legal or other confidence-building institutions prove difficult because mainte

nance of such guarantees ultimately may require the security of a liberal

democratic regime that fosters transparency and public accountability.23 The issue is not whether the East Asian brand of authoritarian

developmental ism worked?it did. The question is what political and

institutional change will be required as the developmental process goes forward. The state institutions that are favorable to economic development in a free market system are generally believed to be those that afford the

19. See David C. Kang, Bad Loans to Good Friends: Money Politics and the Developmental State in South Korea, 56 Int'l Org. 177, 182 (2002).

20. See id.; Overholt, supra note 15; Grimes, supra note 16.

21. Dali L. Yang, China in 2001, Economic Liberalization and Its Political Discontents, 42

Asian Surv. 14-28 (2002). A recent OECD report appears to suggest that China is

experiencing the same economic difficulties as the earlier class of "economic miracle"

states, including high levels of corruption and large problems with bad loans, economic

displacement and slow-down. OECD, China in the World Economy: The Domestic Policy

Challenges (2002) (hereinafter the OECD Report). 22. Maclntyre, supra note 4, at 81.

23. See Jon Elster, Constitution-Making in Eastern Europe: Rebuilding the Boat in the Open

Sea, 71 Pub. Adm. 169, 199-201 (Spring/Summer 1993) (noting that the strength of the

dictator is also his weakness: "He is unable to make himself unable to interfere with the

legal system whenever it seems expedient.").




degree of order, reliability, transparency, and participation sufficient to

inspire confidence, and thereby encourage entrepreneurial activity and

investment.24 State institutions with a higher degree of autonomy and

transparency may better resist rent-seeking demands.25 For a democracy this

requires a sufficiently stable institutional base so that there are neither too

many nor too few institutional actors with sufficient power over the decision

process either to engage in excessive rent seeking or to interfere with

efficient decisions.26 Both fighting corruption and attracting investment

appear to require an institutional base that affords a balance of public

decision-making autonomy and accountability. Theorists commonly use two approaches to connect democracy and

development: they may focus on the statistical correlation between democ

racy and development or they may trace the causal mechanisms in the

development context that lead to increased demands for democratic

representation, rights, and legality. The first approach may address both the

survivability of democracy under various economic circumstances and the

role of democracy in encouraging economic development or dealing with

economic crises or shocks. The second approach is concerned with the

causal mechanisms by which economic development contributes to de

mocratization, highlighting the ways in which such democratization may be

responsive to developmental needs.

Regarding statistical correlation, Adam Przeworski and others used

worldwide statistics to gauge the survivability of democracies from 1950 to

1990.27 Such statistics demonstrated a strong correlation between wealth

and the survivability of democracy, but gave no support for using dictator

ships to achieve development and democracy.28 Gerald Scully, surveying 115 countries from 1960 to 1980, reversed the dependent variable to

consider the effect of democratic institutions on the economy.29 Scully notes

that open societies with human rights, the rule of law, private property, and

market allocation grew at three times the rate and were two and one-half

times as efficient as societies in which related rights were largely proscribed.30 When it comes to the special circumstances of dealing with economic crisis

24. See Mancur Olson, Dictatorship, Democracy, and Development, 87 Am. Pol. Sei. Rev.

567, 572 (1993). 25. Rent-seeking is best understood as "attempts by individuals to increase their personal

wealth while at the same time making a negative contribution to the net wealth of their

community." Thrainn Eggertsson, Economic Behavior and Institutions 279 (1990). 26. Kang, supra note 19, at 182; Maclntyre, supra note 4, at 81, 89.

27. 5ee Adam Przeworski et al., What Makes Democracies Endure?, 7 J. Democracy 39 (1996). 28. Id. at 44-49.

29. Gerald W. Scully, Constitutional Environments and Economic Growth 11-12, 1 83-84 (1992). 30. Id. at 183.




or shock, Dani Rodrik finds further that democracy offers more favorable

results. Rodrik argues that shock will tend to be worse in societies with deep latent conflicts and that democracy affords the ultimate institutions of

conflict management.31 Donald Emmerson, who argues that effected East

Asian countries with high levels of political freedom have been generally more resilient, supports this theory with respect to the East Asian economic

crisis.32 A democracy such as Taiwan fared better during the height of the

crisis and democracies caught by the crisis, such as South Korea and

Thailand, bounced back more quickly. Of course, as noted above, authori

tarian China, with its financial institutions largely protected from global currency markets, fared much better in what began as a currency crisis.

Considering the second approach, Dietrich Rueschemeyer and others

argue that quantitative correlative studies reach the right conclusion, but fail

to offer a reason.33 Tracing causal mechanisms, they urge that the case for

liberal democracy becomes compelling at a certain stage in the industrial

ization process because industrialization transforms society in a fashion that

empowers subordinate classes and makes it difficult to exclude them

politically.34 Unless deflected by a charismatic leader, the subordinate

classes, especially the working class, have the greatest interest in democ

racy; the bourgeoisie have every incentive to roll back or restrict democ

racy.35 Democracy affords institutions that can deal with diverse interests

and the resultant conflicts that emerge. The following brief subsections trace

these developments in South Korea and Taiwan and the emerging potential

problems in China. While the literature tends to emphasize commonality

amongst the countries, it is important to bear in mind they each also have

unique patterns.36 These unique characteristics encourage the emphasis in

the next part of this essay on grounding constitutionalism in the local condition.

31. See Dani Rodrik, Democracy and Economic Performance, paper prepared for the Conference on Democratization and Economic Reform in South Africa, 16-19 Jan. 1998

(Dec. 1997). 32. He contrasts the relatively strong recovery of Thailand and South Korea with Indonesia.

Emmerson, supra note 4, at 46, 52. See also Stephan Haggard, The Politics of the Asian

Financial Crisis, 11 J. Democ. 130, 133-44 (Apr. 2000). By 2002 Indonesia has begun recovery but still suffers the danger of new democracies, increased levels of corruption.

Mark Baird, An Economy in the Balance, Int'l Herald Trib. 19 Sept. 2002, at 6. 33. Dietrich Rueschemeyer et al., Capitalist Development and Democracy (1992). 34. Id. at 1.

35. See id. at 7-8, 50, 57-58. "Capitalist development furthers the growth of civil society?

by increasing the level of urbanization, by bringing workers together in factories, by improving the means of communication and transportation, by raising the level of

literacy." Id. at 6.

36. Singapore's development was accomplished by attracting foreign MNCs to take advan

tage of favorable costs; Korea favored the creation of Korean MNCs which were

supported by foreign lending, the US military, and ruthless exploitation of Korean labor;




A. South Korea

The path to the demise of the South Korean dictatorship bears a striking resemblance to Rueschemeyer's and his colleagues' predictions.37 The

authoritarian leadership in South Korea was built on the collusion between

the military, the political leadership, and the large chaebol (local multina

tional corporations (MNCs)).38 The very success of development policies based on a narrow coalition brought out a new class force in the 1980s

under the banner of minjung (the masses)?a textbook example of a push by subordinate classes.39 The earlier economic (although not politically liberal

izing) developmental policies of the Park Chung Hee (1961-1979) and

Chun Doo Hwan (1980-1987) regimes brought on the demise of the

authoritarian regime.40 After South Korea's financial collapse at the end of

1997 the ruling party, rooted in the past authoritarian regime, failed

substantially. This was evidenced by opposition leader Kim Dae-jung

wining the presidential election.41 Backroom deals within an elite ruling coalition, what was then called crony capitalism, no longer assured

confidence, reliability, and order. As David Kang highlights, high levels of

corruption characterized both the late authoritarian period and the early democratic period.42

Taiwan, with extensive US aid, shifted strategy from ISI in the 1950s, to ELG in the 1960

1970s, and then to ELG-ISI in the 1980s, ultimately losing control over investment

strategy in the 1990s because of expanded investment in the mainland; Hong Kong

employed a laissez-faire investment system, but with substantial public welfare in the

forms of public housing (housing 45 percent of the population at its peak), education, and health care, leaving room for private entrepreneurial initiative, but with reduced

labor costs. See Manuel Castells, Four Asian Tigers with a Dragon Head: A Comparative

Analysis of the State, Economy, and Society in the Asian Pacific Rim, in State and

Development in the Asian Pacific Rim 33, 35-49 (Richard P. Appelbaum & Jeffrey Henderson

eds., 1992). 37. See Hagen Koo & Eun Mee Kim, The Developmental State and Capital Accumulation in

South Korea, in State and Development in the Asian Pacific Rim, supra note 36, at 121-49; see

also Rueschemeyer, supra note 33, at 294.

38. See Hagen Koo & Eun Mee Kim, The Developmental State and Capital Accumulation in

South Korea, in State and Development in the Asian Pacific Rim, supra note 36, at 144-45.

This ruling coalition was decidedly narrower in South Korea than in the post-war

Japanese prototype. It did not include the larger base of a popular, well-organized

political party, and employed a much more repressive policy. 39. See/cf. at 145.

40. See State and Society in Contemporary Korea (Hagen Koo ed., 1993). 41. See Kate Wiltrout, Kim Leads Knife-edge Korea Poll, S. China Morning Post, 19 Dec.

1997, at 1. This change of direction apparently received a further vote of confidence in

late 2002, with the election of another even more liberal candidate from the same party, President Roh Moo Hyun. Weon-ho Lee & Sung-ho Baik, Generation 2030 Bursts

Onstage, Int'l Herald Trib. 30 Dec. 2002, at 7.

42. See Kang, supra note 19, at 193-94.




At the onset of the economic crisis the government was faced with the

need to restore both public and investor confidence.43 Doing so seemed to

require that South Korea attempt to dismantle the developmental economic

model that had persisted under democratization. The government has

attempted to clean up the conglomerates by instituting systems of oversight and putting loans and other financial decisions on a more sound financial

footing. Many chaebol and banks were left to sink or swim under market

pressure, though targeted efforts were made, through a government created

entity, to bail out some banks and restructure MNCs.44 This policy has been

combined with earlier efforts at political reform, such as instituting single terms for the president, a formally acceptable system of constitutional

judicial review, and less strict control over the media. South Korea has

enjoyed a more robust economic recovery than the other countries affected

by the economic crisis.45 South Korea, nonetheless, still suffers from the

charismatic leadership style of the "revolutionary" generation. President

Kim Dae-jung's term in office continued to demonstrate corruption prob lems. After President Kim's term ended, his successor, President Roh Moo

Hyun, has also been plagued by an early corruption scandal, though he seems quite determined to demonstrate political accountability by calling for a referendum on his rule.

B. Taiwan

Taiwan is a textbook case of the East Asian miracle. The country spent the

1950s under harsh authoritarian rule supported by US aid and Import Substitution Industrialization (ISI) strategy. In the 1960s and early 1970s the

development strategy gave way to greater emphasis on Export-led Growth

(ELG), with a hugely dependent economy producing low-level industrial

goods. In the mid-1970s and 1980s, the same combined ISI-ELG strategies evident in the other East Asian NICs emerged, which aimed for high levels

of technological development with local MNC participation.46 Following the Japanese pattern, the Council for Economic Planning and Development

targeted certain industries for development. Taiwan's development pattern

generally favored the emergence of small entrepreneurs. Therefore, the

country did not experience the worker polarization and militancy of South

Korea.

43. See id. Much the same was true in Southeast Asia. Maclntyre, supra note 4, at 82.

44. Meredith Woo-Cumings, The State, Democracy, and the Reform of the Corporate Sector

in Korea, in The Politics of the Asian Economic Crisis, supra note 5, at 116, 130-33.

45. James Brooke, South Korea Finds Fortune by Shunning Japanese Ways, N.Y. Times, 4 May 2002, at C1.

46. See Thomas B. Gold, State and Society in the Taiwan Miracle 56-103 (1986).




With economic success came increasing calls for democratization

throughout the 1980s. With significant pressure from below, a confident

regime embraced the reform process in a top-down pattern. Along with

democratic elections the previously moribund systems of the rule of law and

judicial review began to take on life. The contentious question of unification

long favored the Kuomingtang (KMT) and their position of maintaining the status quo. This pushed the pro-independence Democratic Progressive Party to shift to a more moderate stance and resulted in their successful electoral

takeover of the presidency in 2000. Taiwan fared much better than most

East Asian countries in the early phase of the economic crisis, though there are now signs of economic and political weakness associated with contin

ued tension with China. Taiwan's recent entry into the World Trade

Organization (WTO) will likely increase its economic integration with

China.

C. China

China's recent policies of economic reform bear some resemblance to the

earlier authoritarian South Korean policies under Park Chung Hee (1963

79) of economic liberalization without political liberalization.47 Like South

Korea, China has reached the current developmental juncture with very

large industries and substantial numbers of industrial workers at risk in the

reform process. China's recent entry into the WTO has further placed China's huge state-owned-enterprise system (SOE) at greater risk for eco

nomic failure.48 By some estimates the WTO could put 100 million jobs at

risk in the SOE and agriculture sectors.49 Such conditions have already

engendered massive worker protest, depriving political leaders of critical

support.50 This encourages political interference with bank lending, putting

47. One should be cautious about this comparison. While the SOEs do encompass the heavy

industry sector in China, there are other reforming sectors where the trend is toward

dispersal, rather than concentration, of economic activity. The historical Chinese

emphasis on workers' rights may also serve as a counterweight, though workers have so

far taken a bruising in the reform era.

48. See OECD Report, supra note 21. The OECD report points out that "[government interference leads to poor SOE management and inefficient operations, which foster low

profits and high debt; this in turn makes it more difficult to restructure to improve

efficiency and prompts government interventions that spread the problem by extracting resources from stronger enterprises to prop up those that are failing." Id. at 16.

49. See Jasper Becker, Crisis of State Firms Pushes to the Fore, S. China Morning Post, 9 Mar.

1997 (Money section), at 4.

50. Worker protests are reportedly widespread in China's Northeast industrial belt. Philip P.

Pan, "High Tide" of Labor Unrest in China; Striking Workers Risk Arrest to Protest Pay Cuts, Corruption, Wash. Post Foreign Serv., 21 Jan. 2002, at A-1; Philip P. Pan, Three




the banking sector at risk.51 Privatization in the rural sector has also

sometimes rendered the state's role more burdensome than beneficial.52 The

reform process itself often appears stalled, as the economy is plagued with

judicial corruption, local protectionism, and fiscal failure.53

It remains to be seen whether the private business sector will be able to

take up the economic slack of the state sector in providing employment as

the WTO reform process ensues.54 This effort will require reliable legal and

political institutions. As this seems unlikely, and combined with the ongoing economic weakness in the region, intense political pressure on the regime is

likely. It is doubtful that those foreign banks and other enterprises that may be allowed in under the WTO will be able to carry this developmental burden. If anything, a government facing such pressure is likely to drag its

heels on WTO reform and resist foreign incursion. The reform prognosis is

not good. While China, with its currency largely protected from market

forces, appeared to do reasonably well in the financial crisis and has had

sustained growth since, worrying signs are on the horizon.55 A recent

Organisation for Economic Co-operation and Development (OECD) report

Chinese Workers: Jail, Betrayal and Fear, Government Stifles Labor Movement, Wash.

Post Foreign Serv., 28 Dec. 2002, at A1. Official concern has stimulated a White Paper on

the topic. Jeremy Page, China Publishes Plan to Ease Labor Strife, Wash. Post, 30 Apr. 2002, at A-12.

51. See OECD Report, supra note 21, at 1 7-21, 231-68; Joe Studwell, More Free Lunches in

China, Asian Wall St. J., 7 Oct. 2002, at A-11. As estimated by Standard and Poor's (S&P) China's banks would require a US$518 billion massive capital injection to bring bad or

non-performing loans (NPL) down to acceptable levels. Louis Beckerling & Bill

Savadove, Doubt Cast on Debt Strategy, S. China Morning Post, 11 May 2002 (Bus.

Section), at 1. Official estimates put the NPL ratio at 30 percent, while S&P says a more

realistic estimate is 50 percent. Id.; Mark Clifford, China's Deficit is the Least of Its

Financial Worries, Bus. Wk., 6 May 2002 (Asian Bus. Comment Section), at 25. S&P'S

Terry Chan blames this on political loans by big banks. See Keith Bradsher, More Worry Over Loans by Big Banks in China, N.Y. Times, 10 May 2002, at W1.

52. Rural communities have been historically burdened in several ways: supplying labor for state projects; supplying a percentage of their produce at state controlled prices; and

experiencing an inadequate record of payment by the bankrupt state sector for their

goods. See Growing Pains, The Economist, 18 Mar. 1995 (China Survey Insert), at 19, 21

23; Carl Goldstein et al., Get Off Our Backs, Far E. Econ. Rev., 15 July 1993, at 68-70. 53. See Minxin Pei, China's Governance Crisis, 81 For. Aff. 96 (Sept./Oct. 2002); Denise

Tsang, Bias in the Scales, S. China Morning Post, 24 July 2001, at 3; Jasper Becker,

Learning to do it by a New Book, S. China Morning Post, 12 Nov. 2001, at 12; OECD

Report 2002, supra note 21, at 17-21, 40-41.

54. Evidence shows serious neglect of the private sector, which largely evades taxes to stay afloat, risking official harassment and corruption; at the same time SOEs, who perform more poorly, receive the bulk of bank loans. See OECD Report, supra note 21, at 17-21.

55. By the PRC's own figures the Chinese economy grew by 7.3 percent in 2001, and is

estimated to grow by 7.5 percent in 2002. Daily Report, NAPSNet, PRC Domestic

Economy (2 Aug. 2002) aiwww.nautilus.org/napsnet. Some "revisionists" are skeptical about China's figures and an academic debate has ensued. Edith Terry, The Numbers

Game, S. China Morning Post, 31 May 2002, at 3.




notes that the industrial dynamism unleashed by China's earlier reforms has

weakened.56

III. THE PROCESSES OF CONSTITUTIONALISM AND DEVELOPMENT

The state remains important in the global age.57 The debate m East Asia,

especially China, over whether to maintain a strong state begs the question as to what kind of strong state is needed as development progresses.58 Constitutionalism may provide the formal institutional components that

allow the state to perform its functions on the higher end of the develop ment process in the best manner. Constitutionalism may afford the transpar

ency, accountability, and reliability that citizens and investors depend upon.

Further, if state institutions are not adequate then exposing the economy to

market liberalization may actually work to the country's detriment by

undermining key protections and exposing underlying weaknesses. In the

East Asian economic crisis, such institutional deficiencies and systemic weaknesses were readily exposed. Investor confidence seems to be at its

highest at an intermediate institutional stage between extreme authoritar

ianism and free wheeling democracy, where there are democratic institu

tional checks and yet the formal power to veto or override policy decisions

is confined to a limited number of reliable institutional actors.59 Such

conditions seem likewise favorable to reducing corruption.60

56. The OECD Report notes: "Industry financial performance has deteriorated sharply since

the 1990s. Profits fell to zero in 1998, with more than one-third of enterprises making

losses, and despite noticeable improvement during 1999-2001, financial performance remains weak in many sectors. Growth in industry employment and capital spending has

declined markedly. The deterioration has been pervasive and not simply confined to

SOEs." OECD Report, supra note 21, at 15.

57. See generally Theda Skocpol, Bringing the State Back in: Strategies of Analysis in Current

Research, in Bringing the State Back In, 3 (Peter B. Evans et al. eds., 1985); Stiglitz, supra note 3; Hendrik Spruyt, The Sovereign State and Its Competitors: An Analysis of Systems Change

(1994) (asserting that the economic importance of law and the state in the development of trade has long been recognized).

58. Shaoguang Wang, Tiaozhan Shichang Shenhua: Guojia Zai Jingji Zhuanxing Zhong De Zuoyong

(Challenging the Myth of the Market: The Role of the State in Economic Transitions) 75-76, Chs. 2 & 9 (1997).

59. See Maclntyre, supra note 4, at 94. Maclntyre stresses the importance of credible

commitments and policy stability, on the one hand, and adaptability and policy flexibility, on the other. Id. at 86. "Other things being equal, policy stability will be maximized by an

institutional framework in which control over policy is dispersed so that the likelihood of

arbitrary policy action is reduced; Flexibility in policy-making will be maximized by an

institutional framework in which control over policy is concentrated so that the likelihood

of delay and logjam is reduced." Id. at 87. In his study of the responses of four governments to the economic crisis, Maclntyre found that Indonesia and Malaysia, with authoritarianism

had too much policy volatility; and Thailand, with too much dispersal of power had too

much policy rigidity. The Philippines, a democracy with limited institutions of veto power

under a US-style constitutional system, appeared to have fared the best in relative terms,

with a "sticky but not inflexible policy environment." Id. at 94.

60. See Kang, supra note 19, at 194.




This section argues that constitutionalism best provides the conditions

for this intermediate level of openness and constraint. In the 1990s East Asian economic crisis, the out-flow of capital from the region was due in

part to a lack of investor confidence. There is continued risk that this out flow could happen again. Thomas Carothers laments "the failure of the

region's various rule-of-law reforms to bring transparency and accountabil

ity to the dealings of the ingrown circles of privileged bankers, businessmen, and politicians."61 Stephan Haggard notes that in the aftermath of the economic crisis East Asian governments face the need to generate a new

social contract.62 This new contract will likely take a constitutional form.

Constitutionalism is not a quick fix, but rather a complex process with a

range of interrelated commitments that need to be better understood.

Constitutionalism is the modern response to the need for transparent and fair institutions that aggregate societal interests. In the discussion that

follows, the article considers how constitutionalism in a liberalizing context

may contribute to transparency, order, reliability, and participation, thus

affording the required opportunities for various interests to achieve their goals through accepted channels. Specifically, this section will consider the

following issues: (1) the empowering role of constitutionalism in the

developmental context; (2) the processes of constitution making and execu

tion; and (3) the avenues for securing constitutionalism in the local condition.

A. Empowerment and Development

Constitutionalism has a significant, but insufficiently studied, role in

contemporary consideration of the political economy of development. Constitutionalism empowers diverse forces in society by affording the

institutional transparency, representation, and reliability. This may engender the public confidence needed to secure robust economic activity, which is

especially of concern in societies facing economic restructuring. Constitutionalists have too often focused only on the constraining

aspects of constitutionalism, viewing it as a fortress against political failings. Stephen Holmes worries that the metaphors of checking, blocking, limiting,

61. Thomas Carothers, The Rule of Law Revival, For. Aff. 95, 101 (Mar.-Apr. 1998). Excessive market liberalization has also been blamed for the unconstrained capital out flows. Stiglitz, supra note 3, at 89.

62. Haggard, supra note 2, at 141-44. Haggard notes that elements of the old social contract include: healthy per-capita GDP growth rates; high levels of public and private investment in education and basic health care; balanced growth strategies that empha

size labor-intensive manufacturing and addressed rural poverty through land reform; strong traditions of family support; and a tradition of firms providing social insurance. See id. at 142. He notes several possibilities for the future social contract.




and restraining are too much of a distraction.63 There is a need to appreciate the role of constitutionalism in generating new practices and possibilities, in

generating public policy and the political confidence to carry it out. By

ensuring transparency and accountability, constitutionalism insures con

sent. In this view a constitution affords both a framework for orderly decision making and reliable boundaries of constraint. Both are needed in

an age in which constitutionalism is being planted in varied soil around the

globe and constitutionalists face dramatic social and economic chal

lenges.64 This assumption goes a long way towards explaining why scholars

have noticed a positive correlation between democracy and development. Constitutionalism must be distinguished from mere majoritarianism,

both in its "commitment to 'self-binding' procedures of governance" and its

requirement of "a clear hierarchy of laws, interpreted by an independent

judicial system and supported by a strong legal culture in civil society."65 The populist alternative to constitutional democracy is a plebiscitar?an

democracy, where the leader may feel empowered to get the job done

without regard to the constitutional niceties.66 Both newly elected post authoritarian leaders and leaders facing a crisis often succumb to this

temptation. To do so is not just to ignore constraint, but to also disable

popular democratic will. Such action may also disable the constructive

processes of democratic institution building. Authoritarian leaders who

routinely ignore constitutional requirements may court volatility in public

policy making; leaders who are required to bargain too much may

encourage rigidity and indecisiveness.67 Constitutionalism may provide the

happy medium.

63. See Stephen Holmes, Precommitment and the Paradox of Democracy, in Constitutional

ism and Democracy 195, 227, 235 (Jon Elster & Rune Slagstad eds., 1988). 64. See Jon Elster, Forces and Mechanisms in the Constitution-Making Process, 45 Duke L. J.

364 (1995). 65. See Juan J. Linz & Alfred Stepan, Toward Consolidated Democracies, 7 J. Democracy 14,

19 (1996). 66. Guillermo O'Donnell worries that when the fit with democratic institutions is not good,

there may emerge a "ceasaristic, plebiscitar?an executive" that feels it is empowered to

govern the country as it deems fit; then, normal political institutions, including the

legislature, the judiciary, and various regulatory and administrative agencies, are viewed

as hindrances placed in the way of proper discharge of duties the voters have delegated. Guillermo O'Donnell, Illusions About Consolidation, 7 J. Democracy 34, 39-40 (1996). Maravall worries that the type of "decisionismo" characteristic of plebiscitar?an democ

racy may not override only legal institutions, but also the kind of social welfare,

educational, and infrastructural institutions that are conducive to development. Jose Maria Maravall, The Myth of the Authoritarian Advantage, in Economic Reform and

Democracy 13 (Larry Diamond & Marc F. Plattner eds., 1995). He argues that generating

opportunities to discuss these issues may make people more accepting of economic

reforms, both undermining corruption and cronyism and encouraging public trust. Id. at

24.

67. See Maclntyre, supra note 4, at 94.




B. Mechanisms of the Constitutive Process

Among the more substantial challenges facing a new democracy are the

constitutional founding and its consolidation. These activities are the venue

for the empowerment discussed above. It is useful for analytical purposes to

divide the constitutional process into three stages or types of activity: (1) constitution making?the founding or constitution drafting process, usually

following on the heels of revolution or conflict; (2) constitutional implemen tation?those periods of ordinary politics when the level of civic engage

ment is at its lowest, and when constitutional changes are evolutionary in

nature and largely guided by formal institutions such as constitutional

judicial review; and (3) constitutional politics?those moments of extraordi

nary constitutional politics under the existing constitutional regime. These

moments usually involve a political or economic crisis and demand

substantial civic engagement, as the polity confronts issues of fundamental

structural change. The chief concern of constitutional process at all stages is

to ensure transparency and to effectively engage a range of social, political, and economic interests and ideas. Such a system should engender the

coalition building and support necessary for the successful execution of

economic reform and other policy decisions. The processes of social

engagement in each of the three aspects noted are discussed below.

Constitution making is the primary task of the founding period, when a

high level of social engagement is apparent. Constitution making is usually

accompanied by a sense of crisis and distinguished by a substantial break

from the past. It often involves a constitutional assembly (a legislative or

conventional meeting) as a venue for initiating choices about the emerging political order.68 For example, the East Asian economic crisis spawned a

constitution-making process in Indonesia with the overthrow of the authori

tarian regime. While this case did not involve a wholesale drafting process, a series of amendments to the constitution approved by the Supreme

People's Consultative Assembly, Indonesia's constitutional amendment body, were so substantial in their objectives as to potentially amount to a clean break from the authoritarian past.69 This process compares with similar

previous episodes in Taiwan and South Korea.

68. See Elster, supra note 64, at 370.

69. While constitution-making is usually thought to involve a wholesale drafting of a new

constitution, in cases where democratization dramatically arises out of the politics of the

previous authoritarian regime it is often true that constitutionalists will build the new

order on the carcass of the old constitution through amendment. If there were a

substantial break from the authoritarian past then I would characterize this as a

constitutional founding.




In a rare general work on constitution making, Jon Elster describes an

atmosphere with both "upstream" and "downstream" constraints where

ideas, interests, passion, and reason are at work.70 Where hard-line regimes have been in place, upstream constraints may seek to protect their

members, a proposition that may be accepted because it is often a costly

path to extract revenge.71 This was certainly the goal of some of the earlier

meetings of Indonesia's constitutional assembly, when members of the old

regime were still in substantial control. The election of an opposition

president would have sidetracked this formula except for the continued

importance of the former ruling Golkar party and the military.72 Down

stream constraints look to ratification. Various capitalist and labor elements

are usually actively involved in the constitution drafting process. As a result, a debate over the future shape of the economic development model often ensues. For example, this discussion often questions the appropriate level of

welfare, labor and union protection, investment and monetary structures,

corruption controls, and equal protection.73 Constitutional implementation tests the success of the founding exer

cise, and is a further venue for discourse and empowerment. Such discourse

is more institution-bound than the crisis politics of the constitution making process. During periods of ordinary politics, in addition to the electoral

process and related institutions, the institutional architecture of constitu

tional judicial review generally has been a critical ingredient in shaping democratic constitutional government. Constitutional judicial review pro vides an orderly, somewhat autonomous venue to address difficult constitu

tional issues. In federal systems such a judicial role in the federal courts may serve to integrate legal and human rights institutions across the sub-units of

the system.

70. See Elster, supra note 64, at 373-86.

71. See John Elster, Coming to Terms with the Past, Framework for the Study of Justice in the

Transition to Democracy, 39 Eur. J. Soc. 7 (1998). 72. See Vaudine England, Desperately Seeking Reform in Indonesia, S. China Morning Post,

14 July 2002, at 9. Golkar was the leading party in Indonesia during the authoritarian

period and remains active in politics. Clark D. Neher and Ross Marlay, Democracy and

Development in Southeast Asia: The Winds of Change 75-94 (1995). >

73. In post-authoritarian South Korea and Taiwan capitalist-oriented forces associated with

the old regime were initially supported based on their wealth and record of economic

success. That formula came under challenge when the economic crisis ensued, such that

a change of leadership in South Korea quickly followed. See, Hagen Koo, The State,

Minjung, and the Working Class in South Korea, in State and Society in Contemporary

Korea, supra note 40, at 131. A similar leadership change occurred in Taiwan, though

probably for different reasons. See generally Jaushieh Joseph Wu, Taiwan's Democratization:

Forces Behind the New Momentum (1995). In the Hong Kong Basic Law drafting and

initiating process the issue of economic success maintenance was a central theme of the

pro-China business elite appointed by Beijing. See Michael C. Davis, Constitutionalism

in Hong Kong: Politics Versus Economics, 18 U. Pa. J. Int'l Econ. L. 157 (1997).




The constitutional world tends to be divided between systems with

decentralized judicial review in all courts (usually common law systems) and systems with a central constitutional court exercising constitutional review as a principal issue (normally civil law).74 In the post-World War II

period, constitutional judicial review has become a central component of a

commitment to human rights.75 There is a great deal of variance in East Asia.

South Korea and Taiwan have emerged as conforming civil law countries

with well-regarded constitutional courts. Indonesia appears headed in this

direction, though Indonesian constitutionalism still awaits consolidation.

Mongolia has likewise had a very active civil law constitutional court,

though some might fear too active. The court's ruling that Members of Parliament (MPs) could not serve in the government after the first demo cratic elections largely disabled the reformist coalition.76 Japan and Hong

Kong reflect opposites. The Hong Kong Basic Law provides for review on

matters respecting central authority and local/central relations by the

Standing Committee of China's National People's Congress (NPC), a

seemingly centralized approach.77 At the same time, Hong Kong has

decentralized common law review on other matters within Hong Kong's autonomy. Japan is a civil law country with a structurally decentralized

system modeled on the United States. The Philippines has long been a

hybrid in legal system terms, although constitutional judicial review is now

modeled on the American common law system. For the rest of East Asia, a

system of constitutional review has either been lacking or seriously undermined by authoritarian rule.78

Attempts to theorize constitutionalism have been a major preoccupation of recent decades. The democratic legitimacy of this institution has been a

particular concern. A theory that emphasizes the positive empowering

74. See Mauro Cappelletti, Judicial Review in the Contemporary World (1971 ); Mauro Cappelletti, The "Mighty Problem" of Judicial Review and the Contribution of Comparative Analysis, 53 S. Cal. L. Rev. 409 (1980).

75. See Cappelletti, Judicial Review in the Contemporary World, supra note 74. 76. Tom Ginsberg, Judicial Review in New Democracies, Constitutional Courts in Asian Cases 159

(2003). 77. The Basic Law of the Hong Kong Special Administrative Region of the People's Republic

of China, arts. 17 and 158, April 1990. See Michael C. Davis, Constitutionalism Under Chinese Rule: Hong Kong After the Handover, 27 Denv. J. Int'l L. & Pol'y 275 (1999).

78. China has so-called legislative review, which in practical terms means no formal review. PRC Const, ch. I, ?1, art. 67, reprinted in 4 Constitutions of the Countries of the World 35, 49-50 (Albert P. Blaustein & Gisbert H. Flanz eds., 1992). See also R. R?ndle Edwards et

al., Human Rights in Contemporary China (1986). Malaysia's common law system of review has been rendered largely dysfunctional by threats to judicial independence. See Lawyers Committee for Human Rights, Malaysia: Assault on the Judiciary (1989). Before the demise of Suharto's rule, Indonesia likewise offered little constitutional protection. Lawyers Commit tee for Human Rights, Broken Laws, Broken Bodies: Torture and the Right to Redress in Indonesia

(1993). However, this level of protection is now changing.




conceptualization, in aid of majoritarian processes, is perhaps the most

useful way to address this issue in the developmental context. In a process that involves much more than constraint, the court is equipped for a

complex dialogue with the elected branches of government to approve

legislative enactments or executive acts, disapprove such acts, or do neither. For Alexander Bickel, the court is informed by principle, but takes full account of expediency.79 In a complex dialogue about constitutional

fundamentals the elected branches react to judicial determinations with new legislation, and this in turn may warrant further judicial response.80 The enactments of the legislative branch, sometimes representing commercial, labor, or other special interests, are thereby ostensibly subject to a

"majoritarian" check underwritten by the people in the constitution. This

engaging mechanism would be lost under a strictly plebiscitar?an democ

racy. Through these mechanisms, even in ordinary times complete institu

tional stasis is avoided.

Judicial review does not explain all implementation activity. Higher order Constitutional politics, the third possibility noted, is called into play

during certain periods of extraordinary public concern, when the constitu

tional process is subject to what Stephen Krasner calls "punctuated

equilibrium."81 Such occasions are generally characterized by crisis, but in

this case do not involve a clean break from the past. These more intensely

engaging concerns may often have a distinctly economic character. When

such constitutional politics fundamentally alter the basic social contract, the

dimension is constitutional, whether or not the constitutional text is formally amended. Several recent examples of such constitutional politics addressing economic concerns are noteworthy. Some passed constitutional muster,

fundamentally altering basic public conceptions about the constitutional

order. For example, Reagan's (or Thatcher's) rebellion in the 1980s against excessive welfare spending represented a call for the transformation of the

American (or British) social welfare state earlier institutionalized in the New

Deal (an earlier constitutional moment). This call is still unresolved. The

Japanese polity's engagement in the 1980s, 1990s, and beyond over

excessive corruption and economic malaise resulted in the temporary

79. See Alexander M. Bickel, The Least Dangerous Branch: The Supreme Court at the Bar of Politics

(2d ed. 1986). 80. Id. These enactments and judicial appointments are informed by public debate.

81. Krasner distinguishes this from times of institutional stasis, though he may fail to

appreciate the dynamic role of institutions during normal politics. See Stephen D.

Krasner, Approaches to the State: Alternative Conceptions and Historical Dynamics, 16

Comp. Pol. 223, 240 (1984). Bruce Ackerman argues that the US has essentially

experienced three historical republics as a consequence of such "constitutional mo

ments": before the Civil War, from the Civil War until the 1937 acceptance of the New

Deal, and after 1937. See Bruce Ackerman, We the People: Foundations 17-23, 266-94

(1991).




demise of the ruling party, the age of party coalition politics, and perhaps a

fundamental alteration of the relationship between government institutions

and the Japanese economy. The financial and corruption crisis in South

Korea in the late 1990s likewise fundamentally altered the way business is

done and the government's role in this process. The economic crisis in the

late 1990s propelled most societies in the region toward fundamental

change. Even the recent crisis of corporate scandals in the United States, as

a measure of the constitutional structure in the United States, has produced a dramatic and very quick political and legal response, engaging the three

main branches of government.82 Whether this response will fundamentally alter the basic political-economic structure in the United States is still to be

determined.

C. Constitutional Indigenization and Economic Development

An important, though often less understood, component of constitutional

ism is the project of situating it in the local soil. Local variation is an

essential feature of constitutionalism. Constitutional indigenization enables

constitutionalism to reach the grass roots level and local politics and

practices to shape constitutional commitments. The presence of indigenous activists and local engagement in constitutional movements would appear to ease the path for constitutional importation and transformation. Aung San

Suu Kyi argues that as long as there are genuine commitments to modern

democratic values there is room for variation in local institutional embodi

ment.83 In the cultural area long established traditions may affect how

citizens participate in government. But traditions are also important in the

economic area, where local practices and conditions raise questions from

local autonomy to equal protection. The relationship between political economy and fundamental constitutional commitments is generally a very

practical matter. Indigenization of constitutionalism, however, should not

be a substitute for constitutional fundamentals, as has often been the case in

authoritarian East Asia. This raises the question whether constitutionalism

travels well.84

82. Steven Perlstein, US Reacts Fast When Scandals Break Out, Int'l Herald Trib., 1 Aug. 2002, at 1. Contrast the slow Japanese reaction to similar difficulties over the past decade.

83. See Aung San Suu Kyi, Transcending the Clash of Cultures: Freedom, Development, and

Human Worth, 6 J. Democracy 11,15-17 (1995). 84. See Giovanni Sartori, How Far Can Free Government Travel?, 6 J. Democracy 101 (1995).

Sartori argues that the rule of law and human rights components actually travel better

than democracy. Id. at 102. "[NJobody wants to be imprisoned, tortured, or killed." Id. at 103. The importance of democracy to achieving these components, however, should not be neglected.




How might constitutionalism, in practice, connect with and engage the

society for which it is intended? Development economists argue the need

"to renovate the state so that it can perform well such crucial functions as

providing essential public goods, improving human capital, and facilitating the efficient and fair functioning of the market."85 A large number of

institutions and concerns may be brought into play in such renovation,

including "skilled bureaucrats, capable states, effective legal orders, autono mous central banks, stable policies, transparent governance, equitable taxation, investment in human capital, (and) relief of poverty."86 In a

constitutional system economic concerns may shape the forms of property

ownership, economic accountability, financial system management, com

plaints structures, social welfare commitments, taxes, equal protection,

indigenous communities and their powers of economic control and owner

ship, autonomy structures, and dispersal of power in federal structures.

These institutions elaborate the local constitutional structure, and debates over these issues produce the politics of constitutionalism.

The discussion that follows considers examples of post-authoritarian constitutional debates, organized around three imperatives: (1) where

constitution drafters engage in the neutral process of borrowing and

adaptation, looking for the most suitable model; (2) where constitution

drafters are deeply concerned to avoid past authoritarian practices; and (3) where constitution drafters seek to retain and replicate authoritarian

developmental successes. Typically, any constitutional scenario may in

volve all three imperatives to varying degrees at different times in the

process, and these highlight how the local condition shapes practice.

7. Neutral Borrowing

The notion of neutral borrowing suggest the selection of constitutional

ingredients or texts, with little experience in the area concerned and with an

eye to the most suitable or workable option. The case of post-World War II

Japan affords a good example. While the occupying Americans, in promoting liberal constitutionalism, were broadly reacting to the perceived evils of the

earlier regime, many of the institutional ingredients were borrowed as fairly standard ingredients from the outside. At least initially, the Japanese likely

perceived liberal constitutionalism in neutral terms or with indifference.87 The

85. See Scully, supra note 29, at 183.

86. Diamond & Plattner, Introduction in Economic Reform and Democracy, supra note 66, at

xxi.

87. The broader project itself was clearly a reaction to the perceived inadequacy of past

Japanese governance, both by the Americans and some Japanese participants. But by the

implementation phase Japanese constitutional practice appears to bear out the neutrality claim, though the peace provisions are clearly an exception.




concept's alien quality would seem to assure this reaction. While largely

imposed from the outside, the Japanese constitution traveled reasonably

well, undergoing a substantial degree of indigenization, and taking on a

considerable body of local theory. This result marks an interesting contrast

with the post-World War II South Korean or Chinese efforts, where

homegrown constitutions largely failed.

The current economic crisis in Japan arguably demonstrates failure, as

the Japanese government appears immobilized by party politics. Neverthe

less, the same constitution has been the venue for decades of relatively successful governance. Basic rights under the constitution have not been

aggressively protected but overall the system of rights protection has worked

reasonably well. Constitutional judicial review modeled on the US system, while not robust, has also basically succeeded in key areas. The Japanese

Supreme Court has undertaken to circumscribe governmental limitations on

public demonstrations, the right to strike, and equality of electoral appor

tionment, among other concerns.88 The relative moderation of the constitu

tional system may well reflect weak Japanese traditions of civic engagement and reliance on law. Nevertheless, under this constitutional system, post-war

Japan has been spared some of the harsher authoritarian practices evident in

the region and in its own past. Especially pertinent to the current analysis,

Japanese institutions ranging from the Diet (parliament) to the bureaucracy and the courts have shaped a distinctive political economy with a high

degree of government commitment to social welfare. This commitment is now being challenged in Japan's current constitutional politics.

Constitutional judicial review, a central engine of constitutionalism, has

also mattered in Japan. Judicial action has shaped public discourse in such areas as environmental protection, corruption, military defense, public demonstrations, freedom of association, and the academic freedom associ

ated with the content of textbooks. Norms in these areas have both shaped the business environment, and been shaped by it. They have contributed to

the sense of citizenship that underlies the developmental model and the

substantial demands it makes on governance. These norms and associated

expectations also influenced reaction to the continuing economic crisis.

The Japanese Supreme Court has taken a very passive approach that often

embodies suggestion rather than command. Christopher Ford has character

ized the Japanese rights cases as an indigenous take on US ideas.89 The

Japanese Supreme Court has underpinned its constitutional rights doctrine

88. See Christopher A. Ford, The Indigenization of Constitutionalism in the Japanese

Experience, 28 Case W. Res. J. Int'l L. 3, 29-36 (1996). In some areas judicial rights protection has been woefully inadequate, such as in the area of equality before the law in respect of both gender and ethnicity.

89. Id. at 3.




with a civil law doctrine of "abuse of rights." In constitutional litigation the court appears to be mimicking MITI's bureaucratic developmental practice of "administrative guidance." While this approach is conservative, it

appears to have brought home and rendered effective what was an alien

constitution.

The continuing Japanese economic crisis has shifted things to a more

reactive mode and has tested the conservative Japanese approach to the rule

of law. The administrative agencies and their economic might, upon which

the Japanese have historically relied, have become largely discredited. This

may shift more responsibility to the political process. Elements of neutral

borrowing to achieve constitutional tasks are almost always a part of

constitution making, although existing along side powerful reactive con

cerns. The Hong Kong Basic Law drafters, while reacting to the colonial past as required in the Sino-British agreement, likewise included considerable

neutral borrowing in their drafting.

2. Avoiding Past Practices

Constitution drafters and implementers often seek to avoid past failings. Such concerns may fundamentally shape new democratic regimes, creating

primary imperatives that in other systems may be less important. South

Korea offers a good example. Authoritarianism in South Korea shaped many of the current cleavages in Korean society, leaving its mark on the post authoritarian constitutional structure. Economic concerns were central to

this influence. Rueschemeyer and others argue that the subordinate classes,

especially reflected in the labor and minjung movements, brought down the

authoritarian regime.90 Jang Jip Choi characterizes authoritarian South Korea as an "[o]verdeveloped" state that promoted a form of authoritarian

developmental ism with a defined national interest of "national security and

economic prosperity through export-oriented industrialization."91 Choi ar

gues that three distinct political cleavages characterized Korean society under the authoritarian regime: democracy versus dictatorship, distribution

versus developmentalism, and reunification.92 These shaped South Korea's

90. See Rueschemeyer et al., supra note 33, at 286.

91. Jang Jip Choi, Political Cleavages in South Korea, in State and Society in Contemporary

Korea, supra note 40, at 18, 28.

92. Id. at 14. In a similar vein Hagen Koo identifies four authoritarian characteristics that

have provided a central impetus for democratization: bureaucratic authoritarianism, economic development policies favoring capital concentration, anticommunist security oriented ideology of the state, and the dependent character of the Korean state. See

Hagen Koo, The State, Minjung, and the Working Class in South Korea, in State and

Society in Contemporary Korea, supra note 40, at 146.




democratic transition and the emerging democratic social contract. In

Choi's view, while the first cleavage gave voice to middle class concerns

over the procedural norms of liberal democracy, the democratic concept articulated by students and workers "gave centrality to the concepts of

equality, social justice, and . . . deauthoritarianization."93 In the context of

suppression of information and discourse regarding the North, the third

cleavage has also taken a central role in South Korea's internal politics. Both

the recent famine in the North and the financial crisis in the South have

further shaped these cleavages. Reactive constitutional politics have persisted in the aftermath of the

economic crisis. South Koreans have sought to renegotiate the fundamental

state-society bargain of their political economy, essentially moving from the

developmental state to a free-market regulatory state. They first responded to the crisis by electing a pro-labor president. Worker acceptance of the

pains of restructuring depended on their sense of inclusion and their

confidence in the justice of various solutions. They were much less resistant

to President Kim Dae-jung's reform proposals, in comparison to similar

proposals previously made by President Kim Young-sam, because of earlier

confidence in his pro-labor stance. Workers have been concerned with

avoiding bureaucratic interference in the market on behalf of the corporate

elite, symptomatic of the cronyism and corruption of the past. In Joan Nelson's terms, a negative consensus overthrew the regime, and a positive consensus is still being formed in the post-authoritarian constitutional

order.94 The creation of fundamental structures such as term limits, locus of

regulatory power, central banks, institutional and political transparency, and so forth to cope with the cronyism and corruption of the past are being

sought. Since the onset of its financial crisis, Japan has sought to follow a

similar reactive path, with limited success.

3. Holding on to the Past

The successes of the developmental state have also produced a positive model to emulate under democratic governance. Under authoritarian

development in East Asia, developmental institutions were thought to

include positive components such as "efficient, meritocratic bureaucracies, centralized decision-making structures, and control over a large repertoire

93. Jang Jip Choi, Political Cleavages in South Korea, in State and Society in Contemporary

Korea, supra note 40, at 40.

94. Joan Nelson, Linkages Between Politics and Economics, in Economic Reform and

Democracy, supra note 66, at 51-52.




of policy instruments."95 There is evidence that post-authoritarian govern ments in East Asia had attempted to retain developmental institutions while

otherwise liberalizing and democratizing the political systems. As evi denced by the East Asian economic crisis, the success of reforming countries in sustaining the good elements and dispelling the bad ones, such as cronyism and corruption, are in doubt.

IV. CONCLUSION

In assessing the debates over political and economic reform, it becomes

apparent that constitutionalism has a central role to play. Studies in the

political economy literature appear to verify that regime type ultimately matters in the achievement of economic development goals.96 While

authoritarianism with proper developmental institutions can do reasonably well at early-stage development, this is not invariably so. Furthermore, as

economic development proceeds the developmental potential of the au

thoritarian model may be exhausted. Recent studies have shown that the

developmental achievement of authoritarian regimes in East Asia is not

uniformly positive. Latent costs are just now being appreciated. In addition to the deficiencies of authoritarian practices in respect to democracy, human rights, and the rule of law, there have also been high levels of

corruption. Corruption appears to be a consequence of both early predatory practices and a lack of transparency, and subsequent incapacity of authori

tarian regimes to respond to the interests that economic development creates. Rent-seeking evolves from a top-down predatory behavior in the

authoritarian period when the state is strong, to a bottom-up predatory behavior in the early stages of democracy as business becomes stronger and the state weaker. Corruption may serve as a substitute for adequate state

institutions. Democratic consolidation will aim to curb corruption by

affording greater transparency and stable institutions for checks and bal ances. Greater dispersal and open competition in the society should

accompany this consolidation. Local institutions shape investor confidence.

Either extreme concentrations of power or extreme dispersal appears to

have worked poorly; the former is too volatile and the latter too rigid. Liberal constitutionalism, including democracy, human rights and the

rule of law, appears to provide the tools to engender the degree of public

95. See Stephan Haggard & Chung-in Moon, The State, Politics, and Economic Development in Postwar South Korea, in State and Society in Contemporary Korea, supra note 40, at 58.

Under these conditions, organizations like MITI in Japan and the Economic Planning Board in South Korea were better able to initiate policies of reform.

96. See generally Scully, supra note 29; Rodrick, supra note 31 ; Emmerson, supra note 4.




engagement and political reliability needed for sustained development.

Finding the proper institutional balance is by no means an easy task. The

constitutional fundamentals are essential. Minimally maintaining the pro tections embodied in human rights and the rule of law is important to

achieving transparency and accountability, while sustaining confidence in

political and legal institutions. Constitutional institutions must be shaped to

the local condition. This reality is demonstrated by the varied consequences of importing similar institutions into different countries. Constitutional

systems deeply influenced by the American model work very differently in

Japan, the Philippines, and the United States. Getting the fit just right is the

challenge of local politics. The challenge of constitutionalism is to gain sufficient weight in local

politics. The economic crisis in East Asia has left little room for political

intransigence or dithering over solutions. Public support and investor

confidence became ever more vital commodities. Without them govern ments collapse and economies fail. Democracy itself may fail and decades

of development can be lost. Constitutionalism is crucial to the maintenance

of stability and economic prosperity in a complex free-market society.

Nobody has illusions about achieving constitutional success overnight. Furthermore, not all economic cycles are about institutional confidence.

Such confidence is often a vital issue and a starting point in understanding what works and why. Public understanding and engagement in the process then offer hope that progress can be achieved under unique local con

straints. East Asia, more than anywhere else in the developing world, is at a

juncture from which constitutional success is an imminent possibility. Further study of the dynamics of constitutionalism in East Asian practice can

contribute greatly to understanding the institutional dynamics of economic

development.



Documents

East Asia after the Crisis: Human Rights, Constitutionalism, and State Reform