World on Fire - Brownstein, Michael [22]
What distinguishes the CP Group from the Javanese tofu industry is not social networks or the nature of its products, but rather its breathtaking dynamism. Moreover, while the Chiaravanont family’s economic success is extreme in magnitude, it is representative of Chinese success stories at all levels of Southeast Asian society.
It seems safe to say that this entrepreneurial dynamism—together with frugality, hard work, willingness to delay gratification, and intense desire to accumulate wealth almost as an end in itself—cannot be traced to any single cultural, much less genetic source. (There are plenty of individual Chinese in Southeast Asia who do not exemplify these qualities. My own maternal grandfather was a poor schoolteacher who had an aversion to commerce.) A given ethnic group can be entrepreneurial and market-dominant in one setting, but not in another. The Chinese in China were market-dormant, so to speak, for centuries.
Why some groups prosper disproportionately over others has been the subject of a long and fascinating debate ever since Max Weber described the Protestant work ethic and desire to accumulate wealth as “the spirit of capitalism” itself.
34 Explaining the market dominance of various ethnic groups is not the focus of this book. I leave this debate to others more qualified to resolve it.
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The critical point, however, is that today the “spirit of capitalism” may no longer be enough. What economists call “path-dependence” now plays a tremendous, unavoidable role in group economic success. Access to capital is so important to economic success in a modernized global economy that already-prosperous ethnic groups have an enormous market advantage. The Chinese minorities have a worldwide head start advantage of roughly $2 trillion in assets, not to mention their famous “social networks” of business connections, which are not merely intra-ethnic but include Western and Japanese foreign investors as well. In much of the world, history may have moved beyond the point where a poor ethnic group could, fortuitously or otherwise, develop the “spirit of capitalism” and thereby attain market dominance.
Jakarta Burning
Although Americans prefer to forget this, Indonesia’s General Suharto was a longtime darling of the United States government and business community because of his rejection of populist redistribution in favor of liberal markets and foreign investment. Starting as early as the 1970s, and in exchange for the support of the United States, the World Bank, and the IMF, Suharto pursued raw, globally-oriented free market policies.
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As in all the Southeast Asian countries, the result was an influx of foreign capital, unprecedented levels of growth, and spectacular Chinese economic success. By 1998, Sino-Indonesians occupied a position of economic dominance wildly disproportionate to their numbers. Just 3 percent of the population, the Chinese controlled approximately 70 percent of the private economy. All of Indonesia’s billionaires were ethnically Chinese, and almost all of the country’s largest conglomerates were owned by Sino-Indonesian families. The major exceptions to this rule were companies owned by the children of Suharto, which themselves depended on state favors and Chinese entrepreneurialism. More generally, although Chinese Indonesians were certainly not all well-off, they were economically dominant at every level of society. Ethnic Chinese dominated petty trading occupations in rural areas. They also dominated both retail and wholesale trade in urban areas as well as the country’s informal credit sector. Indeed, almost every tiny town had a Chinese-run general store that was the center of local economic life.
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The extraordinary