“The New Asian Capitalists”

by Calvin W. Lew

November 8, 1995

The economic success of Asian countries and the New Industrializing Economies (N.I.E.s) are due to a combination of Confucian principles, business-government relationships, and other factors rather than one of these factors alone. Although Confucian principles and government intervention in business are contributing factors, they provide the basis and the supporting environment for the Asian business traits of entrepreneurial spirit, a dedicated work ethic, and continued ingenuity.

Confucian principles are probably the main factor in providing an environment for these successful business ethics and behaviors; but a causal relationship cannot be said to exist because Confucian ethics alone do not make one a successful capitalist. After all, Confucian ethics have existed in Asia for over two millennia, but only recently has the entrepreneurial economic boom occurred.

And skilled bureaucracies using business-government relationships alone do not cause economic prosperity and advancement. In fact, these types of economic systems more often than not fail. Examples of failed business environments with government involvement include many European countries and most communist and socialist countries.

Only in tandem would these and other factors help the Asian countries’ national efforts toward economic success. Thus, one major reason Asia’s efforts towards nationally directed economic development succeeded while other countries have failed is due to the Asian people’s deep-rooted belief in Confucian principles and philosophy. These principles include emphasis on education and family ties, guidelines for proper ethical behavior that place individuals in hierarchical relationships, social harmony, and loyalty to the state.

The many tenants of this philosophy and the influence of it on the people and culture of Asia have provided a favorable environment towards the development of the entrepreneurial spirit. The Confucian principle of education for example has greatly benefited Asian society as well as the economy. Asian societies have historically favored and encouraged education. Education has been a priority not only for the virtue of knowledge, but also as an avenue for social advancement and mobility. Many government bureaucracies required strict examinations for advancement or promotion. The contemporary implications of this is a work force that is well-educated; and arguably more ingenious, hard-working, and capable.

Family ties and values is another important aspect of Asian culture that has had economic benefits. While the primary family and economic unit of families in many other countries is the nuclear family; the main unit in Asia is often the extended family. This is beneficial because members of the family have a wider base of economic and social support. Resources (economic and otherwise) are often pooled to help support the parts of the family where the need is greatest. This socialistic concept works because it is on a small scale (rather than national) and is close to the problem. This contrasts with societies where the nuclear family is prominent. If a member of a nuclear family is in need of economic support and his family is unable or unwilling to provide it, then his needs are often provided for by the state. Not only does this drain the state’s resources, but this person often becomes a wasted economic resource himself.

These family ties in conjunction with Confucian principles indirectly promotes and fosters ethical behavior that place individuals in hierarchical relationships. This system of behavior in turn provides for social harmony. Thus, a socially harmonious society is a better environment for concerted national economic advances than a chaotic and disruptive society; where individuals primarily pursue their own interests, no matter the concerted efforts of the state or national interest.

Attributes of these Confucian behaviors as well as the principle of loyalty to the state directly affect the effectiveness of the second major economic factor; that of nationally directed business-government relationships. At the citizen and worker level, the social structure and principle of loyalty to the state provides for a workforce that is willing to accept and strive for specific national directives. Thus, national efforts can be more easily coordinated in this mostly uniform Confucious society than in a more pluralistic one.

At the corporate and management level of business, the idea of loyalty to the state also holds true. While individual corporations and companies in other countries compete against one another for their own bottom line interests, Asian corporations often cooperate with each other in their individual countries (along with government) to further their national interests. Again, this is possible not only because of national loyalty, but also because of the societal structure.

These factors have contributed to the recent rapid economic growth of Asia; but entrepreneurship has always existed in Asia. From the earliest times; albeit on a less grand scale. Entrepreneurs have always bartered and traded their wares and services. A monetary system has also existed from earliest history.

But, despite these roots, Asia only rapidly achieved industrialization resulting from Western pressure and influence. And from the West, Asia had a model to emulate; a model to emulate and to make purely Asian in nature and character. Soon, the characteristics of entrepreneurial spirit, dedicated work ethics, and continuous improvement and ingenuity became associated with the Eastern character of business; areas where the West was seemingly sometimes lacking.

It is these Asian traits that have predominately catapulted Asia into world market equivalency. True, these virtues hold true in other countries; but in the Asian environment, the results appeared “miraculous.” The Japanese Miracle occurred out of the ashes of a destroyed and defeated enemy. Small third world countries like Taiwan and Singapore have become “Tigers” on the Pacific Rim that are towering economic giants compared to their geographical size. And China is a Sleeping Dragon that has awaken and has only begun to rumble. While free market enterprise in the West was built on laissez-faire and the seemingly forgotten Puritan work ethic; the “New Asian Capitalism” is emersed in centuries-old Confucian faith that is very much alive today.