Taiwan

["George Pennefather" <poseidon@xxxxxxxxxxxxxx>]

Taiwan has been in the news with regard to both his relationship with the West 
and
China.
China has been claiming  that Taiwan is a province of mainland China and that 
it will
resist any moves by Taiwan to declare independence. In connection with this it 
may of
value to examine the background to the emergence of Taiwan as a prosperous 
economy.

The prosperity that Taiwan has  experienced was due to a unique conjuncture of 
events.
Because Taiwan was a frontline state in the Cold War between East and West 
Washington
allowed the KMT establish a protectionist regime which meant that indigenous 
capital
was
somewhat sheltered from international capital which was one of the principal 
conditions
leading to its development. Taiwanese capital was free to export to the US while
protecting the home market as it saw fit. Along with this the state played a
gigantically
interventionist role in promoting domestic capital. The state also encouraged 
foreign
capital to invest in Taiwan in partnership with domestic capital. The political
strategy
underscoring this was to  encourage foreign capital into the Taiwanese economy 
so as to
discourage, all the more, China from seeking to reincorporate Taiwan into 
mainland
China.

Another condition leading to the economic prosperity that Taiwan experienced 
were low
wages. Low wages were a result of, among other things, the forcible suppression 
of the
working class movement by a strong armed state.

Agriculture was structured by the state in such a way as to make the peasants 
pay for
industrialisation by artificially keeping prices down. This increased 
discontent among
the
peasant masses.

The Vietnam war was another factor. Taiwan benefited economically from 
Washington's war
against  Vietnam.

Having said all this much of the capital in Taiwan is not always as efficient 
and high
tech entailing highly skilled labour as many have been led to believe. Much of 
the
foreign
investment in the area has been the highly pollutant labour intensive low tech 
coming
from
Japan. Much of the smaller domestic capital in Taiwan is a product of sub 
contracting.
Large US companies have engaged in massive sub contracting in Taiwan because of
relatively
cheap labour conditions.

However things have not been so stable as may appear. The labour movement have 
proved
to
be quite militant. Consequently the pressure exerted by China on Taiwan may, 
under
certain
conditions, destabilise conditions there in such a way as to make it easier for 
China
to
retake. Then China may engage in threatening actions too to encourage 
Washington to
let it
fall back into China's hands since if Taiwan collapses into chaos the West 
could loose
everything.

We see then that Taiwan was not an integral part of the free market world as 
much of
the
West had been claiming. Taiwan and other economies were for purposes of 
propaganda were
presented as due to the acceptance of free market principles. In fact Taiwan 
has been a
very statist society which must influence the character of any future 
integration of
Taiwan into mainland China.

Warm regards
George Pennefather

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