Thailand’s Crisis: Neo-Liberal Agenda and Local Reaction

Abstract

In the eighteen months following the flotation of the Thai baht on 2 July 1997, analysis of the Asian Crisis went through dramatic changes. The neo-liberal faith in free markets and free capital flows, which framed both analysis and policy-making in the early stages, gave way to calls for ‘coordinated Keynesianism’ and restrictions on capital movements. The IMF’s hubris collapsed into a limited admission of error. The debate on the Crisis was conducted on a global scale, moved along by the statements of participants (Camdessus, Rubin, Stiglitz), landmark actions (Suharto’s fall, Mahathir’s revolt), and academic interventions (Krugman, Sachs, Bhagwati). However, the debate was also moved ahead more subtly by events within the key countries (Thailand, Indonesia, South Korea), specifically by the interaction between IMF policies and the realities of local political economy. Because Thailand was the first to collapse and because Thailand became the most apparently compliant subject of IMF tutelage, this interaction in Thailand was especially important.