Abstract

The crisis of capitalism is as old as Marxist thought. Marxists have all along warned about the crisis of capitalism and their prognosis seems to have come true at least in the periphery.

To begin with there were significant underlying problems besetting the Asian economies, at both a macroeconomics and microeconomics level (especially within the financial sector). This paper provides a liberal diagnosis of the financial crisis in Asia. It builds on existing theories, and focuses on the empirical record in the lead-up to the crisis. The main goal is to emphasize the role of financial panic as an essential element of the Asian crisis. That the economic miracle was founded on political forces and imprudent speculation helped in seeing erstwhile developing economies collapse like a house built by pack of cards.

Key words: capitalism, Marxist thought, financial crisis, financial panic, economic miracle