Mexico Redux? Making Sense of the Financial Crisis of 1997-98
Beginning in May 1997, financial crisis swept across Southeast Asia and extended to Brazil and Russia. These events are notable because the crisis took investors and International Monetary Fund (IMF)-World Bank officials completely by surprise, and especially because they occurred after the IMF had implemented what were heralded as important safeguards, embodied in the "Special Information Dissemination Standard," following the events in Mexico in 1994-95. My paper is motivated by the parallels in the conventional wisdom on the causes of the current and the earlier Mexican crises. In the Mexican case, what I elsewhere termed the "Mexican exceptionalism thesis" contends that the crisis was largely an aberration stemming from the country's "peculiarities" (viz., economic mismanagement, corruption, and instability) [Grabel 1996a, 1996b]. An interesting feature of the current crisis is the ubiquitous claim of exceptionalism that is again being invoked by neoclassical economists to explain these events. In the Southeast Asian cases, much is being made of the seemingly newly discovered-yet deeply rootedpatterns of corruption, real estate speculation, and misguided government policies. My paper presents arguments against the exceptionalist explanations of the current crisis. I argue that the current crisis is principally a result of the failed neoliberal policy regime that embraces the ideology of free capital flows. In efforts to attract private foreign capital flows and as a consequence of domestic and interna-