Neo-liberalism and Domestic Capital: The Political Outcomes of the Economic Crisis in Thailand

The 1997 economic crisis in Thailand provided an opportunity for a reinvigoration of neo-liberal economic policies. International financial institutions, together with Thailand's Democrat-led government, emphasised further market reforms, liberalisation, deregulation, decentralisation, privatisation and a reduced role for the state. The deep economic downturn saw a popular rejection of such policies, meaning that the neo-liberal interregnum was short-lived. The 2001 landslide electoral victory of the Thai Rak Thai Party symbolised the intensity of opposition to neo-liberalism. It also showed that national governments remain critical in shaping markets and that domestic economic actors continue to have significant political roles. In Thailand, far from neutering domestic capital's political capacity, the crisis and opposition to neo-liberalism saw this enhanced. One reason for this was that neo-liberal restructuring was not simply about the efficient operation of the market. Rather, it demanded a fundamental transformation of the operations of government and of the ways that business was organised and conducted. This threatened domestic capital. Its economic survival required that it seize the state so that it could control economic policy-making. This was achieved through the Thai Rak Thai electoral victory and its subsequent rule, where the protection of domestic capital's interests was achieved through a re-negotiation of its social contract with other classes.