The Making of Collapse: Taiwan in the 21st Century

by Thung-hong Lin, Academia Sinica, Taiwan and member of ISA Research Committees on Social Stratification (RC28) and Sociology of Disasters (RC39)

Taiwan has experienced great economic, political and social changes during the last three decades. However, most sociological literature on Taiwan still only focuses on its story of successful development. Conventional wisdom usually includes:

  • a strong and rational “developmental state” dominated by the Kuomingtang’s (KMT) authoritarian technocrats, who achieved industrial upgrading through a policy of picking winners;
  • an active export-oriented (globalized) economy based on successful land reform, together with an industrial structure dominated by small-to-medium enterprises (SMEs);
  • a high rate of upward mobility, resulting from small business entrepreneurship, full employment and an expanding middle class.

On the less bright side, the standard story acknowledges that Taiwan is a patriarchal society where gender discrimination, influenced by traditional Confucian culture, persists in families, education and labor market. The story usually ends with the peaceful democratic transition based on a moderate middle class (see table below).

The Changing Paradigm of Taiwanese Development

The “Miracle” paradigm The “Collapse” paradigm
State Authoritarian, autonomous and developmental Predatory and corrupt, not accountable until democratization
Economy Indigenous private-owned SMEs dominated the export-oriented economy SMEs are fading away; flight of monopoly capital to China where it exploits migrant workers
Social stratification and mobility SME entrepreneurship, rising middle classes, strong social mobility and low unemployment rate Deindustrialization and increasing class inequality; class reproduction rather than class mobility; high youth unemployment rate
Gender, family and demography Confucian patriarchal family, gender discrimination in education and labor market, early marriage, low divorce rate, but successful birth control Mitigation of gender inequality; family breakdown: divorce rate as high as in the US; very low fertility rate; a rapidly aging society
Political dynamics and cleavages The KMT authoritarian party-state vs. the indigenous civil society; a major cleavage between ethnicity and national identity Rise of democratic values, class awareness and sense of generational injustice among youth: Sunflower movement against the impact of China

Since 2007, however, this account of the “Taiwanese miracle” has been called into question by the Asian financial crises and the Great Recession. When the ex-authoritarian KMT elites returned to power in 2008, technocrats blamed political turmoil on democracy, and on the pro-independent policies of the Democratic Progressive Party (DPP) government. The KMT administration pursued a more neoliberal developmental policy agenda, emphasizing expanded trade with China. Since March 2014, when public concern over increasing “China impacts” erupted into Taiwan’s greatest student movement since the 1990s, popular debates – including criticisms of Taiwan’s government’s relations with China, and of the tendency for the KMT to ally with big business while overlooking local SMEs and youth employment – have challenged the “miracle paradigm.”

Recent studies have criticized Taiwan’s “developmental state,” arguing that a conservative and corrupt political coalition served KMT authoritarianism, excluding active SMEs and Taiwanese political participation. These studies call attention to similar criticisms of China’s rapid economic development and the “authoritarian resilience” of the Communist party-state. In the context of the economic slowdown, the Chinese central and local states look more predatory than developmental. Revisiting Taiwan’s experience, a better explanation of the association between economic growth and the authoritarian strong state suggests that the former nurtured the latter, not vice versa, while Taiwan’s welfare state and citizenship regime only became political concerns after democratization.

Due to the heavy investment of Taiwan’s big business groups in China since the early 1990s, Taiwan’s industrial structure has changed dramatically. SME’s share of exported value declined from 76 percent to 18 percent. Today, 82% of Taiwan’s exports come from big companies; SME dominance has been replaced by monopoly and multinational capital. For example, the total revenue of Taiwan’s largest enterprise, the Hon-Hai (Foxconn) group, approached 21% of Taiwan’s GDP in 2013; and as Foxconn’s labor conflicts suggest, the concentration of Taiwanese capital has benefited from the exploitation of migrant workers in mainland China and from land expropriation under China’s party-state authoritarianism.

Taiwan’s changing industrial structure has also reshaped social stratification. In the 1990s, an urban middle class was composed of SME employers and skilled workers, which led to high rates of class mobility. When the economy slowed down, however, wealth and income inequality increased, and class mobility declined. As in other post-industrial societies, job security has been undermined, and both precarious jobs and the numbers of working poor have increased.

The only good news may be the mitigation of gender inequality. Gender differences in education and earnings have declined, and are now narrower than in Taiwan’s East Asian neighbors. However, labor market and family-based discrimination may not have greatly improved. Curiously, some research suggests that marriage may make women less happy. In fact, Taiwanese female employees tend to avoid marriage and pregnancy to hold on to their jobs, autonomy, and earning, which has led to a low marriage rate, a divorce rate as high as in the US, and one of the world’s lowest fertility rates.

These economic and social changes have reshaped Taiwan’s political landscape. The political science literature has usually focused on conflicts between the KMT authoritarian party-state and the indigenous civil society, but since the democratic transition of the 1990s, increasing economic inequality and generational injustice have provoked new political cleavages. Some electoral studies suggest that DPP support comes mainly from blue-collar workers and peasants (mostly males), and from younger Taiwanese with more liberal values.

Since 2008, the KMT government has tried to stimulate the economy by cooperating with China’s party-state, and encouraging collaboration between Taiwanese and Chinese big business. What Jieh-min Wu has termed the “cross-strait states-businesses coalition of authoritarian capitalism” is suspected of pursuing economic and political integration of Taiwan and China through the free trade agenda. The government has promoted this agenda through neoliberal “trickle-down” ideology, driven by an implied nostalgia for KMT authoritarianism – an agenda that has deepened tensions along Taiwan’s longstanding divisions of nationality, class, and generation.

The transformation of Taiwan belies its image as a model of development. Long viewed as the engine of the country’s growth, Taiwan’s SMEs are fading away. Big businessmen and KMT technocrats, whose strengths depended on the country’s strong state, are now the advocates of free trade and openness to China. Young Taiwanese face unemployment, downward mobility, job insecurity, and stagnant wages as well as higher tax and social insurance rates. In a book that unexpectedly became a sociological bestseller and source of ideas for the Sunflower Movement, I argue that these social changes have produced an intense generational conflict that follows the contours of a widening class division.[1] In contrast to our long-ago economic miracle, some young scholars now call for a paradigm shift in Taiwanese sociology, focusing on the social collapse that may lie in our future.

Direct all correspondence to Thung-hong Lin zoo42@gate.sinica.edu.tw

[1] Thung-hong Lin et al. (2011) A Generation of Collapse: Crises of Capitalism, Youth Poverty and the Lowest Fertility Rate in Taiwan. Taipei: Taiwan Labor Front.

Taiwan, Volume 5, Issue 4

Comments are closed.