There is no denying that the Asian members of Apec have benefitted from their shift into the capitalist paradigm of the open economy and the dismantling of command economies.

The Apec meeting in Bangkok, coming soon after the Cancun fiasco, must ensure that the growth momentum is sustained. The member countries must continue to support the initiative to eliminate tariffs, to privatise industries, to deregulate, and to standardise laws to create a pro-business environment and unleash the spirit of enterprise.

The challenge is to increase trade and dismantle barriers while ensuring that liberal capitalism does not lead to declines in the fortunes material and otherwise of ordinary citizens. Greed is a violent impulse in any system. Therefore there is a need to ensure that liberalisation does not mean its encouragement.

Perhaps it is prudent to recall economist Mancur Olson's warning about banditry in liberalised economies. He mentions two kinds of bandits: the roving kind, who would expropriate all movable properties and depart, and the stationary kind, who have "an encompassing interest" or incentive to create an environment conducive to the ultimate enrichment of themselves.

One should therefore be wary lest the mantra of privatisation and deregulation turn out to be mere noise to cover up the sale of state enterprises to cronies to form new monopolies, which will charge exorbitant rates and levies, to mention only the most obvious manifestations of oppression. These consequences would be the antitheses of what economic cooperation ought to aim for, which is efficiency and all its benefits, including wider choices and lower prices.

Opacity of administration

Of course, even with abuses and corruption, there may still be rapid creation of wealth, but such mirage prosperity will not be sustainable over the long haul.

Confucius said: "The gentleman understands what is moral and the small man understands what is profitable." Unfortunately, good governance in some Apec countries has been forestalled by the opacity of administration, by the executive branch's control over the judiciary and the media, and by a host of impediments to the creation of civil society institutions.

But because the calls for good governance, transparency and accountability are presented alongside other structural adjustments prescribed by such agencies as the IMF, governments capitalise on the unpopularity of the latter remedies to resist reforms. In this regard, some critics of the IMF, in their eagerness to exonerate Asian economic miracles, have been soft on corruption and opacity and have become unwitting apologists for authoritarianism.

The nightmare of the financial crisis of 1997 is beginning to fade like an old photograph. But we would be in a fool's paradise to ignore the fundamental cause of the financial convulsions: Asian leaders, dazzled by the accolades heaped upon them by admirers of the so-called miracle economies, behaved as if those economies were invincible like the Titanic.

Financial institutions were not adequately supervised. Instead they were induced into disbursing excessive sums to cronies and persuaded to fund unproductive mega-projects. Huge national deficits were ignored.

Joseph Stiglitz summed it up well when he said that "in the very boom were planted some of the seeds of destruction." Limitations in the international financial system made it inevitable that stresses would develop out of incompatabilities between the global environment and the national systems of the "miracle" economies.

Shocks and stresses are almost inherent in any economic system. But good governance and an open and transparent system would provide early warning signals. Such signals are crucial if systemic crises are to be avoided. And without them, corruption and a whole panoply of power abusers will breed and prosper.

But those who rule semi-democracies have the means to prevent warning signals from reaching the people, who are the ones to suffer when a systemic crisis results from the stresses and strains. When the crisis hits, autocrats will use their controlled media to manufacture scapegoats, preferably some evil and malicious foreigners. They are good at attributing success to their own initiatives and blaming systems said to be outside their control for failures.

Dynamically defined

Is democracy necessary for prosperity? Perhaps it is better to ask whether prosperity, in our times, can be worthy of its name if democracy is not a constitutive element of it. Prosperity must subsume freedom, equality, moral probity and an environment conducive to the creative imagination and idealistic aspirations.

True, the economic achievements of the 1990s did lift millions of Asians from poverty. But prosperity creates demands that go beyond the realm of the material. It increases the desire for freedom and democratic space. Economic development should be dynamically defined, as Amatya Sen has done, to cover choice over a larger set of capabilities.

The boundary separating what is economic and what is political is fast disappearing. The growth of the industries of knowledge, information and culture requires an appropriate political environment. An authoritarian environment is definitely not conducive to such industries, and yet these are the industries that will power the global economy in the decades to come.

Asian countries are still seething and fuming over the harshness and iniquities of globalisation. But globalisation issues from the logic of technological and financial revolutions. It is irreversible and, what is more, it is deepening. And therein lies the prospect for Asia in the next decades. If globalisation short-circuited the last "Asian miracle," pro-globalisation internal policies that are sensitive to moral hazards and are people-oriented may be the dynamo to power a new one.

But to invoke a real miracle, Asia requires quality growth. We need physical infrastucture highways, seaports, airports, telecommunications and electrical power generation. But we also need the infrastructure of creativity and knowledge and the institutions of democracy and civil society not just universities and laboratories, but also the creative mind.