Capitalism Comes to Cambodia

The New York Times is reporting that Cambodians have replaced Karl Marx with Peter Drucker. You know all about Marx. As for Drucker, I have mentioned him occasionally on the blog. He was a famed management consultant, someone whose advice was sought out by the titans of American industry.

The Times reports:

For years, Tep Khunnal was the devoted personal secretary of Pol Pot, staying loyal to the charismatic ultracommunist leader even as the Khmer Rouge movement collapsed around them in the late 1990s.

Forced to reinvent himself after Pol Pot’s death, he fled to this outpost on the Thai border and began following a different sort of guru: the Austrian-American management theorist and business consultant Peter Drucker.

“I realized that some other countries, in South America, in Japan, they studied Drucker, and they used Drucker’s ideas and made the countries prosperous,” he said.

The residents of this dusty but bustling town are almost all former Khmer Rouge soldiers or cadres and their families, but they have come to embrace capitalism with almost as much vigor as they once fought to destroy class distinctions, free trade and even money itself.

After being impoverished by Pol Pot and the Khmer Rouge, former Communist officials have discovered the virtue of prosperity. They are a bit late to the game. China turned got on the capitalist road in the late 1970s, under the aegis of Deng Xiaoping. Like the Chinese, the Cambodians decided to stop railing about inequality and to seek prosperity. They drew the same lesson that the Chinese did. Capitalism is better than starving to death. Who knew?

Here is one story of one former soldier, with a nod to the horrors that were inflicted on the Cambodian people by Pol Pot and his Khmer Rouge:

“We joined the communists, and now we have joined the capitalists, which is much better,” said Dim Sok, a local official.

Mr. Dim Sok, 65, was a nearly illiterate farmer when he became a revolutionary in 1970, fighting in the jungles with the Khmer Rouge for five years before they seized power. In an effort to remake the country into an agrarian utopia, the Khmer Rouge government swept the urban population into the countryside to live like peasants and smashed up banks and schools. At least 1.7 million people died under their nearly four-year rule.

The Times returns to Tep Khunnal, and show how he developed his business:

Malai was still a malaria-infested jungle stronghold when Mr. Tep Khunnal moved here in 1998, bringing with him Pol Pot’s widow, whom he married shortly after his boss’s death.

Along with a barely educated but savvy ex-soldier, Soom Yin, he took out a bank loan to test some of his ideas. Their company bought the area’s first corn-drying machine, imported a new breed of sun-resistant corn from Thailand and set up a quality-control system for the corn and cassava that moved through their warehouse.

Today, Mr. Soom Yin owns the largest export firm in the area and can talk for hours about the minutiae of the cassava trade, from moisture levels to price fluctuations. In his spare time, he said, he reads books on management.

The Khmer Rouge ways are “very old now,” he said. “Even me, I don’t even dream about that anymore. We just do business.”

Today Khunnal has retired and is teaching management theory in universities:

He said he began reading about economics while serving as a Khmer Rouge envoy to the United Nations in the 1980s. Although he liked Milton Friedman, the free-market economist, and Frederick Taylor, who pioneered scientific management, he was most drawn to Drucker’s insistence that employees were central to an enterprise’s success.

“What I find interesting for me is that he talks about individuals, he gives power to individuals, not to collectivism,” he said of Drucker. “Frederick Taylor in the early 20th century, he talked about efficiency, but Drucker talked about effectiveness.”

During a recent lecture, Mr. Tep Khunnal exhorted his students to remember that good management was just as important as good ideas.

“In-no-vation,” he said, using the English word, “means a new idea, but to be successful you need strategy.”

It’s not just an idea. In order to succeed you need to have a plan and an organization. And one thing is clear. Rail all you want about inequality, collectivizing agriculture is, as the Chinese discovered in the early 1960s, a formula for mass starvation.