The socialization of capital in Malaysia

A Tale of Two Recoveries: Malaysia vs Germany, part II gives us an example of the macroeconomic value of socializing capital, even partially:

Malaysia’s initial response to the [1997/98 Asian financial] crisis was a textbook illustration of how to exacerbate, not alleviate, a financial crisis. ...

The Malaysian economy experienced a contraction of credit growth from 30 percent in 1997 to minus 5 percent in 1998, reflecting a massive pullback of bank loans. The ringgit plunged, as capital outflows accelerated. A real estate collapse loomed.

Ultimately, seeing the failure in these policies, Prime Minister Mahathir sacked [Finance Minister] Anwar, and re-imposed capital controls to insulate his economy from the deleterious consequences of rapid hot money outflows... Monetary and fiscal policy became expansionary, the ringgit was pegged to the US dollar, and crisis credit conditions began to diminish as domestic rates were reduced drastically. Although Western finance ministries and institutional investors protested apocalyptically and predicted that Malaysia would remain beyond the pale of the investment world for the foreseeable future, six months later even The Economist, one of the IMF’s great apologists, was forced to acknowledge that the embrace of capital controls had done “short-term wonders” in assisting recovery.