Why Nobody Invests in Japan
Tokyo’s Failure to Welcome Foreign Capital Is Hobbling Its Economy
IN POPULAR debates it is often made to appear as if men had it within their power to choose whether or not they will live in an international society. No such choice is open to any community of people. The most self-contained nation is only relatively self-contained: there is no nation which does not have interests vital to its prosperity and security that transcend its frontiers and elude its own sovereignty. The very fact that a nation sometimes feels compelled to proclaim a policy of isolation, and that parties within the nation have then continually to be vigilant to preserve the isolation, is in itself evidence that isolation is not the natural condition of civilized peoples.
Ten years ago, when this journal was founded, mankind had just been made acutely conscious of the need of more dependable international government. At Paris, in the winter of 1919, drastic reforms in the organization of international society were instituted and certain ideals were proclaimed towards which, it was hoped and believed, mankind would advance. The philosophy which inspired those reforms is often identified with the whole problem of international government, as if the particular set of ideas held by statesmen in 1919 offered the only possible answer.
But in the perspective of a tumultuous decade it is possible now to examine that philosophy and with the hindsight of experience to see how ephemeral were many of the cardinal ideas with which men tried to promote a better international order. Perhaps as good a way as any to begin such reëxamination of ideas is to recall the character of the Fourteen Points of Woodrow Wilson. They were intended to be the charter of the new order, and they provide an illuminating standard by which to measure the subsequent disparity between post-war ideals and the actual course of events.
Three major principles controlled the Fourteen Points. The first was that states which were homogenous in nationality would be politically satisfied and therefore diplomatically stable constituents of the new order. President Wilson was not by temperament or judgment a pure nationalist, as anyone can see by recalling that the Fourteen Points did not in their original form contemplate the break-up of the unity of Austria-Hungary. But events forced the issue, and the Fourteen Points as amended before the Armistice became an unqualified commitment to the principle of national separatism.
It must, however, be carefully noted that this principle was then regarded merely as a means to a larger end. It was not national independence as such that was desired but a stable society of nations in which irredentism had ceased to be a cause of agitation. The second great principle underlying the Fourteen Points was invoked to cure the obvious vices of separated nationalities. This was Woodrow Wilson's chief personal contribution to the general body of doctrines which bears his name. It was the principle of laissez-faire and free trade in the economic relations of national states. Woodrow Wilson saw quite clearly that the principle of self-determination accentuated the political separatism of states; he hoped that free trade and a general policy of laissez-faire would make political separatism inconsequential. In short, the new order was to be founded upon political nationalism and economic internationalism: the nations were to have self-determination as to frontiers and culture but were not to exercise this sovereignty in the realm of commerce.
On this foundation, the third major principle was established: it called for the creation of a new organ of international government consisting of a league of politically independent and economically interdependent nations. In one aspect this league was to be essentially a medium of communication and consultation and a convenient agency of coöperation in non-contentious enterprises; in its other aspect this league was to be a committee to deal with unexpected crises. The fundamental assumption was that such crises would be exceptional, provided the underlying constitution of the world was sound in the sense that nationality was politically satisfied and trade was free.
The past ten years have shown that it was not possible to make a map which would wholly satisfy national aspirations and that self-determination in politics plus national self-denial in economic policy was wholly at variance with the will of the peoples. Thus the constitution of the new order which the innovators at Paris envisaged has not come into being, and, as a result, the strain upon the League and upon all the establishments of international government has been greater than they expected.
Two divergent philosophies of internationalism have been precipitated. The one, adhering to the Wilsonian view, looks for progress by the repeal of obstructions in the international economy. The other, attaching itself to the idea of self-determination in economic affairs, looks for progress through highly organized international bargains and arrangements. Thus there is a party of international laissez-faire and of the old-fashioned liberalism; there is another party of international management, of politically planned relationships, which draws its inspiration at once from nationalism and from socialism.
The conversion of Great Britain to protection constituted a severe, if not a final, setback to the liberal internationalism of the Wilson era. It is now safe to predict that during the next decade the problem of adjusting nationalistic economies in a world economy will become the chief preoccupation of students of foreign affairs. For it is as certain as anything can be in such complex matters that the democracies mean to bring their economic arrangements under management and control, and that they will not, at least until they have tried the experiment, submit to what they regard as the awful hazards of laissez-faire. The democracies are in search of economic security and of some richer utilization of the potentialities of modern technology. They will attempt to manage and to plan. This means that they will enormously increase the scope of government and greatly intensify the dependence of the individual upon government.
As a consequence the subject matter of diplomacy will be correspondingly expanded, and a host of things which in the nineteenth century were left to the action of markets and to private trading will be arranged through diplomats. The older questions of frontiers and empires and strategic advantage will no doubt remain, and will be affected by the newer questions arising out of the effort to manage the commerce of the world. But the chief preoccupation will be with the attempt to manage politically the division of labor in the world economy. Of that prospect the commercial policy of Soviet Russia on the one hand and the imperial negotiations at Ottawa on the other are, it would seem, a sure indication.
It need hardly be said that the demands upon statesmanship will be complex beyond anything in human experience. For difficult as it is to manage human affairs on even the smallest scale, the modern world is so international that, if the people wish to plan and manage at all, they are inexorably bound to plan and manage within the limits of the whole world.