Not Just Another Recession
Why the Global Economy May Never Be the Same
Even before the Nixon Doctrine was enunciated in the summer of 1969, the international power alignments in East Asia had already been undergoing a fundamental change. The phenomenal growth of Japanese industrial might was clearly making itself felt throughout the world. The polite Japanese did not have to force themselves to be querulous in compelling the world to sit up and take notice of this new Asian industrial state. Their economy was enough of a "miracle" to attract everyone's attention. Indeed, they did everything in their power to belittle their own economic achievement. It was the prodigious yearly jump in their international trade surplus which advertised their truly embarrassing riches almost against their wish.
It is an interesting fact of world history that this conclusive demonstration of explosive Japanese economic power has coincided in the United States with the budding mood of self-doubt caused largely by its inability to win a decisive military victory in Vietnam.
The changing international power configuration affecting Asia, however, was not entirely due to Japan's remarkable economic growth, nor was it wholly explainable in terms of the relative decline of American economic and military power. To be sure, the principal damage inflicted upon the United States by the Vietnamese war was economic. The deteriorating balance of international trade and the domestic inflation has been among the most significant liabilities of the frustrating war in Indochina. But the Vietnamese war was destined to have a much wider significance than the economic difficulty for the United States. It signified in essence the end of the cold war. The United States suddenly discovered itself deprived of the loyal support of most of its allies for the first time since 1945. The cold war, which had been characterized by bipolar power alignments with strong intra-bloc cohesion, was definitely coming to an end by the time the U.S. involvement in the Vietnam war was reaching its climax.
The fact that most of the West European allies not only refused to coöperate with the United States in its anti-communist war, but often harshly criticized it for its involvement there, was as much an indication of the innate political pluralism of the West as a reaction to the damaged monolithic unity of the East. The increasing restiveness among the NATO members was in fact a reflection of the impaired bloc solidarity of the communist world. Just as America was afflicted with de Gaulle's France, so did Russia have her own Mao's China. As the Sino-Soviet conflict steadily and ominously intensified, the impression of communist disunity, and even of fragmentation, has grown so strong as to render the dissension and frictions among the Western allies quite insignificant by comparison.
Even as late as 1967 when China appeared to be tearing herself apart in an ideological frenzy called the Great Cultural Revolution, the world refused to take the Sino-Soviet disputes very seriously. China was still considered a protégé of the Soviet Union, without whose patronage China could hardly sustain herself as an autonomous political entity. Quite a few observers in the non-communist world were deeply skeptical of the ability of the communist régime to govern the most populous state with one of the oldest political cultures on earth. The predominance of the Soviet Union in what appeared to be a monolithic bloc so overshadowed this gigantic Asian experiment in Marxism that the Cultural Revolution seemed to be yet another proof of the political incompetence of the Chinese communist élites in the absence of close Soviet tutelage. But then, in a year or two, the same combination of events in the much intensified form of a Sino-Soviet border war and gradual restoration of domestic order in China gave evidence not only of the viability of the Chinese communist system but its resilience in the face of hostile pressure from the second most powerful nation on this planet. The result was the greatly enhanced stature of communist China in the world power arena. It became no longer realistic to ignore the régime on the Chinese mainland which appeared solidly in power both domestically and internationally. The sudden willingness on the part of the Chinese communist élites to claim their place in the international community only expedited the process of recognition of the nation's political stature by non-communist states which were relieved to find her willing to coexist with them. The political and economic advantages to be derived from their interaction with China were of course quickly perceived by the new members of the Peking fan club.
In the global power strategy of the United States, the advantages to be gained by establishing some form of rapprochement with communist China were simply too many and too great to be ignored. Aside from the immediate sense of relief resulting from any reduction in the tension built up during the past two decades between the two countries, any leverage which the United States might derive from the rapprochement with communist China in its dealings with the Soviet Union and Japan was certainly welcome. If some measure of "checks and balances" were to inhibit Russian adventurism and expansionism in the Middle East, the Indian Ocean and Latin America, an attempt at improved relations with communist China would be such a sensible and wise proposition as to require no special justification. The speed with which the Four Powers in Europe could reach an agreement on Berlin since the announcement of the projected trip of President Nixon to Peking seems to bear out the practical advantages of a new Sino-American détente. As the Soviet Union expects that tension with communist China will increase in the future, in no small part as a result of Washington's approach to Peking, it would be most imprudent for Russia not to secure her European front as soon as possible. A moderate amount of Sino-Soviet tension and hostility plainly helps the United States by making the Soviet Union, the one power which possesses the actual resources to pose a serious military threat, much more tractable.
On the other hand, it is equally apparent that a full-scale war between the two communist giants would not be in the interest of the United States. The destruction of communist China as a serious rival of the Soviet Union and the absorption of the one by the other would so undermine U.S. security interests as to be utterly unacceptable. This is, of course, not to mention the risk of a global nuclear holocaust such a war would entail.
Ever since the beginning of 1970, there has gradually emerged a noticeable tendency in communist China's foreign policy toward wider contacts with the non-communist world. Treading as it did on the heels of the Cultural Revolution, the world was at first skeptical of China's new affability. Inasmuch as the conventional ideological rhetoric persisted, it was all the more difficult for the world to grasp China's real intentions. Moreover, the predominance of the People's Liberation Army in the period subsequent to the Cultural Revolution further contributed to the world skepticism. But the army seems to have been persuaded of the value of friendly public opinion, especially in the non-communist world. It was not difficult for the Chinese élites, for example, to comprehend that a timely public statement by the U.S. Secretary of State that the Sino-Soviet war was not in the interests of the United States would be worth a few dozen army divisions on its side against Russia. This was especially true in the face of a perennial Chinese fear of tacit American acquiescence, if not outright collusion, in a Soviet military subjugation of China.
In the case of the Vietnamese war the value of public opinion in the non- communist world sympathetic to communist North Vietnam has been fully demonstrated, this time against the United States. What has frustrated a decisive military victory by the United States in Indochina has not been its military inferiority but hostile public opinion at home and on the part of its European allies. Had the Indochinese war taken place a century ago with a similar disparity in military might, no one would have had any difficulty in predicting a quick and decisive military victory for the United States over North Vietnam.
The growth of Japanese economic power, on the other hand, has signaled a need for constructing an international order that would permit room for Japan to play a more independent and influential role. Japan has come to chafe increasingly in the role of a military base for the United States on the far side of the Pacific Ocean. The seemingly unlimited access to the U.S. domestic market enjoyed by Japan for the past two decades and a half has suddenly turned into an economic nightmare for the United States. A generous giver of economic aid and a promoter of free trade has turned into a disadvantaged champion fighting with one arm tied behind his back against a strong challenger. There is now serious economic competition, if not war, across the Pacific Ocean. The United States clearly intends either to blunt the thrust of the Japanese economic challenge or to divert it to other markets of the world. From now on, Japan will be more on her own in the international power arena as well as the economic market. She will have to do her share of maintaining "checks and balances" against the major powers of the world, including the United States.
But the United States cannot help but wish that Japan would do most of the checking and balancing against communist China and the Soviet Union while those two Asian neighbors would in turn check and balance Japan. They could surely take more of the brunt of Japanese economic expansion by granting Japan more access to their natural resources and markets.
Faced with this prospect, the Soviet Union is perhaps more ready than China to play the game of checks and balances against Japan. It has more power and, perhaps, more self-discipline. It feels powerful enough, and therefore confident enough, not only to withstand the Japanese challenge but also to profit by coöperating with Japan economically. At a minimum, the Soviet Union wishes to prevent Japan from amalgamating her prodigious managerial skills and scientific technologies with the vast labor pool of mainland China. More immediately, the Soviet Union desires to draw Japan away from China, keeping the two Asian powers checking and balancing each other as much as possible. The more pressure there is on communist China from Japan, the less pressure there will be on the Soviet Union from China and Japan. Ideally, Russia would find it most advantageous if America, Japan and communist China-all three-checked and balanced one another rather furiously, affording her the greatest room for man?uvrability.
Logical, and even mechanical, elegance is the virtue as well as the vice of an international balance-of-power system. If the game is played with cool rationality and chivalrous gallantry, it could even become a gentlemanly sport. Unfortunately, international balance-of-power games have not always been played with finesse and sportsmanship. This has been especially true in the case of the three powers immediately surrounding the Korean peninsula. At the turn of the present century, even without the modern complications of differing ideologies, one could not easily find a combination of three nations with more dissimilar cultural and political backgrounds and yet with such a singular identity of political purpose. Superficially, China and Japan shared the same Confucian culture and common racial characteristics. But in many ways Japan has had more in common with Europe than with China. Perhaps this dissimilarity is more obvious to the Asian eye than to the European. The difference between China and Japan is best typified by the greatly differing manners in which the two cultures have responded to the imperialistic Occident. The uniqueness of Russian culture, on the other hand, needs no elaboration here.
It is essentially the lack of a cultural consensus as to the acceptable mode in which the balance of power is to be maintained among the Asian powers (the Soviet Union, China and Japan) that makes the prospect of international peace and stability in East Asia rather bleak. In order for a delicate and sophisticated game such as that of the balance of power to be played with a reasonably satisfactory result for the players as well as the spectators, the players must have a set of rules on which there is some common agreement. If there is no consensus on the validity of the rules and no willingness to abide by them, a game would invariably deteriorate into a "dirty fight." Even within the so-called Western state system which had taken centuries to work out a set of commonly accepted practices, the game has broken down often enough to bring despair to lovers of peace.
But the members of the Western state system have had much more in common in terms of history and culture than the three Asian powers. International law, which has been considered a salvation by many, is also a set of authoritative decisions that has grown out of the power interactions among the members of the Western state system. It is enough to point out that two of the three Asian powers are not particularly willing to respect this system of law either by virtue of their ideology or ethnocentric worldview.
The Asian powers, however, have several things in common. Aside from their geographic proximity, they are united in their suspicion and fear of one another. During the past century, each has had reasons to denounce the aggressiveness and malevolence of the other. The Japanese have difficulty in forgiving the Russians for their entrance into World War II in its last days in violation of their nonaggression pact of 1941. On the other hand, Chinese and Russians see no need to condone Japan's militaristic rampage on the Asian continent. The Sino-Soviet border disputes, of course, still continue.
It is the sad fate of Korea to be stuck in the midst of these three powers, continuously victimized by their dehumanizing and destructive violence. One hears Japanese describe the Korean peninsula as a dagger pointed at Japan's heart or a pistol aimed at her head. At the same time, Chinese and Russians regard it as a bridge over which Japanese militarism has exploded all over the Asian continent Thus, the peninsula has always been described as a chronic source of international conflict and military violence. And yet, Korea by herself has never been a threat to anyone. She becomes a threatening dagger or pistol aimed at Japan only if she falls into the hands of China or Russia. By the same token, it is as a bridge for the Japanese military that Korea has been a menace to China or Russia. The Korean people have never threatened their neighbors; they have always wished merely to be left alone. Indeed, it was her smallness and military weakness that made her a source of trouble in East Asia at the beginning of the present century. Korea was a threat to world peace 70 years ago because of her thorough-going pacifism and aversion to military violence.
Korea's big neighbors attempted to neutralize the threat posed by others by each securing for itself a predominance there. Each of the three endeavored to keep the other two out while consolidating its own paramountcy there. The disadvantage of this approach to Asian peace was that paramountcy was attainable only at the cost of war, with devastating consequences for the inhabitants of the peninsula. But, however preposterous such an approach to Asian peace may sound today, it was precisely the approach adopted successfully by Japan with American public approval under President Theodore Roosevelt. Korea's colonization by Japan in 1910 after five years of protectorateship was justified in terms of world peace and a more stable order in East Asia. This was "the final solution" of the Korean question- the elimination of a Korea which was not powerful enough to defend her independence by placing her firmly under Japanese imperialist rule. By letting herself become a perennial battleground for her powerful neighbors, Korea courted her own political demise as an independent nation. Korea was no more to be a source of violence and international disorder. But having turned Korea into a "bridge," Japanese militarism soon went to work to transform the worst of Chinese and Russian fears into a reality.
Not that other approaches to peace never occurred to Koreans. International neutrality was the first to be tried and as a result Korea was ravaged by the guns and the bayonets of her neighbors. Unless a state has sufficient military capability to guarantee its own neutrality, its neutrality is entirely at the mercy of its more powerful neighbors. Inasmuch as the ambition of Korea's neighbors was to secure supremacy in Korea to the exclusion of others, a declaration of neutrality was simply ignored whenever they decided to contest each other's claim by force of arms. As soon as Japan fancied that the influence of either China or Russia in Korea was becoming "excessive," she undertook to counteract it by increasing her own influence. This in turn triggered counteractions by China and Russia, giving rise to a spiral of intervention and conflict.
On the other hand, being separated by a body of water from Korea, Japan constantly felt herself at a strategic disadvantage vis-à-vis China and Russia, who had overland access to the peninsula. In order to compensate for this disadvantage, Japan endeavored to have some prior foothold on the peninsula. China and Russia, of course, were not inclined to recognize such a prior foothold as legitimate.
Another approach tried by Koreans with equally disastrous consequences to themselves was the dangerous game of playing the three powers off against one another. The failure to play this age-old game with any degree of finesse may have been due to an innate clumsiness of the Korean people. But the real reason seems to have been again the weakness of the Korean polity. The game only intensified the mutual distrust and belligerence among the three powers and encouraged the fear that Korea might at any time undermine the position of one in the peninsula by snuggling up to one of the others.
Moreover, the game helped Koreans to earn a reputation among their neighbors for being tricky and deceitful, thus reinforcing their desire to extinguish Korea's political independence. Having learned the truth the hard way-that political weakness is an international sin and that power politics as played by a nation which lacks power is at best international treachery and at worst an invitation to political calamity-Koreans are not likely to get their fingers burned again by indulging in the games of neutrality, big-power rivalry or neighborly protection.
What, then, is the Korean approach to political survival and peace in East Asia? The first principle is Korea's nonalignment, especially in the military sense, with any of the three immediately surrounding powers. This principle is easier to expound than to practice. There is no question that Korea must maintain normal and amicable relations with all three of her neighbors. This is essential for her survival and for peace in East Asia. But a strong alignment with any one of them would immediately be interpreted as inimical by the other two. Intensification of tension and hostility would promptly follow. Korea would again become a source of instability and war.
A very important corollary of this principle of Korea's non-alignment with the Asian powers is her very close special relationship to the United States. To put it more bluntly, a close alignment with the United States is the only practicable way for Korea to remain nonaligned with any of her immediate neighbors.
When Korea was first drawn very reluctantly into the international power process in the last quarter of the nineteenth century, she immediately found herself relying on the United States as a power that could give her leverage against her neighbors. The United States was unique in that it was far enough away from Korea to have a friendly relationship, relatively free of tension and strain, between the two countries, but was involved enough in the Asian affairs to be a Pacific power. Korea was too small to be a threat to the United States while the latter had no territorial interest in the Korean peninsula. These qualities enabled
Koreans to use the United States as a means to break out of the suffocating geopolitical encirclement by the three Asian powers. The United States was in an ideal position to play the role of peacemaker, or referee, on the Korean peninsula, keeping the Asian powers from coming to blows.
But America at the turn of the present century had her own reason for declining the role of referee on the peninsula. She had good reasons to fear involvement in Asian power politics, one of the most important being her territorial interest in the Philippines at the time. By cultural heritage and ethnic inclination, the United States wished to keep Asia at a cautious distance. Even the role of referee, if played too aggressively, could embroil the United States in Asian conflicts especially when there was no consensual acceptance of such a role by the Asian powers. When America, upon the cessation of the Russo-Japanese War, threw her weight behind Japanese hegemony in Korea, the subsequent fate of Korea and Asian peace seemed authoritatively settled.
It is not necessary to describe the train of events that led to the division of the Korean peninsula into two zones of military occupation at the end of the Pacific war and the subsequent U.S. involvement in the Korean War under the aegis of the United Nations. In the two decades following the Korean War, the United States has played the role of an opponent of one of the Asian powers, communist China. Now the United States is endeavoring to redefine the Asian power structure as well as its own role in it.
It is in the interests of the United States and of Asian peace that the United States now accept the role of an active referee on the Korean peninsula. It is clear that a new set of rules of the game for the Asian power balance must be hammered out with active American participation. And it should not be difficult for the United States to persuade the Asian powers to accept its new role of referee.
It is a stark reality of Asian power politics that China and Russia would prefer the American presence on the Korean peninsula to the Japanese. Given a choice between Japanese militarism and American militarism, the Chinese and Russians would choose the latter any time. On the other hand, the American troops on Korean soil are there as much for the defense of Japan as for the Republic of Korea and the United States. The Chinese communist élites are realistic enough to know that the American military presence in South Korea is in fact impeding the pace of Japanese rearmament by giving the Japanese people a greater sense of security from the continental powers. Chou Enlai must realize that one sure way to speed up Japanese remilitarization is to have the American troops in South Korea withdrawn precipitously.
Moreover, if the U.S. role of referee is to be effective, it has to endow its presence in South Korea with realistic components of military power and wealth. To be sure, the military strength need not be great, and substitution is possible between the two components. It is not a mindless exhibition of paranoia on the part of communist China to denounce Japanese militarism for having already gained a foothold in the Republic of Korea in view of the fact of the rapidly diminishing American military presence there and the outstripping of the American economic presence by the Japanese. It is one thing for China to be wary of American presence in South Korea but it is entirely another to be confronted with a Japanese economic ascendancy which completely dwarfs the American economic interests in the peninsula. If any country should insist that American troops remain on the Korean soil, it should be communist China.
If the U.S. presence in South Korea, even in the present form of 42,000 troops, were to be a protective and impartial shield for each of the three Asian powers against the aggressive intentions of the other two, the Asian powers should be willing to accept the American role for the sake of peace in Asia. There seems to be no other alternative. The strategic importance of an independent and stable Korea for Asian peace cannot be overemphasized. A peaceful Korea is a linchpin for a stable Asian balance of power. The Asian powers are all too preoccupied with relative power advantages on the Korean peninsula to leave the linchpin alone. Only the United States has enough detached interest in South Korea to help keep the linchpin functioning properly.
One of the highest policy objectives of the Republic of Korea today is the prevention of another war on the Korean peninsula. It is on the basis of this objective that the Republic of Korea has been working toward the easing of tensions with her three big neighbors. She has been willing to risk the formalization of the division of the nation by taking the initiative in contacts with North Korea in spite of North Korea's continuing revolutionary commitment to its "war of national liberation" and military provocations. She has made it very clear that, if the only means for achieving national reunification is another fratricidal war on the Korean peninsula, she is prepared to defer national reunification indefinitely. This has involved a serious political sacrifice on the part of the Republic of Korea because the issue of national reunification is such a nationalistic imperative that any appearance of procrastination in trying to achieve it is liable to provoke charges of national betrayal. But she is convinced that the only legitimate, or even "patriotic," means for reunification is a peaceful one. She has publicly renounced force as an instrument of national reunification.
Given the revolutionary commitment of North Korea in its "war of fatherland liberation," the policy of peaceful unification of the Republic of Korea has put her on the defensive against the North. But it has been a consistent foreign policy of the Republic of Korea during the past decade to ensure peace on the Korean peninsula by deterring North Korea's war of national liberation. Every foreign policy move of the Republic of Korea has been designed so as to pressure North Korea into abandoning its avowed method of war. From her stand on the involvement of the United Nations to the Red Cross negotiations, the policies of the Republic of Korea have aimed to increase the prospect of peace on the peninsula.
It is sincerely hoped that the United States will be coldly realistic in redefining its participation in the newly emerging power equilibrium in East Asia. It is understandable that the United States does not wish to be a belligerent again in that part of the world. But its desire for peace in East Asia cannot be fulfilled by retreating completely from Asia. America is a Pacific power regardless of her desires. Whatever happens in East Asia is bound to affect her immediately and profoundly. A war there would be brought to America against her wish. Therefore, whatever form U.S. participation in the East Asian power balance may take, it must be for the sake of increasing the probability for peace.
The chances for peace in East Asia, however, will be diminished without American involvement in South Korea as a force to keep Korea's neighbors from warring against one another. If the newly emerging power system which must revolve around the Korean peninsula is to maintain itself, the participants must come to an agreement on the common rules of the game within which the participant roles are defined. Unless the United States succeeds in convincing the other three participants to consent to its role as a referee on the Korean peninsula, neither the power balance nor peace in East Asia is a realistic possibility.