America’s China Policy Is Not Working
The Dangers of a Broad Decoupling
IF HISTORY does not repeat itself closely enough to allow us to predict the future, at least it gives some useful hints. Japan in 1868 was a country with no political, military or industrial strength. By 1905 she had become the strongest power in eastern Asia largely because it had suited the United Kingdom and the United States to encourage her development. Already in 1900, Captain Mahan, in a book entitled "The Problem of Asia," had proposed the coöperation of four sea Powers, namely the United States, the United Kingdom, Germany and Japan, for the protection of Asiatic sovereignties against Russian land power, arguing that by the annexation of the Philippines the United States was irrevocably committed in Asia. Events have strangely distorted his international picture and cast doubts upon his strategic concepts. They have not, however, entirely destroyed his general theory of world politics, which would seem to justify a belief that the future choice of Japan between peace and war may be determined less by her form of government and her industrial strength than by the general distribution of power in the world during the next decade or so.
It looks as if the discussion of the future treatment of Japan at the forthcoming Peace Conference will deal chiefly with political and economic controls designed to prevent her from developing the will and the strength to make war. These are desirable ends. But it is worth while to examine whether they can be attained by the methods now proposed.
The problem of the future treatment of Japan attracts little public attention, or at any rate causes little public concern, because the comparatively untroubled course of events in Japan since the surrender has been in striking contrast with the melancholy tale of disagreement and failure in Germany. This is a natural result of the unified control exercised with such remarkable success by the Supreme Commander for the Allied Powers, and also -- it should be recognized -- of the sensible behavior of the Japanese themselves. Moreover, the Far Eastern Commission, the Allied body charged with formulating policy for the control of Japan under the terms of surrender, has preserved a fair degree of harmony. This may be ascribed not only to its terms of reference (which in effect leave the last word on disputed matters to the United States Government), but also to a disposition on the part of its members to approve the main lines of American policy because they recognize that America must carry the main burden of the task of occupation.
These circumstances are obviously favorable to a smoothly running execution of occupation policy; and it is agreed that satisfactory progress has so far been made towards the main objectives of the occupation period. The disarmament of Japan is complete. A new constitution has been promulgated. Elections have been held under universal adult suffrage. Some progress has been made in planning educational reform. Trade unions have been freely constituted and are playing a part in domestic politics. Steps have been taken towards economic reform aimed at ensuring (in the words of the Basic Policy statement approved by the Far Eastern Commission) "a wide and just distribution of income and the ownership of the means of production and trade."
Nobody can raise serious objection to these measures, for, though it is possible to say, according to taste, that they have gone too far or not far enough, they are clearly on sound general lines. But they are at best only preliminary measures; and what is of real and lasting importance is not what happens under artificial conditions of military occupation but what is likely to happen when allied controls are relaxed or removed and Japan regains freedom of action. The work so far done has been in the nature of clearing away the débris of Japan's shattered political and economic structure, preparing a site and sketching out foundations for a new edifice. But it is the Japanese themselves who will have to plan and build.
The Peace Treaty when it is concluded will no doubt provide for some measure of continuing control or supervision of Japan, so as to ensure performance of the obligations which will be laid upon her. But, whether such control be loose or rigid, the Japanese will have regained their independence. They must observe certain rules, they will be subject to certain restrictions, but substantially they will be their own masters and responsible for the conduct of their own affairs. Indeed, it is probable that the period of tutelage will be short, since in practice a system of divided responsibility is at best inefficient and at worst tends to become unworkable.
What the Allies want, above all, is assurance that Japan will not renew her expansionist policy in the Far East. They would like to feel that she will, within the next decade or so, develop such a form of government as will prevent the concentration of power in the hands of an ambitious and warlike group. In other words, they would like the Japanese people to become unwilling to go to war. But they evidently -- and rightly -- do not regard a democratic form of government as a complete safeguard, and therefore they would like the Japanese people to be unable as well as unwilling to go to war. This combination would make an ideal form of insurance against trouble, and it is useful to consider whether it is feasible.
An attempt to discover how nations are led into war by their rulers raises all kinds of difficult questions which are philosophical rather than political. There is no fixed correlation between forms of government and pacific behavior. Democratic states have often been unprepared for war; but that is not the same thing as being against war if war seems necessary. They have often been reluctant to make war; but that has not prevented them from taking a view of their national interest resulting in war. There have been occasions in the history of modern democratic states when the party in office followed a warlike policy which would perhaps not have been adopted had the opposition party been in power -- as, for instance, in the Boer War and the Spanish-American War. Nevertheless, those wars were fought, and fought by democratic states against the wish of a minority but with substantial popular approval. The decisive factors were not the opinions of the public at the time, but previous and gradual developments of foreign policy to which it had not paid attention.
If this reasoning is correct, it would seem that the most we can hope for, if we wish to diminish as far as possible a disposition on the part of the Japanese people to make war, is a government which will not be able easily to persuade them that war will serve their national interests. Such a government would not necessarily be democratic in form, though it might be so in essence. Consequently, it should be the business of the Allied Powers to concern themselves with the realities rather than the appearances of government in Japan; and of those realities the actual condition and temper of the Japanese people will be a most important component. It is true that in 1941 the political institutions of Japan were such as to favor the rise to power of a small, militaristic group; but they were, all the same, not such as to prevent the defeat of that group by an anti-war party had it been sufficiently numerous and determined. It would be a mistake to suppose that the Japanese people were driven into war only because they had no voice in public affairs. It was a much less simple situation than that, as can be seen from the fact that even today most Japanese blame their leaders of 1941 not for making war, but for getting them into a war they could not win.
This, of course, is not an argument against encouraging the Japanese to build up democratic institutions. It is only an argument against counting upon the adoption of such institutions, especially their adoption under even gentle pressure, as a means of preventing war. The western democracies would not be true to themselves if they did not recommend their own political beliefs and practices, but they would be unwise to assume that these can easily be transplanted into foreign soil. There are signs that many Japanese are now enjoying and appreciating a new freedom, and it is possible that they will know how to make good use of it. Yet there are reasons to doubt whether they, or indeed any people who have an ancient social and intellectual tradition of their own, can assimilate political lessons given to them by foreign teachers. Perhaps they, of all Asiatic peoples, are the most likely material for the ambitious experiment in democratization which is now taking place; but these heady doctrines can stimulate without nourishing, so that in Japan, as elsewhere in Asia, it is likely that the form of government ultimately developed will be something which only superficially resembles its western model.
If we cannot be sure of making the Japanese people unwilling to go to war, can we be sure of making them unable to go to war? Here we are on fairly solid ground, because today the conditions of warfare are such that only a highly industrialized state can be a principal in any but small, localized hostilities.
Japan's economic position is extremely weak. She has been disarmed and demilitarized, her industries have been severely damaged by war and may be further reduced by reparations. Her financial position is desperate. It is difficult to see how she can by her own unaided efforts build up her resources even to a modest standard, while an industrial output which would permit her to make war must be out of the question for as long a time as can reasonably be foreseen. It may be objected that Germany, on her knees in 1918, became a formidable industrial and military power within 20 years. That is so, but the cases of Japan and Germany are not comparable. Germany had land frontiers, across which she could draw strength from contiguous states. The economy of Europe was dependent even after 1918 upon the existence of a prosperous Germany, or at least it was so regarded by the victorious Powers, who therefore handsomely subsidized German recovery and condoned breaches of the so-called Versailles Diktat. But the economy of eastern Asia is not dependent upon a prosperous Japan,[i] though a rehabilitated Japan could probably make important contributions to the economic progress of Asiatic countries. Moreover, the damage done to Japan's economy by the recent war and its sequels is far greater than the damage done to Germany in 1914-1918. That portion of her industrial equipment which survived bombing is to a large extent in poor condition or out-of-date. Her merchant fleet has been mostly destroyed. Her capital resources in the form of foreign investments were used up in the war effort, or are earmarked for reparations or occupation costs. More important still, she has lost her overseas possessions and the valuable commercial footholds which she had gained on the Asiatic mainland, as well as the strategic bases which enabled her to carry on war in the Pacific. The only resources she has left are the undamaged portion of her industry and the skill and diligence of her people. The immediate problem is not how Japan can be prevented from developing a high war potential, but how she can support her population.
By 1950 the population of Japan will be about 80,000,000 as against 70,000,000 in 1936 and 64,000,000 in 1930. Even before the war Japan was obliged to import nearly 20 percent of her total consumption of staple foodstuffs, and these had to be paid for by exports of manufactured goods. But Japan has practically no domestic supplies of the raw materials needed by modern industries, so that in addition to food she had to obtain those materials abroad, also by exporting manufactured goods. In other words, she depended for her subsistence upon foreign trade, and she could sell the required volume of exports only by keeping their prices low, which meant that she must keep manufacturing efficiency up and wages down. In these respects she gained, especially in the years between 1930 and 1937, a considerable success. This success was due, of course, to the intense effort made by the leaders of Japanese industry and trade and to the competitive advantage of low wage costs. In the years under discussion, Japan also received some temporary benefit from a fall in the world prices of raw materials and other fortuitous circumstances which she was quick to utilize. But what chiefly enabled her to balance her foreign trade was her economic relationship with her colonies and Manchuria. To trade with these was not the same as to trade with foreign countries. They were in the yen currency area, and, though the rice, sugar, soya beans, minerals and other essential supplies which she drew from Korea, Formosa and Manchuria had to be paid for in money or in goods, these remained within areas over which Japan retained both economic and political control.[ii]
It will be seen that in the years between 1931 and 1938 (after which her economy was distorted by war and preparation for war) Japan depended for the maintenance of her position in international trade upon factors which are no longer present, namely the possession of colonies and economic satellites, a large body of foreign investments, a stock of gold and annual earnings in foreign exchange derived chiefly from the services of her large merchant marine. All these advantages have been lost. None of them is likely to be regained in sufficient degree to permit of restoring her economic life to the level which it had reached in 1941, except with foreign assistance.
Various estimates have been made of the amount of goods which will be needed to support the population of Japan at a given level of consumption in a selected year after the conclusion of the Peace Treaty, and on the basis of those estimates the necessary amount of imports and exports has been calculated. Such computations must be largely theoretical, since they contain a number of unknowns and variables. But they are of interest in that even the most optimistic of them show that, far from being able to build up her economy to a level approaching that of 1941, Japan will have difficulty in supporting a population of 80,000,000 (the estimated figure for 1950) at a standard of living comparable to that of 1930 -- which was a depression year when the great advances in production and trade of the ensuing decade had not yet begun.[iii] Even that standard can be reached only if other conditions are favorable -- that is to say, if world trade quickly revives, if Japanese exports can find markets, if they can be sold at prices which will produce an adequate return in imported food and raw materials, if industrial equipment and other capital goods do not need to be imported in quantity, and if domestic problems of administration, finance and production are adequately handled.
All these are doubtful assumptions, but even if we suppose that they can be realized there is still no way in which Japan can build up her industrial strength beyond the 1931 level unless she receives assistance from outside. If she receives such assistance in future, then it will be the duty of the parties to the Peace Treaty to see that it is not such in kind or in quantity as to permit Japan to make preparations for war or other aggressive action. Only foreign aid can make possible a dangerous revival of expansionist policies in Japan. It is pertinent to recall here that Japan could not have acquired the political and industrial strength which enabled her to make war in 1941 if she had not received from other countries considerable financial help and some moral support at intervals during her career as a modern state. Her government was able to raise important foreign loans in America and Europe from the time of the Russo-Japanese war, and the funds which she thus obtained were applied to redressing her always precarious balance of trade. Without them her industrial development would have moved at a slower speed, and possibly on sounder lines; while the Anglo-Japanese alliance and the friendly attitude of the United States, if they did not encourage, certainly did not check the expansion of Japan in the early twentieth century.
Such considerations lead one to conclude that, from the point of view of security, the actions of the Allied Powers will be, in the future as in the past, no less important than the nature of the government of Japan and the level of Japanese industry. Indeed, it is easy to conceive of situations where a weak democratic government and a low level of industry might drive Japan into undesirable courses. The strength or weakness of the government is a matter which the Allies cannot hope to arrange to their own collective or individual taste, but they are in a position to influence Japan's economic development. The question therefore arises whether it will be to their advantage to raise rather than lower the level of industry in Japan.
If it is true that Japan cannot without assistance regain her position as a first-class industrial Power, it is reasonable to assume that for a long time she cannot play the rôle of a principal actor in international politics. She must remain a satellite, dependent upon a single strong Power or a strong group of Powers, since she has not strength enough in herself for true independence, and her strategic situation will scarcely allow her to be neutral. She must sooner or later decide into which zone of power she will enter; and all present indications are that she will choose to remain within the zone of the United States. That is a political situation which would probably be approved with few or no reserves by a majority of the Allied Powers. But a weak and hungry satellite or protégé is a liability and not an asset; so that the United States, not only from a long-term viewpoint but also by reason of its current responsibilities as the major occupying Power, is faced with the problem of rebuilding the economy of Japan to a level where she can support herself without being a menace to peace in the Far East. This is a difficult and delicate problem, and it is no wonder that the United States Government has displayed a certain hesitation in attacking it.
In the early months of the occupation all energies were concentrated upon the political education of Japan and economic questions were neglected, or at least treated as of secondary importance. A year later an economic "crisis" was discerned in a condition of affairs which had been present and obvious from the day of surrender. Decisions were then taken by the United States Government as to the economic future of Japan which were scarcely consistent with previous trends of policy. Governments must be praised, not blamed, for revising their plans in the light of experience, especially in these days when the world picture changes with such dizzy speed; but the results of second thoughts are sometimes a little surprising. No decision as to the level of the economic life of Japan had been reached by the Far Eastern Commission, nor had the United States Government given a definite lead until May 1947, when the Commission had been sitting for more than a year. Then Mr. Dean Acheson, at that time Under Secretary of State, announced that in order to promote world recovery it was necessary "to push ahead with the reconstruction of those two great workshops of Europe and Asia -- Germany and Japan."
Not all the Allied Powers will fully approve of this aim, in so far as it concerns Japan. Most of them will agree that Japan must be put on her feet again and, in the words of the Potsdam Declaration, "permitted to maintain such industries as will sustain her economy but not those which would enable her to rearm." But the declaration does not say what level of economy, and there is room for argument on this point. Evidently an economy that did not furnish sufficient food for her increasing population (and would concurrently not provide sufficient employment) would not encourage democratic institutions and a peaceable outlook. It would throw a burden of relief upon the Allied Powers which none of them is prepared to shoulder. The United States is already spending large sums upon food for Japan, but cannot be expected to continue such disbursements indefinitely. It is clear that the economy must be raised to a level where Japan can support herself at a tolerable standard of living. But what is a tolerable standard? Can it be reached without permitting Japan to retain assets which her victors had counted upon as reparations? Can Japan engage in profitable foreign trade without a sizeable merchant marine? Must she be assisted, perhaps by American credits, to find export markets for her manufactures which compete with the exports of some of the Allies who have suffered at her hands? Is it possible, without checking legitimate growth, to guard against the development of war industries in Japan by imposing controls on the use of a few selected strategic materials? And, finally, is it really possible to plan the economy of Japan for a future which is obscure, or shall it be left to take its own course on the assumption that the Allied Powers will not put their faith in automatic safety devices but will exercise vigilance and determination when those qualities are most needed?
These are questions which will be asked at the Peace Conference and which the American delegate may find it difficult to answer to the satisfaction of all his colleagues. For it cannot be denied that, if Japan is to become once more the workshop of Asia, she cannot be permanently held at a fixed level of production and trade. She must be permitted, sooner or later, an economy capable of expansion.
If that is what American policy involves, then the Allies will hope for some assurance on points which cause them misgivings. Those who are exercised about Japanese commercial competition can argue with some force that, if the Japanese economy is to be encouraged to expand, it will in its early stages be tied to the American economy, because it must be supported by American credits or investments. In that case it is not easy to see how, with the best of intentions, some discrimination against the commercial interests of other allied countries can be avoided if the "workshop of Asia" policy is pursued to extremes. Allied countries will be entitled to ask that consideration be given at least to the short-run competitive position of those whose need for rehabilitation is in some ways not less urgent than that of Japan and not less important to world recovery. A case in point is that of the United Kingdom, whose economic recovery might well be retarded by a too liberally assisted development of the Japanese textile industry and merchant shipping; but other allies are in a similar position.
As to the problem of security, most of the Allies will agree that Japan is not likely to regain substantial military strength. General MacArthur is reported to have said that she cannot become a military power for a century. Allowing for picturesque speech, this judgment is no doubt authoritative and correct. But it leaves out of account an important contingency, because if Japan is to be liberally assisted to rebuild her industry and trade one cannot exclude the possibility that in course of time she will be able to exercise an economic dominance over surrounding areas. This is not the same thing as military power, but it is a step on the way. Perhaps this risk is small, as the writer of this essay is inclined to believe; but it cannot be entirely disregarded.
If the issues to be settled at the Peace Conference were purely economic, it would not be difficult to reach a compromise which, while providing adequately for the needs of Japan, would take into account the misgivings suggested above. But the issues will not be purely economic. They never are. Strategic considerations will be present in the mind of all those around the Conference table, though they may not figure on the agenda.
[i] By Japan here is meant Japan proper, not the former Japanese Empire and its puppets.
[ii] It may be objected that in future Japan will be able to trade profitably with these areas, though she will have lost political control. That is true, but their economies will no longer be fashioned to serve Japanese interests. Thus, to take a simple example, Japan could formerly pay for her import surplus from Formosa by dividends and interest from Japanese-owned investments in Formosa, and where these were insufficient she balanced her payments by the sale of Japanese bonds in Formosa. Similar, but not identical, conditions characterized her economic relations with Korea and Manchuria.
[iii] The Far Eastern Commission, in a policy decision issued early in 1947, defined the peaceful needs of Japan as the standard of living for the period 1930-1934. This would be a rather higher level than that of 1931.