Antitrust and the Formation of the Postwar World
In a world fraught with geopolitical un-certainty, Japan is clumsily searching for a new political order. At the same time, it is trying to extract itself from a deep structural recession. Will these challenges produce a new political economy that gives greater weight to consumer interests, or will they merely reinforce Japan’s old mercantilism? Will Japan become a "normal" country and develop a military commensurate with its economic power, or will it continue to assert itself primarily through nonmilitary means? Will Japanese foreign policy continue deferring to the United States, or will Tokyo finally assert its leadership in East Asia?
These three books help readers better understand and anticipate the playing out of this saga. James Fallows spices a well-written synthesis of academic writings with perceptive personal observations and anecdotes based on his extensive travels in East Asia. Richard Samuels provides a masterful study of the Japanese arms and aircraft industries, analyzing the inter-relationship between military and civilian technology since the mid-nineteenth century. Finally, John Dower’s volume offers trenchant essays on the legacies of the Pacific War and the American occupation. In addition to traditional diplomatic and political history, it contains fascinating studies of wartime cinema, "atomic-bomb art," and racial stereotypes.
The strength of all three books is a framework built on three important historical themes, the Meiji Restoration, the Pacific War, and the U.S. occupation of Japan. These are the historical moments that have shaped much of modern Japan, and they are critical to any serious thinking about Japan’s ability to confront the challenges spread before it today.
KEEPING UP WITH THE WEST
The Meiji era laid the foundations of modern Japan, and so provides the first common thread for all three authors. After Commodore Matthew Perry forced Japan to open after 1853, a new oligarchy emerged to mobilize its people in an exploitative effort to "catch up" with the West and avoid external subjugation. The Meiji system provided an "organizing ethic," as Fallows calls it, in which national loyalty subsumed any debate about grand political goals. The Japanese people became subjects, not citizens. Workers and consumers got an artificially small portion of the national wealth, while industry’s share was inflated. This ethic, Fallows writes, "intensified a sense of separateness, rivalry, and victimization relative to Western powers, and of deserved supremacy relative to other nations in Asia."
Part of the system’s legacy was what Samuels calls "technonational" ideology, that is, the Japanese belief that technology is fundamental to national security. What makes Japan tick, then, is a deep sense of insecurity. Since the Meiji Restoration, if not before, the Japanese have been asked to make sacrifices to overcome the nation’s special vulnerabilities. Politics tends to be bounded within this ideological consensus and concerns itself primarily with struggles and bargains among an extraordinarily stable and self-sustaining bureaucratic, business, and political elite.
In Samuels’ analysis, this "cult of vulnerability" caused Japan to continue striving to catch up with the West even after it had already become one of the world’s leading technological powers. Both he and Fallows recognize that this emphasis on state-guided industrialization and technological autonomy is not necessarily unique to Japan; much of Japanese mercantilism has Western intellectual roots. What is exceptional, according to Samuels, is the emergence of an enduring, coherent set of beliefs that guide, or at least justify, this course.
Notwithstanding the dramatic changes that have taken place in Japan since the end of the nineteenth century, both Fallows and Samuels are correct in emphasizing the ethical and ideological continuity since the Meiji era. In their search for a national identity and international role in the post-Cold War world, the Japanese have indeed turned to popular histories about this period for guidance.
THE "USEFUL WAR"
The Pacific War provides a second key factor that fashioned Japan’s current system of state economic guidance. In fact, Dower refers to the conflict as the "useful war" since it consolidated Japan’s policy of economic mobilization on behalf of national goals. During the war, Japan experienced a "second industrial revolution." Capital and the banking structure were consolidated. Small- and medium-sized enterprises were integrated into subcontracting networks centered around large industrial conglomerates. And the industrial work force was stabilized through prohibitions on unauthorized job changes and a seniority-based wage system. Japan’s postwar economic dynamism, in Dower’s view, is an extension of its wartime mobilization.
Samuels, too, stresses the positive aspects of Japan’s military technonationalism. The nation stimulated its industrial growth. It gained institutions and practices for developing and diffusing national technologies. And it laid the foundations of Japan’s current commercial technonationalism. The only seeming tragedy was that after World War I militarists hijacked that system and drove it toward the wrong end.
This reading of history is troubling, however. Samuels fails to explain why the Japanese state was so vulnerable to fanatical military officers. He overlooks the fact that the close links between the commanding heights of Japanese industry and the military helped make politicians unable or unwilling to redirect the economy in more benign ways. The boundaries that the Meiji system had placed on meaningful political discourse precluded development of an effective mechanism to rein in the militarists once Japan started down its disastrous expansionist course.
Consequently, the reverse side of Japan’s transwar continuity is a widespread aversion to the military. The war years dissipated popular devotion to the "national polity." Dower, for example, reminds readers that the war exposed clear limits to national unity and purpose. Japan’s ineffective atomic bomb research underscored military factionalism and the state’s inability to mobilize its leading scientists. Government officials grew paranoid of leftist revolutionaries and disruptive social movements. And despite state efforts at labor mobilization, absenteeism spread as workers became increasingly exhausted, defeatist, and antigovernment. The shattering of private lives thus made the Japanese people especially receptive to pacifism.
Focusing on the "useful" features of military technonationalism and war overlooks the sharp critique of the "absolutist" state articulated by the Japanese themselves after 1945. They provided the intellectual underpinnings of the progressive opposition that challenged the elites who led their country into a devastating conflict. Although that opposition was eventually overpowered by conservative leaders who pursued industrial development with single-minded determination, it did restrain Japanese rearmament and prevent a wholesale dismantling of postwar democratic reforms. Western criticism of Japanese mercantilism too often highlights neoconservative arguments about the virtues of deregulation and free markets. But what may be more necessary in the future is a renewal of the social democratic tradition that is rooted in a condemnation of Japan’s imperial past.
TURNING OCCUPATION INTO VICTORY
The third theme is the impact of the American occupation and the nature of U.S.-Japanese relations. The discontinuities between prewar and postwar Japan are obvious: a new constitution enshrining popular sovereignty and a guarantee of civil rights, a repudiation of war, the shift from military to civilian technonationalism, land reform, and the rise of a vigorous political left and labor movement.
What is more striking, however, are the continuities. The Dower volume shows how America’s Cold War policy in Asia helped restore the power of Japan’s old guard. The key figure in this story is Yoshida Shigeru, the career diplomat who became Japan’s most influential postwar prime minister. He calculated in sober realpolitik terms that an alliance with the United States would give Japan the military security it needed to concentrate on economic reconstruction and growth. But, Dower notes, Yoshida was no liberal democrat. He was disdainful of parliamentary and electoral politics, and he welcomed America’s "reverse course" policies, which weakened and divided the political left and labor movement.
Yoshida’s critics have charged that his diplomatic stance prevented Japan from becoming a truly sovereign nation even after the U.S. occupation ended in 1952. Fallows sympathetically describes the quest of Japanese revisionists to overturn the so-called Yoshida doctrine by revising the postwar constitution and putting Japan on a more equal footing with the United States. In this analysis, Fallows does not consider Japan a "real country" because its foreign policy has merely followed the American lead, except to drag its feet when Japan’s economic interests have been at stake.
What Fallows fails to capture is the subtle shift in Japanese national strategy that took place in the late 1950s. Many Japanese revisionists recognized that the only way to increase Japan’s strategic influence was to work with Washington, not against it, and to use American pressure for a larger Japanese security role to promote Japan’s own rearmament. Likewise, Ozawa Ichiro, the key protagonist in Japan’s current political realignment, is now using similar American expectations about greater Japanese contributions to international security on behalf of his goal to transform Japan into a "normal country."
Fallows’ argument that "big issues" get ignored in Japanese politics misses a key feature of Japan during the Cold War. It was precisely because of the wide interparty divide over the very big issue of defense policy that Japan became so passive. Liberal Democrats embraced the security alliance with the United States and moderate rearmament through the Self-Defense Forces. The Socialists, on the other hand, insisted on a policy of unarmed neutrality and generally refused to side with the United States or even to accept the reality of the Cold War. Over time, this stubborn stance led to the left’s political marginalization. But insofar as the Socialists saw themselves as the guardians of postwar democracy and pacifism, the government was caught in an ideological stalemate that made it unable to pursue an active foreign policy.
Japanese mercantilism, too, was conditioned on the Cold War order promoted by the United States. Both Japan’s commitment to the American security system and its success as an economic model for the rest of Asia were vital to the U.S. containment strategy. The United States therefore not only provided for Japan’s security but also provided wide access to American markets and technology while tolerating Japanese protectionism and technonationalism. In short, Japan’s transwar political and economic system depended on a Pax Americana. Yoshida’s prudent realpolitik and the mobilizing imperative of "renovationist bureaucrats" thus melded in a truly comprehensive Japanese security strategy.
Samuels brilliantly dissects the operational details of that strategy. The Japanese adroitly converted their arms production to supply the U.S. military. American military procurements not only helped revive Japan’s defense industrial sector but also laid the groundwork for technological advances in the civilian sector. Yoshida’s decision to check the growth of his nation’s "military-industrial complex" gave Japan the best of all possible worlds. While gaining access to American technology and production techniques, Japan averted the inevitable economic distortions caused by an overbearing military.
The free flow of technology across the civilian and military sectors, via what Samuels calls "technology highways", enabled Japan not only to spin-off military technologies for commercial purposes but also to develop robust commercial technologies to "spin on" to the defense sector. By contrast, the U.S. preoccupation with the Soviet threat caused it to establish roadblocks between the military and civilian sectors. Over time, this practice put the United States at a disadvantage, causing military technologies to "spin away" without reaping commercial benefits.
CAN JAPAN CHANGE ITS SPOTS?
Can Japan’s unusual system endure? Each of these books makes passing reference to Japan’s future, but none contains an extended analysis of Japan’s current political realignment. On the political-military front, Dower predicts a constitutional revision that will focus on changing Article 9 to permit the "dispatch of fighting forces abroad under United Nations auspices." In fact, the end of the Cold War, the Persian Gulf War, and the North Korean nuclear program have already had the cumulative effect of steering Japan toward a reassessment of security policy. Japanese policy experts now openly debate the pros and cons of reinterpreting the constitution, and public opinion polls indicate a majority are receptive to the idea as well.
By joining forces with the Liberal Democratic Party and the New Harbinger Party to form a dovish coalition, the Social Democrats have finally acknowledged the constitutionality of the Self-Defense Forces. This shift does not necessarily mean that Japan will aspire to great power status in the traditional sense. It does, however, mean that the details of security policy will be publicly discussed in a less ideologically polarized context and that the Japanese electorate will be able to choose between viable alternatives. These developments still may not satisfy Fallows’ criteria for a "real country," but they are politically healthy.
Japan’s economic future is less clear. Fallows asks, but does not directly answer, whether an elected government can tame bureaucratic rule and whether electoral re-form will yield a more consumer-oriented democracy. Given his pervasive theme of historical continuity, Fallows no doubt believes that the obstacles are formidable, if not insurmountable. Samuels, too, seems skeptical about fundamental change in Japan. Any change in policy or institutions is likely to occur within the boundaries of technonationalism. For the foreseeable future, both authors are probably right. The current period of political fluidity is likely to strengthen, not weaken, bureaucratic power.
Observers who believe that Japan is undergoing a historic transformation refer to the economic pressures of yen appreciation, the aging population, the breakdown of lifetime employment, growing consumer interests, and increasing bureaucratic support for deregulation to improve efficiency. Those factors will certainly weaken the state’s ability to shape industrial policy. Indeed, the instruments of industrial policy have been declining since their heyday in the transwar period. But those developments will not weaken Japan as an economic competitor. If anything, they are likely to make it a more effective capitalist system. Relaxing regulatory measures will help weed out inefficient enterprises while providing opportunities for new ones. Those developments, moreover, are unlikely to dramatically open Japan to foreign businesses. Preferential trade and investment practices among Japanese firms will persist. Japanese companies will continue to mediate a large portion of imports to dampen economic and social dislocation. Japanese bureaucrats will continue to view technology as a long-term strategic asset. Technonationalism will survive.
JAPAN AS MODEL AND MENACE
More complex is Japan’s relationship with East Asia. Technonationalism has become the model of development and the foundation of an East Asian economic system. Fallows identifies a number of features of the Japanese model: a one-party political structure; the ability of technocrats to pursue economic policies free from political interference; the use of markets as a tool for industrial development while avoiding excessive competition; the mobilization of nationalism on behalf of economic development; the emphasis on the collective good rather than individual rights; a social bargain that favors producers and thereby preserves the social fabric; a stress on personal savings over consumption; and an educational system geared to making even the "worst-trained students competent."
Fallows sees Japan as the center of the Asian system. By controlling access to capital, intermediate goods, and technology, Japan has shaped East Asian development. It has constructed a hierarchical division of labor whereby Japan maintains the lead in the most high-tech aspects of production. While promoting interindustry trade with its Asian partners, it has discouraged intraindustry trade. In addition to its mammoth trade surplus with the United States, Japan has sizable trade surpluses with just about every East Asian economy except for China and Indonesia. The Japanese export of manufacturing equipment and intermediate goods in East Asia has in turn strengthened the export drive of those nations to the United States. America’s role in the region has been as a military counterweight, a Mecca for higher education, and the chief absorber of East Asian excess production.
While this system currently works for regional prosperity, East Asia’s long-term stability looks more troubling. Dower’s analysis of Japanese perceptions of "self and other" hints at the potential problems ahead. In the 1930s, Japanese notions of racial purity (and superiority) made its vision of a pan-Asian coprosperity sphere a sham. To the extent that those notions survive, East Asian countries will be loath to follow Japan’s lead, even as they depend on Japanese investment, aid, and technology. Moreover, regional economic integration inevitably means migration. The influx of non-Japanese Asians into Japan at a time when it is undergoing a structural economic adjustment could provoke a new xenophobic reaction.
Paradoxically, even in a global economy, Samuels still advocates technonationalism, arguing that nationality and national systems of innovation matter. He is optimistic that technonationalists can cooperate as well as compete. But technonationalism, especially its military-led variety, has dangerous potential if it spreads throughout East Asia. In many respects Chinese leaders, in their pursuit of a comprehensive security strategy, have already embraced the powerful slogan, "rich nation, strong army," just as Japan’s Meiji oligarchs did in a previous century. This trend raises disturbing questions for the future. Will it be possible to manage the rise of China as a technonationalistic power and avoid another Pacific War? To the extent that technology is power, how will the United States adjust to what Chalmers Johnson has called the inevitable "empowerment of Asia"?
What kind of policy should the United States pursue toward Japan? Japanese cooperation, says Fallows, is predicated on America’s economic and military preeminence. Rather than trying to remake Japan in America’s own image, Fallows stresses the importance of American revitalization. To this end, he favors adopting many features of the Japanese system, including a better education system, greater incentives to save, and self-conscious and deliberate industrial strategies. Rather than lecturing the Japanese about trade, the United States should pursue "specific, practical-minded arrangements."
Samuels similarly opposes condemning Japan for technonationalism. He calls on the United States to recognize the interdependence of its own military and commercial economies and to consolidate a "single industrial technology base." While recognizing the logic of these proposals, Dower understands that it would be just as difficult to remake the United States in Japan’s image as it would be to transform Japan. An effective "results oriented" trade policy and real tapping of Japan’s technological base will require Washington’s far greater use of American expertise on Japan. It also demands an accurate identification of the internal pressures (naiatsu) for economic liberalization with which Washington can coordinate its efforts to improve market access. At the same time, the United States must reinvigorate its economic investment in East Asia. This is the most effective way not only to increase American exports to the region but also to improve access to the Japanese market.
While reaffirming the value of the bilateral security alliance, the United States needs to define an appropriate division of labor. As Japan reassesses its security policy, U.S. expectations, whether actual or perceived, will be critical in that debate. The United States and Japan should cooperate immediately with the Republic of Korea to deal with the potential for rapid regime change (or even collapse) in North Korea and the construction of a stable security order after possible Korean reunification.
In the long term, the most critical task will be managing the rise of China. The United States has a vital interest in preventing the rise of a regional hegemon that will restrict American access to East Asia and use the region’s economic capabilities to challenge U.S. power. Any effort by China to reestablish some kind of Sinocentric order will certainly meet resistance not only from Japan but also from Korea and the Southeast Asian nations. But the notion that geopolitical rivalry between China and Japan will enhance America’s regional leverage is misguided. Such competition risks a spiraling arms race and military miscalculations. The resulting instability in East Asia would reduce U.S. economic opportunities and increase the need for American military intervention.
What is necessary is a two-pronged strategy. First, while maintaining a U.S. military presence in East Asia, Washington and Tokyo must take the lead in developing security institutions in both Northeast and Southeast Asia to promote "mutual reassurance measures," military transparency, and norms for resolving disputes by peaceful means. Although these initiatives should welcome the active involvement of all relevant states, they should not be retarded by the resistance of China or any other country. An uncooperative China would then face the prospect of a region-wide network to counter its aggressive behavior. Second, the United States and Japan should engage China directly on a variety of issues ranging from military deployments and exchanges to economic relations and human rights. The aim here would be to reassure China that institution-building is not designed to contain or isolate China but rather to make China a key partner in a regional community based on shared norms of national conduct.
These policies will require finesse and close coordination between Tokyo and Washington. Bilateral differences about the specifics of China policy will be inevitable. But the United States and Japan must not tempt China into playing the two allies off each other to maximize its own interests.
The Japanese are increasingly anxious about the uncertainties associated with multipolarity after the collapse of the Soviet Union. The maintenance of the U.S.-Japan security alliance, while critical, is no longer sufficient for reassuring Japan. Building regional security institutions will be indispensable for encouraging a more relaxed Japanese attitude about security and mitigating regional concerns about possible Japanese remilitarization.