No Brakes, No Compass
Mini Teaser: LEON HOLLERMAN's preceding account of Japan's global strategy makes it easier to talk about what remains a conceptually elusive and controversial phenomenon: Japanese international power.
LEON HOLLERMAN's preceding account of Japan's global strategy makes it easier to talk about what remains a conceptually elusive and controversial phenomenon: Japanese international power. The ``headquarters nation'' idea explains much. The description of Japan's ``adversarial investment'' is timely since it has already become much more significant than what, five years ago, Peter Drucker very usefully defined as ``adversarial trade.'' Hollerman's account also prompts intriguing questions: What will Japan's ``outflanking strategy'' ultimately lead to? Does the campaign to create a global economic headquarters country constitute a viable policy? Is it the actual intention of Japan's political elite to run the world in times of peace? If so, can it be sure of the consent of the world, and especially of the United States?
Let us first make the reasonable assumption that the answer to the last question is no. A new set of questions then emerges: Are Japan's strategists gamblers? Are the members of Hollerman's ``collusive oligopoly'' accountable to anyone?
We can safely say that Japan's political elite includes very few gamblers. Many businessmen have observed that Japanese organizations are extremely risk-averse, and psychologists/anthropologists have been struck by the degree to which Japanese in charge of anything try to cater for every calculable contingency. My own observations confirm that the unpredictable scares the Japanese to an extraordinary extent.
The current situation, marked by the uncertain aims and uncertain strength of the United States, puts real fear into some senior members of Japan's powerful officialdom and business world. I know this from private conversations with them. Of course, one remedy has been imaginatively to create Japanese certainties. Like some American political scientists, Japan's newly emerged ``techno-nationalists'' contrast America's industrial decline with Japan's socio-economic superiority, and postulate a new international power hierarchy determined by economic prowess rather than by the old-fashioned ``European-style'' political and military might. Populist politician Shintaro Ishihara has a third bestseller in the bookstores celebrating ``the Japan that can say no'' (to the United States, that is). One should consider, too, the possibility of a United States dependent on Japan. But while some informed Americans I have recently talked to have already concluded that Japan has ``won,'' the thinking members of the Japanese elite are much less sure. The commonly noticed arrogance of Japanese government and business administrators is to a significant degree a pose, hiding insecurity.
Hollerman correctly identifies Japan's ``passion for security'' as a main motive. The economic strategists of Japan--who plow their gains back into new investments for further conquests of foreign markets and systematically buy foreign assets on a massive scale, all without regard for medium-term profitability--are not in the business of business, but in the business of national security. They have a pathological fear of being victimized by circumstances they cannot control. A common Japanese term, higaisha ishiki (victimhood consciousness), reflects a diffuse but fairly strong sense that the world cannot be trusted and that Japan will always be a potential victim of capricious external forces. Japan's power-holders are products of a socio-political world that is not ultimately regulated by law and that lacks judicial means for solving conflicts. Nothing in their experience at home reassures them that international agreements or treaties can ultimately be trusted.
But since Japan's power-holders are not gamblers and cannot be sure that the United States will allow Japanese hegemony, why are they engaged in what frightened outsiders most easily, even if wrongly, identify as a conspiracy to conquer the world economically? They appear to be undermining their paramount aim.
Political Paralysis
IN MY BOOK, The Enigma of Japanese Power, I offered an answer that remains most convincing to me. What the members of Hollerman's collusive oligopoly have wrought is, in the final analysis, out of control. Answerability is indeed a crucial problem. This follows from the major defect of the Japanese state: the absence of a center of political accountability. The Japanese economic juggernaut has no brakes.
Which brings us to the difference between my analysis and Hollerman's. I distinguish administrative decisions, which involve adjustments to an existing policy, from political decisions, which introduce new commitments or major changes in the way a country orders its domestic affairs or relates to the rest of the world. Japan's administrators (government bureaucrats as well as the bureaucrats in the industrial federations, the financial institutions, and the corporate groupings) are among the world's most capable administrators. But like bureaucrats anywhere in the world, they can of necessity only be concerned with very limited areas of policy-making. What makes Japan special is the inability of its politicians to come up with the necessary political input, even when that would seem to serve the national interest.
A political system with a center of accountability can explain to other countries, to the people at home, and, not least, to itself what it is doing and why. In the process of doing so, it can adjust its actions or take new action to stave off disaster. Hollerman speaks of ``national interests'' and ``national goals'' as defined by a collusive oligopoly. But this oligopoly does not encompass or subordinate all entities that go into the running of a country. And within it there exists such conflict that it is not much good for anything that goes beyond the minimum for which it evolved: Japan's unlimited economic expansion. The concerted efforts of the government bureaucrats, the keiretsu companies, and the industrial associations are not subject to a well thought-out and responsibly administered national policy that includes safeguards preventing the expansionary campaign from undermining its own aims of greater security for Japan. Once one understands this defect, one sees that appeals by the United States and other countries to ``Japan's'' better judgment and ``Japan's'' sense of shared interests are wasted. In that sense, there is no Japan.
Problems of effective political control over forces unbridled by legal sanction have plagued Japan ever since the passing of the Meiji oligarchy at the beginning of this century. Neither the Japanese prime minister nor his cabinet is given the mandate, in practical terms, to make decisions that are binding on all the components of the Japanese power system. Whereas individual Japanese must answer for their deeds and omissions to the organizations they belong to, the larger of these organizations are not, for all practical purposes (as distinct from ritualistic ones), accountable to any other. And, contrary to what many Westerners have been led to believe, Japan does not run on ``consensus'' any more than other countries.
Japan's best bureaucrats have phenomenal memories and, as Hollerman demonstrates, a very well-developed ability to draw advantage from new and unexpected circumstances. But they are only expected to use this intelligence for the benefit of their own organizations. They are not trained to transcend, in their thinking, the interests of their own ministry, [mdit]keiretsu[med] company, or industrial federation. If they are personally concerned about the national interest, they cannot translate such thinking into effective action because their institutions are geared only to think ultimately of themselves, and because if they breach convention they will be considered bad officials. The result is that members of Japan's political elite permanently confuse Japan's national interest with the prosperity and perpetuation of their own organizations.
ILLUSTRATIONS of the resulting political paralysis are plentiful. The best recent example is Tokyo's weak response to the Gulf Crisis. Ministry of Foreign Affairs officials, who told the prime minister in early August that he could not go on his scheduled trip to the Middle East because ``Japan had not made up its mind yet,'' saw only the threat of ``amateurish'' encroachments on their territory. Ministry of Finance officials, who openly wrangled in the following six weeks about the proper level of Japan's financial contribution, focused only on the reputation they had to lose as the guardians of the national budget. Opposition Diet members gleefully seized upon the opportunity to embarrass the government, something they must do every few years to remind the public that they still exist. No Japanese can rise above this discord in the way that Western heads of state can and frequently do in times of crisis. It must be noted that the average politically aware Japanese initially showed a genuine sense of embarrassment--even shame--over Tokyo's inept response.
Two months into the crisis, rationalizations emerged for inaction. Americans were told by the Japanese consul general in New York, Masamichi Hanabusa, that in Japanese opinion, whoever controlled the Middle East would have to sell oil. Japan's business leaders privately boasted that Japan could afford the price any dictator would demand. This line was quietly encouraged by the bureaucracy. One should not be deceived by what officials claim is Japanese opinion. The explanations conveyed not so much a positive belief behind purposeful inaction as a defensive justification hiding incapacity.
A popular explanation for Tokyo's near inaction compares it with the behavior of the United States half a century ago. At that time the United States was already a dominating economic power but was hesitant to become deeply involved in world affairs. Japanologist Ezra Vogel of Harvard, who holds this view, believes that the next international crisis will not find Tokyo so unprepared or uncertain. But this misses the point. We are dealing not with unwillingness to get involved, not with inexperience, not with power-holders of limited talents, not with intellectual or--as some Westerners believe--moral shortcomings. We are faced with the fact that, ultimately, bureaucrats on their own cannot run countries. If the next international crisis closely resembles the Gulf Crisis, there is a chance that Tokyo will be prepared for it. But a political nerve center that can respond to events and crises whose characteristics are unpredictable does not now exist.
A case in which there cannot be any suspicion of egoism illustrates this perhaps even better. In the beginning of 1990, Gorbachev indicated that he was ready for a deal concerning the Kurile islands--the disputed territory that has been an obstacle to the signing of a Japan-Soviet peace treaty. But the possibility for a major diplomatic advance was never explored seriously. There was no discussion, no coordination, nothing to ensure that Japan would get maximum advantage out of Gorbachev's initiative. Japan's government agencies were paralyzed in this as much as they were in the Gulf Crisis.
The Economic Juggernaut
THE ABSENCE of a center of political accountability, on the one hand, and the concerted efforts of the economic bureaucracies and corporations described by Hollerman, on the other, do not contradict each other. Instead, the single-minded devotion to the policy of unlimited economic expansion seemed to camouflage the malfunctioning of Japan's political system. Hollerman's ``collusive oligopoly'' is an acceptable term for the mainspring of Japanese economic power, and is certainly not at odds with my descriptions of it. But what it labels does not constitute a ``summit of the Japanese pyramid,'' as Hollerman maintains, and his examples of central decision-making do not disprove my thesis.
Aside from its relentless economic growth--which has long ceased to have a positive effect on the quality of Japanese life--Japan is drifting. The ``policy change'' of 1973 was not much of a policy change because ``the separation of economics from politics,'' in the phrase of Japan's officialdom, was (and is) less a separation than a subordination of the latter to the former. The shift from ``export promotion'' to ``import promotion'' in foreign trade that Hollerman mentions was little more than an administrative endorsement of an existing trend, to a large extent exploited for public relations purposes. Similarly, the liberalization of the Foreign Exchange Law in 1980 was well within the realm of politically unmediated bureaucratic decisions.
Hollerman's headquarters nation, striving to maximize its control over the world's economy, is the most recent outcome of Japan's politics of economic power that began with the rebuilding of its war-devastated industry. Postwar reconstruction required no political discussion. It could be left to the bureaucrats, who performed skillfully. The occupation authorities, believing that bureaucrats were always servants of ruling politicians, inadvertently gave them greater power than they ever had before.
The strategy described by Hollerman emerged fairly spontaneously from policies that in their essence date from the 1950s. Nothing comparable to parliamentary discussions in the United States or Europe concerning the desirability of welfare statism, of curtailing corporate power, or other non-economic national priorities took place in the intervening period. Not long after 1955, when the Liberal Democratic Party was formed, politicians abdicated their responsibility for seriously thinking about the goals of the nation and the means of attaining them. One could say that postwar reconstruction never stopped, it just phased into unlimited economic growth without attracting anyone's attention. Further expansion was greatly aided by the extraordinary institutional memories of Japanese organizations, coupled with equally impressive institutional motivation. The collective sense of shared traditions, of quasi-sacred purpose, and of the need to impress society with the merit of the institution can only be compared to that of an elite military organization, such as the United States Marine Corps. The behavior of MITI, the Ministry of Finance, or the Keidanren must be seen in this perspective, with their activities that affect overseas markets complementing each other quite naturally.
As Japan's political elite single-mindedly pursued economic expansion, all the other things that countries are normally concerned with were subordinated to the expansionary goals of the oligopoly, or were not properly looked after. Education is a good example: the schools cater to immediate industrial/bureaucratic needs in a way no other country, to my knowledge, has managed to arrange.
Japan has almost no independent foreign policy, beyond the purpose of helping to provide optimum international conditions for economic expansion. The recent vast expansion of Japanese economic power in Southeast Asia is beginning to be accompanied by an effort to supply alternative non-Western viewpoints to Asians, in line with Japanese bureaucratic preoccupations. But Tokyo's international initiatives--mainly concentrated in the ``peace-making'' sphere--are in practically every case gratuitous and will stop at the point where genuine commitments require adjustments by the stronger semi-autonomous domestic power groups.
The Ministry of Foreign Affairs contains some first-class diplomats, but they tend to be highly frustrated, as their organization is to all intents and purposes a public relations agency. Currently, one of its main tasks is to help prevent Americans from taking a second good look at Japan, lest Washington revise what is still, after all, an indulgent approach to Japan.
Japan's extraordinary position in the world has been made possible by the United States. There exists no historical precedent for their bilateral relationship as it evolved after the occupation. For forty-five years now, the United States has protected Japanese interests, as defined by Japan's administrators. Willingness to allow full-speed Japanese economic expansion at the expense of American industry has been especially beneficial. American policy-makers, blinkered by a powerful ideology of free trade that prevented them from understanding the nature of Japan's extraordinary growth, created opportunities that Japanese planners were quick to exploit. The United States has continuously provided a protective diplomatic and strategic shield. All those things by which a state is externally recognized--diplomatic efforts, strategic-military efforts, and even the diplomacy safeguarding economic advantage--were carried out by American proxy.
Japan's dependence on the United States can hardly be exaggerated. The protective shield made it unnecessary for the power-holders in Tokyo to worry much about their weakness in crisis management, which results from inherent disunity and pervasive mistrust among the clusters that share power. Because of American protection, Tokyo has never been required to get involved in intricate international power acrobatics for the sake of its de facto policy of unlimited economic expansion. The recent, popular argument that the relationship is in good shape because the United States and Japan see eye to eye on most foreign policy objectives betrays historical ignorance. Japanese acceptance of American foreign policy cues has been an essential part of the bilateral arrangement throughout the postwar period. The significance of the Japanese contribution to the Gulf effort, when it was finally settled on, was that it was aimed at nothing more than maintaining good relations with the United States. During the entire crisis one could hardly ever detect a sign, in official pronouncements or in serious media commentary, that anyone in Japan was thinking of the events as having a direct bearing on Japan's national interest (this, despite the fact that Japan's industry is more dependent on Middle Eastern oil than is that of any other). To the extent that a discussion took place at all, it was cast in terms of what Japan should do to keep an annoyingly demanding American president satisfied.
Japan's impairing of the industrial strength and its risking of the goodwill of the power on which it is so dependent is therefore all the more frightening a spectacle.
The Poverty of Japanology
WITH JAPAN becoming an increasingly intrusive power, the world faces a force it cannot readily understand, a force whose nature has so far defied enlightened discussion. Part of the problem here is the lack of a proper vocabulary with which to discuss it. What Japan represents internationally, what it has done economically, and what it appears to be doing now--for none of these can we rely on precedents to guide our thinking and language.
Japan obviously constitutes prodigious political might. The frequently heard question as to when it is going to play a major political role is ill conceived. Japan may be all but invisible diplomatically, but its power to cripple entire industrial sectors in other countries, its power over the international financial system, and the role of headquarters nation it is already playing for the rapidly growing ``subcontracted'' economies of Southeast Asia are political factors of the first order. The problems between Japan and its trading partners are political problems, since neither market forces nor special economic measures will make them disappear. They are problems requiring political solutions, and if these are not forthcoming, they will eventually cause political crises.
Twice this century, American resolve rescued the world from what most likely would have been utter political calamity. The United States is now a puzzled bystander, as Hollerman aptly puts it, and does not understand what is happening. Americans find it difficult to accept the notion that corporations can be motivated for long periods by a drive other than that of maximizing profits. In the meantime the American industrial base is very seriously threatened, with major losses being virtually irretrievable. To take only one example: by abandoning general consumer electronics--no longer profitable as a result of years of Japanese dumping on a massive scale--American industry has wounded itself in many places. Even if Detroit, or a part of it, can be saved, between one third and one half of the value of the cars it will produce in the near future will come from imported electronics. Moving back into abandoned sectors, once they become profitable again, is possible according to nineteenth-century economic theory; but in practice the barriers to reentry are prohibitively high.
The destruction of the American industrial base is not only bad for the United States, it is bad for the world. Theories of a global, borderless economy and of economic interdependence only console those who seem unaware of the political forces at play. The jubilation, as American industries close down, of highly ideological partisans of laissez faire, who see in this the wonderful work of market forces, creating ever greater efficiency and benefits for consumers, is witness to the poverty of the conceptual apparatus with which these developments are regarded.
The threats earlier in this century to freedom and independence were more easily visible. And even though there was disagreement as to the true nature of the communist menace, we used a widely shared vocabulary that possessed the strength to engage the imagination. We do not have such a vocabulary to deal with the force that Japan represents, a force certainly not under control of the Japanese people, or--and here I do differ with Hollerman--their administrators.
Japan adds a volume roughly equal to the entire GNP of France to its economy every four and a half years. Tokyo cannot satisfactorily explain to other countries where it thinks this will ultimately lead and cannot dissipate international doubts about Japanese motives. Japanese power-holders cannot explain where they stand on some concrete world problems that others consider most urgent, and they appear paralyzed when others expect action. They cannot make clear what they hope to do when Japan passes the United States as the largest economic power in the world, which at the current rate of expansion may happen around the turn of the century. The combination of incredible economic might with apparent indifference to the well-being of the world is becoming one of the main sources of international tension and conflict. But political scientists, with few exceptions, do not ask the proper questions with regard to this Japanese force because they are misled by the appearance that it is an economic subject.
The discrepancy between Japan as a world power and its diplomatic invisibility is not new. Indeed, one would think that the stubborn persistence of this discrepancy would have caused Japanologists to look more seriously into the possible causes, especially after the three or four years during which Japanese representatives have, at the annual summit meetings and other international forums, repeatedly assured everyone that Japan is ready to take on a broader and more responsible role. The explanations with reference to interwar America or an alleged inexperience are not convincing and fly in the face of history; Japan's diplomacy of the Meiji period demonstrated that it needed no decades of experience to be effective.
Economists, by and large, have ignored crucial Japanese phenomena when these do not fit the conventional categories of their conceptual world. The dominant school of academic economics accepts the axiom that a successful economy must be based on free market principles. Strengthened in this belief by the official demise of Soviet-type command economies, most economists have also missed the fact that it is possible to have interwoven public and private sectors and to have an effective economy at the same time.
Serious attention to actual (as distinct from formal) institutional links would force economists to acknowledge structural incompatibilities between the Japanese and Western economic systems. The conventional separation of private and public sectors has become close to irrelevant in Japan, at least where large corporations are concerned. The entire system thrives on a continuous exchange of political protection, enabling devotion by individual firms to shared long-range goals. The market in this setting plays an ordering role, but is rarely allowed to determine ultimate economic outcomes. (If it did, we would regularly have industrial and banking crises, because underneath their political protection many of Japan's manufacturers and financial institutions have been at times, by Western standards, in very deep trouble).
A small detour is needed to put this into perspective. The political underpinnings of postwar economic organization represent a significant shift when compared with Japanese economic organization earlier this century. In the 1920s the Japanese economy was almost a model of laissez faire when compared with what emerged after the war. This change came about gradually as a result of the demise of genuine entrepreneurialism, the subordination of the profit motive during the militarist period, bureaucratic visions of a New Economic Order dating from the late 1930s, bureaucratic experiences with economic experiments in Japan's Manchurian colony, and organizational and financial innovations in the war years. After 1945 new economic organizational centers for monitoring, coordinating, and guiding the manufacturing industries were formed by the same people who during the war had played important roles in the wartime cartels operating under government auspices. These organizations, the [mdit]Keidanren,[med] the [mdit]Nikkeiren,[med] and the [mdit]Keizai Doyukai,[med] took over from the prewar [mdit]zaibatsu[med] (industrial conglomerates controlled by holding companies) as centers of gravity for economic decision-making. Rather than representing private businesses, they were inspired, established, and shaped by bureaucrats, and they have functioned as solid connectors between the economic bureaucracy and the business hierarchy.
VERY IMPORTANT in the informal merger of the private and public sectors were two major organizational novelties. Hollerman mentions one that has recently received attention by the United States government in its negotiations with Japan: the keiretsu ``families'' of corporations. The keiretsu structures are collective safety nets for large individual firms operating in different industries. Through the pivotal keiretsu banks they almost always ensure success in the launching of new and higher value-added industrial pursuits. Formally glued together through large-scale cross-holding of stocks, the keiretsu companies own each other. Since no one is in charge of the keiretsu clusters, and no one is ultimately responsible for them, they remain sufficiently amorphous to facilitate bureaucratic interference.
Such interference is channeled through the other major innovation, consisting of a large number of overlapping, guild-like, and strongly hierarchical industrial federations that monitor, coordinate, and guide activities in every industrial sector. These industry-wide political entities enjoy strong extra-legal sanctioning powers over all the firms in a sector, because enforced membership entails obligatory conformity to unwritten rules limiting policy-making options.
The combination of these two institutions, the [mdit]keiretsu[med] and the industrial federations, sets the stage for tremendously effective informal control over economic processes. Even Hollerman appears to be insufficiently aware of this. He speaks of ``Japan, Disincorporated'' and ``Japan Reincorporated,'' postulating a phase of genuine economic liberalization in the 1970s and 1980s. I have always thought this to be a weakness in his otherwise admirable work, as I can only see a gradual--and even now ongoing--consolidation of informal power tying ``public'' and ``private'' sector administrators together.
The informal control is vital to Japanese postwar financing methods, arguably the single most important factor in creating the new type of international competitiveness that the bankruptcy-proof large Japanese companies have pioneered. These methods make periodic phases of very cheap to virtually costless capital possible.
Probably the single biggest factor fuelling the forced growth in the early stages of the economic ``miracle'' was a system of financing called overloan, whereby the [mdit]keiretsu[med] banks could increase their lending to the members of the corporate ``families'' without being required to have deposits with the central bank in proportion to these increases. For most of the postwar period, loans from and discounts with the central bank exceeded the deposits of the commercial banks. With the substitution of banks for the old zaibatsu holding companies, a network of inexhaustible financial pumps was established, whose survival was guaranteed by the central bank. Overloan is not practiced at the moment, but another even more audacious financing method took its place, reaching a peak in the late 1980s when it provided conditions for a vast expansion of investment capability.
Some ten years ago, Japan's administrators realized that together they commanded so much informal control that they could insulate a horrendous inflation in capital assets from the consumer economy. They set about to greatly increase Japan's asset base. In the beginning of fiscal 1987, all land in Japan was worth 2.4 times as much as all land in the United States, but at the end of that year it was worth 4.1 times as much (the United States is 25 times larger than Japan). In that same year, the increase in the nominal value of land and stocks was as great as the entire GNP plus a further two fifths of the GNP.
These stupendous additions to the paper wealth of Japan's large corporations (portrayed in the West as merely wild waves of speculation) were used as collateral, against which various financing methods were applied that reduced the real cost of capital for large firms to practically nothing. A very elaborate network of personal connections, whose members can be relied upon to behave predictably, props up money-manufacturing methods and prevents the kind of calamity that would be that method's inevitable result in any genuine market economy. The politics of Japanese economic power are extra-legal and take place beyond the scrutiny of external and impartial regulators. When Japan's financial power-holders are, as it were, exchanging blank checks with each other, no one is sounding the alarm. The Central Bank does not operate as a referee, as central banks do in the West; it is an informal participant in this successful endeavor.
The era of costless capital is over for the time being, and respected Western financial journalists have written crisis scenarios for Japan's equity and real estate markets. They are misinformed. Economic outcomes are still very much under the control of the Ministry of Finance, and if necessary it will create a scandal--such as the recent one engulfing the securities industry--in order to get its way. While the rest of the world desperately wants to believe that Japan is being punished like everyone else for fiscal irresponsibility, Japanese manufacturers have used the nearly costless capital of the late 1980s to invest in production capacity sufficient to give them a competitive advantage that will last well into the next century, even if such investment were to be substantially reduced today.
The Japanese Military
A MAIN characteristic of Japan's informal power system is that it needs to remain exclusionist, since the entry of a new, strong component would almost certainly throw it out of kilter. This should be foremost in one's mind when contemplating the military factor in Japan's future.
The Japanese military has, without many people noticing it, grown to be one of the biggest in the world (the fourth most expensive when measured by budget allocation), while those opposed to it on constitutional grounds pretend that it is a shadow that may be ignored. Only a very dramatic development--such as the reunification of the two Koreas, Korean possession of nuclear arms, or an open collision with the United States--could turn Japan into an unambiguous military power. But a potentially unstable Soviet Far East, the obviously diminished resolve of the United States to maintain a military presence in East Asia, and the resulting vulnerability of the sea lanes between Japan and the main suppliers of its energy, as well as the eventual death of Kim Il-sung (the major obstacle to Korean reunification) are bound at least to accelerate the growth of Japan's naval forces.
The big question is how a Japanese military, less shackled than it is now, would fit in. One possibility is an accommodation with the existing oligopoly, but the friction points in such a relationship would be numerous and it is doubtful that it could result in a stable arrangement. Officials in the Ministry of Finance have so far provided the most significant curb on the euphemistically named Self Defense Forces, but they would not be a match for it in an emergency. The problem is not that SDF leaders today give the impression of being power-hungry; the worry is about what future officers might on their own decide is in the national interest.
It is not only Japanese leftists who respond vehemently to suggestions of a fully rehabilitated military. Those high up in the components of the Japanese System recoil at the thought that they would have to accommodate yet another cluster of power, one possessing the means of physical coercion.
Probably few Japanese would be able to make their thinking on this point very clear, but many Japanese are subliminally aware that their nation must cope with a structural defect relating to political control. They believe that a Japanese military, fully legitimized and permitted to operate overseas, would be a potentially uncontrollable force. As it is, Japanese prime ministers do not have the practical power to control civilian agencies decisively; how could they be expected to bridle ambitious officers? Historically informed Japanese do not have much faith that postwar institutions will be better able to restrain a possibly rogue power element than in the 1930s, since the civilian control mechanism of today is not convincing.
There exists a good contemporary example of what a more self-assured military could be like in the way the police have in the past decade or so increased their gentle but formidable power to order people around. During events deemed to be accompanied by security risks (visits of an American or Korean president, summit meetings, the funeral of Emperor Hirohito, the enthronement of Emperor Akihito) the police have demonstrated that they can bring normal outdoor activity in most of the capital to a halt. Car searches for practice (even a month before the recent enthronement ceremonies) and picking up people whom the police consider potential troublemakers demonstrate police assertiveness. Significant in all this is that neither the prime minister nor anyone else can make the case that there is such a thing as overdoing it. The Japanese police force is essentially in charge of itself. And the fear that the same would be true of a strengthened military is well grounded.
Beyond Complacency
IT BENEFITS no one to postulate wicked motives on the part of Japanese power-holders. Japanese bureaucrats and the bureaucrat-businessmen of the industrial federations or the large corporate conglomerates are doing what is expected of them. This has created a dangerous situation only as a result of the structural defect in the overall control mechanism of the Japanese political system.
Considering what is at stake--perhaps the very way we will live in the next century--I think it is nothing short of scandalous that only a few Japanologists specializing in relevant areas have so far seriously studied the issues addressed here by Hollerman and me. Instead, the American academic community is engaged in heavy self-censorship regarding Japanese political and economic subjects. Seeing scholarly interpretations that can hardly be distinguished from what Tokyo's political elite produces for external consumption, one can only hope that the Japanese studies field will soon be enriched by an infusion of more discriminating minds.
Complacency, once merely unattractive, is now dangerous. If Hollerman and I are wrong, our arguments should be rebutted with information that can stand up to meticulous inspection, since those arguments are not conjured up out of thin air. Our kind of analysis should not be dismissed as ``Japan bashing'' or be met with accusations of ignorance, racism, or other unworthy motives.
If we are right, it would be fair to brand the willful ignorance of the administration in Washington as detrimental to American interests. It would also be fair to brand the editorial policies of authoritative publications like the Wall Street Journal and the Economist, conceptually blinkered as they are, as more than irresponsible. These policies help to bring about the very end that they seek to prevent: the collapse of the world's liberal capitalist order.
The Western countries need to recognize that international bodies such as the General Agreement on Tariffs and Trade are not equipped to cope with the global economic reality of the late twentieth century. And if prevention of world-wide protectionism be their goal they need to design a new multilateral arrangement, while taking the extraordinary factors described here into consideration. In the meantime, new conceptual tools are required to recognize that the Japanese economy is managed in a way incompatible with conventional assumptions of how economies can be run, and for constructing a modus vivendi ensuring continued amity between Japan and the Western countries.
Karel van Wolferen, the author of The Enigma of Japanese Power, has lived in Tokyo since the early 1960s.
Footnote 1: This system, which started to come into its own around 1957, was derived from a system of wartime financing for the manufacturers of war-related goods. Before the war the average rate of borrowed capital in Japan was comparable to postwar rates in Europe and the United States--that is, some 30 to 40 percent. But in the new order, until the late 1970s, major Japanese firms borrowed 80 percent or more of their capital from their [mdit]keiretsu[med] money pumps.
Footnote 2: Chalmers Johnson of the University of California, San Diego, is a major exception. The degree to which he is considered ``controversial'' indicates the strength of non-intellectual impediments in academia.
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