U.S. Won’t Let Japan Inc. Get Moving Again
Japan’s current problems are not primarily economic but political. It has the most catastrophically incompetent government of any advanced industrial democracy, a legacy of its Cold War role as a satellite of the United States. Throughout Japan’s decade of slow growth, the United States criticized the Japanese government for mismanaging its economy, arguing that the prominent role Japan gives the state in shaping the nation’s economic destiny is what was causing Japan’s problems. However, the evidence suggests precisely the opposite.
Japan in recent years was not overregulated but underregulated, and its capacity to formulate good policies and implement them was undercut by political factors. The country’s problems began in the late 1980s when the Ministry of Finance exercised weak or nonexistent supervision over its chief clients, the banks, in their irresponsible lending to speculators. Japan’s subsequent failure to undertake serious reforms during the 1990s was because vested interests emasculated the economic bureaucracy’s ability to change policy.
The intent of U.S. criticism was to discredit alternatives to the American model and thereby provide a sound ideological foundation for further pursuit of an American-dominated liberal democratic order. U.S. ideologues ignore cultural orientations that make the purpose of capitalism in many East Asian countries different from that of serving only the short-term interests of shareholders. They also wildly overstate the attractiveness of the American model. As John Gray, a professor at the London School of Economics, puts it, “The claim of the United States to be a model for the world is accepted by no other country. The costs of American economic success include levels of social division--of crime, incarceration, racial and ethnic conflict and family and community breakdown--that no European or Asian culture will tolerate.”
The actual problem in Japan is political. The political party that has in one form or another reigned over the country since 1949 has become merely preservative, as well as corrupt and incompetent. Its old role as an anti-communist bastion and a formal cover for technocratic rule by the state bureaucracy is no longer relevant. But the Americans love it. The Liberal Democratic Party is the only Japanese political party sufficiently indifferent to the suffering and humiliation of the Okinawans (and other Japanese living near the 91 U.S. military bases in Japan) to act as the United States’ agent within the country.
What is needed for Japan and for all of East Asia is an end to U.S. hegemony, the development of a political system in Japan that actually brings genuine leaders to power and the restoration of industrial policy to its proper place in the society that pioneered and perfected its use.
Japan may tinker with its interest rates and with overcoming its crisis through government-created inflation. But it will only come into its own as a major nation when it has a legitimate and popularly supported government. Such a government would not be frightened by the enrichment of other areas of East Asia and would try to assist their further development. But Japan is a political satellite of the United States. It operates under U.S. military and economic hegemony, which significantly limits its range of options, including its ability to adjust to and profit from the trends toward peaceful commerce in China and the peace initiatives on the Korean peninsula undertaken by the Koreans themselves. Therefore, such a government is nowhere on the horizon, and the prognosis for peace and stability, given trends in the current U.S. government, is bleak.
