Blinded by the Sun

Looking at the Sun: The Rise of the New East Asian Economic and Political System, by James Fallows, New York: Pantheon Books, 517 pages, $25.00

Japanophobia: The Myth of the Invincible Japanese, by Bill Emmott, New York: Times Books, 261 pages, $25.00

Ever since Matthew Perry's first contact with Japan almost 150 years ago, the United States has been remarkably ambivalent toward the Land of the Rising Sun. As Japan has adapted and mastered elements of Western civilization ranging from wearing tuxedos to manufacturing high-tech consumer goods, we have been at turns flattered and fearful.

Over the past 25 years or so, as Japan emerged as the most ferocious--and ostensibly unstoppable--Asian economic tiger, Americans have been particularly edgy on commercial grounds, worried that the Japanese shred U.S. businesses like so much raw meat. James Fallows's Looking at the Sun and Bill Emmott's Japanophobia represent the latest additions to the long-running debate about Japan and American economic policy. Although neither book is exhaustive, each takes a provocative position on the Japanese experience and its relevance for other countries.

Fallows, the Washington editor of The Atlantic Monthly, is a prominent member of what's known as the "revisionist school of thought on Japan. Although their views differ in significant ways, all of the revisionists agree on a fundamental premise: Japan is radically different from Western nations. Hence, they argue, it is a serious mistake to try to understand Japan in terms of American social, economic, and political history.

In part, the revisionist movement was a legitimate reaction to the naive and condescending postwar American perceptions of the Japanese as simply junior Americans who were gratefully and diligently absorbing the gift of our tutelage in democracy. Revisionist writers have focused on the ways in which the underlying reality of Japanese life differs from both surface appearances and American expectations.

Scholar Chalmers Johnson, for example, in his MITI and the Japanese Miracle (1982), traced the continuities between pre- and postwar Japan, not only in specific government policies but in organizational functions and even in the actual individuals who held positions of power. Dutch journalist Karel van Wolferen's The Enigma of Japanese Power (1989) explored in detail the web of corruption underlying Japanese party politics; the nearly autonomous, self-perpetuating bureaucracy that lies behind the facade of parliamentary democracy; and the complex of beliefs and attitudes among the Japanese people that makes the whole mess so resistant to reform.

For all of its insights, the revisionist movement would have been of purely academic interest were it not for the coincidence of two developments: the meteoric rise of Japan's economy in the years since the war and the apparent stagnation of the American economy in the post-Vietnam era. Revisionists have responded with both a diagnosis and a prescription for our own economic malaise. Japan, they argue, is guided by a world view that sees economics as merely a tool of national strength, while America clings to a false religion of neoclassical economic theory. Japan's system works stunningly well, while ours falters. Indeed, Japan literally feeds off of our blind adherence to such outdated concepts as "consumer welfare," "free trade," and "global allocative efficiency." If America is to have any hope of thwarting Japan's rise to global politico-economic leadership, proclaim the revisionists, it too must adopt a protectionist trade policy and an interventionist domestic industrial policy.

Looking at the Sun stands on these familiar revisionist foundations but, in its hemispheric reach and conceptual pretensions, is an altogether more ambitious effort than even van Wolferen's quasi-encyclopedic Enigma. Fallows argues that East Asia, with Japan at the lead, has evolved a form of political economy that is systematically more effective than a free-market approach at producing sustained economic growth and the geopolitical power that eventually follows.

Seeking the source of Asia's success, Fallows locates the roots of the "new Asian system" in old-style mercantilism. He draws on the writings of the early 19th-century German political economist Friedrich List, repeating the familiar litany of what's wrong with free- market, or "Anglo-American," economics. It encourages consumption today at the expense of productive capacity tomorrow and indulges individuals at the expense of the community and the national interest, says Fallows. Above all, it's totally unrealistic as an account of the way the world works. Every nation that has enjoyed a period of global dominance achieved it via interventionist policies.

Eager to apply the coup de grace to the free-market position, Fallows adds a new twist to the old arguments. Anglo-American economics is discredited, he asserts, because it fails the test of history, the test of theory, and the test of current experience.

The free-market position fails the test of history, says Fallows, because it does not explain how England and then America rose to power (both Britain and America, after all, violated free-market precepts routinely). It also fails the test of theory because it "do[es] not explain how one country can take a lead over others in technology or productivity" (the mathematical models of modern economics tell us only about the efficient use of resources at hand, not how new ones are created). And it fails the test of current experience because it cannot explain why Asian economies have grown faster than any others in the last generation (something the Asians themselves proclaim, now that they've emerged from America's shadow and have developed the self-confidence to speak for themselves).

All three of these "failures" amount to the same argument, which has two parts. The first is indeed a historical point. No nation that has risen to economic and political leadership followed a pure laissez-faire policy. Unfortunately for Fallows's argument, neither has any other nation. If "Anglo-American economics" explains too little, Listian mercantilism explains too much. Why did England and America rise to power, how do some countries take a lead over others in technology, and why have Asian economies grown faster than any others if governments of other countries intervened as much or more? To claim that the winners simply did it better is to beg the question of why--and of whether apparent successes can be reproduced elsewhere.

Fallows himself characterizes France, for example, as operating "a Japanese-style dirigiste system without the social control." Yet not only is America not swimming in French cars and VCRs, but the French government is hobbled by the financial wreckage of its subsidized "national champions." Perhaps then it's really the social control that accounts for East Asia's success? "The most successful Asian societies are, in different ways, fundamentally more repressive than America and most of Europe are," writes Fallows, "and their repression has so far been a key to their economic success."

Yet Fallows cannot bring himself to carry his own logic to its natural conclusion. His liberal sensibilities take over, and he beats a hasty retreat: "The Asian model is not 'superior' in any sweeping sense. After all, it is more confining for individuals. It has so far proven inferior in generating new scientific knowledge and fostering lone creative talents and it is hard on the weak, minorities, and outsiders. It could not be applied in most Western countries, especially the United States." (Emphasis added.)

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