Bulletin
N° 218
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___________________________________________________________________
15 December 2005
Dear Colleagues and Friends of CEIMSA,
The political economy of "globalization" has been the subject of
analyses for some time now. One perspective of this phenomenon that is
gaining
prestige in intellectual circles today is the view that economic
warfare is the
essence of this strategy of expanding the "free market system" to
every corner of the earth. Surplus value can be made, so the argument
goes, either by creating new consumer markets (often secured by the establishment of
nearby
military bases) or by sabotaging the nascent consumer markets
of
competing corporations (see Professor Noam Chomsky's
analysis of The
Marshall Plan in Western Europe, and Professor John Gerassi's essay on Latin American, "The
US Empire and the Death of Democracy").
According to the logic of these historical analyses, recent neo-liberal
OVER-EXPANSION in Asia was not a "mistake", but
rather can be recognized as a necessary investment for purposes
other
than immediate profits:, i.e. to destabilize
the
economies in regions which were being developed by corporate
competitors, thus
rendering it unprofitable for further investments. The economic chaos
caused by
the "pull-out" of massive U.S. investments in Thailand, Indonesia,
etc. in the late 1990s could be deemed a "success", and not a failure,
of the US-dominated IMF if the objective was not at all to
develop a
capitalist infrastructure in this region, but, on the contrary, to
prevent
further Japanese-Chinese corporate penetration into these potential
consumer
markets.
An examination of this hypothesis would bring forth several new questions . . .
.
Item A. is an essay by Professor Bertell Ollman (
Item B., sent to us by Grenoble Graduate student
in political science, Benoît Monange,
is an early article by Professor Gabriel Kolko on the
rise of the Asian capitalist bloc.
Item C. is a series of articles by economist Chalmers Johnson,
author of The Sorrows of Empire :
Militarism, Secrecy, and the End of the Republic, [The American Empire Project], on "How Western Financiers Caused the Asia
Crisis".
As usual, we invite CEIMSA readers to comment on the ideas
presented in
these discussions of the "Free Market Economy" and "Market
Socialism" in our era of “globalization".
Sincerely,
Francis McCollum Feeley
Professor of American Studies/
Director of Research
Université Stendhal-Grenoble III
http://www.ceimsa.org/
A.
from Bertell Ollman
Dialectical
Marxism
Market Economy:
Advantages and Disadvantages
(A Reply to Prof. Kang Ouyang's Article on
Marxist Philosophy in
by Bertell Ollman
(Talk at
We must all be thankful to Prof. Kang Ouyang for his
clear and concise summary of the main tendencies in Marxist philosophy
in
Considerations of space as well as my own limited familiarity with
China makes
a full evaluation of Kang's wide ranging article impossible, so I will
focus on
only one area, market socialism or what is often
referred to as
"socialism with Chinese characteristics", which is also the area that
I know best. My choice can also be justified on the grounds that this
is the
subject on which the new generation of Chinese scholars have made their
most
distinctive contribution and for which they are best known outside
A market economy has seven main characteristics: l) people buy what
they want,
but only if they can pay for it; 2) thus, money becomes necessary for
life; 3)
people are forced to do anything and to sell anything in order to get
money; 4)
maximizing profit rather than satisfying social needs is the aim of all
production and investment; 5) discipline over those who produce the
wealth of
society is no longer exercised by other people (as in slavery and
feudalism)
but by money and the conditions of work that one must accept in order
to earn
money; 6) rationing of scarce goods takes place through money (based on
who has
more than others) rather than through coupons (based on who has worked
harder
or longer or has a greater need for the good); and 7) since no one is
kept from
trying to get rich and everyone is paid for what they do, people
acquire a
sense that each person gets (and has gotten) what he deserves
economically, in
short, that both the rich and the poor are responsible for their fates.
Whether the society is developed or underdeveloped, a market economy
has
several important advantages and several major disadvantages: Among the
advantages, we find the following:
These are the main advantages of the market economy, and in his article Professor Kang gives a good account of them. But, as I said, there are also major disadvantages, and these Kang neglects. Among the disadvantages, we find the following:
Once we have
recognized all the
main advantages and disadvantages of the market economy, and once we
have had a
chance to examine and compare them, there are three major questions
that remain
to be answered. First, is it possible to have the advantages of the
market
economy without the disadvantages? Both theory and empirical evidence
argue
strongly that the answer is "no". Even a quick perusal of Marx's
analysis of how the market economy works reveals it as an organic whole
in
which each part serves as an internal aspect in the functioning of the
others.
Similarly, their effects, both good and bad (what I've called
"advantages" and "disadvantages"), entail one another; they
are extended parts and/or necessary preconditions or effects of each
other. For
example, market experiences produce, of necessity, market personalities
in
people, and market personalities become a necessary precondition for
people of
all classes to engage in market relations effectively, and hence for the market to work as well as it does. You can't, in
other words,
place people in market relations and expect them to retain very much of
the
socialist ideas, values and emotions that may once have had. And the
same glue
holds together all the economic, social and psychological aspects of a
market
economy.
For empirical evidence, just look at how quickly and how thoroughly
A second key question
The third, and final, major question iscan people change their mind about the market? And the answer isof course. They
do so all the time, moving from "against" to "in favor" or
from "in favor" to "against". Just because a society opted
for one approach to the market, let's say 25 years ago, when one set of
problems
were dominant, is not in itself a good reason to retain this approach
when
another set of problems become far more pressing.
If the answers I have given to these three questions are correct, then
the
central problem facing China today might be posed as follows: Should
China
stick with the market economy in order to continue to benefit from
what's left
of its advantages (and simply accept all the negatives that come with
it), orbecause the disadvantages have
gotten so badshould China now do whatever
is necessary to deal with
them (and treat whatever benefits it once got from the market as
secondary)? It
is, of course, not for me but for the Chinese people to say what should
be
done. I have only tried to clarify what is involved in making such a
momentous
decision, and, alsoand now we return to
Kang's articleto suggest that it is only
by fully laying out the
main advantages and disadvantages of market socialism that any
effective solution to
According to Kang, the core of Deng Xiaoping's teachings is directed to
"emancipating the mind" and "seeking truth from facts". I
can't think of anything that is more important for us, for all of us,
to do.
The fate of
______________________________________
Copyright Bertell Ollman 2004-2005. All rights reserved.
_____________________
B.
from Benoît Monange :
14 December 2005
Journal
of Contemporary
Asia
Copyright 2001
by Gabriel Kolko
Communism -- its
political
systems, ideologies, and economic institutions -- has disappeared in
Europe and
it is inexorably disintegrating in
It would be an error to dismiss the role of ideas in Communism's
transformation
and ultimate disappearance, but neither can one minimize the way
Mikhail
Gorbachev and Deng Xiaoping pragmatically tailored their economic
programs to
win political support from powerful constituencies. In Gorbachev's
case, the
support of the Soviet industrial managers (the "Red barons"), who
were later to emerge among the principal beneficiaries of the abolition
of
public ownership, was essential to his economic reforms after 1986. For
Deng,
his objective of consolidating control over the Party throughout the
1980s
caused him to articulate inconsistent economic policies that won him
the
support of crucial regional and local Party leaders, who increased
their
economic power at the expense of the central government. (1)
This process of political coalition-building needed an ideology to
rationalize
its practical economic consequences, and market socialism provided
it. But an ideological transformation was long overdue in both
Senior cadres in the
Capitalist ideology now dominates both Chinese and Vietnamese thought
on
economics and society, and both rely upon a determinist Marxist
interpretation
of surrendering to ostensibly "objective laws" to justify employing
capitalist organizational methods. In both nations many key leaders
insist that
economic growth attained by any means, including the application of
purely capitalist
organizations and managerial methods, remains the guarantor that
socialism
eventually will prevail. (3) Deng promulgated such notions after 1978,
and
Whatever the differences in practice and timing, the Vietnamese have
increasingly relied on the Chinese for guidance on economic and
doctrinal
questions. Both share the firm conviction that antipathy toward the
rich must
be eliminated, and indeed the acquisition of wealth should be
encouraged
because it will inevitably redound to the welfare of society. (5) The
IMF and
World Bank in both cases have goaded them and offered blueprints as
well as
substantial funding for abandoning socialist institutions, but both
these
institutions' impact is more as reflection rather than the cause of
Asian
Communism's terminal crisis.
The legacies of the 1979 Chinese invasion and its opposition to
Vietnam's
Cambodia war still exist, but the Vietnamese army and security
apparatus favor
closer relations with China, and in July 1997, Do Muoi,
former head of the Party, prime minister
Based on "the consensus reached earlier by senior leaders,"
In February 1998,
The Ascendant Managers
China and
Corruption pervades the state-owned enterprises (SOEs)
of both
But the SOEs do allow the state to obtain
taxes and
revenues, and in
The net effect of these so-called reforms was to strip assets from the
state
sector and transfer its resources to private investors. "Some [Chinese]
economists," a World Bank expert concluded, "believed that a thorough
contract responsibility system is a de facto privatization, and ... a
substitute for privatization." (9) But these changes in the SOEs increased markedly after the ninth Five
Year Plan of
January 1996, when some thousands of large- and medium-sized state
enterprise
were scheduled to become joint-stock firms -- called "corporatization."
Nearly 100,000 small SOEs by then had been
sold
(usually to their managers), merged, or bankrupted. About half the
largest SOEs by 1999 were partially
privatized and about 950 were
listed on stock exchanges -- the so-called "A" market, open to
Corruption and manipulation have plagued
As a result of all these trends, ignoring entirely that many SOEs are really quasi-private entities, SOEs produced about 78% of
The largest Vietnamese SOEs are
overwhelmingly
profitable and crucial to the state's fiscal base, but the fact remains
that
many are corruptly exploited by their managers and, to varying degrees,
Vietnam
is following the Soviet and Chinese examples. The Party committed
itself to
"equitization" in 1992 but internal
differences were rife and by the end of 1997
The Quality of Life
There is no simple statistical measure of these fundamental qualitative
changes
in
Income distribution data confirm that economic development has occurred
at the
cost of social equity. In both
In both
After 1985
In the latter half of 1997 the rural situation in
Pervasive corruption, touching all aspects of the people's daily life,
is the
one malaise that has characterized the final stages of all of the
Communist
regimes, leading to the dissolution of the essential myth of socialism
as a
superior social ethic and basis of society. That the parties' ranks
have been
increasingly filled by opportunists and careerists has made cynicism
and
corruption inevitable. The Asian Development Bank estimated in early
2001 that
about 30% of
There is no way to redeem these parties and preserve their hegemony at
the same
time. The Achilles heel of all Communist parties has been their claim
to
absolute authority and their inability to prevent its abuse, a process
that has
made their disintegration virtually inevitable. It has also led to
successor
regimes in which many former senior Communists continue as the corrupt
masters
of society. In the last analysis, Communist parties have been
overthrown
principally by ambitious persons within their own ranks. The widespread
corruption that exists throughout
The common outcome of reforms in China and Vietnam, both as a result of
their
definition of objectives and the venal manner in which they have been
implemented, has been troubled class societies based on growing
inequalities.
Breaking the Social Fabric
The condition of labor and urban populations in
Like other nations,
Both nations share the same dilemmas regarding the urban working class:
the
state firms that lose money are under pressure from the IMF, World
Bank, and
domestic "reformers" to dismiss labor as a precondition of
privatization, and there is very little institutional protection for
the great
numbers of superfluous workers in each nation. Worse yet, standards are
even
more deplorable in the locally-owned private enterprises: wages are
low, hours
long, and safety and working conditions extremely primitive. Their
workers are
mainly peasants from rural areas and redundant labor from the state
sector, and
especially docile. Whatever government regulations
exist are scarcely enforced. (24) While
There are many ways of measuring the human and institutional
consequences of
the Communist parties' common strategy, but both are creating
increasingly inegalitarian, class
societies. The Vietnamese have lowered
their taxes on corporate income and international trade, and interest,
rent,
and dividends are excluded from personal taxation. The government has
cut back
on both health and education expenditures, even though the wealthiest
fifth
receives 45% of the public subsidies for both these fields. Education
in
Notwithstanding differences reflecting historical factors or in timing,
With it, the last important Communist experiments in the world are
ending.
* Professor Emeritus of History,
Notes
(1.)
(2.) Yan Sun, The Chinese Reassessment of Socialism. 1976-1992 (Princeton: Princeton
University
Press, 1995), expounds this thesis convincingly.
(3.) Maurice Meisner, The Deng Xiaoping Era: An Inquiry Into the Fate of Chinese Socialism.
1978-1997
(New York: Hill and Wang, 1996), pp. 209-19; Gabriel Kolko,
(4.) U.S. Foreign Broadcast Information Service, Daily Report
(hereafter
"FBIS"), CHI-97-254, 11 Sept. 1997. See also ibid., CHI-97-255, 12 Sept. 1997; CHI-97-256, 13 Sept. 1997.
(5.) Kolko, Anatomy, pp. 38, 58, 70.
Forbes estimates
(6.) FBIS-EAS-97-103; EAS-97-200; FBIS-CHI-97-296; CHI-97-314;
CHI-97-342.
(7.)
(8.) Financial Times, 16 June, 29 Oct. 1995; IMF, Economic Reform in
(9.) Yingyi Qian,
"Reforming Corporate Governance in China," in Corporate Governance in
Transitional Economies: Insider Controls and the Role of Banks, eds.
Masahiko
Aoki and Hyung-Ki Kim (Washington, D.C;
World Bank
Economic Development Institute, 1995), p. 219.
(10.) Financial Times, 9 March 2001. See also ibid., 21, 22 Feb., 1 March 2001; International Herald Tribune, 29 Dec. 2000,
27, 28
Feb., 1, 8 March 2001, 29 May 2001; Tiffany Wu, Reuters, 27 Feb. 2001.
(11.) Zhiqiang Liu, "The Nature of
(12.) FBIS-EAS-98-020.
(13.) IMF, [Vietnam] Staff Country Report No. 99/55, July 1999, pp.
42-58; IMF
Public Information Notice no. 00/55, 4 Aug. 2000, World Bank, Vietnam
Country
Report, 18 Sept. 2000, pp. 8 ff.
(14.) World Bank, World Development Report 1997 (Washington, D.C.,
1997), pp.
222-23.
(15.) Meisner, Deng Xiaoping Era, pp. 231,
250-51;
Anita Chan et al, Transforming Asian Socialism: China and Vietnam
Compared
(Lanham, Md.: Bowman & Littlefield, 2000), p. 127; Douglas Wu,
"China's Quiet Property Rights Revolution," CATO [Institute] Policy
Report, Nov.-Dec. 2000, pp 12-13.
(16.) Dennis Tao Yang, "Urban-Biased Policies and
Rising
Income Inequality in
(17.) FBIS-EAS-98-020. See also Kolko,
Anatomy, chap.
4.
(18.) Trade Minister Truong Dinh Tuyen in FBIS-EAS-98-082. See also World Bank, Asian Development Bank, and
UNDP,
Vietnam 2010: Entering the 21st Century, 29 Nov. 2000, chap. 3, p. 12.
(19.) Peter Mares, "Down in the Delta: Rice and Taxes in
(20.) International Herald Tribune, April 21, 2001.
(21.) Financial Times, 12 Feb. 2001.
(22.) [World Bank] Transition, Nov.-Dec. 1995, p. 19; Financial Times,
1 Oct.,
29 Dec. 1999; International Herald Tribune, 29 Oct. 1999; 7 March 2001.
(23.) Transition, June 1998, p. 16; World Bank, Vietnam Country Report,
18
Sept. 2000, pp 8-9; World Bank et al, Vietnam 2010: Entering the 21st
Century,
29 Nov. 2000, chap. 1, p. 2.
(24.) Ying Zhu and Stephanie Fahey, "The Impact of
Economic Reform on Industrial Labour Relations in
(25.) Jere R. Behrman and James C. Knowles, "Household Income and Child Schooling in
(26.) Nguyen Chan et al., in
(27.) ADB, Asian Development Outlook 2000, p. 121. See also IMF, Staff
Report
No. 00/116, Aug. 2000, pp. 46n-47.
(28). WHO, The World Health Report 2000, 21 June 2000, annex table 1.
_________________
Source
Citation: Kolko, Gabriel. "
_____________________
C.
from Chalmers Johnson :
10 December 2005
How Western Financiers Caused the
by Chalmers Johnson
[This collection of essays by Chalmers
Johnson has
been organized into two groups: the earlier writings, dealing with
Index :
(1) Globalisation: creed of greed -
November 18,
1998 (2) Let's Revisit Asia's 'Crony Capitalism' Economy: America's
free-trade
proselytizing is the true root of what is now a global crisis - June
25, 1999
(3) The Scourge of Militarism: Rome and America (4) America's Empire of
Bases -
January 17, 2004 (5) ON THE JAPANESE THREAT: An Interview with Chalmers
Johnson
- November 1989 (6) Radio interview: Chalmers Johnson; Sydney, December
30,
1991 (7) MITI and the Japanese Miracle: The Growth of Industrial
Policy,
1925-1975, by Chalmers Johnson (8) Chalmers Johnson on the Flying
Geese
model (9) Fickle, Bitter, and Dangerous - An interview with Chalmers
Johnson by
David Ross
(1) Globalisation: creed of greed.
If the APEC leaders fail to deal with the real cause of the
Asian
financial crlsis - the preservation of
American
global hegemony - then this week's summit will fail to accomplish
anything
substantial, argues Chalmers Johnson.
Australian Financial Review, November 18, 1998
After all the endless mouthing off in the pages of The Wall Street
Journal,
The Economist of London and The Australian Financial Review about East
Asia's
"crony capitalism", the lack of "transparency" in Asian
stock exchanges, the "no pain, no gain" logic of the International
Monetary
Fund, and how the Asian economic challenge to Anglo-American capitalism
had
fizzled, we now know that none of these things had anything at all to
do with
the Asian - now global - economic crisis.
Addressing what did cause the crisis is the main business of this
week's APEC
meeting in
Here's the new explanation as it is developing in seminar rooms from
The high-growth economies of
First, a major ideological barrage from the Jagdish Bhagwatis and Ross Garnauts of this world was launched to soften up the Asians. These famous
tenured professors
of economics, who never once faced a "market force" in their own
lives, were hired to preach the beauties of "globalisation',
in this case meaning American economic institutions.
[Ross Garnaut is a Professor of Economics
in the
Research Schools of the
Concretely, these include total laissez-faire, destruction of unions
and social
safety nets, staffing of regulatory agencies with retired financiers,
indifference to pay differentials between CEOs and the ordiniary labor force, moving manufacturing to low-wage areas regardless of the
social
costs, and totally unregulated flows of capital in and out of any and
all
economies.
Then came phase two. Once the Asian
economies had
begun to open themselves up and were standing in the world marketplace
more or
less naked, the "hedge funds" were let loose on them. These funds
are actually huge concentrations of capital owned by very wealthy
Western white
men, who manipulate bewilderingly complex financial instruments called
"derivatives". They usually locate their offices in offshore tax
havens like the
The funds easily raped Thailand, Indonesia and South Korea and
then
turned the shivering survivors over to the IMF, not to help the victims
but in
order to ensure that any Western bank was not stuck with
"non-performing" loans in the devastated countries.
The Americans suspected that all this might cause some trouble. On
March 4,
1998, Admiral Joseph Prueher,
commander-in-chief of American
military forces located in East Asia testified before Congress that the
US
military was on alert for "early signs of instability" in East Asia,
including "labor disputes". The Indonesian armed forces, whom Admiral Prueher's Special
Forces had been training for years, got rid of Soeharto when it seemed necessary, even though they killed about 1,200
shopkeepers and
raped at least 165 Chinese women doing so.
But then it all got a bit out of hand. One of the biggest hedge funds
proved to
be so greedy that the US Government had to organise a
bailout for it, which brought the scheme out into the open.
The weakened economies of
"Globalisation" was discredited as a
crooked financier's scam and even the Nobel Prize committee in
In her visits throughout East Asia this week,
(2) Let's Revisit Asia's 'Crony Capitalism' Economy:
After all the endless mouthing off in the pages of the English-language
business press about East Asia's "crony capitalism," the lack of
"transparency" in Asian stock exchanges, the "no pain, no
gain" logic of the International Monetary Fund and how the Asian
economic challenge to Anglo American capitalism had fizzled, we now
know
that none of these things had anything to do with the Asian--now
global--economic crisis. Addressing what did cause the crisis is the
main
business of the leaders of the countries of
Here's the new explanation as it is developing in seminar rooms from
With the end of the Cold War, the
Then came phase two. Once the Asian
economies had
begun to "deregulate" and were standing in the world marketplace more
or less naked, the "hedge funds" were let loose on them. These
funds are actually huge concentrations of capital owned by very wealthy
Western
white men, who manipulate bewilderingly complex financial instruments
called
"derivatives." They usually locate their offices in offshore tax
havens like the
The Americans suspected that all this might cause some trouble. On
March 4,
1998, Adm. Joseph Prueher, then commander
in chief of
American military forces located in East Asia and today the U.S.
ambassador-designate to China, testified before Congress that the U.S.
military
was on alert for "early signs of instability" in East Asia, including
"labor disputes." The Indonesian armed forces, whom Prueher's special forces had been training
for years,
got rid of Suharto when it seemed
necessary. The
Indonesian troops killed about 1,200 shopkeepers and raped more than
150
Chinese women doing so.
But then it all got a bit out of hand. One of the biggest hedge funds
proved to
be so greedy that the
The weakened economies of
These issues came to a head in
The Americans do not seem to understand that their message of free
trade and
market economics is in serious disrepute. Wall Street itself now looks
like the
ancestral home of crony capitalism.
Chalmers Johnson Is President of the Japan Policy Research Institute in
(3) The Scourge of Militarism:
The collapse of the Roman republic in 27 BC has significance today for
the
The Roman republic, however, failed to adjust to the unintended
consequences of
its imperialism, leading to a drastic alteration in its form of
government. The
militarism that inescapably accompanied
Obviously, there is nothing deterministic about this progression, and
many
prominent Romans, notably Brutus and Cicero, paid with their lives
trying to
head it off. But there is something utterly logical about it.
Republican checks
and balances are simply incompatible with the maintenance of a large
empire and
a huge standing army. Democratic nations sometimes acquire empires,
which they
are reluctant to give up because they are a source of wealth and
national
pride, but as a result their domestic liberties are thereby put at
risk.
These not-particularly-original comparisons are inspired by the current
situation of the United States, with its empire of well over 725
military bases
located in other people's countries; its huge and expensive military
establishment demanding ever more pay and ever larger appropriations
from a
supine and manipulated legislature; unsolved anthrax attacks on
senators and
newsmen (much like Rome's perennial assassinations); Congress's gutting
of the
Bill of Rights through the panicky passage of the Patriot Act -- by
votes of
76-
Checks and Balances
My thinking about the last days of republics was partly stimulated this
past
summer by a new book and an old play. The book is Anthony Everitt's magnificent account of the man who had his head and both hands chopped
off for
opposing military dictatorship --
The Roman republic is conventionally dated from 509 to 27 BC even
though
At the heart of the unwritten Roman constitution was the Senate, by the
early
years of the first century BC composed of about 300 members from whose
ranks
two chief executives, called consuls, were elected. The consuls took
turns
being in charge for a month each, and
neither could
hold office for more than a year. Over time an amazing set of "checks
and
balances" evolved to ensure that the consuls and other executives whose
offices conferred on them imperium -- the
right to
command an army, to interpret and carry out the law, and to pass
sentences of
death -- did not entertain visions of grandeur and overstay their time.
At the
heart of these restraints were the principles of collegiality and term
limits.
The first meant that for every office there were at least two
incumbents,
neither of whom had seniority or superiority over the other. Office
holders
were normally limited to one-year terms and could be reelected to the
same
office only after waiting ten years. Senators had to serve two to three
years
in lower offices -- as quaestors,
tribunes, aediles, or praetors -- before
they were eligible for
election to a higher office, including the consulship. All office
holders could
veto the acts of their equals, and higher officials could veto
decisions of
lower ones. The chief exception to these rules was the office of
"dictator," appointed by the consuls in times of military emergency.
There was always only one dictator and his decisions were immune to
veto;
according to the constitution, he could hold office only for six months
or the
duration of a crisis.
Once an official had ended his term as consul or praetor, the next post
below
consul, he was posted in
After serving as consul in 63 BC (the year of Octavian's birth), for
example,
The system worked well enough and afforded extraordinary freedoms to
the
citizens of
"Remember that you are human"
Imperialism provoked the crisis that destroyed the Roman republic.
After slowly
consolidating its power over all of
The problem was that the Roman constitution made administration of so
large and
diverse an area increasingly difficult and subtly altered the norms and
interests that underlay the need for compromise and consensus. There
were
several aspects to this crisis, but the most important was the
transformation
of the Roman army into a professional military force and the growth of
militarism. During the early and middle years of the republic, the
Roman
legions were a true citizen army composed of small, conscripted
landowners.
Differing from the American republic, all citizens between the age of
17 and 46
were liable to be called for military service. One of the more
admirable
aspects of the Roman system was that only those citizens who possessed
a
specified amount of property (namely, a horse and some land) could
serve,
thereby making those who had profited most from the state also
responsible for
its defense. (By contrast, of the 535 members of Congress, only seven
have
children in the
When a campaign was over, the troops were promptly sent back to their
farms,
sometimes richer and flushed with military glory. Occasionally, the
returning
farmers got to march behind their general in a "triumph," the most
splendid ceremony in the Roman calendar, a victory procession allowed
only to
the greatest of conquerors. The general himself, who paid for this
parade, rode
in a chariot with his face covered in red lead to represent Jupiter,
king of
the gods. A boy slave stood behind him holding a laurel wreath above
his head
while whispering in his ear "Remember that you are human." In
Pompey's great triumph of 61 BC, he actually wore a cloak that had
belonged to
Alexander the Great. After the general came his
prisoners in
chains and finally the legionnaires, who by ancient tradition sang
obscene
songs satirizing their general.
By the end of the second century BC, in Everitt's words, "The responsibilities of empire meant that soldiers could no
longer
be demobilized at the end of each fighting season. Standing forces were
required, with soldiers on long-term contracts." The great general Caius Marius undertook to reform the armed
forces,
replacing the old conscript armies with a professional body of
long-service
volunteers. When their contracts expired, they expected their
commanders, to
whom they were personally loyal, to grant them farms. Unfortunately,
land in
During the last century before its fall, the republic was assailed by
many
revolts of generals and their troops, leading to gross violations of
the
constitution and on several occasions to civil wars. These included the
uprisings of Marius and Sulla and of the failed revolutionary Catilina. There was also the Spartacus slave
rebellion of
73 BC, put down by the immensely wealthy Marcus Licinius Crassus, who in the process crucified some
6,000
survivors. Crassus was a member of the
First
Triumvirate, along with Pompey and Caesar, which attempted to bring the
situation under control by direct cooperation among the generals. Everitt writes, "During his childhood and youth
Caesar became consul for the first time in 59 BC enjoying great
popularity with
the ordinary people. After his year in office, he was rewarded by being
named
governor of
Shakespeare's recreation of the scenes that followed, based upon Sir
Thomas
North's translation of Plutarch, has become as immortal as the deed
itself. In
a speech to the plebeians in the Forum, Brutus defended his actions.
"If
there be any in this assembly, any dear friend of Caesar's, to him I
say that
Brutus' love to Caesar was no less than his. If then that friend demand
why
Brutus rose against Caesar, this is my answer: Not that I lov'd Caesar less, but that I loved
Who will watch the watchers?
The Second Triumvirate, formed to avenge Caesar, ended like the first,
with
only one man standing, but that man, Caius Octavianus (Octavian), Caesar's
eighteen-year-old grand
nephew, would decisively change Roman government by replacing the
republic with
an imperial dictatorship. Everitt characterizes
Octavian as "a freebooting young privateer," who on August 19, 43 BC,
became the youngest consul in
A year after
On January 13, 27 BC, Octavian appeared in the Senate, which had
legitimized
its own demise by ceding most of its powers to him and which now
bestowed on
him the new title of Augustus, first Roman emperor. The majority of the
Senators were his solid supporters, having been handpicked by him. In
23 BC,
Augustus was granted further authority by being designated a tribune
for life,
which gave him ultimate veto power over anything the Senate might do.
His power
rested ultimately on his total control of the armed forces.
Although his rise to power was always tainted by constitutional
illegitimacy --
not unlike that of our own Boy Emperor from
The most serious problem was that the army had grown too large and was
close to
unmanageable. It constituted a state within a state, not unlike the
Pentagon in
the
Augustus is credited with forging the Roman Peace (Pax Romana), which historians like to say
lasted more
than 200 years. It was, however, a military dictatorship and depended
entirely
on the incumbent emperor. And therein lay the problem. Tiberius, who
reigned
from 14-37 AD, retired to
The fourth Roman emperor, Claudius, who
reigned from
41 to 54, was selected and put into power by the Praetorian Guard in a
de facto
military coup. Despite the basically favorable portrayal of him by
Robert
Graves (I, Claudius, 1934) and years later on TV by Derek Jacobi,
Claudius, who was Caligula's uncle, was addicted to gladiatorial games
and fond
of watching his defeated opponents being put to death. As a child,
Claudius
limped, drooled, stuttered, and was constantly ill. He had his first
wife
killed and married Agrippina, daughter of
the sister
of Caligula, after having the law changed to allow uncles to marry
their
nieces. On October 13, 54 AD, Claudius was killed with a poisoned
mushroom,
probably fed to him by his wife, and at noon that same day, the
sixteen-year-old Nero, Agrippina's son by
a former
husband, was acclaimed emperor in a carefully orchestrated piece of
political
theater. Nero, who reigned from 54 to 68, was a probably insane tyrant
who has
been credited with setting fire to Rome in 64 and persecuting some
famous early
Christians (Paul and Peter), although his reputation has been somewhat
rehabilitated in recent years as a patron of the arts.
The short, happy life of the American republic
After Augustus, not much recommends the
Service in the armed forces of the
Given the course of the postwar situations in
Chalmers Johnson's new book, forthcoming at the end of 2003 from
Metropolitan
Books, is The Sorrows of Empire: Militarism, Secrecy, and the End of
the
Republic.
NOTES
1. See, for example, Dana Priest, The Mission: Waging War and
Keeping
Peace with
2. Shasta Darlington, "New Dig Says Caligula Was Indeed a Maniac,"
Reuters, August 16, 2003.
Copyright C2003 Chalmers Johnson E-mail to a FriendSubject:
Wells and NWO Date: Thu, 11 Sep 2003 22:12:01 +0500 From: Simon Jones
<sj958@yahoo.com>
re GlobalCirclenet quote
""The men of the New [World Order] Republic will not be squeamish
either in facing or inflicting death. They will have ideals that will
make
killing worthwhile. They will hold that a certain portion of the
population
exists only on sufferance out of pity and patience, and on the
understanding
that they do not propagate; and I do not forsee any
reason to suppose that they will hesitate to kill when that sufferance
is
abused." -- H. G. Wells, 1924, 'The Works of H. G. Wells',
(4)
http://www.informationclearinghouse.info/article5537.htm
01/15/04: (tomdispatch.com) As distinct from other peoples, most
Americans do
not recognize -- or do not want to recognize -- that the
Our military deploys well over half a million soldiers, spies,
technicians,
teachers, dependents, and civilian contractors in other nations. To
dominate
the oceans and seas of the world, we are creating some thirteen naval
task forces
built around aircraft carriers whose names sum up our martial heritage
-- Kitty
Hawk, Constellation, Enterprise, John F. Kennedy, Nimitz,
Dwight D. Eisenhower, Carl Vinson, Theodore Roosevelt, Abraham Lincoln,
George
Washington, John C. Stennis, Harry S.
Truman, and
Ronald Reagan. We operate numerous secret bases outside our territory
to
monitor what the people of the world, including our own citizens, are
saying,
faxing, or e-mailing to one another.
Our installations abroad bring profits to civilian industries, which
design and
manufacture weapons for the armed forces or, like the now
well-publicized
Kellogg, Brown & Root company, a
subsidiary of the
Halliburton Corporation of
At Least Seven Hundred Foreign Bases
It's not easy to assess the size or exact value of our empire of bases.
Official records on these subjects are misleading, although
instructive.
According to the Defense Department's annual "Base Structure Report"
for fiscal year 2003, which itemizes foreign and domestic U.S. military
real
estate, the Pentagon currently owns or rents 702 overseas bases in
about 130
countries and HAS another 6,000 bases in the United States and its
territories.
Pentagon bureaucrats calculate that it would require at least $113.2
billion to
replace just the foreign bases -- surely far too low a figure but still
larger
than the gross domestic product of most countries -- and an estimated
$591,519.8 million to replace all of them. The military high command
deploys to
our overseas bases some 253,288 uniformed personnel, plus an equal
number of
dependents and Department of Defense civilian officials, and employs an
additional 44,446 locally hired foreigners. The Pentagon claims that
these
bases contain 44,870 barracks, hangars, hospitals, and other buildings,
which
it owns, and that it leases 4,844 more.
These numbers, although staggeringly large, do not begin to cover all
the
actual bases we occupy globally. The 2003 Base Status Report fails to
mention,
for instance, any garrisons in Kosovo -- even though it is the site of
the huge
Camp Bondsteel, built in 1999 and
maintained ever
since by Kellogg, Brown & Root. The Report similarly omits bases in
For Okinawa, the southernmost island of Japan, which has been an
American
military colony for the past 58 years, the report deceptively lists
only one
Marine base, Camp Butler, when in fact Okinawa "hosts" ten Marine
Corps bases, including Marine Corps Air Station Futenma occupying
For their occupants, these are not unpleasant places to live and work.
Military
service today, which is voluntary, bears almost no relation to the
duties of a
soldier during World War II or the Korean or Vietnamese wars. Most
chores like
laundry, KP ("kitchen police"), mail call, and cleaning latrines have
been subcontracted to private military companies like Kellogg, Brown
&
Root, DynCorp, and the Vinnell Corporation. Fully
one-third of the funds recently appropriated for the war in
Some of these bases are so gigantic they require as many as nine
internal bus
routes for soldiers and civilian contractors to get around inside the
earthen berms and concertina wire. That's
the case at
The military prefers bases that resemble small fundamentalist towns in
the
Bible Belt rather than the big population
centers of
the
Our armed missionaries live in a closed-off, self-contained world
serviced by
its own airline -- the Air Mobility Command, with its fleet of
long-range C-17 Globemasters, C-5
Galaxies, C-141 Starlifters,
KC-135 Stratotankers, KC-10 Extenders, and
C-9
Nightingales that link our far-flung outposts from Greenland to
Our "Footprint" on the World
Of all the insensitive, if graphic, metaphors we've allowed into our
vocabulary, none quite equals "footprint" to describe the military
impact of our empire. Chairman of the Joint Chiefs of Staff Gen.
Richard Myers
and senior members of the Senate's Military Construction Subcommittee
such as
Dianne Feinstein (D-CA) are apparently incapable of completing a
sentence
without using it. Establishing a more impressive footprint has now
become part
of the new justification for a major enlargement of our empire -- and
an
announced repositioning of our bases and forces abroad -- in the wake
of our
conquest of
Once upon a time, you could trace the spread of imperialism by counting
up
colonies.
Marine Brig. Gen. Mastin Robeson,
commanding our
1,800 troops occupying the old French Foreign Legion base at Camp
Lemonier in
Djibouti at the entrance to the Red Sea, claims that in order to put
"preventive war" into action, we require a "global
presence," by which he means gaining hegemony over any place that is
not
already under our thumb. According to the right-wing American
Enterprise
Institute, the idea is to create "a global cavalry" that can ride in
from "frontier stockades" and shoot up the "bad guys" as
soon as we get some intelligence on them.
"Lily Pads" in Australia, Romania, Mali, Algeria . . .
In order to put our forces close to every hot spot or danger area in
this newly
discovered arc of instability, the Pentagon has been proposing -- this
is
usually called "repositioning" -- many new bases, including at least
four and perhaps as many as six permanent ones in Iraq. A number of
these are
already under construction -- at
Other countries mentioned as sites for what Colin Powell calls our new
"family of bases" include: In the impoverished areas of the
"new" Europe -- Romania, Poland, and Bulgaria; in Asia -- Pakistan
(where we already have four bases), India, Australia, Singapore,
Malaysia, the
Philippines, and even, unbelievably, Vietnam; in North Africa --
Morocco,
Tunisia, and especially Algeria (scene of the slaughter of some 100,00
civilians since 1992, when, to quash an election, the military took
over,
backed by our country and France); and in West Africa -- Senegal,
Ghana, Mali,
and Sierra Leone (even though it has been torn by civil war since
1991). The
models for all these new installations, according to Pentagon sources,
are the
string of bases we have built around the Persian Gulf in the last two
decades
in such anti-democratic autocracies as
Most of these new bases will be what the military, in a switch of
metaphors,
calls "lily pads" to which our troops could jump like so many
well-armed frogs from the homeland, our remaining NATO bases, or bases
in the
docile satellites of
In Europe, these plans include giving up several bases in
One reason why the Pentagon is considering moving out of rich
democracies like
While there is every reason to believe that the impulse to create ever
more
lily pads in the Third World remains unchecked, there are several
reasons to
doubt that some of the more grandiose plans, for either expansion or
downsizing,
will ever be put into effect or, if they are, that they will do
anything other
than make the problem of terrorism worse than it is. For one thing,
When it comes to downsizing, on the other hand, domestic politics may
come into
play. By law the Pentagon's Base Realignment and Closing Commission
must submit
its fifth and final list of domestic bases to be shut down to the White
House
by September 8, 2005. As an efficiency measure, Secretary of Defense Rumsfeld has said he'd like to be rid of at
least one-third
of domestic Army bases and one-quarter of domestic Air Force bases,
which is
sure to produce a political firestorm on Capitol Hill. In order to
protect
their respective states' bases, the two mother hens of the Senate's
Military
Construction Appropriations Subcommittee, Kay Bailey Hutchison (R-TX)
and
Dianne Feinstein, are demanding that the Pentagon close overseas bases
first
and bring the troops now stationed there home to domestic bases, which
could
then remain open. Hutchison and Feinstein included in the Military
Appropriations Act of 2004 money for an independent commission to
investigate
and report on overseas bases that are no longer needed. The Bush
administration
opposed this provision of the Act but it passed anyway and the
president signed
it into law on November 22, 2003. The Pentagon is probably adept enough
to
hamstring the commission, but a domestic base-closing furor clearly
looms on
the horizon.
By far the greatest defect in the "global cavalry" strategy, however,
is that it accentuates
In his notorious "long, hard slog" memo on
Chalmers Johnson's latest book is The Sorrows
of Empire: Militarism, Secrecy,
and the End of the Republic (Metropolitan). His previous book, Blowback: The Costs and Consequences of American
Empire, has
just been updated with a new introduction.
Copyright C2004 Chalmers Johnson
+++++++++++++++++++++++++++++++++++++++++++++++
CHALMERS JOHNSON was born in
Returning to
Johnson has written numerous articles and reviews and some twelve books
on
Asian subjects, including Peasant Nationalism and Communist Power on
the
Chinese revolution, An Instance of Treason on Japan's most famous spy,
Revolutionary Change on the theory of violent protest movements, and
MITI and
the Japanese Miracle on Japanese economic development. This last-named
book
laid the foundation for the "revisionist" school of writers on
He was chairman of the academic advisory committee for the PBS
television
series "The Pacific Century," and he played a prominent role in the
PBS "Frontline" documentary "Losing the War with
In 1994, together with Steven Clemons, Johnson founded the Japan Policy
Research Institute to promote greater public awareness and
understanding of
(5) ON THE JAPANESE THREAT: An Interview with
Chalmers
Johnson (November 1989).
http://multinationalmonitor.org/hyper/issues/1989/11/mm1189_06.html
Chalmers Johnson is the Rohr Professor of Pacific International
Relations
within the Graduate School of International Relations and Pacific
Studies at
the
MULTINATIONAL MONITOR: What does it mean to refer to
CHALMERS JOHNSON: The state provides opportunities for
entrepreneurship and
the state creates markets. In this sense, the state takes on
developmental
functions. Let me use two fundamental concepts--they're Marxist
concepts, but they're also perfectly sound Adam Smith concepts--ownership
and control. When ownership and
control are both
in the hands of the state, that is the command economy,
classically, the U.S.S.R. A variation of this type of economy, one that
is
typical of reformist Leninist state, is to retain state
ownership but recognizing the enormous inefficiencies in the command economy, and
to devolve
control to the level of the household enterprise. This produces the
kind of
pattern that one saw in
The fourth possibility is private ownership and private control, of
which
examples would be the United States and, to some extent, Hong Kong.
In my
view this is the only model to which neoclassical economics applies.
MM: And the capitalist developmental state is established in
JOHNSON: There is a vast array of institutions, including the Ministry
of
International Trade and Industry, but also the Ministry of
Finance, the Economic Planning Agency and other economic ministries.
There is
also a most unusual, unprecedented in this country, organization of the
private
sector, in an almost corporatist manner, headed at the top by Keidanren,
the
Federation of Economic Organizations. Keidanren has the ability
to process
private sector priorities, and to enforce them. So we don't have
the sort
of situation you have in
In
MM: What do you think about what people refer to as the Japanese threat
to the
American economy?
JOHNSON: Well, it is a threat in various senses. But it is not a threat
in the
sense of being malevolent. I think this should be understood. There may
be a few
Japanese who still believe that World War II isn't over, or something
like
that, but a much greater danger is the Americans who have the nerve to
attempt
to explain
Another problem with
I also think that it is a matter of elementary reciprocity. We
cannot invest
in
Japanese say to me, "We would not have allowed you to impose such costs
on
us. It's up to you to come up with rules that say, Japanese investment
is
welcome, but it can only be in the old industrial heartland--that is,
in
Michigan, IIlinois, Indiana, and Ohio."
And we
don't do it simply because we are stymied by doctrine, by the Council
of
Economic Advisors, by the vestal virgins of St. Adam Smith who tell us
it would
be a sin. But we're perfectly capable of licensing and exercising our
policing
control; and we need to do it, it seems to me, in order to prevent
worsening
relations between
We don't have a foreign investors registration law in
this country. The information that we have about foreign investment in
What I'm saying is that the Japanese threat to
Since money talks, what fool would believe it isn't going to talk when
it owns
a major source of cultural diffusion?
MM: And what you've been talking about here is rules, laws to control
and
direct the form that Japanese investment in this country takes?
JOHNSON: Exactly. Let's talk about an issue that threatens the world as
a
whole: the fact that the 10 largest banks on earth today are
Japanese [this
interview took place in November 1989]. It would seem to me that
anyone
with any prudence--particularly as one looks at the amounts of money we
are
going to use to bail out the savings and loan industry in Texas--would
be
asking themselves: what are the quality of the assets of these banks,
particularly when we know that Tokyo real estate prices look like
they're
undergoing a tulip-panic again? We know that this is a
speculative
bubble that's going to burst at some point. Similarly, I believe
that any
prudent investor or person with a fiduciary responsibility would be
curious to
know the quality of bank examiners and bank regulation in
Managers and people in position of private sector responsibility in the
The critical relationships between
How to deal with it depends, in part, on one's intellectual
assumptions. If you
assume, as most Americans have, that
If you believe, as I do, that
There is something utterly implausible about the idea that
Both the Japanese and the American governments reflect vested interests
built
up in the 1950s and sixties to paper over differences and to suppress
differences, rather than resolve them. Therefore we have a situation
which is a
bit like a pressure cooker that is slowly building up steam and
becoming ideologized. We now have
Americans who are using
These are the sort of issues that I think are becoming significant.
They
certainly surfaced in the recent Sony acquisition of Columbia Pictures.
MM: In what sense?
JOHNSON: Well, as you know, there was a good deal of alarm expressed in
the
MM: What do you think about protectionist legislation?
JOHNSON: Well, I think the issue should not be viewed exclusively in
economic
terms and we shouldn't use the concept of protectionism. Remember that
international trade theory, which is based on neo classical economics,
always
makes at least two errors. One error is that economists don't recognize
that
institutions are an important variable. Economic theory, especially of
the
Nobel Prize variety, is extremely abstract, and has to be translated
into
reality through institutions. And institutions are things created by
people,
not by markets.
Second, economic theory also fails to recognize that markets have rules
and
histories. The issue right now is not protectionism but how to maintain
the
global market. This means coming up with rules. The GATT rules are not
something handed down by Adam Smith; they were written largely by
Americans
when we were the most powerful nation on earth. We are now trying to
produce
GATT rules that will keep the international trading system going in the
1990s.
In a sense we ought to tell the economists to shut up. They have
nothing
intelligent to say on this subject because it is not an economic issue.
Right now we are in our 21st year of bilateral trade deficits with
In my opinion, there are really only two things to do about it. Either
we
quit buying so much from
But I think that by far the more important issue is to expand
domestic
Japanese demand. One of the things that led to the loss of the
upper house
majority by the Japanese conservative party last July, is the
phenomenon of
"rich
It is obviously extremely dangerous to have our government financed
by
foreign savings, not just because of what the Japanese Ministry of
Finance
is doing, but because as you talk to American leaders today, you find
American
Senators realizing what they'd have to do if the Japanese fail to come
to the
next treasury auction.
In the case of
MM: What kind of role does organized labor play in
JOHNSON: Well, one of the keys to the developmental state has been to
restrict
labor entirely. Labor in
MM: What do you think of Japanese Socialist Party Chair Doi?
JOHNSON: Well, we don't really know enough about her. On the one hand,
she is
that unique and exceptional Japanese politician, someone who is
moderately
charismatic. Most Japanese politicians are gray bureaucrats. Here is a
smart,
outspoken, telegenic, middle-aged woman
who has a
contralto voice. She's obviously interesting, and, in a world in which
the
media play a huge role, in which organized interests no longer command
much
voter respect, there is a huge middle class floating vote.
Ms. Doi's victory may renew democratic
development in
But if Ms. Doi is really going to become
Prime
Minister, she will have to put together a more stable coalition than
she has
right now. Clearly she is currently the beneficiary of a protest vote.
(6) Radio interview: Chalmers Johnson. ABC
Radio National's program called
"INDIAN PACIFIC";
(announcer) ... Professor Chalmers
Johnson, the
leading U.S. expert on Japan. With the Cold War over, the most
significant
relationship in the world is no longer that between
(Q) Professor Johnson, you said in your address at
(CJ) The economics profession has become the priesthood of the West in
the Cold War. I mean, the Cold War is over and
(Q) But how does this pan out in terms of the inappropriateness of,
say,
U.S.-theoretically-trained economists guiding American trade policy,
for
example through the Structural Impediments Initiative?
(CJ) The only foreigners I know of who talk about the United States
without
speaking a word of English, or ever having been there, are in the
higher Party
schools in Moscow and Peking. Unfortunately, this is also true of much
of our
policy toward
(Q) Can you give us some examples of the kind of change that the
American trade
negotiators are requiring in
Well, as I said, the Structural Impediments Initiative, in which they
believe
that the distribution system is a barrier to trade. The distribution
system is
extremely complex and it fits the Japanese style of small houses,
inadequate
refrigeration, the desire to shop every day, and yet it also produces
some
benefits: it produces crowded streets that are relatively free of
crime, and
things of that sort, a much more complex urban life than is indicated
in
general theoretical tracts. But these are in some ways innocent
bystanders that
we are attacking in
(Q) That said, many people, in Japan as well as in the United States,
perhaps
for different reasons, do produce cultural explanations of the
difference;
that, they explain the success of Japanese management techniques from a
predisposition to consensus, for example; rather more nastily,
Americans
looking at Japan say that there's simply no way we can penetrate, we're
simply
locked out, we can't fathom what's going on. In any way, benign or
malevolently, do you take cultural explanations seriously as part of
the
explanation for the current relationship between the
(CJ) I guess I've become known for being extremely cautious about
cultural
explanations, basically because I think they aren't really cultural
explanations, they're racist, nationalistic explanations that are
extremely
dangerous. Cultural explanations are almost totally imperialistic, that
is,
it's the Americans saying to the Japanese, the Japanese behave like
Japanese
because they're Japanese and this as thought-terminating an idea as
ever came
along, by the same token the Japanese wish to be exempted from
international
rules of procedure, of trade, of women in the labour force and anything else, by claiming exceptionalism,
by claiming cultural exceptionalism.
Now, let
me say concretely, no social science is going to say that culture isn't
important; it is ultimately the key concept on which the social
sciences rest,
but what we're talking about here is the misuse of cultural
explanations and
above all, they are so imperialistic they stand in the way of empirical
examination of institutional change. I mean, for example, the
famous
Japanese savings rate, highest rate of savings out of personal
disposable
income, households', of any capitalist economy in peacetime. The
Japanese
would have you believe that this comes about because they are naturally
frugal.
The savings rate in Japan in 1930 was about what it is in the United
States
today, that is, households spent every yen they got. It's been
turned
around by institutional change, by massive incentives from the
Ministry of
Finance to save, ease of savings at the Postal Savings System, lack of
enforcement of laws against tax avoidance, and numerous other such
things that
produce this goose that lays the golden eggs. This is what needs to be
studied,
and to recognise that culture in both
cases is more
commonly being used as an ideological excuse for non-action, and as a
smokescreen for political or economic vested interests.
(Q) While the clear quality which is emerging in the Japan-America michubei debates, on both sides is a certain
degree of, if
you like racism and racialism, seeing things in racial terms and
explaining the
world and as well as the extremely negative side of that. Do you think
there's
a capacity in both countries to rise above that, or is it going to get
deeper
and deeper?
(CJ) I think it's one of our most serious problems; it irritates me
terribly
that people like Ishihara do wish to reduce our problems with
(Q) Just to follow up, do you think there have been any substantial
institutional changes in Japan in the last five years, after all the
Reagan
government and Bush, the Reagan administration and Bush
administrations, have
through a succession of unilateral measures really pressed the Japanese
really
hard, and the Structural Impediments Initiative is simply the last and
most
systematic of that. For example, you took the case of the role of the
Postal
Account Savings system and the tax benefits arising from that; that's
now been
taken away. There've been measures of financial liberalisation in
(CJ) Well again, the problem that worries me here is the over-emphasis
on
change, the suggestion that our problems will be solved because the
Japanese
are about to change decisively in our direction and to look like us.
I've been
working on
(announcer) So-called Japanese Nationalists,
like
Ishihara Shintaro, would like to see Japan
break out
of its established relationship to the United States, and scrap its
postwar
Constitution, especially Article 9, which prescribes the limits of
Japanese
military activity. This pressure is growing at a time when the
established
postwar security system is up for grabs: with no Soviet threat, there's
no
longer any external logic for
(CJ) ... this is one of the major controversial issues in this
conference here,
at ANU, is that the economists do want to separate out the economic
system from
the security system, where I want to argue that in fact they always
have been
intimately related, that to a certain extent, what we call GATT has an
economic
logic to it, but it also had an extremely powerful political logic, in
that it
was a grand strategy, implemented by the United States against the
U.S.S.R.,
which was in part to trade economic benefits in the American market for
political and military support in the Cold War; which concretely in the
case of
Japan meant the ability of the Americans to base American forces in
Japan since
essentially 1945; I first arrived there as a naval officer at the naval
base at Yukowska, and that naval base is still
there. These
institutions maybe made great good sense throughout the Cold War, maybe
they
made great good sense in the period of the strategic triangle, of
(Q) I was in Japan during the Gulf War, and one of the things that
struck me
was the peculiar role of the whole question of guiatsu,
of foreign pressure, and it seemed to me that something new was
happening
there, that Kaifu cabinet, for all the
weakness and
the lack of coherence that you pointed to, was able to make significant
gains
in that incremental creep to change the Constitution and to change
public
opinion, by saying, "We have to send troops overseas, look it's not us
that want to do that, it's the Americans forcing us to do it, they're
bending
our arms, Ouch! It's not us"; and of course it's been a long-term
strategy
of the Japanese state to change that constitution.
(CJ) What's on issue now is almost like a mystery novel, of things that
happened 45 years ago, the idea is to say Macarthur was ordered to
reform Japan
by the Potsdam Declaration, that is, that Japan would be disarmed
(Article 9),
and this has worked, that is these reforms have been enormously
effective and institutionalised in Japan;
but it's not to say that Japan
is pacifist or has been undefended all these past years. The
institutional
corollary of Article 9 is the Security Treaty, that is, that
(Q) Ishihara Shintaro is the main bogeyman
of this,
because he speaks English so well; he was considered, even momentarily
perhaps,
but he was considered, even momentarily perhaps, as a possible
candidate to be
President of the Liberal Democratic Party and hence Prime Minister as
the Young
Turk, and that faded, but he was taken seriously, and he's certainly
not alone
in the opinions he's articulating. It seems to me there is that whole
beyond
moderate recognition of the realities of Japan as a world power
approach that
you're taking: there is that larger question, of for example if you do
take the regionalisation approach, the G3 approach,
Europe,
Japan and the United States, there is the whole question of a military
basis
for Japanese power, which will mean East Asia and South-East Asia, and
the
reality is that while Japan has the third largest armed force in the
world, in
terms of spending at the moment, Japan is still intensely disliked
because
of the memory of the war and before that the war in China, and the colonisation of Korea. Do you think there
is, in a
sense, any realistic basis, for not just a more independent foreign
policy
stand by
(CJ)
(announcer) So if the world is moving toward
economic
regionalism, if G7 is to become G2 or G3, where does this leave
(CJ) Obviously, as an outsider, I hesitate to comment on Australian
affairs on
Australian radio and things of this sort, but none the less it seems to
me
that, in terms of fundamentals, Australia remains that the lucky
country: it
is the place that could supply food, raw materials, and things of this
sort,
for what is today the world centre of gravity for manufacturing;
the
complementarities there are enormous. I do believe it is probably true
(7) MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975, by
Chalmers Johnson
[MITI is now MEITI - Ministry of
Economics, Trade and Industry.]
PREFACE
PERHAPS the oldest and most basic subject in the study of
political
economy is the relationship between governmental institutions and
economic
activity. The distinctions in this field lie at the heart of all
modern
political analysis: free trade versus mercantilism, socialism versus
capitalism, laissez faire versus social goal setting, the public sector
versus
the private sector - and, ultimately, a concern with procedures
(liberty)
versus a concern with outcomes (equality).
The focus of this book is on the Japanese economic bureaucracy,
particularly on
the famous Ministry of International Trade and Industry (MITI), as
the
leading state actor in the economy. Although MITI was not the only
important agent affecting the economy, nor was the state as a whole
always
predominant, I do not want to be overly modest about the importance of
this
subject. The particular speed, form, and consequences of Japanese
economic
growth are not intelligible without reference to the contributions of
MITI. Collaboration
between the state and big business has long been acknowledged as
the
defining characteristic of the Japanese economic system, but for too
long the
state's role in this collaboration has been either condemned as
overweening or
dismissed as merely supportive, without anvone's ever
analyzing the matter. With this book I hope to contribute to such an
analysis.
The history of MITI is central to the economic and political history of
modern
As a particular pattern of late development, the Japanese case differs
from the
Western market economies, the communist dictatorships of development,
or the
new states of the postwar world. The most significant difference is
that in
This study proceeds historically for reasons that are elaborated in
Chapter 1.
Its time frame of 1925 to 1975 is significant in that it begins with
the
creation of the official industrial-policy bureaucracy, covers the
period in
which the main issues of industrial policy were discovered and debated,
and
reflects the direct continuity that exists between the prewar and
postwar
periods in terms of personnel and organizations. . . .
[p. 16] Technology transfers - the third alleged "free ride" - were
not exactly free, but there can be no question that they were crucial
to
Japanese economic growth and that the prices paid were slight compared
with
what such technology would cost today, if it could be bought at any
price.
The importation of technology was one of the central components of
postwar
Japanese industrial policy, and to raise the subject is to turn the
discussion
to MITI and the Japanese government's role. Before the capital
liberalization
of the late 1960's and 1970's, no technology entered the country
without MlTI's approval; no joint venture
was ever agreed to
without MlTI's scrutiny and frequent
alteration
of the terms; no patent rights were ever bought without MlTI's pressuring the seller to lower the royalties or to make other changes
advantageous to Japanese industry as a whole; and no program for the
importation of foreign technology was ever approved until MITI and its
various
advisory committees had agreed that the time was right and that the
industry
involved was scheduled for "nurturing" (ikusei).
From the enactment of the Foreign Capital Law in 1950 (it
remained on the books for the next thirty years), the government
was in
charge of technology transfers. What it did and how it did it was
not a
matter of a "free ride" but of an extremely complex process of
public-private interaction that has come to be known as "industrial
policy." MITI is the primary Japanese government agency charged with
the
formulation and execution of industrial policy.
Thus I come to the final school, in which I place myself, the
school that
stresses the role of the developmental state in the economic miracle.
Although the rest of this book is devoted to this subject - and to some
of the nonmiracles produced by the
developmental state in its
quest for the miracle - several further points are needed by way of
introduction. What do I mean by the developmental state? This is not
really a
hard question, but it always seems to raise difficulties in the
Anglo-American countries, where the existence of the
developmental state
in any form other than the communist state has largely been
forgotten or
ignored as a result of the years of disputation with
Marxist-Leninists.
The issue is not one of state intervention in the economy. All states
intervene
in their economies for various reasons, among which are protecting
national
security (the "military-industrial complex"), insuring industrial
safety, providing consumer protection, aiding the weak, promoting
fairness in
market transactions, preventing monopolization and private control in
free
enterprise systems, securing the public's interest in natural
monopolies,
achieving economies of scale, preventing excessive competition,
protecting and
rearing industries, distributing vital resources, protecting the
environment,
guaranteeing employment, and so forth. The question is how the
government
intervenes and for what purposes. This is one of the critical issues in
twentieth-century politics, and one that has become more acute as the
century
has progressed. As Louis Mulkern, an old
hand in the
Japanese banking world, has said, "I would suggest that there could be
no
more devastating weakness for any major nation in the 1980s than the
inability
to define the role of government in the economy." The particular
Japanese
definition of this role and the relationship between that role and the
economic
miracle are at once major components and primary causes of the
resurgent
interest in "political economy" in the late twentieth century.
Nowhere is the prevalent and peculiarly Western preference for binary
modes of
thought more apparent than in the field of political economy. In modern
times
Weber began the practice with his distinction between a "market
economy" (Verkehrwirtschaft) and a
"planned economy" (Planwirtschanft).
In states that were late to industrialize, the state itself led the
industrialization drive, that is, it took on developnlental functions. These two differing orientations toward private economic
activities,
the regulatory orientation and the developmental orientation, produced
two
different kinds of government-business relationships. The United
States is a good example of a state in which the regulatory orientation
predominates, whereas
Another way to make this distinction is to consider a state's
priorities in
economic policy. In the plan-rational state, the government will give
greatest
precedence to industrial policy, that is, to a concern with the
structure of
domestic industry and with promoting the structure that enhances the
nation's
international competitiveness. The very existence of an industrial
policy
implies a strategic, or goal-oriented, approach to the economy. . .
. .
[p. 25] The political nature of plan
rationality can
be highlighted in still other ways. MITI may be an economic
bureaucracy, but
it is not a bureaucracy of economists. Until the 1970's there were
only two
Ph.D.'s in economics among the higher career officials of the ministry;
the
rest had undergraduate degrees in economics or, much more commonly, in
public
and administrative law. Not until Ueno Koshichi became vice-minister in June 1957 vvas modern
economic theory even introduced into the ministry's planning processes
(Ueno
studied economics during a long convalescence from tuberculosis before
assuming
the vice-ministership). Amaya Naohiro reflects this orientation of the
ministry
when he contrasts the views of the scholar and of the practitioner and
notes
that many things that are illogical to the theorist are vital to
the
practitioner - for instance, the reality of nationalism as an
active
element in economic affairs. Amaya calls
for a
"science of the Japanese economy," as distinct from "economics
generally," and pleads that some things, perhaps not physics but
certainly
economics, have national grammars. One further difference between the
market-rational state and the plan-rational state is thus that
economists
dominate economic policy-making in the former while nationalistic
political
officials dominate it in the latter.
Within the developmental state there is contention for power among many
bureaucratic centers, including finance, economic planning, foreign
affairs,
and so forth. However, the center that exerts the greatest positize influence is the one that creates and executes industrial policy. MITI's dominance in this area has led
one
Japanese commentator to characterize it as the "pilot agency," and a journalist of the Asahi who has often been highly
critical of MITI
nonetheless concedes that MITI is "without doubt the greatest
concentration
of brain power in
[pp. 32] As late as 1973 MITI was writing that
[p. 35] Instead, I am concerned to explain why the discrepancy
between the
formal authority of either the Emperor (prewar) or the Diet
(postwar) and
the actual powers of the state bureaucracy exists and persists, and
why
this discrepancy contributes to the success of the developmental state.
[p. 41] For reasons that are still none too
clear, the
occupation authorities, or SCAP (Supreme Commander for the Allied
Powers),
never singled out the civilian bureaucracy as needing basic reform.
However, SCAP
eliminated completely from political life one major rival of the
economic
bureaucracy, the military; and it transformed and severely
weakened another,
the zaibatsu. Both of these developments propelled the economic
bureaucrats
into the vacuums thus created. Equally important, SCAP broke up the
prewar
Ministry of Home Affairs (Naimu-sho), which
had been
the most prestigious and powerful of ministries under the Meiji
Constitution.
The powers of the old Home Ministry were distributed primarily among
the new
ministries of Construction, Labor, Health and Welfare, Home Affairs (at
first
called "Local Autonomy"), and the Defense and Police agencies. But
the loss of power by the Home Ministry also offered new jurisdictions
into
which the economic bureaucrats could expand; for example, the Home
Ministry's
wartime regional bureaus and its police power to enforce rationing
passed,
respectively, to the Ministry of Commerce and Industry and the Economic
Stabilization Board. . . . .
[p. 78] MITI itself, as the descendant of one of the original
ministries dating
back to 1881, is certainly a "welfare community," but it also has
several characteristics that distinguish it from the other economic
bureaucracies. It is the smallest of the economic ministries in
terms of
personnel, and it controls the smallest share of the general account
budget. This last feature is important because it frees MITI from the
commanding
influence of the Finance Ministry's Budget Bureau, which all the
other
ministries must cultivate. MITI exercises control over money
through its
ability to approve credit or authorize expenditures by the Japan
Development
Bank, the Electric Power Development Company, the Export-Import Bank,
the
Smaller Business Finance Corporation, the Bank for Commerce and
Industrial
Cooperatives, the Japan Petroleum Development Corporation, and the
Productivity
Headquarters, all of which are public corporations that it controls -
or in
which its views are decisive. Although MlTl's official budget in fiscal 1956, for example, was only 8.2 billion, the
MITI
Press Club concluded that the ministry actually supervised the spending
of some
160.9 billion. . . .
[p. 157] AS
[p. 195] Virtually all Japanese regard the
defeat of
1945 as the most important watershed in modern Japanese history since
the Meiji
Restoration of 1868. However, from the point of view of the history of
industrial policy, I believe that the 1940's are one continuous
era: the
period of the high tide of state control. Beginning with the
policies of
the Tojo government and continuing with
their
acceleration by SCAP, the Japanese state came to dominate virtually
all
economic decisions, from those of zaibatsu enterprises to those of
individual households. Tojo and his
associates
intended this outcome but were unable to achieve it completely; the
Allied
reformers did not intend it but promoted it anyway, first out of their
commitment to making the government more responsible, and subsequently
out of
their commitment to Japanese economic recovery and growth as part of
the
renewed global resistance to totalitarianism. The prime political
beneficiaries of these developments were the economic
bureaucrats; the
ultimate economic beneficiaries were the Japanese people.
The longer-range significance of the achievement of state control,
however, was
to reveal its weaknesses. 1he fundamental political problem of the
state-guided
high-growth svstem is that of the
relationship
between the state bureaucracy and privately owned businesses. If this
relationship
is overbalanced in favor of one side or the other, it will result in
either the
loss of the benefits of competition or the dilution of the state's
priorities.
State control refers to the attempt to separate management trom ownership and to put management under state supervision. Whereas
big
business typically prefers self-imposed control, economic bureaucrats
typically
prefer state control. During the 1940's, when state control was
achieved,
its weaknesses - the growth of bureaucracy, irresponsible management,
corruption, and lowered efficiency - were also fully manifested. The
result was
that just as the deficiencies of self-control under the Important
Industries
Control Law of 1931 led to the movement toward state control, the
deficiencies
of state control under the Ministry of Munitions and the postwar MCI
led to the
government-business relationship of the high-growth era - that is, to
genuine
public-private cooperation. . . .
[p. 205] A typical Japanese group
includes a
big bank, several industrial firms, and a general trading company. The
bank plays the critical role during expanding business conditions
by supplying capital to the members, and the trading company plays the
critical role during contracting business conditions by importing
raw materials
on credit and fiercely promoting exports of products that cannot
be sold
domestically. SCAP broke up the old zaibatsu trading companies, but
as soon
as the occupation was over, MITI busily rebuilt them. Mitsui Bussan
and
Mitsubishi Shoji were dissolved on November 30, 1947, and their
liquidation
completed on August 31, 1950. The largest and most successful Mitsui
offshoots were the Dai Ichi, Sanshin,
and Kyokuto trading companies, while the leading Mitsubishi
splinters were
the Tozai,
[p. 217] The Foreign Capital Law dealt with this problem. It
established a
Foreign Investment Committee and stipulated that foreign investors wanting to license technology, acquire stock, share patents, or enter
into any
kind of contract that provided them with assets in Japan had first
to be
licensed (kyoka) by the committee. (At
the end of
the occupation the powers of this committee were transferred to the
Enterprises
Bureau). SCAP approved the law in order to guarantee the availability
of
foreign exchange for license payments, but the Japanese were more
interested in
restricting the import of foreign technology to those cases deemed necessarv for the development of Japanese
industries As
SCAP wrote, "Restrictive provisions of the law were to be relaxed and
eliminated as the need for them subsided."' But restrictions did not
even
begin to be relaxed until 1968, long after
[p. 276] The very thought of capital
liberalization
struck terror in the hearts of MITI officials and Japanese industrial
leaders.
In their view trade liberalization had meant only meeting world
competition in
terms of products (quality, design, price, and so forth), a level at
which
Japan had worked out the successful strategy of importing technologv from Europe and America, combining it with Japanese labor power, and
then
offering to the market products that were able to compete profitably
with those
of other countries. But capital liberalization meant competition at
every level
of an enterprise - in technology, capital resources, managerial skills,
and all
the rest. The low levels of capitalization of Japanese firms, a
consequence
of the indirect financing system invented during the capital
shortage of
the Korean War period, made them easy targets for foreign acquisition.
The issue,
of course, was nationalistic rather than economic - the belief on the
part of
some Japanese that the United States had for all intents and purposes
"bought" Western Europ e- and was about to
buy Japan, as well. . . .
[p. 283] The contemporaneous foreign
criticism of
the ministry - James Abegglen's term "Japan,
Inc." and the
[p. 308] Perhaps surprisingly, in light of the determined efforts of
the
American occupiers to change Japanese economic institutions, a
considerable
degree of continuity also exists throughout the Showa era in the means
adopted
by the state to achieve economic development. The great discontinuity
is of
course in the discredited reliance on military force to achieve
economic
security via imperialism. This failed so disastrously that after 1945
it was
totally repudiated. But this does not mean that the strictly economic
development policies attempted during the militarist era were or should
have
been repudiated. Instead of being rejected, they came to form a
repertoire of
policy tools that could be used again after peace and independence had
been
attained. There is actually nothing surprising about this: just as the
activism
of the postwar American state had its roots in the New Deal and just as
the totalism of the postwar Soviet state
had its roots in the
Stalinism of the First Five Year Plan, so the developmentalism of the postwar Japanese state had its roots in the economic initiatives
of the
1930's. In this sense the experience of the 1930's and the 1940's
was not
by any means totally negative for postwar
There are striking continuities among the state's various policy tools
over the
prewar and postwar years. Yoshino and Kishi discovered
industrial rationalization during the late 1920's as a means to
overcome the
recession; their proteges Yamamoto, Tamaki, Hirai, Ishihara, Ueno, Tokunaga, Matsuo,
Imai, and Sahashi applied it again during
the 1950's and 1960's to
achieve modern, competitive enterprises. During both periods the
state
attempted to replace competition with cooperation, while not totally
losing the
benefits of competition. Governmental control over the
convertibility of
currency lasted uninterruptedly from 1933 to 1964, and persisted
even after
that time in attenuated forms. The Petroleum Industry Law of 1934 is
the
precise model for the Petroleum Industry Law of 1962. The plans and
planning
style of the Cabinet Planning Board were carried over to the Economic
Stabilization
Board and the Economic Planning Agency, particularly in their use of
foreign
exchange budgets to implement their plans. MlTI's unique structural features - its vertical bureaus for each strategic
industry,
its Enterprises Bureau, and its Secretariat (derived from the old
General
Affairs Bureau of MCI and the General Mobilization Bureau of MM) - date
from
1939, 1942, and 1943, respectively. They continued to exist in MITI
down to
1973 unchanged in function and even, in some cases, in name.
Administrative guidance
has its roots in the Important Industries Control Law of 1931.
Industrial
policy itself was, of course, as much a part of the Japanese
governmental
lexicon in 1935 as it was in 1955.
Perhaps the greatest continuity is in terms of the people who
executed the
state's industrial policy. Yoshino, Kishi, Shiina, Uemura,
and virtually all
other leaders of politics, banking, industry, and economic
administration were
prominent in public life before, during, and after the war. The
continuities
between MCI and MITI are not only historical and organizational but
also
biographical. The late 1970's marked the end of an era, but the change
above
all was a change of generations: the top leaders of the bureaucracy
were no
longer men who had experienced service during wartime and the postwar
occupation. The new officers of MITI during the 1980's will be young
Japanese
born during the 1960's, and their easy familiarity with peace and
prosperity
makes them different from all other Japanese born during the preceding
years of
the twentieth century.
The wrenching changes that MITI was forced to undertake during the late
1970's
were caused at least in part by the fact that the ideas of the people
who had
guided Japan's economy from approximately 1935 to 1965, the generation
that is
typified by Sahashi, were no longer
adequate to the
new problems facing the nation and the ministry. The old cadres had
been first
of all managers of heavy and chemical industrialization. But the 1970's
and
beyond demanded specialists in managing an already industrialized
economy whose
very weight gave it global responsibilities. It is to MlTI's credit that it produced such leaders, and that they set out to engineer
a
new change of industrial structure, one that emphasized postindustrial
"knowledge-intensive" industries. The greatest assurance of their
likely success in such a difficult venture, however, was the fact that
they had
been reared in an organization that had already changed the industrial
structure once before.
The fundamental problem of the state-guided high-growth system is that
of the
relationship between the state bureaucracy and privately owned
businesses. This
problem erupted at the very outset of industrial policy in the schemes
of
Yoshino's Temporary Industrial Rationality Bureau, and it persisted
uninterruptedly down to the Mitsubishi revolt and to the Fair Trade
Commission's attack on MlTI's administrative guidance
cartel for the petroleum-refining industry. It is a problem that will
never
disappear; it is inherent in the capitalist developmental state. Over
the past
50 years
Self-control means that the state licenses private enterprises to
achieve
developmental goals. The typical institution is the state-sponsored
cartel,
in which the state authorizes cartels in industries it designates as
strategic but then leaves to the enterprises themselves the task of fashioning
and
operating the cartel. This was the approach adopted for the Important
Industries Control Law of 1931, and for the steel industry from the
public
sales system of 1958 to the Sumitomo Metals Company incident of 1965.
The
primary advantage of this form of government-business relationship is
that it
affords the greatest degree of competition and private management in
the
developmental state system. Its greatest disadvantage is that it leads
to
control of an industry by the largest groups in it (as in zaibatsu
domination),
and to the likelihood of divergence between the interests of the big
operators
and the interests of the state (as, for example, in the war-time
"control
associations"). This form of government-business relationship is the
one
typically preferred by big business.
State control refers to the attempt to separate management from
ownership
and to put management under state supervision. It was typically the
form of
the relationship preferred by the "reform" (or "control")
bureaucrats of the late 1930's and by the whole state bureaucracy
during
postwar reconstruction and the early stages of high-speed growth. Its
principal
advantage is that the state's priorities take precedence over those
of
private enterprise. Its primary disadvantages are that it inhibits
competition, and therefore tolerates gross inefficiency in the economy,
and
that it fosters irresponsible management. The closest Japanese
approximations
to it occurred in Manchuria, in the prewar and wartime electric power
generating industry in the wartime munitions companies, in the postwar
coal
industry and in the hundred or more public corporations of contemporary
[p. 311] The third form of the
government-business
relationship, that of public-private cooperation, is by far the
most
important. Although all three forms occurred throughout the entire 50
years of
this study (depending primarily on variations in the political power of
the
state and private enterprise), the broad pattern of development since
the late
1920's has been from self-coordination to its opposite, state
control, and
then to a synthesis of the two, cooperation. The chief advantage of
this
form is that it leaves ownership and management in private hands,
thereby achieving higher levels of competition than under state
control, while
it affords the state much greater degrees of social goal-setting and
influence over private decisions than under self-control. Its principal
disadvantage is that it is very hard to achieve. It flourished in
The chief mechanisms of the cooperative relationship are selective
access to
governmental or government-guaranteed financing, tar- geted tax breaks, government-supervised investment coordination in order to
keep all
participants profitable, the equitable allocation by the state of
burdens
during times of adversity (something the private cartel finds it very
hard to
do), governmental assistance in the com- mercialization and sale of products, and governmental assistance when an industry as a
whole
begins to decline.
This form of the government-business relationship is not peculiarly or
uniquely
Japanese; the Japanese have merely worked harder at perfecting it and
have
employed it in more sectors than other capitalist nations. The
so-called
military-industrial complex in the
laboratories and the existence of such official agencies as the former
Atomic
Energy Commission and the National Aeronautics and Space Administration
- is
thought by Americans to be exceptional, whereas it was the norm for
Japan's
leading industrial sectors during high-speed growth. It is also
perhaps
significant that aviation, space vehicles, and atomic energy are all
sectors in
which the
As noted earlier, the cooperative government-business relationship in
the
capitalist developmental state is very difficult to achieve and
maintain. Even
with such deeply entrenched social supports for cooperation as a shared
outlook
among government and industrial leaders because of common education
(for
instance, at Todai Law) and an extensive
cross-penetration of elites because of early retirement from government
service
and reemployment in big business, the Japanese have difficulty in
keeping
public-private cooperation on the tracks. Industry is quite willing to
receive
governmental assistance, but it does not like government orders (as the
steel
and automobile industries illustrate). Government is often frustrated
by the
excessive competition and preemptive investment of industries it is
trying to foster
(as the petrochemical and textile industries illustrate). Nonetheless,
the
Japanese have worked hard to create cooperative relationships and have
developed numerous unusual institutions through which to pursue them.
These
include the official "deliberation councils" such as the Commerce and
Industry Deliberation Council of 1927, the Cabinet Advisers Council of
1943,
the Industrial Rationalization Council of 1949, and the Industrial
Structure
Council of 1964; MITI's vertical bureaus
and the
corresponding officially sanctioned trade associations for each
industry; the
temporary exchange of officials between the state and private
enterprise (for
example, the posting of young MITI officers to Keidanren
headquarters); the
formal "discussion groups" implemented in the wake of the failure of
the Special Measures Law; and the practice of administrative
guidance, in
which government officials and representatives of banking and industry
can
coordinate their activities unconstrained by law and lawyers.
In addition, the Japanese have fostered social supports for
cooperation. We
have already mentioned two of them- the essentially bureaucratic
education of
both public and private managers and the extensive "old boy"
networks. It should not be thought that these are the only social
supports or
that they are not duplicable in other societies. They would be very
hard to
duplicate in other societies, since they rest on long-entrenched
practices, but
they are not pure cultural givens. As this book has sought to show,
there was
more consensus and cooperation in
In
Morita Akio, chairman of Sony Corporation, believes that the emphasis
on
profitability has been a major cause of American industrial decline. He
asserts, "The annual bonus some American executives receive depends on
annual profit, and the executive who knows his firm's production
facilities
should be modernized is not likely to make a decision to invest in new
equipment if his own income and managerial ability are judged based onlv on annual profit." Morita believes that the
incentive structure of postwar Japanese business has been geared to
developmental goals, whereas the incentive structure of
American
business is geared to individual performance as revealed by quick
profits.
The result is not simply a lack of long-term planning in the
The point is that Japan's more flexible means of evaluating managers
contributes to smoother labor-management relations than in some
other
countries and also avoids disincentives to cooperate with other
enterprises and
with the government. These Japanese practices came into being as a
result of
postwar conditions. According to Morita, "There is nothing in Japanese
history to suggest that smooth labor-management relations came
naturally";
prewar Japanese capitalism was "stark in its exploitation of labor."
The postwar leveling of all Japanese incomes because of inflation and
national adversitv made possible the
relative equality of rewards
that existed during high-speed growth, as well as the emphasis on
measures
other than profitability for managerial performance. These social
conditions
are of considerable advantage to Japan in competing with countries such
as the
United States, but obviously they would be very difficult to
transplant:
although the salaries of American managers might be reduced, the
institution of
some other measure of performance than short-term profitabilitv would require a revolution in the American system of allocating
savings to
industry through stock markets.
The priorities and social supports for cooperation among the Japanese
might not
be replicable in other societies, but it is easv to
imagine that they might be matched - that is, a different society might
be able
to manipulate its own social arrangements in ways comparable to those
of
postwar Japan in order to give top priority to economic development and
to
provide incentives for public-private cooperation. If this vvere the case, then such a society would need an abstract model of the
Japanese
high-growth svstem to use as a guide for
its own
concrete application. Specialists on modern
The first element of the model is the existence of a small,
inexpensive, but
elite bureaucracy staffed by the best managerial talent available in
the
system. The quality of this bureaucracy should be measured not so much
by the
salaries it can command as by its excellence as demonstrated
academically and
competitively, preferably in the best schools of public policy and
management. Part
of the bureaucracy should be recruited from among engineers and
technicians because of the nature of the tasks it is to perform, but the
majority should
be generalists in the formulation and implementation of public
policy. They
should be educated in law and economics, but it would be preferable
if they
were not professional lawyers or economists, since as a general
rule
professionals make poor organization men. The term that best describes
what we
are looking for here is not professionals, civil servants, or experts,
but
managers. They should be rotated frequently throughout the economic
service and
retire early, no later than age 55.
The duties of this bureaucracy would be, first, to identify and choose
the
industries to be developed (industrial structure policy); second, to
identify
and choose the best means of rapidly developing the chosen industries
(industrial rationalization policy); and third, to supervise
competition in the
designated strategic sectors in order to guarantee their economic
health and
effectiveness. These duties would be performed using market-conforming
methods
of state intervention (see below).
The second element of the model is a political system in which the
bureaucracy is given sufficient scope to take initiative and
operate
effectively. This means, concretely, that the legislative and judicial
branches
of government must be restricted to "safety valve" functions. These
two branches of government must stand ready to intervene in the work of
the
bureaucracy and to restrain it when it has one too far (which it
undoubtedly
will do on various occasions), but their more important overall
function is to
fend off the numerous interest groups in the society, which if catered
to would
distort the priorities of the developmental state. . . .
[p. 319] The Japanese of course rely on law, but on short and
highly
generalized laws. They then give concrete meaning to these laws
through
bureaucratically originated cabinet orders, ordinances, rules, and
administrative guidance. All bureaucracies, the Japanese included, are
inclined
to abuse this rule-making authority (compare, for example, the chaos of
rules
churned out by the American Internal Revenue Ser- vice); but the answer
to this
problem seems to lie in finding better bureaucrats, not in eliminating
their
discretionary powers. In the case of flagrant bureaucratic abuse, the
offended
party may have to turn to the courts - something that the Japanese
began to do
during the 1970's more than in the past (for example, in the pollution
suits
and in the FTC's resort to the courts in the Yawata-Fuji
merger case and the black cartel case). Nonetheless, compared to the
participants in other systems, the Japanese seek to avoid
litigation,
relying instead on tailor-made government solutions to concrete problems (as in the Maruzen Oil Company case), and thereby avoiding legal
impact on
sectors that do not need it. At its best Japanese administrative
guidance is
comparable to the discretionary authority entrusted to a diplomat negotiating
an international agreement. Success depends upon his skill, good sense,
and
integrity, and not on a set of legal requirements that no matter how
well
crafted can never truly tell a negotiator what to do.
The fourth and final element of the model is a pilot organization like
MITI.
The problem here is to find the mix of powers needed by the pilot
agency
without either giving it control over so many sectors as to make it
all-powerful or so few as to make it ineffective. MITI itself came into
being
through a fortuitous process of accretion. MCI originated from the
separation
of agricultural and commercial-industrial administration. It developed
by
adding industrial functions while shedding commercial ones, obtained a
planning
capability when the Cabinet Planning Board was merged with its General
Affairs
Bureau in MM, and gained complete control over energy only when coal,
petroleum, and electric pover administration were
com-
[p. 320] bined during the MM era. The war
also
provided the ministry with micro-level intervention powers through its
Enterprises Bureau. MITI itself finally resulted from the union of MCI
and the
apparatus for controlling international trade (the BOT). MITI has never
had
jurisdiction over transportation, agriculture, construction, labor, or
finance,
although it has had a strong influence over them, particularlv over finance, through such institutions as the Japan Development Bank.
The
fight over Sahashi's Special Measures Law
revolved
primarily around MlTl's efforts to extend
its
jurisdiction to cover industrial finance.
It is obviously a controversial matter to define the scope of the pilot
agency. MlTl's experience suggests that the
agency that
controls industrial policy needs to combine at least planning, energv, domestic production, international
trade, and a
share of finance (particularly capital supply and tax policy). MITl's experience also suggests the need not to
be
doctrinaire; functions can and should be added and subtracted as
necessary. The
key characteristics of MITI are its small size (the smallest of any of
the
economic ministries), its indirect control of government funds (thereby
freeing
it of subservience to the Finance Ministry's Bureau of the Budget), its "think
tank" functions, its vertical bureaus for the implementation of
industrial policy at the micro level, and its internal democracy. It
has no
precise equivalent in any other advanced industrial democracy.
(8) Chalmers Johnson on the Flying Geese model.
Shorenstein Reports on Contemporary
Number 5 May 1995
THE
END OF THE JAPANESE-AMERICAN
by Chalmers Johnson
One problem that has always existed with Japan's
idea
that the East Asian economies were like a V-formation of flying geese,
with
Japan as head goose (aside from the fact that China may not always
like
being number two goose), is that nobody ever asked where these
geese were
flying. They were actually flying to
The
... We have every reason to promote multiparty democracy in
The major new element in the Asia-Pacific region is a
(9) Fickle, Bitter, and Dangerous - An
interview with Chalmers Johnson by
David Ross.
http://www.zmag.org/
content/showarticle.cfm?SectionID=40&ItemID=5255
... Chalmers Johnson: We created satellites in East Asia after World
War II in
the areas that we had conquered in exactly the same way and for more or
less
the same reasons that the Soviet Union created satellites in Eastern
Europe -
satellites that gained their independence from the Soviet Union after
the
Berlin Wall was breached in 1989. ...
Chalmers Johnson: One of the things that worried the
We became deeply concerned, however, about the fact that
Therefore, there's no question that we
used organizations that are our surrogates, our proxies - the International Monetary Fund (IMF), the
World Bank, and the World Trade Organization - to
destabilize various nations in
A special study on the "Asia Crisis":
* How To Kill A Tiger: Speculators Tell The Story Of Their Attack
Against The
Baht, The Opening Act Of An Ongoing Drama
* Special Meeting of the ASEAN Foreign Ministers in Kuala Lumpur on 31
May 1997 decided to admit Burma
* Rush to embrace Burma's dictators will be swept aside in march
of
history
by MARK BAKER, in The Age, Melbourne, June 7, 1997; and Sydney
Morning Herald, June 7, 1997:
"The decision by ASEAN foreign ministers to admit Burma as a
full
member next month in open defiance of the United States ... is
likely to seriously complicate ASEAN's future relations with
Europe and
the US ... It is the ASEAN leaders who now stand isolated and
who, with
their Burmese military cohorts, will be swept aside in the
inexorable
march of history"
* Mahathir And Soros:
Currency Crisis And Political Agendas
* Albright 7/27 Remarks At The Asean Regional
Forum
* Paul Krugman defends Speculators
and more ... all at asia-crisis.html.
Kinhide Mushakoji on the
political polarities of
Edith Terry, How Asia Got Rich:
James Fallows' article How the World Works, on how
How the
*********************
Francis McCollum Feeley
Professor of American Studies/
Director of Research
Université Grenoble-3
http://dimension.ucsd.edu/CEIMSA-IN-EXILE/