Top Dog

Geoffrey Hawthorn

  • Nippon, New Superpower: Japan since 1945 by William Horsley and Roger Buckley
    BBC, 278 pp, £15.00, November 1990, ISBN 0 563 20875 9
  • United Nations Human Development Report 1990 by Mahbub al Haq
    Oxford, 189 pp, £9.95, May 1990, ISBN 0 19 506481 X
  • Nationalism and International Society by James Mayall
    Cambridge, 175 pp, £25.00, March 1990, ISBN 0 521 37312 3
  • The International Relations of Japan edited by Kathleen Newland
    Macmillan, 232 pp, £40.00, November 1990, ISBN 0 333 53456 5

An officer in MacArthur’s new administration walked into the Mitsui office in Tokyo in September 1945. ‘There it is,’ a manager said, pointing to a map of the Greater East Asia Co-Prosperity Sphere – Japan’s prewar plan for the region. ‘We tried. See what you can do with it.’ The Americans hesitated. Washington was at that moment more inclined to retribution than recovery. And the power of zaibatsu like Mitsui, huge family-owned conglomerates which had invested in Japan and its imperial territories in North-East Asia, produced matériel for the war, and come to control much of the country’s heavy industry and financial business, was incompatible with the ‘economic democracy’ the American administration wished to introduce. It started to dismantle them.

The decision was short-lived. Congress wanted to reduce its overseas spending. The administration in Tokyo was becoming alarmed at the power and political inclination of the unions it had begun by encouraging. In 1949, Chiang was finally defeated in China. And in 1950, war broke out between the two new Koreas. The United States now needed matériel of its own in East Asia. It asked Japanese firms to provide it. The zaibatsu took the chance to regroup into keiretsu, centred now on banks rather than family holdings, and to extend the integration of manufacture and distribution. By the end of the Fifties, the government in Tokyo felt confident enough to raise domestic demand. In 1960, it announced a National Income-Doubling Plan. In the next ten years, Japan managed a rate of capital formation unmatched by any economy before and only exceeded since by South Korea in the Seventies. ‘The Greater East Asia Co-Prosperity Sphere – isn’t it nice?’ a Japanese cabinet minister remarked in 1969. ‘We tried to construct it by military power in the past. This time we are going to create it by economic power.’

That has certainly been the strategy. And Asia has been favoured. Japan extended important credits to Taiwan and South Korea. As the keiretsu have moved through textiles, metals, heavy machinery, chemicals and finished metal goods to more advanced electronics, they have transferred manufacturing and technology to East Asia and more recently also to the South-East. By the mid-Eighties, the amount of Japan’s direct foreign investment in Indonesia was second only to its investment in the United States. Much of the Government’s own Overseas Development Assistance has also been to the region. In 1986, the influential Nomura Institute suggested that to reduce its dependence on the United States, Japan should direct ‘globally-traded funds into regional markets’. It is only the most promising connection of all which has yet to be made: that between Japanese capital and technology, Siberian resources and Chinese labour and markets – a co-prosperity sphere of great potential. (Gorbachev has asked for investment in the eastern USSR, but the Japanese have been frustrated at not being sure who they’re dealing with and what authority these people have. China also wants Japan to invest, but in order to improve China’s exports, not, as Japanese firms want to do, to exploit the Chinese market.)

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