Japan: Finding its place in a new global order

By Taichi Sakaiya

In few corners of the world will the new "geo-strategies" arising from the changes in Europe (discussed elsewhere in this issue by Mihály Simai) have more importance or urgency than in Japan - the new economic giant on the world scene in the closing decades of the 20th century. In the following article, however, Taichi Sakaiya questions whether Japan's opinion leaders, policy-makers and media truly appreciate that an old world order is ending and a new one arising.

How Japan manages to adapt its own special culture to these global rearrangements, he contends, is one of the most urgent problems facing that country today. In the past, he notes, Japan's failure to adjust to such realignment "led straight to its calamitous role in World War II."

A writer and social commentator, Mr. Sakaiya graduated from the University of Tokyo where he majored in economics, and has served in the Ministry of International Trade and Industry. He is the author of a number of works on the problems of modern Japan. The following article is excerpted from the Spring 1990 issue of Japan Echo with permission. - Editor

At the Washington Conference of 1921-22, multilateral pacts embracing Japan, the United Kingdom, France, Italy and the United States were established to replace old bilateral alliances - such as that between Japan and the UK, concluded in 1902, which had helped to fuel Japan's rapid industrial and military expansion.

But the aftermath of World War I saw a major alignment of political forces - which the Washington Conference attempted to address. Japan's leaders, however, continued to operate on the assumption that the old British interests in Japan held true - and that the country's military adventurism would be tolerated. By the time they realized their error, Japan had reached the point of no return and found itself on the threshold of a disastrous war.

To avoid a similar miscalculation in our own time, we must first of all come to grips with the fact that the breakdown of the Yalta setup heralds a major regrouping of the world's political forces. This is only the most obvious change that faces Japan in the 1990s and beyond. Some of the most fundamental political and economic assumptions on which the world has operated are being rapidly underminded. Japan must face up to these changes if it is to avert another disaster.

One such change is the trend toward the formation of regional blocs as manifested in the European Community's plans to create a single market by 1992 and the US-Canadian Free Trade Agreement that went into effect in 1989. While these are technically economic agreements focused on market unification, they are premised on regional and cultural proximity. In essence, the impulse that we have seen gaining momentum over the past few years - particularly in Western Europe - is the consolidation of a particular cultural sphere.

As countries open their borders and bring their industrial standards and regulations into line with those of the rest of the world, the international flow of peoples and goods will certainly accelerate, lending further impetus to the forces of consolidation along cultural lines.

This trend poses a serious dilemma for Japan. Some Japanese commentators have suggested that we respond to American and European moves toward regional market integration by proposing a unified Pacific basin market, but the cultural diversity embraced by this vast area argues against the feasibility of such a scheme. Great obstacles would have to be overcome before Japan could integrate its markets with those of the United States and Canada, for example. As our Western trading partners join hands with one another, Japan could easily be left out in the cold.

The consolidation of cultural spheres in Europe has been accompanied by attempts on the part of ethnic groups within nation-states to reassert their cultural identities. On a personal level, for example, I have been interested to notice the resurgence of the Catalan language over the course of repeated visits to Barcelona, Spain, in recent years. The same phenomenon has reached crisis proportions in the Soviet Union as national movements have been gaining momentum in the non-Russian republics.

In short, national boundaries are giving way to cultural, ethnic and regional boundaries. This brings us to a third development of crucial importance to Japan in the coming decades: a radical change in the very concept of the modern nation-state.

In Japan, the world "globalism" is understood almost exclusively in the economic sense. But in most of the world its increasingly frequent use reflects the perception that the nation-state is no longer the absolute and unchallenged political concept it used to be. One indication of this is the burgeoning flow of refugees world-wide.

The flood of migrants over the last several decades signals a sharp departure from the traditional concept of the nation-state: as a body sustained by the loyalty of its people and, in turn, committed to their protection. This was a concept to which Japan had subscribed enthusiastically ever since it bid farewell to the feudal age in the mid-nineteenth century. It marks the emergence of a new globalism whose repercussions extend far beyond the "borderless economy" that the Japanese are so fond of contemplating.

An aerial view of the Nippon Convention Center at the Makuhari New Town development project in Chiba Prefecture in Japan which hopes to become a top international convention facility.

The decision by President Nixon in 1971, to free the cost of gold, signaled the dawn of a new age of currency - untied to any commodity and thus divorced from production costs. For roughly the next decade, there was an effort by the United States to stabilize the dollar by keeping its budget and external accounts in some semblance of order. But then the Reagan administration threw caution to the winds - and (et the budget and trade deficits balloon to monstrous proportions in an attempt to create the illusion of prosperity.

The effects of this policy of fiscal irresponsibility extended beyond government finance to every level of economic activity. Over this century, America's ratio of private debt to gross national product, for example, had held remarkably steady, allowing for the impact of war and depression. Beginning in 1983, however, it climbed at the extraordinary rate of 10 percentage points a year. Even now, the average corporate ratio of net worth to total capital is falling as companies continue their borrowing spree.

A similar attitude has invaded American households. It is no longer deemed necessary to keep the family accounts in the black each month. In fact, since 1986, America's household budgets have registered an aggregate deficit - an unprecedented development. Clearly, a new perception of money has permeated society from top to bottom.

Related to this change is the increasing dissociation of prices from cost. Japan is very much at the forefront of this trend, though it began elsewhere with the erratic rise of oil prices in the 1970s. In the 1980s the market value of Japanese land and stocks has soared far out of proportion to the returns one could rationally expect from their ownership.

A final development to which the Japanese must pay heed is a general reassessment of the utility of military power. Of course, it would be naive to imagine that all the peoples of the world have suddenly committed themselves to peace. But there is mounting skepticism as to the relevance of military might to national security.

The nuclear arsenals of the United States and the Soviet Union can be unleashed only at the risk of mutual annihilation and are thus, for all intents and purposes, useless. In the past, it was suggested that this state of affairs rendered the quality and quantity of conventional weapons all the more crucial. Yet the United States lost the war in Vietnam, and the Soviet Union - even while spending 12 per cent of its GNP on armed forces - was unable to win the conflict in Afghanistan. In light of these ironies, people have begun to question the point of accumulating military firepower, personnel and technology beyond a certain point.

Thus many of the fundamental economic, political and military assumptions that have dominated the postwar era are crumbling. Yet Japan continues to uphold the orthodoxy of the modern nation-state and modern industrial society, and to cleave to policies predicated on these principles. The gap between global trends and the contemporary Japanese mind-set is steadily widening.

The so-called structural impediments talks between Washington and Tokyo are designed to help close this gap. In the course of the initial discussions, the focus inevitably shifted from Japan's economic policies to its social systems. Soon it is bound to become apparent that the problems run even deeper. At issue is the basic value system of postwar Japan.

In the past four decades or so, Japan has operated on the basis of three basic values: efficiency, equality and safety. Policy-making during this period has been essentially a matter of balancing the demands of these three principles.

In the case of environmental policy, for example, this meant weighing the imperative of protecting public safety and health against that of maximizing industrial efficiency. In regard to taxes it was a question of equity versus efficient revenue collection. Opinion leaders debated long and hard over the priority of one principle over another. In the meantime, however, a host of other important human values - freedom, choice, enjoyment, courage, and so forth - were virtually forgotten.

By thus focusing the energies of a relatively homogeneous population on a few simple, clear-cut values, Japan achieved a high degree of economic efficiency and industrial competitiveness. Indeed, seen in this light, its postwar success is hardly surprising. But the people have paid for this achievement with their own personal freedom, range of choice, and ability to enjoy life. Within the confines of contemporary Japanese society, their wealth cannot buy happiness.

Japan's tendency to sacrifice the freedom and happiness of its people in the cause of economic preeminence hardly endeared it to its trading partners. But as a member in good standing of the Western bloc, the country was viewed as more of an asset than a threat, and efforts were made to accommodate its idiosyncrasies. From here on out, however, it is Japan that will have to do the accommodating.

A significant number of people knowledgeable about Japan have now begun to argue that cultural differences are no excuse for unfair policies. It is, in my view, becoming increasingly apparent that Japan's postwar culture is indeed at odds with the emerging world order - and Japan bashing can only escalate.

It is time for we Japanese to take matters in hand and overhaul the society we have so labouriously built up since World War II. History has already shown us what can happen when we carelessly allow global trends to pass us by. We would do well to heed the lesson.