The United States and the New World Order

A COLD PEACE: AMERICA, JAPAN, GERMANY, AND THE STRUGGLE FOR SUPREMACY. By Jeffrey E. Garten, Times Books, 277 pp., $22

AMERICANS are finding it distressingly difficult to make political choices these days, in large part because they are caught in the middle of a paradigm shift, a transformation of deeply held assumptions about the common conditions of life. The United States economy is becoming international just as its international influence is waning, and US leaders are working with policies that emerged when American dominance of the industrial West was still a foregone conclusion.

Jeffrey E. Garten's "A Cold Peace" is not the first book to suggest that the US status in the "new world order" is likely to be vastly diminished and problematic; Paul Kennedy's "The Rise and Fall of the Great Powers" (1988) inaugurated the genre. But Garten, an investment banker and former State Department official, has brought a sharp analysis to bear on a central aspect of this decline: America's troubled relations with the most formidable of the rising powers, Japan and Germany.

Observers have been understandably fascinated by the resurgence of former enemies from the devastation of World War II. Garten shows that the Japanese and German recoveries sprang from the historic strengths of these intensely goal-oriented societies, strengths that were reborn thanks to the capital the US generously provided after the war. Despite America's influence on their postwar social structures (Japan and Germany are the only industrialized countries the US has ever occupied), their world views a nd economic strategies have remained uniquely their own. Garten observes that it is precisely because their political realities are so distinct - so closed, collective, and traditional - that they challenge every aspect of America's individualistic, free-market ideology.

Garten's book provides a corrective balance to much of the nationalist hysteria Americans have directed at Japan in the recent past. He shows that many of the "faults" Americans find in Japan's protected and subsidized economy can also be detected in Germany's, though the US treats the latter with considerably less distrust. He also argues that the relative decline of the US in the face of these two troublesome allies is as much due to American failures in education and infrastructure-building as to plot ting by the Germans and Japanese to steal US markets.

Unfortunately, Garten's neoliberal emphasis on the strengths of Japan and Germanys' planned economies causes him to undervalue America's laissez-faire approach to corporate culture. Contrary to the now fashionable calls for the US government to take a greater role in guiding the manufacturing sectors, these rivals' much-vaunted industrial policies are beginning to show their flaws. For instance, Tokyo's multibillion-dollar effort to create a "fifth generation" of high-speed computers has fallen far behin d the loosely coordinated efforts of American academics and corporate scientists working on similar projects.

On the other hand, though he overrates the merits of government-led economies, Garten does not subscribe to the "America First" chauvinism that has intoxicated both liberals and conservatives: This is no protectionist or isolationist tract. Garten says America's leadership will continue to be necessary to preserve world stability. He reminds those who would consider abdicating US global responsibilities that the chaos of the '20s and '30s resulted when no great power rose to assume England's discarded ma ntle of geopolitical stewardship.

Nevertheless, it is also the case that the US can finance its leadership role only by setting its domestic house in order. Garten's suggestion of fusing the domestic and foreign policy establishment into one giant National Economic Security Agency is intriguing; it's unfortunate that he hasn't put forward more concrete policy proposals such as this. As it stands, his diagnosis of the US predicament is telling and provocative, and shows that Americans have the intellectual tools to deal with their problem s, if not the political will.

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