Fallows Offers an Unclouded View Of East Asia's Economic Outlook

A TOYOTA executive tried to explain to me last year why Japan's biggest carmaker would not lay off a single Japanese worker, despite a huge slump in car sales:

``It would bring confusion inside Japan.''

Such denials by businessmen of ``free market'' theory in favor of the national interest are among the odd aspects that Westerners often encounter in Japan and other parts of East Asia. But it is just such a uniqueness of culture that helps account for much of that region's economic success.

James Fallows, the Washington editor for the Atlantic Monthly magazine, spent four years tracking Asia's cultural uniqueness and economic formulas in the late 1980s, living in both Japan and Malaysia, tapping the insights of resident foreigners and reading up on his history.

During those years, the commentaries of this former Carter speech writer became a leading intellectual force in the United States. Fallows's astute articulation helped to redirect US foreign policy away from its postwar assumption that Japan was a benign student of Western capitalism and democracy, a nation that was becoming ``more like us.'' He dismisses these popular ideas of Japan, such as that of the late Edwin Reischauer, as romantic.

Instead, Fallows tries to show how Japan has been on an economic war footing for 120 years in a race to win economic success and dominate Asia, a fact to which the West is only beginning to awaken.

``The memory of not having been equals remains clear and important in Asia and yet is largely unrecognized in Europe and the United States,'' Fallows claims.

Fallows, in a magazine article entitled ``Containing Japan'' (unfortunately translated into Japanese as ``Strangling Japan''), painted that nation as an economic menace to international (read Western) order and the new threat after the Soviet Union.

This earned him a semi-racist label among the Japanese as a ``Japan basher.'' Fallows actually spends most of his effort criticizing US practices that impede its international economic effectiveness.

It is partly to his credit that President Clinton has avoided vague trade pacts, instead finding the persistence of the US trade imbalance unacceptable, and demanding that Japan show measurable results in further opening its markets. One could argue that the limited success of these trade efforts is due in part to the dynamics Fallows describes.

Building on his magazine writings, Fallows has now come out with ``Looking at The Sun: The Rise of the New East Asian Economic and Political System,'' a book that offers little in theory, but which is rich in telling detail about Japan and Asia, much of it from journalists and scholars.

Fallows's prime target is traditional Anglo-American laissez faire economic theory, which he blames for being blind to Asia's methods of government intervention in markets and of putting producers ahead of consumers.

The blindest spot of Western economists, he finds, is an assumption that the Western model is the only model, and that other nations will inevitably follow it.

``This is not supposed to be an ideological age, but the ideas we use to explain events are very, very powerful,'' he writes.

Fallows does a service by revealing how Japan reached back to the theories of an obscure 19th-century German thinker, Friedrich List, for its intellectual origins in justifying a way that government should guide markets and business, making up for their failures.

This has led to a mercantile form of capitalism characterized by national industrial policy, collaboration among corporations, and cohesive international trade strategies by businesses and government.

Meanwhile, in the international competition of ideas, Japan has created a small industry of intellectuals, both American and Japanese, to counter the arguments of Fallows and other so-called Japan-bashers.

For that reason alone, ``Looking at the Sun'' is worth an unclouded reading to prevent its view from being eclipsed by Japan's active public-relations machine.

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