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Asia in Japan's Embrace: Building a Regional Production Alliance
By Walter Hatch and Kozo Yamamura
Cambridge University Press
1997 (first published in 1996)
281 pp., $34.95 (pb)
Review by Eva Cheng
Asia in Japan's Embrace tries to establish that the apparently phenomenal industrialisation of the "Asian Tigers" in recent years was merely pseudo-development. That pseudo development, it argues, was founded on a structural dependency on, and formed part of an integrated production circuit headed by Japan.
The book's perspective and key arguments make sense, until the last chapter. That chapter (12) is a pathetic defence of the interests of "western high-technology manufacturers" (primarily a code for US capital) by two US chauvinists. It suggested that the west, especially the US, should pierce open and undermine Japan's production network in Asia and replace it by one headed by western interests, which would probably be less stingy and culturally imposing.
Walter Hatch and Kozo Yamamura urge western governments to help, even finance, such endeavours by their own capitalists, stressing, by implication, that US capital mustn't let its "influence" wane in Asia.
While paying lip service to human rights (they "aren't unimportant"), and critical of Washington's threat of trade sanctions on Asian countries which suppress dissidents and workers, the authors say that the US "must flex its muscles ... more skilfully, and perhaps more selectively". They claim that "government officials and business executives all over the region fear that, before too long, their economies will be smothered in Japan's embrace" and assert that they hope the US, as a "potentially countervailing force", will remain "economically engaged" in Asia.
Ignore the last chapter and the book is a lot more worth reading. A refreshing aspect of Asia in Japan's Embrace is its rejection of neo-classical economists' fanciful interpretation of the world with its static flaws and general crudeness as a tool to analyse real social processes.
Their criticisms include: its reliance on "factor endowment" as a key determinant of the economic path of a country, its incredible arguments based on assuming away essential aspects of reality, and its wishful conviction that Japan's stronger economy and trade position in relation to the rest of Asia (and the world) will, in time, whittle away to reach a harmonious "equilibrium".
More important is the book's investigation of the significant changes in Japanese capitalism's domination of its Asian satellite economies since the yen's forced appreciation starting in 1985. The US dollar halved its value vis-a-vis the yen within about a year of the September 1985 Plaza Accord, when the key imperialist nations agreed to push up the value of the yen to correct Japan's unhelpful trade surplus with the US.
Though first published in 1996, before the July 1997 explosion of the Asian economic crisis, the book's key hypothesis still stands, even in the continuing fallout from the earlier explosions.
The authors' argument is that since 1985 qualitative changes in this relationship have taken place. There has been a shift from the more traditional neo-colonial domination, by way of the extraction of energy and other raw resources from and the selling of end manufactured products to the subjugated economies in Asia, to turning these economies into an organic part of Japan's extended cross-border production base through controlling critical technology and parts.
The significant trade between Japan and Asia (including Asian exports to Japan and trade between Japanese affiliates across Asia) largely reflects the physical movement of parts, which forms an integral component of Japan's vertically controlled production network in the region.
The authors stress the critical role of the collaboration (collusion) among big Japanese capitalists, and between them and the Japanese government, in bringing about this situation — basically the extension of monopolisation by collusion in the Japanese context to the rest of Asia.
According to the authors, the much hailed export-driven growth of the Asian Tigers (South Korea, Taiwan, Singapore and Hong Kong, plus those included later — Indonesia, Malaysia, Thailand and the Philippines) took place firmly within this context of a new form of subjugation by Japan. The authors call them paper tigers because their "industrialisation" was "technologyless" and their development was pseudo and captive to Japanese capitalism's needs.
Asia in Japan's Embrace supports this argument with reasonably extensive sources, including facts which are still valuable for interpreting the ongoing crisis in Japan and the rest of Asia.
The authors' emphasis on technology as the critical tool by which Japan has been able to subjugate other economies in the region is correct. But they tend to divorce Japan's technological superiority, and its elaborate mechanism for defending it, from the critical motive of Japanese capital — profit. The authors do not explain how maintaining or, even better, widening the technology gap is a key means by which capitalists make super-profits.
The authors make the bold assertion that western capital, especially US capital, is more generous in transferring real technology to Asia. This claim is not adequately backed by facts, and it is certainly not the reality.
The authors also show little awareness of the critical importance of the market. They rightly point out that Japan's vertically controlled production network in Asia was partly a means by which it could sell more — indirectly, as products of those Asian exporting countries — to the key world markets, especially the US. But they seem to presume the market will always be there — in the short run in the key imperialist countries and over the longer term also in Asia, if its per capita income continues to rise.
The authors don't seem to have noticed that capitalists everywhere have been plagued for some time by inadequate markets for their products. The increasing might of their productive machines is certainly one contributing factor, but the gap is also maintained, even widened, by the increasing impoverishment of potential consumers in the imperialist countries, as well as the Third World.
Asia in Japan's Embrace also contained occasional naive assertions, such as that following the sharp rise in asset values in Japan in the late 1980s, "foreigners" were "impressed" and therefore "lent money without hesitation". In fact, these "foreigners" were financial capitalists from other imperialist countries desperate to find an outlet for their overflowing surplus capital.
Another example is the statement: "Western firms are uncomfortable in a business regime that runs so much on long-standing personal relationships, rather than on clearly established legal guidelines." This naively suggests that the top capitalists, their families and their agents in government in the imperialist camp outside Japan have used personal links to forge business deals only casually, if at all.
The authors say: "We do not believe that international capital in general is an instrument of exploitation, nor that foreign direct investment is a zero-sum game that always enriches the stronger nation at the expense of the weaker one". It seems that Hatch and Yamamura have very little idea of the fundamental causes of the continuing impoverishment of the Third World or the role of imperialism in it. They actually believe that "international capital", while making a "fair buck" from investing in the Third World, is an agent to bring about growth and development there.