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Published online by Cambridge University Press: 07 May 2025
Sixty five years ago, the United States emerged from the Second World War as the undisputed hegemon of world capitalism. But within a generation, neither the American will nor the American ability to continue managing the global capitalist order could be taken for granted. This essay will argue that the key to understanding the repair and continued re-enforcement of American economic and financial primacy since the system-shaking tremors of the 1970s can be found in the postwar experience of Japan and its neighbors. Within that experience lies a paradox: it was precisely Japan's deviations from orthodox capitalist methods – the distinctive marks that characterize its political economy – that help explain the continuation of an American-centered world capitalist system long after one might have expected its manifest contradictions to bring it down.
1 Perry Anderson ‘Two Revolutions: Rough Notes’ New Left Review 61 January-February 2010, p. 93.
2 See B.C. Koh, Japan's Administrative Elite Berkeley and Los Angeles: University of California Press, 1989, esp. p. 254.
3 Andrew Gordon The Evolution of Labor Relations in Japan: Heavy Industry, 1853-1955 Cambridge (Massachusetts) and London: Harvard University Press, 1985.
4 Brenner has defined capitalism succinctly as follows: ‘the capitalist mode of production distinguishes itself from all previous forms by its tendency to relentless and systematic development of the productive forces. This tendency derives from a system of social-property relations in which economic units – unlike those in previous historical epochs – must depend on the market for everything they need and are unable to secure income by means of systems of surplus extraction by extra-economic coercion, such as serfdom, slavery, or the tax-office state. The result is two-fold. First, individual units, to maintain and improve their condition, adopt the strategy of maximizing their rates of profit by means of increasing specialization, accumulating surpluses, adopting the lowest cost technique, and moving from line to line in response to changes in demand with respect to supply for goods and services. Second, the economy as a whole constitutes a field of natural selection by means of competition on the market which weeds out those units that fail to produce at a sufficient rate of profit.' Robert Brenner, ‘The Economics of Global Turbulence', New Left Review, 229, May/June 1998, p. 10.
5 Michael L. Gerlach Alliance Capitalism: The Social Organization of Japanese Business Berkeley and Los Angeles: University of California Press, 1992, chapter four.
6 Textile manufacturers in the Carolinas promised to deliver these two key battleground states into the Republican column in return for a pledge by the Richard M. Nixon campaign to reduce imports from Japan. See I. M. Destler, Haruhiro Fukui and Hideo Sato The Textile Wrangle: Conflict in Japanese-American Relations, 1969-1971 Ithaca and London: Cornell University Press, 1979.
7 Akio Mikuni and R. Taggart Murphy Japan's Policy Trap: Dollars, Deflation, and the Crisis of Japanese Finance Washington: The Brookings Institution, 2002, chapter three.
8 Jacob M. Schlesinger Shadow Shoguns: The Rise and Fall of Japan's Postwar Political Machine New York: Simon and Schuster, 1997, part one. See also the discussion in Gavan McCormack The Emptiness of Japanese Affluence Armonk, New York and London: M.E. Sharpe, 1996, particularly chapter one.
9 William Greider Secrets of the Temple: How the Federal Reserve Runs the Country New York: Simon and Schuster, 1987, chapter one.
10 The key insider account remains David Stockman The Triumph of Politics: Why the Reagan Revolution Failed New York: Harper Collins, 1986.
11 See Robert L. Bartley The Seven Fat Years and How to Do It Again New York: MacMillan, 1992, p. 59.
12 Robert C. Angel Explaining Economic Policy Failure: Japan in the 1969-1971 International Monetary Crisis New York: Columbia University Press, 1991.
13 Clyde V. Prestowitz, Jr. Trading Places: How We Allowed Japan to Take the Lead New York: Basic Books, 1988, part 2.
14 Hoping to give the ideologically-rigid Treasury department of the first Reagan administration an excuse to intervene in currency markets, Fites commissioned a study from Stanford's Professor Ezra Solomon that demonstrated Japan's policies were deliberately keeping the yen's value down. See R. Taggart Murphy The Weight of the Yen New York: W. W. Norton, 1996 pp. 153-159.
15 The implication was that in this range, bilateral trade problems would largely disappear. Although the remark was attributed to C. Fred Bergsten, his actual words were ‘the objective should be a yen-dollar rate of between 180-200 by the end of 1982.' ‘What to do about the U.S.-Japan Economic Conflict' Foreign Affairs vol. 60, #5, (Summer, 1982) p. 1069.
16 R. Taggart Murphy ‘Power without Purpose: The Crisis of Japan's Global Financial Dominance’ Harvard Business Review March/April 1989, p. 71-83.
17 Robert Brenner ‘What is Good for Goldman Sachs is Good for America: The Origins of the Current Crisis’ Center for Social Theory and Comparative History, Institute for Social Science Research, UC Los Angeles, October, 2009, p. 2.
18 Quoted and translated by Taniguchi Tomohiko, ‘Japan's Banks and the “Bubble Economy” of the late 1980s, ‘Monograph Series Number 4 Princeton, New Jersey: Center of International Studies, Program on U.S.-Japan Relations, Princeton University, 1993.
19 See the discussion of the mechanics of asset inflation in Mikuni and Murphy, Japan's Policy Trap, pp. 145-164.
20 See the account in Murphy The Weight of the Yen, pp. 226-231.
21 Richard C. Koo Balance Sheet Recession: Japan's Struggle with Uncharted Economics and its Global Implications Singapore: John Wiley & Sons (Asia) Pte Ltd, 2003, esp. p. xi.
22 John Judis ‘A Dollar Foolish’ The New Republic December 9, 1996. An account from the Japanese side of the negotiations can be found in ‘Sakakibara kyokucho madamada tobidasu “Dai-hogen” ‘Shukan Bunshun November 23, 1995, pp. 42-5.
23 James Fallows ‘China Makes, The World Takes’ The Atlantic July/August 2007 pp. 68-69 discusses the high percentage of the revenues of a given product in today's economy that stem from its branding, design and retailing as opposed to its actual manufacture on the factory floor.
24 R. Taggart Murphy ‘East Asia's Dollars’ New Left Review 40 July/August 2006, pp. 54-57. discusses the arrest of a Japanese entrepreneur who took all the neo-liberal talk literally.
25 Karel van Wolferen ‘Japan's Stumbling Revolution’ The Asia-Pacific Journal 15-2-10, April 12, 2010. This is an English version of an article that originally appeared in Japanese in the March, 2010 issue of Chuo Koron.
26 R. Taggart Murphy ‘With Friends Like Us: How the Obama Administration Helped to Topple the Japanese Prime Minister’ The New Republic (website) June 8, 2010.
27 Ho-Fung Hung ‘America's Head Servant? The PRC's Dilemma in the Global Crisis’ New Left Review 60, November-December 2009.
28 See ‘China Officials Wrestle Publicly over Currency’ The New York Times, March 25, 2010.
29 ‘China's Durable Inequality: Legacies of Revolution and Pitfalls of Reform’, The Asia-Pacific Journal, January 21, 2007.
30 Maruyama Masao ‘Theory and Psychology of Ultra-Nationalism’ translated by Ivan Morris in Maruyama Masao Thought and Behavior in Modern Japanese Politics, edited by Ivan Morris, London: Oxford University Press, 1963. The original appeared in Japanese in the May, 1946 issue of Sekai.
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