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China and Japan: Where Are They Headed?

China and Japan: Where Are They Headed?

How serious is the recession in Japan? What are China's prospects for achieving democracy? Will China and Japan form an East Asian superpower? Three prominent authorities look at the answers.

Leslie Evans Email LeslieEvans

How serious in the recession in Japan? What are China's prospects for achieving democracy? Will China and Japan form an alliance that will serve as an East Asian superpower? These and other questions were addressed by three prominent authorities at a colloquium in UCLA's Bunche Hall May 6, sponsored by the Center for Social Theory and Comparative History and co-sponsored by the centers for Chinese and Japanese Studies. The speakers were Karel van Wolferen, author of The Enigma of Japanese Power; William J. F. Jenner, author of The Tyranny of History: The Roots of China's Crisis; and Ian Buruma, author of Bad Elements: Chinese Rebels from Los Angeles to Beijing.

One question the speakers were asked to address was whether China and Japan are evolving toward a common type of neoliberalism. Following is a slightly abridged summary of their remarks. The summaries include some material from the question period.

Karel van Wolferen: The Enigma of Japanese Power

Let us begin by answering some imaginary questions: Why isn't the political elite doing anything about the situation? The rest of the world says if you don't do anything you may trigger an international recession. The answer, simply, is that Japan has no government in the ordinary sense of the word, that is of an entity that can stave off disaster. Japan has no such entity. It has a cabinet , prime minister, etc. The cabinet meets once a week to endorse documents prepared by the ministries. The prime minister has very little leeway in decision making. Who are the decision makers? The answer is that there are no policymakers. There are people who have been charged with keeping things going, but not real policymakers. It is a political economy that is fascinating, but which I don't understand. Japanese administrators in business, and in government, in the large industrial associations, in all the bodies that participate in running the show, these people have been successful in establishing something that is considered a miracle, but they themselves don't understand exactly how it works. Almost no one has a bird's eye view of the whole thing. There is no discussion of fundamental economic aspects of the Japanese situation. Freedom of economic speech does not exist in Japan.

The result of all this is that the current situation of the Japanese economy has problems. Some of the problems are identifiable: a politically determined overcapacity, far grater than that in the Western countries such as the United States. It has become a problem, but it is unclear what the solution to this would be.

Not As Bad As It Looks From Outside

The stories you may have read that the Japanese economy is on its back, is finished, are untrue. Japan is a superb example of the fact that the state of economies depends on what people believe about them. What can be said is that there is much less economic activity in Japan than there should be, which has led to problems in employment and other such things.

The solutions that are sought out by non-Japanese in the U.S. Treasury, The Economist magazine, are entirely useless. Most of these concern getting rid of the problem loans in the banking system. If the Ministry of Finance were to carry out what they are urged to do, the system would collapse. A key reason for the gloom is that the sense of stability that existed in the system no longer exists. The idea that companies could not go bankrupt no longer exists. Many groups felt they had such a guarantee. Now some important groups are no longer guaranteed and some have actually gone bankrupt. But this has not gone so far as allowing all the technically bankrupt entities to go actually bankrupt. That step would deepen the gloom and erode what impetus there is for economic activity.

You can't really distinguish a private and a public sector in Japan. The history of Japan never witnessed a real bifurcation, as in the West. Nominally private banks are not controlled by any commercial code or any civil code. Every law that does exist is essentially only a tool in the hands of the administrators. Discussing public and private sectors is the wrong approach in Japan; these two types cannot be genuinely differentiated.

No One Has the Power to Make Basic Policy Changes

The current economic downturn has not been reversed until now because there is no group in Japan with sufficient weight and ability and imagination to even detect relatively easy policy departures that would stimulate domestic demand and help them to come out of the current doldrums. One proposal that is gaining some ground is a housing policy. If the people who could make a difference could all agree that there should be a housing policy that would make mortgages deductible from your taxes, that would give incentives for home ownership, that would almost instantaneously get Japan out of its present difficulties. There is a constituency that is against this, but the main reason it is not being contemplated is connected with the fact that there is no institutional arrangement by which this can be translated into policy. Their administrators do not have a means of changing national priorities.

The existing priorities grew out of rebuilding a war-torn economy. The administrators have never diverged from that policy--unlimited expansion of production is the core, not profit making. The basis of this was established in the last two years of the war, it is a war economy fundamentally. The economy based on unlimited expansion of national production remains the basis today. But today Japan's output spills out into saturated world markets. It is too large an entity to not have alternatives for occupying its productive forces. Japan, as a Japanese analyst I know has put it, is like a whale in a pond. Japan is too big to engage in unlimited production irrespective of demand.

There needs to be a middle class that has some leverage over policy. That does not exist. Nor is there any incentive to change the system soon. The system, far from the foreign picture, is nowhere near collapse. It looks worse if you look using the measure you would use to rate the American or European economies, but these standards do not apply in Japan.

I have had many discussions with senior bureaucrats and they can see these things, but none of them can achieve any significant change. We are dealing with a political economy that has no precise parallel in other countries. It is therefore impossible to predict what will happen to it.

Western Neoclassic Advice Is Wrong

The kind of advice they are getting on the basis of a Western neoclassic standpoint is very unsatisfactory for Japan. Japan is a wonderful laboratory to look at assumptions that we have based on our education and the education that is dominant in the West. The Japanese experience contradicts much of this basis.

 

The idea that Japan doesn't have a government is diplomaticly unacceptable. The idea that you cannot negotiate with a center in Japan is a problem for any international organizational center that must deal with Japan. But if you know the experience of diplomats who have to deal with Japan you know that they cannot find the person or person who should be responsible for what they expect them to be responsive to.

The Middle Class Is Too Weak to Control the Government

Ninety-six percent of Japanese people, at least a large majority, consider themselves middle class, and are, but they are not politically significant. From Tokugawa to now we have seen many ways in which a political regime can render the middle class ineffective in the political arena. In Europe the middle class became entitled with legal protections. This did not happen in Japan. In the 17th century Tokyo was larger than any European city, perhaps 7 times as large as any city except Istanbul. The ruling class incorporated the middle class into their system through the ie system. Merchants were allowed to be powerful, while they were supposed to be on the bottom of the social order. This was a trade of autonomy for power. Commercialism was by this pact kept out of the area of Japanese society where it might become a challenge to the Tokugawa rulers. The merchants intermarried with the samurai. The government sought to industrialize Japan, but there was no industrial bourgeoisie.

After World War II you have a consolidation of a system in which the trends toward an emergence of the bourgeoisie were effectively killed.

The lifetime employment system, which only applied to about a third of the workers, ensured the paralysis of the middle class. You were expected to give so much of your energy to the company you had hardly any left for your family much less for a political movement, which would have been suppressed in any case. So we have seen no example of a political movement of salarymen. Hence the salaryman is not represented in the Japanese political system. The LDP does sometimes say "we represent you." This is of crucial importance when we begin to talk about the Japanese political economy, because there are no private or public sectors. You can?t have one without the other. The conditions for having a public and a private sector were the emergence of the bourgeoisie. In feudalism you do not have a public and private sector.

In South Korea under Park Chung Hee, Chun Doo Hwan, and etc., they did give birth to a middle class. Further, this middle class was inspired by Protestant and Catholic ideas. This gave the middle class some leverage over the regime.

If powerholders are not faced with consequences for their actions, if they are not trained to explain their actions to others, they cannot explain them to themselves. This is all connected: no bourgeoisie, no accountability, no coherent policy.

 

 

William J. F. Jenner: China Shows the Ability of a Leninist Ruling Class to Adapt and Survive

 

I will be knocking neoliberalism on the head in regard to China, and affirming the impossibility of predicting change that is to come. If the epithet liberal, whether "neo" or any other kind, is meant to apply to the institutions of China today, and if this is meant to replicate 19th century Hong Kong or the United States, it does not apply. There is no framework of law reliably enforced by reasonably independent courts, reasonably free markets, etc.

At the death of Mao almost everything was public property. Since then the shift to private property has been vast, but also blurred, with actual title very unclear. Who has the right to dispose of land? The collective, the farmers, the community, the local government? Farmers have very unclear title to the land they farm. As long as the Communist Party controls the courts, it is very unlikely that the courts will find against the government, which means that the courts will uphold the interests of the party rather than legal property rights as understood in the West.

Although China is a market economy, it is not a free market economy. If we want to find a label from the West without pushing it too far, it would be late feudal. Mao's China was very much like feudalism, with people tied to the land, while the hou kou system of local registration fixed people to their jobs. This system is still in place, although there are possible escapes from it. The Stalin-Mao model of screwing the workers has now become an obligation. Mere liberal ideology in China looks like a mask for a criminal privatization of the economy.

But could liberalism work in China? Let's look at Hong Kong. The previous administration in Hong Kong created a regime that was the closest to pure liberalism, where the government tried to stay out of the economy and let it run itself, minimal state involvement. But this is not a necessary model for market economies in a Chinese context. This model was not followed by Singapore or Taiwan, which had huge state involvement in the economy. Could China establish liberalism? Perhaps in some coastal enclaves? This is not impossible but not terribly likely.

Predictions Met with Surprises Every Decade Since 1952

I should add that predictions from the past about China have not been very good. If you look at the predictions from outside the country in the early 1950s, say 1952: private industry and farming had quite a strong base in China in 1952. It looked as though the economy would remain semiprivate for decades to come. Three years later the high tide of socialist collectivization wiped all this out, and in 1960 you had the greatest famine in human history. Now look at the situation in 1962: From outside it was not clear how bad things had been, but it looked as though there was a kind of sensible return to moderate Stalinist norms. But instead we got the Cultural Revolution.

In 1972 no one would have predicted the counterrevolution in a decade.

From 1982 to 1992 the change would not have been quite so sharp.

At the beginning of the period we are talking about, in the 1950s, for some 10 or 20 years, China had a party that actually worked, that could enforce policy with little or no resistance. Peasants who had gotten land in the early 1950s gave it up again in the late 1950s without much resistance. The Great Leap Forward policies provoked the great famine without much resistance. But those policies discredited themselves. By the mid-1960s the party was greatly weakened in the countryside, and then was comparably weakened in the urban areas by the Cultural Revolution. The urban young, who would have been the next generation, were sent off to the countryside and found out what a mess that was too. Their lives have been ruined for nothing. By the time they got back to the cities in the 1970s they had been forced to think for themselves. This is the generation that is now in their 50s and are coming into their own. This is a factor for unpredictable change.

To return to the Mao era: The collectivization went off without much opposition; dealing with industry was more of a problem. The industrialization was crazy even at the time. It was driven by political considerations rather than economic ones, such as locating factories far inland to resist potential U.S. attack. Much of it was outdated when first built. Factories were rewarded for producing what was in the plan, not what was needed.

The Post-Mao Crisis

By the death of Mao in 1976 the country was in profound crisis. I had worked from 1963 to 1965 at Foreign Languages Press in Beijing as a translator. Some of the same individuals who had tried to impress me with the superiority of the socialist system in the 1960s, after Mao's death told me how bad things were. Personal relations in the workplace were also under great strain. Members of factions who had been trying to kill each other a few years earlier were now forced to share offices.

Mao's chiliastic approach had left the economy barely able to feed the people. The pressure was now on state enterprises to be profitable, foreign capital was being sought. Whole new professions have emerged. Everything has been marketized. Shopping is the new religion. Nearly 20 years after the dissolution of the communes, the countryside has been divided into tiny plots. There is not much money to be made from agriculture now, so village families look for second occupations. Many villages are run by the dominant surnames, as in the period before the Chinese revolution. The old gods are being worshipped. Basic education is limited. There are staggering differences in income and opportunity between the poorest inland communities and Hong Kong and the Shanghai-Nanjing megalopolis.

China's rural population faces a lot more changes in the coming decades. Those who are still peasants have been left ill equipped to face the pressures of globalization.

Who Are the Agents of Change?

One group is the armed forces, who will have a decisive voice in the changes. Under the People's Republic the military conquered for the CCP. They took over much of the local government in the Cultural Revolution. In the great crises of the 1970s and 1980s, down to Tiananmen, the army high command had a prominent voice. The military had a big role in the anti-U.S. gesturing of 1999 and 2000. The military has a large and secure budget, when China faces no credible external threat.

But the army in many respects has lost much of its privileged status of the Mao years. Indeed, there has been widespread civilian resentment of military privilege for some time. They didn't get much sympathy for their heavy casualties in the China-Vietnam war in 1979. Their license to engage in many industrial and business interests is being scaled down, they are being pressured to divest. Now that the PLA command no longer shares a common history with the party civilian high command as they did in the first 30 years of the regime, what role will they see for themselves in the future government of China?

Now that the Chinese state is becoming more corporatist one might wonder if Mao's warning that the CCP could become a fascist party was entirely exaggerated. It is now a ruling class with membership open even to representatives of private business, once their bitter enemies.

As the party has changed, so has the state. The state has lost the ability to raise revenue. Today only something like 10 percent of the economy still belongs to the state. This gives it the ability to carry out repression but not to handle the needs of the various populations. The CCP presents itself as a nationalist party. It calls itself a party that is representative of the advanced productive forces (read: the new rich). Those who control the party will control China for a long time to come. The party may change its name, but the same people at the top are here to stay. It shows the ability of a Leninist ruling class to adapt and survive.

Retreat from a National Belief System

There is a terrible problem of anomie. There are no accepted principles of socialist responsibility and of agreement on how the society should be run. It is a cliche that corruption threatens the survival of the regime. I would suggest that the system's own apparatchiks no longer have their heart in the values of the system but in the protection of their own bailiwick. People do their jobs long after they have lost belief in what they are doing. Such a system can collapse in a few days, as happened in East Germany in 1989.

Where is democracy to come from? Who knows. You can see all kinds of people and institutions who try to maximize their resources and income for an uncertain future and to protect themselves personally. There is very little to count on except oneself and one's family. Despite the high rates of economic growth and the progress of industry, job creation is not keeping pace with the growth of the labor force, and there remain so many unskilled jobs, even for existing urban workers.

The current process, begun in the Deng era, is inherently unstable. It is like careening down a mountainside--there is little ability to call a halt. All sectors will be affected by pressures of globalization. Is China simply to be a territory to be used for cheap labor and a market for goods? Or will China develop its own multinationals? Will China create its own real banks? Will China provide the opportunity for Chinese to function at a high level within China as Chinese do when they go abroad?

The Chinese government protests often that China will never play the hegemon. It seems in fact to protest too much. It is conventional wisdom that China is on the way to becoming a great power. I think it is more sensible to see China as a great regional power, not a great global power. China's military forces will soon have the capacity to act outside its borders. Its vital interest are defined as defending an empire, part of which still has to be recovered (Taiwan).

Back in the Mao period the issue of national pride tended to focus on sovereignty and revolutionary independence, while today much sovereignty has been yielded to international capitalism, to be replaced with nationalism.

You might say that China is a modified status quo power, not seeking any fundamental realignments. This is trickiest in relation to Taiwan. Clearly economic self-interest argues for a policy that does not threaten Taiwan's de facto independence so long as it does not declare formal independence. After Taiwan, the South China Sea is the most troublesome area. China has asserted its claims more forcefully than in the past, and its claims are agreed to by no other state.

In regard to the United States and China: The two countries have long been seen to be a kind of mutual obsession. China maneuvers to keep the U.S. in the region, while trying to constrain what the U.S. does there. The United States provides a certain stability in East Asia and it does not appear to me that the Chinese government has been anxious for any real disengagement of the U.S. from the region.

 

 

Ian Buruma: Demilitarizing Japan Infantilizes the Elected Government

 

One of the advantages of studying both China and Japan is that you learn their mutual prejudices, often shared by the experts that study them. One of the Chinese prejudices is that China has little to learn from Japan. I would like to compare the Meiji period with the kind of problems China is facing now. There are huge differences, but one of the similarities is one that has to do with the legitimacy of government. More so in China today than in Meiji Japan, legitimacy is predicated on high speed economic development, the promise that everyone will get rich and they should keep their mouths shut and not criticize the government.

Meiji Borrowings from the Chinese Emperor System

The Meiji leaders in the late 19th century also felt they needed an authoritarian government to fend off chaos and instability. The problem with this is that you need something other than democracy to legitimate your monopoly of power. In Meiji they borrowed from China and Europe. Meiji is thought of as a period of wholesale Westernization, but there was also borrowing from China: they borrowed the idea that the emperor was the center of secular power. This was a Chinese idea. and the source of huge future problems that we all know about. China had a lack of difference between church and state. The emperor was the center of religious truth and political power. That became the case in Japan in the Meiji era but had not been so before.

The Meiji leaders and representatives went around the world shopping for elements they could use for Japan. They were relieved to learn from their representatives in Germany that there were nondemocratic models based on a collective identity of blood and soil, something that did not exist in Japan previously. The German idealist ideas that developed in opposition to French rationalism were of great use to authoritarian governments ever since.

Wilhelmine Germany also offered a sense of collective victimhood, that the nation was encircled and refused its place in the sun, something that was very strong in Japan prior to World War II.

In China Today: Individual Liberty But No Action by Groups

If we look at China today one of the salient facts is that there are not even the beginnings of a civil society. Japan up until Pearl Harbor was more pluralist than China is now. The Chinese leadership has been very effective in ferreting out all collective sources of opposition. There is a high degree of individual liberty in China--sex, drugs, and rock and roll--but any collective action is quickly crushed. In Japan prior to World War II there were still critical voices in the press, political parties, and other organized critics of the government.

The party in China now has no ideological legitimacy. Even the leaders do not really believe in communism. All that is left is the idea of making the country richer. They have even sought to emulate the Japanese notion of social harmony to keep stability, which is profoundly antidemocratic and denies the legitimacy of difference of interest, is calculated to brand as traitors those who insist on differences. The Chinese do this as well. The Chinese have a one-party state that co-opts the urban elite, that brings into itself the whole of the urban elite. You give them status, you give them money, and the elite it is hoped will become the new middle class, and that it will be conservative.

This is the Singaporean model, and challenges the idea that the middle class produces democratic institutions. If they succeed, it will be an example of the possibility of a conservative middle class that hangs onto stability like a mantra. This will leave the voices for change in other strata such as the peasantry and the poorer workers. If the party succeeds it will mean we will not see the coming together of the educated middle class and the dispossessed, which is a bad thing for democracy.

What it leaves for peasant and lower class opposition are forms of millenarianism. Large-scale rebellions have to be tied together by something. They are likely to be tied together by religious or semireligious ideas. Much of this is clandestine. The state tries very hard to put this kind of activity under the control of the state. Most of these elements that are not under state control are underground. There is also the mafia, businesses that run with few rules in the gray area of the Chinese legal system. So there is at best a kind of dark civil society made up of semigangster capitalism. There is more of a middle class than existed in the Soviet Union. It is not just old party hacks that put the money in their pockets like in the Soviet Union. But this middle class in China is conservative.

The Risks of Promoting Ethnic Nationalism in China

The other element of the CCP approach is an ethnic nationalism. The most vocal exponents of this view are the yuppie middle class. They act as though these are ancient Chinese ideas, but they are actually European ideas that came to China via Japan.

I agree with Bill Jennner that this is an unstable and volatile system. Many people will not get richer. Some will get progressively poorer. What will happen in the event of a severe economic crisis? It is likely that they will repeat the mistake made by the Japanese and go for belligerent nationalism. Their instinct in trying to defuse the anger is to direct it toward a foreign enterprise, such as trying to retake Taiwan. This could supersede the current rational restraint, as an attack on Taiwan could become tied up with holding onto power at home. and the rational approach be set aside in the interests of their mafialike economic control.

To get back to Japan, we know that the Japanese did choose the option of military expansion in war. When this came down in flames in 1945 we know that was not the result of mistakes, or bad constitutions. People sought cultural causes rather than the kind of political explanations they had for Germany, which they saw as the capture of power by a gangster regime. In the case of Japan where there was no Nazi party and no takeover of the government by a minority party, it was blamed on cultural militarism. It was felt that there had to be a cultural makeover rather than the purely political one used in postwar Germany. It was as though Japan was an alcoholic who had to be kept away from militarism, like not taking a drink.

The Threat to Democracy of a Demilitarized Japan

Japan was basically given the same kind of deal the Europeans were given, though the Europeans were not so emasculated as the Japanese. The deal was that the defeated Axis would become economic powers but not military ones. But in the case of Japan it has had two consequences: it has been a bad thing for Japanese democracy. What was flawed in the Meiji constitution was making the emperor the commander in chief and that the armed forces owed their loyalty only to the emperor and not to the parliament. This took the military out of the realm of parliamentary politics. What Article 9 did is to have the same effect. It took everything to do with war and peace out of the hands of the elected parliament and gave it to Washington. It fostered the idea that the democratically elected Japanese government could not be trusted to deal with questions of war and peace, with Washington playing the role the emperor did before.

This has also institutionalized American hegemony. As China's power rises there are bound the be tensions in East Asia. One option is for the us to stay there forever as the regional policeman. A second option is that China gradually becomes the dominant power in east Asia.The third is that there is some kind of military alliance between Japan, South Korea, and ASEAN, which Japan would have to lead. So far this last is the one the Japanese are least interested in taking. If we are unhappy with the total dominance of the democratic states by the United States then we must be prepared to let other states play an important part. This means letting the Germans and the Japanese play a larger role. I am quite pro-American, but still see the need for a revived military role for Germany and Japan.

How serious in the recession in Japan? What are China's prospects for achieving democracy? Will China and Japan form an alliance that will serve as an East Asian superpower? These and other questions were addressed by three prominent authorities at a colloquium in UCLA's Bunche Hall May 6, sponsored by the Center for Social Theory and Comparative History and co-sponsored by the centers for Chinese and Japanese Studies. The speakers were Karel van Wolferen, author of The Enigma of Japanese Power; William J. F. Jenner, author of The Tyranny of History: The Roots of China's Crisis; and Ian Buruma, author of Bad Elements: Chinese Rebels from Los Angeles to Beijing. One question the speakers were asked to address was whether China and Japan are evolving toward a common type of neoliberalism. Following is a slightly abridged summary of their remarks. The summaries include some material from the question period.

Karel van Wolferen: The Enigma of Japanese Power

Let us begin by answering some imaginary questions: Why isn't the political elite doing anything about the situation? The rest of the world says if you don't do anything you may trigger an international recession. The answer, simply, is that Japan has no government in the ordinary sense of the word, that is of an entity that can stave off disaster. Japan has no such entity. It has a cabinet , prime minister, etc. The cabinet meets once a week to endorse documents prepared by the ministries. The prime minister has very little leeway in decision making. Who are the decision makers? The answer is that there are no policymakers. There are people who have been charged with keeping things going, but not real policymakers. It is a political economy that is fascinating, but which I don't understand. Japanese administrators in business, and in government, in the large industrial associations, in all the bodies that participate in running the show, these people have been successful in establishing something that is considered a miracle, but they themselves don't understand exactly how it works. Almost no one has a bird's eye view of the whole thing. There is no discussion of fundamental economic aspects of the Japanese situation. Freedom of economic speech does not exist in Japan.

The result of all this is that the current situation of the Japanese economy has problems. Some of the problems are identifiable: a politically determined overcapacity, far grater than that in the Western countries such as the United States. It has become a problem, but it is unclear what the solution to this would be.

Not As Bad As It Looks From Outside

The stories you may have read that the Japanese economy is on its back, is finished, are untrue. Japan is a superb example of the fact that the state of economies depends on what people believe about them. What can be said is that there is much less economic activity in Japan than there should be, which has led to problems in employment and other such things.

The solutions that are sought out by non-Japanese in the U.S. Treasury, The Economist magazine, are entirely useless. Most of these concern getting rid of the problem loans in the banking system. If the Ministry of Finance were to carry out what they are urged to do, the system would collapse. A key reason for the gloom is that the sense of stability that existed in the system no longer exists. The idea that companies could not go bankrupt no longer exists. Many groups felt they had such a guarantee. Now some important groups are no longer guaranteed and some have actually gone bankrupt. But this has not gone so far as allowing all the technically bankrupt entities to go actually bankrupt. That step would deepen the gloom and erode what impetus there is for economic activity.

You can't really distinguish a private and a public sector in Japan. The history of Japan never witnessed a real bifurcation, as in the West. Nominally private banks are not controlled by any commercial code or any civil code. Every law that does exist is essentially only a tool in the hands of the administrators. Discussing public and private sectors is the wrong approach in Japan; these two types cannot be genuinely differentiated.

No One Has the Power to Make Basic Policy Changes

The current economic downturn has not been reversed until now because there is no group in Japan with sufficient weight and ability and imagination to even detect relatively easy policy departures that would stimulate domestic demand and help them to come out of the current doldrums. One proposal that is gaining some ground is a housing policy. If the people who could make a difference could all agree that there should be a housing policy that would make mortgages deductible from your taxes, that would give incentives for home ownership, that would almost instantaneously get Japan out of its present difficulties. There is a constituency that is against this, but the main reason it is not being contemplated is connected with the fact that there is no institutional arrangement by which this can be translated into policy. Their administrators do not have a means of changing national priorities.

The existing priorities grew out of rebuilding a war-torn economy. The administrators have never diverged from that policy--unlimited expansion of production is the core, not profit making. The basis of this was established in the last two years of the war, it is a war economy fundamentally. The economy based on unlimited expansion of national production remains the basis today. But today Japan's output spills out into saturated world markets. It is too large an entity to not have alternatives for occupying its productive forces. Japan, as a Japanese analyst I know has put it, is like a whale in a pond. Japan is too big to engage in unlimited production irrespective of demand.

There needs to be a middle class that has some leverage over policy. That does not exist. Nor is there any incentive to change the system soon. The system, far from the foreign picture, is nowhere near collapse. It looks worse if you look using the measure you would use to rate the American or European economies, but these standards do not apply in Japan.

I have had many discussions with senior bureaucrats and they can see these things, but none of them can achieve any significant change. We are dealing with a political economy that has no precise parallel in other countries. It is therefore impossible to predict what will happen to it.

Western Neoclassic Advice Is Wrong

The kind of advice they are getting on the basis of a Western neoclassic standpoint is very unsatisfactory for Japan. Japan is a wonderful laboratory to look at assumptions that we have based on our education and the education that is dominant in the West. The Japanese experience contradicts much of this basis.

 

The idea that Japan doesn't have a government is diplomaticly unacceptable. The idea that you cannot negotiate with a center in Japan is a problem for any international organizational center that must deal with Japan. But if you know the experience of diplomats who have to deal with Japan you know that they cannot find the person or person who should be responsible for what they expect them to be responsive to.

The Middle Class Is Too Weak to Control the Government

Ninety-six percent of Japanese people, at least a large majority, consider themselves middle class, and are, but they are not politically significant. From Tokugawa to now we have seen many ways in which a political regime can render the middle class ineffective in the political arena. In Europe the middle class became entitled with legal protections. This did not happen in Japan. In the 17th century Tokyo was larger than any European city, perhaps 7 times as large as any city except Istanbul. The ruling class incorporated the middle class into their system through the ie system. Merchants were allowed to be powerful, while they were supposed to be on the bottom of the social order. This was a trade of autonomy for power. Commercialism was by this pact kept out of the area of Japanese society where it might become a challenge to the Tokugawa rulers. The merchants intermarried with the samurai. The government sought to industrialize Japan, but there was no industrial bourgeoisie.

After World War II you have a consolidation of a system in which the trends toward an emergence of the bourgeoisie were effectively killed.

The lifetime employment system, which only applied to about a third of the workers, ensured the paralysis of the middle class. You were expected to give so much of your energy to the company you had hardly any left for your family much less for a political movement, which would have been suppressed in any case. So we have seen no example of a political movement of salarymen. Hence the salaryman is not represented in the Japanese political system. The LDP does sometimes say "we represent you." This is of crucial importance when we begin to talk about the Japanese political economy, because there are no private or public sectors. You can?t have one without the other. The conditions for having a public and a private sector were the emergence of the bourgeoisie. In feudalism you do not have a public and private sector.

In South Korea under Park Chung Hee, Chun Doo Hwan, and etc., they did give birth to a middle class. Further, this middle class was inspired by Protestant and Catholic ideas. This gave the middle class some leverage over the regime.

If powerholders are not faced with consequences for their actions, if they are not trained to explain their actions to others, they cannot explain them to themselves. This is all connected: no bourgeoisie, no accountability, no coherent policy.

 

 

William J. F. Jenner: China Shows the Ability of a Leninist Ruling Class to Adapt and Survive

 

I will be knocking neoliberalism on the head in regard to China, and affirming the impossibility of predicting change that is to come. If the epithet liberal, whether "neo" or any other kind, is meant to apply to the institutions of China today, and if this is meant to replicate 19th century Hong Kong or the United States, it does not apply. There is no framework of law reliably enforced by reasonably independent courts, reasonably free markets, etc.

At the death of Mao almost everything was public property. Since then the shift to private property has been vast, but also blurred, with actual title very unclear. Who has the right to dispose of land? The collective, the farmers, the community, the local government? Farmers have very unclear title to the land they farm. As long as the Communist Party controls the courts, it is very unlikely that the courts will find against the government, which means that the courts will uphold the interests of the party rather than legal property rights as understood in the West.

Although China is a market economy, it is not a free market economy. If we want to find a label from the West without pushing it too far, it would be late feudal. Mao's China was very much like feudalism, with people tied to the land, while the hou kou system of local registration fixed people to their jobs. This system is still in place, although there are possible escapes from it. The Stalin-Mao model of screwing the workers has now become an obligation. Mere liberal ideology in China looks like a mask for a criminal privatization of the economy.

But could liberalism work in China? Let's look at Hong Kong. The previous administration in Hong Kong created a regime that was the closest to pure liberalism, where the government tried to stay out of the economy and let it run itself, minimal state involvement. But this is not a necessary model for market economies in a Chinese context. This model was not followed by Singapore or Taiwan, which had huge state involvement in the economy. Could China establish liberalism? Perhaps in some coastal enclaves? This is not impossible but not terribly likely.

Predictions Met with Surprises Every Decade Since 1952

I should add that predictions from the past about China have not been very good. If you look at the predictions from outside the country in the early 1950s, say 1952: private industry and farming had quite a strong base in China in 1952. It looked as though the economy would remain semiprivate for decades to come. Three years later the high tide of socialist collectivization wiped all this out, and in 1960 you had the greatest famine in human history. Now look at the situation in 1962: From outside it was not clear how bad things had been, but it looked as though there was a kind of sensible return to moderate Stalinist norms. But instead we got the Cultural Revolution.

In 1972 no one would have predicted the counterrevolution in a decade.

From 1982 to 1992 the change would not have been quite so sharp.

At the beginning of the period we are talking about, in the 1950s, for some 10 or 20 years, China had a party that actually worked, that could enforce policy with little or no resistance. Peasants who had gotten land in the early 1950s gave it up again in the late 1950s without much resistance. The Great Leap Forward policies provoked the great famine without much resistance. But those policies discredited themselves. By the mid-1960s the party was greatly weakened in the countryside, and then was comparably weakened in the urban areas by the Cultural Revolution. The urban young, who would have been the next generation, were sent off to the countryside and found out what a mess that was too. Their lives have been ruined for nothing. By the time they got back to the cities in the 1970s they had been forced to think for themselves. This is the generation that is now in their 50s and are coming into their own. This is a factor for unpredictable change.

To return to the Mao era: The collectivization went off without much opposition; dealing with industry was more of a problem. The industrialization was crazy even at the time. It was driven by political considerations rather than economic ones, such as locating factories far inland to resist potential U.S. attack. Much of it was outdated when first built. Factories were rewarded for producing what was in the plan, not what was needed.

The Post-Mao Crisis

By the death of Mao in 1976 the country was in profound crisis. I had worked from 1963 to 1965 at Foreign Languages Press in Beijing as a translator. Some of the same individuals who had tried to impress me with the superiority of the socialist system in the 1960s, after Mao's death told me how bad things were. Personal relations in the workplace were also under great strain. Members of factions who had been trying to kill each other a few years earlier were now forced to share offices.

Mao's chiliastic approach had left the economy barely able to feed the people. The pressure was now on state enterprises to be profitable, foreign capital was being sought. Whole new professions have emerged. Everything has been marketized. Shopping is the new religion. Nearly 20 years after the dissolution of the communes, the countryside has been divided into tiny plots. There is not much money to be made from agriculture now, so village families look for second occupations. Many villages are run by the dominant surnames, as in the period before the Chinese revolution. The old gods are being worshipped. Basic education is limited. There are staggering differences in income and opportunity between the poorest inland communities and Hong Kong and the Shanghai-Nanjing megalopolis.

China's rural population faces a lot more changes in the coming decades. Those who are still peasants have been left ill equipped to face the pressures of globalization.

Who Are the Agents of Change?

One group is the armed forces, who will have a decisive voice in the changes. Under the People's Republic the military conquered for the CCP. They took over much of the local government in the Cultural Revolution. In the great crises of the 1970s and 1980s, down to Tiananmen, the army high command had a prominent voice. The military had a big role in the anti-U.S. gesturing of 1999 and 2000. The military has a large and secure budget, when China faces no credible external threat.

But the army in many respects has lost much of its privileged status of the Mao years. Indeed, there has been widespread civilian resentment of military privilege for some time. They didn't get much sympathy for their heavy casualties in the China-Vietnam war in 1979. Their license to engage in many industrial and business interests is being scaled down, they are being pressured to divest. Now that the PLA command no longer shares a common history with the party civilian high command as they did in the first 30 years of the regime, what role will they see for themselves in the future government of China?

Now that the Chinese state is becoming more corporatist one might wonder if Mao's warning that the CCP could become a fascist party was entirely exaggerated. It is now a ruling class with membership open even to representatives of private business, once their bitter enemies.

As the party has changed, so has the state. The state has lost the ability to raise revenue. Today only something like 10 percent of the economy still belongs to the state. This gives it the ability to carry out repression but not to handle the needs of the various populations. The CCP presents itself as a nationalist party. It calls itself a party that is representative of the advanced productive forces (read: the new rich). Those who control the party will control China for a long time to come. The party may change its name, but the same people at the top are here to stay. It shows the ability of a Leninist ruling class to adapt and survive.

Retreat from a National Belief System

There is a terrible problem of anomie. There are no accepted principles of socialist responsibility and of agreement on how the society should be run. It is a cliche that corruption threatens the survival of the regime. I would suggest that the system's own apparatchiks no longer have their heart in the values of the system but in the protection of their own bailiwick. People do their jobs long after they have lost belief in what they are doing. Such a system can collapse in a few days, as happened in East Germany in 1989.

Where is democracy to come from? Who knows. You can see all kinds of people and institutions who try to maximize their resources and income for an uncertain future and to protect themselves personally. There is very little to count on except oneself and one's family. Despite the high rates of economic growth and the progress of industry, job creation is not keeping pace with the growth of the labor force, and there remain so many unskilled jobs, even for existing urban workers.

The current process, begun in the Deng era, is inherently unstable. It is like careening down a mountainside--there is little ability to call a halt. All sectors will be affected by pressures of globalization. Is China simply to be a territory to be used for cheap labor and a market for goods? Or will China develop its own multinationals? Will China create its own real banks? Will China provide the opportunity for Chinese to function at a high level within China as Chinese do when they go abroad?

The Chinese government protests often that China will never play the hegemon. It seems in fact to protest too much. It is conventional wisdom that China is on the way to becoming a great power. I think it is more sensible to see China as a great regional power, not a great global power. China's military forces will soon have the capacity to act outside its borders. Its vital interest are defined as defending an empire, part of which still has to be recovered (Taiwan).

Back in the Mao period the issue of national pride tended to focus on sovereignty and revolutionary independence, while today much sovereignty has been yielded to international capitalism, to be replaced with nationalism.

You might say that China is a modified status quo power, not seeking any fundamental realignments. This is trickiest in relation to Taiwan. Clearly economic self-interest argues for a policy that does not threaten Taiwan's de facto independence so long as it does not declare formal independence. After Taiwan, the South China Sea is the most troublesome area. China has asserted its claims more forcefully than in the past, and its claims are agreed to by no other state.

In regard to the United States and China: The two countries have long been seen to be a kind of mutual obsession. China maneuvers to keep the U.S. in the region, while trying to constrain what the U.S. does there. The United States provides a certain stability in East Asia and it does not appear to me that the Chinese government has been anxious for any real disengagement of the U.S. from the region.

 

 

Ian Buruma: Demilitarizing Japan Infantilizes the Elected Government

 

One of the advantages of studying both China and Japan is that you learn their mutual prejudices, often shared by the experts that study them. One of the Chinese prejudices is that China has little to learn from Japan. I would like to compare the Meiji period with the kind of problems China is facing now. There are huge differences, but one of the similarities is one that has to do with the legitimacy of government. More so in China today than in Meiji Japan, legitimacy is predicated on high speed economic development, the promise that everyone will get rich and they should keep their mouths shut and not criticize the government.

Meiji Borrowings from the Chinese Emperor System

The Meiji leaders in the late 19th century also felt they needed an authoritarian government to fend off chaos and instability. The problem with this is that you need something other than democracy to legitimate your monopoly of power. In Meiji they borrowed from China and Europe. Meiji is thought of as a period of wholesale Westernization, but there was also borrowing from China: they borrowed the idea that the emperor was the center of secular power. This was a Chinese idea. and the source of huge future problems that we all know about. China had a lack of difference between church and state. The emperor was the center of religious truth and political power. That became the case in Japan in the Meiji era but had not been so before.

The Meiji leaders and representatives went around the world shopping for elements they could use for Japan. They were relieved to learn from their representatives in Germany that there were nondemocratic models based on a collective identity of blood and soil, something that did not exist in Japan previously. The German idealist ideas that developed in opposition to French rationalism were of great use to authoritarian governments ever since.

Wilhelmine Germany also offered a sense of collective victimhood, that the nation was encircled and refused its place in the sun, something that was very strong in Japan prior to World War II.

In China Today: Individual Liberty But No Action by Groups

If we look at China today one of the salient facts is that there are not even the beginnings of a civil society. Japan up until Pearl Harbor was more pluralist than China is now. The Chinese leadership has been very effective in ferreting out all collective sources of opposition. There is a high degree of individual liberty in China--sex, drugs, and rock and roll--but any collective action is quickly crushed. In Japan prior to World War II there were still critical voices in the press, political parties, and other organized critics of the government.

The party in China now has no ideological legitimacy. Even the leaders do not really believe in communism. All that is left is the idea of making the country richer. They have even sought to emulate the Japanese notion of social harmony to keep stability, which is profoundly antidemocratic and denies the legitimacy of difference of interest, is calculated to brand as traitors those who insist on differences. The Chinese do this as well. The Chinese have a one-party state that co-opts the urban elite, that brings into itself the whole of the urban elite. You give them status, you give them money, and the elite it is hoped will become the new middle class, and that it will be conservative.

This is the Singaporean model, and challenges the idea that the middle class produces democratic institutions. If they succeed, it will be an example of the possibility of a conservative middle class that hangs onto stability like a mantra. This will leave the voices for change in other strata such as the peasantry and the poorer workers. If the party succeeds it will mean we will not see the coming together of the educated middle class and the dispossessed, which is a bad thing for democracy.

What it leaves for peasant and lower class opposition are forms of millenarianism. Large-scale rebellions have to be tied together by something. They are likely to be tied together by religious or semireligious ideas. Much of this is clandestine. The state tries very hard to put this kind of activity under the control of the state. Most of these elements that are not under state control are underground. There is also the mafia, businesses that run with few rules in the gray area of the Chinese legal system. So there is at best a kind of dark civil society made up of semigangster capitalism. There is more of a middle class than existed in the Soviet Union. It is not just old party hacks that put the money in their pockets like in the Soviet Union. But this middle class in China is conservative.

The Risks of Promoting Ethnic Nationalism in China

The other element of the CCP approach is an ethnic nationalism. The most vocal exponents of this view are the yuppie middle class. They act as though these are ancient Chinese ideas, but they are actually European ideas that came to China via Japan.

I agree with Bill Jennner that this is an unstable and volatile system. Many people will not get richer. Some will get progressively poorer. What will happen in the event of a severe economic crisis? It is likely that they will repeat the mistake made by the Japanese and go for belligerent nationalism. Their instinct in trying to defuse the anger is to direct it toward a foreign enterprise, such as trying to retake Taiwan. This could supersede the current rational restraint, as an attack on Taiwan could become tied up with holding onto power at home. and the rational approach be set aside in the interests of their mafialike economic control.

To get back to Japan, we know that the Japanese did choose the option of military expansion in war. When this came down in flames in 1945 we know that was not the result of mistakes, or bad constitutions. People sought cultural causes rather than the kind of political explanations they had for Germany, which they saw as the capture of power by a gangster regime. In the case of Japan where there was no Nazi party and no takeover of the government by a minority party, it was blamed on cultural militarism. It was felt that there had to be a cultural makeover rather than the purely political one used in postwar Germany. It was as though Japan was an alcoholic who had to be kept away from militarism, like not taking a drink.

The Threat to Democracy of a Demilitarized Japan

Japan was basically given the same kind of deal the Europeans were given, though the Europeans were not so emasculated as the Japanese. The deal was that the defeated Axis would become economic powers but not military ones. But in the case of Japan it has had two consequences: it has been a bad thing for Japanese democracy. What was flawed in the Meiji constitution was making the emperor the commander in chief and that the armed forces owed their loyalty only to the emperor and not to the parliament. This took the military out of the realm of parliamentary politics. What Article 9 did is to have the same effect. It took everything to do with war and peace out of the hands of the elected parliament and gave it to Washington. It fostered the idea that the democratically elected Japanese government could not be trusted to deal with questions of war and peace, with Washington playing the role the emperor did before.

This has also institutionalized American hegemony. As China's power rises there are bound the be tensions in East Asia. One option is for the us to stay there forever as the regional policeman. A second option is that China gradually becomes the dominant power in east Asia.The third is that there is some kind of military alliance between Japan, South Korea, and ASEAN, which Japan would have to lead. So far this last is the one the Japanese are least interested in taking. If we are unhappy with the total dominance of the democratic states by the United States then we must be prepared to let other states play an important part. This means letting the Germans and the Japanese play a larger role. I am quite pro-American, but still see the need for a revived military role for Germany and Japan.

 

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