In this context, the view that Japan and Europe grew faster than the United States because they had a comparatively smaller military budget is misleading. American military expenditure fueled the production and profits of the most advanced components of U.S. monopoly capital as well as the economic expansion of Europe and Japan. The links between American armament expenditures and capital accumulation in Europe and Japan are diverse. Consider, for example, the formation of NATO. The bulk of its costs were borne by the United States, generating a flow of dollars to Europe that helped ease the dollar shortage of the 1950s. At the same time, NATO??™s military findings were of crucial importance for the modernization of, at least, the electronic and aviation industries of the European countries. In the Japanese case, beginning with the Korean War, the links are much clearer. American war orders uplifted the whole industrial sector of the shattered Japanese economy. A decade later, the American escalation in Vietnam actually helped Japan reenter the Southeast Asian economy.
America and the Japanese Miracle reveals additional evidence of this process but the historical role of the United States is interpreted in a way that conceals the contradictions inherent in the system of exploitative capitalism. Forsberg starts by addressing Washington??™s postwar strategic objective of keeping Japan on our side. He correctly points out that the other side was not the Soviet Union or China, but simply a neutralism. He does not tell us why such a path should have been regarded as a threat. But Forsberg??™s work is entirely assembled on the grounds that the Cold War was a response to a threat, which sharpened the wit of U.S. policy makers in international relations. The restoration of the power of Japan??™s Zaibatsus is seen, in this context, as the product of the Cold War. Yet there is evidence that salvaging Japan??™s powerful monopolies was already on the agenda of influential figures and bodies in Washington even before Japan??™s surrender.
U.S. strategy involved a special economic backing of Japan, which Forsberg illustrates very well, and with approval. The Washington-imposed embargo on trade with the People??™s Republic of China provided a major justification for the embracing support given to Japan. The picture that emerges is that the United States took autonomous actions, requiring one-sided measures of protection, because Japan would otherwise have ceased to function. Thus, contrary to the author??™s own claim, Washington??™s policies did not stem from an enlightened attitude but were the logical result of the sovereign view of the world which matured within the U.S. government during the Second World War. Sponsoring Japan involved, however, a number of frictions and conflicts. Japan??™s desire to keep some trade relations with China could not be altogether ignored, and had to be offset by other arrangements. The substantial decline in the ties with China meant that an anchor for Japan could be found only by opening up export markets in the United States, and possibly elsewhere. The urgency of finding such outlets increased as the Korean War approached its end, engendering a decline in the demand for military related supplies.
Domestically, the U.S. government had to mediate with business groups, at the time mostly in the textile and apparel industry, which feared Japanese competition. Internationally, the strategy required U.S. authorities to coordinate with their allies, especially Britain and France. These countries were reluctant to open their markets because of the perceived lack of exchange from Tokyo. The diplomatic pressure became particularly intense during the negotiations leading to Japan??™s membership in the General Agreement on Tariffs and Trade (GATT) in 1955. A similar pressure occurred when Japan applied to join the Organization for Economic Cooperation and Development in 1964. In the first instance, Washington signed a dozen trilateral treaties allowing third countries greater access to U.S. markets, provided they waived the right to use GATT??™s clause thirty-five against Japan. This clause enabled a contracting nation to deny GATT privileges to another when trade could damage domestic producers.
The discussion of the legal and political procedures of the GATT case is most interesting. It illustrates how U.S. activities in support of Japan??™s entry into the organization constituted another step in the weakening of the British position both in Asia and in the world. Japan??™s membership in GATT contributed to the destruction of the imperial system of preferences, which was the pillar of British sovereignty in the Commonwealth. Although not explicitly stated by the author, the narrative of the book shows that shoring up Japan implied extending American influence at the expense of Britain. The discussion of Japan??™s laws limiting foreign investment is informative, well written, and one of the best sections of the book. The laws were passed when the country was still under occupation. But why did the United States allow regulations that ultimately discriminated against American multinationals Unfortunately, the explanation given by Forsberg is particularly weak. He maintains that Japan??™s risky balance of payment position throughout the 1950s prevented the United States from pressuring Tokyo. However, it can be as easily argued that Japan should have opened its doors to American multinational companies, precisely because it was suffering from a dollar shortage. More realistically, we can say that salvaging Japanese capitalism from within demanded that the reliability of Japan??™s dominant classes be safeguarded. Without the network of the yen area, and with a shattered country, the opening up of the economy to foreign direct investment would have jeopardized the solidity of the ruling groups and further diminished their legitimacy.