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A Cold Peace: America, Japan, Germany, and the Struggle for Supremacy.

A Cold Peace: America, Japan, Germany, and the Struggle for Supremacy. Jeffrey E. Garten. T/mes, $22.During the war against Iraq, George Bush built a consortium of like-minded democracies and held it together, with impressive results. He and the Europeans did it again following the coup in Moscow, quite possibly saving democracy for the Soviet people. Indeed, Bush's one major accomplishment as president has been to show what the great democracies can do when they choose to act in concert. True, his New World Order was held together by phone calls and presidential charm rather than treaties and institutions, but for a while it sure looked promising.

While they fought together in the Gulf, the same allies were also fighting in Geneva--except there, at the negotiations on the General Agreement on Tariffs and Trade (GATT), they were fighting each other. By any objective economic standard, the GATT's efforts to liberalize trade worldwide were, and are, far more important than rescuing Kuwait. In trade, however, there is no Saddam Hussein to scare off parochialism. The French and Germans deadlocked the talks by stubbornly defending their outrageously cynical farm-subsidy system. The Americans have sulked petulantly toward unilateralism and a regional trade bloc. The Japanese have dived under the furniture, hoping that they, the world's second largest economic power, can somehow escape notice.

So which world will it be? Multipolar consortium or multipolar disarray? The Gulf war or the GATT?

The latter, says Jeffrey E. Garten, an investment banker and former State Department official, in his bracing new book. "If current patterns prevail, the nineties could well be notable for its [sic] lack of leadership. The New World Order will, in fact, be a world without order."

Garten makes his case with exceptional clarity and balance, born of a simphfying assumption that, unlike so many other simplifying assumptions, does more good than harm: Relations between America, Germany, and Japan pose the "critical question deterraining the shape of the world as we head for a new century." Each of the Big Three is a major economic power (together they account for almost half of the world's economic output); each is a regional fulcrum; and each has had its--shall we be delicate?--problems with the others.

Garten can handle the economics, security issues, and politics of all three countries; it is above all the broadness of A Cold Peace that makes the book so useful. Gatten is always detailed, never provincial. For exampie, in his deft parallel treatment of German and Japanese development since the 1850s, it is America, not Japan, that emerges as the special case.

Out of those divergent national histories-Japan and Germany on the path of collectivist developmentalism, America on the path of individualist entrepreneurship--comes the book's central worry. Each country benefits from free trade, secure borders, and some modicum of environmental harmonization. Yet defending these three international public zones against parochial pandering and oppormnistic free-riding requires that, as Garten puts it, "at least one of the Big Three, and probably two, will have to take a broad and long-term view of their interests." Now that America's postwar moment of unchallenged economic dominance is over, who will ride herd over parochialism?

America, Gaxten argues, is tangled in its own economic and social problems. Here, as with many who see America in decline, he gets carried away. He says that poverty is at 20 percent rather than the actual 13.5 percent, and that U.S. productivity is declining, which it most certainly is not. But never mind--there's still plenty to worn/about. As for Japan, it's a "follower," partly because its political system is vimally incapable of setting big policy directions. Garten stresses Japan's recurrent political scandals, but those are symptoms of a deeper problem. The fractious ministries and backroom Mr. Bigs of Japan's Tammany Hall-style politics are good at routine management and taking care of private-sector friends. But their eagerness to keep the boat from rocking leads them to freeze when a controversial decision is needed---witness Japan's paralysis during both the Gulf war and the GATT.

While Americans hyperventilate about Japan, our more substantive dust-ups have been with Bonn. The GATT is one such controversy. Another occurred in 1987, when a public spat over monetary policy (Treasury Secretary James Baker announced that he would let the dollar sink rather than follow the Germans into tighter money) helped precipitate the stock market crash. Then there is the German-French plan for a European defense force, which drew a sharp public rebuke from Bush.

Everywhere, Garten sees divergence and potential conflict. "Avoiding a 'Cold Peace,' "he writes, "will depend on whether the-Big Three can overcome the forces that will be pushing them in separate directions. Collisions and chaos are inevitable unless someone takes control." He predicts tensions over military burden-sharing, over the division of environmental responsibility, and especially over economic policies and practices. "in place of East-West tensions," he says, "we will see competition among the various kinds of capitalism." Differences may breed conflict, as American universalism and missionary zeal collide with the realities of quite different, yet very successful, German and Japanese capitalism.

Yes, yes-but. Many readers, in the end, may emerge from Garten's book a good deal less pessimistic than its author. First, because where common interests are strong, countries with quite different systems can and do work together. The Big Three share a compelling interest in secure borders and open trade. Second, because the sources of Big Three tension that Gaeten describes are about as benign as sources of international tension can be.

The divisive question today isn't: Can and should democracy survive? Or: Can we avoid blowing each other to bits? Or even: Whose homeland is this? The questions are rather: How will we apportion environmental responsibility? Who will be the technological leader in a nip-and-tuck race? Will we be able to control our tempers as our varying styles of capitalism instzuct each other?

These latter sources of tension are the less inflammatory ones. They also have enormous constructive potential. Economic and technological rivalties, unlike the enmity of the past, pay dividends as they drive countries and companies to achieve--so long as no one panics. Garten the pundit and analyst frets over drift, tension, and challenge; but Garten the synthesist leaves us feeling, above all, how blessed we are today to have such manageable problems.

--Jonathan Rauch
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Author:Rauch, Jonathan
Publication:Washington Monthly
Article Type:Book Review
Date:Jul 1, 1992
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