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Looking at the Sun.

James Fallows' remarkable new book is not so much about Asian economies as about Western conceptions of those economies; his subject is nothing less man what happens when economic theory collides with real world experience. I should say at once that Fallows is my friend, and has advised me on a previous book of my own. Thus readers who seek a critique of Fallows' views should look elsewhere, since I agree with what he has to say. In Looking at the Sun, he has undertaken a daunting subject, but one that logically follows from his own experience in recent years.

Returning to America in 1989 after serving as The Atlantic Monthly's Asian correspondent for four years, Fallows, who has since spent another year and a half on the road in Asia, became one of the most visible of the so-called "revisionist" thinkers on Japan. The revisionists were a small and diverse group that included Chalmers Johnson, professor of economics at the University of California; Clyde Prestowitz, a former U.S. Trade Representative; Karel van Wolferen, a Dutch journalist living in Japan; and Pat Choate, a Washington economist. In the late 1980s and early 1990s, the revisionisis were reviled as wrong-headed, destructive, uninformed Japan-bashers. Their opponents often hinted that they were racist as well.

But as is so often the case, the truth of this situation was the reverse of what generally appeared in the press. In fact, the revisionists were friendly and knowledgeable critics; most had lived and worked in Japan; they maintained close ties to Japanese friends and colleagues; and many of them spoke Japanese fluently. Furthermore, the revisionists did not always agree on what the U.S. should do about Japan; indeed, they were often uncomfortable being lumped together.

Nevertheless, the revisionists expressed certain common views: that Japanese capitalism differed fundamentally from Western capitalism; that Japanese companies pursued strategies different from their Western counterparts; that the American government has failed to comprehend me differences between the two systems; and that the economic consequences of this misconception for America were potentially dire. These rather impersonal, systems-oriented views provoked a fury of vitriolic, ad hominem attacks within the United States.

Despite intense critical reaction, many revisionist ideas have lately won some measure of acceptance. In academic circles, the term "revisionism" has been replaced by "comparative capitalism," since there is now wide agreement that the Western and Asian economies do in fact differ. The history of the U.S. government's dealings with Japan during the Cold War has brought to light several unsavory episodes, not easily defended by anyone. The Clinton administration has been more insistent about addressing the trade deficit with Japan, in the process legitimizing many revisionist views.

Even the term "Japan-bashing" went briefly out of favor after the Columbia Journalism Review reported that Robert C. Angel, an American working for the Japanese-funded Japan Economic Institute, invented the term in 1977 as a way to stifle debate, including legitimate debate, on Japan. The phrase was only too successful. Angel said, "I view that modest public relations success with some shame and disappointment," and added, "Those people who use [the term] have the distinction of being my intellectual dupes."

But the list of intellectual dupes is long, and continues shamelessly to grow; recently Senator Bradley criticized the Clinton trade policy as "Japan-bashing." The casual indifference with which American politicians and the American press employ disinformation terminology created by a foreign competitor is a wonder to behold. One might have thought that once its history

were known, "Japan-bashing," like "nigger," would become an unacceptable term in intelligent discourse. Yet against all logic, "Japanbashing" is making a comeback.

Which brings us to the central concern of Fallows' new book: the peculiar intellectual inflexibility of the West in dealing with Asia. Looking at the Sun takes the structure of a personal tour of the major Asian nations; along the way, Fallows reviews the history of Western and Asian economic ideas over the last two hundred years. The book is disarming: informal, easy-going, and extremely well-written. But the casual surface conceals an underlying rigor, and a profound concern: How, Fallows asks, do ideas about economies take hold, and what facts are neccessary to dislodge them? Why has it been so difficult for Americans to look clearly at Japan and the other countries of Asia?

One answer is a simple imperviousness to contrary fact by influential observers. Fallows provides many examples of this intransigence. Since the current trade dispute seems to revolve around the problems of Motorola in Japan, it is perhaps worth reviewing one of the most spectacular of Fallows' cases: Labor Secretary Robert Reich's views on Motorola in the context of the global economy.

In 1989, Reich, then a lecturer at Harvard, published an article in The New Republic in which he argued that U.S. trade pressure on Japan to open its markets to Motorola was misguided, since Motorola actually made its cellular phones in Kuala Lumpur. Motorola immediately responded that this was untrue; their phones, they said, were manufactured in Illinois by American workers.

Six months later, in an influential article in the Harvard Business Review, Reich repeated his assertion that Motorola made its cellular phones in Kuala Lumpur. Once again, Motorola denied the claim, writing both to the Harvard Business Review and to Reich personally.

A year later, in The American Prospect, Reich again stated that Motorola's cellular phones and pagers were "mainly" manufactured in Kuala Lumpur. Again, Motorola vigorously denied that this was so, although by now it must have been clear to them that an appeal to the facts would do no good. And it didn't: In his next book, The Work of Nations, Reich again repeated the erroneous Motorola example as evidence of why current U.S. trade policies toward Japan were misguided.

Fallows recounts Reich's handling of Motorola in detail and goes on to document similar errors in Reich's statements about semi-conductors and high definition television. Although Fallows is too polite to say so, the conclusion is inescapable: A major cabinet figure in the Clinton administration, and a leading expert on the global economy, simply does not know what he is talking about. Reich is an intelligent man, but he has been praised for his theory of the global economy which states that the nationality of corporations no longer matters. Understandably, he may be reluctant to accept data to the contrary-data which suggest that national origin still matters very much. (Einstein once said that we should be careful about our theories, because a theory determines not only what we observe, but what we can observe.)

Fallows makes the astute point that if examples from business to support Reich's view were plentiful, the secretary would long ago have abandoned the Motorola case as more trouble than it was worth. Why make one's argument with disputed cases, if indisputable cases can be used instead? Fallows implies that Reich has clung stubbornly to Motorola because better examples cannot be found--because Reich's theory itself is deeply flawed, and ultimately cannot be supported by data. The economies of modern nations do not work as Reich would have us think they do. On the contrary, most evidence shows that corporations are not truly global in their effects; they are likely to favor, and disproportionately benefit, their countries of origin.

If contemporary ideas about the global economy are often misconceived and fanciful, the economic behavior of the Asian nations goes a long way toward explaining why. Fallows argues persuasively that the powerful, emerging economies of Asian nations simply do not work according to established Western economic thinking, and in fact reveal the inadequacy of such thinking. This is the central concern of Fallows' book, expressed in its opening paragraph: "The [West] is awash in information about... Asia. But it lacks... the right theories to give that information coherence and shape." It is the goal of Fallows' personal tour of nations and economic history to come up with the right theories.

Fallows' answer begins with his discovery, in a bookstore near the campus of Hitotsubashi University, of a rare English translation of the work of a nineteenth-century German economist, Friedrich List. Well known in Asian universities, and carefully studied by Asian economists, List has been so thoroughly forgotten by Anglo-American economists that Fallows has been unable to obtain his work in translation anywhere in the West.

Fallows' extended discussion of List, and what has been overlooked by the Anglo-American economic tradition, leads the reader to a markedly different concept of why economies exist, and how they behave. In doing so, Fallows contradicts nearly all the conventional precepts of Western economic dogma. He directs our attention back to the centrality of raw economic power; he re-emphasizes the importance of nations as economic units; he makes the case for guided economic development; he explains the strengths of an economy that favors the producer instead of the consumer; he teases out the inevitable, essential interrelations of government and business.

As he proceeds, it becomes clear why Fal. lows has chosen to write this book in an informal, unthreatening tone. Handling potent material, his goal is to persuade, and he knows it will not be easy. In a secular work where economic dogma has replaced religious dogma, Fallows is openly heretical. No doubt he will face a vigorous and ad hominem counterattack. (Ad hominem attack is the secular, information-age equivalent of burning at the stake.)

But whatever form the criticism takes, one suspects that events are now firmly on Fallows' side. Reviewers rarely consider what authors know only too well--that their books will still be around in five or ten years. A book is a bet, and the stake is the author's reputation. Fallows' 1989 work, More Like Us, holds up well, and in many ways appears more relevant now than it did then. I anticipate a similar fate for Looking at the Sun.

As the twentieth century draws to a close, it is increasingly clear that the West has failed to understand what the Asian economies are doing, and why they have succeeded so spectacularly for so long. And it is increasingly agreed--if only in private--that traditional Western economic thinking cannot adequately explain the Asian success (or even, for that matter, earlier American periods of economic success). Thus a new theory must sooner or later arise, and become the new dogma.

In Looking at the Sun, James Fallows has given a clear, elegantly stated contribution to that new and emerging debate. It is, in my view, an exceptional effort, and a great gift.

Michael Crichton is the author of the novels Jurassic (1990), Rising Sun (1992), and Disclosure (1994).
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Author:Crichton, Michael
Publication:Washington Monthly
Article Type:Book Review
Date:Apr 1, 1994
Words:1772
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