“Japan’s New Imperialism” by Rob Steven is a slightly-dated (published 1990) but nonetheless comprehensive analysis of the rise of Japanese imperialism in Southeast Asia since the 1970s. Since the end of decolonization, “a new revolutionary force is sweeping through and transforming Southeast Asia. That force is capitalism, and once again the catalytic upsurge in its development is coming from Japan,” so begins the book. Examining the dynamics of this transformation is the task Steven has set himself.
Using Marxist economic theory, Steven examines the social forces engendering the flight of capital from Japan to Southeast Asia. He begins with an analysis of what was known as endaka fukyō, the high yen recession. According to Steven, although the Japanese ruling class depicted the 1973 oil shock as the cause of Japan’s economic woes (not unexpectedly, Steven writes, because ever “since the Meiji Restoration, competition from foreign capital in one form or another, from the gunboat diplomacy of the 1860s through the free trade imperialism of the nineteenth century and then the Second World War, has been a greater threat to Japanese capital than have the ordinary Japanese people” (p.12)), the origins of the endaka begin much earlier than 1973. To deal with capital’s declining profitability in the 1960s, the Japanese ruling class adopted a “three-pronged approach, which it would repeat in the subsequent period of crisis a decade later” (p.13). Firstly, ‘scrap and build’, where less profitable industries were run down and new ones built from the surplus of the old, was accelerated. Secondly, the run down industries were relocated abroad. And thirdly, a wholesale attack on the Japanese working-class, through the temporary labour and subcontracting systems.
This industrial restructuring, Steven argues, was “not unexpectedly the seed and eventually the dominant form of the next crisis” (p.14). The Reagan administration’s monetarist solution to the U.S.’s external deficit made U.S. capital more competitive, but with devastating consequences to the Japanese working-class: “By reducing the dollar outlays needed to employ American workers, it made investment in the US increasingly more attractive than Japan. Japanese employers thus once again forced down wages which in real terms were already not much more than half those in America” (p.16). In this, Japanese unions helped employers “single out old, infirm, or rebellious workers for redundancy” (p.19), which, sadly, does not surprise me. The limited spending power of Japanese workers restricted the domestic market for Japanese capital, leading to export-led economic production. “A lot of money could be made producing machinery cheaply in Japan and selling it in the lucrative markets of the advanced countries in Europe and America” (p.19). It was during this ‘second Japanese miracle’ that major Japanese corporations, such as Toyota, Matsushita Electric Industrial Co., Ltd (now Panasonic), and Hitachi, achieved their international prominence.
U.S. capital, however, didn’t take too kindly to Japanese capital’s competition for the American market: “It was one thing to rely heavily on he US for food and raw material supplies in the immediate postwar period, since this did not threaten the interests of American capital, but quite another thing to storm into the latter’s backyard and gobble up its diminishing market” (p.21). But by this period, “the already crisis-ridden US system had as its counterpart in Japan an unprecedented industrial specialization, an unprecedented dependence on export markets and an unprecedented dependence on the American market” (ibid).
Among the weapons used by U.S. capital against Japanese capital “was its monetarist strategy to reduce its deficit with Japan by shifting much of the burden from its own to the Japanese working class. The spectacular rise of the yen, following the ‘G5’ agreement (among the finance ministers of the five major powers on 22 September 1985) that adjustment of the exchange rate should receive the highest priority, had just this effect” (p.27).
Japanese capital adopted the same “three-pronged approach” as in the 1970s: the scrapping of less profitable industries, an attack on the working-class, and transferring industries overseas.
The rest of the book is devoted to examining Japanese direct foreign investment (DFI) in Asia. Steven divides Japanese DFI into three periods: the labour-intensive textile DFI in the 1960s, the raw materials DFI in the 1970s after the oil shock, and the machinery investments in the 1980s.
The first period of textile investments (1962-73), centered in Latin America and Asia, was “characterized by small projects and small companies” (p.71), “chiefly for the local markets” (p.68), and “grew out of the crisis of rising real wages following the revival of capital accumulation in the mid-1950s” (ibid). South Korea and Taiwan were the primary targets of the DFI.
The second period of basic and raw materials DFI, “continued the emphasis on labour intensive industries in Southeast Asia, but it also included a powerful new thrust into securing raw materials” (p74). Industries such as steel, non-ferrous metals, petrochemicals, pulp and paper, etc., were relocated abroad, “so that Japan could concentrate on machinery, final processing and final assembly” and other high-valued production processes (ibid). Japanese DFI in this period was quantitatively larger than during the first, involving larger investments and larger corporations, and was directed at resource-rich countries such as Indonesia, the Philippines, Brazil, and Saudi Arabia.
The second period ended and the third began due to a “shift in the line-up of forces opposing Japanese capital” (p.83). Until the early 1980s, Japanese capital’s main confrontations had been with the working-class in Japan and the various Southeast Asian countries. During this time “relations with the ruling classes of the advanced countries had been relatively cooperative” (ibid). By the 1980s, Japanese capital increasingly had to compete with the capital from the advanced countries, namely the U.S. The strategy Japanese capital adopted was to “as far as possible geographically separate the points of production and sales, so that the maximum profits could be made from simultaneously exploiting both the lowest wage costs as well as the most luxurious markets” (p.83-84). Japanese transnationals have established numerous overseas subsidiaries, even in the advanced countries, but “instead of importing components almost exclusively from Japan as in the past, they are not bringing in more from cheap production sites in Asia” (p. 86).
Steven then examines Japanese capital’s strategies in selected countries and regions. In the U.S. and Europe, despite significant DFI, these regions remain sites of consumption and not production. In South Korea, Hong Kong, Taiwan, and Singapore, the so-called NICs, formerly major sites of Japanese textile and electronics production, Japanese capital is increasingly shifting production away from these countries, due to successful working-class struggles for higher wages, the rise in Asian currencies, and local competition. Singapore and Hong Kong have in particular been transformed into clearing houses for Japanese capital, or so-called ‘middlemen’ for Japanese neo-colonialism in neighbouring countries. In Thailand and Malaysia, while still importance sources of raw materials, Japanese capital is increasingly centered in more production oriented investments, taking advantage of political stability, infrastructure, and low wages, as alternatives to the NICs. And in the Philippines and Indonesia, Japanese capital is still primarily invested in resource extraction and raw materials processing, due to the abundance of raw materials, low wages, and minimal environmental regulation, as well as political and social instability, which discourages riskier and more capital-intensive DFI.
I enjoyed reading this book, which I think is a valuable and comprehensive analysis of Japanese imperialism, despite a lot of numbers and charts. And although the book was published in 1990, I doubt much has changed since then. Probably Japanese capital has intensive the changes he describes, and not much else. I definitely didn’t expect such a thorough analysis. Palgrave publishes some amazing scholarly books, but I wouldn’t have expected such a progressive, anti-capitalist and anti-imperialist, if not Marxist, book from them. This book reads and feels a lot more like something published by Monthly Review than Palgrave!