[lbo-talk] Boycott Japan and China

Yoshie Furuhashi critical.montages at gmail.com
Thu Aug 10 11:02:40 PDT 2006


On 8/9/06, Marvin Gandall <marvgandall at videotron.ca> wrote:
> Yoshie writes:
>
> > The largest institutional investors, Tokyo and Beijing, have continued
> > to support the dollar:
>
> > Essentially, Tokyo and Beijing, state capitalist actors, are the
> > largest individual members of the multinational ruling class, but they
> > can't participate in US elections, and they can't easily wield their
> > economic power to put pressures on the US government, even if they had
> > any misgivings about Washington's Iraq War, Iran campaign, or Middle
> > East policy in general (it is not clear that they do), for that will
> > result in momentous upheavals in Japan and China as well as the USA.
> >
> > That's the most important gap between the power elite who directly run
> > the multinational empire, who are American, and the ruling class, who
> > are multinational. In essence, the multinational ruling class can't
> > control the US power elite, for the most powerful members of them need
> > the USA as their most important export market. No wonder the empire
> > is running amok.
> ==================================
> Yoshie has touched upon something important here. Leaving aside the question
> of whether the US rulers are still "running amok" or are now thrashing about
> wildly trying to find an escape from a Middle Eastern trap of their own
> making, the fact that the US remains the central export market for the rest
> of the world is the single most important factor underlying its economic and
> political domination of the world economy.
>
> Everybody wants to sell their products in the US, which harbours the world's
> largest and freest spending body of consumers.

Not everybody, but Tokyo and Beijing certainly export both capital and goods to it, exports of capital and goods mutually dependent on each other, i.e., without their export of capital to it, American consumers would have much less purchasing power.

I finally got around to reading the NLR article that John Gulick recommended to me offlist, which sketches a triangle relation among Japan, China, and the USA:

<blockquote>Since the early 1950s, exports have been the lodestone of Japan's growth—most particularly, exports to the United States. While that is still happening, as any glance at Detroit's woes can attest, equally important in recent years has been Japan's exports to China—both the physical and the financial kind. China's hunger for Japanese capital goods, to allow it to produce the exports to feed an American market, permitted Japan's capital-goods manufacturers to boost capacity-utilization rates to the point where they were making money again. The positive cash flow meant that balance sheets could be strengthened and debt paid down, allowing the banking system to put the worst of the so-called 'bad loan crisis' behind it.

China has thus helped alleviate what had come to seem an insoluble problem: the overwhelming pressure on the cost structure of Japanese industry once it joined the ranks of the developed nations. Japan had long sought to preserve what is essentially a 'late developer' model: export-led growth; systemic protectionism; severe restrictions on foreign equity; and cartels that funnelled cash into industrial coffers in order to offset the price-cutting necessary to win export markets. But during the 1990s the yawning gap between domestic Japanese prices and those overseas finally sucked in and chewed up cartel after cartel ('price destruction' was the term coined by distraught Japanese businessmen), while the collapse of real-estate prices crippled the financial mechanism that had seen cheap financing channelled from household savings to industry. And no matter what was done to shackle market forces, there was no escaping the economic reality of well-trained Chinese willing to work twice as hard as their Japanese counterparts for one-tenth of the wage.

But Japanese industrial leaders found the means of coping with this threat to their way of doing business by undertaking what amounted to a division of labour with China. Both countries engaged in tacit cooperation to support the dollar, permitting Americans to purchase Japan's high-value added products—automobiles, machine tools, aerospace components—and China's lower-end products, manufactured largely on imported Japanese equipment. For many Japanese working-class households, the end of job security has been partly alleviated by waves of cheap Chinese imports of food and clothing.

(R. Taggart Murphy, "East Asia's Dollars," New Left Review 40, July-August 2006, <http://www.newleftreview.net/?page=article&view=2625>)</blockquote>

But this is more a sketch than anything else. It would be nice if we had an article that fleshes it out with figures, proportions, and historical trends.

-- Yoshie <http://montages.blogspot.com/> <http://mrzine.org> <http://monthlyreview.org/>



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