The Japanese Challenge to the American Neoliberal World Order

The Japanese Challenge to the American Neoliberal World Order

Author:      Yong-Wook Lee

ISBN:           9780804758123

Publisher: Stanford University Press

Year:           2008

Price:         $48.00


Reviewed by Werner Pascha, Institute of East Asian Studies (IN-EAST), Duisburg-Essen University, Germany

While Japan has so often been identified with a low-key approach to foreign policy or, at best, with “leadership by stealth”, it is noteworthy that it has recently challenged US development policy leadership in the Asian region. In particular, Japan’s eventually failed proposal of an Asian Monetary Fund (AMF), leaving out the US, in the midst of the 1997/98 financial crisis showed some astonishing bravado. Why did this happen? What does it tell us about Japan’s foreign policy-making? These are the key questions of Yong Wook Lee´s book, a revised doctoral thesis in international relations at the University of Southern California. Needless to say, the “AMF puzzle” is not only of historical interest. Japan has been following up its Asian agenda through the Miyazawa Initiative of 1998 and particularly through the Chiang Mai Initiative of 2000, which is currently being turned into something very close to the original idea of an AMF.

After introducing the key questions in chapter 1, Lee explains and defends his theoretical approach in chapters 2 and 3. Basically he argues that Japan’s policy stance is very much shaped by (earlier) meaning-oriented domestic discourses, in which a developmentalist role of the Japanese state was established, and the resulting understanding of identity and interests among actors. Chapter 4 is dedicated to outline the relevant discursive roots in Japan since the Meiji Period. Three research agendas are presented: Marxism, economic liberalism, amd developmentalism. Lee argues that the developmentalist school, which stresses the role of the (Japanese) state for successful industrialization, has become the dominant breed since the 1980s, supported by successful and seemingly fitting cases of state-led industrialisation in other East Asian economies. Chapter 5 traces the role of this understanding in Japan’s approach to regional development policy issues during the 1980s to the early 1990s. One of the most noteworthy cases discussed is Japan’s role with respect to the World Bank’s East Asian Miracle study of 1993. For Lee, it is particularly important to understand the role of Japan’s Ministry of Finance (MoF) and of its bureaucrats. Several of its members took up important positions in the Asian Development Bank, experienced ideological clashes with a neoliberal agenda supported by the USA, and returned to Japan to form an “Asian faction” within the MoF, their developmentalist convictions rather strengthened than shaken. The financial crisis of 1997/98 is at the core of chapter 6. Concentrating on the role of MoF, the author shows how it shifted from supporting the IMF during the negotiation of the Thai rescue package in the summer of 1997 – on the understanding that the US, which did not contribute to this package, would leave the leadership role to Japan, which America did not – to demanding an AMF, as the “Asian faction” around Sakakibara was able to argue that the US would otherwise use its leverage in the IMF and elsewhere to torpedo the Japan-supported Asian developmentalist agenda. Finally, chapter 7 is devoted to a summary and a short outlook on the Chiang Mai Initiative, with which follows up on its failed AMF proposal, and Japanese proposals towards a new world economic order, which also follow this legacy.

Summing up, Yong Wook Lee offers a valuable and carefully researched account of Japan’s role in the regional development dialogue of the 1980s and 1990s. If one wants to understand Japan’s surprising outspokenness against US-held “neoliberal” convictions, this is a good source to turn to. There are also some weaknesses. Concentrating on the role of MoF, the book is relatively silent about other players. For instance, the relationship of bureaucrats with politicians, cabinet and parliament, is sparsely covered. While it may be Lee’s believe that Japanese politicians hardly count, it is questionable whether the same mechanisms underlying politics before the current decade will still drive the Japanese policy-making arena in the future. Another missing factor is other international players. Of course, the US is mentioned frequently, but even in this context there is little actual analysis, for instance about the claim of a deep link between the Treasury and the IMF. Another instance is the role of China or other East Asian players, which is hardly covered. (China’s role during the critical days of the announcement of the AMF proposal in September 1997 is only mentioned in a footnote).

Your reviewer, as a trained economist, was sometimes exhausted by the amount of jargon used to explain and defend the methodological approach of the book – it seems that some further “disarmament” from the needs of submitting a formal Ph.D. thesis might have been desirable. Still, it is meaningful that Lee has located himself within the constructivist approach to IR, developing what he calls an “identity-intention analytical framework”. This approach certainly has its merits. For instance, I agree with Lee that, for instance, a simple interest group approach or a realist national interest approach could not easily explain the intricacies of the “AMF puzzle”. However, concentrating on discourses and how they shape interests and practice leaves out the question to what extent the emerging convictions really fit what is going on in the “real world” and have the potential to convince others. Simply put: Is the developmentalist “story” really convincing? Does it draw the right policy conclusions? Is it really sensible to support national governments, when they promote their self-made industrialisation agendas, often enough disregarding issues like moral hazard, cronyism, etc.? Japanese actors have made several attempts over the years to develop a strong challenge to IMF and World Bank scholarship on these matters. Has, for instance, the Asian Development Bank Institute, founded in Tokyo, been successful with this endeavour? I have my doubts, but more important: Because Lee does not discuss it, he can say rather little about the sustainability of the beliefs that seem to have become so prominent in the MoF of the 1980s and beyond.