Restructuring in the Global Economy: From Pax Americana to Pax Nipponica?

See, in particular, Buchan A. , Power and Equilibrium in the 1970s (London: Chatto and Windus, 1973); and R. Aron, The Imperial Republic trans. F. Jellinek (Englewood Cliffs, N. J.: Prentice-Hall, 1973), especially postscript.

The costs of this separation were registered at the time through the dissenting voice of Susan Strange, ‘International Politics and International Economics: A Case of Mutual Neglect’, International Affairs, Vol. 46, No. 2, 1970.

Of course, not all would agree with this. For a survey of dissenting opinions about the persistence of US hegemony from different perspectives, see Strange S. , ‘Cave! Hic Dragones: a Critique of Regime Analysis’, International Organisation, Vol. 36, No. 2, 1982; B. Russett, ‘The Mysterious Case of Vanishing Hegemony: Or, Is Mark Twain Really Dead?', International Organisation, Vol. 39, No. 2, 1985; and J. Petras and R. Rhodes, ‘The Reconsolidation of US Hegemony', New Left Review, No. 97, 1976.

For an overview of the changes in the bilateral trade balance through these years, see Kuwayama P.H. , ‘The Evolution of Trade with Japan’, in Jameson K. Skurski R. (eds.), US Trade in the Sixties and Seventies (Lexington, MA: Lexington Books, 1974).

For what is still the best analysis of the components of the overall US balance of payments in these years, see Block F.L. , The Origins of International Economic Disorder (Berkeley: University of California Press, 1977), especially Chapter 6.

Quoted in Barnet R. J. , The Alliance (New York: Simon and Schuster, 1983), p. 307.

For a more complete discussion of the NEP, see Calleo D.P. , The Imperious Economy (Cambridge, MA: Harvard University Press, 1982), Chapter 4.

The two revaluations of the Yen between 1971 and 1973 totalled 36%, which was the largest appreciation of any major OECD currency.

The most important of these so far as Japan was concerned were in textiles, automobiles and steel. On these agreements, see Aggarwal V.K. , Liberal Protectionism: The International Politics of Organised Textile Trade (Berkeley: University of California Press, 1985), especially Chapter 5; G. R. Winham and I. Kabashima, ‘The Politics of US-Japanese Auto Trade', in I. M. Destler and H. Sato (eds.), Coping with US-Japanese Economic Conflicts (Lexington, MA: Lexington Books, 1982); and K. Jones, Politics vs Economics in World Steel Trade (London: Allen and Unwin, 1986), especially Chapter 6.

It was widely believed within Japan that the US Administration was an active accomplice to the first OPEC price revolution. This belief reinforced the salience of the traditional Japanese perception of their weak position within the international economy. For a survey of the impact of the oil shocks on the Japanese economy, see Watanuki J. , ‘Japanese Society and the Limits to Growth’, in Yergin D. Hillenbrand M. (eds.), Global Insecurity (Harmondsworth: Penguin, 1982).

For Kissinger's reflections on this strategy, see Kissinger H. , White House Years (Boston: Little, Brown and Co., 1979). For insightful commentary on the strategy, see Stanley Hoffman, ‘Weighing The Balance of Power', Foreign Affairs, Vol. 50, No. 4, 1972.

Buchan A. , The End of the Post War Era (London: Weidenfeld and Nicolson, 1974), p. 269.

Though, even at a trend rate of around 5% pa, it was still substantially above that of the remainder of the OECD world. For convenient comparisons, see Balassa B. Noland M. , Japan in the World Economy (Washington, DC: Institute for International Economics, 1988), Table 1.2, pp. 6–7.

Block, op. cit., note 5, p. 160, Table 7.

As Davis perceptively observed at the beginning of the second Reagan Administration, ‘. (t)here is a vulgar irony in the fact that it was Reagan's lusty embrace of that false god of the Democrats - John Maynard Keynes - that guaranteed his re-election, while Mondale and the AFL-CIO once again looked like Republicans in their conservative insistence on fiscal probity and restrained growth', Davis M. , Prisoners of the American Dream (London: Verso, 1986), p. 231.

Komiya R. Itoh M. , ‘Japan's International Trade and Trade Policy, 1955–1984’, in Inoguchi T. Okimoto D.I. (eds.), The Political Economy of Japan, Volume 2, The Changing International Context (Stanford: Stanford University Press, 1988), p. 212. For a general statistical summary of the nature and geographical distribution of Japan's trade imbalance at its peak, see T. Beal, ‘Japan's Trade Surplus: Some Less Explored Dimensions', Proceedings of the British Association for Japanese Studies, Vol. 11, 1986.

For his distinction between ‘regulatory’ and ‘developmental’ states, see Johnson C. , MITI and the Japanese Miracle (Stanford: Stanford University Press, 1982), pp. 17–34. For his thoughts on the appropriate mix of the policies to correct the current imbalances, see ‘How to Think about Economic Competition with Japan', Journal of Japanese Studies, Vol. 13, No. 2, 1987.

Drucker P. , ‘Japan's Choices’, Foreign Affairs, Vol. 65, No. 5, 1987; and R. Morse, ‘Japan's Drive to Pre-eminence', Foreign Policy, Vol. 69, 1987–88.

See Gilpin R. , The Political Economy of International Relations (Princeton, N.J.: Princeton University Press, 1987), p. 386.

Kennedy P. , The Rise and Fall of the Great Powers (New York: Random House, 1987), p. 463. It should be noted that he does not endorse this caricature.

van Wolferen K. G. , ‘The Japan Problem’, Foreign Affairs, Vol. 65, No. 2, 1986–87, p. 302.

For this characterization, see ‘X', ‘The Sources of Soviet Conduct’, Foreign Affairs, Vol. 25, 1947.

In this mould, particularly note Goldstein J.L. Krasner S.D. , ‘Unfair Trade Practices: The Case for a Differential Response’, American Economic Review, Vol. 74, No. 2, 1984; S. D. Krasner, Asymmetries in Japanese-American Trade: The Case for Specific Reciprocity, Policy Papers in International Affairs, No. 32, Institute of International Studies, University of California, 1987; and S. D. Krasner, ‘A Trade Strategy for the United States', Ethics and International Affairs, Vol. 2, 1988.

Komiya Itoh , op. cit., note 16, p. 217.

On this topic, see George A. Saxon E. , ‘The Politics of Agricultural Protection in Japan’, in Anderson K. Hayami Y. (eds.), The Political Economy of Agricultural Protection: East Asia in International Perspective (Sydney: Allen and Unwin, with the A-JRC, 1986).

Some of these increased Japanese imports from the United States—especially manufactured imports—are clearly the result of intra-firm trade by the subsidiaries of Japanese companies located in the United States. But high domestic growth in Japan has also had important effects here; in the first quarter of 1988, Japanese growth was artificially high, but nonetheless running at a decade-high annual rate of over 11% pa. Subsequent quarterly results pulled down this figure substantially; see ‘Fall in GNP Growth Relieves Fear of Inflation', Australian, 29 April 1988, and ‘Economy Shows 10-year Record Rate of Growth: EPA', Japan Times, 2 July 1988. Nonetheless, the IMF's latest prediction is that Japanese growth will average out at 5.5% over the full year; see World Economic Outlook, October 1988, p.3.

It should be noted that the large percentage increases in imports from the NICs and the EEC are artificial to the extent that both commence from a low base; neither has previously figured as a significant supplier to the Japanese economy.

These figures on the changing sources and relative size of Japanese imports come from ‘MITI white paper calls for international policy coordination', Japan Times, 25 June 1988.

For an excellent analysis of the various perversities entailed in the attempts to manage the bilateral trade balance through currency realignment, see Gordon B.K. , ‘Politics and Protectionism in the Pacific’, Adelphi Papers, 228, 1988, pp. 23–30.

See ‘Japan heads for new clashes over trade', Financial Review, 2 November 1988, and ‘Export growth the “problem”’, Far Eastern Economic Review, 17 November 1988.

For an account of this record, see ‘Documenting intervention’, Far Eastern Economic Review, 31 March 1988.

‘Bangemann warns on US protectionism', Financial Review, 30 August 1988.

In 1985, the US international investment position of the US showed a deficit of $112 billion, but over the next two years this deficit nearly quadrupled to $403 billion (or 9% of GNP); see OECD Economic Surveys: United States (Paris: OECD, 1988), Table 12, p. 38.

For general reflections on this, see ‘Japan's banks: Tokyo dominate world lending’, International Herald Tribune, 10 February 1988.

Okimoto D. I. , ‘Outsider Trading: Coping with Japanese Industrial Organisation’, Journal of Japanese Studies, Vol. 13, No. 2, 1987, p. 401.

Japan 1988: An International Comparison (Tokyo: Keizai Koho Center, 1988), Table 6–4, p. 56.

On this, see Orr R. M. Jr. , ‘The Rising Sun: Japan's Foreign Aid to ASEAN, the Pacific Basin and the Republic of Korea’, Journal of International Affairs, Vol. 41, No. 1, 1987.

Figures on this are hard to find and not constant over time, but financial journalists commonly suggest that Japanese purchases consume between 25% and 40% of the US Treasury bond market.

See McCormack G. , ‘Japan's Superpower Dilemmas’, Centre for Asian Studies, University of Adelaide, June 1988, p. 4.

This remedy has been proffered by the former Chairman of the Council of Economic Advisers to the President, Martin Feldstein; see his ‘Correcting the Trade Deficit’, Foreign Affairs, Vol. 65, No. 4, 1987. For more on his arguments, see ‘Group of Seven urged to let the $US slide’, Financial Review, 20 September 1988.

For an analysis of this episode, see Baldwin D.A. , Economic Statecraft (Princeton, N. J.: Princeton University Press, 1985), pp. 251–261.

Kennedy , op. cit., note 20, p. 466.

Or selectively implemented, as in the case of the Toshiba sanctions.

Komiya Itoh , op. cit., note 16, sum up this transition by saying that what began as a ‘trade conflict’ has been transformed into an ‘economic conflict'. Even this characterization runs the risk of being too narrowly drawn.

Luttwak E. , ‘An Emerging Postnuclear Era’, The Washington Quarterly, Vol. 11, No. 1, 1988.

For an overview of that history of the ‘China Card', see Segal G. , ‘Card Playing in International Relations: The United States and the Great Power Triangle', Millennium: Journal of International Studies, Vol. 8, No. 3, 1980.

Vogel E. , ‘Pax Nipponica?’, Foreign Affairs, Vol. 64, No. 4, 1986.

Inoguchi T. , ‘Japan's Images and Options: Not a Challenger, but a Supporter’, Journal of Japanese Studies, Vol. 12, No. 1, 1986.

This was first formulated by Bergsten over a decade earlier in relation to US-German relations; see Bergsten C.F. , ‘The United States and Germany: The Imperative of Economic Bigemony’, Towards a New International Economic Order (Lexington, MA: Lexington Books, 1975), Chapter 23.

Bergsten C. F. , ‘Economic Imbalances and World Politics’, Foreign Affairs, Vol. 65, No. 4, 1987.

See the three-part article on Japan by Suich M. , Financial Review, 16–18 August 1988.

Rosenau J. N. , ‘The Tourist and the Terrorist: Two Extremes on the Same Transnational Continuum’, in Rosenau J.N. , The Study of Global Interdependence (London: Frances Pinter, 1980).

The best examples of this work are found in Bergsten C.F. Keohane R.O. Nye J.S. , ‘International Economics and International Politics: A Framework for Analysis’, in Bergsten C.F. Krause L.B. (eds.), World Politics and International Economics (Washington, D.C.: Brookings, 1975); J. S. Nye, ‘Transnational and Transgovernmental Relations', in G. L. Goodwin and A. Linklater, New Dimensions of World Politics (London: Croom Helm, 1975); and R. O. Keohane and J. S. Nye, Power and Interdependence: World Politics in Transition (Boston: Little, Brown and Co., 1977).

Krasner S. D. , Defending the National Interest (Princeton, N. J.: Princeton University Press, 1978).

For Pareto, non-logical is an appropriate description for much behaviour that is an instinctively based way of relating means to ends, and it should not be confused with illogical behaviour: see Pareto Vilfredo : Sociological Writings, tr. Mirfin D. (Oxford: Basil Blackwell, 1966), especially pp. 143–149.

There are more complex and nuanced versions of the theory. Briefly, the most important of these include (a) the attempt to introduce ‘regimes’ as ‘intervening variables’ between the raw distribution of power between states and the outcomes manifest at the international level; see Krasner S.D. , International Regimes (Ithaca: Cornell University Press, 1983); (b) the attempt to consider the question of the possibility of cooperation between states as a source of international regimes; see, in particular, R. O. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton, N. J.: Princeton University Press, 1984).

For the most concise statement of this argument, see Kindleberger C.P. , ‘Dominance and Leadership in the International Economy’, International Studies Quarterly, Vol. 25, No. 3, 1981.

Kindleberger C. P. , The World in Depression 1929–1939 (Harmondsworth: Penguin, 1987), p. 304.

See, for instance, the following: Block F. , ‘Trilateralism and Inter-Capitalist Conflict’, in Sklar H. (ed.), Trilateralism (Boston: South End Press, 1980); S. K. Holloway, ‘Relations Among Core Capitalist States: the Kautsky-Lenin Debate Reconsidered', Canadian Journal of Political Science, Vol. 16, 1983; J. F. Petras, ‘The Myth of the Decline of US Hegemony', Telos, Vol. 28, 1976; Gilpin, op. cit., note 19, Chapter 2, and S. Strange, Casino Capitalism (Oxford: Basil Blackwell, 1986), Chapter 3.

See Fitzpatrick J. , ‘American Deterrence Theory as a General Theory of History’, forthcoming, 1990.

See, in particular, Jervis R. Lebow R. N. Stein J. G. , Psychology and Deterrence (Baltimore: Johns Hopkins University Press, 1985); and the critique of rational actor models by R. Jervis, ‘Realism, Game Theory, and Cooperation', World Politics, Vol. 40, No. 3, 1988.

For examples of the pre-history of the concept of hegemony, see the following small, but high quality, sample of sources from different ideological and political traditions: among neo-marxists, Sweezy P.M. Magdoff H. , ‘The End of US Hegemony’, in Sweezy P.M. Magdoff H. , The Dynamics of US Capitalism (New York: Monthly Review Press, 1972); G. Arrighi, ‘A Crisis of Hegemony', in Amin S. , Dynamics of Global Crisis (New York: Monthly Review Press, 1982); among Gaullists, see J. Rueff, The Monetary Sin of the West (New York: Macmillan, 1972); amongst left-liberals, R. Steel, Pax Americana (New York: Viking Press, 1967); and among world systems theorists, see I. Wallerstein, ‘The Three Instances of Hegemony in the History of the Capitalist World-Economy', in I. Wallerstein, The Politics of the World-Economy (Cambridge: Cambridge University Press, 1984) and R. D. Wolf, ‘Hegemonic Powers in the Contemporary World', in I. Wallerstein (ed.), World Inequality (Montreal: Black Rose, 1975).

Keohane , op. cit., note 56, p. 32. This resembles, but does not quite replicate, Wallerstein's emphasis on dominance in agro-industries, commerce and finance.

Ibid., p. 139.

Kindleberger C. P. , op. cit., note 57, p. 247.

See, for instance, the way in which the concept of hegemony is wielded by Stephen Krasner in his ‘American Policy and Global Economic Stability’, in Avery W.P. Rapkin D.P. (eds.), America in a Changing World Political Economy (New York: Longman, 1982), p. 32, where hegemony is used to refer to a diverse range of power capabilities tied to specific issue areas. It implicitly encompasses absolute dominance in foreign exchange reserves, foreign capital investments, exports, petroleum, wheat, foreign aid, food aid, R&D expenditures, strategic weapons and naval capabilities.

For its presence in the literature on development theory, see Packenham R.A. , Liberal America and the Third World: Political Development Ideas in Foreign Aid and Social Science (Princeton, N. J.: Princeton University Press, 1973).

See Gilpin R. , War and Change in World Politics (Cambridge: Cambridge University Press, 1981), Chapters 4 and 5.

Russett , op. cit., note 3, pp. 208–214.

See, for example, the introductory essay to a special issue for International Organisation on the topic of ‘The State and American Foreign Policy', where the three major theoretical approaches to the topic are described as ‘system-centered, society-centered, and state-centered’ - so mirroring Waltz's famous three levels-of-analysis; G.J. Ikenberry, D. A. Lake and M. Mastanduno, ‘Introduction: Approaches to Explaining American Foreign Economic Policy', International Organisation, Vol. 42, No. 1, 1988, p.1.

For an outline of this simple categorization and its usage, see Krasner S.D. , ‘United States Commercial and Monetary Policy: Unravelling the Paradox of External Strength and Internal Weakness’, in Katzenstein P.J. (ed.), Between Power and Plenty: Foreign Economic Policies of Advanced Industrial States (Madison: University of Wisconsin Press, 1978), esp. pp. 57–66.

On this theme, see Ruggie J.G. , ‘International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order’, International Organisation, Vol. 36, No. 2, 1982.

Note here the interesting and exasperating essay by Keohane R.O. , ‘The World Political Economy and the Crisis of Embedded Liberalism’, in Goldthorpe J. (ed.), Order and Conflict in Contemporary Capitalism (Oxford: Clarendon Press, 1984). The source of the exasperation comes from the strict separation which he maintains throughout between those factors which are working at the level of ‘the system as a whole’ and those which are ‘internal to’ each individual nation. Clearly there are social factors which can be regarded as either ‘internal’ or ‘systemic', but some of the most important (especially the role of finance) defy these watertight compartments.

For examples of this style of work, see the essays in Evans P.B. Rueschemeyer D. Skocpol T. (eds.), Bringing the State Back In (Cambridge: Cambridge University Press, 1985), and also M. Mann, The Sources of Social Power (Cambridge: Cambridge University Press, 1986).

Shonfield A. , Modern Capitalism: The Changing Balance of Public and Private Power (London: Oxford University Press, 1965). See also his posthumous volume by Z. Shonfield (ed.), In Defence of the Mixed Economy (Oxford: Oxford University Press, 1984), and ‘The Politics of the Mixed Economy in the International System of the 1970s', International Affairs, Vol. 56, No. 1, 1980.

One of the themes which pervades this book is the increasing involvement of the state in economic life. He concludes his recent text by arguing that ‘. (i)t is paradoxical that governments have responded to the growth of global economic interdependence by enhancing their authority over economic activities. Both global market forces and state interventionism have become more important determinants of international economic relations than in the recent past': Gilpin, op. cit., note 19, p. 408; emphasis added. While the continuing - perhaps increasing - importance of the state is a perfectly correct observation within the trade sphere - where an increasing percentage of world trade falls outside GATT principles - it is certainly not true in the domain of international finance, as Strange has so amply demonstrated; see Strange, Casino Capitalism op. cit., note 59. Nor is it true within the domestic domain, where the retreat of the welfare state - now so significant that it must be regarded as a strategic retreat - is everywhere evident.

Once traditional political realism had to create space in its research programme for economic variables and problems, it became impossible to talk in terms of the general distribution of power as the ultimate determinant of outcomes in the international system. ‘Basic force models’ of the traditional kind could not explain the fact that great powers sometimes lost on particular issues. Hence a series of assumptions had to be ditched if realism was to survive - the assumption that there was only one ‘distribution of power’ (what might be called ‘the melting pot’ theory of power), and the allied assumption that weaknesses in one domain to be offset against strengths in others (the assumption of fungibility). Once this was done, it became possible to confine realist analysis to particular self-contained issue-areas; macro-realism gave way to micro-realism. The only permanent loser was the notion of the fungibility of power.

For a pertinent case study of this process, see Brett T. Gilliat S. Pople A. , ‘Planned Trade, Labour Party Policy and US Intervention: The Successes and Failures of Post-War Reconstruction’, History Workshop, 13, 1982.

For this theme, see Kolko G. , The Politics of War (New York: Vintage, 1970). Where the New Left historians erred was in resorting to a post hoc, ergo propter hoc argument; that is, they attempted to turn a consequence of the pattern of events which came to transpire into a cause of the Cold War. The attempt to elevate consequences into causes necessarily leads to exaggeration of the political freedom of action of Washington vis-a-vis the constraints posed both from within its prospective sphere of influence and its own domestic constituency.

For an interesting argument discussing the possible sources of, and explanations for, the ‘reactive’ character of Japanese foreign economic policy, see Calder K. , ‘Japanese Foreign Economic Policy Formation: Explaining the Reactive State’, World Politics, Vol. 40, No. 4, 1988.

For a convenient summary of the economic performance of the ‘Big Seven’ over the period 1965–81, see the Appendix to Yergin and Hellenbrand, op. cit., note 10.

Stewart M. , The Age of Interdependence: Economic Policy in a Shrinking World (Cambridge, MA: MIT Press, 1984), Chapters 5 and 6.

For one of the more consistently argued examples of the case for reform, see Stewart F. Sengupta A. , International Financial Cooperation: A Framework for Change (London: Frances Pinter, 1982). For a short, recent survey of options, see E. Balladur, ‘Building an International Monetary System: Three Possible Approaches', Asian Wall Street Journal, 25 February 1988.

Cooper R. N. , ‘International Economic Cooperation: Is it Desirable? Is It Likely?’, Washington Quarterly, Vol. 11, No. 2, Spring 1988.

For a concise overview of these different structures which inhibit meaningful macroeconomic policy coordination, see Thurow L. , ‘A time to dismantle the world economy’, The Economist, 9 November 1985. As with much of his work, Thurow's forceful analysis of the problem of differing ‘national interests’ completely overwhelms - indeed, directly discredits - the solution of multilateral reform which he advocates.

Putnam R. D. Bayne N. , Hanging Together: The Seven-Power Summits, rev. ed., (Cambridge: Harvard University Press, 1987), make the pertinent point that a minimal degree of success at policy coordination has been possible where the failure to act entails common, system-wide afflictions.

On this history, see Destler I.M. Mitsuyu H. , ‘Locomotives on Different Tracks: Macroeconomic Diplomacy, 1977–1979’, in Destler Sato , op. cit., note 9; and Putnam and Bayne, ibid.

I have argued this case more extensively in my ‘International Economic Management’, in Conflict Management: Studies in Contemporary International Politics (Geelong, Vic.: Deakin University Press, 1988) (with Gary Smith).

For evidence of this symmetry, inspect the arguments made by J. Tumlir of GATT and S. Ramphal of the Commonwealth in, respectively, ‘The Protectionist Threat to World Order’, International Journal, Vol. 34, No. I, 1978–9, and ‘June 1983 (or was it '33?)’, Development Policy Review, Vol. 1, No. 2, 1983.

For what is still the best account of the genesis of this over-exposure, see Moffitt M. , The World's Money (London: Michael Joseph, 1984).

It is arguable that the chances of a consciously orchestrated ‘debtor's cartel’ were always slim in the sense that the ultimate consequences - a permanent rejection of external finance - could never be rationally justified as a deliberate act of national policy. The bodings of such a cartel therefore seem to have been a bargaining tactic used by debtors to influence G5 deliberations.

For comparison of the savings rates of various OECD countries over the 1980s, see International Monetary Fund, World Economic Outlook (Wasthington, D.C.: IMF, April 1988). These show a slow decline in savings as a proportion of disposable income in the Japanese rate from 18% to 15% over the decade, but a virtually constant 10% gap between this declining rate and US savings rates. In earlier decades, the Japanese savings rate was consistently over 20%. For a general discussion of the significance of national differentials in savings rates, see L. Thurow, The Zero-Sum Solution (New York: Simon and Schuster, 1985), Chapter 8.

In 1986, Japanese government expenditure amounted to 17.4% of GNP, while the comparable figures for the US and the UK stood at 24.5% and 40.6% respectively; see World Development Report 1988 (New York: Oxford University Press, 1988), Table 23, pp. 266–267. See also G. C. Allen, Japan's Economic Policy (London: Macmillan, 1980), Table 9, p. 97.

Nakane C. , Japanese Society (Harmondsworth: Penguin, 1973), and also H. Aujac, ‘Cultures and Growth', in C. Saunders (ed.), The Political Economy of New and Old Industrial Countries (London: Butterworths, 1981), pp. 56–61.

For an excellent study of one particular example of this active industrial policy, see Anchordoguy M. , ‘Mastering the Market: Japanese Government Targeting of the Computer Industry’, International Organisation, Vol. 42, No. 3, 1988. This emphasizes the importance of domestic competition within Japanese industrial policy.

For an excellent discussion of the role of MITI in Japanese attempts to reduce their resource dependency in the economic environment created by the first OPEC price rise, see Ozawa T. , Multinationalism, Japanese Style: The Political Economy of Outward Dependency (Princton, N. J.: Princeton University Press, 1979), pp. 168–175.

For a detailed account of these networks of financial dependence, see Eccleston B. , ‘The State, Finance and Industry in Japan’, in Cox A. (ed.), State, Finance and Industry (Sussex: Wheatsheaf, 1986).

For an excellent account of the Japanese adjustment to the two oil shocks, see Watanuki J. , ‘Japanese Society and the Limits of Growth’, in Yergin Hellenbrand op. cit., note 10, Chapter 6.

On this, see Lesbirel S. H. , ‘The Political Economy of Substitution Policy: Japan's Response to Lower Oil Prices’, Pacific Affairs, Vol. 61, No. 2, 1988.

Kennedy, op. cit., note 20, pp. 461–467.

For details on differences in interest rates between the US and Japan, see OECD Economic Surveys: United States, Table 16, p. 47, and also Table 17, p. 50.

See, in particular, his discussion of the growing political corrosion as evident through opinion polls and government stances; Gordon, op. cit., note 29, pp. 20–22.

On this, see Pempel T. J. Tsunekawa K. , ‘Corporatism Without Labor? The Japanese Anomaly’, in Schmitter P.C. Lehmbruch G. (eds.), Trends Towards Corporatist Intermediation (Beverley Hills: Sage, 1979).

For a recent review of the diversity of Japanese attitudes to alliance issues, see E. A. Olsen, US-Japan Strategic Reciprocity: A Neo-Internationalist View (Stanford: Hoover Institution Press, 1986), Chapter 6.

That is, without a common European central bank. This point of dispute within the Community is somewhat less important than it might otherwise be because of the relatively good record of the existing ‘currency snake’ in smoothing over fluctuations, and the sound prospects of the snake for the future. On Thatcher's attitude to the integration question, see ‘Thatcher ridicules European union’, Financial Review, 22 September 1988.

See ‘Not quite free trade’, Far Eastern Economic Review, 3 November 1988.

Though, it might be added, a declining surplus. In 1979, agricultural trade earned the US a surplus of US$30 billion, but by 1986, this had shrunk to only US$4 billion; see Thurow L. Tyson L. , ‘The Economic Black Hole’, Foreign Policy, Vol. 67, 1987, p. 6.

Note here the comments made by the Chair of the UK's Trade and Industry Committee when the trans-Atlantic ‘hormone war’ broke out in late 1988: ‘Americans are great at brinksmanship. We have to face them down in typical John Wayne style'; ‘Europe attacks retaliatory sanctions by US', Financial Review, 30 December 1988. On the analogies to be drawn between the US position in the Uruguay Round and its negotiating stance vis-à-vis the USSR, see Hywood G. , ‘EC unimpressed with Reagan's all-or-nothing approach at Montreal’, Financial Review, 9 December 1988.

Japan 1988, op. cit., note 36, Table 4–3, p. 32.

One useful index of recent trends in foreign investment can be seen in the relative magnitudes of cross-investment between the US and Japan; in 1987, Japanese investment in the US totalled some US$6.3 billion, while US investment in Japan came to only US$26.3 million - a ratio of 240:1. See ‘Strong yen boosts appetite for US investments’, Financial Review, 24 October 1988.

For a slightly dated overview of Japanese investment in Europe, see Sekiguchi S. , ‘Japanese Direct Investment in Europe’, in Tsoukalis L. White M. (eds.), Japan and Western Europe (London: Frances Pinter, 1982).

See ‘Japan Slow to React to Changing Europe’, Asian Wall Street Journal, 25 October 1988.

For a dated - but not outdated - overview of the pattern of East-West trade as it emerged in the 1950s and 1960s, see Wilczynski J. , The Economics and Politics of East-West Trade (London: Macmillan, 1969), esp. Part 1; see also F. D. Holzman, International Trade Under Communism (London: Macmillan, 1976), Chapter 4.

In certain sectors such as agriculture this overall conclusion is unlikely to hold, for reforms - insofar as they succeed - will tend to depress the current high level of Soviet grain imports.

Gorbachev's main economic advisor, the academician Aganbegyan, has recently claimed that a 1985 survey revealed that 71% of production machinery ‘could not meet modern requirements’ and was ‘obsolete'; see his ‘The Economics of Perestroika’, International Affairs, Vol. 64, No. 2, 1988, p. 183. For more of his writings, see ‘New Directions in Soviet Economics', New Left Review, 169, 1988, and The Economic Challenge of Perestroika (Bloomington: Indiana University Press, 1988).

On the policy of the Reagan Administration to COCOM, see Wendt E.A. , ‘Export Control Policy and COCOM’, Department of State Bulletin, Vol. 88, No. 2132, 1988.

For an example of this style of critique, see Krauss M. , How NATO Weakens the West (New York: Simon and Schuster, 1986).

For examples of such arguments, see Calleo D.P. , Beyond American Hegemony (New York: Basic Books, 1987), and D. P. Calleo, H. van B. Cleveland and L. Silk, ‘The Dollar and the Defense of the West', Foreign Affairs, Vol. 66, No. 4, 1988.

The fundamental implications of this fact of geography has usually been ignored in analyses of Western nuclear strategy and arms control postures. For an interesting attempt to accommodate this geographical given, see Freedman L. , ‘US Nuclear Weapons in Europe: Symbols, Strategy and Force Structure’, in Pierre A.J. (ed.), Nuclear Weapons in Europe (New York: New York University Press, 1984).

For a recent overview of developments and options, see Yost D.S. , ‘Franco-German Defence Cooperation’, The Washington Quarterly, Vol. 11, No. 2, 1988. See also M. Lucas, ‘The United States and Post-INF Europe', World Policy Journal, Vol. 5, No. 2, 1988.

See Cummings B. , ‘The Origins and Development of the Northeast Asian Political Economy: Industrial Sectors, Product Cycles, and Political Consequences’, International Organisation, Vol. 38, No. 1, 1984.

For an outline of the internal debates about Japanese geopolitical options in the run-up to World War Two, see Iriye A. , The Origins of the Second World War in Asia and the Pacific (London and New York: Longman, 1987).

Cummings, op. cit., note 122, p. 3.

For a recent overview of these efforts, see Suzuki T. , ‘Japanese-Soviet Trade: Past Trends and Future Prospects', Coexistence, Vol. 25, 1988.

Ito K. , ‘Japan and the Soviet Union - Entangled in the Deadlock of the Northern Territories’, The Washington Quarterly, Vol. 11, No. 1, 1988.

For reportage of recent discussions apparently centering on Soviet proposals for the Japanese to lease the islands, see ‘Soviets “ready to compromise” with Japan on disputed islands', Financial Review, 23 September 1988.