The Confucian Model

[Kamaji]

The Confucian Model

The economic system behind East Asia’s rise represents an epochal threat to human freedom.

By Eamonn Fingleton
January 24, 2022

In April 1998, Sony Corporation chairman Norio Ohga made world headlines with his comment, “The Japanese economy is on the verge of collapsing.” In reality, nothing in Sony’s experience supported such an assessment. On the contrary, its business boomed right through the 1990s. More generally, Japanese industrial corporations continued to gain share from American rivals. Yet they all talked as if Japan was a hopeless basket case.

Even the president of Toyota Motor, Hiroshi Okuda, joined in, suggesting Japan could cause a “world-wide financial crash.” This despite the fact that Toyota’s sales soared fully 95 percent in the 1990s. Between 1989 and 2019, Toyota went from little more than one-quarter of General Motors’ revenues to nearly twice G.M.’s.

As for Ohga, in the quarterly accounting period when his remark was made, Sony’s sales in the Japanese market increased by 14.7 percent. Measured against 1989, the last year of Japan’s 1980s boom, Sony’s profits in 1998 were up fully 131 percent. As if that weren’t enough, the 1990s was the decade when Sony finally buried once-formidable American rivals such as Motorola, RCA, and Zenith.

This is cognitive dissonance on a vast scale. What was really going on? In truth, Japan’s alleged economic disaster of the 1990s was a fake funk. Japanese leaders just pretended their economy was collapsing. There was method in their madness: They desperately wanted Washington to cut Tokyo some slack in trade negotiations. This was a time when Americans had never been more incandescent about Japan’s closed markets. The gambit worked—in spades. Not only did Washington back off trying to open Japan, it has never subsequently really tried.

The issue of Japan’s true performance is of first order historic importance because of its implications for, 1) the rise of China, and 2) the coming triumph of authoritarianism around the world. China runs about twenty years behind Japan, as is obvious in, for instance, the global car industry. This means it has a lot of technologically easy catch-up growth ahead of it. Combine this with the fact that China boasts four times America’s population (and eleven times Japan’s), and it is hard to exaggerate how dominant Beijing will be by 2050.

Both China and Japan operate essentially the same authoritarian—and almost universally misunderstood and underestimated—economic model. Let’s call it the Confucian model.

Invented in the desperately poor circumstances of early 1950s Japan (and thus a memorable instance of necessity playing mother to invention), the Confucian model has long been powerfully shaping economic outcomes in South Korea and Taiwan as well as, of course, China and Japan. The model’s function is to force-feed the growth process.

We will discuss some of the Confucian model’s key features in a moment. First, let us note that this model is fundamentally incompatible with American hopes for a global rollout of free markets. There are two immediate problems:

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Source:  https://www.theamericanconservative.com/articles/the-confucian-model/