THE EASTASIA EDGE is really three books which
keep bumping up against one another. One is a pastiche of challenging facts about the group of nations that the authors, borrowing Orwell's term, call "Eastasia": Japan, Taiwan, China, North and South Korea, Hong Kong, and Singapore. These nations now play a crucial role in the U.S. economy. "Since 1975," Professors Roy Hofheinz and Kent Calder tell us, "the value of combined U.S. transpacific trade has exceeded that of all of U.S. transatlantic commerce." It is no longer surprising to read that Japan has captured a quarter of the U.S. automobile market, but it will come as a revelation to many who still think of Japan as a treasury of cheap labor and supplier of shoddy goods that our major Asian ally is the source of 70 percent of such advanced computer components as random access memories. "Leading U.S. businesses like IBM now depend more and more on advanced components purchased from such Asian firms as Hitachi and Nippon Electric." Japan is at least three years ahead in the production of robots and is planning to have a completely unmanned factory in operation by 1985.
The thesis of "Japan as No. 1" is by now a familiar one. Less well known are the striking growth rates of the other East Asian nations. South Korea is now underselling Japanese steel by $50 to $100 a ton. (Japan undersells Pittsburgh by nearly 25 percent, according to the authors.) A South Korean construction firm has built one of the most spectacular engineering projects in the world at the port of Jubail in Saudi Arabia, outcompeting U.S. construction companies.
In cars, watches, steel, textiles, and cameras the East Asian export offensive has begun to change the economies of the Western world. For example, in a decade Biel, the center of the Swiss watch industry, has lost almost half of its watchmakers. The impact of Japanese steel on Pittsburgh and Youngstown and of Japanese cars on Detroit is now much advertised by the companies and unions concerned.
The authors point out some surprising facts about the rising prosperity of East Asia in a world in recession. "Between 1977 and 1980, Japan's unit labor costs declined 5.5 percent while those in every major Western industrial nation were rising." Singapore reduced its unit labor costs despite increased oil prices, and per capita income is soon likely to exceed that of Britain.
All this adds up to what the authors call a "threat" from East Asia, which they say appears "to be reemerging as the world's dominant economic force." One of their books describes the East Asian economic success; the second attempts to analyze its causes, and the third seeks to sketch the appropriate American response. To make their point about East Asia the authors lump societies with social systems as different as those of China and Singapore, arguing that common racial heritage, Confucianist values, the reliance on ethics instead of law, emphasis on education, the insistence that government back up the family in protecting public welfare but stay lean while doing it -- all help explain the phenomenon of East Asia. This is more a potpourri of observations than a theory. To a nonspecialist who has visited the region, much of it rings true, but some does not. The thesis depends a good deal on the argument that the region has enjoyed unusual stability since the war, but it is an eccentric definition of "stability" that can embrace what has happened in China over the last 30 years -- the convulsions of the cultural revolution and the current counter-revolution.
But in fact the book is meant less as a dissertation on Asia than as a tract for America. Indeed, one of the authors has given up a chair at Harvard to start a "consulting and trading company specializing in Eastasia." Although the authors make fun of the genre, their book seems to be another contribution to the growing body of literature on the "secrets" of Japanese management. To their credit, they enlarge the secret to include more than a single factor such as worker participation or education or aggressive government support of industrial "winners" instead of "losers." But what the authors gain in subtlety they lose in clarity. From their account it is hard to see what weight they assign to the particular factors they mention.
As a mine of information about a crucially important region of the world The Eastasia Edge is fascinating. As a contribution to understanding its peculiar dynamism the book is provocative but unconvincing. As a recipe book for fashioning American response it is hopelessly inadequate. It repeats the familiar unsupported claims of large corporations that laws curtailing the bribing of foreign officials and the anti-trust laws are important obstacles for American firms in competing with foreign firms. The authors make some sensible suggestions about encouraging investment in certain industries instead of others, offering incentives to build up research and development within the United States, forging closer links -- do the authors mean greater accountability? -- to local communities. They seem to be offering a vision of centralized government planning on the Japanese model which they admire for its secrecy and concentrated power. Again and again they remind us that you cannot "borrow blindly" from the industrious nations of the East, but their solutions turn out invariably to be such "lessons from Eastasia" as an American version of the Japanese General Trading Company.
The authors do not draw what seems to me to be the real lesson of their book. Eastasia is flourishing in an economic senseebecause the nations of the region have built on their own strengths and cultural traditions. If we were to follow their example, it should mean expanding democracy, not abridging it, taking advantage of the decentralization offered in the federal system, not overthrowing it. The authors rightly stress the point that economic success requires popular mobilization. But it is the concentration of power in the hands of big government and big corporations that causes so many Americans to believe that they have no role in re-creating our society. It is odd that the authors would prescribe more of it as way of mobilizing the country to compete. It is also strange that we who live in a country of extraordinary potential should need to look upon the new prosperity of what not so long ago was one of the poorest and most afflicted regions of the world as a "threat." The authors are right to note that Americans will have to compete more effectively in a world where, fortunately, power and wealth are increasingly diffused. But if we are to compete successfully it will be as a byproduct of building a society in which Americans feel secure about our own future and once again are excited about our historic experiment in democracy.