Were the ’90s Declinists Right About Germany and Japan?

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The anxieties about American competitiveness during the late 1980s and early 1990s were for the most part about American competitiveness vis-a-vis Germany and Japan. In looking back at that period one should not make the dialogue out to be any more sophisticated or daring than it was. Considering it I am struck by its superficiality — by the extent to which such things as the history of the German and Japanese economies was neglected in favor of the speaking of much drivel about “management style,” and the lazy, shallow, frankly self-serving way of explaining industrial success that reduces everything to “culture” (mainly because one could no longer speak of “race” and still be respectable). In the process those who did so attributed to both countries strengths and faults they did not possess.

Still, for all its failings it was an acknowledgment that the “American way” of doing things was not necessarily perfect, that the country may have had some things to learn from others in the manufacturing field on which Americans had long prided themselves as the world’s leaders (for a long time, very justly), and that perhaps change was called for. Of course, such concerns came to seem passé amid the tech boom, amid Eurosclerosis and Japan’s “lost decade,” but a generation on the situation looks rather different from how it did in the mainstream’s “vacation from reality” of the late ‘90s.

In fairness, neither Germany nor Japan did so well as some hoped and some feared they would do. Germany gained less by reunification than some expected. Japan’s “lost decade” turned into a “lost generation.” And indeed, recently considering the implications of a devotion of a larger portion of their Gross Domestic Product to defense spending it seemed to me worth pointing out that the two countries are, in terms of their weight in the world’s economic life and power potential relative to others, a long way from where they had been circa 1995 (when an Eamonn Fingleton could make the case for Japan’s becoming the biggest economy on Earth by the end of the decade, and get Bill Clinton’s own endorsement on the dust jacket of the book in which he made that case).

Still, the two countries have had their successes — not least in that manufacturing arena. Germany proved itself a force to be reckoned with here, as made clear by any look at the list of the world’s “hidden champions” — while it fostered the development of an economic “greater Germany” across Central and Eastern Europe that has given it the scale of a superpower in this sphere (the more in as it enables it to leverage the still-larger European Union in its preferred direction), all of which has compelled Anglosphere commentators of even the most sneering type to show some respect. Japan does not seem to have done much less well. (We talk about who is installing the most industrial robots, but would do well to remember that Japan is the number one builder of those robots, accounting for almost half the global production. And while microchips are talked about as “the new oil,” it is worth remembering which country leads in making the silicon wafers and photoresist chemicals and any number of other products essential to chipmakingJapan again.) Indeed, when one controls for their demographic profiles, adjusting the figures for their working-age populations, one finds that in the twenty-first century Germany was actually faster-growing than the U.S. or Britain, and Japan did about as well as those two states. By contrast the dominant trend in those years has (in the case of the U.S., in spite of the lift it got from its immense defense spending and its shale boom), generally been a matter of a stagnant or eroding manufacturing base (in Britain’s case, fairly steadily eroding since the financial crisis of 2007), as they owe such gains as they seem to make to FIRE sectors a lot less solid than the manufacturing successes of the others.

Indeed, if the twenty-first century has been a less than thoroughly booming period for Germany and Japan, just as it has generally been for the advanced industrialized nations, or for that matter the world at large, it seems possible to say that those who argued for Germany and Japan as sowing the seeds for manufacturing success in a way that the U.S. and Britain were not — for all the limits to their understanding of what Germany and Japan were actually doing — can claim at least some validation from how things have actually gone this century.

Originally published at https://naderelhefnawy.blogspot.com.