Far Eastern Enigma
Japanese Industry : Its Recent Development and Present Condition. By G. C. Allen. (Institute of Pacific Relations. $1.)
PROFESSOR ALLEN is known to students of economic affairs both as an authority on the economics of the Far East and as a skilled delineator of industrial facts and trends. He uses his special qualifications to good purpose in this authoritative monograph. His object, as he says in the introduction, is "to examine the present condition of Japanese industry and to estimate the probable future line of development," to study "the results of the impact of the present Sino-Japanese War on Japan's industrial structure." In the course of the investi- gation he reaches conclusions "having an important bearing both on Japan's staying power in a long war and also upon her competitive capacity when the present struggle is over."
The investigation first takes him back to the early twenties, when Japan is seen wrestling with a post-war economic pro- blem far less severe, indeed, than that afflicting the European nations, but involving essentially the same elements of a dis- torted economic structure, a much increased national debt, and an inflated currency. The 1923 earthquake frustrated the first attempt to solve the problem by the orthodox means of deflation ; the next approximation to success in economic re- adjustment, achieved at the cost' of considerable social and economic strain, foundered under the impact of American depression and the pressure of the Army political group. One of the interesting points, indeed, about .Professor Allen's survey is the light it casts on the fatal interaction of economic and political events ; the pressure of the Army or totalitarian group towards a Wehrwirtschaft for its own sake gaining ground gradually through the distresses of the twenties, ex- pressing itself in measures of economic control whose signifi- cance only becomes plain a decade later ; triumphing in 1931 with the Manchurian adventure, just when the powers of the liberal and business elements of Japanese economic life were reduced to their lowest ebb through the effects of the world slump ; and dominant ever since, tightening the screws further and further on the economic and social life of Japan, distorting the structure of her industry and trade to suit the needs of strategy, crushing down the standard of living of the Japanese people. It is a depressing story.
Depressing and interesting, too, is the parallel betwees Japan and Nazi Germany, shown here in an almost tin' summarisable multitude of instances. From the story of foreign exchange and trade control, of the initial encourage- ment and subsequent ruthless destruction of the small pro- ducer, of financial autocracy and of budgetary manoeuvres, there emerges so close a likeness that if all proper names were left out, and symbols substituted for the distinctive names of commodities, one might believe oneself to be reading an account of the activities of Field-Marshal Goering and Dr. Schacht. This, apparently, is the shape of war or quasi-war economy, no matter who is running it. Professor Allen's book was written while Europe was at peace; it gives an unpleasant turn to one's speculations as to the sort of economy with which we ourselves are likely to be saddled by the time our own war is over.
As for Japan's staying power and prospects, Professor Allen's forecasts are cautious to a degree. He calculates that unless concerted external pressure is put upon Japan by the Western Powers (an event which is now unlikely, to say the least of it) she can carry on the Chinese War for another year at least, and probably much more. She can maintain her exports—though only at the cost of a fearfully low standard of living—, she can continue to improve the efficiency of her indtrstries, she can ease her raw material position, not im- mediately or completely, but more and more as time goes on, by drawing on the developing resources of Manchuria and North China. When the Sino-Japanese war is over—Pro- fessor Allen appears to assume, if not a complete conquest of China, at all events the retention of what Japan has gained hitherto—the prospect grows no clearer. Will there be a relaxation of control, a redirection of the economy towards the peaceful aim of improving material conditions, an aban- donment of the Yunsenii or Wehrwirtschaft, a reversion, in fact, to comparative liberalism? Or will the fearful difficulties of the change prove too unattractive, the pressure of the militarists too strong, and the country be launched on a new adventure? Evidently the answer is not only to be found in the East itself ; it depends on what meanwhile has hap- pened to our Western war—the war whose ultimate origins are by no means unconnected with some of the events here chronicled by Professor Allen.
7apanese Industry is well arranged, adequately supplied, but not overloaded, with statistics, and presents to the lay reader a clear picture of its complicated subject matter. It is objective and free from wishful thinking, as befits a publica- tion of the Institute of Pacific Relations, and provides a valuable contribution to the understanding of a problem of which the outbreak of our own war, whatever its effect on relative news values, has done nothing to diminish the
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