"A stabilizer makes and enforces rules of the economic system, provides
a key currency, and also, in a liberal economic system, supplies a
relatively open market of last resort--preeminently, in the current
context, for the exports of developing nations. Despite Japan's rising
economic wealth, the Japanese political economy appears structurally
incapable in the foreseeable future of playing all these roles
simultaneously, in the comprehensive way that the United States has
assumed them since World War Two ... Japan lacks the vital ability to
project its military strength internationally ... Japan is strongly
impeded by both domestic and foreign opposition to rearmament from
developing that sort of military capacity. Cultural factors,
particularly lack of a transcendent sense of national mission, also
complicate Japan's emergence as a dominant world power. Most
importantly, domestic structural constraints persist, which limit
Japan's emerging global role and render it almost invariably reactive.
The fragmented character of state authority in Japan makes decisive
action much more difficult than in nations with strong chief executive,
such as the United States or Fifth Republic France."
"Halfway to Hegemony?: Japan in a Changing Global Economic Order"
As the Japanese economic juggernaut lumbered inexorably onward through two oil shocks and beyond, there was a deepening angst at the geopolitical implications of Japan's persistent rise in the late 1980s. On the more academic side, political scientist Ezra Vogel asked seriously, if rhetorically, about the possibility of a Pax Nipponica in a landmark 1986 Foreign Affairs article, following on the arguments posed by his classic volume, Japan as Number One.
In the spring of 1989, just as the Japanese economic bubble was cresting, I argued in the Harvard International Review that despite Japan's rising wealth, the Japanese political economy would be structurally incapable of fulfilling three critical functions of a stabilizing power in the international system in the foreseeable future. Political economist Charles Kindleberger ascribed these three functions to true hegemons: first, making and enforcing rules of the economic system; second, providing a key currency; and third, supplying a relatively open market of last resort. I argued, in particular, that Japan would prove incapable of filling these globally important functions in the comprehensive way that the United States had done since World War II, sustaining the prospect of more extended global US political-economic hegemony than might otherwise prevail. My contentions regarding Japan thus raised questions about both Japan's own prospective geopolitical path and the somber predictions of decline, by political theorists such as Paul Kennedy, that the days of US global preeminence were severely numbered.
In my pessimistic 1989 assessment of Japan's geopolitical prospects, I did not dwell--and I would not dwell today--on the superior economic capacities of other nations. China was still economically small and vulnerable at the time, relative to Japan, and remains so, despite its remarkable recent growth. Even the United States had serious economic difficulties, including low savings rates and massive current-account deficits, that still cast a shadow over its otherwise dominant global role. I conceded the economic scale and potential dynamism of Japan, but emphasized the domestic structural obstacles to a prominent global role that Japan nevertheless then confronted.
Japan's global rule-making capacity, first of all, was constrained by a distinct lack of offensive military power and the subordinate political standing of the Japan Defense Agency, rooted in the strictures imposed by the 1947 "no-war" Constitution, I argued. Veto players in the complex Japanese legislative process made changes in this embedded status quo difficult. …