Free trade has been a venerated economic principle in the United
States going back 200 years. But there have been challengers.
The first was Alexander Hamilton, who in 1791 argued for
government policies that would encourage native manufacturing while
protecting it from British exports.
Britain was the world's great trading power then - a role that
eventually passed to the United States, without much attention
having been paid to Hamilton's theories. But now that Japan wears
the crown, some professors at the Harvard Business School are trying
to supply the theoretical framework for another challenge to free
The professors' views are not brand new. But the audience seems
to be growing. Last week, for example, representatives of the auto,
machine tool, chemical and semiconductor industries traveled to
Harvard, in shifts, for workshops that lasted six days. A principal
concern was the onslaught of low-cost, high-quality Japanese goods,
and the professors, in effect, justified a tougher strategy to deal
with the competition.
``We are looking for an intellectual structure that reflects the
real world, and this one does,'' said Andrew A. Procassini,
president of the Semiconductor Industry Association, representing an
industry that is losing badly to the Japanese.
The Harvard theory comes in two layers, one involving trade
strategy and the other Japan's manufacturing prowess.
The latter has to be matched, the professors said. American
factory costs have to come down, partly through joint research
projects, such as Sematech, the semiconductor industry's embryonic
effort. The technology that emerges from this research should be
shared by competitors within an industry.
This sort of factory technology sharing is rare in the United
States. But the goal is to do away with competition at the factory
level. Instead, each company in an industry would have expertise to
build a state-of-the-art ``generic'' factory. Competition would be
elevated to product design and to marketing.
In addition, manufacturing efficiency would be enhanced through
greater loyalty between customers and suppliers. Such loyalty comes
easily to the Japanese, but is resisted by Americans.
These manufacturing ideas are shared by the five principal
members of the Harvard professorial group: Joseph L. Bower, Bruce R.
Scott, Robert H. Hayes, Kim B. Clark and Richard Walton. The ideas
also are being pushed by the Berkeley Roundtable on International
Economics at the University of California. …