Asia's Industrial Revolution

...Not only has Japan managed to achieve much higher growth rates of productivity than the United States, it has done so under the constraint of a permanent employment system...

...Even in economic downturns and even during major restructuring, which followed the energy crises of the 1970s, leading Japanese companies have tended not to fire redundant workers...

...Large, multidivisional enterprises such as General Motors, Siemens, and Hoechst eclipsed the small-scale firm...

...Great Britain absorbed know-how from the Italian city states, the United States received technical assistance from Great Britain, and so forth...

...Did East Asia Grow by "Getting the Prices Right...

...The grip of theory over reality is graphically illustrated by the response of Japan's Marxists to their own country's economic growth...

...Finally, the response to such investment has also been mixed...

...Finally, no impediments to long work hours and strict work rules have obtained, but business has had to pay labor high rates of real wage increase and to train it...

...What is more, income distribution in Japan, South Korea, and Taiwan has been fairly equal, certainly by American standards...

...Relocation of labor-intensive industries in developing countries is the catalyst of their growth...

...An example comes from American and Japanese head-on competition in a third market, Korea...

...Reform decimated a class of wealthy landowners who otherwise constituted a serious challenge to government authority...

...In answer to the first question posed earlier, therefore, we can say that industrialization in East Asia has certainly not been a matter of "getting the prices right...

...With the death knell sounded for dependency theory by East Asian development, heterodox economists began to emphasize the more progressive aspects of capitalism, arguing that industrialization in East Asia and other parts of the third world reflected the combined, if uneven, spread of capitalism on a global scale...

...Tariff barriers against Japanese goods have also induced Japanese firms to establish production facilities in the United States...

...It was about $6,500 in Korea and Taiwan...

...and liberalize, deregulate, and privatize their economies (to prevent further "Asian-style" miracles...

...The industrialization of Japan, South Korea, and Taiwan was not supposed to happen...

...Adding to the equivocacy of American economic performance is the enigmatic role played by Japan, the most successful lateindustrializing country and the only one thus far to come anywhere close to challenging the United States at the world technological SUMMER • 1993 • 329 frontier...

...Some observers (Robert Reich, for one) argue that Japanese firms based in the United States have revived regions of the Rust Belt and have reinforced domestic technological capabilities...

...Sure enough, imports poured into Korea as a consequence of liberalization, but ironically, most of the imports came from Japan...

...In part, economists' incomprehension is attributable to cultural differences...

...Nevertheless, despite these changes, like England a century earlier, the United States grew rich by dint of original technology...

...The phenomenon of late industrialization, while not culturally distinct, is baffling...

...They continue to invest more heavily in plant-level production skills than most American firms...

...Ultimately, how one judges the influence on the United States of late industrialization in general and Japan in particular depends on the alternative with which one compares it...

...They invented "dependency" theory to prove that imperialism precluded the capitalist development of the third world...

...Whatever quaint characteristics of late industrialization have excited economists' curiosity — say, Japan's permanent employment system, its quality control circles, or its subcontracting networks—have usually been interpreted as culturally determined (by Confucianism) and unreplicable...

...The origins of hostility date to the Jeffersonian vs...

...But because it has, in fact, succeeded in undermining the competitiveness of advanced capitalist countries, its challenge is unprecedented...

...If Japanese corporations can restructure without massive layoffs, why shouldn't American corporations be expected to do so...

...The factory women who wasted the years of their youth fueling East Asia's export boom lived highly regimented lives...

...New production methods were dependent on technological breakthroughs in machinery, energy, and transportation...

...Demanding that American corporations match the most progressive characteristics of East Asian late industrialization is a giant step away from denying that East Asia is even industrializing...

...Opposition to government intervention is spearheaded by big business (witness, say, the antipathy toward industrial policy expressed at Bill Clinton's economic summit by John Young, chief of Hewlett-Packard...

...The absolute wage level achieved by workers in Taiwan and Korea is also impressive...

...From basket cases in the early 1960s, South Korea and Taiwan became the first ex-colonies in the twentieth century to achieve economic development, meaning a sustained increase in per-capita income, at relatively full employment, with an absence of severe balance-ofpayments constraints...

...Nevertheless, in the current American context, demands for permanent employment in exchange for management's freedom to restructure are progressive...

...It is a new capitalist paradigm...

...Paralysis From Ambiguity Ambiguity always characterizes economic development or decline, since no one can ever be sure whether short-term or even seasonal fluctuations represent a temporary or permanent deviation from a long-run trend...

...For better or worse, this has allowed at least some Americans (including many workers) to live better than otherwise during the past few years...

...There is practically no foreign capital in the "commanding heights" — those industries that are considered critical for development (including banking...

...It is precisely against this combination of learner and innovator that corporate America has been unable to compete...

...Their knowledge of oriental history and institutions is limited...

...Treasury, economic policies in the IMF and Bank since the early 1980s have hammered away at the need for developing countries to open their markets (to increase American exports...

...That is what sustained its extraordinarily high wage levels by world standards...

...Optimists argue that despite its high social costs, "restructuring" may help American firms compete better in the future...

...Yet government policies seem to have resulted in unprecedented economic growth...

...Big business in advanced capitalist countries attaches the highest status and financial rewards to R&D, design, and other staff functions related to innovation...

...Moreover, productivity data for any given year register the effects of past investment...

...Even their leading enterprises do not have the competitive weapon of new technology with which to industrialize...

...The general corporate manager overshadowed the ownerentrepreneur...

...Reality was always surpassing theory, which partly contributed to the eclipse of Japan's large Marxist academic population...

...East Asia's achievement of fast increases in per-capita income with relatively small deviations about the average makes its growth model worthy of serious study...

...The postwar governments of Taiwan and South Korea inherited a nationally owned banking system from Japan, their erstwhile colonizer, and control over the purse (despite exhortations to "privatize" from Washington) enabled them to impose performance standards as a condition for subsidies...

...The fear of illiberalism is most pronounced in the Bretton Woods institutions (the International Monetary Fund [IMF] and the World Bank [or just plain "Bank"]) which are responsible for policing world markets for breaches of laissez-faire...

...At the end of 1991 Japan's direct investment in the United States was estimated at roughly $85 billion...

...Now it is uncertain whether the East Asian economies will continue to grow or whether the American economy will continue to decline...

...In fact, the American government already provides copious support to business by various means—military expenditures in particular, tax breaks and other privileges at the state and local level, import protection for industries such as automobiles, steel, machine tools, and so forth...

...At first they argued that Japanese capitalism was an appearance...

...By the 1900s, the American economy had some of the highest tariffs in the world...

...Due to inflation and the relative constancy of the exchange rate (also set by the government), the real interest rate on foreign loans was effectively negative for borrowers...

...But why, one may ask, does even enlightened corporate America oppose a policy, which, after all, promises to give it government support...

...Top management of the Bretton Woods institutions is made up of country delegations, with the American delegation—appointed by the U.S...

...In 1985-87 the United States forced Korea to liberalize one hundred specific manufactured goods in which American firms supposedly excelled...

...competitiveness...

...What is altogether free of ambiguity is the response of top managers to the Japanese 330 • DISSENT challenge—it has been class-bound...

...than in Japan...

...They attach "conditionality" to their loans, and unless their conditions are met, loans are denied, and a tacit seal of approval to borrow in private financial markets is withheld, making it hard for borrowers to raise capital independently...

...With respect to the third question about labor repression posed above, it is undeniable that East Asian countries have had highly authoritarian political systems...

...In a new interpretation of Marx's theory, a profit squeeze in high-wage economies sends capitalists scurrying to poor countries in search of cheap labor (and not just raw materials, as was maintained in the past), which in turn triggers third world manufacturing activity...

...They link state intervention in the third world with rampant rent-seeking, restrictions on trade, and a misuse of foreign loans (degenerating into the 1980s debt crisis...

...Japan was still feudal...

...The impact of all this competition on American incomes is itself ambiguous...

...A consequence of this, as postulated by the brilliant political economist Paul Baran, was imperialism and the subjugation of peripheral countries to the needs of more powerful capitalist states...

...Meanwhile, the American machine-tool industry has been receiving tariff protection against imports of machine tools from Japan and Taiwan with no strings attached...

...Although an agrarian elite is long gone, hostility to industrial policy in the United States continues to be born out of privilege and income inequality, and not just "interest groups...

...During the Reagan-Bush era, government support of business increased and regulation decreased...

...Permanent Employment Traditionally, organized labor in the United States opposed involving itself in raising productivity, which it regarded as manageSUMMER • 1993 331 ment's job (just as American radicals have tended to see industrial policy as an internecine battle within the establishment...

...In a seminal book on Japan, Asia's New Giant, the editors, Hugh Patrick and Henry Rosovsky, "gently suggest that Japanese economic growth was not miraculous: it can be reasonably well understood and explained by ordinary economic causes...

...In answer to a question posed earlier, "late" industrialization does have an original set of institutions associated with it...

...They are formidable competitors because they can shift resources from subsidiary to subsidiary, and can take a long-term profitmaximizing view...

...The Bretton Woods institutions, moreover, are empowered to impose their will on borrowers...

...High on the hit list of corporate America is industrial policy and the permanent employment (no-layoffs) practices of corporate Japan...

...Thus, the general properties of an industrialization based purely on learning appear to be quite distinct from those of an industrialization based on pioneering technology...

...Reciprocity At the heart of successful late industrialization is a reciprocal principle of subsidy allocation...

...This leads to a second important question: Is late industrialization merely a spin-off of advanced capitalism or does it represent an historically new capitalist paradigm, with its own distinct set of institutions...

...This interpretation is in keeping with Marx's own view of industrialization in India, which he interpreted as a mirror image of industrialization in Britain, symbolized by the arrival of the railroad and the transfer to India of British technology, capital, and rules of competition...

...Given the disasters of many poor countries with extensive government intervention, and given the overwhelming mainstream support for marketdriven growth (reinforced by the collapse of central planning), the key question is: did, in fact, Japan, Korea, and Taiwan industrialize by "getting the prices right...

...Nevertheless, East Asians don't appear to have nearly as much trouble in understanding Anglo-Saxon economies (many study in the United States) as Anglo-Saxons have in understanding East Asian economies...

...Japan and increasingly Korea and Taiwan are major investors in R&D...

...Their industrializations bear no resemblance to the First or Second Industrial Revolutions in one critical respect...

...In an industrialization based on learning, education is obviously key...

...Sadly, labor repression, in tandem with military rule, appears to be a general property of late industrialization...

...When this line of argument proved untenable, they suggested that Japan was merely an American colony...

...In exchange, the industry has agreed to invest a certain percentage of its sales in R&D and environmental protection...

...It was characterized by a "curb" market interest rate (set competitively by market forces at around 35 percent in real terms), a commercial bank rate (set by the government at around 2 to 3 percent in real terms), and a rate on foreign loans...

...All these innovations went hand in hand with a distinct set of institutional arrangements...

...Governments in East Asia have protected firms from foreign competition, but have set strict export targets for them to meet...

...Moreover, while U.S...

...They believed that Japan's only economic advantage over the United States lay in its closed markets, a view echoed by a large Japan-bashing lobby and segments of the American work force...

...On an industry-wide basis American competitiveness looks good, but many American industries are buttressed by Japanese investment...

...When the Bank's internal Operations Evaluation Department concluded in a confidential report that the Bank had underestimated the role of the government in East Asian development, the immediate response of Bank officials was to obstruct the report's publication...

...Late industrialization is a pure case of "learning...

...Starting in early U.S...

...Foreign firms have been allowed to operate in Korea mostly for purposes of exporting laborintensive products, for developing service industries, or, recently, for transferring specialized technologies...

...Preconceptions blind our understanding of what is, in fact, extraordinary: not just the rise of a serious challenge to Western economic hegemony but also the demise of underdevelopment in once abjectly poor countries...

...Because late industrializers do not have the competitive weapon of new technology, their governments have had to play a far more interventionist role than in the past...

...Real wages rose faster in Korea than in a comparable growth phase in Great Britain, the United States, or even Japan...

...Simultaneously the dollar depreciated against the yen by 65 percent and the Korean government offered domestic importers subsidized credit to "Buy American...

...Never before has the West sustained a serious blow to its economic hegemony...

...It also disciplines business in the form of regulation—say, antitrust laws and environmental and safety controls...

...Most international comparisons of productivity using aggregate statistics showed the United States still enjoying a comfortable lead over Japan (even in automobiles...

...What Accounts for East Asia's Effectiveness...

...Not only have they protected new and other industries from foreign competition, they have also targeted strategic firms and industries for special incentives, including loans at concessionary interest rates, subsidized rents, and restrictions on foreign investment...

...Industrialization Through Learning To understand East Asian industrialization, one must remember what lay at the root of Western economic hegemony...

...The wage differential between production workers and general managers tends to be about 4:1 in East Asia but at least 10:1 in the United States...

...Private businesses have simply been blanketed with favors...

...Treasury—wielding the most influence because it is the biggest financial contributor...

...Innovations transformed the chemical and heavy electrical industries of Germany, and a radically different system of mass production evolved in the United States...

...By contrast, in the fast-growing late industrializers, subsidies have tended to be allocated according to the principle of reciprocity, in exchange for concrete performance standards that are monitored by a well-trained, elite government bureaucracy...

...Finally, whether in India or Turkey, East Asia or Latin America, a general characteristic of late industrialization is a developmental state...

...For example, in Korea's efficient integrated steel mill, the Pohang Iron and Steel Company (which, ironically, recently supplied technical assistance to the United States Steel Corporation), workers have received only two days off per month...

...The role of the government was limited to providing the infrastructure and administrative laws and regulations necessary to promote private enterprise...

...Why the insistence on business as usual...

...For example, South Korea had a three-tier financial structure for the first twenty-five years of its development...

...What the government doesn't do is to combine the two interventions developmentally, the way governments do in East Asia...

...It follows that whereas the owner-entrepreneur was the hero of the First Industrial Revolution, and the corporate manager was the protagonist of the Second, the production engineer is the dominant figure of late industrialization...

...Has, in fact, Japan made a real impact on U.S...

...In short, the policies of the powerful international financial institutions during the Reagan-Bush era have celebrated market determination of prices, including the pivotal prices SUMMER • 1993 • 325 of capital and foreign exchange...

...As every schoolchild knows, starting around 1760 innovations such as the spinning jenny, the water frame, and the steam engine transformed British industry and society and caused productivity to reach unprecedented heights...

...If Japanese competition has killed American jobs, hot money from Japan has financed the American budget deficit...

...There was not even a Labor Ministry in South Korea...

...Instead of either small-scale enterprise or the SUMMER • 1993 • 327 multidivisional firm, late industrialization has been characterized by the diversified business group, as exemplified by the zaibatsu in Japan, the chaebol in Korea, and los grupos in Latin America...

...Moreover, in late-industrializing countries such as Brazil, India, Mexico, and Turkey, the development process shows many of the same characteristics as in East Asia, even if growth has been slower...

...Moreover, not just South Korea and Taiwan but also Japan were transformed by land reforms in the late 1940s (which, uncharacteristically, received American blessing...

...American trade unions have tended to be lukewarm to the Japanese influx, both because it creates a lot of organizing work and because Japanese factory life is oppressive...

...Initially this made it hard for Hamilton to introduce the first American industrial policy (his 1791 Report on Manufactures...

...Nevertheless, accident rates in Korea have been extremely high and hours of work have been among the longest in the world...

...Most genuinely regard the development failures of Africa, South Asia, and Latin America as a function of excessive government economic intervention...

...On the one hand, government intervention in Japan, Korea, and Taiwan has been extensive and has involved distortions in the price of capital and imports subject to protection...

...For the United States to regain its competitive edge the message is impeccably conservative—save more and generally do more of what the United States has always done in the past...

...East Asian governments allocated subsidies more sensibly than elsewhere not because they were smarter but because they had more power over business, a power that reflected deep underlying historical and social conditions...

...By contrast, the big business groups of late industrialization have diversified into technologically unrelated industries because they have no proprietary technology to exploit...

...Company to company, Japan tends to be the better performer, especially in mid-tech and electronics industries...

...labor affairs were handled by the Korea Central Intelligence Agency...

...Nevertheless, it is hard to argue that labor repression was any greater in East Asia than in, say, Brazil, Argentina, or Turkey...

...It seems more correct to argue that in all late-industrializing countries the state has disciplined labor...

...What makes East Asia special is that the state has also disciplined capital...

...labor should demand that whatever government incentives business receives (and it is bound to receive more under the Clinton administration), nothing should be given away without a concrete, monitorable, development-oriented performance standard in exchange...

...Capitalism On A Global Scale...

...By contrast, the emphasis of the late-industrializing firm has been on the shopfloor, because it is here where borrowed technology must be made to work and eventually improved to the point where it becomes a competitive weapon, as in the case of Japanese quality control systems and product improvements...

...Little wonder American business doesn't want an industrial policy...

...For one thing, firm structure is different...

...In the slow-growing late industrializers, subsidies have tended to be allocated according to the principle of giveaway...

...Yet plenty of evidence supports the opposite view...

...Therefore, East Asia's exceptionally fast growth cannot be attributed to extraordinarily harsh political repression...

...Relative to a socialist model, this new brand of industrialization offers a modest alternative...

...The Reagan and Bush administrations doubted that Japan was a bona fide threat...

...Such "late" industrialization, as it may therefore be called, has been solely a process of borrowing technology that has already been developed by more advanced countries...

...Others dwell on the alleged tax evasion, sexism, and anti-unionism of such investors...

...It is true that beginning in the late 1960s 326 • DISSENT South Korea and Taiwan experienced high real-wage increases...

...The process of late industrialization, and what it portends for American business and labor, are investigated below...

...Industrialization in South Korea and Taiwan eventually exploded in political democracy, but dictatorship was the rule for many years...

...This strategy, however, has not worked in the last twenty years...

...They have given big business concessionary credit, but they have prevented capital flight or illegal exports of capital to private bank accounts...

...Strikes were prohibited, and labor leaders spent long years in jail...

...When, after World War II, we come to the rise of manufacturing activity in Japan, Korea, and Taiwan, as well as, say, Turkey, India, Mexico, and Brazil, something is quite distinct...

...Whatever the political underpinnings, in both cases capitalism supposedly expands into a global system the way dots of red ink radiate to all corners of a map...

...The reciprocity principle is the linchpin of industrial policy in Japan, Korea, and Taiwan...

...For example, the Taiwanese machine-tool industry has received government support to buy ailing American machine tool companies as a way to upgrade its technology...

...But their heritage as technology borrowers still manifests itself...

...The scatter spreads from the center and the spots all have more or less the same hue...

...In exchange for subsidies, the government holds big business accountable for achieving concrete, monitorable performance standards (with respect to, say, exports and worker training...

...But what makes "late" industrialization unique is that even its leading enterprises have had to borrow technology and win market share without the competitive asset of new products or processes, the hallmark of the First and Second Industrial Revolutions...

...Heterodox economists have not merely downplayed the originality of late industrialization...

...It was unclear for at least half a century whether the British empire was decaying...

...A final question, therefore, is: can labor repression explain Korea's and Taiwan's exceptionally fast growth...

...Pessimists claim that not nearly enough fundamental restructuring has occurred to make a difference...

...The American establishment interprets Japan as being successful by dint of being good at what the United States has historically been good at—generating high rates of investment in physical capital and education...

...The American establishment has staked its reputation on the superiority of liberal capitalism, and any association by successful industrializers with another type of growth model is extremely threatening...

...They tend to integrate more tightly shopfloor production efficiency and new product development...

...Statistical problems bedevil income distribution comparisons, but the orders of magnitude are unmistakable, and are corroborated by other facts...

...Those Japanese practices that suit their profits and prejudices they tend to favor, and those that don't they tend to oppose...

...Finally, many case studies support the view that if American companies cannot penetrate the Japanese market (whose manufacturing industries are now virtually denuded of tariffs or quantitative restrictions), this is because the United States cannot offer products agreeable to Japanese buyers...

...The best-paid male production workers now typically earn more than the average wage in the American South or in the British North...

...A strong case can be made for using the progressive aspects of the late-industrializing model to hold American corporations to higher standards, while fighting against late industrialization's seamier side...

...history, there has been a deep antagonism to the state on the part of its privileged elite...

...As such, economists find it inconceivable that capitalist development does not conform to their own theories about how it should work...

...Anglo-Saxon economists have almost unanimously regarded late industrialization as nothing analytically new...

...They transfer them to other subsidiaries or retrain them...

...Indeed, given that the governments of Japan, Korea, and Taiwan 328 • DISSENT have used subsidies extensively to develop manufacturing activity, one could say that "late" industrialization has been a process of getting the prices "wrong...

...On the other hand, many of the same policies have had far less felicitous effects in Latin America, South Asia, and Africa...

...The strategic focus is on overhead...

...With neoliberalism ensconced in the U.S...

...East Asian conglomerates are almost entirely nationally owned...

...This finding is somewhat baffling...

...Depending on the exchange rate between the 324 • DISSENT yen and dollar, the wages of workers in Japan are surging ahead of those in the United States...

...Japan's permanent employment system covers only the labor aristocracy and has operated hand in hand with company unions...

...The major reason lies in the dangers American mainstream economists and policymakers perceive in a successful development model that does not feature free markets and an embrace of laissez-faire...

...What, however, was for Baran a hypothesis about imperialism became an article of faith for many of his epigones...

...Reality, therefore, does not provide much support for the view that late industrialization is merely the spread of a seamless web of capitalism on a global scale, spearheaded by the multinational firm...

...In 1991, the World Bank estimated in its annual World Development Report that percapita income in Japan was $26,920, compared with only $22,560 in the United States...

...On the one hand, loss of market share has prompted American companies to cut back employment, close plants, and speed up production for remaining workers...

...manufacturing activity as a share of gross national product declined after the Second World War (with services accounting for a larger slice of the pie), since the 1970s the share of manufacturing in total output has stabilized...

...The role of the government was still rather modest, but greater than in the past...

...Many economists supported their stance...

...Variations in economic performance among late industrializers that have all experienced extensive government intervention relate to the different principles governing subsidy allocation...

...Their subsidiaries are organically linked by tradition or the persistence of family management...

...Then they maintained that Japan was experiencing an absolute decline in its living standards...

...Hamiltonian schism (the Jeffersonians representing rich southern planters and independent farmers and the Hamiltonians representing northern manufacturers...

...In another interpretation called "global Fordism," stagnation in high-wage economies drives capitalists to poor countries in search of cheap skilled labor, leading to plant closings in the advanced countries and investments in mass production abroad...

...Technological progress was realized through trial and error in a particular set of institutions that featured the small-scale firm, under the aegis of the owner-entrepreneur...

...Whether on the left or right, they have had a hard time explaining why, of all poor countries, South Korea and Taiwan have managed to industrialize or why, of all high-income countries, Japan continues to chip away at American competitiveness...

...Koreans bought Japanese goods despite a weak dollar and other incentives to "Buy American" because Japanese products were judged to be of better quality and Japanese companies slashed their prices to offset a higher yen...

...Then they shifted and claimed that Japan was helping American capitalism...

...They do not capture how productivity is likely to behave in the future as a result of current investment rates, which have been much lower over the last decade in the U.S...

...Late" industrialization in Japan, South Korea, and Taiwan has evolved squarely within the capitalist fold...

...The "strategic focus" of early and late industrializers has also taken distinct forms...

...Even conceptually, late industrialization has bamboozled Western economists...

...332 • DISSENT...

...By the early 1980s the income of the top fifth of the population exceeded that of the bottom fifth by a factor of only 4.0 in Japan, 4.3 in Taiwan, and 4.9 in Korea, compared with as much as 10.7 in the United States (whose income distribution lies closer to that of the typical third world country than to that of the typical European social democracy...

...Instead, American management has done everything possible to raise productivity without raising wages—largely by means of layoffs and harder/smarter work on the part of remaining workers--and trade unionization has declined...

...There is no evidence of further "de-industrialization...

...Similarly, in the Second Industrial Revolution a century later in the United States and Germany, what permitted these countries to leap-frog ahead of England in per capita income was another wave of technological change...

...As noted earlier, big business in East Asia gets extensive government support (in the form of, say, cheap credit for targeted industries and incentives to R&D...

...All big businesses are diversified, but the multidivisional enterprises that emerged from the Second Industrial Revolution typically retained a technological focus—say, cars in the case of General Motors, electronics in the case of Siemens, and chemicals in the case of Hoechst...

...At present it makes it hard even to move beyond macroeconomic "fine tuning" of the money supply and budget to some modest form of guided capitalism...

...Not all three prices that existed side by side in Korea's capital market could have been right, and the negative real interest rate on foreign loans was fundamentally distorted in a capital-scarce country...

...These "world systems" theories have complemented mainstream arguments to the effect that the multinational firm is the agent of third world industrialization...

...Big business has been allowed to import technology, but it has been obliged to invest in building its own technological capabilities...

...Of course, earlier industrializers learned from one another...

...Trade unions regarded their mission as one of demanding higher wages, which, they argued, would force management to raise productivity in selfdefense...

...To hold business to a higher standard, U.S...

...The trouble seems to lie precisely in the fact that late industrialization is capitalist...

...Innovation itself increasingly became a matter of systematic research and development (R&D) rather than trial and error...

...One of Marx's great insights was to recognize that capitalism, while progressive, also tended under certain conditions toward stagnation and decline...

...But unless labor takes this step, it will remain as mired in trouble as many American industries...

...But exactly because of its modesty, it has a chance of succeeding in the present American context...

...Over 350,000 Americans are employed in Japanese companies, either in manufacturing or services...

...Middle management at the Bank and Fund consists of thousands of professional economists...

...Both countries brutally denied trade-union rights in the name of a national emergency to thwart communist insurgency...

...Yet some of the ethnographic evidence (scholarly and anecdotal) indicates that, by and large, Japanese bosses are generally praised by American workers (who, on average, do not belong to unions by a ratio of roughly 8 to 1...

...At one time they denied its very existence...