“I hope that the present crisis will weaken the influence of the United States throughout the world,” says an opponent of neo-liberalism, HIROFUMI UZAWA, Professor Emeritus of Economics at the University of Tokyo, who was a teacher of several Nobel Prize Laureates and an advisor to Pope John Paul II.
Japan can boast the second strongest economy in the world, and in spite of that, your economists are playing second fiddle. Why?
I will try to illustrate this with a story. In 1956, a brilliant economist Ken Arrow (a 1972 Nobel Prize Laureate, note by L.K.) invited me to America, or more precisely to Stanford. Once he called me in and he pulled out two manuscripts from this drawer, two studies – they were exactly the same. One was mine, I had been intending to publish it in the journal Econometrica, and I definitely did not copy it. Arrow warned me that plagiarism was the worst offence in academia, but added that he believed me.
Who wrote the other paper?
Let’s call him “Mr. F”. I know his name, but I am trying to forget it. This Mr. F at that time also wrote another paper and in a footnote stated that he owes the writing of it to Paul Samuelson (a 1970 Nobel Prize Laureate, note by L.K.). He sent it to Professor Shigeto Tsuru for approval, but did not know that he was a good friend of Samuelson. Tsuru soon discovered that it was a copy of Samuelson’s work, a mere translation of it into Japanese. He didn’t keep it to himself. He let Samuelson know; so, for a number of years, he spoke about “Japanese plagiarists” everywhere we went.
And those prejudices prevail?
Yes. For example, Larry Summers evidently suffers from many prejudices against Asians. At the time when he was the chief economist of the World Bank, for example, he issued an internal memorandum in which he said that factories that may represent an environmental burden should be built in Asia – for example in the Philippines – but not in the US, because the closing down of a Philippine factory will not damage America that much. Fortunately, something that objectionable caused a wave of disagreement and Summers resigned from his leading position at the World Bank.
But then he became Secretary of the Treasury during the Clinton era…
… and now he is the head of the National Economic Council of President Barack Obama.
Mentioning him, what do you make of Obama’s taming of the crisis?
This whole pickle is a broader consequence of the concept of neo-liberalism. After the Second World War, the US became a superpower and started promoting Pax Americana – often to the detriment of other countries. George W. Bush reduced taxes for the extremely rich – I think that this was the largest tax cut in history, after Hoover’s in 1928. Bush did that in line with the so-called trickle-down theory, according to which the entire society benefits from tax cuts for the richest class – the money of the rich gets to the very bottom, to the poor. But then Bush launched the war in Iraq, the economy found itself in difficulties, and the “subprime” loans were absolutely unethical. The money from them was covered by securities that were in turn traded, but it was the money of people who wanted a house and had nothing else left.
How is the crisis manifest in Japan?
Since its occupation by the Americans, after the Second World War, Japan is no longer an independent country; it is a de facto colony of the United States. One of the first books of the macroeconomic expert John Maynard Keynes, at that time an employee of the UK Ministry for Indian Affairs, was that from 1919, on the Indian currency and finance. There are many parallels there: at that time, for example, a vast portion of British army expenditures were paid by India, as were British pensions. The rationale was the following: the British Army and Navy are protecting India’s safety, and British bureaucrats are serving in India. And such services must be paid for. Today’s link between Japan and the US is very similar.
That’s strange. When one walks through Japanese towns, one can see that American pop-culture is accepted very warmly. For example, no other Disneyland in the world is as popular as the one in Tokyo.
Japanese bureaucrats get their education in the US – after all, it was similar with Indian bureaucrats; they were trained in Britain. You will not hear a single word of doubt raised by Japanese politicians, bureaucrats, or the media, against the US. That is one of the reasons why Summers was able to say that objectionable thing about building factories in Asia. He knew well that Japan would not officially and publically cast doubt on his scandalous statements.
Is that not a relict from the Second World War? Japan came out as the vanquished, Americans were considering dropping an atom bomb on Kyoto (in the end, they decided for Hiroshima, because Kyoto was the traditional seat of emperors, note by L.K.). After the war, they did not depose Emperor Hirohito, formerly a key ally of Adolf Hitler.
The Americans immediately began applying two basic occupation policies. The first, during the war, consisted of them bombing all of the historical cities, full of neighbourhoods with narrow streets. They had special bombs for that, which reliably destroyed mainly wooden houses. During post-war renewal, cities with broad streets and boulevards were built, through which American cars can drive easily. And in the post-war years, Japan was not permitted to produce cars and have any heavy industry whatsoever; that only changed during the Korean War, when the US used Japan as a factory.
And the other occupation policy?
That concerned agriculture. Given that the United States was contending with a surplus, the US government prohibited Japan from producing agricultural products that could compete with their supplies. This expanded throughout the world, and in our country, it was being sold under bizarre slogans: “Why are the Japanese not healthy? Because they eat poorly!” Or we heard that we should be eating more beef. And that we do not perform so well intellectually, because we eat too much rice. Bread is better for us.
Hirofumi “Hiro” Uzawa (*1928)
Probably the most significant Japanese economist. He revolutionarily introduced ideas of human and social capital (education, medicine) into economic teaching and in the Sixties he outlined the foundation of the so-called new growth theories. For years, Uzawa worked at western universities (Stanford, Chicago, and Cambridge), where he led a number of major economists – such as Nobel Prize Laureates Joseph Stiglitz, George Akerlof, and Robert Lucas. He was honoured by the Emperor of Japan and is a member of the Japanese Academy of Sciences and a Professor Emeritus of the University of Tokyo. Although he is a Buddhist, Pope John Paul II chose him as his advisor. He and his wife Hiruoku live in Tokyo.
You yourself worked in the United States for many years – at Stanford, at the University of Chicago…
I transferred to Chicago at the invitation of Lloyd Matzler who was – as a proponent of Keynes’ teaching – a bit lonely. He wanted to have me close by, in order to balance out the influence of the market fundamentalist Milton Friedman (a 1976 Nobel Prize Laureate, note by L.K.).
Fundamentalist? Friedman is usually referred to as a proponent of the free market.
I remember one of his lectures on why blacks are poor. Friedman preached that in childhood they have a choice: to study, or to play. And because they make the rational choice that they would rather play, they cannot be surprised later that they will have lower-paying jobs or that they would be the first to get fired. One of the black students stood up at that time and asked: “Mr. Friedman, do I have the option to rationally choose my parents, too?” Friedman made no reply. Whenever he was made to feel uncomfortable, he remained silent.
And others at the faculty agreed with him?
It depends. Once Frank Knight, with whom Friedman had studied, called the professorial body together. He got up and said: “I cannot stand what Friedman and George Stigler (another major economist and a 1982 Nobel Prize Laureate, note by L.K.) are doing now. I prohibit them from spreading any further that they had studied with me.” – That was unseen!
What made Knight so angry?
Primarily Friedman’s support for Barry Goldwater, who was a presidential candidate in 1964 and who announced publically that a nuclear bomb, or even a hydrogen bomb would be required to resolve the Vietnam War. Knight was of the opinion that the dropping of atom bombs on Hiroshima and Nagasaki were the worst crimes ever committed by mankind. He himself adopted and was bringing up a girl whose parents died in Hiroshima. He was also obviously angered by the theories about poor blacks. Chicago suffers the most from segregation in the US. They told us that if we cross this and that road, a safe return is not certain at all. President Obama, too, started as a community field worker in South Chicago. He studied in New York and at Harvard, but then returned to Chicago. That is one of the reasons why I admire him.
Today, Japan holds over 600 billion dollars of the US debt. In an auction of US bonds, it was only shunted to second place by China last year. Is this, too, related to the relationship between the US and Japan?
Yes. Until recently, the government operated the Japanese Post, an organisation with four hundred thousand employees, which was also an insurance company and the largest savings bank in the world. Several years ago, American experts recommended that it be privatised, and four out of the five banks that then assisted in that process were American; understandably, the recommendation of those banks to purchase American bonds in volume followed. This entire colossal privatisation only took place in order to help the United States get out of economic difficulties!
Do you think that the influence of the USA in the world will weaken, as the country is marked by the present economic crisis?
I hope so, and I also hope that that will be the end of Pax Americana and neo-liberalism. European countries should take greater initiative. Japan in not in a position to be able to do any thing independently. The country is under the control of the US Army. Even the Japanese Army is to a large extent steered by the American. Let us take, for example, the recent accident at the Tokyo Narita Airport (an unsuccessful landing, caused probably by a sudden change in wind, claimed two people’s lives, note by L.K.). The vast majority of Japanese airspace in the Kanto area is controlled by the US Air Force. Only a strip of land around Narita is under the control of Japanese authorities. This strip of land has the least stable weather in the entire area. Narita in Japanese means literally “the place of lighting”. Why did they choose this place? I think that it was under the influence of the US Air Force.
How did it come about that you were an advisor to John Paul II?
In 1990, I got an invitation from the Vatican to participate in the drafting of the encyclical Centesimu annus. The original encyclical, Rerum novarum, was published in 1891 by Pope Leo XIII, and its subtitle was The Abuse of Capitalism and the Illusion of Socialism. It said that the Industrial Revolution brought significant progress, but at the same time put many people into a grave situation. Leo XIII wrote that capitalists oppress the poor, but at the same time, warned against an uncritical reception of socialism. And John Paul II decided to publish a “new Rerum novarum” on the hundredth anniversary of the work. He wanted to evaluate the shift that occurred in the church’s attitude to social themes and also opened new questions, such as the environmental impact of economic growth.
In the journal Macroeconomic Dynamics, you describe yourself as the first “outsider” to participate in the preparation of the encyclical. How do you mean that?
I was told that I was the first non-Catholic to cooperate on the new encyclical with the Pope. Its subtitle was The Abuse of Socialism and the Illusion of Capitalism – that is, precisely the opposite of the original version. John Paul II thought that the dropping of the bombs on Hiroshima and Nagasaki was the greatest crime ever committed by mankind. He also said that every religion has a different god, but we must know how to cooperate and communicate. The only religion that the Polish Pope did not recognise was Buddhism.
And you are a Buddhist?
Yes. One of my students later had the occasion to meet the Pope and they reportedly also talked about me. “Uzawa, that Japanese Buddhist?” the Pope allegedly recollected. I thought that it was an honour, but then I remembered how the Pope once asked me to spread the religious message of the new encyclical. “I am not a Christian and I am not qualified for that,” I answered. John Paul II perhaps felt insulted by my rejection.
Professor Charles Horioka of Osaka University told me recently that you were one of the two or three Japanese speculated about as a Nobel Prize Laureate.
A certain American professor once introduced me at a lecture as the “leader of the communist movement in Japan”. I wanted to express my reservations, but the gentleman’s wife died that evening, so I let it go. Unfortunately, a reporter of the influential daily Boston Globe was also present, who wrote a comical article about me, according to which I even led the Japanese communists! My former students Joseph Stiglitz and George Akerlof (both 2001 Nobel Prize Laureates, note by L.K.) then kept asking that American paper for an article of apology for a number of years.
And how did it turn out?
In the end, they did put something together, but it cannot be considered an apology. Lawrence Klein did get a Nobel Prize in spite of him having been a member of the Communist movement when he was young, but I don’t think I will get it. And I have never been a member of the Communist Party!
The Author’s Observation from Tokyo
I prefer working here; I wouldn’t be able to stand it at home, in Japan. “I feel too much pressure there”, I was told two years ago by a certain young lady from a hotel car hire agency in Rarotonga, an island in the heart of the Pacific. She left her hi-tech homeland, which is swiftly criss-crossed by absolutely precise Shinkansen trains, to a tiny land that can be driven around by car in twenty minutes, and the hearty natives are therefore happy to make do with having a scooter – in addition to a pig and a palm-leaf hut – or just plain walking.
She is not alone. The ascending generation of Japanese are looking for a looser lifestyle, not only in the South Pacific tropical lands, but also in Western Europe and in New Zealand. Their parents, grandparents, and great grandfathers and great grandmothers turned the backwards island of green tea, geishas, and Shinto temples into the second strongest economy in the world. How? By their devout service to the Japanese corporation (or to the family of an employee of a Japanese corporation) for which, as tradition dictates, they not only work hard all their lives, but also live, breathe, and drink (a boss’ invitation for sake is not turned down, on principle) all their working lives.
Work – that word has a higher meaning in Japan. If you are woken at midnight by the sound of a power drill and the shouting of workers repairing the road near a fairly choice Tokyo hotel, the receptionist is nearly puzzled by your complaint: “But they are working!” He exclaims it as if they were saving the world from a approaching apocalypse.
And it is no accident that the idea of human (and social) capital was introduced into economic theories, namely those concerning economic growth, by a Japanese man in the 1960s – Hirofumi Uzawa. In a country poor in natural resources and especially land, education and work have been the only possible keys to success.
Emphasis on education and work causes that pressure from which young Japanese flee. Often, they sober up and return home a few years later, having found out that elsewhere in the world they cannot find everything they would want, either.
An abbreviated version of this interview, obtained in Tokyo, was published in Týden No. 16 on 20 April 2009.