Abstract
In the past few years, much attention has been paid to the growing power of Japan in the international monetary and financial system. At the end of the day, however, opinions vary considerably about the degree of this power. Robert Gilpin, to provide one example, portrays Japan as the dominant financial power of today.1 Susan Strange, on the other hand, asserts that Japanese power in the international economy is still quite limited.2 This chapter argues that the confusion might stem in part from the fact that Japan’s growing influence in the international monetary and financial system is derived from two separate although interconnected developments: Japan’s emergence as a creditor nation and the internationalisation of the Japanese financial system. Each of these can be seen to have brought a different kind of power to the Japanese state. Creditor status can be seen to have given Japan a certain amount of ‘relational power’ — defined by Strange as ‘the power of A to get B to do something that they would not otherwise do’ — while internationalisation has allowed Japan to acquire a degree of ‘structural power’, which in Strange’s terms is the power to ‘change the range of choices open to others’.3 In what follows, each of these phenomena is outlined in turn and analysed in terms of its impact on the influence of the Japanese state in the international monetary and financial system.
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Notes and References
In the 1980s, Japan supplanted the United States as the dominant creditor nation and financial power. Never before in the history of international finance has such a dramatic shift taken place in such a relatively short time’. R. Gilpin, The Political Economy of International Relations (Princeton, NJ: Princeton University Press, 1987) p. 328.
See S. Strange, ‘Finance, Information and Power’ (mimeo) presented at ISA/BISA conference (March 1989).
See S. Strange, States and Markets: An Introduction to International Political Economy (London: Pinter Publishers, 1988).
S. Wagstyl, ‘External Assets at Record Levels’, Financial Times (27 May 1989).
See, for example, C. Kindleberger, International Capital Movements (Cambridge: Cambridge University Press, 1987) pp. 33–6.
D. North, ‘International Capital Movements in Historical Perspective’, in R. Mikesell (ed.), United States Private and Government Investment Abroad (Eugene, OR: University of Oregon Books, 1962) p. 32.
E. Lincoln, Japan: Facing Economic Maturity (Washington, DC: Brookings, 1988) pp. 99–122. Lincoln stresses that this opposition was largely political. The economic case for reduced government spending was not strong in his opinion.
William Emmott, The Limits to Japanese Power AMEX Bank Review Special Papers. 16 (October 1988) p. 10.
A. Spindler, The Politics of International Credit (Washington DC: Brookings, 1984) p. 175.
R. T. Murphy, ‘Power without Purpose: The Crisis of Japan’s Global Financial Dominance’, Harvard Business Review (March—April 1989) pp. 71–83.
R. Gilpin, ‘American Policy in the Post-Reagan Era’, Daedalus, 116(3), (Summer 1987) pp.48–9. Another ‘political’ account of continued Japanese investment in this period is provided by Danielian and Thomsen: ‘Japan is eager to minimize the political friction with the US by investing much of its $43.5 bilateral trade surplus in US stocks and bonds’, in R. L. Danielian and S. E. Thomsen, The Forgotten Deficit: America’s Addiction to Foreign Capital (London: Westview, 1987) p. 44.
Akira Ariyoshi, ‘Japanese Capital Flows’, Finance and Development (September 1988) pp. 28–30.
See Rich Miller, ‘Japan seems set to end U.S. domination of world monetary system’, Financial Times (2 November 1988).
C. Rapoport, ‘Home is best in unstable times’, Financial Times (16 November 1987).
Ian Rodger, ‘Bank of Japan presses US to reduce spending’, Financial Times (10 November 1988).
E. Lincoln, ‘Reassessing US—Japan Relations’, Fletcher Forum, 12(1) (Winter 1988) p. 68. Even The Economist has taken up this possibility: ‘But what about a deliberate investment strike?… Organized by the government, a collective refusal to finance America’s twin deficits might be feasible’, ‘Hooked on T-Bonds’ (7 February 1988).
L. Pauly, Regulatory Politics in Japan: The Case of Foreign Banking (Ithaca, NY: Cornell University Press, 1987) pp. 6–7.
Y. Funabashi, Managing the Dollar: From the Plaza to the Louvre (Washington, DC: Institute for International Economics, 1988) p. 87.
See M. Barnhart, Japan Prepares For Total War: The Search for Economic Security, 1919–45 (Ithaca, NY: Cornell University Press, 1987).
See. L. Hollerman, ‘International Economic Controls in Occupied Japan’, Journal of Asian Studies, 38 (4) (August 1979) pp. 707–19.
See, for example, R. Feldman, Japanese Financial Markets: Deficits, Dilemmas, Deregulation (Cambridge, MA; MIT Press, 1986);
Y. Shinkai, ‘The Internationalization of Finance in Japan’, in T. Inoguchi and D. Okimoto, The Political Economy of Japan: Vol.2, The Changing International Context (Stanford, CA: Stanford University Press, 1988).
For the growing ‘internationalism’ in the Japanese political scene, see J. Pempel, ‘The Unbundling of “Japan Inc.”: Changing Dynamics of Japanese Policy Formation’, Journal of Japanese Studies 13(2) (Summer 1987).
)K. Pyle, ‘In Pursuit of a Grand Design: Nakasone Betwixt Past and Future’, Journal of Japanese Studies 13(2) (Summer 1987).
See J. Horne, Japan’s Financial Markets, p. 181; and E. Hayden, ‘Internationalizing Japan’s Financial System’, in D. Okimoto (ed.), Japan’s Economy: Coping with Economic Change in the International Environment (Boulder, CO: Westview Press, 1982) p. 104.
As the government deficit surged, the bargaining power of government and banks reversed’, M. Crum and D. Meerschwam, ‘From Relationship to Price Banking: The Loss of Regulatory Control’, in T. McCraw (ed.), America vs. Japan (Boston, MA: Harvard Business School Press, 1986) p. 289.
R. Dale, The Regulation of International Banking (Cambridge, MA: Woodhead-Faulkner, 1984) p. 44.
J. Home, ‘Politics and the Japanese Financial System’, in J. Stockwin et al. (eds), Dynamic and Immobilist Politics in Japan (London: Macmillan, 1988) pp. 176–7.
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Helleiner, E. (1990). Money and Influence: Japanese Power in the International Monetary and Financial System. In: Newland, K. (eds) The International Relations of Japan. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-21016-9_3
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DOI: https://doi.org/10.1007/978-1-349-21016-9_3
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