Looking at the Sun: The Rise of the New East Asian Economic and Political System by James M. Fallows (1995). Twenty years ago, journalist James Fallows spent more than five years in Asia gathering information and building a compelling argument about how and why this region, especially Japan, was growing so rapidly. This book explores those findings.
Western civilization rests on the ideas of three thinkers: Isaac Newton, Adam Smith, and Jean-Jacques Rousseau. Modern science, free-market economics, and political theory are rooted in their work. However, Fallows argues that Asia has developed an alternative form of capitalism, one based not on Smith’s ideas but on those of the German economist Friedrich List.
The main differences between the Western economic model and List’s approach are: (i) consumers versus producers, (ii) free markets versus government intervention, (iii) automatic growth versus deliberate development, and (iv) individuals versus the nation.
For example, in the case of (i), Western economies typically prioritize offering consumers a wide range of affordable products. In contrast, in Japan, prices for the same products are often two or three times higher than abroad. The additional profits from domestic sales serve as a financial reserve to compete internationally. For instance, Hitachi would instruct its sales representatives to bid 10% below competitors and continue lowering their offers until they won the contract. Through this strategy, Japanese companies strengthen themselves and gradually drive foreign competitors out of the market. This illustrates how the producer is prioritized over the consumer in Japan’s economic model.
Government intervention can be seen in another example: Intel. In the 1980s, the U.S. company invented flash memory technology but could not mass-produce it domestically, so it sought to partner with Japanese firms. The Japanese government, however, allowed Intel to operate in Japan only if it licensed the technology to local companies. As a result, most flash drives today are produced by Japanese brands.
This book was an excellent read and helped me better understand Japanese society. My perception of Japan has changed significantly after reading this fascinating work.