From Apec to Xanadu

Creating a Viable Community in the Post-cold War Pacific

Donald C. Helleman, Kenneth B. Pyle, Donald C. Hellman

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315502991
• Edition: 1
• Topic: Law
• Subtopic: Jurisprudence
• Index: Law

This volume analyzes the concerns that must be addressed if Asia-Pacific Economic Cooperation (APEC) is to be a viable component of the post-Cold War international order, such as what the future role of the USA who made Asia's transformation possible since 1945, is as a leader in that region. The economic analysis of legal and regulatory issues need not be limited to the neoclassical economic approach. The expert contributors to this work employ a variety of heterodox legal-economic theories to address a broad range of legal issues. They demonstrate how these various approaches can lead to very different conclusions concerning the role of the law and legal intervention in a wide array of contexts. The schools of thought and methodologies represented here include institutional economics, new institutional economics, socio-economics, social economics, behavioral economics, game theory, feminist economics, Rawlsian economics, radical economics, Austrian economics, and personalist economics. The legal and regulatory issues examined include anti-trust and competition, corporate governance, the environment and natural resources, land use and property rights, unions and collective bargaining, welfare benefits, work-time regulation and standards, sexual harassment in the workplace, obligations of employers and employees to each other, crime, torts, and even the structure of government. Each contributor brings a different emphasis and provides thoughtful, sometimes provocative analysis and conclusions. Together, these heterodox insights will provide valuable supplementary reading for courses in law and economics as well as public policy and business courses at both the graduate and undergraduate levels.

1 Introduction

Donald C. Hellmann

Kenneth B. Pyle

DOI: 10.4324/9781315503011-1

In Xanadu did Kubla Khan

A stately pleasure-dome decree:

Where Alph, the sacred river, ran

Through caverns measureless to man

Down to a sunless sea….

Five miles meandering with a mazy motion

Through wood and dale the sacred river ran,

Then reached the caverns measureless to man,

And sank in tumult to a lifeless ocean:

And ‘mid this tumult Kubla heard from far

Ancestral voices prophesying war!

The shadow of the dome of pleasure

Floated midway on the waves;…

It was a miracle of rare device,

A sunny pleasure-dome with caves of ice!

From “Kubla Khan,” Samuel Taylor Coleridge ¹

Asia and the Pacific Rim will be the center of the global political economy in the twenty-first century.

Judgment of the overwhelming majority of studies by international banks and scholars

We are confident that, by giving further coherence and direction to our economic and technical cooperation, we will contribute substantially to the goal of a prosperous Asia Pacific community as we move towards the 21st century.

From the “Declaration on an Asia-Pacific Economic Cooperation Framework for Strengthening Economic Cooperation and Development” (Manila, November 1996)

The history of the twentieth century has been punctuated by quixotic hopes and plans for establishing international harmony and peace. Among these periodic flights of fancy, none has gained more followers than liberal internationalism, which has repeatedly proposed the notion that as economic ties among nations proliferate, so political conflicts will subside. Such arguments were frequently made at the beginning of the century until the European war broke out in 1914. Nonetheless, such hopes reappeared again when a new order was proposed at Versailles. Wilsonianism, which envisioned a liberal capitalist world order evolving through peaceful economic competition and interdependence, likewise was not equal to the task of maintaining the peace.

These past examples of dashed hopes seem forgotten in the dawning days of the post-Cold War era in East Asia. Nowhere else does the optimism of liberal internationalism spring so strong. In East Asia the new focus on wealth creation and trade are believed sufficient to dissolve the kind of tensions that have disrupted the region throughout much of the century. This trade-weighted optimism has been especially evident among the founders of the region’s preeminent new organization, the Asia-Pacific Economic Cooperation (APEC) forum, whose leaders have frequently expressed their faith that economic progress and national development seen in the latter part of the twentieth century will extend into the new millennium, strongly promoting regional harmony. Such soaring hopes, particularly in the wake of twentieth-century history and the recurrent fate of liberal internationalist expectations, must strike one as akin to the capricious fancies that seized the Romantic poet Samuel Taylor Coleridge when he awoke from an opium-induced sleep to write in his poem, “Kubla Khan,” of the bizarre and surreal world of Xanadu.

The prosperity that has engulfed and transformed East Asia during the second half of the twentieth century has given rise to roseate but delusive views which may constitute the “stately pleasure dome” of a modern-day Xanadu. The monochromatic economic optimism often evident in the articulation of the APEC vision for the region ignores the lessons of recent history—the “ancestral voices prophesying war” of which Coleridge wrote. The wealth and stability of post-Cold War Asia are organically linked to the war, revolution, imperialism, nationalism, and Cold War confrontation that dominated the region for most of the past century.

As an Oriental potentate, Kubla Khan could decree the creation of his pleasure dome, but such “a miracle of rare device” is not of the real world. The prosperity of East Asia developed and flourished during the Cold-War era under a security regime created and maintained by the United States. A continued American military presence or, more appropriately, a new security regime, remains a central ingredient for stability in the region. Modern-day Xanadu is fragile and contingent on political and economic forces outside of as well as within Asia. Accordingly, the preservation of this miracle presents the need for new international arrangements (ideally, institutions) that will facilitate the creation of a new community in the Pacific and provide a framework within which the unique complexities and challenges of Asia can be integrated viably into the modern global system.

The emergence of East Asia, made up of vibrant, rapidly growing and late-developing nation-states, into the center of the global political economy constitutes a change in the international landscape as great as any event since the Industrial Revolution. Despite the enormity and palpability of this development, the world’s great powers have made few explicit and comprehensive efforts to address this issue on either the regional or global level. The only significant regionwide effort to address the emergence of Asia is the Asia-Pacific Economic Cooperation forum, which was created in 1989 as the Cold War ended. APEC was brought into being at the initiative of small and middle-range regional powers and is focused on modest and narrowly economic goals. Its importance is more symbolic than substantive, but the fact that it has flourished despite a weak organizational structure—and despite the passive participation of the great powers in the region—is testimony to the immediate need to understand and try to manage the modern-day Xanadu in terms that are practical, not just poetic.

During the second half of the twentieth century, the projection of East Asia into the heart of the global system is matched in international significance only by two other events: the protracted Cold War and the collapse of both the western and Soviet empires. Against this historical backdrop, the consensual agreement that East Asia will economically surpass Europe and North America in the twenty-first century, and the prospects of an economically developed region operating within a framework of values and institutions different from those of the West, pose an unprecedented challenge for effectively organizing the international system to assure peace and manage prosperity.

For the third time in this tragic century, in the wake of devastating world conflict, the international community is faced with the task of creating a stable new order. The rules and institutions that were established in the aftermath of World War II and prevailed in the Cold War are no longer adequate to the task of managing the complex new conditions of the international political economy. What is distinctive about the current age of international upheaval is the absence of leadership. Neither the United States, the leader of the coalition that “won” the Cold War, nor the core states in Europe or Asia have taken initiatives to create institutions appropriate to the new political-economic circumstances of the contemporary scene.

The fundamentals of the international system have changed in a variety of ways. One of the most important is the profound shift that is taking place in the distribution of economic power. Newly industrializing countries in Asia, following Japan’s example, are achieving remarkably high rates of economic growth. For decades, the growth rate of almost every economy in this region has exceeded that of the United States and the countries of the European Union, and this pattern is likely to continue. The twenty-first century is likely to witness a continuing shift in the global balance of economic power away from the developed economies bordering on the North Atlantic to the rapidly industrializing economies of East and Southeast Asia. By the year 2020, China is projected to have the largest national GNP in the world; Japan will remain the third-largest national economy; and the other East Asian nations are expected to have a combined gross national product larger than that of Western Europe.

The magnitude and scope of this economic transformation are of awesome proportions and require the creation of new institutions. There are many dimensions to this challenge. One is political. In the past, when rising new powers captured a substantial portion of world trade in a relatively short period of time at the expense of their trading partners, the resulting shift in trading patterns gave rise to intense economic conflicts and greatly exacerbated political tensions among the major powers. The rapid diffusion of industrial and economic power from the older industrial powers to the emerging economies of East Asia holds the potential for similar conflicts.

Another reason the economic dynamism of East Asia is especially challenging, as Professor Robert Gilpin of Princeton University discusses in his contribution to this volume, is because national economic interests are, if anything, more important in the affairs of states than they were a decade ago. In a highly interdependent world economy, Gilpin writes, the economic relations among the great and even the small powers help provide both the glue holding the international community together and the friction driving nations apart. Wars in the future may well find legitimacy in economic, not just in territorial or moral reasons.

Still another important challenge for the new international order, Gilpin points out, is how to reflect and integrate the values and mores of Asia into the institutions and rules of the new order. For more than three centuries the international system has been dominated by the Western powers and centered on the North Atlantic. These powers, their interests, and the values inherent in their civilizations largely determined the nature of the international order and the rules that governed it. The Cold War itself was essentially a struggle between two extensions of European civilization. The Western allies fostered a liberal international order based on policy prescriptions of neoclassical economics, especially the commitment to free trade and nonintervention by the state in the economy. This model prevailed, and when the Berlin Wall came down in 1989 a U.S. State Department official proclaimed that the West had achieved “the end point of mankind’s ideological evolution.” There were, at last, no ideological competitors: “The triumph of the West, of the Western idea is evident… in the total exhaustion of viable systematic alternatives to Western liberalism.” ²

In spite of this triumphalism, since 1989 Asian leaders frequently have asserted alternative values, institutions, and rules of international order. They reject Western claims of universalism as dogmatic and legalistic and speak of an Asian form of capitalism with a legitimate role for state-led economic growth and, in the cultural sphere, social goals beyond individualism. As a consequence, the role of the state in various national economies, government policies regarding regulation, and private business practices have emerged as the subjects of international disputes. What this means, of course, is that Asian countries are seeking a greater say in determining the nature of the rules and institutions that govern international economic and political affairs. To be viable, a new international order must take into account the values and interests of these rising powers. In his broad ranging essay, Gilpin questions whether APEC, as presently constituted, is adequate to the task of representing this emergent region in the creation of a new international order.

The rise of Asian powers, however, entails not only the accommodation of Asian values and institutions in the new order; the Asian powers must assume greater responsibility for maintaining the stability of the international system. This raises a plethora of major issues. What constitutes security in the new era? What will replace the United States in its outmoded role as guarantor of security? What tension will arise between the forces of globalization and regionalization? Because the rise of Asia also signifies the dawn of Asian nationalism, the region may well confront the divisiveness and conflict seen in the West during the nineteenth and twentieth centuries, when the combustible mix of nationalism and economic growth set the agenda for international relations.

That Peter Drysdale and Andrew Elek were among the intellectual progenitors of APEC is manifest in their comprehensive chapter. It provides both a description and analysis of APEC from the inside out. All of the unique and arcane expressions that are regular features in official APEC publications (e.g., open regionalism, concerted unilateral decision-making) are defined in the context of the evolution of APEC. This chapter can serve as a primer for those not familiar with the complex, rapid, and remarkable achievements of the first comprehensive regional organization for the trans-Pacific world.

The strengths of Professors Drysdale’s and Elek’s chapter extend beyond a clear and comprehensive review, for unlike many proponents of APEC, the authors also address sensitively several political as well as economic issues; the importance of building an Asian-Pacific community to assure continued economic prosperity; and the imperative that APEC become an integral part of the global political economy. Drysdale and Elek link the ASEAN experience to the APEC process, and the aggressively statesmanlike style and substance of their argument displays how middle powers like Australia have had and may continue to have an important leadership role in shaping the international landscape of the postwar Pacific. Because the authors are both economists, much of the analysis employs the paradigm of neoclassical economics, and this inevitably gives short shrift to the central role that nationalism has played in the economic as well as the political dimension of the foreign policies of APEC members. Despite the commitment to economic liberalism nurtured by APEC, the age of nationalism is just dawning for most Asian nations. One of the most striking features of this chapter is the rather negative assessment given to the American role in the APEC process.

The link between economic prosperity and political stability is addressed frontally in Kenneth Pyle’s chapter, which treats the future of the U.S.-Japan alliance as critical to the success of APEC’s aspirations. He argues that APEC depends on a stable security environment, which in turn requires a clarification and revitalization of the U.S.–Japan alliance. Reflecting a fundamentally realist position, he asserts that “a new order must be reflective of the relative strength of the major powers in the region,” which will entail Japan’s assumption of a significantly greater share of political responsibilities. The U.S.-Japan alliance is critical because it links dominant military power with dominant economic power and thereby provides the potential for a strengthened regional stability. Tracing what he calls a “paradigm shift” under way in Japanese politics, Pyle believes there is an opportunity to restructure the alliance to fit post-Cold War realities and provide the context for an effective APEC process.

Donald Hellmann argues in his chapter that it is hard to imagine a Pacific-centered, multilateral, free-trade-oriented world without the full-scale participation and leadership of the United States. This provocative hypothesis is based on what he sees as four integrally related features of the international system_

1. An empirical imperative to link the economic and security dimensions of international relations;
2. An organic relationship between the international experience of Asia in the twentieth century (e.g., colonialism, nationalism, revolution, the Second World War, the Cold War) and the embryonic Pacific community;
3. The need to create some sort of institutional framework to address political-economic cooperation in the region and to relate this to the workings of the global economy; and
4. The United States, as the leader of the coalition that “won” the Cold War and as the only global political/economic power, has a window of opportunity for leadership that is available to no other nation—including the regional great powers, China and Japan.

Hellmann does not see the failure of the United States to provide a fresh and constructive strategic vision as a result of the relative decline of American economic power. He argues that America is the center of the Asia-Pacific trading system, the dollar is the currency of account, and the United States is the world leader in technological innovation. Moreover, American military strength in the Pacific is criticized only because it is structured and legitimated in terms appropriate to the Cold War, not the contemporary scene. Professor Hellmann proposes a concept of constabulary security that would link, inter alia, economic interests and the use of force as the first step toward a new system. Within this broad framework of analysis, APEC is seen at once as “promising and seriously flawed,” an “updated, economic version of the Kellogg-Briand Pact of 1928” and the only regionwide forum for communication at the dawn of the Pacific century. Hellmann makes a plea for dramatically upgrading Asia as a priority in American foreign policy, because the opportunity for real leadership is at once historically unprecedented and rapidly disappearing.

In contrast to other more assertive approaches to institution-building in the Pacific, Professors Akio Watanabe and Tsutomu Kikuchi in their chapter offer a valuable and thoughtful Japanese perspective that is more cautious and evolutionary. They argue the need to build a sense of community and common interest in the region rather than beginning with grand architecture and imposing institutions. Their analysis st...

Table of contents

• Cover
• Half Title Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Preface
• APEC Members
• Commonly Used Abbreviations
• 1. Introduction
• 2. APEC in a New International Order
• 3. APEC: Community-Building in East Asia and the Pacific
• 4. America, APEC, and the Road Not Taken: International Leadership in the Post-Cold War Interregnum in the Asia-Pacific
• 5. The Context of APEC: U.S.-Japan Relations
• 6. Japan’s Perspective on APEC: Community or Association?
• 7. Reflections on APEC: A Korean View
• 8. APEC: An ASEAN Perspective
• 9. China and APEC: Interests, Opportunities, and Challenges
• Appendix I: Chronology of Significant Events in APEC’s History
• Appendix II: Important APEC Documents
• Index