UNTIL THE END of the Cold War in 1989, the phrase 'economic ideology' to most Westerners referred implicitly to Soviet propaganda. The battle between the free market and Soviet-style collectivism, with its Maoist variant, was the familiar one. Only after the fall of the Berlin Wall did it seem for a few years as though the battle was over and free-market institutions had triumphed.
Then, with the sharp contraction of the Russian economy in the early part of the 1990s, instability in Mexico and Latin America, and ethnic warfare in Africa and the Balkans, the picture grew more complicated. In the mid-1990s, Asia was in the grip of an economic boom that seemed likely to redraw the lines of the global economy. Japan, which had faced an enormous loss of prestige during the Gulf War, resulting from its own political inertia, suddenly grasped a way to expand its influence among developing countries, starting with the progeny of its wartime Greater East Asia Co-Prosperity Sphere.
These nations could become a critical group of allies in international organisations, such as the United Nations, as well as alluring venues for Japanese industry, which was being chased abroad with the rapid rise in value of the yen. Tokyo thus began a quiet but determined campaign to re-enter the treacherous intellectual space where economists play politics and economic policy becomes a tool of national interest. The campaign wrapped together a newly minted, Japanese approach to development economics, and an old-fashioned appeal to pan-Asian values. Diplomatically, it was accompanied by a sharp tilt to Asia, and a measured downplaying of Japan's relationship with the United States.
The campaign failed in most of the obvious ways, first in imprinting the Asian economic model as a distinct and successful alternative to the free market. But it succeeded, perhaps, where it was most important - in sustaining a challenge to the reigning ideology of the global economy. Japan became the first of the major powers to attack the convergence theory forcefully championed by the US in the aftermath of the Cold War.
Japan embraced and promoted a theoretical middle ground between the market and centrally planned economies, starkly different from the neoclassical model, which was supposed to work best in the early stages of industrialisation, and had been pioneered by the Asian economies. The proof of the Asian model lay in the Asian economic miracle. Until Japan made the link, it was largely an issue for academic economists, not policy makers. In Japanese hands, the Asian model gained strategic and diplomatic traction that ultimately fed into the anti-globalisation protests of the new century.
The Japan of the 1990s was a study in grey caught between paradigms, stuck in a dual economy in which some of its multinationals thundered along while the domestic economy stagnated, crippled by public inertia and political confusion, and yet bearing seeds of a new Japan. Japan might be diminished and humbled in the post Cold War equation, but amid the grey, Japanese were asking questions about core values, seeking the means to engender creativity and entrepreneurialism, and groping for new forms of political and economic leadership. Japan lost the decade, but it began to find itself.
