Industrializing a Nation is an Art of War

By Mwarang'ethe

Kenyans have agonised over many years why we are unable to develop with all the manpower and resources in our hands. With a religious conviction, we have convinced ourselves that, if only we were less corrupt, we would have ended our poverty and attendant social miseries. We are also convinced that, all will be well if we utilise “donors” funds well, have free primary education, and “fight” diseases like AIDS and malaria.

These are myths and delusions fostered by the propaganda from the media, donors, NGOs and our schools. As thus, this common wisdom is totally baseless. The other side of the story that is left deliberately untold is this. Nations do not develop or industrialize and maintaining their prosperity, by fighting corruption, diseases and such mumbo jumbo.

In truth, these are lullabies given to Africans to ensure their continued deep sleep as others f#%£% them. Excuse that French please. So, how do nations develop? Well developing a nation IS AN ART OF WAR.

Industrialising a nation is an art of what, is what the Japanese Prince cannot tell Raila. (See Japanese Prince Dinner with Kenyan PM Here: http://www.youtube.com/watch?v=3ITzlWOqYc4&feature=channel.

Among other lullabies, the Japanese Prince did mention how Japan has helped us grow more rice (yes, a Malthusian activity we have mentioned many times). In his remarks, the Kenyan Prime Minister said there are a number of Japanese companies in Kenya. He seemed very pleased with that.

In this article, we wish to dispel these delusions and myths, not with mere speculations, but with factual evidence of what Japan has been doing since 1945. Armed with these facts, you will decide whether we know what we are doing or not.

After the 2WW, the remaining imperial centre of capital, i.e. USA was desperate to stop the spread of socialism. To do so, it had to assist countries like Japan that had lost that war. So, USA provided Japan with:

 Industrial technology.
 Finance capital.
 Dropped import barriers while permitting Japan and Germany to protect their industries and markets. This was the same formula USA had used in building its industry and wealth.

Question

(a) Did Kenya/Africa get access to technology, finance, markets and more crucially, are we able to protect our industry and market?
(b) If no, it means that, we believe we will develop under free trade regime. We will be very happy to get any example of a nation that has ever developed under free trade regime as we have embraced it.

As Japan rebuilt under the above conditions, it developed long term strategies for entering existing high tech markets (Schumpeterian activities, the opposite of Malthusian activities like rice growing the lullaby the Japanese Prince sung to us). These strategies were composed in detailed plans spanning 20 – 50 years for getting a share of existing markets. At first, it started by introducing new and highly refined versions of existing products and then slowly upgraded these products.

It begun with CRUDE copies of advanced German cameras like Leica and Rolliflex. They then honed their skills by continually upgrading their entries into these markets until their level of quality and technology began to equal that of Germans and then surpassed them. In a span of less than 20 years, using such long range managerial approach, the Japanese were able to gain by far the largest share of the worldwide camera and optical goods market and thereby, edging Germans to the sidelines.

Having taken this market, they now took aim of other existing markets which they could use their advanced optical skills. These were small copying machines, professional video devices, computerised silicon chip etching equipment. They now dominate this market as well and have edged the Americans who plan 24 months ahead.

As Japanese chanted free trade and laissez faire lullabies to Africa, the Japanese Ministry of Finance (MOF) and the International Trade and Industry (MITI) controlled the government’s budget, set monetary policy, collected taxes, supervised banks, brokers, and insurers and established parameters for credit, asset values, capitalization and lending.

More so, through cross shareholding, they ensured no outsider takeover (remember how Raila is happy about presence of Japanese companies in Kenya?). To further these mercantile schemes under the banner of laissez faire for the foolish, they ensured Japanese corporations are primarily owned by each other.

Questions for you

(a) Does Kenya have any long term plans for entering any high technology market? Please do not tell us about tea branding and tourism marketing in Germany.
(b) How coordinated is ownership of Kenyan companies like Kenya Railway, Safaricom, Telkom, Ken Gen etc?

To further protect its markets, Japan came up with very complicated high product prices which were protected from imports by arbitrary health, safety and quality standards. These “standards” permitted charging Japanese consumers 3 times the price for consumer products as that paid by the rest of the world. Through these "standards" which are never met, instead of TARIFF, the Japanese prevented others from selling on its home front. See the irony, in Kenya/Africa; a Minister proudly launches a new foreign product as you can see here. http://www.youtube.com/watch?v=EVC4OcWFf9U&feature=player_embedded#.

These high prices were nothing but hidden taxes along with other dictated policies and creative accounting which gave Japanese industry the same finance capital as it has received 100 years earlier. In other words, government financed industry and protected home market created a comparative advantage which permitted the Japanese industry to sell, for a period of time, at what would be a loss for a free enterprise corporation. Having built the world’s most modern industry and captured markets around the world, so long as trade surpluses are maintained, losses can be absorbed up to a point by those high domestic prices taxing back a part of the economic multiplier gains.

When Japanese government tried to deflate cautiously the land and stock bubbles by raising interest rates, the Wall Street bankers went on the attack using their new weapons of mass destruction, i.e. derivatives to sell the market short and bring it crashing down.

In other words, Japanese formula is this. Buy RAW RESOURCES cheap (from Kenya/Africa), build and maintain the most efficient industry in the world, educate its citizens, pay Japanese labour well (remember SAPS from IMF telling us to pay badly?) charge Japanese consumers above export prices, price exports just under the products of other nations and sell enough on the world market to pay for it all with a substantial cushion to spare. It may appear that, these policies contravene the Most Favoured Nation clause in free trade treaties. Well, that’s a small deal. As long as all nations face same arbitrary standards, the problem is “solved.”

So, why don’t the rich nations force Japanese to comply with the laws Kenya/Africa must comply with? Very simple. In 1987 when Japanese sold its bonds, the global liquidity was lowered such that, America experienced the worst one day stock collapse. So, if they are forced to, they will liquidate these investments, properties and dollar will crush. This is jiu jitsu economics at its best because USA and Japan, China etc, are now locked in debt – equity embrace that no knows how to get out of it. Remember that, these nations have very old art of art of war skills.

When the Western capital withdrew finance capital from Asian Tigers (this is a story for another day) they shattered (deliberately) these economies and then bought the best industries for pennies on the dollar. When they turned these derivatives as we noted above on Japan, they met their match. Japanese never permitted outside finance capital to gain TITLE to their industrial wealth. How so? They simply kept all bankrupt banks and industries running by ABANDONING capitalism’s bankruptcy rules. This enabled Japan to maintain trade surplus, expand savings, and thereby avoid DROP IN LIVING STANDARDS. We see the entire world now trying these formulae’s. We will see the end of this soon.

We have cut short a very long story, but, we hope short as it is, we are able to show that, developing a nation is more than fighting corruption, inviting foreign investors, “bringing development,” new constitutions etc as we are told. It requires leaders who understand the art of war.