It is my understanding, developed over four decades of relevant research, that many Asian economists and their governments are using a superior economic understanding (Shimomuran Economics) in order to produce much higher economic growth. The following eight questions illustrate where some of the gaps in Western economic understanding may be in the hope of producing debates leading to a better understanding of these issues.
1. FDR’s USA – the three administrations of Franklin Delano Roosevelt from 1932 to 1944 – produced an economic growth of 8.5% a year in the USA. See http://en.wikipedia.org/wiki/New_Deal.
In fact, Roosevelt’s twelve years in office can be split in half, as follows:
The first six years of economic recovery (1932-1838) when the economic growth rate averaged 4.9% and
the second six years (1938-44) when the economic growth rate averaged 12.25%. (See http://en.wikipedia.org/wiki/File:US_GDP_10-60.jpg)
If we define an economic miracle as an economy where the growth rate is over 10% for a consecutive five year period, then America was the world’s first economic miracle. As Alan Milward puts it:
“Given that the United States had peculiar advantages in quantity of resources, its freedom of intervention by the enemy and end the great amount of slack that existed in the economy before 1940 it remains a logical and revealing approach to ask precisely why the productive effort in many economies fell short of that in America”
Page 75, Alan S Milward, War, Economy and Society 1939 to 1945, Allen Lane, Penguin Books Limited, London 1977.
Q1 How was that American economic miracle produced?
2. Japan’s Economic Miracle Mr (later Dr) Osamu Shimomura (1910-1989) [no relation to the nobel-winner of the same name] became the main author of Japan’s first three or four very successful “Income-Doubling” plans from 1946 onwards, appeared to have studied and earned how the USA had produced their economic miracle.
Q2 What did he learn and how did Japan rise rapidly from the ruins produced by World War 2?
3. The master economist Dr Osamu Shimomura (who, judging by his results in Japan and China, was by far the most important economist of the 20th Century) called upon Japanese economists to “abandon the static western concept of savings-investment equilibrium.”
Q3 What did he mean?
4. Various Chinese Delegations visited Japan in the early and mid-1970s to research how Japan had produced a high rate of economic development. By 1980, they had learned and applied so much that the Japanese Foreign Ministry on 31 August 1980 was moved to comment
“China will emerge as a tremendous economic and military power in the 21st century.”
Q4. What did these Chinese delegations learn from the Japanese economic experience and how did the Chinese government apply these fresh understandings in their new economic development policies?
5. The UK’s National Economic Development Office (NEDO) in 1980 produced a paper called “Transferable factors in Japan’s Economic Success.”
Q5 What did that paper conclude?
6. The USA is in deep depression and due to its faltering economic growth, the country desperately needs to understand investment credit economics to stimulate no-government-debt, higher private investment and economic growth and to introduce an import substitution programme to restore the prosperity of its people.
Q6 How relevant is the FDR experience of stimulating economic development to current American circumstances and what does the Obama administration need to do now?
7. The master economist Kenneth K Kurihara, commenting on the Japanese economic miracle, wrote
“If, therefore, greater investment can be financed partly by credits, there is no need for that ‘abstinence’ which the classical economists considered necessary for economic progress, any more than there is for that ‘austerity’ which some present day underdeveloped countries impose on already under-consuming populations at the constant peril of social unrest. Nor is it difficult, in such credit-creating circumstances, to agree with Keynes’ observation that investment and consumption should be regarded as complementary rather than competitive.”
(Kenneth K. Kurihara, Growth Potential of the Japanese Economy, Baltimore, John Hopkins Press 1971 page 138)
Q7 What does he mean?
8. Franklin Delano Roosevelt left the world two great gifts (among many others) – the technology of the atomic bomb and the technology of economic bomb – the keys to the graveyard and the pathways to undreamt-of prosperity. So here is the big question:
Q8 If Western economists have not studied these economic development issues and do not understand how to reverse the economic decline of the Anglo-Saxon Countries and deal with the credit crunch by growing the economy more rapidly and producing widespread prosperity in the under developed nations thus helping to “make poverty history”, then how useful are they?
© George Tait Edwards 2013
Note: George Edwards tried to advise the Thatcher governments about these issues, lobbying parliament through the Grylls Group during the 1979-83 years, but he failed to have any positive effect due to well-funded Clearing Bank opposition to the interests of the British people.
Macmillan Academic (now the Palgrave Press) have published four books dealing with this topic as follows:
1 John C Carrington and George T Edwards,Financing Industrial Investment, London, Macmillan, 1979.
2 John C Carrington and George Edwards, Reversing Economic Decline, London, Macmillan, 1981.
3 George T Edwards, How Economic Growth and Inflation Happen, London, Macmillan, 1984.
4 George T Edwards, The Role of Banks in Economic Development, The Economics of Industrial Resurgence (Foreword by Harold Lever) Macmillan, London, 1987.
George Edwards has also co-authored a score of articles (six with John Carrington, four with Harold Lever, and the rest on his own) on related topics in various national newspapers and magazines, during the last 40 years. His email is email@example.com. He continues to write in this area because he believes Shimomuran Economics is now desperately needed by all of the world’s people.Tags: Domestic (UK), Europe, Global
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This post was written by George Tait Edwards