FROM FINANCE TO INDUSTRY: THE CRISIS IN AUTO - Part 6

It was especially concerned to reconstitute capitalism in Europe and Japan, but to do so in a way that kept them open to American capital. As the U.S. integrated foreign capitalists into this project, it created new competitors.

Consistency in pushing for the priority of the "open-door" abroad implied that the U.S. would move to an open door policy for imports and investment at home. In the particular case of Japan, the fact of the Cold War and the centrality of Japan to the penetration of capitalism into Asia, led the U.S. to accept a certain "flexibility" in mutual international economic relations. Japan was permitted to restrict foreign investment, yet access foreign technology; to maintain, into the mid-1980s, an undervalued currency; and it was allowed to restrict entry into its market, yet retain full access to the U.S. market. (At the time, in the post-war years, it should be noted, Japan was only a semi-industrialized country with a limited market for consumer goods.)

While still under U.S. occupation, the Japanese state and corporations had smashed the militant Japanese trade unions by the early 1950s, with the auto sector being a crucial battleground. By the 1970s, Japan — with borrowed or bought technology and the competitive advantages of lower wages — was making significant inroads into the U.S. auto market. Japan's exports of small, fuel efficient and relatively inexpensive cars meshed with what U.S. consumers were looking for in a period of elevated energy prices and economic stagnation and inflation. When Japanese imports increased especially fast and the U.S. government moved to limit them, the Japanese corporations got the message and moved to directly produce inside the United States.

The Japanese auto companies quickly proved that they could compete as effectively without the cost and so-called cultural advantages of Japan. They could match or surpass the competitiveness of General Motors, Ford, and Chrysler even while producing within North America. By the end of the century, they had captured half the U.S. and Canadian car markets and were serious challengers in truck production. Well before the "Great Financial Crisis" that unfolded in 2008 and forced GM and Chrysler into bankruptcy, the Detroit Three were in serious troubled

General Motors and Toyota

The explanations of why GM, in particular, failed range from its complacency in light of past successes to the failures of its models in terms of styling, quality and price.

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