By Kent E. Calder,
I remember the Nixon Shock of August, 1971 as though it was yesterday. I was in Hawaii -- Ala Moana Shopping Center in Honolulu, to be exact.
It was usually thronged with Japanese tourists. That day, however, it was strangely silent, with few tourists, as they ironically could not spend their suddenly powerful yen.
No one knew what their money was worth, and many of the tourists from Japan seemed to fear that America had grown strangely nationalistic and unfriendly, even in traditionally relaxed and welcoming Hawaii.
That paradoxical yet vivid scene that I witnessed in a Hawaii shopping center, as a young Harvard University student, took place half a century ago.
I marvel, as many my age do, how fast time flies. Yet I also marvel at how profoundly Nixon's actions, as well as Japan's response in those days, have reshaped my own life. And I am impressed at how easy it is to both be shaped by, and also to misunderstand, the ongoing flow of history.
As I walked the idyllic pathways of Hawaii on August 15, 1971, I knew very little of Japan. I had visited Tokyo twice for a few day as a child with my parents, and then once again as a young student.
Yet I had never lived there, and spoke no Japanese. The country was an exotic one that I had seen almost totally from afar. The strange scene that I encountered in Hawaii, however, and the seismic global events that followed as I returned soon thereafter to Harvard, reshaped my life.
I had been studying African politics, but suddenly came to realize that the important global changes then reshaping the world were happening continents away from where I had supposed.
The key development transforming global affairs was not so much the end of European empires, as I had thought, but the rise of Asia, and America's struggle to adjust to the new global economic trends emerging there.
Japan was quietly becoming an economic super power, in a world that could not understand its sharply etched yet strangely submerged strengths and vulnerabilities.
When I returned to Harvard, former U.S. Ambassador to Japan Edwin Reischauer, despite his deep erudition, had no doctoral students of Japanese Politics. I resolved to become his disciple, and that decision has changed my life.
Since departing for graduate study in Tokyo three years thereafter, I have spent nine years in Japan, including over four of them with U.S. Embassy Tokyo, and crossed the Pacific more than 250 times.
The historic Nixon Shocks during the summer of 1971 had two dimensions. The first was America's sudden tilt in Pacific affairs from Japan to China, epitomized by Henry Kissinger's secret July, 1971 trip to China, without prior notice to Japan, and Nixon's own visit to Beijing a few months later.
The second shock, of course, wa
s what I had witnessed in Hawaii -- Nixon's sudden destabilization of the yen and U.S.-Japan economic relations, through his suspension of U.S. dollar convertibility into gold, together with special tariffs directed particularly against Japan.
History will judge both of Nixon's major Shocks in the summer of 1971, I believe, to have been fateful to world affairs, likely ranking with events like the two World Wars, the Marshall Plan, and the collapse of the Soviet Union as among the most important watersheds of the twentieth century.
Both of them were important, albeit in different ways that only became clear in retrospect. Together, these two shocks thrust Japan and the United States into a very different era of Pacific relations, so contrasting to the more comforting yet static era in which Reischauer had served.
The Nixon-Kissinger overture to China appeared in Washington to be a stunning geopolitical success at the time, putting the Soviet Union on the defensive, and helping the United States to extricate itself from the Vietnam War debacle.
Given China's massive scale and growth potential, some re-definition of Beijing's constrained international role during its early post-revolutionary years was no doubt inevitable.
Global consumers, and all actors with a stake in global prosperity, including hundreds of millions of Chinese, have no doubt benefitted from China's deepening global economic integration since Nixon's day.
Yet the geopolitically ambiguous terms on which a resurgent, and yet increasingly statist and soft-authoritarian China is now re-joining the world, largely on open-market terms that the United States traditionally reserved for allies, have begun to cast a retrospective shadow on Kissinger's 1971 achievement.
John Foster Dulles did not live in the era of the Nixon Shocks. No doubt, his policies toward China, even for his day, were rigid, myopic, and sometimes bigoted.
Yet the fundamental understanding of Dulles that relations with Japan, in concert with Southeast Asian nations, needed to be the core of America's position in Asia, was insightful, as Reischauer and Ronald Reagan both also understood.
Japan's cooperation with the United States during the Ron-Yasu years of the 1980s, quietly coordinated by U.S. Secretary of State George Shultz, was the key to ensuring the collapse of the Soviet Union and ending the Cold War, through massive Japanese financial flows across the Pacific that dwarfed in importance on the global geo-economic level anything that Henry Kissinger accomplished with China.
That brings us, in conclusion, to the historical consequences of Nixon's second shock -- his rough economic treatment of Japan in August, 1971.
Treasury Secretary John Connally's tariffs, quotas, and sanctions proved, in the final analysis, to be neither as effective as Nixon hoped nor as damaging as Japan feared.
Yet they led over time, through the mediation of geo-politically sensitive economic diplomacy, to a new era of trans-Pacific finance -- of floating exchange rates and increasingly liberalized financial flows.
That era has endured, given enormous stimulus to global equities, and become an important bulwark of the global capitalist economy.
As the world assesses the high-profile heritage of Richard Nixon, Henry Kissinger, and their overtures to China in this anniversary year, we should not forget the quieter yet more enduring contribution of George Shultz, and how he transformed U.S.-Japan economic tensions into a tool for building constructive and central aspects of the global political economy that we know today.
(Kent E. Calder is interim dean of the Johns Hopkins School of Advanced International Studies in Washington and director of the Edwin O. Reischauer Center for East Asian Studies at SAIS.)
