He
criticizes "the so-called neomercantilitsts" like James Fallows who
"have argued that the dynamic and fast-growing economies of East Asia
have succeeded not by following but by violating the rules of
neoclassical economics. The Asian fast developers have achieved such
astounding high growth rates, the neomercantilitst argue, not because
of the untrammeled working of free markets but because governments in
each case stepped in to promote development through industrial
policies."
"James Fallows has made perhaps the most sweeping indictment of
neoclassical economics 
in
his book, Looking at the Sun. Fallows argues that the
Anglo-American preoccupation with market-oriented economics has
blinded Americans to the critical role played by governments."
Liberals, like Fallows, do not like free trade and want America to
have Washington make an industrial policy. Fukuyama spends much of
his book analyzing the cultures of nations and says that some are
what he calls "familistic" and are unable to trust others very much.
These "societies such as China or Italy" have to use "state
intervention [as] the only avenue by which" they could "build
large-scale industries." But he says those cultures that that have "a
high degree of trust" like Japan and Germany "can create large
organizations without state support. He writes that the free market
economists are "far more serious" and have more intellectual weight
than those who want to have a big government guide industry.
He does not share the enthusiasm of Gary Becker and James Buchanan who feel free enterprise can work equally well everywhere. I think Fukuyama is wrong in not seeing the power of capitalism for all cultures. He is correct that some cultures are higher than others.
