Miti and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975

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Summary: The Economy of Nihonjinron
Review: MITI And The Japanese Miracle: The Growth of Industrial Policy, 1925-1975 is Chalmers Johnson's in-depth, revisionist approach to understanding Japanese culture, society and economy. As the title eludes, the text focuses on what specific societal, governmental and cultural systems allowed for Japan's bubble economy of the 1980s. Like Harumi Befu's Hegemony of Homogeneity, MITI draws its strength from analyzing and criticizing the essentialist approach to understanding Japan. At the same time, both texts suffer from a clear lack of conclusions on the nature of Japan, though this does not undermine their ultimate validity.
MITI is useful in understanding Japan's last century in that it attempts to give an unbiased, insider's view of the history of Japan's industrial boom. Johnson's central argument is that Japan owes its unprecedented and generally unexplainable (inscrutable) economic achievements to what he calls a "plan-rational system". Johnson believes that the Ministry of International Trade and Industry (MITI) combined with Japan's "iron triangle" formed from the government, bureaucrats and heavy industry were not only interconnected but completely interdependent; working together as a single whole with only one goal: economic development.
The first chapter entitled, "The Japanese `Miracle'" serves a double purpose of showing the central argument of the text while at the same time analyzes and eventually disproves/ invalidates the four main conclusions being drawn by Johnson's contemporaries about Japan's economic boom. Here, Johnson explains the first theory, "The national-character explanation argues that the economic miracle occurred because the Japanese possess a unique, culturally derived capacity to cooperate with each other, " (8). Basically this theory is an outgrowth of typical post-war American Nihonjinron literature. This essentialist, anthropological approach merely makes generalizations about Japanese culture from America's experience with Japan during WWII. This theory relies on the assumed inscrutability of Japan. This theory is entirely devoid of the very real conscious actions taken by the Japanese government to change Japan's economy which Johnson focuses on heavily in his text.
The second and fourth approach are based on the idea that no miracle occurred. These economically based theory rely on the randomness of market forces combined with Japan's ties to America. This means that the bubble occurred merely by chance with no effort put forth by Japan, and that Japan, or any nation for that matter, has little to no actual control over the market. As with the first approach, the second and fourth both undermine the intelligence of Japan's leaders in government and business by denying them credit for strengthening their own nation.
Similarly, the third approach says that it is Japan's unique business structures that give Japan its economic edge. Johnson explains that the structures glorified in English as the "three sacred treasures" are, "the `lifetime' employment system, the seniority (nenko) wage system, and enterprise unionism, " (11). Johnson points out that the main problems with this theory are that the "three sacred treasures" are only three of many systems and structures in place that could help ensure a strong business thought these others are typically ignored by American authors. More importantly, many of these "unique" business practices were in fact started in America and Japan merely borrowed them. This theory also crumble under the fact that Japan is now suffering from a ten year recession and none of these systems have seemed to help.
Johnson explains his own theory of a plan-rational system in that, "Observers coming from market-rational systems often misunderstand the plan-rational system because they fail to appreciate that it has a political and not an economic basis... The very idea of the developmental state originated in the situational nationalism of the late industrializers, and the goals of the developmental state were invariably derived from the comparisons with external reference economies," (24). Johnson's explanation is that Japan does not follow the general rules of free market economics because, as a "late industrializer", Japan as a nation was consolidated and focused on the single goal of catching up to the West. Johnson sees Japan's economic boom in the 1980s as an outgrowth of Japan's unprecedented plan-rational system.
MITI is an important text when trying to understand Japan, Nihonjinron and America's perception of Japan during the bubble economy. The text's strength lies on the in-depth analysis and recognition of generally accepted misconceptions about Japan, Japanese culture and economy. Most Nihonjinron texts are only applicable and valid when pertaining to the era and specific situation which they are attempting to analyze. Even in the post-bubble economy of present day, MITI is still a valid text and integral in understanding the political and industrial structures in Japan that in turn shaped the culture and society over the last century and that ultimately will dictate where Japan will go in the future.

Rating:
Summary: Challenge To Read
Review: Considered to be one of the first books that pointed the different capitalist style that Japan practiced from 1925 to 1975. A capitalism-style that Chalmers Johnson labeled the "developmental state". MITI and the Japanese Miracle gave Mr. Chalmers Johnson the reputation as the "godfather of Japanese capitalism." This text would later become a reference source for other critics of Japan-style capitalism in the late 1980's and early 1990's.
I found this to be a challenge to read. The first two chapters were a breeze. As you further get into the book, many of the Japanese and agencies become difficult to pronounce. Since I am not familiar in pronouncing the Japanese language, the rest of the book was formidable. If you have a basic ability of pronoucing Japanese, you may find this text to be an easier read.

Rating:
Summary: Challenge To Read
Review: Considered to be one of the first books that pointed the different capitalist style that Japan practiced from 1925 to 1975. A capitalism-style that Chalmers Johnson labeled the "developmental state". MITI and the Japanese Miracle gave Mr. Chalmers Johnson the reputation as the "godfather of Japanese capitalism." This text would later become a reference source for other critics of Japan-style capitalism in the late 1980's and early 1990's.
I found this to be a challenge to read. The first two chapters were a breeze. As you further get into the book, many of the Japanese and agencies become difficult to pronounce. Since I am not familiar in pronouncing the Japanese language, the rest of the book was formidable. If you have a basic ability of pronoucing Japanese, you may find this text to be an easier read.

Rating:
Summary: Like a novel
Review: This book is the classic to be read in the field of the developmental state which refer to East Asian economic developmental strategy not only for Japan. thou Chalmers Johnson is not the one who coined the word, developmental state, he has been most influential in that field by this book. btw dry and technical? I can't see why this book recieves that kind of respose. the overall style of description is something of an well written novel. the author gave the life to the past with details. and that it's interesting enough to be sombering overnight. Below I try to depict the position of this book on the discouse of economics
Johnson revived almost forgotten ghost from the sea of oblivion: mercantilism.
Mercantilism seemed completely beaten away long before modern economics took shape. Mercantilism was a pragmatic adaptation, not a theory of how economies are supposed to operate. It anticipates or at times contradicts market signals, with the goal of channeling resources to (or away from) selected sectors, in the interests of the prosperity of the one or the power of other. But economists argued that such a policy is no more than the terror against market efficiency. The wisdom of the state can¡¯t be claimed to be more efficient than market. Moreover, it often mass-produces rent-seeking distortions on resource allocation. It makes more harms than benefits. The state should not guide the resource allocation. The role of the state lies in other area: providing the public good and responding to market failures.
Johnson labeled this kind of role as the ¡®regulatory state¡¯. The United States and Britain exemplify the ¡®regulatory state.¡¯ Such state¡¯s task is the setting of rules that govern entry, exit, competition, investment, pricing, and other basic functions of the market. That kind of task is called as economic regulation. Economic regulation provides the basic framework of rules needed to keep market operate and responses to the problems of market failure.
But developmental state, as Johnson found in Japan¡¯s success story, holds that economic regulation has the goals beyond market maintenance. Developmental state takes the long term national welfare as the primary mission of state. It actively intervenes in economic activities to improve the international competitiveness. Japan¡¯s economic bureaucrats and business leaders rejected the philosophy of laissez-faire, free trade of open markets. To them, these concepts were little more than protection for the economically powerful exporters. The strategy of developmental state is the denial of extant hierarchy of comparative advantage. To achieve high growth rate, there should be high return sectors. But such sectors, in general, have no relation with developing countries. Then, should developing countries rest with agriculture or labor-intensive industries? Not necessarily. Such sectors tend to be low value-added, in other words, with low growth prospect. If you don¡¯t have it, then make it! Japanese bureaucrats sought to use activist policies to generate ¡®competitive advantages¡¯. In this regard, developmental state is a logical offspring of economic nationalism and neo-mercantilism. Driven by such a motive, developmental state use economic regulation to foster the technological development, capacity growth, and competitiveness of targeted industries considered essential to national economy in the future.
Both models don¡¯t deny the role of the state. But they differ from each other in the perception of resource allocation. The point of neoclassical economics is the efficiency, whereas the one of neo-mercantilism is the effectiveness. There could be no a priori or empirical criterion to judge which model is valid to the real world, for each has its own supporting evidence. The arbiter is the whim of trend. Chalmers Johnson captured the public not for its theoretical superiority but for its timing. The 1980s is the time when orthodox recipes of economics lost its effectiveness. The US lost its competitiveness not only in the world market but also in its domestic market. The word, competitiveness or competitive advantage has seized the day. Competitiveness or competitive advantage is not the word of efficiency but the word of effectiveness. Even if the economy were efficient, it could be not effective on the market. Then what efficiency is for at all? Formidable competitor, Japan, became the teacher. ¡®Japan is No.1.¡¯The US should learn from the superior. It was the reason why Chalmers Johnson took the attention. He was not the only one who drew such a picture of Japan. But the manner he challenged neoclassical economics and its timing were Johnson¡¯s advantage. But the time swung against developmental state theory. Japan has been lost in doldrums. Now the time reveals cracks in and limitations of the developmental state theory. Criticisms focus on a reductionism of the state, incomplete and even misleading elucidation of state-society links and growing doubts about the positive correlation between the state and economic performance. Still the developmental state theory has the validity in explaining certain period (from 1945 to 1973) of Japanese economy. But it lost once the dominant position it enjoyed.

Rating:
Summary: An analysis of Japanese economic dev. in the 20th century
Review: This is a very dry and technical presentation of how the Japanese economy developed during the Showa era. Mr Johnson covers the pre-war colonialist era as well as the post-war reconstruction and focuses on government economic policy. He ends by questioning the Japanese model's effectiveness outside of Japan.

Rating:
Summary: An analysis of Japanese economic dev. in the 20th century
Review: This is a very dry and technical presentation of how the Japanese economy developed during the Showa era. Mr Johnson covers the pre-war colonialist era as well as the post-war reconstruction and focuses on government economic policy. He ends by questioning the Japanese model's effectiveness outside of Japan.