Page 174 - Global Political Economy_Understanding The International Economic Order

SYS TEMS O F POLI TICAL ECONO MY
panies seeking entry into the Japanese market naturally regard the
practice of self-regulation as discriminatory. The self-policing system,
with its emphasis on “fairness” and on tailor-made rules enforced in
self-regulatory associations, may conflict with the rules embodied in
the World Trade Organization (WTO) and is thus an immense hurdle
to be cleared to open the Japanese market and internationalize Japan
more completely.
Industrial policy has been the most controversial aspect of the Japa-
nese political economy. 17 As I have already noted, industrial policy
refers to deliberate efforts of a government to guide and shape the
overall structure of the economy. In the early postwar decades, the
Japanese provided government support for favored industries, espe-
cially for high-tech industries, through trade protection, generous
subsidies, and other means. The government also supported creation
of cartels to helpdeclining industries and to eliminate “excessive com-
petition.” 18 Through subsidies, provision of low-cost financing, and
especially “administrative guidance” by bureaucrats, the Japanese
state plays a major role in the economy. 19
The effectiveness of Japanese industrial policy has been very con-
troversial and a matter of intense debate. On one side are revisionist
scholars and proponents of the developmental state who attribute Ja-
pan’s success to its unique economic system and the government’s
powerful role in the economy. The opposing position is held by
American and some Japanese economists, who emphasize Japan’s
market-conforming economic strategy.
Chalmers Johnson’s MITI and the Japanese Miracle: The Growth
of Industrial Policy, 1925–1975 (1982), in which he credits Japan’s
Ministry of Trade and Investment (MITI) with having orchestrated
postwar economic and technological success, is the most outstanding
20
statement of the revisionist or developmental state position. Accord-
17
A useful and sympathetic treatment of Japanese industrial policy is Miyohei Shino-
hara, Industrial Growth, Trade, and Dynamic Patterns in the Japanese Economy
(Tokyo: University of Tokyo Press, 1982). A wide-ranging discussion of Japanese in-
dustrial policy from several different perspectives is Hugh Patrick, ed., with the assis-
tance of Larry Meissner, Japan’s High-Technology Industries: Lessons and Limitations
of Industrial Policy (Seattle: University of Washington Press, 1986).
18
Jeffrey R. Bernstein, “Japanese Capitalism,” in Thomas K. McCraw, ed., Creating
Modern Capitalism: How Entrepreneurs, Companies, and Countries Triumphed in
Three Industrial Revolutions (Cambridge: Harvard University Press, 1997).
19
For a discussion of administrative guidance, consult Bernstein, “Japanese Capital-
ism,” 479
20
Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Pol-
icy, 1925–1975 (Stanford: Stanford University Press, 1982).
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