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Transition to Post-WW II Era

Defeat by Allied
Forces in WWII, 1945
 End
Japanese colonial
rule


Taiwan— to Republic of
China
Korea—independent
 Break

up zaibatsu
 keiretsu
Transition to Post-WW II Era

US Occupation of
Japan
 US
seeks to break up
zaibatsu
 Firms continue on as
keiretsu

Example: Mitsubishi
Nature of Japanese System, Post-WW II:
Johnson reading

What are the elements of the capitalist
developmental state model, according to
Johnson?
Nature of Japanese System, Post-WW II:
Johnson reading

What are the elements of the capitalist
developmental state model, according to
Johnson?
 Bureaucrats

“Best and brightest”


are elite
Very competitive civil service exams
Tokyo University (established 1877)

Educate civil servants
Nature of Japanese System, Post-WW II:
Johnson reading

What are the elements of the capitalist
developmental state model, according to
Johnson?
 Bureaucracy
has authority
Nature of Japanese System, Post-WW II:
Johnson reading

What are the elements of the capitalist
developmental state model, according to
Johnson?
 State
policy is market-conforming
Nature of Japanese System, Post-WW II:
Johnson reading

What are the elements of the capitalist
developmental state model, according to
Johnson?
 Exemplified
by MITI
Ministry of International Trade and Industry
 In 2001, MITI became METI


Ministry of Economy, Trade, and Industry
Nature of Japanese Economic System,
Post-WW II

Central role of economic bureaucracy
 Industrial

policy
Sector specific
 Promote
increasing sophistication
Textiles, consumer goods
 Steel, machinery



Automobiles
High-tech
Semi-conductors
 Robotics

Nature of Japanese Economic System,
Post-WW II

Central role of economic bureaucracy
 “Administrative
 “Mercantilism”
guidance”
Nature of Japanese Economic System,
Post-WW II
World’s 3rd largest economy
 Economy is highly efficient and
competitive in areas linked to international
trade, but productivity is far lower in
protected areas such as agriculture,
distribution, and services

Review: Nature of Japanese System, PostWW II

What are the elements of the capitalist
developmental state model, according to
Johnson?
 Bureaucrats

are elite
Well paid, recruited through merit, w/relevant skills
 Bureaucracy
has authority
 State policy is market-conforming
 Exemplified by MITI
Nature of Japanese Economic System,
Post-WW II

Close ties between government and
keiretsu
 “amakudari”
(descent from heaven)
Nature of Japanese Economic System,
Post-WW II

Close ties between government and
keiretsu
 “Iron

triangle”
What are the three parts of the “iron triangle”?
Nature of Japanese Economic System,
Post-WW II

Close ties between government and
keiretsu
“
“iron triangle”
business
interests
/
bureaucrats
__
\
politicians
Recent Sources of Economic
Stagnation in Japan

“Close ties between economic
bureaucracy and corporations (including
banks) under their regulatory
jurisdiction…has contributed to Japan’s
problems.”
Source: Daniel Okimoto, Stanford
TIME Thursday, Jul. 12, 2007
Japan: Abe on the Brink

“Suicide of one minister under
a cloud of corruption
(Agriculture Minister
Toshikatsu Matsuoka)

By July 8 even one of Abe's
substitute ministers—
Agriculture Minister Norihiko
Akagi, named to replace the
late Matsuoka—was mired in a
fresh campaign-funding
scandal.

A recent survey by the
YOMIURI SHIMBUN
newspaper pegged Abe's
approval rating at an anemic
32%
Abe's Agriculture Minister
Matsuoka, under fire for accepting
questionable political donations,
died on May 28 at a Tokyo hospital
after reportedly hanging himself
Sep 14, 2007
Japan's Abe takes one for the team

Abe announced his resignation
on Wednesday afternoon in
Tokyo.

While he [had] pledged to
refocus in his new
administration, the daily drip of
scandals that forced the
resignation of cabinet ministers
and other party officials quickly
ended any hopes for a fresh
start.

(There are now reports that
Abe himself is involved in
financial wrongdoing.)
Japan in the 21st Century

Which theory best explains Japan’s
economic stagnation 1990-2010?
Nature of Japanese Economic System,
Post-WW II

Weak position of organized labor
 Company-based
unions
Loyal to company not union
 Ties to national federation of labor weak

 Compare
British and Japan as of 1980
60% of workers in Britain unionized
 30% of workers in Japan unionized

Nature of Japanese Economic System,
Post-WW II

Small welfare state
 Social
protection
 Compare British and Japan as of 1990
25% of GDP spent on welfare in Britain
 10% of GDP spent on welfare in Japan

Nature of Japanese Economic System,
Post-WW II

“Dual economy” of large and small firms
 Small,

“satellite” firms
Employment
Women
 Temporary
