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The Developmental State

thy adjusting to these challengesabsorbing the oilprice rises, hlilig inflation at a low figure, and shilling the weight of its indus iii si itiet tire away from cleclimng to competitive industries? hits flagrantly flouting all received principles of capitalist rational Ill (C use Dores words (p. iS), was turning it into One of the worlds Lu 11(51 big nations an(l the model for all the other countries ofEast Asia, in Ii i hug China. The cases of the socalled East Asian NICs (newly in Ii sit i:ilized countries) were also calling into question the lectures of liii es of American dependency theorists and World Bank officials /511 droned on about why Latin America was doomed to Un(lerdevelo ) 1 mill. At the same time, the Anwricans and the British, the exemplars ii ii ie principles of capitalist rationality, were l)ejflg repaid fur their or Ic 0 h( cxv with stagflation, high rales of unemployment, and a hollowed ill manufacturing l)ase. Their (lee line was checked only marginally (fur iiig the succeeding decade by Ronald Reagans credit card binge, is Ii ichi left the United States as the worlds largest debtor, and Margaret I hitchers determination to let the market rule, which only made Britain sit Iv. I )turing the 1 qqos, as a result cii overconfidence and arrogance, Japan ill )wed a speculative bubble to develop in its domestic economy. Fhe spi ci i upward in prices was based primarily on overinvestrilent in prodmietive apacitv and unrestricted hank lending using inflated real estate prices as ii hlateral. When the inevitable collapse came, instead of refurming its I iiiking practices and holding its (OlilpiLifles ueSponsil)le fur had invest ulielit decisions,Japaii exported the l)uI)ble to South Korea amL Southeast .\si;t, thereby precipitating the East Asian economic crisis that started in i Many writers in the United States concluded from these events that lie Asian miracle was a flash in the pan and that the end of history, hat is, the elimination of all alternatives to the American way of life, had liuially and definitively arrived. Unfortunately fur them, these American ters have seen only those aspects of the Asian econonuc crisis that neo classical economics illuminates fur theni. They have refused to notice the intel war context in which the Asian ecollomnieS flourished or how overex ieiided they themselves are its the economic and military guarantors of lie Asian systeni. In any case, my history of the Ministry of litternational hiacle and Industry (MITT) was devoted to an explicit period of twentieth century history, as its subtitle indicates: The Growl/i of Industrial Policy,


liii C



The Developmental State: Odyssey of a Concept

Chalmers Johnson

ill intro(lucmg the idea of the capitalist (l( One ol IIIy nlaifl stale ink) of moclernJapanese industrial policy wn a history velol)mental 1.0 go beyond the contrast lxtween the American and Soviet ecofloflhi(s. The AmericanSoviet comparison had heconie a frature of virtually all tlw CaHonical works of the American side (luring the cold warsuch is Sanuwlsons Economics textbook. I wanted, instead, to call attcHtiorl to 11w differences, not tlit similarities, between the capitalist economics of 11w Lnited States and Britain, oil the one hand, and Japan and its ernulati elsewhere in East. Asia, (>11 Ihe other. During the 1 7O5, when I was doiii the research for MITI and the Japanese Miracle ( ig8) these differences were beginning to show, even though there wits, an(l is today, enormot ideological resistance in the Englishspeaking countries to any attempt hi take them seriously. I Looking hack on 11w era of the igos, Ronald Dore, in Flexible Rkidi ties: Industrial Policy and Structural Adjustmen,t in the Japanese .Lcon(nuv. 1 p70i 9o, noted in the second paragraph of his introduction that II os [tlie Japanese] dont believe in the invisible hand. Why on earth, thet Dore asks, should Japan, an economy which ahnost flaunts its rigidil les as a matter of principle, he the most successful among the OECD [Oi;i nization for Economic Cooperation and Development] countries at ds


(oinjCin Dst Williams, thond Ioliiic;il Eroimm: A (IItIcfui of lsstiis Raiscil iii (liilniiis loloisuns MIII (111(1 I/u /(I/flIIiSe tloucle, fl LOS! tI/IC IuI/urIuuIu)n(ul fltimu (1/ 1 iiouuii(, 15th/owl, (ui//I Siudal I)evilo/auuelu/ (Fu:mktuii: Campus, i .7. Sic ilso i)iui 55 illitins, /0/wil/: IC500(l flue /11(1 f liii! (/15 (Loiotoui: ROtItti/lip, I ) (ilitliunis Ji lii nIi. MIII (01(1 the /a/iani.o ,\lnecle: i/u (,uiwllu n/ Jnducliml 1o//(), 1)2 511)75 (S1iiifonl: Sluif ii LIlI(lSIp Iiis,, iiSi) tCxt. i-l iiliiiiicis silI 1)I _ililIS l)li101lUtIC1ll5 in th

I invoked the concept of developmental state to characterize the role lie Japanese. state played in Japans extraordinary and unexpected post

u. Roll/Ill Don Iinvib/u liiipdi//i.o Jndiistiuil 15//u/i auud ,SIuiie(ui,n/ rtd iusfnueiu/ 1 lunnun. 1970_u)5(1 (Siuifoid: Siantoid Unis,:iu loss, i gSh), p, i Ii.


(he /a/)afl:s/



Ci (Al


J( )i I JS( IN
11111 Iou ii

The Develo/nnintai State

war (nriclunellt. I never sai(l or irnplie(l that the state was solely responsi ble forJapans economic achievements or that it behaved like the state iii commaml econormes in assigning tasks and duties to the Japanese people. N( tnetheless, many reviewers, usually seihidentified as ecOn Imists, allege that I (lid. Thus began one major stream of response to the (-olicept: it was heretical. AngloAmerican theory taught that there Were only two possible eXl)lailatiolls lorJapans wealthit muSt be an extreme instance of getting the prices right, orJal)an was toying with socialism and would sooii begin to show signs of Soviettype misallocation of ie sources and strwtural rigidities. It could not exemplify the role of the state in a market econonry, 1)e(ause even what Adam Smith had to say oti that subject was Ho longer creoliteol in the extreme, rational choice ver sion of Western ecoflomu ifl(hvidUalism.this line of attack on the concept deveh)pmental state came as a sur pnse to mIle. When I wrote the history of MIfl, I (lid not realize the extent to which economics had l)e(oule the doctrinaire orthodoxy of the West ohiring the cold war awl ceo )( musts the oens( li_s of social science deviancy within the Englishspeaking university estal)hshnient. My 1)00k was not even consciously olirected at the world of academic economics l)Ut rathet at such issues as the uses of the state in the setting and achievement of so cml goals, the failures of Soviettype socialist disl)lacemnent of the market, comparative state bureaucracies, and pubhcpriv ate cooperation. Thus, I tended at first not to pay too mitch attention to reviewers who note(L that ill quibble with some of Johnsons formulations (Joiii ecofloniists nal ofAsian Studies) autol I am lIIiti(1 that Johnson hits unnecessarily alien 1 came to realize, itt((I unaiuy econ( iHuists (Journal qj Japanese Studies) bull of Angh ) the however, that nI) 1)00k was an ideob >gical red flag to Alneri(aIl (:01(1 war orthodoxy about economic correctness. That is to say, MITI, industrial policy, Jal)ans economic growth, and above all the icloi of a (levelopimienutal state (ont inue to threaten people on 1)0111 sides iI the Pacific with deep vested interests in the cold war relationships. Thus, without ever contradicting or even coiifrontmg the historical (vi dence I ha(l presented froixi both l)1ewi and postwar Japan, critics devel iiia oved several standard pioys for dealing with itui book. These afl(l suggested. lions oh them have been repeated over and over again. One, I for example, by Kuroda Makoto, MITIs chief negotiator with the Unite I eriotigi accurate is States over tiaole in semiconductors, is that my history

niger relevant because Japan has chauuged amid 110 longer does in a i iii policy iii the old way. Another (compare Karl Zinsmeister for the I hi ((ge lotilidatio)fl) invites readers to imagine how niiiidblowiuigly s I iIi Japanese would be if the state had not intervened. Or I ani taxed ill Ii IIlnlelstat[ing] the eCOfloflllc activities of the 1)rivate sector (Naka iii Iakaftisa) without ever specifying what private might mean in pin as opposed to) the United States or how and by whom tile incentives I lu JijiaI)eSe private actors fitccd were changed over time. Siiiue nw book was published in the early iq8os, several other writers ii. e iaken up the same broaol subjectthe role of the state in the Asian loin ket economiesand analyzed it in contexts (Iiflerent from the Japa lu-se md with attention to other aspects of Japans activities than indus iiii policy. The most ilnportimt of these works are Alice Amsdemm, Asias \u-vi (o-,nt, on the fundamentally different inicroe(:onounics of the 1w leant developimiental state from tho)se reconimendeol by tIle English I.riigniage economics textbooks; Robert Wade, Governing- the Market, on mmiv aspects ol Taiwans economic growth but ptt1icularly on the corpo lIst politics that sustain the declopniental state; aiid Jungen Woo Nicieclith WooCumings) 1/ace to the Swijt, on how the single most im in miut tool oh industrial po)hicv in the growth of South Korea Was (0)11 1111 1)1 finance, Another criticalh ihuul)ortaiut work that theoretically Inslinguishies the capitalist developmental state liomn the Soviettype )nnmnnanol economy, market so)ciahism, and laissezlair( is YuShaii Wu, uum/uii-ative Economic TransJormation .s: Mainland China, Ilung-ary, the Soviet I nina, and Taiwan. In a sense, these works led to) the World Banks unintended paean to u oll0flhi( success: Time i.ast Asian Miracle: Economic Growth and Public Policy I g) The Japanese aidgivnug authorities forced the ideological con set vatives of the bank to write this study its a condition for further Ja xt 1 I misc lun(ling. The study does not actually say anything new and is itch In utmally misleading on fundamentals, hut in the foreword the president itt the Worlol Batik, Lewis T. Preston, writes, This diversity of eXl)eiienc(
, ,

koroul.i vkikomo, Ms ilus 11)001 MHI, IoI-yo IIu.cmuses.c I(mda (jui II i u)HX): Ii; Ku-I Ziii, usssssmti, MI 11 Muilusu-: lacuans Inuliisiu-s,sI lnIIc Dun suit Work, ISu/l(f R,-,-mu-w (Siui/n iju!:i) S-;; N,uk,iisunr,i Eik:uf isa, ru-view, fri/semis Qiuar/mu-f (OcIohuiDuctiuuhu-r I )Ss): !I51 I .i uuuij,ui u- ,uuiuis tallow, u-I ui, Lju .us.isiusi tIn Ito/i S/ms-u-i /ouunusa(, lii,- A usicsjcasu llsisJ)sm /
I .Suuunioui I uu1) : 2127.

(ltialiiieis lolinsoil md 1. It K-Itii, A I)isasni


In \tikiin:



(Smnnu-i I gi ) : Siiidies, Ihe .\atmnal InI,,esl lin,nii, Jnum mnm/ ( (1 01 ill!)) cmii /hi/iiJimii Iiiitiicim, In (I itmirsJ II)II,I!ILI1, 4 I/s (htiiiiii ig/): 4 I_Ili: Isoiii Y1in;iniui.i, ri-sn-ic ot MIII miii,! , in. 2 m/_lsmimn Studies J I I I f,-l)Cifi in!, (i i)S ): /a/mtmlm(-n ili,,nci, In C Johnsi in, /nuusum/ i?f/ms/mimsseci i/mit/mm j, iii tiiiiitlid (5kw, (ii in hunk will lii is-ii us n-vu-is.




iluu u II .njsuIu-n zIsmim \ J (sa,,/: 5smsu//s Jason ausd Lusts- Issdsuslda/j;emisss,s (Nt-ui Yu I,: )\Iou d tJiuivu-isii lI ess, I gSu); kohl-Il \luI(-, (;suzsu-iuusss$ /15, tIiu-t 1mmssiasmsn Ilscsssv asid thu lisle ss/ Cavenususu,-n/ so East Issaus Isidso/usimfsa/moss (luinu eiuulu: Iiiuuu-u-uolu Liou-rsit Iress, 5 I/!u);lus-u-uu Wsuo, i/ills- (us liii Swift: S/a/i isusil Imusesuss-e mum Kaueiumu Iusdu,Iuia/Emm/jm,is (Nes \uurk: I ulunnlui.u Uuiiw-isjj Iiu-ss. i I ): \iu-SIu,usu Wui, Csssmu/smmumm/i-is- Iosssssusiss Iuasss/sssussa/sm)uss- linus loss! (bun, I1ssusiisut, I/is Sovdi-/ I ussass, alit! /Oiisi(s55 (Sl,mnliui uI: Si:mnfiusuI Uiuiu-isji Fri-s,
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Ci IALMLRS Jol (i S( )N
[in East Asia] reinforces the view that eeoiioiniC policies and policyadvice 7 If Jeffrey Saclis illl(l must be countryspecific, if they are to be effective. similar a(lvisers in Russia and Eastern Europe had taken tins stricture seri ) rcstrue:ture th COfllfli1fl(l eCOflOfliiCS 1 oush wheti hwy Wei( ask((l to he1 there, the OUtCoITles iiiight l)e much less vexed and politically volatile. I do not here feel the need to revicw the theory of the developmental state. That I esalnady been (lone quite brilliantly in the works cite(l above, as well as in the articles colleeleel in this volume. Before leaving the subject, however, I would like to mention tw() articles that in my view make major contribut H ills to synthesizing the diflirent aspects of the developmental state and solving noteworthy East Asian puzzles (ftr exam ple,, was Hong Kong before its return to China an example of laissez leire? Answer: no). These are Ziya Onis, The Logic of the Develolunen tal State, and Manuel Castells, Four Asian Tigers with a I)ragon I Lead: A Comparative Analysis of the State, Economy, end Society in the Asian Pa cific Rim. These works deserve to be 1)ett(r known. For my own thoughts em the (lev(lol)nwrltal state alter MITI and tin Ja/ia mce Miracle. see the collection of mv essays entitled Japan, Who Governs? The Rise oft/ic Dveiopmental State. The c1e:velopmentil state exists ;m(1 is in the process of altering the world balance of powem-, whether or not the Anglo.\.rmierican academic and journalistic establishments recognize it. My purpose here: is not to re:stae what has already been well said hut to undertake three lesser tasks: first, to summarize what MITI and the Japanese Miracle actually said, which has often gotten lost in the ideoh)gical disputation about its possible mm pli(atiOns: sece)nel, to reveal for the lit-st time the editorial debate thmt preeele:el publication of the book over whether the Japanese case const tUte(l a model; and, third, to (:onSi(ler the reviews under four broad head ings: (i) Wham was moore importammt, time market or industrial policy? (2) Is Japan a democracy, and is the capitalist developmental state: e;omnpatihie with demnocracy? () Did ,Japans success depend on the: period in whici m it oce;urre:d? and (,j) What is the nature: of l)ureaucraticcivilian relatioims (these terms are preferable: to publicprivate) in the empitahst (levelop
World lt,ink, i/u last Isbn \1,rad,: lonn,,,u Groat?, and lulln Io/n (w Y,,ik: ( )x si. Iirss. I . ol ih t)stlitiloInlil Slit, (nmam1iii ljililni .i.j, 11). ((1, 5. Zisa Cots, Tht : t (tiii 1 Voiir Asian Fa_gis with a t)i.iig,ii I ha, (01),, I I ) lOgIl), 111(1 NIanuil (astcIIs 1.iIlliv( snalssis of the Siao, tzoiiomv, 10(1 SocitI ii) ilie \Siii la( la Rim, in Rich,,,i,I l I?,ni (Net, ,t1t1(t1)l511ii tiOtJll Iis I I(lid(IS(ilI, ids ,SIaIr ((0(1 l),v Io/1fl((iI it, I/u ,-toa,, lao/ic bury Park, Calif.: S;u.g, IggI), pp. 1:17 lad nut s J tilt i oon, Japati, l4?((, (diver,, ? 7?,, lb se 0/ (lie l)evtlo/nni,, 101 Slat, (Nt tv \

iinimt.ji smieme? The:se fi)um areas cover all iiim big MITI and theJapanese Miracle. titmliii:sts I

The Developmental State

time serious

controversies sur

mime imnmediate paragraphs below, I quote xtensively from MJTI and (lit /a/mnece Mjracle in order to provide a synopsis of the argument it con (II is. The esscnee of the argument is that credit for time postwarJapanese (I tiloiflic imiirack sheulel go primarily to conscious and consistent gox III mIIm(ntal policies dieting from at least the: 1 q2os:

I slates first priority will define its esserme:e,.., For more than o years the ;lp:mncse sLime lma,s given its first priority to ecomlomic deve:lopme:nt. Some of lie Japanese states priorities for e:conomic developrnent, such as the imnperi ,,Iisnm of mhe Pacific War, were disastrous, but that does not altir the fact timat Is priorities have been eonsistenm, (Pp. 1056)

the depression required ecolmomjc (leVelopnment, war prepara

fighting required econommmic developnmeimt. posmtr reconsmruc aimd iil(l(p(imdence f romu U.S. aid n

and war

I i( imi required economic developnl(Il t.

ii red iii monmic devtlo ;rmmenm . The nm(an,s to achieve (ievelopimmeim m fi ir (lime 1 iimsc ultimately proved to he equally good 6w the other causes, There are striking colmtiimuities among time states various policy tools over the prear md postwar years. (P. 305) the issue is not one of state inmervention in the ecomtoiny. All stabs intervene in their eeolmomies for various reasons,,,. The United States is a good eamn ik of a smate in which time regulamrv onentamioim predominates, whereas Japarm is a good example of a Stab in which the developmental orientation predominates. A regtmlatom-y, or marketrational, state concerns itself with the foiimms and Proceduresthe rules, ilyou willof ecolmomie: competition, l)tlt It does mmot eoimcern itself with substantive matters, (Pp. 17, ig) A state attempting to match the economic achies eme:nts of Japan must adopt the same priorities as Japan. It must first ef all in a developnmintai statsand only then a regulatory state, a welfiiri state, an equ:mlity st;mte, or tvhmate:ver otlie:r kind of functional state a society may wish to adopt. (I.
11w I und;mmentd problem of the stateguided, highgrowth system is that of time relationship between the state bnreaucracv and

privately owned


Ni ionic it g)

(:h,ilnursoIuyoti. Flo





(luart,rly (i7.

01. 2 (\Iii,


tgg-,): 1127.

lids problem (rup(e(l at the very outset of industrial policy.... Over the past 5(1 years Japan developed and attempted to implemnt three eliffrreiit solci lions te thms problemmiamely, selfe:ontrol, state control, arid cooperation. None of them is perfecm, but each is prefe:rable: to either pure laissez Cure or state socialism as long as forced development renmains the top priority ed time state. (Pp. Ogi o)






The Developmental Stale

The Supreme Cointitacider for tile Allie(l Powers (SCAP) never singled out 1111 (iili;lfl i)ureau(-rac-v aS mecling i)asic ref orill. liowever, SCAP eliminated



rival of the ((OflOilliC bureaucracy, md severely weimkencd another, the zaibatsu. The pn1g1 had little efle(t n the economic miniSttirs ,(ll more irn portant sds SC\J.s i isistence that the economic functions previo isiy shared between the (lilnielit an(l tlii /ail)atsu should how i place(l exclusive iii governmental liaiI(Is. (Pp. 41,
1)! ie major

(01 npletely from J)Olit i(al


cc Is ci

state interventic m in

the imioclei is the perfect ion of marketcc miormmcing the ecoiiomiiy [Japamiese mmietlxxls in

the military;

and it translorme(l

liii I

I catiomi of govermiimiental financial imistitutuomss, svhose infhieiuce is as 111(1 icatmve as it is immonetary;

The Emiterprise.s Bureaus next big initiative .sas the enactment of the For .jgii Capital Law (1 cj-jo) The Foreign Exchange and Foreign Trade Control Law of t 4() had already given the govcrnmeiit power to concentrate all fir eign exchiaimge earned from exports (1w law such foreign exchange had to be sold to a foreign exchange bank within mo (lays of its acquisition), and this powr iTiii(l( 1 iossiimlt tile ( omitrol of flfl)0Lt5 through the use of a foreign ex (hangc budget. MITI ina(Ie every effort to suppress imports of finished goods, parti( ularly those that competed with (loIhlestic products, hut it ur geiutly sought imports of modern technology aiuL machniery. The problem was to keep the Jmrice clown amid to untie the ixu kage in which such foreign tecliiiology iioriiially (ailie wrappedto sepal-ate the hreign technologs froihl its foreign ownership, patent rights, knowhow agreements, proposals for capital participation, voting rights, and fireign rnaiiagers oil boards directors. The Foreign Capital Law dealt with this problem. It established Foreign Investment Conimnittee and stipulated that Vestors wanting license technology, acquire stock, share patents, or enter into aii kind of that proicIed them with assets Japan bad to lu licens cl by tli (f( nntilmtt (P. 2 1 7)

the extelisive use, narrow targeting, and Iv revision of tax iticentives; the use of ii idicative tc set goals amid ccii felines for the entire economny ; the creation of numerous, formal, arnl II liii Ic cm sly oper;It Imig I oruihis for exchoigim ig views, revising policies, oh cccii ii feedback, amid resolvimig (lifferemices; the assigtltmlemit ml sc ocie govern clcict,cl imlmictions to various pri\atc uicl semiprivate ;Issociatiomls (JETRO cc II l.xt ernal hude Organiz;mt ion], Keidunrcn) an extensive reliance omi ; pmrttctilarly the mixed pul)1icprivute v.mricts, to imnplc ccli I 1 milcy iii I ughrisk or otherwise refract orv arias; t lie creat iom and usc 0 I Ice g ivernment of an utic-omisoliclatecl ins estmmieflt budget separate I rom

ccci f Ilot funded by the general account Icudget; the orientation of antitrust ccclii y to deveb qnnental and intcrtiatiomial competitive goals rathcr than I cctly to the iilaimitenancc of domcstic competition; government conducted and developitient (the comptiter imidus and the usc ol the gcvernniints licensing cud appros al lut hioritv tim cc Ic eve de eli )pllimntal goals. Perhaps the no nt imnpc crtal It marketd:o nf( n-nfl
cs )


gccscrnmentspomisored research

jonit ventures,

ig I Ilethod (If Ill tcmveution is achni im list rat ive gumd;cn It is necessary ml) 1)1(1 overly detailed laws that put a strait jacket mi c reative adlmciiuist ui
... . . .









Specialists on niodermi Japaii will differ as to the precis elements and the weight to ix atta(ll((I to each eleiiient in such a model, but the following. based (ill the histi wy of MITT, is imi ( ,wmi estmnlat u in of the essential features of tileJal)ahlcse (hveloi)mehl(aI stat The first elcinetit of the mncxlei is the ex istenue of i small, inexpensive, limit elite state bureaucracy staffed by the best managerial talent available in tIle system The duties of this bureaucriuy would be first, to i(lemstifv and choose the industries to be developed (industrial strti( tuirm jiolira) ; s(sotUl, to i(Lentil and iioose the best ineamis of rapidly de eloping the cll( 15(11 ill(hlstries (industrial ratioiializatioii policy) and third, to ; supervise competition in the designated strategic sectors in order to gu;mrant(( their economic health amid effectiveness. These dttties would be perfortuexi using mnarketconiormmg methods of state intervention. (Pp. 31415) The se ond element is a po1iticml systemil in which the bureaucracy is given sufficient scope to take initiative and operate e fbc tively. Tins means that the legislative and juduial branches (ml govermnneiit fliUst bc restricted to safety valve functions A iiotlJajMnese example would bc something like the American legislative branchs relationship to the wartime Mamihattami hrolect or to tue postwar nuclear stibntarimie dcveloprnent program. (Pp.

Highly detailed statutes serve the iliterests pruIlaril of lawyers, n( it ccl c levclo miiicuut 1 At its best Jaliauesc admuilmiist iativc guidlahlce is 11)1111 ).1 ci dc to tile discm etionars authority cut rust ccl to a dliplc itmiat i iegotiat i ig an lilt e rmlati( dIal agreermient. Success depends upon Ills skill, goc )d seIne, am Id i mi I (gIl ty, and m i( it on a set of legal requlrelnemi is that 10) tnat I er lioss well crafted cii m sever truly tell a negotiator what to n lo. (Pp. i 7i

elcmnent (If the model is a pilot organczatioml like Mill. experiemice suggests I hat the agency that (Out rols imiduist tial policy (( ii ceds to mnihimie at least planning. em hergy, doniestic production, ilite ri i;c tloml;ll trade, and a share of finalo-c (particularly capital supply alicl tax pol ny) The key c:liaracteristics of MITT are its small size its indirect con 1101 of governnient funds (thcreby freeing it of subservience to the Finuiice

lIce fourth amid fitial



Nllmhistrvs Bureau of



its tlilmmk tank ftmnctions, its vertical bu

ia 115 fcw


implemel ltat loll of iiulrtstrial Pc li

at t lie


le el. andI

its iii

Iternal cleniocramy. dcmnc uracy.

cli cstnah

It has (Pp. i



cquicvalen t ill all, other

ads ancc-d

q o)




Many of these ( uotatiotis, particularly the fourpart model, come Ironu 1 I te final chapter cf MITI and the Japanese Miracle, titled A Japanese
Model? fhis chapter did not exist in the original mniuluscript but wits .oided at the insistence of the chief editor of SttmiIrd Univei-sity Press. Al tilcmtigh usually such editorial decisions are of no great imnportance, ex





(ui i ii

The Developmental State

ii ilistries particularly,

e:ept perha )s to the author, in this instailce they relate to what is perhaps 1 the single most important question collcernmg the Japanese developinen tal state. Is it duplicable? Is there really a Japanese model? What are the general, culturefree lessons to be learned from the Japmese case? There is no longer any question that the Japanese use of market mecha nisins for developmental purposes has l)eefl suCcessfully elnulate(l in other countries. The most important exaniples, in descending order of their ilis lance from the Japanese precedent, are South Korea, Taiwan, Singapore, )itahst developmental states 1 and i-long Kong. The growth of these live ca has also ten(led to promote growth in the surrounding areasthrough trade, investment, emulation, and other inlluences. During the 1 ggos, the Peoples Republic of China also began to adapt the institutions ofJapaiis developmental state to its own Leninist heritage, a command economy it was attempting to (lisrnantle. Beyond Japan and the NICs, this growth has often occurred without an exj)licit pilot agency such as MIT! and has pro duced severe economic and envir( inmental dislocations together with high levels of structural corruption. These were the primary reasons why Thailand aiid Indonesia were the countries first affected by the econonhic crisis that began in 1997. None of the Asian cases is a clone of the Japa nese experience. Soirie followers improved on the Japanese model (for ex ample, state control of chaeboithat is, zaibatsubanks in Korea), and oth ers ignored Japanesetype controls on unchecked growth and paid the consequences (lbr example, repeated bouts of inflation in mainland China). Nonetheless, its is made clear below and in other papers in this xtiticmihtr forms of state guidance volume, all the East Asian cases relle(:t 1 (lemonstrale(l be efiective that were first to by Japan. was however, the takehome message I had in mind when I was That not, history of MITI. I never doubted thatJapan was a better model writing the capitalism, but the second and third worlds than AngloAmerican for 1)0th broader (oliclusiori difierent point trying signal way of a a I was to by namely, that the learnfromJapan craze then sweeping the Unite(l States was danger( usly ahistorical and simpleminded. I conceived the 1)00k ii ternis of eight chapters: an introduction to the Japmese developmentil state, an anal}sis of the functions and status of the Japanese state bureau cracy, and six chapters on the history of Japanese industrial policy fi-om 1 g2r3 to 1 fl7i. My l)rimitiy locus was the prewar and postwar continuities, both institutionally and in terms of personnel, that my research had re vealed. To the extent that I had a didactic purpose at all, it was to stress thatJapans case would be hard to emulate. If nothing more, it depended to a large extent on losing a big war to the right people at the right time. The only reviewer who ever divineol this message from the pullisheol 1)00k was Walter Goldfraiik. i-Ic accepted thit the structures arid l)rite ticos of MIT! (Ministry of International Trade and Industry) and its pie

bear primary causal


ivili amid diversification of postoccupation apanese inolustry. lie bit asked, Is this history generahizable? His answer (and mine) is, Yes, Iii ii ly if a nation is similarly eonimitteel to the mobilization of industry. liii Japanese ease is actually One e)f an economy mobilized for war but ii (5(1 demobilized during peacetime. The: political costs of running an

fo)r the

omiy in this


were not ones that Americans


Ronald Rca

were about to) pay. Although he (loes not l)ut it so baldly, wrote II tank, Johnson argues that the Japanese model is not transfe:rable:




omletmic bureaucrats enjoy a scope and initiative unthinkable: in U.S. while its planning and control mechanisms have: evolved through

seqtmeilce: of conjunctures and state interventions that together have mitt ted to a long and nonrepeatable: learning process. That is cer one of the conclusions that I dre:w ironi my research while: I was in lii process of doing it. I had no doubt that othe:r Asian, African, and at iii American nations would try to) emulate Japan, hut I did not recom iiettd that the United States try it. I instead stressed that the United -(tat(s woulol have to match Japanjust as it had matched, hot col)ie(l, to 1JSSRwhienJapins enrichment starteol to) turn to) eflll)owermenit. In I iitg so, the Americans would have to draw on an(l perhaps reform their wit particular national heritage, not copy that 0)1 a country fifteen hun Ii ed years olde:r than the:y were. I wrote: niy history of MITI during the summer and autumn 0)1 1 q8o, it tel sonic eight years of rese:arch on the subject. I then submitteoI it to)

which had already pul)lislle:d three: earlier J. C. Bell, was one of the most talented a ;olemic pul)lisho:rs of the: time. I-Ic had e:xtriordinary knowledge of let i(ls in scholarly publishing about Asia and an almost perfrct ear as an -di tom-. I trusted his advice: about the: structure of my manuscript. On Do: eItIl)er 29, 1980), Bell wrote: to) me, in piert:

oaiilord University Press,

)ks of mine. Its chie:f o:ditor,

A strong last chapter seems to trw absolutely necessary. Such a chapter might over sonle of the same ground as Chapter i, and is ould surely make tIle saiiic basic point that you make: in Chapter i, but would be s eiy dii ferent loin Chapter 1 by reason of its referen ces to specifics now known to the I caner. Without such a chapter the reader is baffled. Which of the arious el clileuts of MITIs success are to be considered central, anol how (10 they late to the others? The fact that they get the brightest guys front lodai? The tact that so many highlevel bureaucrats go on front MIII to) become high cx citink os in industry? The fact that MITT operates in some terrain between state sociahisni and laicsez/azre capitalism that is fre of the major drawbacks

55 aln-r Uohtt ii,k,

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So o1o



6 (Nos ,into-r 1 $;) 7it

Ci t.tiviiits Jot INSON ol 1)0111 (xtremes The Lu that MIII somehow has a uiaiidate to (liticUlties, plan I(( ordingly, atid get its plft5 ernho(lied In legislation? What (10(5 MIlls 50 (ar (X})(ileli(( atI(l UI) to? What is tile takchonu lmssage?

The Develop tnen (vi State



i i ii


On January



I replied:

Iii the case ol MIH, I lrle(I to write a ilarratlu history about iiow theJaj)iiiiese ongiiial state economic apparatus grew (soniething that I believe histories (if Inlr(alI(r.uI(s 1(15 rare), (01111)11 (((I with tW( I (liapters (01, re Sill!

sj)(ctively, t Ii& Jalialiese (5( )LiOtil) and tlit Japanese bureaucratic polity. on OIflnl(itt that the ette(t Lot the narrative insloryj iS 0111 ol tccideiit, expedi (fl(V, (:h;n)ce iea(ls Inc ti 1 think that I hav( 511 (cee(l(51, even though you ( l( inl
it, Si! ice that is Irecisel) tile I nessage I wanted to oiivev to afl couHtrV tlunkiig of setting ui its oWn MIT. [lie narrative is whats original about this hookit is really hidden history. Most hooks on J;ipi([1 (10 not eVefl mention Mill, let alone the Ministry (ii Mtiiiitioiis. All books that (10 IflIntion MITI do in itliing more than thatbe ause i i h ulv kin IWS anythi ig about it, and the iiiinistryIike all hureau( raclesprelers to rettlion confidential. What I coil 1 11cr (11 Ic but (a) the time lr;ime, aii sider rigi iitl al)otlt the hrn ik is 111 It ha larger tune Iraine iflt() (olisid(rlLtiOli; this take must why the external observer (b) the identitication (it Sotne kes political ;tutors in Japan who are normally f/icy are bureaucrats (i.e., Yinliiiio, Sliiina, Kishi, Saliaslu, (verb okedbeca etc.); and (c) the detailed analysis 01 the Whys iii which an effective state bu I certainly could wnte a last chapter, but some of my coii reaucracy works chisioiis \%OU1(l he (listiil(tly (iowrih)ehIt and pirhtps uiin((eSsarlly harsh ioi the J1tpa1s. I (10 not think, ti r exaililile, it would be nue to say that t;misiii I be goi ul I( ft a Iiati( l1, ( ft to (all the final (ilal)telh(s at ont time I was t liink ii ig ot (I( )itlg iI( oii the Mo nulert ul F lks Vt hI Brought toll Pearl Harbor.

de floce, an extntplary model in its own right, Bell never let Inc it was written at his insistence and that such advice is what Ii edit ilig is tll about* Iii liv I agree with him. But, amiltlyric;tlly speaking, the issue still re IIIaItIS tillIt it is hard to abstract a model front historical reality. This is
I iii

sot.iiided like the piper 1111(1 Widke(l oil a (liii. The book I llI)ter that set ftrih aJapanese model, regardless of whIther I lit me;it ii ig srtcii it model was a good idea. When (itry AhliHsoll later it a i eview for the American Political Science Riview that cilapt(r () was
ii tI I i(hIt







t lie errors of both the Marxists 1111(1 the neoclassical economists: i\(IgCfler1(lizt the histories of Germany and Irtnce, On the One imith of England arid the Liiited States, oii the other. These kinds of

Is ii e not flew in what are called thic social sciences_Bentham be ed lie could draft a system of laws for any country Irotti China to Peru, Itisseitu actually drafted a Constitution for Poland without ever it ig t iteie. - But any social science worthy of the fl1mle, it Seetns to me,

leal with 1)0111 the gelleralizitl)l( iifl(L tite particular without ruling the other out of cottrt. The current fad for rat iolial-ch(oice tiit 0 1 iit(l other forms of extreme ecomlolni r((huctioliisni are sit)iply tile litIst (xhtmples ((1 httlenlpts at social science that fail this (lemileiltary test. I hey ate coinlnnations of sterility and hubris that reselnbie Scho1tsti



develoj)mental sItte actually exists in time and in East Asi;t m(h 111s() exists as tn abstract ge11eraIiztt bit about till ssem e of the East Asian exaitiples. It is both p;trticular 1111(1 geiieraliz
lii e


I believe that the


Bells reply ol January 7 was unyielding:

i\ow. ti (eli wi let her argi.iineIit (If I Lamit ve, there can lie (10 SeriOtts (hI (HIlt on should set torth your corn lusions that till 1)00k lIee(1s a (mclusioii might regard them as downbeat, some (slIders without regard tI whet her proLIs(ist, unnecessarily hard oti the Japanese, mean to Fldridge Cleavei etc., so iiiiy that you say as courteously as possible exactly what you tlutik the You should let all us (Ilickelis in on the takehome lacts warrant saying message, whether tills in that accident. (xpc(luIi(s, chance is the ltamt ot the game as opposed IC) the various lorms of econonlu, ra(:ih(l, and historical or whatever. Because us hlckeiis caii read what you wrote, determinism. hut us cant read IVilat you tltink ahottt what you wrote unless you write it. Dig? OK if its tlot socko, better if it is.


It en belore MITI and the Japanese Miracle was pul)iishedl, oflicials of Ill had heard about my research and approached mc for permission to Ii tiatishatioti, TIit JETR() officer iii San Francisco, who reported to II ikyo on activities at th( University of Calithrnia, Berkeley, where I was thIn teachitig, had written back to his ministry about what I was doing. II iethcl(S.s, the lriiriistry (lid (lot know much about tm; I had not spent a lIlt of time interviewing at MITT, ami most of my research was documen lit v, except for a niajor interview with fin-nier viceInillisler Sthashi iht igeru. Each of us shotthd probably have been Irtore (:autious about thit lIt lIe! before agreeing to work together.
I in ,tI1isoi, 11511w, !li1hIHCflfl ( , 1

There it wits. I had asked his advice and he had given it. He once coi It Inente(l that the original manuscript ended the way bagpipe music usit



Io//(,rnlS(i,flo 1IiS,7, 77 (N1;j( ti

LIj)IIII tor IsIihin(tiIir
(It tti(-I





I5.Uti]ijI.. of

III.pI.i(r(1 1IIflVII,hLti..Ifl, Ii 111(1111 (fluId SIpielllher






The Developmental State

i,iliut, Is

A Senior MIT! ofiicer, Yama(la Katsuhisa, the former secretaly of Miyazawa Kiichi when he was MITT minister arid in I q8) head of the Planning Office in the Ministerial Secretariat, Hew to California to say that the ministry itself wanted to translate irty book as a way of instructing new officers about the (lillicUllies OlJa})ans i)ost7ar highspeed growth. I agreed, and he arranged for a group of bright, young MIT1 officials, each partly e(iUCated in an English or an American university, to (10 the transla lion. They were unpaid and did the work after hours. I met with them on several occasions in Tokyo to resolve problems. They (lid a good job, and the terms hattenshikokata kokka (developmental state) and kiseishikokala kokka (regulatory state) became better known in Japan than their English
1 equivalents (lid in the United States. MITI also USe(l the translation 1(1 l)romote tlie political career of Yitn() i as vice minister and the followmg ear ran Toshihiko, who i-etirecl in 1 successfully for the upper house of the I)iet. lie is the listed supervising translator (kanyakusha) even though he (lid not actually participate in ilie work, and with each copy of the 1)00k the ministry included a long di alogue between me and Yano in which he repeatedly sas that I got the history right but (lid not pay enough attention to the ways Japan and the ministry were opening up to the outside world. My book thus helped tnos political campaign and MITIs public relations effort to con 7 both \ vince the outside world that MITI had changed. Yimada suggested to me that if I would write a sequel about MITI after 1q75, stressing Japans commitment to internationalization (kokusaika) he would arrange in t(fli(Ws with all tile theii liing ministers and ViC( ministers. I declined oii grounds that it is imj)ossil)le to have perspective Ofl a governmental )lementing policy. But it also oc 1 agency while it is actually making an(i iln curre(l to me that I was being set, up to I)ecome the ministrys captive po pagandist. There is no (loubt in retrospect that it would probably have l)een better if I had entrusted the translation to a scholar (as I did with the Korean and Chinese translations). But having the book pul)lishe( I with MITTs blessing ensured extensive reviews in japaneseil was brief lv on the l)Usirless books 1)estSeller list in September i 982and that it
, ,


t,, iiism that never acknowledges its name.

Is I Ole and that

Ii, which was of course J)recisely why the nhirlistry translated hi a i it her hostile interview with Bernard Krisher, the then MITT mii i, \f Sliintaro, used my 1)00k to defend the ministry. At one point in ho ii, t ci view, wrote isher, Abe came close to l)oasting about this P iiisiii. 1-ic rose from his desk to fetch a copy of Chalmers johnsons 11W l )ok, MTTI and the Japanese Miracle, which describes the origins and I .itiuiis of the system. This system was the MITT way, a quiet protec
iii gi owl

iwatake Teruhik() (MITI, 1qfq) wrote, The value of this showing the great (ontril)utions of MITI officials to high

lii Ii iglish, on the other hand, the ministry has consistently argued that of industrial phcy have been overstated by foreign oh (15. In the early i qos, Japanese propaganda organs emphasized the .iI cirdun;tances surrounding the lgSosiqHos when MITT was hy in tive, and they listed ways in which Americans exaggerate Japms in intl ial policy. A (lecade later, they were still at it: Then are even fine who argue that Japan is fundamentally different, with a set of rules hit ire [ic] incompatiblt. with those generally accepted elsewhere. I,, fapan, we use tile term industrial policy to niean those government Ii it egies that are put in place to SUp)leiflent the market lnech;mismn only sshi,ji and where Ilrccssuv. Ihie point is Ol)ViOU5. MIT! is (Inphatically not an academic research g.m. It has always taken shelter in secrecy and likes to confuse its corn ititors with (lismforrnation Tn 1973, when the ministry changed the nile (if th( Enterprises Bureau to the industrial Policy Bureau, some ofocts complained that it was not a good i(iea to say too publicly exactly is fiat that key bureau actually does. In Kozo Yimamuras review of MITI ui,o/ the Japanese ?vIirac/o he goes out of his wily to reassure an unknown \I Ill official who, he says, wanted to issue a denial that the ministry was is iower ml as I had (lescnbed it. Not to worry, writes Yaniainura, There or ziiany of us outside Japan who (10 not believe MITI in effect runs the I.ml1mcse economy or that MITT has perfected the art of industrial poli
Iis.,t,k, T,ii,ti,k,, in i,oo,, jvnnaiu. Spieiiiti,., I gHo, pi. I 7. th rood knt,,,, intIr,i,u, ot Ui, St,iiit,i,,, lin(i,,,,, Oi tot,,r , fSo, 4 io, j(i. is. Jipin t,( iiiloflhIQ I0slitu (JIt) (if Iiiirjc;i, Jopaii i iii(/U.i/,Io/ Io/irio (W.,shjni,,,i IF!, if)54). Flu F! is Ilglsi(icd nn,t,r ito hiriign .\iiiis Rcisii,tI,,n Ct as ii, ((I Ito Jtiiii,s, (;oo,nnw,it Sc, it.so/o/,o,, ., Poit , !nd,,.,f,/of io1 (Iokv,, p 1110, 0 is ipS), uvti,, Ii i knosvIdgvs it :,, nd isin:il potiiis ti:is, iIIO(ti ii ioiisidii:,ht, 1 (00 1, I,iilo,, to ti, ipid ixtiulsioii ot itiiJ:ipincsi. icoooii, ni roiiit,iii:itioi, with t:,s,,i,tit, Illici niii,in,I ti, lois mu hiah I,ii4s of iitoC:itioii, J:,pi slut, (Ilij,tovn,,ni pl:iitii es, :,iu,t iii.ik StiiLi,hot(t,r (,iIlti,,t of COiilp:mflh,. g. J:mpin F.( ,,nonih hnindoi,on (JEF), /0/mn: I Iii/nrl:,. on /ni/iot,/ol iS/ny (h,kvo ii,tu, 1(1(14) tip. i, 2. Thi ji:i: is:, tlFI-ci,,t,. looiid:itj,,o

would be widely read. Looking back on it, MITT may have more regrets about translating ii,v book thaii I do about not ensuring a scholarly translation. The Hnnistlv has always been ambivalent about its own history and industrial policy, lc pending on whether it was writing in Japanese or in English. InJapanesc.
MITT officers reviewed the 1)00k lavishly. In the official house organ

(:h,lin,, Johnson,

!,usan.,ho to

Ni/iou no hiiki p.
21 I.

iiOIlS. V,I1()

Toshihiko (1ko: I IS

tiiiiai,iii, I

,,. , ) pi. 2005. t,,,,ti,r 1 .\,I.k,, lhi,S1iOcS, Si




Tue Developmental Sta1e

II .011

I think Yamaniura misunderstood his informant, who was cymakiug. merely trying to preveilt foreigners from finding out too much. Much the snfle worry was expressed by Kuroda Makolo, MITIs bestknown hard line negotiator. tier Sonys Morita Aki() Wrote aboUt how Japanese capi talismmi dilfrrs Ironi AtigloAmericami capitalism: We must not provide a dangerous basis br the argUm(flt that says japaii conehicts usd1 by a (Iii or some lime I leie nt set of rules and must be treated dillerently have reJ)eltedly stati(l that we 5110111(1 aVoi(l expressiOnS such is Jal)iL Just a frw years alter his review, even Yatnamura nese-style practices. was asking, Will Jaj)amis econoiruic structure change? Confessions of a h)rmer optiflhist. MITT is not imutereste(l in abstract analysis of the Japanese economic sys tem, and while its translation of my hook may have serve(l its interests at one time, it no longer (li(l so a frw years later. Nonetheless, because of its ,romnpt translation, iiiy 1)00k was widely read arid reviewed in Japan as 1 well as the Umte(l States. liraiwa (,aishi, then head of Tokyo F.Icctric Power and later presidemut of Keidanren, conclU(Ie(I his review by saying that Japan nee(Ied a new MITT fi r the peru ul alter 1975. A leading au tofliOtwejOUlniil castigated MITT a.s industrys overprotective mama afl(l as a bureau(:ratic sokaiya (corporate extortionist). Takernura Kenichi, a journalist ol the pulp magazines, used his review to tell Ronald Reagan to provide soiiw real inCentiVeS for peop in the United States to save to stop protecting declining industries and the lawyers who represent them, and to create modern trading companies that can compete anywhere in


no is aimmong bureaucrats amid civilians, clearly overlap. No )mmethe )viiit;ts framework is useful so> long as it is not pushed too fM.

Ii is lime compatil)ility of time developmnental state with democ racy

1,1cC s imn,u. Pomicy vrsus rum: M.RKl:T

the workl* In this varied context, I receive(l my iliost comprehensive review in any language. A doctoral candidate at Keio University, Oyama Kosuke, writing ill the obscure Kikan Gyosei Kanri Kenkyu (Administrative maiiageinellt re search quarterly), presented the books argument, reviewed major fom eigfl reviews, and concluded that my 1)00k raised tour 1;u11(lauIerl(al issues of continuing coiitroversyH I agree with him. In the pages that Ibhiow I want to analyze each ob Oyamiias tour categories, laying out what is at issue, what is obten misunderstood or obscured, and where the controvem sies stand nearly two decades after the 1)00k was published. It goes with out saying that this categorization is somewhat artificial and that some is

\,tllELltflhlL, l(VI(W,



ed iii (1,,elico IsinhIlsOhl lic,,ui sl,,itie, Aptit l(t2, III) 17(1 kOIlOCIL Mui.()t() ic (:epiialisiii: The feje.eIItSL Dii tile 01, Cali/orum Mneingeiflitt Iiev,,et, Sumeihel
j). 5.
22. jaje;eiies(

Iu,u Y,tiieecimteca, ed, /0/Inns lAneininU S/r,,cleeo: Should it (;hnnrs? (St ,etde : Sn heI ieee Simiehe, I jgo) i I 1 H2, e. coo; /idet lea llaneleai, (idol 1 1 tii.uw.e (.eistie, review, tnilue?, Scpieieehei 21, L( p. 55; I;ekeinur.e kenielti, res jew, Sleeehaee los/, Sepienihee IC). I (Met te i gS). 24. Os tioa koseiki, its ew, Kiknee (yossi Knee,, Keeehyu, no.

first point concerns the question of how iribluemitial the Japa stales industrial policy was and how munch of Japans highspeed 10)111 ic growth was actually the result ol market forces. I Ic; cites its spe lie n )I(sentatives of the mnerket borcc.s school Kozo Yitniunurii in his re ie lv of 11111 and the Japanese Miracle in the Journal ofJapanese Studies and iii iya Ryrmtaro, who (luring the 1 gSos was Japans bestknown exponent .\iigloAmericami ecoilonuics and a critic ob MITT but who subseq uently Iii ((I as a professor arid went to work for MIT! as head of its research in .111110. Yaniamuma immdeeel poses the question directl y in his review: To is fiat extent has time postwar econoumc peuforimiance been olue to tIme poli Iis ic! a developmental stite and to what extent to market forces? mu imamnuras alternative explanatiomi to the elevelo lmiental state is that eaii WS still catching up witlu the West and was lucky iii many ways. tie ;iisoi throws in the old canard about howJapami was about to> undergo I eelni;mimiental structural change that would reveal l\IITIsacconiplish ii (Ills to) be meaningless: I have the distnic t. frelimig that Johnsomi will C inc to regret all this discussion concerning MITIs effectiveness amid hell cc o>1 the other laudatory remarks he made about MIII. Because when i;nm too begins to have its economic woes, its it clearly has begun to hive, MITTs I)atting average is going to eleclimie awfully quickl y. In this ui i.se, I thinkJohnsons 1)00k came out len years tOo> late, I do not know whether Yemamura came to regret his prediction, but .ipali went on iii the decade after he wrote these words to extract a (:0)01 II II ion dollars from the rest of the world while racking UI) the greatest timde surpluses ever recorded. Even when the Japanese economy fell into a selhinduced recession in the 1 990S, its households cOIitumUe(l to save h ese to a filth of their income, it became the creditor nation to the rest of time world, imiclueling the United States, aml each year the government invested several hundred l)illiOmi (10lltm5 in infrtstmucture. Are these the ccl )nomi( We)Cs Yamanmura had iii mind? As for Yamamuras own eXplaflationi for Japans highspeed ecoiuomic 41( cwth, it boils clown to good luo:k, Yiiiruamura believes that imidustriid l>1 iv was not important in Japans oalcluing up with and overtaking external

\ellveneeIee, hes iW, pp. 212_I;.



p, 214.



Ci 1A1MIi{S


The Developmental .Sta


rfirerice e(:onolnies because the winners had l)eefl in ellect prese leCte(l by the Western natiolis.- AllJapaii had to do was emulate them. lie does not go into wh among all the nations allied with the United States, Japan was the only one that carried this catchup strategy to the point of altering tin. world balance of l)ower. As far as he is concerned, Japan was just luc:ky. I would argue that the very contrast between industrial policy and mar ket forces is hilse and l)roIlLI)lY ideological. Industrial policy is not an al ternative to the market hut what the state does when it intentionally alters incelitives within niarkets in order to influence the behavior of civilian producers, consumers, anti invest ors. Ameri(:ans are perfrctly flimiliar with the states struclurmg the domestic real estate market to 1ivor family ownership of houses. American in(lustrial poticy1llows its citizens to (le(iuct mortgage interest payments in calculating their taxable income, an(L they respond by obtaining and carrying large mortgages. As Richard E. Caves concludes from the smw evi(lence that Yamamura dealt with, the analyti(;al issue is the overall pattern of business incentives create(l by MITI has enough instruments to create substantial MITTs policies positive in(iuceinents for many types of conforming decisions by the l)ri vate sector; it can also make life thoroughly miserable for any company MITT has been able to guarantee a fat price(;ost that defies its wishes margin md easy access to needed inputs for any sector it chose to en courage. Altering market incenti es, reducing risks, offering entrepre neurial visions, am I managing conflict are some of the functions of the developmental state, as I have demonstrated historically anti as some economists have started to (lemonstrate theoretically. There is a powerful argunlent thit can be mil(Ie against industrial pol icy, but Yiinaniura does not make it. The real objection is not to its use as an alternative to or a displacement of market forces but that it is more commonly used to protct vested interests than to achieve national (Level opmeiit. The state can. structure market incentives to achieve (levelol) mental goals, as the Japanese case clearly illustrates, but it c;m also struc ture them to enrich itself aiid its friends at the expense of consumers. good jol)s, and development. Several reviewers of MITI and the japanee Miracle made this point. Robert Reich, for example, stresseci tlIatJaJ)an 5 private business strategies depended on its public industrial policies Neither could exist without the other. But because the United States has an &tsfly lol)bied government, its industrial policies ser,e piittril

ii Iii

[This wis] Herbert Hoovers dream which caine to brief fruition iii I ii Is liii I )elano Roosevelts National Recovery Association. Neither pro I Iii direct review by, or accountability to, the people in the factories, is ii legions that will be affected. This was even more true in the i I iiltemporaiyJipan from i 925 to 1975, a point to which I sIl re iii iii ii it next section. ii ( leaving the issue of the economists and their views on industrial hi v, I would like to raise the question of why arguments like those of iiiiiliiiiia, although logicall} flawed, recur so often and with such ehie ui ill Englishi-languagl discourse. I believe it is becmse they are ideo I ii ii. Although there is a contemporary impulse in academic social sci ii C lii oveilook or (liscount ideology, Martin Malia reminds us of the iii doing so in the case of the fumier USSR. One of the most embar I sicig failures of reusionist Sovietologists was their inability to see tIle I tins within the USSR that led to its (oll;mpse. The key variable that they ii sislei i thy discounted or misconstrued (hiring the last three decades of I II Si iviet Unions existence was ideola )gy.H lit ihaling with Japan, Western ideologists want to defend Western lais / liii e capitalism against Soviet-style (hisplacemnent of the market. A ccli ii ii ii leohogical dimension of the cold war was to posit a free market 5}siii iii which the state served only as referee over and against the socialist hlspI:iceluent of the market for state ends. The achievements of the Japa I SI (levelol)mentLl state Were inconyenietlt for both sides in this debate. I hii illustrated to the West what the state could do to itnl)rovt the ottt iiies of market forces, anti they illustrated to the Leninists that their big ii isI,ls( was the displacement of thit market rather than using it for (level pluiental purposes. Western i(leologists sensitive to these issues are quick to intervene in his issiomis ofJaI)amse capitalism. David Williams has noticed an interest I Hg instance in the book edited by Ezra Vogel. Mothi-nJajx,nese Organ/:a I/ill a/1(l (i q7) Williams observes:

isIs of )Ohitically wellconnected, declining industries, not the II high valueadded jobs for Americans. Rapid industrial change, Ri Ii, is relatively easy to achieve when the leaders who plan it

uriotis worries about politics

iii ;mssociatjonist statea



let cr1 Drucker, the dean ot American business experts, wrote in hi ohiiiiie 11111(1 lconomjc Realities intl listerprise Strategy (sc in Vogels ilhii:t ion, Drucker.s art i( Ic is un mnrdiaii Iv lollosvi d hisselltimig commnrllts by I high litrick.Wh we must ask, should

article lor A unique h a set of the ;irgtm

27. Ibid., j). 2





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ITlOSI ii ltlii(iiti1tl stll(IelitS 1)1 W( 111(1 lRiSIii(SS tRiI(lS fl ( u 1 ire i iii ediat o )rrectiofl by tn ecOflOiniSt? The reason is actually quite 1)01(1: I)ruckers conclusion, thatJaj)anese firms pt11t financial ends other than short term profits, denies one of the key tenets of mainstream economiC analysis. The universal reach of classical political economy requires still rejec tRill of the very idea thatJapanese economic practice COttl(1 differ in any sub lu.\ineiican ecOnOmiC l:1 h definition. It was 1)e 4 stamitial way Ironi Aiii cause the issum was so ftmn(lani(ntal ii) all tlieormtically aware ecollofliic (liscLlSSiOfl thi:it Patrick was forced to attack 1)ruckers coiim1sions, as it Were, ott the spot.
fll(iits ( )l ( )H( ( )t t lie

The JJtvelupmenlal State

scientists iii Japan coii this obfttsration by agreemg that Japan was really just a late I 11111 ig version of American democracy an(l a proper place to apply st i:il voting stuLies, gametheoretic electoral rules, and principal it I Iteones of bureaucracy. Even to suggest otherwise wa.s revision ciii I Japanl)1tsliing. I imsi ilt is that there is still not even an elemetitary mapping of the i ilIeS( governniettt in English. There is ito history of the j1e1v Mm II ci I lome Allairs (Naimusito) the [)itlna(le of the (leveloplttental it itt It ii it was disniembered into many othtr agencies by the Americami II):tt ion. There are also no histories of the Ministries of Finance, Jus ii, ( icttstructioii, Transportation, and so forth; no analysis of the thou ciii is iii nonprofit foundations (zaidan. hojin and shadan hojin) created in I In 15 and t ()05 f( ir bureaucratic purposes; and no understandimig of I Iii, if anything, chatigeci wheim during 1 qqcy Japan changed parties ii I clinic ministers four times. Writing in iqq in tlte mtewsletter of the Iii title of Social Science of the Utiiversity of Tokyo, Professor IIiwatari in ihiimo confesses, Political stu(hes of JaI)aml have lint yet I ully ad csse I either the symbiotic rehimt tomiship between the lnmieaucracy atm(l lit iciafls or the role of political parties. We still need ui understanding ci In Japanese state. )i te petsistent. thetne iii the reviews of MITI an.d the Japanese Miracle is I a I I lie book caine dangerously close to a (lelelise of las(isnt. Foi eX1liit itt an insightful review of the book, Christopher I lowe says: ( )iie iiiay ttcstion whttliet iii his [Johnsons] coni})arisons with systems such as liii iii the L.S., he has adequately weighed the political implications mif icc existence of suli a powerful, semniautoitolnous group in society. For c. I lie authot shows, from 1q31) 11w saiiie group that devised the postwam cc itclc worked hard for one of the most despicable political regimes )(Ii(1tCd in the twentieth century. Murray Sayle echoes this point: icc his magisterial MITI and the Japanese Miracle, Chalmers Johnson cred Is lie capitalist (level(q)Inental state with being a genuine Japanese in ii OIL With respect I believe that Mussolimii holds the patent, although cc iever got his model to fly. Richard Nielson adds: There are severe cfitical difficulties in a deimiocrtcy to efiectively unpiemmient an industrtal pc they. [Johnson treats] the political issue asaconstraint. Indus It il policy was an important coinponetit of fliscist ideology. And even lice (histinguished theorist of technology J)ohicy kodama Fumtiio worries icccitv Japanese and foreigners (notably E. 0. Rcischauer, former Amttemi


t lie Japanese state itself. Many political

liii cl


Given these i(Ieological considerations, the subject ofJapan as a (level opnwntal state arouses resistance to its dispassionate stU(ly that has grown only more intense since my history of inciustnal 1)0110 was pub


ANt) ii IF: D1:vF:t.oiII:NrAL SrvrF:

In his review, Oyama stresses and agrees with my contention that in the Japanese developmental state the politicians reign and the bureaucrats rule (seijika wa hunrinshi, kanryo ga tochisuru). lie also notes, however, that even though Japan is ruled by bureaucrats, it is more democratic than the military and/or bun nmcrmtic authoritarianism th;tt prevailed iii all East Asia and many regimes in Latin America at the time. Yet, he is also concerned that MITIs policies have streflgtliene(1 the abstract entity called Japan hut have not cLotie much to enrich the lives ofJapanese con sinners and city dwellers. The Japanese peoples standard of living did not change anywhere near a much as time haiige in the JaI)aneSe gross nit tionid proltut. Furthermore, 1)ecaUse I stressed that after MITI officials failed in the i g(ios to enact specific new legislation authorizing their or ders to in(luStiy, they continue(1 their oversight anyway under the covet of adtnmistrative guidance, the question natuially arises: Is Japan a (lenlocracv under the rule of law, or is it merely administered through law wheit convenient? These critically imJ)ottaflt (IttestionS lie at the heart of the study of the Japanese polity and, by extension, of the developmental state. In address ing this subject, American political science has squandered at least decade trying to force Japatt into various versions of Anierican pluralist constitutional, and rational choice theory, while avoiding empirical ic

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Ci IALMERS JOHNSON can ambassador to Japan) when he praises MITI for its commitment to social engmeerillg. Mv position on this controversy is to deny any necessary connection be tween authoritarianism and the developmental state but to acknowledge that authoritarianism can sometimes inadvertently solve the main pohti cal problem of economic development using market forcesnamely, how to mobilize the overwhelming majority of the population to work arid sacrifice for developmental l)roj((ts. An authoritarian government can achieve this mobilization artificially and temporarily, but it is also likely to misuse such mobilization, thereby making it harder to achieve in the future. In the true (levelopmental state, on the other hand, the bu reaucratic rulers l)oSst5S a l)tr1icntlmr kind of legitimacy that allows them to be much more expernnental and undoctrinaire than in the typical au thoritarian regime. This is the legitimacy that comes from devotion to a widely l)elievedin revolutionary 1)roj(ct. Korean public anger at the rules the International Monetary Fund tried to impose on South Korea in 1 Q7 is a good example of public support for a developmental state. The leaders of a developmental state (10 not enjoy legitimacy in the sense of a mandate bestowed on them by civil society. The concept of civil society (or its absence) has, in any case, been invoked much too fimcilely by fbr eign experts trying to explain the fimilure of such revolutionary regimes after the fimct. 7 The legitimacy of developmental states cannot be ex plained using the usual statesociety categories of AngloAmerican civics. The successful capitalist developmental states have been quasirevolti tionary regimes, in which whatever legitimacy their rulers possessed did not come from external sanctification or some formal rules whereby they gained ollice but from the overarching social l)roj;ts their societies en dorsed and they carried out. As HaJoon Chang and Robert Rowthorii note, Even central planning works l)etter than the market for situations where there is one overriding objective, as in wartime or in a space pro gram. This one overriding objectiveeconomic developmentwas among the Japanese l)(oJ)l( after the war, among the Korean people after Syngman Rhee, among the Chinese exiles and the Taiwanese
Ch lisi 01 )h( 1-low, re-vi, w 110111/In (IJ 1/11 .5(11001 of 0,1111/UI (10(1 tfllC(l U Sloth,, l7 I i) Mui-i-as Ha; It, Japan ecte) rious, Nez, I ork Rezuew of liook.c, March oH, I qH 5, p. pe ii. Richard Nielson, nI ow, .5/on,, JXIUllULI11l(11l 11ev/lw (WiiiIei I ()H) St; liEd kodaiiia ivt,nio, Tsusansho ni )oru kiscki va Intatilo kano ka (Is Ely MITIprodoceil inino Ic possi liii i SICOIl(i (lOll?), C/ito Kom,,, March 1 gH;, pp. I ii) 17 ;G. On lliis point, sc, (astclls, Four Asia, F,ieis oiI a Drai.oii Ik-ad. 17 See, iii particular, N. L. l)ink, Institutioral Aiophiliiotisioss 111(1 tlw ir nsiilon troni Communism: Fhi Case ot China, 11,-i/is/i bomb! (If Ioii/evzl ,S? ence 04, no. 3 (Juk Ill): i H. ;H. I lajoon ( ,:li, and Rohe-rt Rowtliorn, Iniroelocti(,li, in Chang and Rossihorn, eds, 3 /10/, (If the .5/ole in Economic Chnnils (Oxtoid:Oxtoid Uniseisily loss, I ge), p. i H.

H. i

The Developmen tal Stat,

kaishek acknowledged that he was not going home again, 1w Si i igaporeans after the Malayaii Emergency and their expul ii liii Malaysia, anlomig the residents of Ilong Kong after they fled 4 liii Ill ISI ii, aitcl among Chinese city dwellers after the Cultural Revolu to \\I iai distinguishes these revolutionanes fromn those in the Leninist ill i III, insight that the market is a better mechanism fbm achieving ii ipeet ives than central planning. The market includes 1)eople who I ii, iii w ok for a common goal; central planning excludes them. I SI i-li ievolutionary legitimacy in a developmental state ever be dc i, ii n One must first note, in the words ofJohmi Schaar, Democracy i,iti ,sl I lie most prostituted word of our age, and anyone who employs o iii i iIeieimce to any modern state should be suspect of either ignorance liii I in tives. With that stricture in mind, if one mneans by democracy h 1110 of state accountability to the representatives of the mijority of I// /1 ItS combined with respect for the rights of minorities, the answer is 1111 thlv no. At the same time, the leaders of the developmental state (10 iipiiv legitimacy in the sense that their claini to political power is based ii sine source cif authority above and beyond themselves. They (liffer in I Pits sense from authoritarian rulers whose continued rule depends on iteinopoly of force remaining a genuine mnonopoly The source of tutu, oily in the developmental state is not omie of Webers holy trinity of ,Iii innal, rationallegal, arnl charismatic sources of authority. It is, ,doi, i-evolutionary authority: the authority of a people (:ommitted to In- Ii tiisformation of their social, political, or economic order. Legitima lie-curs tromn the states achievements, not fromn the way it came to
(Ii tog



legitimacy based on projects or goals is, of course, fragile in that it cannot withstand failure. Equally serious, it cannot adjust to vic II a 11(1 the 1 )ss of mission. The legitimacy of the leaders of a develop it-ill il state is like that of field commanders in a major military engage toil I. It conies from people working together, amid it probably cannot lot ig survive either elefeat or victory. This problem is an abiding source of ii si;iliility in such regimes, one that often leads to severe crises, such as iii ii Japans defeat in World War II or the Korean revolution of i I,, Ihe extemit that a developmental state possesses legitimnacy and is not psI a dictatorship of development, its leaders are somewhat akin to those of revolutionary mass movements. It goes without saying that they manip
Si it-li


John Scha;zr, I.cgi/u ,IIm in 1/u Mothrn S/al, (New Brunswick, N.J.: Transaction 1,, ioks
vS I / p.

or t,irtlni- ilisctissuon ol tIns sue, see Chalin,is Johnson, What Is the Best System f Nit i,,nal I-e,in,,i,zic Managiinent tom- koiea? iii Li-cJay Cho and Yoozi I B eing Rim, e,ls,, Is,ou,, Io/I/Icc,! I,cono,nt: An In.s/i/,iluo,,al ISs:c/asHv, (Boulder, Cob,: Wests jew, I e54) pp.



ulate their followers through propaganda, have enormous (Liii iculty in l)eing held responsible ibr failures, and often misuse the stale fi)r prmlte purposes. But they can also alter the 1)alance of power. The postwar 1)11 reaucratically led moveilient. to enrich Japan was a revolutionary prqjct, one that enjoyed legitimacy among the Japanese lwople for what it promised rather than for how its leaders got there. h) think of such a regime as authoritariaii is to 1)0th miss the point and liil to recognize real authoritarianism when it occurs.

The Develop men tal I.



Ti ii: TIME


Oyanias strictures on the time franie of my studyi 925 to 1975can be (leilLt with speedily. He makes two points, with both of which I agree. The issue here is not a difference but a clarification of views. Oamas first })onht is that i 925 to 1975 is an arbitrary time frame and that there are several other ways of periodizing modern Japailese history. He specifically mentions Beriiard Silbermans (livision of Japans modern century into a penoi of bureaucratic absolutism, i S6Siqoo, and a period of limited )lurL1ism, I 9001 ()6. Although I believe Silberinans division mislo 1 cates the periods of absolutism and does not deal with the prewar and postwar continuities surrounding World War II, I accept Oyainas basic point that there are other possibilities. Hidaka Rokuros three cycles of democracy and bureaucracy seem to inc more accurate in identifying periods of relative absolutism. His c clese;icli of winch has two parts, democratization followed iy bureau cratizationale cycle one, Meiji Restoration to the constitution, followed by i8qo to the end of Meiji ( iqi 2); cycle two, Taisho democracy, 1()i 2 to ig 1, fbllowed by militarism, i(f 1 to 1945; and cycle three, postwar de
fi)llowed by highspeed growth and single is obviously quite different from that of Silberman. But not evident in either of theni is the flict that Japans preoccupation with in(Iustrial policy coincides with the greatest f)eriods of both militarism and democracy. The high tide of state influ ence over the economy occurred during the war and the occupation. One of my P11POS(S in stressing the era i 925 to 1 975from the found ing of the Ministry of Commerce and Industry to the aftermath of the oil
mociatization, 1945 to 1 g6o,

g 1 . u 5 This schema party rule, igo to 9

lieniint 5, Sdlnimin, Fin ltur(;ui( nile Sink in I Pu 1 liii lIui)IeIii ii ,\uihniiiu 1.,,iuiuuuiiu 1, III 1(t%ul() >.IjuIi Lilull. \ Idol kosi hulinflhi, i(I., (OIl//Ui III tiO(IiIIl /(l/)(Ill( I. 11,1/oil (triiueinn: lnmeinn tJniuisin lius, H)Svi. pje For I tiulakis ptiiodiz.utiouu, sei CI1;ilnnis lolinson. liii People it tin IflViiuI((t ii,, \luitiiiui( ii Nivliiiini.ili, iii Cool (;ii k met Sicpiiun K. (.r;uiliuut. u-its.. Shown: Tin/n/mn a/ ibm/it/a (New\oik: Norton, I pgn), pp 711)0.

precisely to see Japan in a different light than that shed by victors history. f.u 1,1 ii was working on and implementing industrial policy befiwe 1925, iii se, ;iimd I agree with Arthur Tiedemann in his review for the Amen of ugH iii i/ouieai Review: Many of the concerns, attitudes, l)ritctic:es and poli I hat lie Uohimson] believes originale(l as responses to the situational n-u it ives of the post1925 periO(i really are rooteti more deeply in pulls nist. But. the period 1925 to 1975 is still a distinct unity in my 1 )li because it Was (lonminated by men born in the middle to late p11111 1 p eI1 who virtually all survived the war and continUe(l to work for the is u-I umiument if they were not uniformed military officers, and because it wood of global, not just Japanese, concern for economic pohcy. .1 iiis use of industrial policy to transform its economy comcicled with .uliui s First FiveYear Plan, Hitlers New Order, Roosevelts New Deal, I s iuusiiinism, the German 1 vVirtschait Wunder, the Chinese Great Leap H u wad, the welfitre state. and many other ideologies and formulations )an niade a criticall 1 1 PP role of the state in economic affairs. Ja ,111 uuIant contribution to this era and to the modes of thought and J)oht ii lessons that grew out it. The period of my history also virtually coin iii in Japanese terms, with the Showa era, and while I agree that there ii itimiuig sacrosanct about 1925 to 1975, that is also true about the Wa period, the twentieth century, or the postwar era. )vimnas second point is more important, lie asks why I ended my ii iv imi 1975. What started to change then? More precisely did the sue: iii the Japanese developmental state in the postwar era depend on iiiuusimaiiy favorable international conditions? If time postwar conditions neue unusually favorable, is the developmental state possible under dif icuit international conditions? These questions are in line with Gold Ii .uuiks criticism that Johnsons book consistently understates the contri liii iouis of worldsystemic factors (e.g.,Japanese and U.S. impenalismn, the poitunities in the Asian regimes). Although I would not put it in uhllranks terms, I accept his point. lime COi(l war both promoted and can iouflaged the enrichment of Iii iiumi and the rest of capitalist Asia. In MITI and the Japanese Miracle, I de u I I ecl the Korean War as the virtual equivalent of the Marshall Plan for J.isiii. There is no question about the importance of the environment in which Japans highspeed ee;onotm(; growth occurred. But two points at least need to be made as guides to future research. First, the policies, atti uI(l(s, and delusions of the United States need to be studied, as do those id uo responded to tliem. Sec( nid, Japan was not the only country allied
I .1


,-\ullioi Iiu.tuuiutuun, iui i-Is, ,l,n,,,ea,i 11,s/o,ua/ Ieonw 55, no. pp. toiktiiunk, Iii PP 7n2:i






(lii AIM Ills



The Dtveloprnen tat Stat,

I. i iiied States or prepared to manipulate the Americans preoc cilpal ii m wi iii the USSR to its own advantage. But it wasJapm that gave a ililIOS() xiIormance of how to extract the most from the United States while paying the least to support its global strategies. That cannot be cx plained by worldsystem factors. In a more general sense, the gains from a developmental state strategy may iiever again be as great as they were In 1111 1945 to i but other things being equal, a developmental state will always extract more of what gains are possible within a particular in ternational environment than will a state with diffrrcnt priorities. Japans comnutment to in(Iustrial policy did not end in 1975. If any thing it became more intense. The new roles for industrial policy that began after 1975 were the nurturing of hightech industries not already developed in reference (conolnies, promoting Japans national interests while pretending to Support its competitors rules for socalled free trade and borderless economies, and achieving national security through technonationalism: This agenda was very different from that of 1925 to 1975. The imd1 o)70s saw the end ol the era of Japans catching up and the beginning of its uneasy tenure as an economic superpower, which is why my book ends there.

wit Ii

t lie


Oyamas last point of controversy is his most important. It concerns the J)atterns of interaction within the developmental state between the offi cial state Imrcaucracy and privately owned and managed business enter prists. This area was and remains controversial lwcause scholars cannot agree on how to incorporate and weigh cultural (liii erences as they mani fest tlwinselves in ecomlmic organizati( ins and labormanagement rela tions. It is the area where scholars have most often trapped themselves by projecting onto JIpiLn the norms of the American private sector. David Friedman, Kent Calder, Daniel Okimoto, and Richard Samuels have all sought to improve on my picture of the developmental state by (Lecreils ing the weight of the state in economic affairs and increasing the infloi ence of private miomiagers allegedly responding to private incentives. I be lieve that they have all erroneously (perhaps also ideologically, because they are all Americans writing during the last (lecade of the cold wti) conceived the relationship between the government and J)riatt actors as dichotomous and zerosum and that Calder, in particular, has failed ii
On nc Iinon:ttionalisn,, su Rih;,rd J. S:trnwls, Rul, \a(ion, S/ron,, Ar,,c,: Na(un,n/ 00(1 the iech,oiouu1 irniiforna/mii of fa/hul (ItIi,t,:i: Cornell Lnn,rsitv Iiess, I rod Jill Shiti. I/u Favc to (he l,n,do,n: i/u ]SX 1),al (10(1 (lie Sell,nr of l,n,rua s Iilflu, to (New York: l)ouhhdn,

I tat private [nay mean somnethuig dilftrent in Japans ethical sys (hoes in his own. )vaIIIa accurately notes that I claim to have found three diiftrent pat ins of publicprivate interactio>n (luring the lilly years of Japans in(lus iii,ii policies that I cover. These are sel1control, state control, and public iatc cooperation. By self or private control I meant that the state hIegiited control 10) priate cartels fbr each industry and that each indus al sector was run by the members of the cartels in response to) state in ii ives. This pattern prevailed from approximately i q 1 to i 940, and it estil ted in almost total control ofJapanese manufacturing by zaibatsu or i ilizations. Ibis pattern was followed by state control, meaning th( direct imposi 1)11 0)1 state institutions onto the private economy, displacing private car ohs, private ownership, l)ri\ate labor organizations, and private manage iiwimt with so-called control associations (toseikai) during the war and )tIh)hic corporations (hoc/an, jigyodan, and so) on) during the occupation .iiiol alter the restoration of sovereignty down to the present lime. Just as 7 Rate control was never complete (luring the lirst l)(:rio(lst(l, corn in imimications, and the most important portion ol rail transport were slate enterprisesstate control was never complete during the second I)eri(l. Ii is was particularly true of the toseikai, which were covertly (l( )ulinate(l iv tIme zaihatsu. The most complete achievement of slate control actually ((nrred during the Allied Occupation. This secO)Hdl l)erio)(l lasted troni .)j))Ioxirnately 10)40 to 1952. Neither selfcontrol nor state control worked very well. The first led to cxl remes of concentration and oligopoly that elicited violent protests ,t4ainst monopoly capitalism from workers and particularly 1i-omn the I iiilitarv amid other groups committed to national unity and a national sin 141cness of purpose. The second led to the bureaucratism and misalloca lull of resources everywhere associated with state socialism. These condi ii ins contributed directly to Japans defeat in World War II, in which it was HOt So much outfought as it was outproduced. Alter i 952, the Japa use public an(I l)flvat( se(t015 reconciled with each other and perfrcted cooperative management schemes. These schemes avoided an emphasis
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(1. Sc, D:ivnt Friidni.tii i/u Wo/i,1(/er,100d th,ne/e: Iuuduistuai Drzilo/nuueuu( aim Po/i(ieal lianLy in /a/)an (ttti:it:m: (mmrn,tt Univirsitv lnss, I Kent F. C:Ildel, ,S(rul,,7c Ca/n/a/u U: lunate Iiuuiuuuess nun l,ilulu Inu/nue in /apanse Juclustu,a/I,uuauue (lrunceioti: Innccion Fi,icr ii, Ircs, i c>;) : I)mnht 0 )kiinotu,, IiuIueen Sill! (Old f/lu MauI;u(: /0/1010 se Iiidu.ctu,al lolmev for lie,?, Iuh,io/o, (Stinlorit: Stantoid Lnisctsii lrcss, i : :10(1 Ricli,nd J. Sunuuils, tin Il,us,n,ss (uf II, /uu/oulul:s Stt, 1 flle, ivlad (i in (:oillpamuns ((lull I listoucal lSus/ouiiis (lit,, men: irnill lJnivcrsiis luss, I c)57). AlIlmouiti luni ,muit of dtc, still tlw nnh siiats ot [rosw;lr 1 ihlit orporiutions is l,nlcn,is lotlnson, Jui/rouis 15mb/u in/ui (:suumhou,,ri (Vi istini,.ton, l)C.: \nicrH in Fnterprtse

tui,iiUitc, l75).




The Developmental State

ii rich, whereas in the carhier periods it faltered badly. The live hot always been the masters of creativc in(lustriai nlimagi= ii ii say time least. But the ftvorable postwar outcome may lIe (lue to I 11(1 than improved statecivilian relationships. The exact naturc I ii I Im i is of the internal organization of Japan, lime. remain obscure, i I ii ic u le >iogical attempts of tile Americans during the cold war to re Ic. jalmaii as an appropriate ally did not help in clarihing theni. kit fur than iltteliij)ting this soi-t of research, Calder reformulates I liii S iiiodern ecomiomnic history, lie asserts that the states schemes for cl cIISIV( modernization (luring the Meiji era were mainly in support of i Iv.ttcscctor objectives and that institutionally speaking, the role of if, ciliate sector iii the Ji1 )ancse economy was thus prior to that of thc 1 Ic, 1-us evidence fbi- these propositions is (lrawn from a history of the ii list iiai Bank of Japan (IBJ) which he only obliquely acknowledges was I ii I 02 to i 1)52 a government organ and was privatized by order of ic Allied Occupation. I also l)elieve he has failed to (10 elementary area I 1(11(5 research on the (hifierent meanings of ho and shi in Japan and cc hue and private in the United States. He fimils to umlerstaml that rim his private managers in the postOccupation IBJ are not American ic Ic. shiorttenim 1 mofit lliiXimizers hut engaged in a nationally .sanctionc<l ccc ci >emative enterprise. The Japatiesc. niamiager, as Rodney Clark classi thy put it, has a view of management as a bureaucratic amid cooperative iriiIi ime: the govcrmnent of a company rat her than the imposili( m of an lit iepreneumial will (In a market place amid a work fbi-ce by superior skill, cinage, orjuclgmmient. ii klers error, like that of the writers mentioned earlier who overstatc cci imisinterpret the rolc of the private scct r in Japan, conies from a corn IIII;ilion of parochialism and i(leology. Given the history (if federalism (he scl)aratioil of powers in the United States, it is a particularly map lid qitiate venue from which to study the East Asian state. This source of c For was (lien coiiipounded by the imperial pret&.nsiofls of the United talcs during the Occupation and the c:olcl war. These writers, in my opin oIl, are trying to forc.Japan to fit the paradigms of government that they cycle taught in American political science (ourses. The best of them learn cciii their failed attempts and go on to becomnc mature, serious conmpara I costs. They then begin to c;onfront what X. L. Ding is getting at. when he
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either private profit or the states socialization of wealtli. The) were Ina(le possil)h by the elimination of the military from public life, the re form of the zaibatsu rc)1adulg owiiers with managers, afl(l the offering of careerjob security to male heads of households iii Strategic, exporting in dust rws. This new approach worked phenomenally well and captured the atteritioll cii industrial sociologists around the world. They launched what amounts to virtually a new (hscipline under the rubric of the principles
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however, perceptively argues that the differences between these three modes are more apparent than real. Fle believes that each of them boils down to Murakami Yasusuke s compartmentalized competi In all three periods there is a single patteril in tion (shikiraretci kyoso) which the state cartelizes or compartmentalizes each industry, restricting new entrants. It does so by promoting and protecting socalled keiretsu (industrial groups) from aiiy form of legal or hinam:ial challenge by out siders and protecting the domestic econoniy from international competi tion. Each individual industry thus enjoys a stable, cooperative environ niemit in which it can divide up the domestic market and export to the willingness to trade ac American market, given the Americans bases on JapuI(se military U.S. have cess to their market fbr the right to policies. foreign their for soil and other passive forms of support and the associations, control wartime The cartels of the 1 9()s, the a state of consisted It structure. postwar keiretsu all had ii similar rela vertical a maintained that mother agenc) or bureau (genkyokzt) for association trade recognized tionship with its clieiits, aim officially through affairs their managing eadi industry, and in(livldual enterprises ad hoc, iioiilegal, Gemeinschajttype relationships. In Oyamas perspective, the governmentbusiness relationship in .1i11)itn has always beeii informal and covert (hikoshikisci annnoku.sei). State control was never lull) achieved before or (luring thc war, and it has never been fully surrendered to the


present day.

I believe these are stimulating propositions that deserve further re search. The chief evidence for my alleging a dialectical progression toward publicprivate cooperation is that in the third period Japan per fected new forms of management, enlisted extraordinary labor commit
Uciciic,csiii kimSumo, Okuiuuc,c llciccshi, ticci Sct,ikc Nitkccto, cci. ,,.\,/m,, i cois.. cks of Jti)LllcSc COIYIpLlcicS) (Tok)cc: iciari.tiiii Shccicn, 1 kaolin genial) (iincci i/n l,.ci n/I/it /a/oncsl (nc/iniali ,Sc/icn, titus. Thomas 1. i,iiiccti (Lou cciii siLlsilciccc1c) Ioiji, i). ii iccrc1i41i cliicls, liii siiniii,iI ivorks aic kcccincv dciii Krttu iLtIi Icltclcc.ctlc)lcii, i C lick, ilit /a/ in,cc (on/aini (Nccc l-i.nccc: \iic licc,clc Pit s,, i c)7c) ccitt cs. Jici I.. lrucci, t/,cii (O\iOI (I: (,l,ii (101011 iiis,., L 1 IhJnpancte in/id /0/Sc ,S ,NIcir.iktiiii \ausukc, Sliini/iIiIahd lao/cu no joint (lii 11)41 cci tin mcv middli nitss) (lcilacc: (1cccc hccccccc Sh;c, I cSi). Sri,
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statu.sociulv relations hisi oricallv dii [urs notably thu modern Viusturmi i)iitturml, arid thu distiiicnvu haturus ol thu East Asian pattern (10 not simply elisiippuar alter industrialization or dermiocratiza )urvasivu. without clearcut lion. In last Asia, thu status are organizationally 1 houmidarius. Thuir possurs and lunctionsaru. dillu.su, and thus pay litlu ru uuntl, the linus between public and pris ate. p0 1 spurt to duu process. Consu

In Fast Asia. thu pattern ol


htical and personal, 11 irnial and iniorrnal, othci;iI and nonollicial .gs urn men cii and market. legal and custornar and bunviru prm udural and sulmstaiitiiml, are all blurred. This is thu Case in precommunist China, in sumi authoritarian Taiwan, as well as 111 duinocraticJapan.



I believe Hiwatari is right when he advises that Cakkr should consider who created and protec teel thu special kind of hank (longterm (re(lit bank) that he asserts is the headquarters of corporateled strategic capi 1-lowever, it is equally unportant to stress, as I did in the earlier talism. discussion of industrial policy versus the market, that regardless of the cultural or iiatioiialistic; norms that may 1)ritil in either the state or civil ian enterprises, both (Ut ities need each other. That is what I think the Jai)anese (liscovered asa result of their disastrous inidcentury experi ences and what Amurican political scientists have yet to discover. The (;on cul)t developmental state nwans that each side uses the other in a mutu ally hetielicial relationship to achieve (ieelopmental goals and enteq)rise viability. When the (Levelopmeiital state is working well, neither the state officials nor the civilian enterprise managers prevail over the other. The state is a catalytic agency, iii Michael Linds sense of the term, and the managers are responding to incentives an(l disincentives that the state es tablishes. This is not an easy combination to put together, but when it is (lone properl), it can l)10(luc( miracles of ucoiioimc development. Whether, in the current (linmte of economic globalization and Anglo Amuricafl tnumph;ilismn, it can mange to miuintaimi its equilibnum is something that remmuiils to he seen. But I am quite certain that if the (Levelopmental state goes under, the U.S. regulatory state will not be far behind.

Ii bs with No Spiders, Spiders with No Webs: / he (;enealo of the Developmental State

Bruce Cumings

7. Dinv, Insiiimitiomtt AimmpIiihmnusntsi p Iliiv.mtmmi, ,\ftui hi 1:iiiImqtmakm l-,Imcimon, m. r viicitmm-t I.mmmml, lhm- ( imItim Scmim-, i\af,onal In(emmst (Spring , 1

I ((((a): l 2.

In his book (Sri Japan, James Fallows begins tme chapter with a story mmii linding an English translation of lrie(lrich Lists ilie Natural System m/ Inlitnai Economy in a bookshop in Japan. He writes that it had taken mmmii five years to find an English version of Lists work, and on doing so I exhales his version of eureka: Friedricli List!!! He goes on to argue I lit list, not Adam Smith, was the economic theorist behind Japans in mhistrial growth. Now compare E. F!. Norriman, writing in i gm who began a passage mum ott Prussian influence on postRestoration Japan by saving. It is a mmiii iiiionplace that ItO [Hirobumi] modelled the Japanese constitution Ii md much else] very e;loscly upon the Prtissian. Or corripiure Karl Marx, ivi to in 1 Si7 m)tecl that the only original American economist was Henry a Listian thinker who saw the United States as a iatedeveloping in mit mstrial power, needing strong protection of its market and its nascent in ml mist ries.i Since Careys Principles oJ Social Science was widely read in Japan iii t lie 1 SSos, 4 perhaps Fallows ought also to exclairn, henry Cany!!! In a imele few sentences we have uncovered not a truth about civilizational


lilies lalinus, Looking (it tin Sit,,: I/n It,ii a//In 1\i5,i Last rtSiUil Lcom,o,nji (i,,l IolituaIS t5 (NeivYmmik: iammiiim-mmmi, mm)m)j), l I 7. a 1. Ii Nmm rmmm i, ()m/i us of (I, (lu/ira /a/uinmse S/a/i: ,S,lmshd II sti ogt of L. It. Vorina ml, mm 1.

( i I; Nm (tim-k: i5mmiiliuon, I!75), x Kam I Marx, Il;tsiiat md (mrmi, ii (aum,dri,sm: Ia,uu/a/,onc /01 (hi Cmi qime o/Ioliln-aI liop, ,0. mans. Martin NIt md.mus (Nm-mv York: S nt:mgm- I(mmmmks, 0)7;). Rmmbm-mm Smimoamiim-s, \mm,m-mmma timiml J.mtxmmm, in Fmmmm-st K. Mai mmimlfamm-s (1 Timnnmsmmmi fm., 11%., tiit(mii(tfl171S/ ,10n,t Iimla/,om: :1 .Smirtm-- ((.mmmmhrmmlgm-: l-immvmmd Lmnsm-msiix ln-ss. I
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