Themes and Goals
This unit is designed, through student readings, lectures, and in-class discussion, to teach about Japan’s postwar development and introduce the competing free-market (or neo-classical) and developmental state paradigms. (For complete definitions of these paradigms see 1. and 2. in the “Terms & Concepts” section of the Instructor’s Introduction.) These competing paradigms are most typically employed to explain postwar economic development in Japan, and subsequently deployed as the lessons to be learned from Japan’s experience. At stake is whether Japan’s success is primarily attributable to the allocative efficiencies of free markets or to the state’s strategic, systematic, and comprehensive intervention in those markets. The unit also moves beyond these paradigms by examining the Japanese developmental state in its historical context (with a focus on class formation), and the role of entrepreneurship in fashioning markets where none existed before. The readings combine a comprehensive survey of the institutions and processes of postwar Japan, with a fun and detailed look at the way the television industry reworked Japan and Japanese society as it embodied and enabled economic success.
Students should come away with an understanding of:
The heart of this unit is the juxtaposition of two related but distinct understandings of postwar Japanese development, as expressed by the books of T.J. PEMPEL and Simon PARTNER. Both works move beyond the free market and state-led development paradigms, albeit in different ways. Pempel shows how the developmental state is underpinned by a particular class configuration, and shows how the historical formation of this class structure is crucial to understanding the developmental state. Partner is more critical of the paradigm. While the developmental state is also implicit in many parts of his analysis, he focuses more on entrepreneurial agency, showing how it triumphed when state policies were irrelevant or even antagonistic. But his analysis avoids slipping back into a simplistic, free-market story. Rather, he ends up showing in wonderful and entertaining detail exactly how certain consumer markets – and key ones to Japan’s development success – were socially and historically constructed; indeed, how their construction necessitated the reworking of society itself.
This unit provides opportunities to integrate an international comparison and alternative theoretical perspectives into the study of the relationships between markets and states, and economic and social change and development. The analyses of the dynamics of states, markets, industries, and social and economic development should be accessible to students regardless of previous exposure to Japanese studies or political economy. The theoretical implications of these readings should encourage critical examination of processes in the United States and other developed and developing countries.
The materials in this unit should, first, provide students with a fairly comprehensive introduction to the postwar political economy of Japan (though there is ample material here for advanced students of that topic as well). Second, the unit introduces the free-market and state-led paradigms of development, and leads students beyond those paradigms.
Finally, this unit should help show students how to think critically about some of the following.
Audiences and Uses
This unit is designed to be useful to a wide variety of undergraduate courses, including but not limited to:
It can also be tailored to suit graduate seminars.
Note: Underlined terms are explained in the “Terms and Concepts” section below.
Japan’s formal surrender in World War II was followed by a seven year U.S. military occupation of the country under the leadership of General Douglas MacArthur. The Occupation intended to not only demilitarize Japan but also reform it politically, socially, and economically. The emperor’s role was reduced to mostly ceremonial duties, and a new constitution re-structured postwar Japan’s government, centered on the National Diet and a parliamentary system, with voting rights extended to all adults. Rural land reform was carried out, breaking up the landholding class, and the zaibatsu, the large conglomerates of Japan’s industrial and war machine, were broken up. Early Occupation authorities tried to restructure Japan’s economy around its “natural” comparative advantages, namely, agriculture and such light industries as textiles.
As Simon PARTNER notes in Assembled in Japan, these attempts to reduce Japan’s industrial capacity were short-lived. American authorities started to foster Japanese heavy industry as postwar concerns over Communism grew and the necessity of technology to broader Occupation reforms became clear. A wealthy and industrialized Japan was seen as a bulwark against the spread of Communism and leftist influence. Although initially the U.S. encouraged the formation of labor unions (the right to collectively bargain was written into the new constitution promulgated by the U.S.) and political groups from the left, the “ reverse course” in the late 1940s was marked by U.S. support of conservative political efforts to crack down on labor and Communist groups, as well as by the softening of anti-monopoly laws which allowed big business to re-group into horizontally and vertically-integrated keiretsu. As T.J. PEMPEL observes in Regime Shift, the reforms were crucial in changing the class configuration in Japanese society, creating blocs of big business, small business, and rural farmers, which underpinned the electoral dominance of the conservative LDP (Liberal Democratic Party) for decades. Thus, the socioeconomic structures that coalesced during the postwar period were crucial, though not absolutely deterministic, in undergirding the political economy that emerged.
This sets the background for the remarkable rise of Japanese industry following the crippling effects of defeat in World War II. Neoclassical explanations, with their emphasis on the night-watchman state, attribute Japan’s economic success to limited government interference in labor and capital markets, and in general, argue that the market, when left alone, finds the right prices and quantities of goods to produce. In contrast, the developmental state paradigm emphasizes the role of institutions like the MoF (Ministry of Finance) and MITI (Ministry of International Trade and Industry) whose export-oriented industrialization policies, with a focus on selecting and nurturing certain industries, and control over import/export licenses and capital markets, all reflected a state which shaped and controlled the direction of the economy. Both of these paradigms of development are insufficient, however, for understanding the postwar development of Japan.
The story of the Japanese electrical goods industry, as explored by Partner, demonstrates that states are not best understood as a single monolith with perfect information governing the market. Rather, his study of postwar Japan shows competing interests among businessmen and politicians leading to policies that were indifferent and sometimes even antagonistic to the development of these industries. The neoclassical paradigm implicitly assumes that certain social structures, such as the middle-class household with a demand for radios and TVs, exist naturally. This paradigm is also problematic in the case of Japan, whose postwar economic situation was hardly one that would “rationally” involve consumption of expensive “luxury” items like TVs or washing machines. In sum, markets and states do not exist in isolation from each other, nor does either operate outside of certain given historical and structural circumstances. For Pempel, class configurations resulting from struggle underlie the political economy of postwar Japan, shaping the structure and policies of the state. For Partner, agents (entrepreneurs) working creatively within the structure of postwar policies refashioned the social configuration (households, along with gendered relationships and roles) of postwar Japan, and thereby enabled the success of the electrical goods industry. Both accounts emphasize how Japan thus created its own comparative advantage in key industries and sectors.
Terms and Concepts:
Neo-classical or Free Market Paradigm: The neo-classical or free market paradigm argues that development is most likely to occur when the state, with some minor exceptions, refrains from significant intervention in industry or the regulation of trade. Instead, the state should allow the market to regulate itself. According to this paradigm, minimization of state-induced market distortions leads to a more efficient market-based allocation of resources, and therefore greater development success, than in other developing countries. The advocates of this paradigm argue that Japan’s postwar economic boom can be attributed to the government’s absence of economic intervention and its passive facilitation of the natural allocative efficiencies of the free market, meaning that postwar growth can be seen as the product of the ability of Japanese corporations to harness the potential of international markets and domestic production advantages, such as cheap labor.
Developmental State Paradigm and State-led Development: The term “developmental state” refers to the state and its abilities, while “state-led development” refers to the state’s actions and decisions. The developmental state paradigm is one in which a strong, autonomous state or leadership intervenes in the economy to promote economic development. Similar to Soviet-style centrally-planned economies, the developmental state identifies national economic goals and intervenes and directs the economy to achieve those goals. The similarity ends there, however, as companies are largely privately owned, and market competition between companies plays a key role. Developmental state actions include but also go far beyond mere “interventions in the market” such as the regulation of prices, control of imports, or exertion of influence over financial indicators. According to this paradigm, the Japanese state crucially exerted various kinds and degrees of pressure and influence to get private companies to act in accordance with the accomplishment of national goals, for example by directing and “encouraging” companies to go into selected sectors, actively channeling capital investment into selected sectors at the cost of others (very different from the mere adjustment of interest rates), and orchestrating the creation of strategic sectors and even technologies that did not previously exist.
Zaibatsu: The zaibatsu were the powerful financial and industrial conglomerates, each organized around a holding company controlled by a powerful family. These large conglomerates monopolized the prewar and wartime Japanese economy and concentrated power in the hands of a very small elite prior to being dissolved in the postwar American occupation.
Reverse Course: The so-called “reverse course” refers to the 1947 change in American policy that shifted the focus of the Occupation from the promotion of democracy, the implementation of social reforms, the supporting of labor unions, and the purging of business and political leaders involved in the war effort to increasingly conservative policies for the strengthening of Japan as a political and economic ally in the fight against Communism in Asia. “Reverse course” policies included the reintegration of those war-era leaders into politics and business and crackdowns on organized labor and the political left.
Keiretsu: The postwar remnants of the zaibatsu, the keiretsu remain powerful groups of affiliated companies linked together by central banks or trading companies, although their inter-company ties, domination of the market, and concentration of power are somewhat diminished.
*** Most important
The following two readings (especially the first article) provide historical context and a quick, concise, and schematic presentation of the elements of the developmental state theory, its background, and its relationship to other relevant theories. They thus provide a good starting point for developing lectures that lay out the historical and theoretical background for the readings.
*** HENDERSON, Jeffrey and Richard P. APPELBAUM. “Situating the State in the East Asian Development Process.” In States and Development in the Asian Pacific Rim, edited by Richard P. APPELBAUM and Jeffrey HENDERSON. Newbury Park: Sage Publications, 1992. Pages 1-23.
* SO, Alvin and Stephen CHIU. “Current perspectives on East Asian development.” In East Asia and the World Economy. Thousand Oaks: Sage Publications, 1995. Pages 3-30.
The unit is designed as a two-week unit, assuming three hours of class time per week. The student readings can be configured in a number of different ways, depending on the level of the class. It is important to know that Pempel’s Regime Shift is dense and a little difficult (on the other hand, it is very well-written, well-structured, and authoritative). It is thus suited for upper division undergraduate courses and graduate seminars. In contrast, Partner’s Assembled in Japan should be fine for all levels. For lower division undergraduate classes, it may be best to have the students read all or some parts of Assembled in Japan, and for the professor to use Regime Shift as a basis for lectures. In this case, the article by Henderson and Appelbaum could be assigned to undergraduates in the first session of the unit to introduce the concept of the developmental state and its relationship to other paradigms; the required readings for the second week would then consist of a few chapters from Partner (a summary of the chapters is below). A graduate seminar or advanced upper division course, on the other hand, could take the form of a two-week unit that covers all or part of Regime Shift in the first week and all or part of Assembled in Japan in the second. Somewhat less advanced courses could read fewer chapters of each. The star system accompanying the description of each reading helps to illustrate these options.
*** Most important
* Undergraduate, *** Graduate
*** Undergraduate, *** Graduate
*** Undergraduate, ** Graduate
Student Activity: Discussion questions
WADE, Robert. “ Japan, the World Bank, and the art of paradigm maintenance: The East Asian Miracle in political perspective.” New Left Review (217), June 1996. Pages 3-36.
JOHNSON, Chalmers. MITI and the Japanese Miracle. Stanford, CA: Stanford University Press, 1982.
WOO-CUMINGS, Meredith. The Developmental State. Ithaca: Cornell University Press, 1999.
FUJIMURA-FANSELOW, Kumiko, and Atsuko Kameda, eds. Japanese Women: New Feminist Perspectives on the Past, Present, and Future. New York: The Feminist Press, 1995.
GELB, Joyce, and Margarita ESTEVEZ-ABE. "Political Women in Japan: A Case Study of the Seikatsusha Network Movement," Social Science Japan Journal 1, no. 2 (1998): 263-279.
GORDON, Andrew. "Society and Politics from Transwar through Postwar Japan." In Historical Perspectives on Contemporary East Asia, edited by Merle Goldman and Andrew Gordon. Cambridge: Harvard University Press, 2000. Pages 272-296.
HAYES, Louis D. Introduction to Japanese Politics. New York: Marlowe and Company, 1995.
IMAMURA, Anne. Urban Japanese Housewives: At Home and in the Community. Honolulu: University of Hawaii Press, 1987.
LeBLANC, Robin M. Bicycle Citizens: The Political World of the Japanese Housewife. Berkeley: University of California Press, 1999.
BLOCK, Fred L. Postindustrial Possibilities: A Critique of Economic Discourse. Berkeley: University of California Press, 1990. Especially Chapter 2 (Economic Sociology) and Chapter 3 (Markets).
GRANOVETTER, Mark. "Economic Action, Social Structure, and Embeddedness, ” American Journal of Sociology (91), 1985. Pages 481-510..
MOORE, Barrington. Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World. Boston: Beacon Press, 1993.