J Econ (2009) 98:181–184 DOI 10.1007/s00712-009-0084-9 BOOK REVIEW
Cargill, T. F., Sakamoto, T.: Japan Since 1980 Cambridge University Press, Cambridge, New York, 2008. Paperback, £14.99, XIV, 314pp Sebastien Lechevalier
Published online: 4 August 2009 © Springer-Verlag 2009
Cambridge University Press has launched a new series—The World Since 1980— whose aim is to examine politics, economics, and social changes in important countries and regions over the past two and a half decades. Japan since 1980 is a volume of this series, written by an American economist, Thomas F. Cargill, specialist of the financial and central bank policy in Japan and author of reference book on these issues (e.g. Cargill et al. 2000), and a Japanese political scientist, Takayuki Sakamoto. This series introduces an interesting point of view in adopting a new chronology of the world economic history, by comparison to what can be found in our textbooks: the turning point is maybe not the beginning of the 1970s but the end of the 1970s, with the victory of the neo-liberal revolution in the US and UK. It may mean that events and trends in the political economy field matter at least as much as the ones in the productive and financial fields. This period may have come to an end recently, since the beginning of the current crisis. To a certain extent, this understanding of the chronology fits well the Japanese case. This period may have begun with Nakasone, who has been prime minister from 1982 to 1987 and has finished with Koizumi, prime minister from 2001 to 2006. Both of them can be defined as “neo-liberal”. What is our image of Japan during this period? The simplest way is to consider that it has been a two-steps process: success (1980s) and failure (1990s). This image is not completely wrong but leads to an underestimation of institutional transformations of Japanese capitalism during this period. That is why this is maybe more pertinent to consider some keywords characterizing Japan’s trajectory during this period: for example, deregulation, financialization (Dore 2000), internationalization, and
S. Lechevalier (B) Ecole des Hautes Etudes en Sciences Sociales, Paris, France e-mail:
[email protected]
123
182
S. Lechevalier
increasing inequalities. They are not specific to Japan. However, Japan may have experience them in a different way compared to the US or Europe. Considering the failure that characterized Japan since the early 1990s, shall we forget Japan? One contribution of Japan since 1980 is to show that it would be a mistake. This is not because Japan still remains the second largest economy (even for few months or years ahead). This is because the trajectory of Japan the last 30 years is simply fascinating, from Japan as Number 1 (in the 1980s) to the “Lost Decade” (1991–2005). Moreover, putting aside the performance of the economy, it is possible to consider that, to some extent, the transformations of the Japanese economy since the 1980s are representative of the ones that affected the rest of the developed world, and therefore it is possible to learn from it. Two contributions: analyses of the financial issues and of the political process The main contribution of Japan since 1980 is without any doubt the analysis of the monetary policy and more generally of the financial issues. The authors convincingly show the importance of these issues in the dynamic of the Japanese economy since 1980. They also provide a fairly good narrative of the period (chapters 3–5). The chapter 3 offers a clear and detailed analysis of the financial deregulation in Japan in showing that “(…) government innovation was the main channel of liberalization policy (75)”. The quality of the analysis of the bubble (chapter 4) is also worth mentioning. The authors distinguish between what is common to all the countries and what is unique to Japan, the conjunction of “flawed” liberalization and BOJ policy mistakes (90–91). A second important contribution of this book is the analysis of the political process. The authors focus on the contribution of Koizumi Junichiro, Prime Minister from April 2001 to September 2006. Their best contribution in this field is certainly their analysis of the neo-liberal nature of Koizumi’s reforms. Finally, let us emphasize the quality of the figures in this book, with always a clear reference to the data source. Two disputable theses and some limitations What is more disputable in this book is the idea that deregulation in Japan has been a natural and reasonable answer to a changing international environment. This thesis is defendable but it would have been appreciated if the authors have mentioned other interpretations, in contradiction with this thesis. For example, in an influential book (which even not cited by Cargill and Sakamoto), Ronald Dore proposes a radically different analysis of the pressures that coordinated capitalisms like Japan and Germany have faced since the early 1980s (Dore 2000). According to him, they correspond to an ideological shift towards more free-market thinking and to a new balance of power within the firm between managers and employees. The second disputable thesis concerns the explanation of the Bubble and the subsequent Lost Decade. The authors clearly refer to Friedman and Schwartz’s interpretation about the role of the Fed in the Great Depression to support their idea that:
123
Cargill, T. F., Sakamoto, T.: Japan Since 1980
183
“government failure offers a more reasonable explanation for the financial disruptions of the past three decades (68)”. The implicit interpretation is that the trajectory of Japan can be explained by a series of policy mistakes. This is one possible interpretation of the Lost Decade, but not the only one and we may regret that the authors did not mention other theses.1 Moreover, to our view, this book suffers from three limitations. The most obvious is the absence of analysis of the international context, from a real economy perspective. It is indeed difficult to argue that the relationships with China (who became the first trade partner of Japan in 2006) and other Asian countries (where Japanese companies are developing a strategy of “production fragmentation”) did not affect the performance of the Japanese economy. The lack of analysis of the changes that occurred in the Japanese society, to which is dedicated only a part of a chapter (among eleven!), is a second important limitation. This is particularly problematic for two reasons. First, this series’ aim is to analyze three dimensions—economic, social, and political—with the idea they are deeply interconnected. Second, a major change occurred in the Japanese society since the mid-1980s, rising inequalities. This fact is mentioned and analyzed by the authors but key references like Tachibanaki (2005) or Genda (2005) are absent. Last but not least, the most obvious weakness of this book is that it does not offer any convincing analysis of the institutional changes that occurred in the Japanese economy since 1980. Here again, we can be surprised by the absence of references such as Aoki et al. (2007) or Yamamura and Streeck (2003). They would have allowed the authors to go beyond weak statements regarding the changing nature of the Japanese institutions—such as “There has been change in Japanese management, but a great deal of continuity also exists” (242). In particular, a deeper analysis of the organizational change at the firm level is required to take into account the increasing diversity of performance and organization of the Japanese firms (as shown by Aoki et al. 2007). As a whole, again, this book offers a good narrative of the major events that occurred in Japan since 1980. It provides a good analysis of the macro developments, of the role of the monetary policy and of some dimensions of the political economy in Japan during this period. However, the analysis of the social, institutional, and organizational changes is relatively weak. From this point of view, this book does not reach the objective of the series, to which it belongs. References Aoki M, Jackson G, Miyajima H (2007) Corporate governance in Japan. Institutional Change and Organizational Diversity, Oxford University Press, London Cargill TF, Hutchison MM, Ito T (2000) Financial policy and central banking in Japan. MIT Press, Cambridge Dore R (2000) Stock market capitalism: welfare capitalism. Japan and Germany versus the Anglo-Saxons. Oxford University Press, London Genda Y (2005) A nagging sense of job insecurity: the new reality facing Japanese youth. International House of Japan, Tokyo 1 Other interpretations include slowdown of productivity growth, due to the decline of the innovation
capability or the over-accumulation of productive capabilities (Yoshikawa 2002).
123
184
S. Lechevalier
Tachibanaki T (2005) Confronting income inequality in Japan: a comparative analysis of causes, consequences, and reform. MIT Press, Cambridge Yamamura K, Streeck W (eds) (2003) The end of diversity? Prospects for German and Japanese capitalism. Cornell University Press, New York Yoshikawa H (2002) Japan’s lost decade. LTCB International Library, Tokyo
123
