Japan’s Great Stagnation

Japan’s Great Stagnation

Forging Ahead, Falling Behind

W. R. Garside

This timely book presents a critical examination of the developmental premises of Japan’s high-growth success and its subsequent drift into recession, stagnation and piecemeal reform. The country, which within a few decades of wartime defeat mounted a serious challenge to American hegemony, appeared incapable of fully adjusting to shifting economic circumstance once the impulses of catch-up growth and the good fortune of an accommodating international environment faded.

Chapter 2: Catch-up Growth and Maturity: Developmentalism in Retrospect

W. R. Garside

Subjects: asian studies, asian economics, asian politics and policy, economics and finance, asian economics, economic psychology, political economy, politics and public policy, asian politics, political economy


The principal features of the ‘stylized developmental state’ outlined in the previous chapter would appear, on cursory reflection, to explain the mainsprings of Japan’s post-war economic success. Nonetheless, retrospective analyses of the ‘Japanese miracle’ have become the staple diet of revisionist economists and historians. Not only have the certainties of earlier writing on Japan’s post-war economic development become much more fluid but the criticisms of the ‘developmental state’ have deepened. It is not merely that the system faltered in later decades; it was, critics argue, always deeply flawed. Most economists and historians, it is alleged, have been living with a delusion created in part by Japan itself to cover the nakedness of its self-interest. We are now told that the developmental state of Japan’s high-growth period was a fable, a myth, and that academics, especially in the West, have been judging a ‘Japan that never was’.1 They have a case. Chalmers Johnson’s classic description of a powerful and sophisticated bureaucracy judiciously deploying incentives and administrative guidance to steer the economy2 has spawned counter studies that show a divided, ineffective and at times counterproductive political and bureaucratic apparatus.3 It had always been a fallacy to regard the Japanese Yoshiro Miwa and Mark J. Ramseyer, ‘The Fable of the Keiretsu’, Journal of Economics & Management Strategy 11, no. 2 (2002): 169–224; Dick Beason and Dennis Patterson, The Japan That Never Was: Explaining the Rise and Decline of a Misunderstood Country (Albany: State University of New York Press, 2004); Chelsea C. Lin,...

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