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 3: Developmentalism as Ideology

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

Extract

Until the 1980s Japanese authorities were not unaware of the strains and contradictions embedded within their chosen form of political economy or of its ineffectiveness at times, despite headline success. There is still uncertainty about why the same authorities remained wedded to so many features of the post-war developmentalist agenda when a combination of domestic and international forces suggested that Japan needed to embark upon a fundamental rethink of its basic premises. The priority accorded to export-led development, to defending the ‘dual economy’, to resisting any sustained appreciation of the yen, to retaining bureaucratic influence and prestige, and to eclipsing the full force of the free market in favour of the networked-relational state that embraced business, government and finance was to be a fundamental part of Japan’s economic denouement from the 1990s onwards. Hindsight, economic ‘rationality’ and apparent common sense borne of Western economic values spurred criticism and sometimes outright denunciation of Japan’s unfolding policies from the early 1970s onwards (as indicated in Chapter 2). Only by identifying the underlying rationale of Japan’s post-war political economy can we begin to appreciate the fundamental premises that were to play such a distinctive and enduring role during subsequent periods of recession and deflation. With the various parameters of the developmental agenda firmly in place during the period of stellar economic success down to the early 1970s, it is not surprising that the Japanese authorities came to believe that they possessed a workable and superior form of economic management. High growth...

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