Japanese State - Market Relations

Theories on the relationship between the state and the market in Japan, and on the strength of the Japanese state, have changed a great deal over the last several years.

The classic view of the Japanese state/market system was first well defined by Chalmers Johnson. Before his time most Americans and other Westerners believed that Japan was a capitalist state not much unlike Western states, especially England. However, Chalmers Johnson and his colleagues promoted the view that Japan was not a simple capitalist state, but a Capitalist Development State. This differs in that development, through industrial policy, is a national goal which government takes a commanding role in achieving. Elected officials, or, more specifically, the Liberal Democratic Party (LDP), Business, and the Bureaucracy form a triangle of power working together towards this goal. Power is not distributed equally, though, and due to many different circumstances the bureaucracy emerged in control. They suggest that this is a side effect of WWII and the American occupation. In order to remove the threat of Japan potentially building up again militarily and going to war again, America took many precautions. One was to purge the public sector of officials and officers who might promote similar policy as pre-war. However, if America were to purge the bureaucracy, it would become problematic. First of all, the occupation forces would have to take control of the Japanese government, making the restructuring of Japan much more time consuming and costly. Second, once the Americans pulled out of Japan it would be easy for opposition forces to raise dissidence against the obviously non-native government and potentially topple it. Regardless, after the American occupational forces pulled out, the bureaucracy was the one facet of Japanese government left untouched. Another precaution taken was the redistribution of power. Afraid that the Japanese supreme court would overturn occupation laws, the Americans seriously undermined the court's power, transferring even more power to the executive branch. 1

According to Johnson, this left the bureaucracy in a position to take control over Japanese society. The bureaucracy held the nation's most capable and most experienced people. After retiring from the bureaucracy, officials would either join the LDP and take positions of power there, or would move to the private sector and take some of the highest positions in business. In fact, Johnson proposes that the relationship between business and bureaucracy is itself the fundamental difference between Japanese and other capitalist states. Japan's bureaucracy, made strong by the policies of the American occupational forces, takes command of business, forcing it to comply with the state's industrial and economic policy. An example of the power chain would be of MITI, the Ministry of International Trade and Industry, creating policy, giving it to the Diet to be stamped with a seal of approval, and then forcing it on the business sector.2 This statist view of the Japanese state/market system, this triumvirate of power, is still held by many intellectuals. Karl von Wolferen promotes a very similar theory in his article "Japan Is a Class Based Society," only differing in his view that there is no one corner of the triangle in overwhelming control of Japan.3

Although the statist view is supported not only by many intellectuals, but by the American public as well, new evidence and examination of the Japanese system points towards different political models. Michio Muramatsu, in his article "Patterned Pluralism Under Challenge: The Policies of the 1980s," supports the view, which must be shocking to statists, that Japan's system is a form of pluralism. Pluralism is the political model first used to explain American politics, in which there are many different groups vying for power. Policy is arrived at by these groups seeing who can get the most support in the legislative branch. The reason why Muramatsu calls the Japanese system "Patterned Pluralism" is that he sees two distinct differences between the Japanese system and the pluralist model. One is that the bureaucracy makes the final decision in most policy matters. Another is that they attempt to accommodate all interests before forming the policy. He feels that each ministry has jurisdiction over a specified area of policy, and that these ministries become arenas in which many actors: LDP, business, etc.; participate in policy-making decisions. In pluralism the state is inherently weak, and Muramatsu finds evidence of this weakness in the delegation of authority, mobilization of nonpolitical resources, informality, and targeting which the Japanese governments participated in during the Meiji period and continued in after 1945.4

Clearer evidence of Japan having a weak state, and a more convincing model of Japanese state/market relations is argued by Margaret McKean, in her work "State Strength and Public Interest." Like Muramatsu, McKean feels that Japan has a weak state. One example of this weak state can be seen in MITI's attempts to regulate the energy industry. As McKean says, "In his study of the history of regulation in the energy sector Richard Samuels shows that the policies promulgated by the energy bureaucracy in MITI have, in fact, been utterly transmogrified by the energy industry and that every government attempt to go into the energy business has been thwarted and converted instead into public subsidies of private energy research and development."5 McKean believes that the bureaucracy does not assume a leadership role at all, but rather takes on the role of follower as much as possible, coordinator for solutions when it can't simply follow, and delegator when coordination won't work. Coordination can be seen in the government support of research and development projects such as in the computer mainframe industry, which resulted in Japan being the only industrial democracy not dominated by IBM in the computer industry. However, as McKean explains, ". . this will only work in industries where there are high risks, heavy capital needs, long gestation periods, steep learning curves, a need for pre-commercial prototypes, the promise of advancements in other areas as a result, and potential commercial utility across several industries."6 When these situations do not present themselves, the government acts as a mediator, attempting to coordinate a compromise between rival players. When even this won't work, the bureaucracy deregulates power to lower administrative bodies, or to the industries themselves (re: dumps the problem off on someone else without sticking their own necks out). An example of this is the Large-Scale Retail Stores Law, in which MITI faced opposing interests from department stores, superstores and discount chains, convenience stores, small retail outlets, and family retail shops. Unable to find a compromise, MITI delegated the decision making to the local chambers of commerce and the entrepreneurs themselves.7

McKean's political theory differs slightly from Muramatsu's. She believes that Japanese politics follow the Coporatist model, in which the state seeks to form policy by formal negotiations with interest groups. She calls these interest groups "peak associations", and says that they move into clusters around the ministry which has jurisdiction over their area. Thus, the groups' representation is highly corporatist. However, she still believes that the method of participation and influence is undergoing pluralization (that is, new actors are gaining entry and influence). The most obvious evidence for pluralization is the movement of policy making, more and more, from the bureaucracy to the LDP and Diet.8

Although the predominant view of Japanese politics in the past has been that it has a statist structure in which the state leads the market, different opinions are growing in voice. These new opinions suggest that Japan has a weak state, some opinions holding that it is a pluralist, some that it is a coporatist, some that it is an elitist system. Regardless of which form is correct, it is increasingly obvious that the market has not been in a purely subservient role in Japan.


1. Kristen Parris. "Class Lectures, 4/24/95 - 5/17/95".
2. Gary Allinson and Yasunori Sone, eds., Political Dynamics in Contemporary Japan.
3. Dudley, ed., Japan, Opposing Viewpoints.


1 Parris, "Class Lecture, 5/10/95".
2 McKean, p. 73.
3 Von Wolferen, 118-123.
4 Muramatsu, 50-71.
5 McKean, p. 85.
6 McKean, p. 101.
7 McKean, p. 86.
8 McKean, p. 78.