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With the war behind them, the Japanese set out on a grand scale to become viable world traders. In the early 1960s, Prime Minister Ikeda Hayato, supported by a group of extraordinarily far-seeing bureaucrats and young aggressive business managers, set out to redirect Japan's energies from the ideological bickering of the postwar period into asingle-minded pursuit of economic gain. Ikeda's "Double Your Income" policy was to help build up a new industrial structure for Japan. Its success was fueled by heavy capital investment at the disposal of the government's financial planners—made possible by high personal savings and a banking apparatus adapted to Japan's needs. The acquisitive instincts unleashed in this burst of activity were corporate and group-directed rather than individual, though Japan does have its quota of individual entrepreneurs. The authoritarianism and group/national identity which the Tokugawa used to fortify their shogunate in the Edo period unexpectedly served as an adhesivelinking the different and often disparate elements of Japan's modem-day business society. If the average Japanese businessman of today knows little about the power structure of the Tokugawa bakufu, he nevertheless exhibits aspects of that tradition in his daily life. This unit shows how the Japanese, in the wake of their WWII disasters, made business history through a combination of international marketing, technological improvements, labor-management harmony, and a keen sense of international business competition honed on fierce domestic competition. Japan's economic success was not based merely on business skills and cultural factors; the success was also supported by the "development economy" of a skilled bureaucracy working in the Meiji tradition. Through such organizations as the Economic Planning Agency and the redoubtable Ministry for International Trade and Industry (MITI, its name since changed to METI), not to mention the Ministry of Finance and the Bank of Japan, government planners set the beat for Japan's sudden rise in productivity and business efficiency. Yet beyond all these important factors, the real leaders of the economic surge were a new generation of business managers. By looking at the international marketing work of such companies as Sony, Matsushita (Panasonic), Toyota, Honda, and latter day successes like Fujitsu and Kyocera, we can chart the rise in Japan's GNP. The trading companies, exemplified by Mitsubishi and Mitsui, deserve attention as extraordinary world marketing influences.In the video for this unit, we enter the Japanese factories, see the people who work there and how they work, while voice-overs and interviews with Japanese experts offer a cross-section of views about how their successes have been achieved. Businessmen, bankers, and bureaucrats provide insights into the distinctive kind of management-labor relationship that has been constructed, and the relatively small gap-amazingly small by US standards-between the compensation and living standards of top Japanese executives and the average workers.





Video: "Inside Japan Inc."  "Reinventing Japan."




After viewing the video and reading Chapter 6, you should have a basic understanding of the following concepts.


1. The importance of government planning in Japan's economic success.


2. The impact of young executives and bureaucrats who planned for long-range goals.


3. The significance of Japan's labor-management relationship and how the relationship developed.


4. The reform of the Japanese economy imposed by the US-led Occupation, particularly the transition from xaibatsu to keiretsu, and how these developments affected economic growth.


5. Japan's trade dependency, and vulnerability, with respect to energy and food imports.6. The debate over Japan's proper role on the international stage.



This is a list of important terms and people that you should understand from reading the text.


Capitalist Developmental State

Joseph Dodge



Lifetime Employment

Market Rational/Plan Rational


Nakasone Yasuhiro

Nissan Strike


Technology Transfers

Yoshida Shigeru/Yoshida Doctrine







1. What did Yoshida deem to be the "excesses of democracy?" How did he want the government to respond?


2. In the Chapter Annex of Chapters, four competing views of Japan's international role are presented. Re-read these views, then argue for and against each of them. Which do you believe (if any)? Why?


3. Japan's Constitution prohibits armed forces, yet Japan has its Self Defense Forces. How and why has this happened?


4. In the mid-1970s, Japanese industry shifted from its traditional emphases to new ones. Which industries declined? Which grew? Why did the emphasis change?


5. Much has been made of Japan's system of so-called "lifetime employment," What does this system actually entail? How does it affect employers' attitudes toward, and treatment of, employees?


8. Why did the dollar stay strong and the yen weak during the late 1970s and the early 1980s? Why and how did the yen strengthen in the late 1980s?


9. In the text, Chalmers Johnson proposeS four different explanations of "The Japanese Miracle." Re-read that section. Which, if any, of those theories do you believe is true? Why? Argue for your view and against any you believe to be false.


10. What is the significance to Japan of the visits to the Yasukuni Shrine by the prime minister? to other Asian nations? What impact does it have internationally? Why?


11. Part of Japan's modern success is attributed to planning for long term gains rather than short term profits. How has this affected the development of Japanese industry? How has this affected US-Japan bilateral relations?


12. What are the differences between the prewar zaibatsu and the postwarkeiretsu? Be specific.


13. Japan's international political stance is strongly tied to its economic success, in that the Japanese do not attach a moral agenda to trade ("value-free diplomacy"). Contrast this to American foreign policy. Discuss in terms of Japan's trade dependency with respect to energy, food, and other raw material imports.


Miracle by Design:

The Postwar Resurgence of Japan

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