Chair: Ehud Harari, Hebrew University of Jerusalem

Discussant: Quansheng Zhao, American University

John Campbell has called Chalmers Johnson’s "capitalist developmental state" the only concept from Japanese studies to be widely applied in the larger field of comparative politics. Now, nearly twenty years since Johnson coined the term, does it still fit the nation for which it was originally intended?

The CDS concept has generated enormous controversy. Some political scientists have argued it is impossible for the state to act independently from interest groups, while some economists have argued that "picking winners" could only slow, not propel, economic growth. MITI’s initial strong endorsement of the concept was reflected in the speed with which it translated Johnson’s MITI and the Japanese Miracle into Japanese. However, after fifteen years of American criticism for the trade-distorting effects of industrial policy, MITI officials now insist that they’re not so powerful after all.

The panel will consider whether the CDS concept still applies in a Japan which has experienced "deregulation," financial and trade liberalization, the challenges of competing in a time of rapidly changing technologies, and nearly a decade of economic stagnation. Have criticisms of the concept been justified? Does the concept need to be modified? Does it apply to a smaller part of the state? What does MITI mean when it says it has abandoned industrial policy?

To allow the audience to read the papers before the conference, they will be available by February 10, 2000 on the website of the Japan Information Access Project: http://www.nmjc.org/jiap/ Paper presentations will be firmly limited to 10 minutes each to allow a full hour for discussion.

Lonny E. Carlile, University of Hawaii

There has been a concerted drive in Japan over the past twenty years to ‘reinvent government.’ In conjunction with this, ambitious plans have been put forward by a series of high profile commissions for thoroughgoing "administrative reform." These plans have recently begun to bear fruit in legislation that could potentially bring about substantial changes in the administrative structure and procedures of the Japanese government bureaucracy.

The question that is addressed in the paper is to what extent, if at all, does this current restructuring of the bureaucracy constitute a deconstruction of the Japanese developmental state? The issue is tackled by first discussing the extent to which the organizational structure and functions performed by the Japanese bureaucracy since World War II corresponded to the capitalist developmental state model. It then reviews the kinds of changes that are currently being proposed or are under way and discusses how the slated changes involved are likely to impact the basic structure and function of the Japanese state. The resulting picture of the future Japanese state is then compared with the CDS model and the pre-reform Japanese bureaucracy in order to assess whether the administrative reform effort constitutes a modification or reinforcement of the CDS.

Mark Tilton, Purdue University

How has guidance by the capitalist developmental state coexisted with the exuberance of the capitalist market? A number of scholars have argued that refusals by firms to go along with state-run cartels, as in the case of Sumitomo Metals or the machine tool industry, reveal the weakness of the CDS even during the period of rapid growth. Some also argue that Japan’s economy, far from being state-controlled and cartel-ridden, is actually characterized by more intense competition than most Western economies.

The debate over the Japanese state and competition has received attention in international trade circles as Japan’s trading partners have accused Japan of nurturing private anticompetitive practices in such industries as film, glass, autos, soda ash, and steel. The alleged purpose is to covertly make possible trade protection that can no longer be given officially and openly. In response to such criticisms the Japanese Diet has toughened Japan’s Anti-Monopoly Law and MITI has publicly backed away from sponsoring cartels.

How should we evaluate competition-based critiques of the CDS model? How do we assess the evidence that MITI has been able to further industrial policies by relying on restraints on competition? How have the reforms to the Anti-Monopoly Law and changes in industrial policy over the last decade changed the relationship between the capitalist developmental state and private anti-competitive arrangements?

Marie Anchordoguy, University of Washington

This paper will analyze Japan’s telecommunications industry policy over the past 20 years, focusing on NTT. It will analyze the debate preceding the partial privatization of NTT in 1985 up through the decision to break NTT up into two regional local firms and one long-distance/international company in July 1999. The focus will be on how state capacity has changed and whether industrial policies toward telecom have been effective in the past two decades.

The paper will show that the partial privatization and subsequent "break-up" of NTT were primarily driven by political objectives rather than by concerns for economic efficiency and consumer welfare. MPT wanted to increase its power; MITI was trying to wrestle control of telecom; MOF wanted to sell NTT stock to cover the national debt; politicians were pro-MPT because post office personnel get the vote out; Keidanren, representing firms left out of the "NTT family," wanted privatization and selective liberalization; there was no strong representative for consumer interests in the policy-making process. Who won and who lost power and why will be a core focus of the study.

The paper will also analyze the nature of technological change in the industry and explore what role telecom policy has had in Japan’s current lag in telecom software and internet-related technologies. To what extent have industrial policies toward telecom changed with the times? Are the policies today appropriate for the international environment? Will NTT’s "break-up" help it become more competitive? Is the CDS model still effective?

Teruo Gotoda, Soai University, Osaka

The current economic crisis has pushed Japan’s postwar economic miracle into distant memory. For almost a decade, the Japanese people have witnessed appalling governmental mismanagement, not to mention corruption, in dealing with grave economic difficulties. Fearful of future pay cuts, unemployment, and a failed pension system, the population has simply stopped spending. In addition, the bursting of the real estate and stock market bubbles have forced the shutdown of financial institutions. The Ministry of Finance tried its best to save the "convoy system" of financial institutions with taxpayers’ money, but to no avail. At the same time the dogged insistence by the Bank of Japan on keeping interest rates at zero percent exasperates pensioners and ensures ever higher rates of savings in a nation that is drowning in savings.