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Fueling Growth: The Energy Revolution and Economic Policy in Postwar Japan.

Fueling Growth: The Energy Revolution and Economic Policy in Postwar Japan This is a well-researched tracing of early postwar economic policy that uses the energy sector between 1945 and 1960 to explore the origins of contemporary Japanese economic policy. Laura Hein uses most of the available secondary sources to advantage and supplements them with archival materials to add to our understanding of the ways in which energy markets evolved in tandem with the Japanese economy in the postwar period.

Hein's central purpose is to expand our understanding of the Japanese policy process by including labor and the United States as central players. She suggests summarily that previous studies have focused exclusively on domestic business and bureaucratic elites and therefore have painted too narrow a view of how energy and economic policy developed. She argues that the most neglected actors are labor unions and U.S. policymakers, each of which enjoyed considerable influence in postwar developments.

The central historical tale is well known: after the war, Japanese planners sought a solution to pressing economic and political problems. Forbidden by the U.S. Occupation to organize their economy around "state control" and zaibatsu, as in the prewar period, they struggled to find a way to stimulate growth and democracy simultaneously. Planners created comparative advantage, first through a program of priority production, and then through a series of targeted industrial rationalizations and industrial structure policies. Throughout this process they were fortunate to have the support of the general public, the benefits of "special demand" generated by the U.S. military for the Korean (and Cold) War, and public acceptance of the legitimacy of state intervention.

The book has several flaws. The first is that despite admirable archival research--particularly on the U.S. side--Hein's arguments often seem gratuitous. The reader cannot be sure of Hein's own criteria for judging the importance of the role of labor or of the United States because she never states these criteria with any precision. Hein tells us to expect to find the interests of organized labor "accommodated" by economic planners, that labor enjoyed a "direct role" in economic policy, and that "the presence of organized labor continued to shape the range of possible choices for policymakers..." (p. 5). She then says that organized labor was "the source" of Japan's first important postwar economic policy initiatives (p. 6). Later, they "influenced economic policy" and had a "comfortable niche" in decision making (p. 7). On page 80 labor pressure explains "part" of Japanese policy, but on page 81 it is a "potent force." Throughout the book, labor's role is "institutionalized." The reader is not sure if labor was a participant in, a constraint on, or a designer of the policy process. These distinctions matter if policy is to be explained.

A second related problem is that Hein oversells the role of labor. By Hein's own account, labor fails consistently to achieve influence after the first months of the Occupation. It never captures the strategic heights of the economy, and only rarely does more than act as an interest group that, for a short time, threatened conservative dominance and had to be coopted. She documents how labor was "marginalized" during debate over state control of the mines in 1947, how it failed in 1949 to protect wages and industry-wide bargaining, how it was "pushed out" of decision making in electric power by 1949, and how it was "elbowed out" when rationalization policies were adopted in the early 1950s. Hein's claims would be more convincing were they less lofty.

A third and most difficult problem is that the book never clearly states a central problem of its own. Does Hein want to explain how the Japanese rebuilt their economy? Or does she want to describe the energy sectors? The result of embracing multiple, nascent themes is that Hein does too much with too little focus. She offers documentation based on considerable research and effort without the conceptual road map that would help the reader evaluate her evidence.

Fourth, and oddly for a historian, Hein largely dismisses the impact of prewar institutions and market structures on postwar developments in economic and energy policies. She includes a short chapter on the energy industries in the prewar period, but ignores the inheritance of two (unintegrated) oil industries, two coal mining sectors with different political interests, and a policy elite that survived intact across the war and reconstruction. Since the senior officials of MITI (and indeed of much of Japan's postwar political elite) were trained in the prewar and wartime bureaucracy, it is misleading to claim that MITI was "newly established" in 1949 (p. 11). If anything, it was newly reestablished.

There is little to quarrel about vis-a-vis her rich and detailed descriptive account, based largely as it is on previously published secondary sources in English and Japanese. (Although one may wonder why Hein neglects several important institutions in postwar energy policy, such as the Japan Petroleum Exploration Company--postwar Japan's first effort to move upstream independently of the foreign majors; the Federation of Electric Power Companies--possibly the strongest business interest group in postwar Japanese energy policy; and the Science and Technology Agency--created to implement nuclear energy policy in 1956 when business mistrusted MITI's intentions and power.)

It is only when Hein pushes herself beyond these sources that she begins to make an original contribution. This she does in several ways: she is the first to offer a convincing explanation why there was so little U.S. investment in the Japanese utility sector. She disputes the assumption of many that the Japanese rejected this (and all) foreign investment, and tries to show how the reluctance of U.S. investors made them undervalue a rare opportunity. This will be a contested claim, but Hein documents her case well, especially by contrasting the oil and electric utility sectors. Second, Hein provides new insights into the internal dynamics of Japan's most influential and creative unions. That they do not achieve what she claims for them is not to diminish the importance of understanding how they coped with their own membership and their relationship to the business and bureaucratic elite. Third, her claims for the importance of the U.S. agenda in setting Japan's table are made with great and convincing care. Her linkage of U.S. Cold War foreign policy objectives with Japanese economic policy choices is particularly subtle.

In short, this is a frequently enlightening, but protoanalytic monograph. Hein demonstrates her ability to accumulate and weigh evidence judiciously to make a point, but the reader is not always invited to understand why the author feels this or that particular point worth making.

Richard J. Samuels is professor and associate department head in the Department of Political Science at the Massachusetts Institute of Technology. He is the author of several books, including The Politics of Regional Policy in Japan (1983) and The Business of the Japanese State: Energy Markets in Comparative and Historical Perspective (1987). He is currently working on a political and economic history of the Japanese arms industry.
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Author:Samuels, Richard J.
Publication:Business History Review
Article Type:Book Review
Date:Jun 22, 1990
Words:1170
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