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The Japanese Economy.

This may be the book that every economic Japanologist and every Japanological economist has been awaiting for 20 years, 25 years, or ever since he or she decided the "Japanese miracle" was "for real" rather than a flash in the pan. It combines in 14 chapters up-to-date literary descriptions of various aspects of the Japanese economy, historical accounts of how some Japanese economic institutions "got that way," and frequent injections of state-of-the-art theoretical analyses (mainly quantitative, in chapter appendices) of problems inherent in the main text of that chapter, suggested by the literature surrounding it, or of special interest to the author. Our author, Professor Ito, was born in Japan in 1950, the year the Korean War began and by my reckoning three years before the take-off of the "Japanese miracle." His education was entirely Japanese until, in the early 1970s, he came to America as a graduate student in economics. Receiving a doctorate at Harvard, he taught there and at the University of Minnesota. His present primary affiliation is a full professorship at Hitotsubashi University in the Tokyo suburbs; he retains secondary affiliations with Minnesota, with the National Bureau of Economic Research and (unofficially) with various trans-Pacific airlines.

After a two-chapter introduction beginning with 1603--the end of nearly 150 years of intermittent civil war by the accession of Tokugawa Iyeyasu to the Shogunate--Professor Ito presents four chapters on macrodynamics. They deal with growth, fluctuations, domestic financial markets, public finance, and macro-policy both fiscal and monetary. This group, which for some readers is the heart of the book, is followed by three chapters essentially micro-economic--industrial structure and policy, labor and industrial relations, saving and capital costs. The next pair of chapters introduces the international economy; one is on trade, the other on finance and exchange rates. I believe the international-finance chapter involves Professor Ito's principal field of specialized economic study. To bring the book to a close, we have three "current events" chapters on controversial matters. Chapter 12 is about the economic conflicts or "frictions" of Japan with the U.S. Chapters 13-14 relate somewhat less directly to the parlous state of economic relations between Professor Ito's (and my) "two countries." The first of this closing pair of chapters deals with the distribution system; the second discusses asset prices (land and equities), which may or may not have been undergoing "bubble" phenomena as our author was putting pen to word processor. There is no summary chapter on "Whither Are We Drifting?" Professor Ito wisely refrains from either forecasting or futurology, but I imagine him to be basically an optimist about Japan's economic prospects.

A remarkable performance, both piece by piece and all in all, but with items for quibbly reviewers to quibble about. This reviewer too is on the quibbly side, with four quibbles.

Quibble #1 is about the blurbs and the book jacket: This book is touted as an undergraduate text, whereas it is basically a treatise and a reference work. As a text, it is both too expensive and too overwhelming. How many "old Japan hands" would need, or even look upon with equanimity, a similar work on China, Germany, Brazil, or any other country about whose economy they know no more than the representative undergraduate "major" in economics, international relations, public policy, or Asian studies in an American, British, Canadian, or Australian university knows about Japan's?

Quibble #2 is in part a condolence. If published ten or even five years ago, a book like this one would be seriously out of date already in many respects. (The ambitious Brookings Institution study of Asia's New Giant was "dated" in spots even before publication (1976) by the oil shock of 1973!) Someone, presumably Professor Ito himself, must therefore undertake to revise and re-revise the descriptive sections of most of these chapters, if the book is to remain current in the year 2000. I might also add that fads, fashions, fancies, and follies in quantitative economic scholarship are frequently fairly flexible, so that some of Professor Ito's brilliant appendices risk superannuation or worse over the same period 1992-2000. They may by the later year be dead as doornails, phlogiston, or the ether--mentioning no examples nearer home! Such being the case how much of his bright professional future will our author be willing to devote to "donkey work" of keeping these pages up to date, and how large a staff will assist him?

Quibble #3 involves diplomacy and human relations, at which I am a notorious malpracticioner. In his controversial chapters, Professor Ito does his level best to be impartial and even-handed as between producer interests in Japan and the U.S. But his level best consists largely of over-cautious blandness. With so much blame to go round between the Japan- and the America-bashers, I should have preferred a more "plague on both your houses" approach, including more attention to consumer interests in the two countries.

Question #4, and last, is likewise idiosyncratic: I should have preferred a different balance--more history, more microeconomics (industry studies), even a little futurology, at the expense of quite so much evidence that our author "Could distinguish, and divide/A hair twixt south and south-west side." What seems to me especially down-played here is variability within Japan. Tokyo is no more like Osaka than New York is like Chicago, and Mitsui no more like Mitsubishi than Ford is like General Motors, or the New York Times like USA Today.
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Author:Bronfenbrenner, Martin
Publication:Southern Economic Journal
Article Type:Book Review
Date:Oct 1, 1992
Words:903
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