CIRJE-F-177 "Capitalist Politicians, Socialist Bureaucrats? Legends of Government Planning from Japan"
Author Name Yoshiro Miwa, Yoshiro and J. Mark Ramseyer
Date October 2002
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Remarks Subsequently published in Antitrust Bulletin, pp. 595-627, Fall 2003.

The debate over the role bureaucrats played in the postwar Japanese economy has been the wrong debate. To date, it has been a debate about effectiveness: the government tried to promote growth through interventionist policies, but did it succeed? In fact, the government never tried. Majority voters did not want interventionist bureaucrats, and consistently rejected communist and socialist candidates offering interventionist approaches. Instead, they chose candidates from the centrist, decidedly non-interventionist party. Reflecting those electoral market exigencies, politicians in power seldom gave their bureaucrats the authority to alter market investment and production decisions.

To explore these issues, we first investigate the tools Japanese politicians gave their bureaucrats. We find that bureaucrats lacked the mechanisms they would have needed to shape significantly production or investment. Second, we reexamine the central anecdote behind the legend of Japanese bureaucratic power: the 1965 showdown between Sumitomo Metals and MITI. We find that Sumitomo rather than MITI won the battle. Last, we survey the case law on bureaucratic power, and find that Japanese courts strictly restricted bureaucratic discretion.