[PEN-L:32794] Damn Marxist Economists Again

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

The punch line comes at the end.

"Capitalist Politicians, Socialist Bureaucrats? Legends of
 Government Planning from Japan"
      Antitrust Bulletin, Forthcoming

      BY:  YOSHIRO MIWA
              University of Tokyo
           J. MARK RAMSEYER
              Harvard Law School

Document:  Available from the SSRN Electronic Paper Collection:
           http://papers.ssrn.com/paper.taf?abstract_id=349341

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Paper ID:  Harvard Law and Economics Discussion Paper No. 385

 Contact:  J. MARK RAMSEYER
   Email:  Mailto:RAMSEYER@xxxxxxxxxxxxxxx
  Postal:  Harvard Law School
           1575 Massachusetts Avenue
           Cambridge, MA 02138  UNITED STATES
   Phone:  617-496-4878
     Fax:  617-496-6118
 Co-Auth:  YOSHIRO MIWA
   Email:  Mailto:miwa@xxxxxxxxxxxxxxx
  Postal:  University of Tokyo
           7-3-1 Hongo, Bunkyo-ku
           Tokyo 113-0033,    JAPAN

ABSTRACT:
 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.

 There is a broader moral here, and it goes to the perils of
 relying on secondary research. For obvious reasons, Japanese
 politicians and bureaucrats encouraged stories that disguised
 ordinary pork-barrel policies as growth-enhancing intervention.
 Although the tales they told differed little from the
 self-serving accounts politicians tell everywhere, in the 1960s
 most Japanese social scientists were Marxists. Understandably,
 they had little sense of how markets worked, and no skepticism
 at all about the powers of governments to plan. Yet it is their
 accounts on which modern observers rely for their picture of the
 postwar Japanese political economy. Had modern scholars done
 more than recount the conclusions in the secondary literature,
 they would have noticed that they were merely adding academic
 gloss to political sloganeering. Unfortunately, they never
 tried.


--

Michael Perelman
Economics Department
California State University
michael@xxxxxxxxxxxxxxxxx
Chico, CA 95929
530-898-5321
fax 530-898-5901