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The Fable of the Keiretsu, and Other Tales of Japan We Wish Were True


  • Yoshiro Miwa

    (Faculty of Economics, The University of Tokyo)

  • J. Mark Ramseyer

    (Harvard Law School)


Most of what we collectively think we know about the Japanese economy is urban legend. In fact -- * The keiretsu do not exist, and never did. An entrepreneurial "research institute" in the 1950s created the rosters to sell to Marxist economists looking for the "monopoly capital" that their theory told them would dominate their "bourgeois capitalist" world. Western scholars hoping for examples of culture-specific forms of economic organization then brought them back to the U.S. * The zaibatsu did not succeed pre-war because they bought politicians, exploited the poor, or manipulated disfunctional capital markets. They succeeded for all the usual varied reasons a few firms succeed in any modern economy. They acquired the (perjorative) zaibatsu label because they happened to be thriving when muckraking journalists in the 1920s and 30s came looking for someone to blame for the depression. * Japanese firms have no "main bank system," and never did. Economists popularized the idea as an anecdote on which to peg their mathetical models, and non-economists use it (like the keiretsu) as yet another putatively culture-bound economic phenomenon. * Japanese firms are neither short of outside directors nor badly governed. The charges simply represent yet another variant on populist journalism. Like firms in other competitive capitalist countries, Japanese firms survive only if they adopt governance mechanisms appropriate to the markets within which they must compete. * The Japanese government never seriously guided or intervened in the Japanese economy. When the economy boomed, politicians and bureaucrats did take credit. They had created the success through their own faresighted leadership, they claimed. Marxist scholars dominated Japanese social science departments, and they were not about to suggest instead that market competition might account for the success. Happy as they were to find an example of successful government intervention, neither were most Western scholars of Japan.

Suggested Citation

  • Yoshiro Miwa & J. Mark Ramseyer, 2004. "The Fable of the Keiretsu, and Other Tales of Japan We Wish Were True," CIRJE F-Series CIRJE-F-278, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2004cf278

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    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    2. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
    3. Avinash Dixit, 2003. "Trade Expansion and Contract Enforcement," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1293-1317, December.
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