Networks and the Japanese “Miracle”

Japan is by all accounts the advanced capitalist society whose market transactions have been most intertwined or embedded in social relations, as Caves and Uekusa suggest in the quote above. The most conspicuous form of network organization in the Japanese economy is keiretsu, a term referring to clusters of interlinked firms that, in the late 1980s, sounded exotic and intimidating given the competitive might of Japanese business at the time, but in the early 2000s smacks of third world crony capitalism, the rigidities of an overly managed economy, and anachronism.

Thus, how Japan's forms of business organization are seen fluctuates with the country's economic fortunes. From the 1950s until the early 1970s, when Japan was growing rapidly but on most development criteria still lagged behind Europe and the United States, a dominant view was that Japan's distinctive economic institutions were cultural anomalies, and the nation's economic advancement was proceeding in spite, not because, of them. In the 1980s, with Japan emerging as the equal, if not the superior, of the West in an array of business and technological endeavors, while retaining, even leveraging, its exotic network forms, the flavor of the commentary changed.