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The Fable of the Keiretsu

Urban Legends of the Japanese Economy

For Western economists and journalists, the most distinctive facet of the post-war Japanese business world has been the keiretsu, or the insular business alliances among powerful corporations. Within keiretsu groups, argue these observers, firms preferentially trade, lend money, take and receive technical and financial assistance, and cement their ties through cross-shareholding agreements. In The Fable of the Keiretsu, Yoshiro Miwa and J. Mark Ramseyer demonstrate that all this talk is really just urban legend.

In their insightful analysis, the authors show that the very idea of the keiretsu was created and propagated by Marxist scholars in post-war Japan. Western scholars merely repatriated the legend to show the culturally contingent nature of modern economic analysis. Laying waste to the notion of keiretsu, the authors debunk several related “facts” as well: that Japanese firms maintain special arrangements with a “main bank,” that firms are systematically poorly managed, and that the Japanese government guided post-war growth. In demolishing these long-held assumptions, they offer one of the few reliable chronicles of the realities of Japanese business.

192 pages | 2 line drawings, 14 tables | 6 x 9 | © 2006

Asian Studies: East Asia

Economics and Business: Business--Business Economics and Management Studies, Economics--History, Economics--International and Comparative, Economics--Money and Banking

History: Asian History

Law and Legal Studies: International Law, Law and Economics


“In this sparkling tour de force, Miwa and Ramseyer drive a final stake through the heart of that venerable vampire, the keiretsu. Fearlessly criticizing almost everyone who has previously written on this subject, they clear away the thicket of nonsense that has for so long obscured for so many the true workings of the Japanese economy.”--Gary Saxonhouse, University of Michigan

Gary Saxonhouse

“Miwa and Ramseyer so systematically dismantle the conventional understanding of Japanese economic institutions that The Fable of the Keiretsu will no doubt be an instant classic. Their no-holds-barred account leaves the prior conception of the Japanese economy as a system of interrelated corporations and banks with little connection to a market economy in a shambles. There will surely be a strong reaction to their thesis that the keiretsu, main banks, and successful central government planning were figments of the imagination of academics on both sides of the Pacific. But Miwa and Ramseyer’s data are so compelling that I don’t see how the pieces could ever be put back together again.”--Roberta Romano, Yale Law School

Roberta Romano

The Fable of the Keiretsu is so important and well written, it should become a classic in both the academic and popular literature on Japan. Urban legends about Japan view the country as following some kind of Confucian collectivism that does not follow behavior that would be consistent with economic rationality. Yoshiro Miwa and Mark Ramseyer instead argue that the facts about Japan conform closely with what would be both observed and expected in a market economy in which firms maximize profits.”--Daniel F. Spulber, Kellogg School of Management, Northwestern University

Daniel F. Spulber

"The keiretsu is only one of the mythological beasts slain by ridicule and meticulous statistics in this highly readable knockabout polemic."

Ronald P. Dore | Pacific Affairs

Table of Contents

Preface ix
Acknowledgements xi

1. Introduction 1
2. The Fable of Keiretsu 6
3. And of the Zaibatsu 38
4. The Myth of the Main Bank 61
5. And of Outside Directors 89
6. Legends of Government Guidance 115
7. The Cost of Kipling 147

Notes 161
References 165
Index 179

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