Explaining Policy Failure: Japan and the International Economy, 1969–1971

This paper examines the determinants of Japan's most serious postwar blunder: failure to define and implement effective and timely counter-measures to deal with its change from deficit to surplus international monetary status during the 1969–1971 period. It concludes that intense bureaucratic compartmentalization and a lack of supra-ministerial leadership of national policy were key determinants of this failure, leaving Japan's political system dependent upon irresistible external pressure (gai-atsu,) in this case from the United States, to define and force implementation of necessary policy changes. This critical but largely ignored episode illustrates a negative aspect of the traditional insulation of Japan's national bureacracy from political (as opposed to administrative) interference in the definition and pursuit of basic national policy objectives.