The Japanese economy is at a crossroads. Forty years of superlative economic expansion have been followed by more than four years of severe stagnation. Japan seems mired in a bog, weighed down by a series of financial crises unprecedented in the postwar era, a major wave of industrial hollowing-out, rising unemployment and corporate bankruptcy, and a growing divide between insider haves and outsider have-nots throughout the system.

Looking at the contemporary economic situation, one cannot but ask whatever happened to the miracle? What became of the Japanese economy that appeared so threatening that some Americans spoke of the need for cold war-style containment? Where today is the developmental state capable of turning depression to growth on the basis of smart industrial policies that deserved to be emulated throughout the world? What is the condition of the fabled &&-e&u network of stock affiliated companies in big business? And how well protected today are Japan’s celebrated “crown jewels”: the lifetime employment system, the wage-seniority system, and the enterprise-union system?

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