Introduction

Japan’s prolonged economic stagnation has left many observers questioning the wisdom of Japanese economic organization and institutions. The current system is often viewed as so cozy and inflexible that reformers have been and will be unable to muster sufficient political power to force change until the system is confronted with a major crisis. Conventional wisdom, in both media analysis and academic research, is that a coalition of powerful political interest groups is blocking critically needed reforms, because these groups would lose wealth and power. This view provides, we argue below, a far too simplistic picture of institutions and institutional change in Japan.