To talk about the economic challenge of Japan has become almost trite. We have all become familiar with the growing body of literature devoted to detailing various aspects of Japan's economic achievements: Japan has the world's highest rates of personal savings; it has tranquil and almost strike-free labour relations; its rates of unemployment are at least five points under those of other advanced industrial democracies; it is, today, the world's leading creditor nation, with net capital exports during 1986 of $131 billion; it has an enviable reputation for high quality and price competitive manufactured goods; it is the world's preferred supplier of automobiles and consumer electronics; and the list goes on and on. 1 What is perhaps less well known is how utterly controversial and even ideological the explanation of Japan's economic performance has become, particularly among Japan's competitors, and above all in the United States.