Vol. 9 No. 7 (July 1999) pp.318-320.

JAPANESE LAW: AN ECONOMIC APPROACH by J. Mark Ramseyer and Minoru Nakazato. Chicago: The University of Chicago Press, 1999. 310 pp.

Reviewed by Kenneth Holland, Department of Political Science, The University of Memphis. Email: kholland@memphis.edu.

In THE CLOSING OF THE AMERICAN MIND (1988), Allan Bloom describes the fragmentation of the American university, a disciplinary splintering so severe that it is now difficult to find anything "universal" about a university. Not only do the humanities, social sciences and natural sciences have little in common, but the various social sciences are also at odds with each other. The two extremes, observes Bloom, are anthropology and economics.

Each is based on a different understanding of human nature. Each traces the cause of human behavior to a different source. Anthropologists regard the human experience as rooted in mystery, with religion as its most profound expression. Economists view humans as rational actors, inhabiting a universe that indicates the path to good and evil through pleasure and pain. Anthropologists trace human behavior to culture and note that there are many cultures, both past and present. Economists, on the other hand, explain human actions by the universal human desire to maximize pleasure and minimize pain. Fundamentally, all human beings everywhere and at all times are the same.

Who, then, can best explain Japanese law--the anthropologist or the economist? Ramseyer and Nakazato, law professors trained in economics, believe that the anthropologists have gotten it all wrong. Cultural differences between Japan and the United States do not explain, they say, the legal differences between the two countries. In fact, what is truly remarkable, they observe, is the legal concurrence between the world's two wealthiest nations. By emphasizing the uniqueness of Japan's culture, anthropologists and sociologists have misled Westerners into thinking that Japanese law is irrational and non-Western. Beginning with the premise that Japanese and Americans are fundamentally the same, the authors draw our attention to the similar ways in which they have structured their laws.

Not only do Japanese and American individuals share much in common, their two societies are similar. Both Japan and the United States are democracies, with high respect for individual rights and public opinion, and highly successful free market economies. The scientists of culture see East and West, shame societies and guilt societies (to use Ruth Benedict's categories in CRYSANTHEMUM AND THE SWORD: PATTERNS OF JAPANESE CULTURE). Lawyers trained in the Chicago school of economics, by contrast, see convergence and the institutions that all advanced industrialized democracies share. Ramseyer and Nakazato's findings support the convergence theory of Francis Fukuyama developed in THE END OF HISTORY AND THE LAST MAN (1993) and challenge the sharp contrast between East and West drawn by Samuel Huntington in THE CLASH OF CIVILIZATIONS AND THE REMAKING OF WORLD ORDER (1998).

The remaining differences between the laws of Japan and the United States are due, say the authors, to institutional, not cultural, variation. Governments build institutions and can change them at any time. Ramseyer and Nakazato explain differences between Japanese and U. S. civil procedure, for example, by noting that both federalism and trial by jury are unknown in Japan. In an environment of rational decision making, institutions matter because they structure incentives. Different sets of incentives produce different behaviors. The emphasis on institutions as explanations of behavior rather than culture is reflected also in Guy Peter's INSTITUTIONAL THEORY IN POLITICAL SCIENCE : THE NEW INSTITUTIONALISM (1999).

There is an ironic reference to the Japanese novelist Yukio Mishima in the book. In the 1960s Mishima noted with alarm that Japan was growing more and more westernized. He tried unsuccessfully to revive worship of the emperor and to return power to the military. In front of soldiers he was hoping to incite to engage in a coup d'etat, he committed SEPPUKU, a ritualized form of suicide. By referring to the novelist as a lunatic, Ramseyer and Nakazato reveal their insensitivity to the question whether Japan has given up some things of value by embracing capitalism, liberal democracy and rationalism. There is no discussion of the high value peoples around the world ascribe to nationalism and what there is about this irrational drive that can mobilize millions to support tyrants and to sacrifice their wealth and lives. Is there an economic explanation for the rise of nationalism in Europe, Africa and Asia?

According to Ramseyer and Nakazato, anthropologists base their generalizations about Japanese law on myths. Anthropologists have observed the following differences between U. S. and Japanese law:

Judicial decisions do not affect Japanese behavior.
Japan's economic success is due to its unique culture.

Japan needs far fewer lawyers than does the United States.

Personal relationships are more important than contracts in Japan.

Japanese are less likely to sue than Americans.

Gangsters have much influence on Japanese corporations' shareholder meetings.

Japanese courts cannot enforce their orders.

Japan's low crime rate is due to Japanese culture.

Administrative agencies in Japan regulate corporations by means of extra-legal "administrative guidance."

Each of these statements is a myth. Ramseyer and Nakazato are iconoclasts. They destroy the myths on which these assertions are based. They found that:

Judicial outcomes shape human behavior to the same extent they do in the United States.

Japan's economic success is due to the protection afforded private property by the laws and the courts.

The number of legally-trained persons working in Japan is roughly the same as in the United States, adjusted for population.

Japanese contract law closely resembles U. S. contract law, and contracts are strictly enforced in Japan.

The litigation rate in Japan is lower than that in the U. S. only because judicial decisions are easier to predict and there are no juries.

The rates for blackmail of corporate executives is the same in Japan and the United States. Gangsters have no special influence in Japan.

Japanese courts have powerful ways of forcing defendants to comply with their orders and they do make use of them.

Japan's low crime rate is due to the ethnic, racial, religious and socioeconomic homogeneity of its population.

Japanese courts, citing the rule of law, no longer permit administrative guidance.

The authors have demonstrated the utility of the economic approach to analysis of the law and legal system of countries around the world. The approach reveals inefficiencies and can contribute to legal reform. The book proves its premise that Japanese law closely matches that of the United States and that the remaining differences are due to institutional variation. This finding invites political scientists to compare Japanese and U. S. institutions and to calculate how much variation in policy is explained by institutions and how much by culture. The authors, however, go too far in jettisoning culture from their attempts to explain behavior. Political culture is necessary to explain a variety of political phenomena, including institutional differences. Why does Japan have a unitary government rather than a federal one? Why did governance by local, elected school boards--a favorite reform of the American occupation forces--fail miserably in Japan? Why is Japanese productivity higher than that of most western countries? Political culture, coupled with the new institutionalism, are more powerful analytical tools than the rational choice model developed by the Chicago school alone.