The social origin of economic reasoning: Three changing paradigms in Japanese economic policy, 1931-1965

The economic policy of the Japanese state between the 1930s and the 1960s showed three distinctive paradigms: the managed economy in the 1930s and the 1940s, the technological innovation in the 1950s, and the high growth in the 1960s. The economic reasoning behind these three policy paradigms differs itself from neoclassical economics not only in the unit of analysis, the preference of ends, and the instrumental means, but also in several other basic aspects concerning the methodology of economic science. Is it governed by the same universal and transcendent economic laws as some economists suggest? Is it simply a different value system which has nothing to do with rationality as some ultraculturalists suggest? What is the dynamic of change? And what is the nature of economic reasoning?;I conclude that economic reasoning is cultural not only because instrumental rationality varies cross-nationally, but also because institutionalized beliefs of rationality reproduce themselves overtime; economic reasoning is historical not only because its methodology can be inductive, but also because its focus in a nation is historically defined; economic reasoning is institutional, not only because its instrumental means is organizational, but also because its propositions are intellectually constrained, reflecting collectively shared beliefs of rationality.;Drawing upon four case studies, I argue that Japanese economic reasoning is not simply a value system. It reflects a rationality, but this rationality is significantly different from the rationality described by neoclassical economics. I found that the dynamics of change in Japanese economic reasoning came from four dimensions: the changing perception of international environment functioned to set up the primary goals for economic actors, challenging the existing policy paradigm in economic thinking; the diffusion of foreign economic ideas through cross-national learning served in finding new policy paradigms, providing intellectual legitimacy to each policy alternative; the resulting manifesto of popular values operated in selecting the acceptable new policy paradigms, defining the moral and ethical nature of each economic rationale; and the constant trajectory of institutional structures of the state and state-business relations helped to identify the social foundation of the instrumental means.