To the Editor

We received the following letter from the author of "The Irrelevance of Japan," which our editor in chief mentioned in his April letter:

I am flattered to have attracted the attention of your publication, but I suspect that you may have misunderstood my perspective. I too am impressed by the vitality of certain areas of "pop" culture. Just as important are Japan's strengths in product design, logistics and production engineering. But if macro-economic policy is designed to shrink the economy, these micro strengths are but whipped-up spume on a stagnant sea.

Observations about micro strengths should also be balanced against identification of micro weaknesses, none of which is more obvious than Japanese companies' inattention to marketing in general and brand development in particular.

Then there is the question of what business is for. Is it, as has been understood for the period since 1938, simply to accumulate production potential? Or should it serve also the interests of capital providers, most notably Japan's pensioners?

These are complicated questions which do not admit of "cultural" explanations, and are not significantly illuminated by the suggestion that one age cohort is increasingly familiar with mobile phones. Indeed, a total balance sheet of Japan's micro abilities and defects would likely show it as neither better nor worse than any other major developed economy apart from the exceptional case, the US.

This is most regrettable. Of course Japan is a rich nation with huge latent potential, a potential so colorfully visible in Shibuya. There is no reason, save the greatest failure of macro-economic policy making since the 1930s, that Japan should not again experience stable and robust nominal GDP growth.

But only with the ruling class out of the way can micro strengths reasonably be expected to make themselves visible enough to affect the macro outcome. The mantra monotsukuri Nippon (a ruling class obsession) obscures the fact that what Japan excels at is something entirely different, and an area of accomplishment which, as you note, belongs more to Shibuya's orange hair brigade than to Tokyo University's law graduates.

The parallel I drew in my essay was with Britain in the 1960s and 1970s. Not a dynamic period macro-economically, but the high water mark of Britain's "pop" culture. Today Britain is economically far more successful, but in 2002 failed for the first time since the 60s to place a band in Billboard's Top 100.

We should be careful to separate micro success from macro sclerosis, and vice versa. Furthermore we should separate our view of Tokyo from our view of Japan. According to a recent OECD publication, 46% of all fast growing firms are in Kanto. The number of such firms per capita in Kanto is 30 to 100 per cent higher than in the rest of the country.

Tokyo, and Shibuya in particular, can probably look after themselves. But the price of macro economic failure becomes incarnate close to Shibuya, in Yoyogi Park. Whether one focuses on Yoyogi or Shibuya is a matter of personal taste. I fear that, for now, Yoyogi represents the more significant development.