Capital as Will and Imagination: Schumpeter's Guide to the Postwar Japanese Miracle
Joseph Schumpeter’s conceptions of entrepreneurship, innovation, and creative destruction have been hugely influential. He pioneered the study of economic development and of technological paradigm shifts and was a forerunner of the emerging field of evolutionary economics. He is not thought of as a theorist of credit-supercharged high-speed growth, but this is what he became in postwar Japan. As Mark Metzler shows in Capital as Will and Imagination, economists and planners in postwar Japan seized upon Schumpeter’s ideas and put them directly to work.
The inflationary creation of credit, as theorized by Schumpeter, was a vital but mostly unrecognized aspect of the successful stabilization of Japanese capitalism after World War II and was integral to Japan’s postwar success. It also helps to explain Japan’s bubble, and the global bubbles that have followed it. The heterodox analysis presented in Capital as Will and Imagination goes beyond the economic history of postwar Japan; it opens up a new view of the core circuits of modern capital in general.
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Capital as Will and Imagination: Schumpeter's Guide to the Postwar Japanese Miracle
Joseph Schumpeter’s conceptions of entrepreneurship, innovation, and creative destruction have been hugely influential. He pioneered the study of economic development and of technological paradigm shifts and was a forerunner of the emerging field of evolutionary economics. He is not thought of as a theorist of credit-supercharged high-speed growth, but this is what he became in postwar Japan. As Mark Metzler shows in Capital as Will and Imagination, economists and planners in postwar Japan seized upon Schumpeter’s ideas and put them directly to work.
The inflationary creation of credit, as theorized by Schumpeter, was a vital but mostly unrecognized aspect of the successful stabilization of Japanese capitalism after World War II and was integral to Japan’s postwar success. It also helps to explain Japan’s bubble, and the global bubbles that have followed it. The heterodox analysis presented in Capital as Will and Imagination goes beyond the economic history of postwar Japan; it opens up a new view of the core circuits of modern capital in general.
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Capital as Will and Imagination: Schumpeter's Guide to the Postwar Japanese Miracle
Joseph Schumpeter’s conceptions of entrepreneurship, innovation, and creative destruction have been hugely influential. He pioneered the study of economic development and of technological paradigm shifts and was a forerunner of the emerging field of evolutionary economics. He is not thought of as a theorist of credit-supercharged high-speed growth, but this is what he became in postwar Japan. As Mark Metzler shows in Capital as Will and Imagination, economists and planners in postwar Japan seized upon Schumpeter’s ideas and put them directly to work.
The inflationary creation of credit, as theorized by Schumpeter, was a vital but mostly unrecognized aspect of the successful stabilization of Japanese capitalism after World War II and was integral to Japan’s postwar success. It also helps to explain Japan’s bubble, and the global bubbles that have followed it. The heterodox analysis presented in Capital as Will and Imagination goes beyond the economic history of postwar Japan; it opens up a new view of the core circuits of modern capital in general.
Mark Metzler is Associate Professor of History at the University of Texas at Austin. He is the author of Lever of Empire: The International Gold Standard and the Crisis of Liberalism in Prewar Japan.
Introduction: Inflation and Its ProductionsChapter 1. The Revolution in Prices1.1 Faustian Capital / 1.2 World War I and the Political Economy of Twentieth-Century Inflation / 1.3 Postwar Stabilization / 1.4 The Great Inflation of the 1940s / 1.5 Exporting Inflation / 1.6 The Inflation Comes HomeChapter 2. Dramatis Personae2.1 "The Schumpeter Vogue" / 2.2 At the Monetary Bonfire / 2.3 The Marxists / 2.4 The Capital Creator / 2.5 The SchumpeteriansChapter 3. What Is Capital?3.1 When New Capital Comes onto the Stage / 3.2 The Distribution of Promises / 3.3 Credit Inflation the Mechanism of Capitalist Development / 3.4 Capital as Indication / 3.5 The Capitalist Process as an Ideal–Material CircuitChapter 4. Flows and Stores4.1 Energy, Capital, and Debt / 4.2 Flows of Production / 4.3 Stores of Promises / 4.4 Saving Follows from Investment / 4.5 Power and PlanningChapter 5. Japanese Capitalism under Occupation5.1 Imagining Postwar Development / 5.2 First Responses: Burning, Looting, and Printing / 5.3 The Amplification of Monetary Flows / 5.4 The Constriction of Material-Energetic Flows / 5.5 Liquidating Japanese CapitalismChapter 6. Inflation as Capital6.1 The Ishibashi Line / 6.2 The ESB Line: "Modified Capitalism" / 6.3 Inflation and Social Leveling / 6.4 Taxation as Monetary Regulation / 6.5 The Limits of Modified CapitalismChapter 7. Interlude (Deflation)7.1 Joseph Dodge and the Theory of Capital Restriction / 7.2 The Sphere of International Capital / 7.3 Ministers of Restriction / 7.4 "The So-Called Stabilization Panic" / 7.5 Inside Money and Outside Money / 7.6 The World Economic CrisisChapter 8. The State-Bank Complex8.1 Banking as Economic Governance / 8.2 Superdirect Finance / 8.3 The Privatization of the Positive PolicyChapter 9. The Turning Point9.1 A Schumpeterian Turning Point / 9.2 Social Sources of Keynesian Stabilization / 9.3 The Second Try at Global Postwar Stabilization: Some Interim Conclusions / 9.4 Dollar Capital as Divine Providence / 9.5 "Dangerous Delusions"Chapter 10. High-Speed Growth: The Schumpeterian Boom10.1 The Restoration of the Business Cycle / 10.2 "The Postwar Is Over": The Schumpeterian Boom Begins / 10.3 Ishibashi and Ikeda: The Ascent of the Positive Policy / 10.4 The International Circuit: The External Capital ConstraintChapter 11. High-Speed Growth: Indication and Flow11.1 The Domestic Circuit: Imagined Capital for Real Growth / 11.2 Monetary "Flows," "Leakages," and "Absorption" / 11.3 Credit Creation as Planning; Planning as Credit Creation / 11.4 The Investment Doubling PlanChapter 12. Conclusions: Credere and Debere12.1 Norms and Exceptions / 12.2 Stocks of Debt and Debt-Destruction Crises / 12.3 Autodeflation / 12.4 Mirrors and MiraclesAppendixTable A-1. Basic indicators of money and credit, 1868–1965Table A-2. Credit creation and industrial investment, 1940–1965Table A-3. Prices and wages, 1936–1965Table A-4. Indicators of manufacturing production, 1936–1965NotesReferencesIndex
In this meticulously researched book, the author makes two provocative claims that are apt to start a debate: that Japan's quick growth after World War II was the result of inflation; and that Joseph Schumpeter advocated a mixture of entrepreneurship and inflation as the most effective way to create economic growth. The combination of solid scholarship with bold theorizing makes Capital as Will and Imagination into a very welcome addition to the current debate, not only of the economic history of Japan but also of the nature of economic growth and its causes.
Richard Smethurst
Mark Metzler has written a brilliant book on the economic intellectual underpinnings of Japan's postwar economic recovery and subsequent high-speed economic growth. His approach and conclusions are both powerful and unique. Metzler argues that the European economist who had the greatest impact on Japanese planners after World War II was Joseph Schumpeter, who argued that finance capital is a way to direct the factors of production to new uses. In Capital as Will and Imagination, Metzler uses Schumpeter’s ideas and Japan’s experience as paradigms to look at the rise and development of modern capitalism in general. Building on his earlier book on Japan and the gold standard, Metzler has made himself the primary Western historian of Japanese capitalism in an international context.