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Austrian Economics in Japan: An Interview with Hiroyuki Okon

Austrian Economics Newsletter

Tags History of the Austrian School of Economics

07/30/2014Hiroyuki Okon

Volume 17, Number 4 (Winter 1997)

An Interview with Hiroyuki Okon, Wakayama University

Hiroyuki Okon is associate professor of economics at Wakayama University, where he teaches undergraduate micro and graduate history of economic thought, and is an adjunct scholar of the Ludwig von Mises Institute. His primary research area is the Austrian School, on which he has written nine published papers, in Japanese and English, that have appeared in Keizai Riron (The Wakayama Economics Review), Osaka Shindai Ronshu, and The Keizai Seminar. His specialties are the economics calculation debate, Hayek's theory of social evolution, and the history of economic thought in Japan. He has twice attended the Austrian Scholars Conference, where he spoke with editors of The Austrian Economics Newsletter.

AEN: What is it like to be an Austrian economist in Japan?

OKON: I suppose Austrians have always felt themselves a breed apart. The Japanese economics profession is just as dominated by neoclassical and statist thinking as anywhere else in the world. So my colleagues think I am radical and a little strange.

But another way to look at it is to see yourself on the cutting edge. I have some students who see it that way. Also, Austrian economics provides the tools to explain phenomena taking place in Japan today, especially in the financial markets, that others do not have ready explanations for, like the recent financial debacle.

AEN: First let's talk about the paper you presented at the Austrian Scholars Conference. Tell us about Katsuichi Yamamoto, who seems somewhat like Mises's Japanese counterpart.

OKON: I was so pleased to see Yamamoto's name listed in the Mises Institute's time line in the Austrian Family Album. My dream is that Austrians all over the world would come to know his name and his contributions to economics. He was born in 1896, so he was younger than Mises and older than Hayek. He died in 1987 at the age of 91. He published 30 books and more than 100 papers, essays, and notes. Soon I'll have the opportunity to visit his archive in the National Library of Japan in Tokyo. It's very far from Wakayama, so it's a rare opportunity for me.

AEN: Are you now writing his biography?

OKON: Yes, but it is a long-term project. In the course of my research, I hope to arrange for the publication of Yamamoto's most important work. This will be a key to promoting Austrian economics in Japan. My first article on Yamamoto appears in the inaugural issue of the economics journal of Wakayama University.

AEN: Let's begin with Yamamoto's intellectual influences.

OKON: He grew up at the turn of the century in severe poverty. In 1910, when he was 14 years old, he witnessed a series of dramatic political events. The Japanese government accused some socialist and anarchist writers, most famously Syuusui Kotoku, of plotting the death of the Emperor Meiji. Twelve people were put to death. Two of them were from Yamamoto's village. This was the first time he heard names such as Peter Kropotokin and Karl Marx.

When he began his serious study of economics in 1920, he was first attracted to the ideas of Hajime Kawakami, a professor at Kyoto Imperial University and author of Binbo Monogatari, or A Study of Poverty, first published in installments in the newspapers from September to December of 1916. This series established Kawakami as one of Japan's leading Marxian thinkers.

Yamamoto went to Kyoto solely for the purpose of studying with Kawakami. So when he finished his studies, and began teaching at the Wakayama College of Commerce, he was a Marxist. He went about enlightening the bourgeoisie and the working class about the oppressiveness of capitalism. However, as he later recalled, he had felt some contradiction in Marx's theory from the beginning.

AEN: How did he make the transition?

OKON: Through the writings of Physiocrat journalist Guillaume Francois Le Trosne and economist A.R.J. Turgot, whom Murray Rothbard regards as a direct forerunner to the modern Austrian School. Yamamoto discovered these writers during studies he undertook in France from 1925 to 1927. Yamamoto was fluent in French.

When he came back to Wakayama, he began teaching the subjective theory of value to his classes. The next year he published two very important papers: "Turgot's Theory of Value" (Naigai Kenkyu 1:2) and "Theories of Value in Physiocracy" (Keizai Ronso 26:3). These were his first repudiations of Marxian economics. Then he topped them off with a direct hit on Kawakami's theories in the very next issue of Naigai Kenkyu.

Then in 1930, his fullest treatment appeared: On Marxism: A Critical Study (Kyoto: Shiso-Kenkyuukai). This book sold tens of thousands of copies. He wrote it before he had read Mises and Hayek--that would come later--but the book is still right on the mark. He exposed the theoretical weaknesses and inconsistencies in Marxian historical materialism and surplus value theory. He said communism couldn't work because no one is clever enough to manage it under collective ownership--an argument similar to Hayek's.

AEN: When did he finally make contact with the modern Austrian School?

OKON: Actually, he follows Eugen von Böhm-Bawerk's argument fairly closely in this 1930 book. He used it to attack the Marxian idea of exploitation. But his knowledge of Mises must have come about in 1931, when he went to Germany and the Soviet Union to observe the realities of the planned economy. He was curious how the problem of calculating profit and loss would be handled by these socialist systems. The result was his second book, Economic Calculation: The Fundamental Problem of Planned Economies (1932). In it he examines the views of Neurath, Tschajanoff, Varga, Strumilin, Leichter, Kautsky, Heimann, Halm, and, at last, Mises.

AEN: What about Hayek?

OKON: It's a curious fact that he doesn't mention Hayek or raise knowledge-problem types of arguments at all. Most likely it was too early in the debate. Instead, his style of argument is entirely Misesian. After presenting all of Mises's views, he writes: "I have nothing to add to Mises's argument. I must confess he is totally right."

AEN: That would make this a very early account of the socialist calculation debate in the history of thought.

OKON: Since Hayek's edited volume didn't appear until 1935, and Trygve Hoff's book didn't appear until 1938, I think we can say that Yamamoto's book was the first in the world to systematically analyze the socialist calculation debate.

Yamamoto then went to teach the mostly Marxist students at the Kokumin Seishin Bunka Kenkyusyo (The Institute for Japanese Spirit and Culture), where he tried to disabuse them of their fallacies from 1932 until the war. This was a period when Marxism was very popular among academics. Marx's Das Kapital became a best-seller, and the leading Marxians were people like Yoshitaro Omori, Itsuro Sakisaka, and Moritaro Yamamada.

AEN: Yamamoto could speak German as well?

OKON: Yes. When he went to Russia, there were no Japanese interpreters available. So he took a Russian-speaking German translator with him. So from Russian to German to Japanese, Japanese audiences got a glimpse of life under Soviet socialism. Also, he spoke English, and during these years testified before the U.S. Congress.

AEN: Just so we are clear, thanks to Yamamoto's 1932 book, Japanese economists knew about the socialist calculation debate before English-speaking economists?

OKON: Three years before. Yes.

AEN: What do you find unique about Yamamoto's approach to the subject?

OKON: Well, he was the only one of the Austrians who actually traveled to the Soviet Union in the thirties to observe what was taking place, and to evaluate it in terms of Austrian theory. He wrote three key articles: "The Russian Farmer Under Communism" (1934), "A Trial of the Planned Economy in Russia" (1936), and "Prices in a Socialist State" (1938).

AEN: What about on the theoretical front?

OKON: He presented Mises's and others' views very clearly. And he also made what I think is an impressive and perhaps original criticism of socialist Eduard Heimann's argument on the calculation problem. Heimann had argued that it was possible to abolish private property in the means of production and still retain the ability to calculate factor prices, so long as markets for consumer goods are retained. The values could simply be imputed backwards from consumers to producers, since values are connected as if by an "elastic string."

But Yamamoto pointed out that in order to have true economic calculation, profits and losses must be calculated by comparing prices and costs. But these prices and costs must be formed independently of each other in their respective markets or otherwise they will not reflect real conditions.

The mutual independence of all product markets and all production markets implies that appraisement is necessary in all markets. Otherwise, economic calculation will not be rational. Abolishing property and markets in factor goods is the equivalent of cutting the "elastic string" and introducing chaos.

AEN: Did Yamamoto extend his analysis to the mixed economy?

OKON: Actually, this was one of his main accomplishments during this period. He was a relentless critic of keizai tosei (economic control) as practiced by the Japanese government and army in the 1930s. First came the cartelization of industries deemed important by the government. Then came the controls on capital flight. Then came the nationalization of utilities.

Finally, by 1938, the "National Mobilization Law" was imposed. It gave the government complete power to control all people and all resources. Japan finally had the wartime economy or tousei-keizai. Even today, we see the effects of this tragic step, in the form of a huge and hugely powerful national police force.

All during this time, the government kept claiming that property was still in the hands of private owners. The government's role was merely in regulating production and distribution. But Yamamoto correctly pointed out that private property was merely a disguise for market socialism.

AEN: Did he ever come under fire for his views?

OKON: Certainly. But he never compromised his relentless arguments. For example, on the nationalization of electricity, he pointed out that the question of whether this or that facility ought to be built is not a technical question but an economic one, which can only be settled by market exchange. He also pointed out that one intervention inevitably leads to more to correct the distortions generated in the first round, a process that ends in the total state.

In 1941, a collection of these blistering writings appeared as A Criticism of the Planned Economy. It is a great book. But just as soon as it was published, the authorities banned it and forced it out of print. So it was never circulated widely and, sadly, never came back into print.

AEN: And then after the war?

OKON: This is when tragedy struck. General MacArthur's occupation forces put Japan under martial law. They rounded up intellectuals suspected of having sympathies with the imperial system. Yamamoto, even as an outspoken free-market economist, was targeted and accused of being an imperial sympathizer. I can think of many things to say about him, but this is not among them. It was the height of ironies. Nonetheless, Yamamoto was jailed by MacArthur for a grueling two years.

During this time, he was forbidden from publishing anything, which accounts for the gap in his vita from 1942 to 1945. It seems tragedy had struck Austrians all over the world. At a time when Mises was struggling to get a job in the U.S., after having been forced to flee his homeland, Yamamoto was jailed by occupation forces in his own country.

After getting out of jail, Yamamoto immediately went back to work on his life's mission. He worked to establish a Liberal Party of Japan, drafted a plan for post-war economic recovery, was professor of economics at Chuo Gakuin University, and was elected to the Diet five times.

AEN: It appears that Yamamoto's life and intellectual interests parallel that of Mises's and Hayek's.

OKON: Yes, even on the question of Keynesianism. In 1955, the Liberal Party and the Democratic Party merged, and the new party made Keynesianism its official economic doctrine. The government's Economic Council Board was renamed the Economic Planning Agency. It produced a "Five Year Plan for Economic Self-Support," which not only gave the projected figures for the next year but also spelled out needed measures to implement the plan.

Yamamoto criticized the plan by pointing out that the government cannot determine the correct prices for countless goods and services. It can't know all the people's demands. It can't forecast people's abilities and available resources. It can't anticipate all available technologies and it can't account for potential natural disasters. He said the only institution that can do these and properly respond to unexpected changes is the free market. Also, during this period, he wrote a book in tribute to Ludwig Erhard, the German free-market reformer.

AEN: And the welfare state?

OKON: The Japanese welfare state began about this same time, in 1955. The new party imposed a series of programs, like unemployment insurance, social security, a guaranteed national income. In 1957, the Kishi cabinet pushed the slogan, "The Abolition of Poverty (By Government Activity)."

Welfare systems are never stable, especially not social security. The revenues are used to fund the present generation, so it's unclear whether my generation will receive anything from the program. The government has tried to solve this situation through an ever-rising tax rate. But clearly that can't work forever.

All this was predicted by Yama- moto in his book A Warning About Social Security: Its Limit in a Free Society, which appeared in 1961. Later came his even more controversial book Welfare and the Ruin of the Country (1975). Here he argued against the idea of dependency on government, on the grounds that it is contrary to true social cooperation. You will be pleased to know this book was dedicated to Mises, Hayek, and Roepke, who, Yamamoto says, most strongly influenced his thought.

AEN: What was Yamamoto's last book about?

OKON: It was a collection of articles published in 1980 under the title The Struggle Against Socialism. In one particularly important chapter, he deals with how markets accommodate drastic and shocking change much better than government can. In "severe trials of reality," like natural disasters and oil shocks, firms and families adapt themselves to changes in accord with their own needs, while government intervention can only obstruct the attempt to deal with these trials.

AEN: Your personal website (http:// contains some material on Yamamoto and the Austrian School generally.

OKON: The bulk of it is an attempt at a complete bibliography covering the socialist calculation debate, year by year, from 1920 to the present, along with several papers, and essays in Japanese and English. In Japanese, I've drawn attention to all the major Austrian thinkers. As the use of the web grows, I can expand knowledge of the Austrian School within Japanese academic circles. We've got lots of work to do, however.

AEN: The last entry in the bibliography is from the New Left Review, an article that appeared in 1997.

OKON: This is an interesting piece by socialists Fikret Adaman and Pat Devine. They summarize the Austrian case against socialism into three points. First, socialist economies can't calculate. Second, they don't provide incentives to produce. And third, they lack a means of discovery.

These authors admit the Austrians are right on these points. They go on to say that socialists have only solved the first two problems, which of course, they haven't. They then assert that socialists have yet to respond to the last problem, the discovery problem. So they conclude that they need an Austrian socialist model that incorporates a socialist solution to the discovery problem.

Of course, that's absurd. There is no socialist means of economic discovery, any more than there is a socialist means of economic calculation. It's curious how they assume that socialism is right, true, and cannot be refuted. The only task is to continually construct and reconstruct a theory around this assertion.

Like most socialists, these authors believe socialism to be superior to markets because socialism is supposedly just, and brings about equality and fairness. Austrians need to do more work in this area. I think the best way to understand and refute these arguments is the approach Mises uses in his Anti-Capitalistic Mentality.

AEN: In the balance, which Austrian argument against the economics of socialism is the most effective?

OKON: My answer must necessarily touch on the continuing debate between Misesians and Hayekians. I think Misesian Joseph Salerno is correct in arguing that the calculation argument is ultimately more important than the knowledge argument.

Look at the history of the Soviet Union. The calculation problem was the overwhelmingly important one for making socialism work. Quite simply, the planners literally had no idea what to tell people to do. They had no way to calculate profit and loss, so instead invented a huge variety of non-market forms of calculation. But these alternative methods had nothing to do with reality.

Also, Salerno's argument is persuasive because he is approaching the very core of Mises's argument. Hayek's argument about the transmission of knowledge in society comes across as ambiguous and fuzzy in comparison. It allows some room for socialists to make yet another counter-argument, but the Mises­Salerno argument is impossible to respond to.

AEN: Who is your favorite Austrian economist?

OKON: I like Mises best. But, still, it's hard to choose. When Murray N. Rothbard died, I wrote an obituary for him in Japanese, calling him "pure, strict, logical, calm, firm, comprehensive, simple, clear, principled, fundamental, thoroughgoing, ardent, energetic, and indomitable." I think all these words also apply to Katsuichi Yamamoto, the greatest Japanese Austrian and libertarian.

AEN: And Hayek?

OKON: I have learned an enormous amount from him. Recently I've been doing some work on reinterpreting Hayek in light of trends in evolutionary economics. The phrase itself is very slippery. As G.M. Hodgson has pointed out, it has been used to describe Veblenian-style Institutionalists, Schumpeterians, Misesians, the classical economists, game theorists, and complexity theorists.

For Hayek, I think it is fair to say his evolutionary economics simply described his focus on economic change. But why is this a subject that consumed him so fully? It's essential to understand the influence that Friedrich Wieser had on Hayek's view of equilibrium. From his earliest years, he pursued his economic studies from this perspective. He was among the most faithful of all general equilibrium theorists. In this respect he was far different from Mises, who never saw equilibrium as a real-world construct.

But during the socialist calculation debate, Hayek discovered that equilibrium theory has its shortcomings. He had difficulties answering the socialist claim--made from the perspective of neoclassical economic theory--that coming up with market prices is as simple as solving simultaneous equations.

AEN: So his later emphasis on social evolution was his out.

OKON: What Bruce Caldwell calls Hayek's "transformation" was a consequence of his career-long and largely unconscious struggle to escape the equilibrium framework. For example, he came to attribute an almost almighty power to prices as the coordinators of all economic activity, even to the neglect of human rationality, entrepreneurship, discovery, and the contributions of firms and other organizations to the competitive process.

Why? Because he never could fully escape his equilibrium orientation. Hayek continued to assume that all theoretical difficulties should and could be overcome by amending, redefining, reinterpreting, or renaming the notion of equilibrium.

As his struggle progressed, he eventually latched on to the idea of spontaneous order. The concept lacks a strict definition, but it allowed him to more easily move from economic theorizing over to social philosophy. Yet even here he encountered problems.

I agree with Viktor Vanberg that there is a serious conflict within Hayek's idea of spontaneous order. On the one hand, we have the methodological individualism inherent in the idea of the invisible hand. On the other we have Hayek's theory of group selection. These two positions are not consistent. There may be a resolution in the idea of "tacit knowledge," but it is not clear where this research program can lead us.

AEN: But Hayek is better known than Mises in Japan?

OKON: Of course, and in fact, the collected works of Hayek are already published in Japanese. The reason is not only related to his Nobel Prize. Hayek's works contain a somewhat ambivalent attitude toward the state and government. They can be read and welcomed by a variety of thinkers from left to right.

In some ways, the ambiguity of Hayek's works is in harmony with our culture and tradition. We Japanese often avoid making our opinions clear and strict. In contrast, Mises is always clear. He doesn't allow for diverse interpretation. That may be considered too radical in Japan. Hayek was invited to Japan several times, but, alas, Mises never was!

AEN: Is Public Choice theory well-known in Japan?

OKON: Buchanan and Tullock are well-known, of course, and their books are translated into Japanese. There are quite a few studies done of the political business cycle, for example. But much of this is another excuse for number crunching, and I doubt it will lead to any fundamental rethinking of economic theory, much less a rethinking of the role of government in society. Nonetheless, it is a good thing for economists to examine bureaucrats as self-interested agents. But it will take Austrian economics to push them further.

AEN: What about your own theoretical development?

OKON: My initial interest in the Austrian School came from being exposed to the ideas of Ludwig Lachmann and G.L.S. Shackle. The process went this way: When I was in graduate school at Osaka City University, I became curious about the economics of socialism. My professor, Yoshinonori Shiozawa, suggested I read Don Lavoie's book Rivalry and Central Planning. I proceeded to write a lengthy paper on the general themes he laid out. It was through this book I found Lachmann, and my writings reflected interest in themes like process, evolution, uncertainty, and the unknowability of the future.

At the same time, I was reading Mises, Hayek, and Kirzner. I began to see that Mises did not have to resort to non-economic arguments to make the case for the economics of a liberal society. To correct the errors of neoclassical and social economic thought, we don't need to abandon theory; we need to take theory more seriously and secure it more firmly to human choice, as Mises did.

AEN: Did you read Human Action?

OKON: Certainly. And I was also fortunate to have discovered the Mises Institute during this period. The Austrian Study Guide produced by the Institute opened up a whole new world to me. I applied to come to the Mises University. On the plane to the U.S. I read Murray Rothbard's Essential von Mises. After that week, I was convinced, and my Austrian orientation was secure. I followed up by reading Man, Economy, and State. About three years ago, I found out about the life and work of Katsuichi Yamamoto from a colleague who is now a professor and is also interested in Austrian economics. Yamamoto has provided me with a wonderful model of how to proceed.

AEN: Do you do applied work as well?

OKON: I've done some work on the recent financial history in Japan. It lends itself to a classic Austrian exposition. In the 1980s, the Japanese economy experienced a huge boom in the price of land and stocks. It went through four phases. Phase one stretched from October 1982 to October 1987. Monetary relaxation came with the Plaza Accord in September 1985. The Nikkei soared from 10,000 to 39,000 yen.

Phase two came with the collapse on Black Monday, which took the market down to 21,000. It recovered the next year. Another decline in 1990 marks the beginning of phase three, and finally the bubble fully deflated by 1992, with the Nikkei falling to 14,309 yen--rock bottom. Neither it nor the economy has recovered since. So much for the "Japanese miracle."

AEN: So the miracle was a mirage?

OKON: A paper mirage created by government. These ups and downs were not natural market phenomena. They were an artificial result induced by the Ministry of Finance and the Bank of Japan. The 1985 Plaza Accord was supposed to create a strong yen and weak dollar, and bring currencies into line. The Bank of Japan reduced the discount rate step by step. It had been as low as 2.5 percent in February 1987, and the volume of money and credit increased rapidly, pushing up stocks and land prices.

The result was a casino economy, with speculation in land and stocks running wild. In 1989, the Bank of Japan finally boosted the rate to 3.25 percent. But contrary to Keynesian expectations, the inflationary frenzy did not stop. So the Bank of Japan kept up its upward march, finally increasing the discount rate to 6 percent. The artificially inflated economy burst, as it inevitably would have no matter what the Bank and the Ministry of Finance had done.

Today, the cycle has started all over again, with the Bank of Japan driving down interest rates in an effort to restart the economy. The discount rate now stands at an incredible 0.5 percent, with the central bank doing everything in its power to boost investment.

But business confidence remains very low, and banks already have too many bad loans on their books. The best way to end these cycles would be for the central bank and the government to stop attempting these countercyclical credit policies. They always backfire. I don't think the managers understand Austrian business cycle theory well enough to know the cause and effect relationship between loose money and sector-specific booms and busts.

AEN: What role did the Ministry of Finance play in this?

OKON: It was the power broker behind the Plaza Accord, of course. It should also be blamed for accepting the bad advice of then-Secretary of the Treasury James Baker to increase "investment in infrastructure." All that did was put strains on the national budget.

But the full story of the Ministry of Finance's attempt to stop the boom hasn't been told. Most real-estate loans came to be monopolized by the Jusen, non-bank banks established by the major city banks in the 1970s as subsidiary companies. The Jusen were founded to provide housing loans, but these loans proved so profitable that banks took them over. That left the Jusen to speculate in real estate. They then became the major players in the money game.

In 1990, the Ministry of Finance worried about the skyrocketing prices and ever-increasing debt load, and imposed the Soryo-Kisei or "total-volume restriction." It applied to all financial institutions, except one: those that were established by Agricultural Cooperatives. It takes no guesswork to know where the money went after that point: straight to those associated with Agricultural Cooperatives, directly into housing and real estate. The Soryo-Kisei had an escape hatch and ended up prolonging the inflationary boom.

AEN: What happened to the Jusen in the meantime?

OKON: The Jusen came crashing down, in a manner similar to the S&L industry in the U. S. The Japanese government decided to dispose of all furyo- saiken, or non-performing loans, and created a new institution to recover the loans, like the American RFC. But to make up the losses, the Ministry of Finance forced mother banks to contribute over 3.5 trillion yen, banks which had nothing to do with the Jusen to give up 1.7 trillion yen, and taxpayers to fork over 680 billion yen.

Where is the fairness and justice in that? The Japanese government was taxing the public to bail out both debtors and bankrupt companies. What about responsibility, market discipline, independence? The Japanese government doesn't know the meaning of these words.

AEN: Has the government learned a lesson?

OKON: Well, we can look at its report on the debacle from December 1995, which discusses how the financial system should be reorganized. On the one hand, it promotes "market mechanism and the principles of self-responsibility." On the other hand, it calls for "utmost efforts to protect depositors and to maintain the stability of the financial system for the next five years," along with a new deposit insurance system.

Here we have the classic interventionist contradiction: a mix of markets and intervention. But in practice you have to have one or the other or else risk another collision. I never expected much from the celebrated "Big Bang" reform of Japan's financial institutions. If we could get the Austrian School better known throughout Japan, people would begin to learn the right lessons from these financial meltdowns.

AEN: What's behind the consumption tax mess?

OKON: Soon after this topsy-turvy ride in finance and real estate, the government embarked on another attempt to extract more revenue from taxpayers, in part to pay for growing welfare payments. It increased the consumption tax from 3 percent to 5 percent. This was yet another hammer blow to market exchange. And it sent the economy into yet another tailspin, just as you would expect. Most economists predicted reduced consumption, but hardly anyone knew how bad it would be.

Ironically, the tax will not likely raise more revenue, and it certainly won't lead to paying off the national debt. The structure of government spending is outpacing its revenues. The tax rate will probably rise further in the future unless something is done. The system will continue to unwind.

AEN: Despite the growth in the Japanese welfare state, how do you account for the higher rate of saving in Japan over the U.S.?

OKON: Some economists attribute this to cultural differences. But I'm not sure that's the whole answer. In Japan, the ultimate sign of social and economic achievement is to own a home. With land so scarce, this is quite difficult to do. Until the age of 40, then, most people are saving money only for this purpose. Without this one factor, I doubt savings rates would be higher than in other countries.

AEN: What kind of policy would you recommend?

OKON: Complete deregulation, lower taxes, and drastic spending cuts, starting with infrastructure, education, and social welfare. It's the usual mix of Austrian policy recommendations that are no less effective and desirable because they are repeated so often. It's the best, and really only, course out of our present woes.

AEN: Do you worry about U.S.­Japan trade disputes?

OKON: It's always unfortunate when these occur, and I'm sure there is plenty of blame to go around. Both the U.S. and Japan practice protectionism in selected industries; neither is in a position to accuse each other of erecting unfair trade barriers. They still do, because hypocrisy is a universal feature of government.

Trade bureaucrats would have us believe that all trade hinges on the balance of decisions they make and the disputes they resolve. For example, we hear about the conspicuous cases of U.S. autos or the Fuji­Kodak dispute. But we know about them only because the respective trade ministries are publicizing them. But trade disputes do not capture the reality or the real miracle of commerce between the two nations.

The reality is that sectoral disputes comprise only a tiny percentage of overall trade between our countries, much less with the rest of the world. The vast majority of international trade is peaceful and undisputed, and takes place outside the offices of the ministries of trade. The miracle is the perfectly ordered system of mutually advantageous exchange that has grown up without government interference. This is especially true in the financial sector, where market traders comprise a powerful force independent of government control.

But we don't hear much about this because it doesn't appear in press releases that business reporters use to write their stories. And it doesn't fit with the model that many political people use to think about international trade. Their model is based on conflict, not cooperation.

AEN: Are there good textbooks in Japan?

OKON: They are passable, but not Austrian. The history of thought books do not deal with Austrian economics in any substantial way. I would like to assign Human Action as a textbook. There is a Japanese translation by Toshio Murata, but the students would never buy it. At 10,000 Yen, it is too expensive. But I do use the Mises Institute edition of business cycle essays with an introduction by Roger Garrison. I like Garrison's graphical approach. It helps bring my Keynesian students around to the Austrian perspective.

AEN: Does Austrian economics in Japan have a future?

OKON: We're working on it. The Austrians in Japan are geographically diverse. Before e-mail, it would have been difficult for us to connect apart from conferences. There are not enough of us to hold the equivalent of an Austrian Scholars Conference here yet.

So right now, we have an e-mail study group that involves eight economists. One of them is Tsutomu Hashimoto of Hokkaido University, who is presently translating O'Driscoll and Rizzo's Economics of Time and Ignorance. In addition, we are making plans for a book on Austrian economics. So the number of people involved and the level of interest is growing.

AEN: Aside from scholarship, do you have any new campaigns?

OKON: The most recent issue to hit Japan is the question of currency traders. Ever since the collapse of the Malaysian currency, we've seen another wave of attacks on speculators. But I am a big defender of people like George Soros. He is doing his best to keep currencies in line at their appropriate market values. Of course he is criticized in Japan. It's a sad fact of history that people tend to turn against markets in hard times, instead of toward them, as they should. But there is no law of history that can't be changed.


Hiroyuki Okon

Hiroyuki Okon is associate professor of economics at Wakayama University, where he teaches undergraduate micro and graduate history of economic thought, and is an adjunct scholar of the Ludwig von Mises Institute. His primary research area is the Austrian School, on which he has written nine published papers, in Japanese and English, that have appeared in Keizai Riron (The Wakayama Economics Review), Osaka Shindai Ronshu, and The Keizai Seminar. His specialties are the economics calculation debate, Hayek's theory of social evolution, and the history of economic thought in Japan.