Financial Stabilization in Meiji Japan

<p>With a new look at the 1880s financial reforms in Japan Steven J. Ericson's <em>Financial Stabilization in Meiji Japan </em>overturns widely held views of the program carried out by Finance Minister Matsukata Masayoshi. As Ericson shows rather than constituting an orthodox financial-stabilization program--a sort of precursor of the "neoliberal" reforms promoted by the IMF in the 1980s and 1990s--Matsukata's policies differed in significant ways from both classical economic liberalism and neoliberal orthodoxy.</p><p>The Matsukata financial reform has become famous largely for the wrong reasons and Ericson sets the record straight. He shows that Matsukata intended to pursue fiscal retrenchment and budget-balancing when he became finance minister in late 1881. Various exigencies including foreign military crises and a worsening domestic depression compelled him instead to<em> increase </em>spending by running deficits and floating public bonds. Though he drastically reduced the money supply he combined the positive and contractionary policies of his immediate predecessors to pull off a program of "expansionary austerity" paralleling state responses to financial crisis elsewhere in the world both then and now.</p><p>Through a new and much-needed recalibration of this pivotal financial reform <em>Financial Stabilization in Meiji Japan</em> demonstrates that in several ways ranging from state-led export promotion to the creation of a government-controlled central bank Matsukata advanced policies that were more in line with a nationalist developmentalist approach than with a liberal economic one. Ericson shows that Matsukata Masayoshi was far from a rigid adherent of classical economic liberalism.</p>