For over two decades, economists and political scientists have cited Japan to show just how effective a strong, well-designed industrial policy can be. Chalmers Johnson, president of the Japan Policy Research Institute, ably represented this point of view in his 1982 book MITI and the Japanese Miracle: The Growth of Industrial Policy, writing that "Japan's postwar economic triumph-that is, the unprecedented economic growth that has made Japan the second most productive open economy that has ever existed-is the best example of a state-guided market system currently available."

But more recently the Japanese system has also met with a fair amount of criticism, and in Divided Sun, Scott Callon, the chief market strategist of Bankers Trust Asia Securities in Tokyo, weighs in on that side of the argument. He notes that in the case of Japan, government's ability to combine cooperation with competition has seriously disintegrated-that in fact the process of disintegration was already under way when glowing assessments like Johnson's appeared. "The elaborate structures to promote cooperation that appear in Japanese high-tech consortia are often nothing but a public show: seemingly cooperative institutions mask an underlying reality of fierce competition and conflict," he says. And the evidence he uses to support this charge comes from four different Ministry of International Trade and Industry (MITI) case studies extending from 1975 to the present time: the Supercomputer Consortium; the VLSI (Very Large-Scale Integrated Circuits) Consortium, which concerns itself with advanced semiconductor technologies; the Fifth Generation Consortium, which is designed to make artificial intelligence breakthroughs; and TRON (The Realtime Operating System Nucleus), an ambitious bid to revolutionize personal computers.