By J K Galbraith

ISBN-10: 1560006749

ISBN-13: 9781560006749

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3 Elites also recognized they had to move in one of two directions: ( 1 ) they could dismantle this obsolete system, relying more on unfettered markets and less on firmly established relationships to carry out exchange, or ( 2 ) they could try to expand the scope of the system ; that is, they could try to rescue relationalism by extending its social networks into a new and more fertile environment in which firms might still be adopting existing technology, and thus one in which selective relationalism might yield net gains.

It built a massive pyramid, using a number of first-tier subcontractors who called on a larger number of sec­ ond-tier subcontractors, who relied on an even larger number of third-tier subcontractors, and so on. Nishiguchi and Beaudet ( 1 999) have docu­ mented the solidarity of Toyota' s supply club. In 1 997, when a fire destroyed 3 1 . Surveys by the Small and Medium Enterprise Agency show that the ratio of subcontrac­ tors to the total number of small and medium firms in Japan 's manufacturing sector climbed steadily between 1 966 and 1 98 1 .

27. " I discuss this further below. 28. The Dai-ichi Kangyo group was not actually formed until 1971 , when two banks-Dai­ ichi and Kangyo-merged. 29. See Sheard ( 1 994, 333-338) . 30. Pascale and Rohlen ( 1 983) do a fine job of telling (and analyzing) these events. 54 Part One: Base l i ne Nakatani ( 1 984) , as well as Lincoln, Gerlach, and Ahmadjian ( 1 996) , have demonstrated empirically that horizontal keiretsu serve a useful purpose­ at least in the event that the economy is still developing or maturing.

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American Capitalism: The Concept of Countervailing Power by J K Galbraith


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