tice of vertical integration (Blinder, 1990, p. 21). In Japan, however, each concept is accepted and incorporated into the market structure of the economy. The keiretsu is a vertically integrated megacompany (Blinder, 1990, p. 21). This type of structure was introduced into the Japanese steel industry, and that structure continues to prevail in the industry. Major Japanese manufacturers seldom seek out the lowest cost supply source. Rather, they look to their regular supplier, who quite probably is a member of their keiretsu. Similar practices are followed in obtaining capital, and in the retail marketing of their products. According to the Japanese, these practices develop reliable long term relationships, which cut costs "as business partners learn from and help one another" (Blinder, 1990, p. 21).
Through an industrial policy characterized by high levels of cooperation by government and industry, cartels are not only permitted in Japan, they are encouraged (Sarathy, 1989, pp. 132 160). Cartels flourish in the Japanese steel industry. In the contemporary political and economic environments in the United States, deregulation, and a tendency toward non intervention by government in the private sector economic or social characterizes the general American attitude toward government's role in society. In Japan, however, government intervention, and even government partnership with private sector organizations, is an accepted way of life. Unlike the United States, Japan has a de jure industrial policy. Under such a system, the Japanese are able to develop comprehensive and explicit policies for industrial development, within a structure of cooperation and mutual assistance between industrial enterprises and government. Few of Japan's major industrial firms, however, are state owned, including those in the country's steel industry.
In Japan, the entire society is based in large part on the concept of consensus, and th...