Katsuhito Iwai
Encyclopedia
is a Japan
ese economist
and critic
. He has studied the theory of money
, macro dynamics, evolutionary economics
, philosophy of corporation
, fiduciary law, and history of social thoughts. His work includes the book, Disequilibrium Dynamics (Yale University Press, 1981), and many articles published in academic journals. He has also written many books and articles in newspapers and magazines for the general public on a wide array of subjects ranging from global capitalism, post-modernity, civil society, money and language to literature and movies. His keen observations and surprising analysis of the work by Shakespeare, Marx, J. S. G. Boggs
, Ihara Saikaku
have established him as one of the foremost essayists in Japan.
, Japan
in 1965. After graduating in 1969, he went on to study economics at MIT in Cambridge
, Massachusetts
where he received his Ph.D. in 1972.
at Berkeley
from 1972 to 1973 and an Assistant Professor of Economics at Yale University
from 1973 to 1979. He served as a Senior research Associate at the Cowles Foundation for Research in Economics, Yale University
from 1979 to 1981. Since then, he has been Associate Professor and then Professor of Economics at the University of Tokyo
.
He was also a Visiting Professor of Economics at the University of Pennsylvania
, and a Visiting Associate Professor of International Affairs at the Woodrow Wilson School, Princeton University
from 1988 to 1989. He was a Visiting Fellow in Dipartimento di Economia Politica, Università di Siena in 1997. He served as the Dean of Graduate School of Economics and Faculty of Economics at the University of Tokyo
from 2001 to 2003. He has been a member of Science Council of Japan from 2005. In 2009, the University of Belgrade
awarded him an honorary doctorate.
He won the 1982 Grand Prix of Nikkei Economics Book Award for his book, Disequilibrium Dynamics - A Theoretical Analysis of Inflation and Unemployment, the 1993 Suntory Academic Award for his book, On Money, and the 2003 Kobayashi Hideo Award for his book, What Will Become of the Corporation? In 2007, he was awarded the Purple Ribbon Medal for Academic Distinction by the Government of Japan.
's theory of cumulative process and J. M. Keynes' theory of effective demand
.He has demonstrated that, if, in a monetary economy, prices and wages are flexible, a deviation from equilibrium inevitably produces firms' expectational errors and starts a dynamic process that drives prices and wages cumulatively away from equilibrium. He has then argued in opposition to the neoclassical
view of the self-regulating
nature of laissez-faire
market mechanism
, that what stabilizes the monetary economy is the inflexibility of money wages and that an equilibrium it gravitates to almost never achieves full-employment. He has proven that the trade-off
between unemployment
and inflation
never ceases to exist no matter how long the time span.
Katsuhito Iwai is often cited for his formulation of a bootstrap theory of money
. Everybody uses money as money, Iwai writes, because everybody else uses money as money. He has offered proof, in his search-theoretic model of decentralized exchanges, that, to sustain itself as an equilibrium, the monetary system
requires no "real" conditions.
Iwai is credited with constructing mathematical models of Schumpeterian evolutionary process
es that describe how large numbers of firms interact with one another, by competing to innovate, trying to imitate and struggling to grow. Over a long span of time, Iwai argues, what the economy approaches is not a neoclassical
equilibrium of uniform technology, but at best a statistical equilibrium of technological disequilibria. Profits
in excess of normal rate, therefore, never vanish from the economy.
Iwai has also built a new theory of the corporation
and of corporate governance
. According to Iwai's famed characterization, business corporation is an entity consisting of two-tier ownership relations. The shareholders own the corporation as a legal thing, and the corporation as a legal person owns the corporate assets in turn. This person-thing duality of the corporation, Iwai states, is behind the age-old controversy over what the essence of corporate personality is. The person-thing duality of the corporation also causes what we observe among the contemporary advanced capitalist economies around the world in terms of their highly varied corporate structure
s.
In light of these theorizations, Iwai has revived the traditional principle of corporate governance where the managers' fiduciary duties toward the corporation serve as its very foundation. In recent years, Iwai has been known to be involved in his attempts at developing a non-contractual theory of fiduciary law.
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
ese economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
and critic
Critic
A critic is anyone who expresses a value judgement. Informally, criticism is a common aspect of all human expression and need not necessarily imply skilled or accurate expressions of judgement. Critical judgements, good or bad, may be positive , negative , or balanced...
. He has studied the theory of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
, macro dynamics, evolutionary economics
Evolutionary economics
Evolutionary economics is part of mainstream economics as well as heterodox school of economic thought that is inspired by evolutionary biology...
, philosophy of corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
, fiduciary law, and history of social thoughts. His work includes the book, Disequilibrium Dynamics (Yale University Press, 1981), and many articles published in academic journals. He has also written many books and articles in newspapers and magazines for the general public on a wide array of subjects ranging from global capitalism, post-modernity, civil society, money and language to literature and movies. His keen observations and surprising analysis of the work by Shakespeare, Marx, J. S. G. Boggs
J. S. G. Boggs
J. S. G. Boggs was an American artist, best known for his hand-drawn, one-sided depictions of U.S. banknotes and his various "Boggs bills" he draws for use in his performances. He spends his "Boggs notes" only for their face value. If he draws a $100 bill, he exchanges it for $100 worth of goods...
, Ihara Saikaku
Ihara Saikaku
was a Japanese poet and creator of the "floating world" genre of Japanese prose .-Biography:Born the son of the wealthy merchant Hirayama Tōgo in Osaka, he first studied haikai poetry under Matsunaga Teitoku, and later studied under Nishiyama Sōin of the Danrin School of poetry, which emphasized...
have established him as one of the foremost essayists in Japan.
Education
Katsuhito Iwai entered the University of TokyoUniversity of Tokyo
, abbreviated as , is a major research university located in Tokyo, Japan. The University has 10 faculties with a total of around 30,000 students, 2,100 of whom are foreign. Its five campuses are in Hongō, Komaba, Kashiwa, Shirokane and Nakano. It is considered to be the most prestigious university...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
in 1965. After graduating in 1969, he went on to study economics at MIT in Cambridge
Cambridge
The city of Cambridge is a university town and the administrative centre of the county of Cambridgeshire, England. It lies in East Anglia about north of London. Cambridge is at the heart of the high-technology centre known as Silicon Fen – a play on Silicon Valley and the fens surrounding the...
, Massachusetts
Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
where he received his Ph.D. in 1972.
Career
He was an Assistant Research Economist at the University of CaliforniaUniversity of California
The University of California is a public university system in the U.S. state of California. Under the California Master Plan for Higher Education, the University of California is a part of the state's three-tier public higher education system, which also includes the California State University...
at Berkeley
Berkeley, California
Berkeley is a city on the east shore of the San Francisco Bay in Northern California, United States. Its neighbors to the south are the cities of Oakland and Emeryville. To the north is the city of Albany and the unincorporated community of Kensington...
from 1972 to 1973 and an Assistant Professor of Economics at Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
from 1973 to 1979. He served as a Senior research Associate at the Cowles Foundation for Research in Economics, Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
from 1979 to 1981. Since then, he has been Associate Professor and then Professor of Economics at the University of Tokyo
University of Tokyo
, abbreviated as , is a major research university located in Tokyo, Japan. The University has 10 faculties with a total of around 30,000 students, 2,100 of whom are foreign. Its five campuses are in Hongō, Komaba, Kashiwa, Shirokane and Nakano. It is considered to be the most prestigious university...
.
He was also a Visiting Professor of Economics at the University of Pennsylvania
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
, and a Visiting Associate Professor of International Affairs at the Woodrow Wilson School, Princeton University
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....
from 1988 to 1989. He was a Visiting Fellow in Dipartimento di Economia Politica, Università di Siena in 1997. He served as the Dean of Graduate School of Economics and Faculty of Economics at the University of Tokyo
University of Tokyo
, abbreviated as , is a major research university located in Tokyo, Japan. The University has 10 faculties with a total of around 30,000 students, 2,100 of whom are foreign. Its five campuses are in Hongō, Komaba, Kashiwa, Shirokane and Nakano. It is considered to be the most prestigious university...
from 2001 to 2003. He has been a member of Science Council of Japan from 2005. In 2009, the University of Belgrade
University of Belgrade
The University of Belgrade is the oldest and largest university of Serbia.Founded in 1808 as the Belgrade Higher School in revolutionary Serbia, by 1838 it merged with the Kragujevac-based departments into a single university...
awarded him an honorary doctorate.
He won the 1982 Grand Prix of Nikkei Economics Book Award for his book, Disequilibrium Dynamics - A Theoretical Analysis of Inflation and Unemployment, the 1993 Suntory Academic Award for his book, On Money, and the 2003 Kobayashi Hideo Award for his book, What Will Become of the Corporation? In 2007, he was awarded the Purple Ribbon Medal for Academic Distinction by the Government of Japan.
Contributions
Katsuhito Iwai is known to have integrated Knut WicksellKnut Wicksell
Johan Gustaf Knut Wicksell was a leading Swedish economist of the Stockholm school. His economic contributions would influence both the Keynesian and Austrian schools of economic thought....
's theory of cumulative process and J. M. Keynes' theory of effective demand
Effective demand
In economics, effective demand in a market is the demand for a product or service which occurs when purchasers are constrained in a different market. It contrasts with notional demand, which is the demand that occurs when purchasers are not constrained in any other market...
.He has demonstrated that, if, in a monetary economy, prices and wages are flexible, a deviation from equilibrium inevitably produces firms' expectational errors and starts a dynamic process that drives prices and wages cumulatively away from equilibrium. He has then argued in opposition to the neoclassical
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
view of the self-regulating
Homeostasis
Homeostasis is the property of a system that regulates its internal environment and tends to maintain a stable, constant condition of properties like temperature or pH...
nature of laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
market mechanism
Market mechanism
Market mechanism is a term from economics referring to the use of money exchanged by buyers and sellers with an open and understood system of value and time trade offs to produce the best distribution of goods and services...
, that what stabilizes the monetary economy is the inflexibility of money wages and that an equilibrium it gravitates to almost never achieves full-employment. He has proven that the trade-off
Trade-off
A trade-off is a situation that involves losing one quality or aspect of something in return for gaining another quality or aspect...
between unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
and inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
never ceases to exist no matter how long the time span.
Katsuhito Iwai is often cited for his formulation of a bootstrap theory of money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
. Everybody uses money as money, Iwai writes, because everybody else uses money as money. He has offered proof, in his search-theoretic model of decentralized exchanges, that, to sustain itself as an equilibrium, the monetary system
Monetary system
A monetary system is anything that is accepted as a standard of value and measure of wealth in a particular region.However, the current trend is to use international trade and investment to alter the policy and legislation of individual governments. The best recent example of this policy is the...
requires no "real" conditions.
Iwai is credited with constructing mathematical models of Schumpeterian evolutionary process
Evolutionary economics
Evolutionary economics is part of mainstream economics as well as heterodox school of economic thought that is inspired by evolutionary biology...
es that describe how large numbers of firms interact with one another, by competing to innovate, trying to imitate and struggling to grow. Over a long span of time, Iwai argues, what the economy approaches is not a neoclassical
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
equilibrium of uniform technology, but at best a statistical equilibrium of technological disequilibria. Profits
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
in excess of normal rate, therefore, never vanish from the economy.
Iwai has also built a new theory of the corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
and of corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
. According to Iwai's famed characterization, business corporation is an entity consisting of two-tier ownership relations. The shareholders own the corporation as a legal thing, and the corporation as a legal person owns the corporate assets in turn. This person-thing duality of the corporation, Iwai states, is behind the age-old controversy over what the essence of corporate personality is. The person-thing duality of the corporation also causes what we observe among the contemporary advanced capitalist economies around the world in terms of their highly varied corporate structure
Corporate structure
Corporate structure consists of various departments that contribute to the company's overall mission and goals. The Marketing Department is considered by some business professionals as the most important entity in the corporate structure. Without this department, sales or new customers can not be...
s.
In light of these theorizations, Iwai has revived the traditional principle of corporate governance where the managers' fiduciary duties toward the corporation serve as its very foundation. In recent years, Iwai has been known to be involved in his attempts at developing a non-contractual theory of fiduciary law.