This book, historically dense and conceptually rich, is a complex analysis of what Calder calls Japan's "bifurcated" political economy, in which a protected domestic sector coexists with a highly competitive and dynamic export sector. The high visibility of the large industrial groups conceals the fact that three-quarters of the Japanese work force is employed by firms of fewer than 30 employees. The heart of Calder's thesis is that Japanese policymakers react to threats to the ruling party's preeminence, i.e., crises, by extending income compensation, entitlements and subsidies. Domestic political crisis provokes or accelerates welfare-oriented policies. Market-oriented retrenchment comes as a crisis subsides. Thus import expansion, which threatens small domestic firms, is going to be politically difficult. Turning to defense, Calder concludes that defense budgets are low because counterpressures from agriculture, public works and other "grass roots oriented" sectors have been so strong; the Defense Agency has little status and the conflicting objectives of defense-related interest groups and the lack of clear-cut, generally accepted military objectives have made it difficult to resist those counterpressures. Whether or not one agrees with all of Calder's conclusions, the outstanding merit of this book is in forcing readers' attention to the domestic underpinnings of Japanese foreign policy.