Ministry - The Inside Story of Japan's Ministry of Finance, Harper Collins, £23

Japan and Germany have inspired a bitter-bewildered response to their economic success since 1945. Bewildered because they lost the war and bitter because they have done so well since then.

Germany has mollified many with its difficulties since reunification and its bankrolling of the EU, but Japan has continued pumping out consumer durables, buying huge chunks of the planet's real estate and resolutely refusing to consider importing much of anything.

Its recent economic troubles and corruption scandal have tarnished an image burnished by decades of growth, but essentially the myth remains: Japan uber alles.

It is the sheer size of Japan's leap forward since 1945 that inspires awe and a feeling of something akin to inferiority among onlookers raising the eternal question. How did they do it?

Much of the success has been ascribed to the national characteristics of hard work, company loyalty, mechanical and electronic genius and the iron hand of the Ministry of Finance the all-seeing, all-powerful intellectual and fiscal generator of Japan's economic miracle.

In The Ministry The Inside Story of Japan's Ministry of Finance (Harper Collins, £23) Peter Hartcher does his best to explode this myth. He takes us inside an organisation whose time has passed, whose arrogance surpasses its skills, whose overriding mission is to perpetuate its bureaucratic powers and privileges rather than serve the public interest and an institution which has badly mishandled the economy.

The ministry, or Okurasho, claims to be the oldest surviving civil service institution in Japan, dating itself from AD 678 when the emperor established a treasury.

This lineage imbues the ministry with a mythical sense of destiny and a barely-concealed contempt for its purported political masters. It and Japan's destinies are one and the same and passing political and democratic consideration are of no consequence.

This attitude was one which drove Japan to wage the second World War and was supposedly addressed by the US occupation of the country following defeat. But lest the author be accused of peddling Japanese-bashing conspiracy theories, he points out that the institution was ignored by the reform-minded Americans.

So, the ministry continued with its pre-war traditions and prejudices intact, and it continued aggressively to self perpetuate itself. Hartcher is very impressive in outlining the extensive old-boy network which maintains, as he calls it, one of the most exclusive clubs in the world.

The high-flyers in the ministry are virtually all recruited from the University of Tokyo, and despite ministerial directives to broaden recruitment to other elite universities it still recruits 8090 per cent from the University of Tokyo.

Once inside, staffers are expected to put in long hours, but the rewards are large. Respect is an important one but the other is guaranteed financial security under the practice of amakudari (literally translated as the descent from heaven, which in itself conveys the arrogance of its practitioners) whereby a senior finance official is guaranteed a golden parachute, well before retirement, into a lucrative position in a private or semi-state company with attendant high salaries and a (second) large pension.

Another satisfying byproduct for the ministry is that it yearly colonises the great Japanese companies and other branches of the state with loyal lieutenants and thus has a vocal and powerful coterie in situ to thwart any attempts by the state to overhaul the ministry.

Hartcher's low opinion of the ministry's financial acumen centres on the culture of the organisation it only allows law graduates into the high-flyer stream which rather boggles the western mind used to the dominance of economists in matters fiscal and the recent Japanese banking crisis.

He catalogues the monumental blunders which plunged Japan into recession the refusal of the ministry to allow banks to go under naturally, meant billions of taxpayers' cash was flung into black holes with little explanation. Its blind insistence on raising taxes in the teeth of a recession and the unearthing of sleazy relationships between some of its officials and private companies.

Hartcher is scathing about its acumen in the wider world pointing out that the ministry's role and lack of understanding of global trends has meant that despite Japan being the world creditor nation its money-market power is negligible with London, New York and Frankfurt.

Hartcher writes crisply and lucidly, and his grasp of Japanese politics is sure, as befits the former Tokyo bureau chief of the Sydney Morning Herald. We have to take his word for the all-pervasive hand of the ministry in Japanese politics and whether it needs root-and-branch reform or abolition could only be answered by another Japanese expert, but he sets his case out well.

His skills come into play shedding light on an institution which guards its right to set the national budget another factor which westerners, used to the executive arms of the state setting the agenda find hard to deal with and his grasp of Japanese cultural/bureaucratic nuances which he credits with setting Japan's economic agenda more so than mere fiscal considerations.

A View from The Third Floor of the IFSC will resume on June 5th.