Page 171 - Global Political Economy_Understanding The International Economic Order

CHA PTER S EVEN
people’s overwhelming belief in their uniqueness, in the superiority of
their culture, and in their manifest destiny to become a great power.
Many terms have been used to characterize the distinctive nature
of the Japanese system of political economy: Shinto capitalism, devel-
opmental state capitalism, tribal capitalism, collective capitalism, wel-
fare corporatism, competitive communism, network capitalism, com-
panyism, producer capitalism, stakeholder capitalism, strategic
capitalism, and, perhaps most famously or infamously, “Japan, Inc.”
Each of these labels connotes particularly important elements of the
Japanese economic system, such as its overwhelming emphasis on
economic development, the key role of large corporations in the orga-
nization of the economy and society, subordination of the individual
to the group, primacy of the producer over the consumer, and the
close cooperation among government, business, and labor. I believe
that the term “developmental state capitalism” best captures the es-
sence of the system, because this characterization conveys the idea
that the state must play a central role in national economic develop-
ment and in the competition with the West.
Despite the imperative of competition, the Japanese frequently sub-
ordinate pursuit of economic efficiency to social equity and domestic
harmony. 14 Many aspects of the Japanese economy that puzzle for-
eigners are a consequence of a powerful commitment to domestic har-
mony; and “over-regulation” of the Japanese economy is motivated
in part by a desire to protect the weak and defenseless. For example,
the large redundant staffs in Japanese retail stores developed from an
effort to employ many individuals who would otherwise be unem-
ployed and discontented. This situation is also a major reason for the
low level of productivity in nonmanufacturing sectors, and it ac-
counts in part for Japan’s resistance to foreign direct investment by
more efficient foreign firms. The Japanese system of lifetime employ-
ment has also been utilized as a means to promote social peace; Japa-
nese firms, unlike their American rivals, are very reluctant to “down-
size” and lay off thousands of employees. At the opening of the
twenty-first century, however, Japan’s economic problems are causing
this situation to change. Nevertheless, the commitments to political
independence and social harmony are major factors in the Japanese
state’s determination to maintain firm control over the economy.
Economic Role of the State
Ever since the 1868 Meiji Restoration, the Japanese state has assumed
the central role in the economy. Following Japan’s defeat in World
14
Frank Upham, Law and Social Change in Postwar Japan (Cambridge: Harvard
University Press, 1987).
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