Page 181 - Global Political Economy_Understanding The International Economic Order

CHA PTER S EVEN
a member of the alliance of stakeholders who share the monopolistic
rents generated by this oligopolistic form of business organization.
The exclusive nature of the keiretsu system has significantly limited
foreign firms’ access to the Japanese market. The keiretsu also makes
it extremely difficult for foreign firms to “take over” Japanese firms
and gives Japanese firms a huge advantage in corporate expansion.
Whereas the keiretsu firms can easily purchase a non-Japanese firm
in order to acquire its technology or to gain market access, it has
frequently been difficult for non-Japanese firms to purchase Japanese
firms for the same purposes. Furthermore, the keiretsu’s control of
distribution channels effectively shuts non-Japanese firms out of some
Japanese markets. Although the situation is changing as this is writ-
ten, non-Japanese still regard the keiretsu as a significant barrier to
trade and foreign direct investment, while the Japanese, on the other
hand, regard the keiretsu as a key element in their economic success.
The problem of differential or asymmetrical access has been a major
cause of conflict between Japan and its trading partners.

The German System of “Social Market” Capitalism
The German economy has some characteristics similar to the Ameri-
can and some to the Japanese systems of political economy, but it is
37
quite different from both in other ways. On the one hand, Germany,
like Japan, emphasizes exports and national savings and investment
38
more than consumption. However, Germany permits the market to
function with considerable freedom; indeed, most states in Western
Europe are significantly less interventionist than Japan. Furthermore,
except for the medium-sized business sector (Mittelstand), the non-
governmental sector of the German economy is highly oligopolistic
and is dominated by alliances between major corporations and large
private banks. The German system of political economy attempts to
balance social concerns and market efficiency. 39 The German state

37
This section draws from PhilipGlouchevitch, Juggernaut: The German Way of
Business: Why It Is Transforming Europe—and the World (New York: Simon and
Schuster, 1992).
38
Gunter Heiduk and Kozo Yamamura, eds., Technological Competition and Inter-
dependence: The Search for Policy in the United States, West Germany, and Japan
(Seattle: University of Washington Press, and Tokyo: University of Tokyo Press, 1990).
39
The German system is representative of classical liberalism that emphasizes a free
market and a strong welfare-oriented state. See Razeen Sally, Classical Liberalism and
International Economic Order: Studies in Theory and Intellectual History (New York:
Routledge, 1998).
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