Japanese Economic System

1
Japanese Economic System

• History and Structure

2
Exceptional features of capitalist economy

• Nature of success? Debate
• Government guidance
• Current state
• New Traditional Economy familistic organisation
  or production groupings

3
Historical and Cultural background

• Isolation and homogeneity identity and culture
• Shinto absorption of foreign influences
• 6 7 th C Shinto, Buddism, Confucianism
• Post -1600 Confucian influence education
• Post -1868 bushido code

4
Tokugawa

• 1185 - 1600 Shogun military rule emperor
• 1603 Tokugawa control unity, isolation
• Peace
• Business development
• Sophistication infrastructure, literacy

5
Meiji Restoration

• Open to western advance
• Samurai rights terminated compensated
• G state industry development
• Colonising activities Taiwan, Russia
• Korea
• Political democracy 1920 Ziabatsu
• Manchuria
• Peqral Harbour 1945

6
Post -1945

• Demilitarisation
• Land reform / zaibatsu reform
• Keiretsu
• Growth p.c. Y
• - persistent trade surplus
• - p.c.Y highest of advanced industrial
  economies
• - G-7

7
Micro and macro economic foundations

• Resource endowments
• Labour
• Natural resources
• Capital stock
• Innovation quality, productivity
• 3 Central principles
• Lifetime employment
• Seniority wages
• Enterprise union

8
Firm and Keiretsu System

• Pre-war Zaibatsu
• keiretsu define
• - horizontal
• -vertical
• Table 6-1
• Table 6-2
• -Network externalities - kanban

9
Management Decision-making

• USA U-mode of management
• M-mode of management
• J-mode in Japan nemawashi (horizontal)
• ringhi-sho (vertical)
• Superiority integrates superior expertise
• Intra-corporate solidarity
• Long-term L / M relationship stability of
  finance and planning

10
Government Industrial Policy

• Controversial
• MITI
• Amakudari
• Intervention product cycles, rationalise
  cartels, depression cartels
• Success Rapid growth
• Failed 1950s automotive industry Honda, also
  Sony

11
Why has Japan failed to be number 1?

• High S ratio explain
• Planning policy forecasts, lack of price
  stability
• Quality of life?
• Economic miracle ended why?
• Technology leadership failed
• Exports surplusses
• Questions p. 175 Rosser