Global Contentions – East and West
Edited by Geoffrey M. Hodgson, Makoto Itoh and Nobuharu Yokokawa
Chapter 9: The evolution of Japanese capitalism under global competition
Makoto Noguchi INTRODUCTION In the 1980s, the world marvelled at the strength of the Japanese management system. Japanese ﬁrms quickly recovered from the oil crises of the 1970s, and they adapted themselves promptly and ﬂexibly to a rapid appreciation of the yen in the latter half of the 1980s. However, as a result of subsequent and radically altered circumstances, the structural fragility of Japanese capitalism has been revealed. Hence, in the 1990s, the reputation of the Japanese economy in the world has been reversed. Why did the Japanese model of capitalism, at its heyday in the 1970s and 1980s, suffer from such a subsequent decline? Why did Japanese capitalism fail to cope with great changes in the global economy? Why did its international competitiveness deteriorate so dramatically? In what direction will it now evolve? These questions are important for their own sake. Clear explanations must precede adequate discussions of economic policy and institutional reform. This chapter situates the analysis of the Japanese economy in the conﬂictual dynamics of differentiation and homogenization, found in the institutional diversiﬁcation and synchronized transformation of the capitalist world. WHAT WAS THE SECRET OF JAPANESE STRENGTH? The contrast between the Japanese and the US economies in the 1980s could not be more dramatic. In that decade the US economy fell into debt, accumulating huge budget and trade deﬁcits. In contrast, the Japanese economy strengthened its position as a creditor, with cumulative export surpluses brought in by its superior competitiveness in export markets. During...
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