Institutional Characteristics of Japanese Capitalism - Essay Example

Explore and analyze the major al characteristics of Japanese capitalism Before speaking about the very topic of the work, it is worth mentioning the notion of capitalism itself. Capitalism is a type of economic system which is characterized by the wide spreading of private ownership, investing capital into production, distribution and other branches of economic activities, with the purpose of getting profit in competitive market. Industrial revolution is a remarkable point in capitalism development. Most of well-developed countries are considered to have capitalist type of economy. Before speaking about the major institutional characteristics of Japanese capitalism, it is worth going back to history and defining the main reasons for the development of the peculiarities of Japanese capitalism. In 1946 Japan appeared to be a ruined nation that could never recover. Japan’s economy was shattered. (Ashton,1948) However Japan made a miraculous recovery. It left behind its empire and the military. It turned instead to democracy and to developing its business strength. The United States made loans to help Japan rebuild. The resource that Japan used was its most proven one – a united people willing to work and save for the good of Japan. (A.D.Chandler,1990) The savings of individual Japanese supplied money to Japanese banks. They worked in cooperation with government to rebuild Japan’s damaged factories. They modelled their new industries after the best the world had and then improved them. They trained people to work in the industries. Using resources from overseas, factory workers processed them into well-made products. Their steel industry began to complete with the world leaders. Cameras, stereos, television sets, and calculators streamed off modern assembly lines. By the 1970s Japan was the world’s third ranking industrial power. By the 1980s its automobile industry had become the largest in the world. Today the Japanese people have a prosperous economy. Their major cities of Yokohama, Osaka, and Nagoya each have populations of more than two million. Tokyo has more than 8 million people. Within its borders, Japan has more universities than all of Western Europe. Japan has not reached its level of success without problems. In such countries as the United States, people worry about Japanese competition. Many American business leaders have watched profits fall as shoppers buy Japanese goods. In some cases American factories have closed, and workers have lost their jobs. The Japanese government has had to work hard to persuade other countries not to place trade restrictions on its goods. (Fruin, W. Mark,1992) Masahiko Aoki states that Japanese growth was not an application of American technology and organization of production. As many people have commented, the Japanese introduced a different method of production. English individualism has been the source of industrial leadership for two centuries. (Aoki,1988) It is worth focusing on the organization of production more than on the physical capital used, starting with a very specific Japanese industrial practice. The kanban system, also known as the just-in-time delivery system, is a prominent feature of modern Japanese industrial production. It has been recognized widely as a productivity-enhancing element in the Japanese context and even tried as a means to increase productivity in the United States. The origin of the kanban system, however, is not Japanese; it is American. Japanese observers, seeking to rebuild their economy after World War II, noted how American supermarkets cut down on inventory costs by scheduling deliveries as close as possible to the time of sale. (Aoki,1988) Another problem of the Japanese economy at the moment, long mired in a continuing recession and banking crisis. Poor economic conditions and stock-market performance in Japan contrast sharply with prosperity and a stock-market boom in the United States. It is hard to find Americans worried about the Japanese economic power-house today. (Lash S., Urry S.,1988) Problems of rapid industrial growth, such as pollution, crowding, inflation, and the need for more oil, have caused some Japanese to question to country’s direction. Some people are trying to persuade the government to return Japan to older ways and values. Others say that such Japanese values as loyalty, hard work, cooperation, and the ability to organize are still at work in modern industries. They point out that many Japanese companies are spending money to clean up the environment. With these virtues the Japanese can overcome any problems. Speaking about the features of Japanese capitalism, it should be mentioned that all the economic theories are interested in the same question: why is Japan, so deeply integrated into the world economy, characterized by such a small level of involving the foreign capital into its national economy? Though Japan is a capitalistic country, its economy has some features of closed type. Though there is a tendency to internationalization and globalization of Japanese economy. The age of internationalization of Japanese economy is almost 10 years, though the results of it are not impressive. It is not easy to define the causes of the low speed of development of Japanese business in using the international business strategies. But without any doubt one the reasons is the conservative culture of Japanese business. According to Peter Dicken these two notions are different though both of them are characteristic of Japanese capitalism: "Internationalization" refers simply to the increasing geographical spread of economic activities across national boundaries; as such it is not a new phenomenon. "Globalization" of economic activity is qualitatively different. It is a more advanced and complex form of internationalization, which implies a degree of functional integration between internationally dispersed economic activities”. (P.Dicken,2003) Surely Japan is a unique country: small territory, high density of population, limited resources. Natural cataclysms cause the feeling of danger and that is why Japanese people are so united. They realize that their surviving mostly depends on their unity and social solidarity. The Japanese work in group better that the European people do. According to Sen Katayama the Japanese people joined the world of modern production and exchange at a time when capitalism had entered a new stage of its development - the stage of imperialism. Normally, the development of capitalism would have produced a bourgeois, democratic revolution in Japan; but the existence of imperialism changed the history. Imperialism is the negation of democracy: it means the end of bourgeois democracy and the re-introduction of autocracy under a variety of political forms. In countries which completed their bourgeois democratic revolution, such as England and France, imperialism develops a reaction against democracy and established the autocracy of imperialistic state capitalism; in countries which had not completed their bourgeois revolution, such as Germany, or which never had the beginnings of one, as Japan, imperialism prevents the appearance of the institutions of bourgeois democracy.  The feudal class still exists; but it is reformed in capitalistic and is put into the service of imperialism; autocracy is not abolished, but bent to the uses of imperialism. These processes were characteristics of capitalism development in Germany and Japan as well. Imperialistic capitalism was developed on the basis of still prevailing feudal conditions and ideology, a situation excellent for the profit of the ruling class, but simply murderous to the workers and peasants, and disastrous to the rise of democratic ideas and institutions. Instead of comprehensively developing the internal market and its corresponding normal conditions of production, the Japanese ruling class embarked upon a policy of export trade and imperialism, because it was more profitable, and because the development of the internal market would have meant the end of low wages and the appearance of homogeneous, aggressive proletariat. (Katayama) Among the major characteristics of Japanese capitalism it is possible to point out several of them. The first characteristic was determined by the foreign factor. Japan was under great pressure of the USA after the World War II. The USA used Japan as an important strategical factor in war against Vietnam. The second characteristic determined by the human element. Japan had much of the cheap labour force. The third is efficient production. The fourth characteristic is special government regulation and economy planning. In the process of reformation of Japanese economy the key factors of the government regulation were actively used. The fifth characteristic is a rapid development of the scientific technical potential and application of the new technologies into production. One of the key features of Japanese capitalism is stimulating the labour activity in the sphere of science. According to this characteristic Japan takes the second place in the capitalistic world. A special attention should be paid to the peculiarities of Japanese national character, national features in social economic development of the country. As it has been already mentioned Japan showed the example of the effective adoption of the foreign technology. This peculiarity is connected not only with the flexibility of government interference in country’s economy but with the specific features of Japanese culture and philosophy. Modern Japanese culture absorbed much from the times of feudalism. Generally it is possible to say that Japanese capitalism is characterized by the range of national features, which differentiate it from the classical capitalism of Western Europe and the USA. Japanese capitalism is less statistical and more social. Besides a great cultural difference should be taken into account. It is a fact that there were always various outlooks of the Eastern and Western countries. But of course, there are some common features, such as: the UK and Japan are both democratic counties, they are both well-developed, have post industrial societies. Speaking about differences Japanese a functionalist perspective should be mentioned. Japanese capitalism is interesting for its strict rules and norms in every sphere of life: beginning from economy to educational system. It is very difficult to find the same features in the UK or the USA where the norms and traditions are not so strictly observed. As it was mentioned above Japanese society is not strictly stratificated. The economic growth of Japan led to the high level of life almost for every citizen. This is not observed in the UK where there is still a division on rich and poor. Another difference of the UK and Japan is their immigration policy. Though it is very strict in both country it is possible to see a great ethnic diversity in the western countries. It is worth mentioning that policy and stability of economy of every country is closely connected with the individual education of people. Social duty is on the first place for Japanese people and that is why the slogan - individual as an integral part of society is in the centre of Japanese policy of education. Japanese capitalism is characterized by the special gender (the discrimination of females) policy, while there is a great feminism movement in the UK.  In conclusion it is possible to note that Japan entered the way of capitalism when all the other countries were starting to transfer to imperialism. That was why Japanese capitalism was developing in the imperialistic form and got the features of imperialism. References   Aoki, Masahiko. Information, Incentives, and Bargaining in the Japanese Economy. Cambridge: Cambridge University Press, 1988. Ashton, T. S. The Industrial Revolution. London: Oxford University Press, 1948. E Abe and R Fitzgerald, ‘Japanese Economic Success: timing, culture and organizational capability, in E Abe and R Fitzgerald, ed., Origins of Japanese Economic Power (1995) Becker, Gary. An Economic Approach to Human Behavior. Chicago: University of Chicago Press, 1976. A.D.Chandler, Scale and Scope: The Dynamics of Industrial Capitalism (Harvard University Press, 1990) 338.644 CHA P.Dicken, Global Shift: the Internationalisation of Economic Activity (2003) 338.09 DIC Katayama Sen, The Labor Movement in Japan Fruin, W. Mark. The Japanese Enterprise System: Competitive Strategies and Cooperative Structures. Oxford: Oxford University Press, 1992. Gerlach, Michael L. Alliance Capitalism: The Social Organization of Japanese Business. Berkeley: University of California Press, 1992 Kumar, K. From Post-Industrial to Post-Modern Society: New Theories of the Contemporary World. Oxford: Blackwell, 1995. Lash S., Urry S. The End of Organised Capitalism. Cambridge: Polity Press, 1987. Introduction. M.E.Porter, The Competitive Advantage of Nations (London: Macmillan, 1990) 338.6048 POR . Read More