Review: The Great Transformation of Japanese Capitalism ed. by Sébastien Lechevalier
Author of the review: Walter Skya (University of Alaska Fairbanks)
In lieu of an abstract, here is a brief excerpt of the content:
In The Great Transformation of Japanese Capitalism, Sébastien Lechevalier writes that “the ambition of this book is to offer a very different account from what is usually accepted about the trajectory of [the] Japanese economy since the early 1980s” (p. 158). He notes that until the end of the 1980s, the performance of Japan’s economy was regarded as clearly superior to those of the United States and Europe. However, the dominant viewpoint today is that Japan is inescapably on a downward slope. Lechevalier states that from a neo-liberal viewpoint, the stagnation of the Japanese economy is caused by the failure of the Japanese socioeconomic system to adapt to a new global and technological environment. He challenges this neo-liberal view, however, arguing that the neo-liberal solution to the Japanese economic crisis is, in fact, one of the causes of the problems that Japan has faced over the past thirty years.
In Chapter 1, “Thirty Years of Neo-Liberal Reforms in Japan,” Yves Tiberghien provides a chronology of the structural reform process of Japanese capitalism over the past thirty years and offers an explanation for this process. In Chapter 2, Lechevalier discusses the evolution of the model of the Japanese firm. Characteristics of the classic Japanese firm—such as its employment practices, corporate finance, and corporate governance—have been evolving, but Lechavalier rejects the notion that this evolution is leading into a convergence of the Japanese firm with the Anglo-Saxon or liberal model of the firm. Rather, he finds an increasing diversification among Japanese firms. In Chapter 3, Lechevalier shows that there has been a decline in the classic Japanese forms of coordination of the economy. However, he also argues that this has not been replaced by market-driven forces. Instead, the classical forms of coordination in Japanese-style capitalism have been replaced by new forms of collaboration.
In Chapter 4, Lechevalier discusses the rising level of inequality, fear of downward social mobility, and employment security in Japan: “Social protection in Japan was not accompanied by massive public expenditures because it was essentially based on the firm and the family” (p. 100). The rise of inequality in Japan has been caused by such things as the increasing level of non-regular work (such as part-time and temporary work), which today represents more than 30 percent of the total work force and more than 80 percent of the new jobs created, and by the increase in the growth of the so-called working poor. Lechevalier contends that “the rise in inequality in Japan came from the introduction of neo-liberal policies without a corresponding establishment of a real welfare state” (p. 101). Accordingly, a new Japanese-style welfare system needs to be invented. Chapter 5, written by Lechevalier and Arnaud Nanta, discusses the postwar Japanese education system and the implementation of school reforms since 1992.
In Chapter 6, Lechevalier questions the suitability of the American Silicon Valley type of innovation pattern, which is characterized by the prominent role of individual entrepreneurs in new, small startup firms experiencing phenomenal growth thanks to a particular product or technology, and is financed by venture capital. He points out that although this innovation system has been raised to the level of an American national model, in reality it is specific to certain industry sectors—namely, information and communications technologies and biotechnology. The traditional Japanese innovation system, on the other hand, is the exact opposite, with domination by very large corporations, financing by banks, the central role of industrial policy in coordination of research and development efforts, the relative weakness of universities as a source of innovation, and intellectual property rights disadvantageous to inventors. Lechevalier argues that Japan’s long economic crisis is not due primarily to the Japanese innovation system, however. In fact, he emphasizes that the strength of the Japanese economy has been connected to other forms of innovation, such as industrial organization—which, for example, the Toyota production system is best known for. Accordingly, even though most of Japan’s reforms have been inspired by the American system, this has not led to a convergence of the Japanese system with the American system.
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