Industrial associations as ideational platforms: why Japan resisted American-style shareholder capitalism

Abstract

Significant wage and treatment differentials between regular workers in long-term employment and precarious non-regular workers have been a major political issue in Japan since the mid-1990s. I argue this phenomenon was caused by Japanese society’s resistance to American neoliberal hegemony. Why has Japan resisted it, and how has the resistance resulted in the rapid increase in the working poor? I contend anti-liberal, anti-free market norms of Japanese society centred on ‘systemic support’ have bolstered resistance to convergence in order to prevent capitalist dominance from severing long-term social ties, such as management-labour cooperation. My broadened definition of systemic support incorporates dominant elites’ support and protection of subordinates in exchange for their loyalty and obedience. This paper will explore reasons for the resistance to convergence by examining an ideational conflict within Japanese elites between the market liberalisation and anti-free market camps, particularly between two major industrial associations, Keidanren and Keizai Doyukai, which have played a key role as ‘ideational platforms’ for Japanese corporate society. Under the Hashimoto (1996-8) and Koizumi (2001-6) administrations, the market liberalisation camp gained influence, but since 2006, both the anti-free market camp and its subordinates (e.g. regular workers) have driven anti-neoliberal backlash.

Keywords:

• social norms
• industrial association
• labour market
• systemic support
• Japan
• neoliberalism

Acknowledgements

The author was grateful to the two anonymous reviewers whose comments helped improve this article. Earlier versions of the paper were presented at the 59th annual convention of the International Studies Association, San Francisco, 4–7 April 2018, and the 30th Society for Advancement of Socio-Economics, Kyoto, 22–25 June 2018.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Fumihito Gotoh is teaching and research fellow in the Department of Politics and International Relations at the University of Warwick. He focuses on East Asian politics and political economy, comparative capitalisms, and the politics of finance. His article ‘Social Norms Strike Back: Why American Financial Practices Failed in Japan’ co-authored with Timothy J. Sinclair was published in the Review of International Political Economy in 2017. Previously, he was a senior credit analyst in Tokyo for the Industrial Bank of Japan, Merrill Lynch and UBS.

Notes

1 MOF officials provided preferential treatment and confidential information for financial institutions in exchange for the benefit of wining and dining. This resulted in the arrest of five MOF officials and the resignation of the finance minister and MOF administrative vice-minister and weakened the power of the MOF.

2 The term ‘administrators’ was used originally by van Wolferen.

3 Interview with Toshio Yamagishi, emeritus professor of social psychology at Hokkaido University, on 20 November 2015.

4 Examples of major corporate bailouts from 2000 onwards include Daiei (a retail chain), Sojitz (a general trading house), Mitsubishi Motors, Isuzu Motors, Orient Corporation (a non-bank), Sanyo Electric (an electronics manufacturer), Olympus (an optical equipment manufacturer), Tokyo Electric Power, Sharp (an electronics manufacturer), and Toshiba (an electronics manufacturer).

5 Under the main bank system, the bank having the closest relationship and usually the largest credit exposure with the corporate borrower is made responsible for monitoring the company as a main bank.

6 While Doyukai comprises ∼1,400 top executives of some 950 corporations, Keidanren consists of about 1,350-member companies.

7 Kobayashi, Miyauchi, Shiina and Mogi obtained an MBA from the Wharton School of the University of Pennsylvania in 1958, an MBA from the University of Washington in 1960, a BS in mechanical engineering from Bucknell University in 1953 and an MBA from Columbia University in 1961.

8 For instance, from April 2001 to March 2003, the council included Tatsuo Hatta (professor of spatial information science at the University of Tokyo, who proposed the liberalisation of the electric power industry), Naohiro Yashiro (a neoliberal economist), Atsushi Seike (professor of economics at Keio University), Minoru Mori (CEO of Mori Building, a Doyukai member), Eiko Kono (Chairman and CEO of Recruit Corporation, a Doyukai member), Reiko Okutani (a Doyukai member, CEO of The R Co., Ltd. whose second largest shareholder was Orix), Akinori Yonezawa (professor of computer science at the University of Tokyo, Okutani’s husband) and Rie Murayama (managing director of Goldman Sachs Japan).

9 Interview with Yoshio Shima, professor of management at Tamagawa University, on 20 November 2015.

10 Interview with Tsuyoshi Oyama, Partner, Centre for Risk Management Strategy, Deloitte Touche Tohmatsu, on 1 October 2014.