POL 334
Political Economy of Japan
Dr. Lairson
JPRI Occasional Paper No. 22 (August 2001)
Japanese "Capitalism" Revisited
by Chalmers Johnson
plan-rational and market-rational economies
capitalist developmental state
capitalist regulatory state
"industrial policy."
Vogel on Germany and Japan
Convergence???
What is Vogel’s thesis? How does his argument explain why Germany and Japan
have not adopted these reforms?
Freiden and Rogowski???
How do Vogel’s ideas about politics and political economy compare with those you
might hear on TV or the radio? Do they seem similar or different?
How does Vogel describe the differences between Germany/Japan and the US?
Coordinated market economies versus liberal market economies
foster more long-term cooperative relationships between firms and
labor, firms and banks, and different firms. And the state and
intermediary associations play a critical role in establishing and
maintaining the framework for this private-sector coordination.
Although there is considerable variation across sectors and across
firms within individual countries, the coordinated market economies
remain sufficiently distinct from liberal market economies to make this
a useful distinction.
Germany and Japan as different kinds of coordinated market economies
German firms, banks, and unions are more inclined to coordinate their
activities at the sectoral level, whereas their Japanese counterparts
coordinate through intersectoral industrial groups or supply networks
The German government facilitates private-sector coordination,
whereas the Japanese government organizes and guides the private
sector more directly. The German government has gone further in
codifying its economic model in law, whereas the Japanese model rests
more on informal networks and standard practices. And German labor
is more powerful than Japanese labor in both politics and corporate
management.
Germany, the principles of collective bargaining and codetermination
are codified in law and organized through a massive array of national,
regional, and plant-level associations
Japanese firms are linked to banks, other firms, and government
agencies in even denser networks of interrelationships than are their
German counterparts, making them even more reluctant to support
reforms that might jeopardize these relationships.
Big question Vogel wants to answer:
What is the political process by which nations will converge on the liberal
market or market rational economic system?
Freiden and Rogowski give an answer. What is it?
Why not?
look at how the German and Japanese systems bind the potential winners
from liberal reform, such as competitive manufacturing exporters, to the
potential losers, such as workers and protected service industries. Frieden and
Rogowski (1996) contend that internationalization should increase conflict
between the competitive and the protected sectors of the economy and
strengthen the hand of the competitive over the protected sector. In Germany
and Japan, however, the competitive sector cannot push through liberalization at the expense of the protected sector because the two are linked through
business relationships and political ties.
In Germany and Japan, however, the competitive sector does not necessarily
bear the expected preferences for liberalization. Competitive firms remain
bound to the protected sector through long-term business relationships and/
or cross-shareholding arrangements with unions, banks, suppliers, distributors,
and other firms and through political ties to industry associations, political
parties, and government agencies. These firms derive comparative institutional
advantages from the micro institutions of German and Japanese capitalism, such
as labor relations and financial systems, so they must weigh the expected
efficiency gains from liberal reforms against the potential costs
of undermining these institutions. As a result, they are much less favorable
toward these reforms than they would be in the absence of these institutions
and more favorable toward reforms designed to preserve or reinforce these
institutions.
Explain the preceding paragraph.
What is the difference between political parties in G&J and political parties in the
US?
the dichotomy between so-called plan-rational and market-rational economies that
had dominated Cold War ideological debate to include another basic prototype-- the planrational market economy, neither socialist nor Anglo-American capitalist in orientation or
operation (see Johnson, 1982a; 1995). I argued that Japan was a leading exemplar of this
type In the Japanese-style economy, the government imbeds incentives and disincentives
within the market to achieve its goals; market-players, enjoying private ownership of
property, respond as they see fit in order to secure their personal advantage. It is not a
command economy and there is no socialist displacement of the market.
I called Japan an example of a "capitalist developmental state," in contrast to the
"capitalist regulatory state" found in orthodox English-language capitalist theory, and
also noted that Japan's economic achievement was not unique; its main principles and
institutions were being duplicated in South Korea and Taiwan with equally impressive
results
he evolution, structure, capabilities, and powers of the Japanese state's bureaucratic
apparatus for implementing "industrial policy." I emphasized the state's importance
because until that time there had been no serious research on this subject; the
extraordinary powers of the Japanese bureaucracy in the economy, as compared to the
powers of the parliament or the private sector, were virtually unrecognized among Japan's
Cold War allies. I did not say that the state was the sole element influencing the
economy, but I stressed that unelected, elite officials played much larger roles in
economic affairs than was suspected by those who categorized and studied Japan as a late
developing version of the Anglo-American type capitalist economy.
By the mid-1980s, Japan was no longer "catching up" with the so-called advanced
industrial societies; it was the size of two Germanies and posed a competitive
challenge to the automotive, steel, consumer electronics, robotics, semiconductor,
liquid crystal displays, and other industries of many countries. The United States
produced libraries of articles and books on Japan's business secrets;
How did US conservatives and Japanese ministries respond to the developmental
state thesis?
Fifteen years later, with the United States's current account going from a surplus of $5
billion in 1981 to a deficit of $125 billion in 1985, the focus was again on exchange rates.
For neoclassical economists advising the U.S. government, this was a "safe" approach. It
avoided the delicate issue of whether Japan was a different kind of capitalism, and it
promised some relief from the trade deficits, which had begun to elicit Congressional
calls for protectionist measures. The problem was that while exchange rates affect prices,
Japan's competitive advantage was not primarily in prices. Japan's trade surpluses and the
worries they created in the United States were caused by its developmental state-- easy
access to capital for Japanese exporters in designated strategic industries, research and
product development consortia, the blocking of foreign investment and sales in Japan,
governmental efforts to separate foreign technology from foreign ownership rights, and
many other industrial policy measures.
On September 22, 1985, the Ministers of Finance and central bank governors of France,
Germany, Japan, the United Kingdom, and the United States met in the Plaza Hotel
(hence "Plaza Accord") in New York. The United States and Europe insisted that Japan
was benefiting too much from its price advantage in international trade and forced it to
agree to a coordinated program of dollar selling that led to a 30 percent decline in the
value of the dollar and a comparable rise in the yen over the next two years. This
initiative worked, but not in the way its sponsors had expected it would. The change in
the prices of Japanese and American goods had little effect on the trade balance since
Japanese goods were more attractive to international consumers because of their quality,
fuel efficiency, and design than because they were cheap. At the same time, United States
government officials made no real effort to follow up the Plaza Accord by forcing open
the Japanese market to cheaper American products, because they assumed that "market
forces" would do it for them. Instead, the Plaza Accord brought down the Japanese
economy because of the Japanese government's wild and ill-considered overreaction
to it.
Until 1968 Japan was a net debtor nation and the United States was the world's largest
creditor nation. After 1968, as Japan's trade surpluses grew each year, it became a
creditor nation and began to overtake the United States. In the middle Reagan years, 1985
and 1986, the positions of Japan and the U.S. became reversed. Japan's net external assets
at the end of 1984 were $74.3 billion, up from $37.2 billion in 1983. In 1985 they grew to
$129.8 billion and in 1986 to $180.3 billion. In 1985, Japan became the world's largest
creditor nation; and the following year, the United States became the world's biggest
debtor nation.
The system of maximizing the current account surplus worked well for Japan until it
replaced the U.S. as the world's largest net creditor nation. By becoming the world's
largest net debtor instead of its largest creditor, the U.S. could no longer act as a very
good customer for Japan, as Japan can sell goods to the U.S. but cannot convert the sales
proceeds into yen without driving down the yen/dollar rate.
The Plaza Accord came about because of the need to rectify the growing imbalances
between an ascendant Japan and a declining United States-- and it did succeed in making
Japanese products much less competitive. The yen/dollar exchange rate went from
«262=US$1 in February 1985 to «158=US$1 by early 1987, thereby significantly
increasing the prices of Japanese goods on international markets. The Ministry of
Finance, lacking real understanding of or confidence in Japan's economic achievements,
panicked; it feared that Japan would be crushed by losing its artificial exchange-rate
advantage.
The appropriate policy for Japan in these circumstances would have been to shift its
economy to one that relied much more on domestic demand than on exports, to
undertake reforms in order to expand domestic demand, and to forge mutually
beneficial trading relations rather than ones based entirely on Japanese advantages.
great opportunities to expand domestic demand in the Japan of the late 1980s-housing, hospitals, urban planning, and urban transportation all were (and still are)
inadequate-- but this is not the route that the economic bureaucracy chose.
Instead, the Japanese government chose to bind itself ever more firmly into its Cold
War relationship with the United States and to respond to the Plaza Accord by trying to
undercut it. Under orders from MOF, the Bank of Japan slashed interest rates in order
to generate an investment boom. The reduction in the cost of capital was intended to
expand and modernize factories so that they could produce goods that would
remain competitive abroad despite a price disadvantage. According to Kenneth
Courtis, then chief economist for the Deutsche Bank in Tokyo, between 1986 and 1991,
Japan invested some $3.6 trillion in new plants and equipment and in research. This was
targeted at reducing the costs of making products by 40 to 50 percent (McCormack,
1992). The net result, however, was to build huge excess capacity without regard to
international or domestic consumer demand. And this led to a banking crisis--- as
well as a stagnant economy-- that Japan has yet to overcome.
When urban land began to grow even more spectacularly in value during the late 1980s
investment boom, it became the basis for a classic speculative bubble. Land became the
collateral on which banks lent huge amounts of money, which was in turn used to buy
more land (or shares on the Tokyo Stock Exchange) and to borrow even more from the
banks on the basis of the newly acquired land and stock.
Satoshi Sumida, governor of the Bank of Japan during the late 1980s and a former MOF
official, was the actual author of the "bubble economy." During December 1989, when
the bubble was at its height, he was replaced as governor by Yasushi Mieno, an official
who had spent his entire career within the Bank of Japan and was much more attuned to
sound monetary policy than MOF officials. Recognizing that land prices were soaring
beyond any realistic measure of value, he instituted tight money policies to stop the
banks' lending to speculators. On December 25, 1989, Mieno raised the discount rate
to 4.25 percent and in August 1990 raised it again to 6 percent. The resulting
tailspin of the property and stock markets produced a crisis of "non-performing
loans" (i.e., loans that could not be repaid) and a threat of insolvency to the entire
banking system that has lasted well over a decade and that as of early 2001 still shows
no signs of being rectified.
In response to the immediate cause of the slowdown-- the crippling of the banking sector- the Japanese government chose to try to "grow" its way out of the problem. As in
the past, it relied on its powerful export sector to pay the bills and tried to get the stronger
banks to help the weaker banks via the so-called convoy system (goso-sendan soshiki).
This meant that the government would deal with banking inefficiency and overcapacity
gradually through mergers and cutting employment through natural attrition. The
government did not use Japan's huge hoard of savings to liquidate the non-performing
loans; nor did it order the consolidation of the financial sector, which, as we shall see, it
was too weak politically to do. "Growing out" of its troubles was also a wildly unrealistic
policy.
During the late 1940s, when it became apparent that the forces of the Chinese Communist
Party were going to win the Chinese civil war, the United States reversed its policies of
attempting to democratize occupied Japan and instead devoted itself to making Japan the
U.S.'s leading satellite in East Asia. They rested fundamentally on two American
beliefs: that the poverty stricken economies of postwar East Asia could never
compete successfully with the United States and that economic growth was one very
important way to divert the people of these economies from the attractions of
socialism, neutralism, communism, or other anti-American orientations.
In order to prevent an intolerable rise in the value of the yen, Japan essentially had
to disguise its surpluses by leaving them in Japanese-owned financial institutions in
the United States where they became capital exports for American use. This did not
enrich Japan in any real sense but it did give the country enormous financial leverage
over the U.S. As Eamonn Fingleton has noted, for the first seven years of the 1990s,
Japan's net external assets jumped from $294 billion to $891 billion. By contrast,
America's net external liabilities rocketed from $71 billion to $831 billion (Fingleton,
1999:215).
Both countries also became more dependent on each other. Following the U.S.'s 1987
stock market crash, Japan bought large amounts of American shares and thereby
helped prevent a more serious panic. Moreover, Japan's low-cost financing replaced
America's virtual dearth of domestic savings and allowed the United States to run
huge external deficits without paying any of the usual costs, particularly a
catastrophic loss in value of the dollar, while keeping inflation low and American
financial markets buoyant. If Japan ever does become a genuine market economy and
the United States is forced to finance its own debts from domestic savings, the
deflationary impact on the U.S. will be devastating.
In the same manner, when in 1995 Japan asked for American help in promoting its
"growing out" strategy, the U. S. obliged with a "reverse Plaza" campaign to lower the
value of the yen and raise the value of the dollar. Of course, it had no choice since if
Japan's hidden threat of withdrawing funds from the U.S. had been carried out, it would
have ensured the end of the Clinton presidency with the 1996 elections.
The result of this promotion of the liberal democratic order was the economic meltdown
that began in Thailand in the summer of 1997, then spread to Indonesia, Malaysia, and
South Korea, leapt to Russia, and finally destabilized Brazil. The metaphors used by the
American press to characterize the crisis reflected its progressive stages. At first the
financial panic was the Asians' own fault and reflected their "crony capitalism," an
allegedly higher degree of insider trading and governmental corruption than existed in
New York or Washington DC.
The possibility of a state being able to implement a successful industrial policy depends
upon some precise political arrangements. In attempting to forge an industrial structure
that the state believes is necessary for the good of the society as a whole-- one that
market forces alone will not produce-- it must prevent what in the jargon of bureaucratic
studies is called "agency capture." This refers to the tendency for special interests to
bribe, disable, or dominate-- in short, to capture-- the state organs set up to control and
direct them in ways that they do not want to go but that the state believes they must.
During the period of Japan's high-speed economic growth, approximately 1955 to 1975,
its state organs for formulating and implementing industrial policy, particularly MITI and
the Ministry of Finance, achieved exceptional levels of autonomy from vested interests.
They also enjoyed high internal esprit de corps and respect from the public. This was
possible because of a political structure that the Japanese refer to as the "1955 system.
Many American analysts argue that the developmental state and the prominent role it
gives the state in shaping a nation's economic destiny is what caused Japan's decade-long
slowdown and the catastrophe that overwhelmed South Korea and Southeast Asia in
1997. The evidence suggests precisely the opposite. Japan was not overregulated but
underregulated and its capacity to formulate good policies and implement them was
undercut by political factors. The country's problems began in the late 1980s when the
Ministry of Finance exercised weak or nonexistent supervision over its chief clients, the
banks, in their irresponsible lending to speculators. Japan's subsequent failure to
undertake serious reforms during the 1990s was not caused by the economic
bureaucracy's intervention in the economy but by the economic bureaucracy's loss of
autonomy to implement policies in the face of vested interests. The LDP remains the
problem. It can no longer play its assigned role within the developmental state, but it is
artificially perpetuated in power by the demands of the old Cold War relationship.
Vogel on Germany and Japan
King, Desmond, & Wood, Stewart. (1999). The political economy of neoliberalism: Britain and
the United States in the 1980s. In Herbert Kitschelt, Peter Lange, Gary Marks, & John Stephens
(Eds.), Continuity and change in contemporary capitalism (pp. 371-397). Cam- bridge, UK:
Cambridge University Press.
This article examines the potential for convergence in forms of capitalism. Many in
the US have asserted that all capitalist nations must eventually look alike –
specifically that they must all operate on the liberal market model of the US. The
focus of the article is on the domestic political arrangements that support the forms
of political economy for a nation.
Much of the pressure for change comes from leaders in politics and industry in both
nations, with calls for increasing competition and reducing protection:
open labor markets, liberalize finance, reform corporate governance, deregulate industry, cut
welfare spending, and restructure taxation.
What is Vogel’s thesis? How does his argument explain why Germany and Japan
have not adopted these reforms?
How do Vogel’s ideas about politics and political economy compare with those you
might hear on TV or the radio? Do they seem similar or different?
How does Vogel describe the differences between Germany/Japan and the US?
Coordinated market economies and liberal market economies
Germans and Japanese models:
the Hausbank and main bank systems, collective bargaining and lifetime
employment, interfirm networks, and close government-industry ties.
Coordinated market economies such as Germany and Japan differ from liberal
market economies such as the United States and the United Kingdom in that they
foster more long-term cooperative relationships between firms and labor,
firms and banks, and different firms. And the state and intermediary
associations play a critical role in establishing and maintaining the
framework for this private-sector coordination. Although there is
considerable variation across sectors and across firms within individual
countries, the coordinated market economies remain sufficiently distinct from
liberal market economies to make this a useful distinction.
And how Germany and Japan differ from each other?
The German and Japanese variants of the coordinated market economy model also
differ from each other in important ways. German firms, banks, and unions are
more inclined to coordinate their activities at the sectoral level, whereas their
Japanese counterparts coordinate through intersectoral industrial groups or
supply networks (Soskice, 1999). The German government facilitates privatesector coordination, whereas the Japanese government organizes and guides
the private sector more directly. The German government has gone further in
codifying its economic model in law, whereas the Japanese model rests more
on informal networks and standard practices. And German labor is more
powerful than Japanese labor in both politics and corporate management.
In Germany, the principles of collective bargaining and codetermination are
codified in law and organized through a massive array of national, regional,
and plant-level associations. This means that these organizations have an
institutional stake in maintaining the system and that fundamental change requires
legislation.
Germany has moved further toward the liberal market model than Japan,
especially in finance and corporate governance reform, for several reasons.
German politics is more infiltrated by international interests and views than is
Japanese politics. Foreign firms have a stronger presence in Germany than in
Japan and play a greater role in advocating reform. Third, the German bureaucracy
has not shaped the substance of reform nearly as much as its Japanese counterpart.
Japanese officials have been especially zealous in designing reforms so as not to
undermine their own regulatory discretion, a critical source of leverage over
industry. Finally, Japanese firms are linked to banks, other firms, and
government agencies in even denser net- works of interrelationships than are
their German counterparts, making them even more reluctant to support
reforms that might jeopardize these relationships.
the Japanese government plays a much more active role than the German
government in cultivating and monitoring private-sector coordination and
relies on regulatory powers as leverage in doing so. Therefore Japanese ministries
have been much more zealous than their German counterparts in trying to protect
regulatory discretion.
What are the characteristics of those groups we would expect to promote reform toward a
liberal market model in Germany and Japan? Who are these people? Hint: Winners and
losers from globalization.
look at how the German and Japanese systems bind the potential winners
from liberal reform, such as competitive manufacturing exporters, to the
potential losers, such as workers and protected service industries. Frieden and
Rogowski (1996) contend that internationalization should increase conflict
between the competitive and the protected sectors of the economy and
strengthen the hand of the competitive over the protected sector. In Germany
and Japan, however, the competitive sector cannot push through liberalization at the expense of the protected sector because the two are linked through
business relationships and political ties.
Frieden and Rogowski (1996) offer a model for deducing societal preferences
that suggests the competitive sector should favor liberalization, the protected
sector should oppose it, and internationalization should strengthen the competitive
sector vis-à-vis the protected sector. According to standard economic analysis,
economic liberalization should reduce prices and expand choices for consumers,
lower costs for producers, and boost economic growth. It not only improves
efficiency in the short run but also can bring more dynamic long-term benefits by
stimulating business activity and innovation. Protection has both a distributive
cost, in that it punishes consumers in favor of producers, and a social welfare cost,
in that it distorts the allocation of resources within the economy.
how economic ties between the two sectors shape industry policy preferences and
how political ties between the two affect the aggregation of these preferences.
First, those groups with the greatest apparent stake in liberal reforms, such as large
manufacturing exporters, are reluctant to embrace reforms that might undermine
the comparative institutional advantages of close long-term relations with workers,
financial institutions, other business partners, and the government.
Second, those who do favor liberal reforms cannot forge a strong political
coalition because the major industry associations and conservative political parties
incorporate both the potential winners and the potential losers from reform. Thus
the associations and the parties must work out internal compromises between
constituent groups before proposing reforms. The other political parties are even
less likely to support liberal reforms. As a result, Germany and Japan wind up with
a distinctive pattern of economic reform: They proceed with reforms slowly and
cautiously; they package delicate compromises, including considerable
compensation for those who might be disadvantaged by the reforms; they design
reforms to preserve the core institutions of their respective models as much as
possible; and they seek novel ways to build on the strengths of these models.
In the United States and Britain, in contrast, industry has supported liberal reforms
more strongly; industry groups have been more likely to lobby on their own or to
form ad hoc coalitions rather than to work through national peak associations; and
the conservative parties have embraced the liberal market model much more
wholeheartedly. As a result, the United States and Britain have moved much more
boldly with liberal reforms than have Germany and Japan
Why should we expect any changes in the German and Japanese models? Globalization?
Political pressure from abroad?
What is the Frieden and Rogowski model? Does Vogel agree with this?
In Germany and Japan, however, the competitive sector does not necessarily
bear the expected preferences for liberalization. Competitive firms remain
bound to the protected sector through long-term business relationships and/
or cross-shareholding arrangements with unions, banks, suppliers, distributors,
and other firms and through political ties to industry associations, political
parties, and government agencies. These firms derive comparative institutional
advantages from the micro institutions of German and Japanese capitalism, such
as labor relations and financial systems, so they must weigh the expected
efficiency gains from liberal reforms against the potential costs
of undermining these institutions. As a result, they are much less favorable
toward these reforms than they would be in the absence of these institutions
and more favorable toward reforms designed to preserve or reinforce these
institutions.
Explain the preceding paragraph.
German firms do not want to negotiate wages at the firm level because that destroys “the
cooperative atmosphere at the workplace.”
German and Japanese companies rely more on cooperative relations with labor and less
on labor flexibility. “We compete on quality and safety, not on price.”
Remember that during the last 30 years when US manufacturing has been decimated by
competition from Asia, German manufacturing has more than held its own as a
competitor in global markets.
I have focused here on industry preferences, but one would expect consumers to
advocate liberal reforms as well. After all, many economists would argue that consumers
are the ultimate beneficiaries of liberalization. Yet here again, German and Japanese
consumers and consumer groups do not always bear the expected preferences for
liberalization. They sympathize with producer groups such as farmers or retailers, or they
value social stability, product safety, and/or environmental protection over economic
efficiency. In fact, Japanese consumer groups have strongly opposed agricultural
liberalization, one policy change that could substantially improve their economic welfare.
The German and Japanese conservative parties are not “liberal” parties in the classical
sense of the word (Kitschelt, 1999). They are considerably less likely than their British
and American counterparts to embrace liberal economic policies. In part, this reflects the
parties’ recognition of the industry preferences and industry association positions
previously outlined. In addition, the protected sectors of the German and Japanese
economies are larger than those in Britain and the United States, and these sectors are
especially powerful politically. So both the Christian Democratic Union (CDU) (as well
as its Bavarian partner, the Christian Social Union) and the LDP represent advocates as
well as opponents of liberal reform.
Some German and Japanese firms do in fact advocate liberal reform. I simply suggest
here that the institutional context of German and Japanese capitalism modifies these
preferences: Fewer firms advocate reform than one would otherwise expect, and
those firms that do advocate it are more ambivalent than one would otherwise expect. In
addition, these preferences are aggregated in a manner that further moderates demands
for liberal reform. The major industry associations and political parties represent both the
advocates and opponents of reform, so they do not push for the all-out victory of
one side but rather arrange delicate compromises between the two. If anything,
they tend to favor the potential losers from liberal reform.
The German and Japanese conservative parties are not “liberal” parties in the classical
sense of the word. They are considerably less likely than their British and American
counterparts to embrace liberal economic policies. In part, this reflects the parties’
recognition of the industry preferences and industry association positions previously
outlined. In addition, the protected sectors of the German and Japanese economies are
larger than those in Britain and the United States, and these sectors are especially
powerful politically. So both the Christian Democratic Union (CDU) (as well
as its Bavarian partner, the Christian Social Union) and the LDP represent
advocates as well as opponents of liberal reform.
Looking cross-nationally, Germany and Japan have not converged on the liberal
market model. Their labor and financial markets remain much more heavily regulated
than those of the United States or Britain. They maintain greater cooperation between
labor and management, closer ties between banks and industry, denser networks of
relationships between firms, and closer coordination between government and industry.3
Despite popular cries of the end of German and Japanese capitalism, these two economies
have preserved many of their distinctive features.
Margarita Estevez-Abe, "Rashomon: The Japanese Welfare State in a
Comparative Perspective"
What is Welfare?
Various forms of payments to support incomes and consumption
Rules that affect jobs, job security, pay rates
How does Japan compare?
Looks both small but large
Small spending but large functional equivalents
Japan has differentiated system – not very egalitarian; based on work: occupation,
size of firm, full or part time
Low income mothers must work but child care is provided
Social security and health care are based more on type of work with more options
for opting out benefits are high for certain categories of workers
Part time workers – mostly women – are not enrolled in welfare benefits
When benefits are egalitarian, they are very low
Functional equivalents –
Policies that promote private welfare provisions
Policies that protect jobs – restrict competition: benefits to firms that also
help workers
Public service employment – large spending but low levels of government
employment
Japan welfare policies prefer strategies that accumulate capital:
Capital is socialized
Production is private