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

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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 liberaliza- tion at the expense of the protected sector because the two are linked through business relationships and political ties.

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