Japanese Capitalism(s): Turning Points, Driving Forces and Consequences

Following Chalmers Johnson (1982) seminal analysis, Japan is known and debated as prime example of a developmental state and state-led capitalism. However, a closer look to its historical development shows that Japan's industrialization is not a simple case of state-directed capitalism, but much more complex and marked by turning points. Already before its full reintegration into the world system and the introduction of Western technology, Japan experienced a proto-industralization primarily driven by private entrepreneurs. During the late 19th century, this proto-industry was the economic foundation, which allowed Japan to embark on a modernization and industrialization path and to withstand colonization pressure by Western powers. The industrialization effort was embedded into the introduction of a nation state including modern administrative, educational, juristic and military institutions and was initiated by the state, but quite early key industries were privatized. Accordingly, the role of the state in economic development was surprisingly limited in Japan as a late-comer and up to the 1930s Japan's economy followed a liberal model. This changed fundamentally during the years of war (1937-1945), which saw the introduction of an increasingly state-managed economic system oriented towards the war efforts. The developmental state not only survived the years of U.S.-occupation (1945-1952), but after fierce social conflicts in the early postwar era state-led developmentalism became from the 1960s onwards the central piece of Japan's new social contract. Since the collapse of the bubble economy in the early 1990s and the following decades of economic stagnation, the model of Japanese capitalism is increasingly questioned and submitted to structural reforms. Abenomics is just the latest attempt to lead Japan back to developmentalism. This paper will analyze the driving forces behind the turning points of Japanese capitalism(s) and discuss its consequences for our understanding of the variety of capitalism.