静岡県立大学
短期大学部
研究紀要第９号
1995年度The Specificity of Japanese Economy：Japanese Employment
Practices and Nowadays Meaning of Japanese Capitalism

67

The Specificity of Japanese Economy １)：Japanese Employment
Practices and Nowadays Meaning of Japanese Capitalism
Shuki Sasaki
Introduction
In the two decades following the Second World War, Japan’s economic performance was remarkable. The two oil shocks of 1973 and 1979, however, highlighted the vulnerability of the Japa
nese economy and substantially reduced the economy’s growth trajectory.
Many commentators have tried to explain the cause of the success of the Japanese economy,
and various explanations and interpretations have been offered. The same is true of Japanese emp
loyment practices and industrial relations. Less industrial conflict in Japan may have had a subst
antial influence on Japan’s economic success, a view which has led to a great deal of commenta
tors’ interest in the Japanese employment relations oversea. 2)
Studies of Japanese employment practices abound, not only inside Japan but also outside, man
y of which characterise Japanese employment practices in terms of life-time employment, seniorit
y-based wages and enterprise unionism. Although it is arguable whether Japanese employment pr
actices should be characterised in this way, it is possible that the Japanese-style management has
been idealised.
Regular workers in large enterprises toil for long hours with partly unpaid overtime, death fro
m overwork, a few holidays and very low rate of absenteeism. There is also a remarkable use ofcushion workers

whose employment status is unstable as part-time and leased workers.

Why do Japanese workers, who are supporsed to be protected by the three sacred treasures
put up with such a harsh work place? Lifelong job security applies at most to only about onethird of Japanese workers. We should argue the background to these Japanese employment practices, and to focus on the specificity of the Japanese economy compared with Fordism.
1. The method of theorising the economic structure of Japanese society
In order to advance the social scientific analysis of the present day Japanese economy, it is necessary for us, if Marx’s concepts of the social formation are to be reinstaled, to reconstitute th
em in a new framework, within which it is also necessary to restructure economic methodology.
The concepts of regulation theory reconstituted the Marxist notions of productivity, mode of pro
duction, superstructure and so on3). Therefore, it is meaningful for us to take one of the measures from the regulation school’s analytical framework, especially, to focus on the specificity of theJapanese economy.
We follow the basic methodological categories of Lipietz.
① A labour process model: This involves the general principles governing the labour process
and the way it involves during the period when the model is dominant. These princeples cover not only how the labour process is organized within firms, but also the division of labou

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r between firmo. There may be, of course, whole sectors or regions which remains outside the model, but it remains amodel in that the mostadvanced’ sectors, in terms of theseprinciples determine how others will involve.
② A regime of accumulation: The logic and law of macroeconomics describe the parallel dev
elopment, over a long period, of the conditions of production on the one hand and, on the other hand, the conditions under which production is put to social use (household consumption, investment, government spending, foreign trade).
③ A mode of regulation: This involves all the mechanisms which adjust the contradictory andconflictual behaviour of individuals to the collective principles of the regime of accumulation. At the basic level, these means of adjustment are simply the extent to which entrepreneurs and workers are in the habit of conforming, or are willing to conform, to these principles,
because they recognize them as valid or logical. At another level, institutionalized forms are
more important the rules of the market, social welfare provision, money, financial net- works.
These institutionalized forms can be state-determined, private or semi-public4).
And Lipietz’s arguments on the characteristics of Fordism are as follows:① mass production, involving growing polarization between skilled mental labourers
and deskilled operatives, and increasing mechanization leading to a sharp rise in productiv
ity and an increase in the volume of capital goods per worker.
② a proportionate share-out of value added; that is, increased real wages to match in creases
in productivity.
③ a consequent stability in firms’ profitability, with plant used at full capacity, and full em
ployment.
④ social legislation covering minimum wage levels and generalized collective agreements, wh
ich made employers give their workers annual wage rises in line with increased national
productivity.
⑤ a welfare state ;that is, an advanced system of social security which meant that wage-ea
rners remained consumers even when they were prevented from

earningtheir living throughillness, retirement, unemployment or the like.
⑥ credit money issued by private banks, though controlled by central banks, as the economy
demanded and not as a function of available gold reserves.5)
I think one must re-question whether it is the principles of Fordism that have created the mode of regulation6) of the Japanese economy even during the thirty golden years, when the crisisof the second half of the 1970s came to the high growth country of Japan.
The Japanese perceived this crisis from the outside through the oil shock. Although it came as a national crisis, there was no experience of things which the labour movement could be credi
ted with, like stoppage of the production line or wages rising above the rate of productivity. Th
e Fordist crisis was one of the foreign notions which entered Japan.
However, the regulation theory was born of a modernisation of perspectives within Marxism.
If we take one of the measures from the analytical framework of the regulation theory, we haveThe Specificity of Japanese Economy：Japanese Employment
Practices and Nowadays Meaning of Japanese Capitalism

69

to focus on the specificity of the Japanese economy.
Especially, we have to focus on a new system of capitalist rule formed on the basis of the tr
ansfromation of society since the oil crisis. The flexibility of a production place and the systemof participation are ruling

measures designed to appropriate the activity of workers. And the key point is that a new system of rule is formed on the basis of the division of society into thecentre and the periphery. Japanese employment practices and welfare states are limited to the centre.
It is certain that the background of QC circles, the suggestion system and multi-skilling have b
een Japan’s traditional routine system of employment and industrial relations. However, today the
se are combined with things like free-flow lines and machining centre with intensive ME technol
ogy, and they came to be crystallised in a pseudo-independence for workers and the mobilisationof an intensive system of rule. This is then the system of motivation on which the society ofoverwork is based. Because it has become inseparable from the personnel-record system to check workers’ independence and spontaneity, it has not produced a genuine spontaneity. Because this structure of motivation and the ME revolution have combined into a system in which they mutually promote each other, the Japanese system has received worldwide attention.
How do the special features of this kind of production process relate to the transformation of
the labour market and the reduction of the welfare state? The distinctiveness of the Japanese lab
our market has traditionally been its dual structure, while the welfare state has been kept to aminimum.
On the issue of corporatism and the welfare state, Japan has generally been seen as getting behind, compared with Europe and United State of America. However, in all the countries of Europe and America in which ME technology and services have become central, the labour moveme
nt has become a specialised interest, the labour market has been divided into two, and private c
apital has proceeded to permeate into welfare state services. The result is that the structure of capitalism has been Japanised. This is a transformation of Fordism into a system governed by a hi
gh level of information technology.
In the case of Japan, when the old structure was transformed by ME technology and services
along the same lines as in Europe and America, the bifurcation of the labour market and the mi
nimalisation of the welfare state proceeded even further. There has thus been a kind of converge
nce between Japan and Europe and America.

2. The characteristics of the Japanese economy
I think I would like to conclude that the characteristic of the Japanese economy is a systembeing regulated by

the Japanese-style regulation . It means that economic development depends

on the division of society into centre and periphery. The Whole society is regulated by reproduc
ed difference between the centre and the periphery, and the Japanese social productivityis expand
ed by reproduced difference.
First, in production process, this is where the highly computerised central production process and the Taylorlist supported peripheral production process diverge. The key point is that the pecul

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Shuki Sasaki

iar quality of the Japanese society into centre and periphery, a division which is promoted by the transformation of the production process.
Second, the labour force market is divided into central workers and peripheral

workers. The

central are male regular workers in large companies. The peripheral are workers excluded by FA,
part-time workers, subcontracted workers, seasonal workers, foreign workers and leased workers.
Attention must be given to the income differentials and social welfare differentials between centr
al workers and peripheral workers.
Third, the Japanese-style compromise between management and workers (Japanese employment
practices) is limited to regular workers in large companies. On the other hand, peripheral workers are under the flexible employment adjustment.
Fourth, on the consumer market, the consumers are divided into the high-income class and the
low-income class. High-income group demands higher grade goods, highquality services and more personal goods.
Fifth, a regional society is subordinated to the centre (a big city) economically. On 1980’s, J
apanese economy concentrated on a pole (Tokyo). The Japanese regional structure is concentricbecause of a reflection of the Japanese regulation. The regional society is taken as a low-added
value production sector, and supplies the peripheral workers, and offers the consumer market of
popularised goods and services. As a result, industrial linkage in the regional economy is broken
and the regional economy is organized by the virtical division of labour system with Tokyo as
the centre. Then, income differentials and productivity differentials are expanded between the centre and the region.
The regional economy have the mode of growth, consumption-led growth without expanding p
roductivity. The growth cycle in the regional economy is as follows; low income → increasing
consumption → increasing goods imported from other regions → enlarged tertiary industry7) .

The Specificity of Japanese Economy：Japanese Employment
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3. Japanese Employment Practices and duality
The structure of the Japanese industry is characterised by duality. There are giant multi-nationa
l enterprises with many national and international branches and firms. These are instanced by the
car-making and electrical／electronic industries. On the other hand, there are a large number ofsmall and medium-sized enterprises, including subcontracting firms that employ some eighty percent of the labour force, who are in general are linked and in many cases controlled by the large scale enterprises. Among these, very small enterprises with no more than a few employees ac
count for a significantly high proportion of all enterprises in Japan.
There is a clear tendency for the proportion of very small enterprises to rise, while that of lar
ger enterprises is declining. For example, the proportion of very small enterprises with four empl
oyees or less rose from less than 20 per cent in 1960 to 47 per cent in 1986. On the other hand, the proportion of enterprises with 1,000 employees or more decreased by more than 40 per
cent between 1960 and 19868) .
Thus, Japanese enterprises are being divided into two groups, a very small number of very la
rge high-capital enterprises and a large number of small-sized enterprises.This duality is also reflected in wages and other employment conditions. It is often said that Japanese employment prac
tices are characterised by life-time employment, seniority based wages and enterprise-based unionism.
First, life-time employment does not literally mean that a worker is employed by a company on graduation from a school until he／she retires from his／her entire working life. But it meansthat a worker has spent a large part of his／her working life in the same company for 20 to
30 years.
Workers and manager in large enterprises , roughly one-third of labour force, comprise the cor
e of the Japanese economy and participate fully in the Japanese accord. Surrounding the core are continuous gradient workers employed by suppliers or subcontractors of large companies and asizable group of part-time and temporary workers, especially women, who make up

the periph

ery of the Japanese economy. Namely, life-time employment in large enterprises is protected bya sizable group of peripheral workers.
Second, the seniority-based wage system is one in which wages increase with age and merit.
The seniority-based wage system is a kind of means to get young workers in low-level wages.
Starting wages for anyone are rarely living wages in Japan. Workers only get those after some t
en years of loyal service. It is essetially a system of withheld wages. If ever one is to get livin
g wages, One has to stay on in the same company, and benefits

really only begin to accrue in

middle age. This is the reason why the Japanese management has always and still does preferyoung to older workers.
Third, enterprise unionism means that it organises workers on a enterprise basis. A union tries
to organise all workers of the enterprise, irrespective of their jobs and whether they are blue-collar or white-collar workers.
But exclusiveness to outsiders is a charasteristic of the Japanese labour unions. Because the72Japanese unions organise in principle only

Shuki Sasaki

regular workers, nonregular workers such as part-time workers are virtually excluded from union organisation.
Such workers are not incidential, but essential to the Japanese-style regulation. The position ofregular male workers in core companies is both protected by and threatened by the position of
the remainder of the working class.

4. The structural changes after the oil-shock
After the first oil shock, enterprises were forced to review their labour force policies becauseof drastic changes in the economic and industrial environment. They pursued the rationalisationof company management through the strategies which included the decentralisation of administrati
ve structures, the closure and merger of non-profitable sectors and the establishment of new subs
idiaries or related companies to revitalise business activity. The rapid introduction of new technol
ogy and contracting-out peripheral business were also part of the strategies adoped.
After the oil shock, employers insisted time and again that the Japanese enterprises employed t
oo many workers, a burden which could not be carried in a state of emergency. The target of t
he adjustment extended from the peripheral

workforce, such as part-time workers, to white-collar workers who had been the best protected group under the Japanese employment practices.
Large enterprises reviewed and restructured seniority-based wages and promotion systems, and pu
shed their middle-age and older workers out into their subsidiaries or related companies.
As a result of the successive defeats in the SHUNTOU (spring offensive) since the turning po
int in 1975, the growth in the labour productivity curve and the real wages curve clearly began
to diverge. Productive technology at this time rose very rapidly;in fact, the use of highly flexibl
e and re-programmable ME-type machine tools and various types of flexible manufacturing syste
ms became widespread and hastened the advance of office automation.
These changes, accompanied by globalisation of the accumulation path and the increasingly co
mpetitive reorganisation of the Japanese-style management will increase labour flexibility.
The Japanese-style management, if looked at abstractly, has not changed very much. The realit
y is that the reorganisation is tends to refine the competitiveness that exists inside and outside t
he company. Even in large enterprises, life long employment is not a self-evident presupposition.
The number of workers within the web of the Japanese-style management has been greatly reduced. In a word, a kind of cooperativeness within large enterprises has been shaken off. The entire
Japanese economy is permeated by competitive flows of labour resulting from the pressures of
its hierarchical structure, at the apex of which is the Japanese-style management.

Conclusion
As mentioned above, the characteristic of the Japanese economy is that the whole society is r
egulated by the reproduced difference between the centre and the periphery. The Japanese social
productivity is expanded by the reproduced difference. This difference resulted in a certain kindof taming of the working class’. This difference reinforced by the passion to climb the educati
onal ladder and supported the cultivation of a competitive culture’.

The Specificity of Japanese Economy：Japanese Employment
Practices and Nowadays Meaning of Japanese Capitalism

73

There is neither an across-the-board lifting of the minimum livelihood by means of state-depen
dent welfare nor any system of wage regulation involving intersecting-enterprises in Japan, and so seniority based wages was neccessary for workers. Lifelong employment was neccessary for large enterprises when they need to preserve skills while adjusting to a fierce technical revolution
and to a long-term chronic shortage of labour.
In relation to the limitless occupational categories and the internal teaching of skills, the poli
cy of labour supervision in large enterprise during the period of rapid growth was clearly differe
nt from the tradition of Henry Ford. Nevertheless, this difference can also be considered

to have resulted both from the absence of intersecting-enterprise unionism and a level of negotiating p
ower possessed by enterprise unions which is limited to wages and company welfare.
But one should not overestimate the Japanese-style management. Especially, after the oil shock, the number of worker within the web of the Japanese-style management

has been greatly red

uced. On the other hand, the Japanese enterprises employed a large share of prepheral workers.
They are one kind of cushion workers

whose employment statusis unstable.

There is not a class compromise, but a surrender in Japan. The background to this was workers’ ass
imilation into company-ism

andcompetitivism , which were cultivated during the period of rap

id growth and then consolidated by the powerlessness of unions during the period of rationalisation.
During the process of the economic crisis since the 1970s, the diffusion of information technology has opened up a series of serious changes in the nature of capitalism. In particular, the unit of investment has shrunk, trade unions have become weaker, and the economic role of the state has decreased. These changes have actually reversed the developmental tendencies of capitalism.
Although this has not been a desirable change and included a kind of retrogressive historical henomenon, I think we need to grasp it as the emerging characteristic of the After-Fordism9).
Note1) This is a revised version of a paper presented to postgraduate students of faculty of Commer
ce and Economice, the University of New South Wales, Sydney, 2052, Australia.
2) Throughout the word tody, debate about the meaning of so-called Japanese management, has
extended very widely. For example, Paul Kennedy’s
rge Friedman’s

Rise and Fall of the Great Power’, Geo

The Coming War with Japan’,Morisima Michio’s

naze nihon wa seiko shita ka (Why Could Japan Succeed?), K. Dohse, U. Jurgens and T. Malsch’s

From Fordism to

Toyotism? : social oranization of the Labour process in the Japanese Automobile Industry’. M.
Keney and R. Florida’s

Beyond Mass Production: production and the Labour process in Japan’.
3) I think, Regulation theory is meaningful to focus on the specificity of the Japanese economy.
Because we can have a correct understanding of the specificity of the Japanese economy compared with the western style economy.
4) Lipietz A., Towards a New Economic Order: postfordism, ecology and democracy, Polity press, 1993, p2

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Shuki Sasaki

5) Ibid., pp6-7.
6) the basic idea here is that social coherence, or

regulation,” is embodied in stable institution

al arrangements or established social routines. Stable institutional patterns are not automaticallygenerated, but are the products of concrete social forces and struggles. For the regulationists,
capitalism is always potentially unstable. During stable pariods, disequilibrium is held in checkby prevailing institutions. However, once certain threshold point are reached, existing institutio
nal arrangements begin to unravel, and dislocation sets in. It becomes increasingly difficult toobtain productivity improvements from the given to unravel, and dislocation sets in. It becomes increasingly difficult to obtain productivity improvements from the divergence between the ability to generate output and to allocate appropriate shares to accumulation and consumption. T
his creates a social prisoner’s dilemma, leading to increased malfunction, chaos, and disruption.
At these points, the institutional structure of society rigidifies, blocking the institutional regulati
on necessary for restructuring.
7) For a more detailed argument, I would like to refer to my book, Chiiki no sangyo to keizai
riron (Regional Industry and Economic Theory)”, ACCESS 21, 1993.
8) Ministry of Labour, Yearbook of Labour Statistics,Various Issues.
9) The regulationists understandpost-Fordism’as a system which opens up great possibilities fo

r realising the interests of workers. Aglietta sees post-Fordism as a good example of the path t
o a democratic labour system. In contrast to this , I see

after-Fordiam’as a new system of capitalist rule formed on the basis of the transformation of society since Fordism. on the pointof workers, in comparison with Fordism, after-Fordism represents a clear regression.