The role of the state is greatly expanded and plays a role in stimulating economic growth and providing social welfare programs and public investment. Transfer payments represent a higher percentage of total government expenditures and reliance on economic planning of the indicative type are the basis of the system. Codetermination between labor and management with labor sitting in the boards of the companies and German banks are the major shareholders in German companies. State Directed Capitalism exists in Japan and other East Asian countries and there is a far closer relationships between government and business. In Japan, the overwhelming emphasis in on the group and one's responsibility to it.
Employees are loyal to the company, and there is little job switching.
There is cooperation between labor and government and companies and government. These three types of capitalism can be compared on the basis of the extent of the government involvement in the economy with respect of government expenditures to GDP and taxes to GDP to the extent to which resources have been diverted from private to public. In a period of less than two years, communism collapsed in the Soviet Union and in its Eastern European satellite countries. Political and economic structures that were regarded as unchangeable were dissolved. Central economic planning was inefficient, and rejection of market prices, wages, and interest rates as indicators of scarcity resulted in the production unrelated to the needs of consumers.