Corporate Capitalism in Japan

221 Pages·2000·1.598 MB·English

by  Hiroshi Okumura (auth.)

Corporate Capitalism in Japan
Classics in the History and Development of Economics
General Editor: Michio Morishima, Emeritus Professor of Economics, London
School of Economics and Political Science
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Marco Fanno
A CONTRIBUTION TO THE THEORY OF SUPPLY AT JOINT COST
THE MONEY MARKET
Hiroshi Hazama
THE HISTORY OF LABOUR MANAGEMENT IN JAPAN
Hiroshi Okumura
CORPORATE CAPITALISM IN JAPAN
Alfonso de Pietro-Tonelli and Georges H. Bousquet
VILFREDO PARETO
Neoclassical Synthesis of Economics and Sociology
Joseph A. Schumpeter and Yasuma Takata
POWER OR PURE ECONOMICS?
Yasuma Takata
POWER THEORY OF ECONOMICS
Giulio La Volpe
STUDIES ON THE THEORY OF GENERAL DYNAMIC ECONOMIC EQUILIBRIUM
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Corporate Capitalism
in Japan
Hiroshi Okumura
Professor of Economics
Chuo University
Japan
Foreword by
Michio Morishima
Translated by
Douglas Anthony and Naomi Brown
First published in Great Britain 2000 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS and London
Companies and representatives throughout the world
Acatalogue record for this book is available from the British Library.
ISBN 978-1-349-39092-2 ISBN 978-0-333-97789-7 (eBook)
DOI 10.1057/9780333977897
First published in the United States of America 2000 by
ST. MARTIN’S PRESS, LLC,
Scholarly and Reference Division,
175 Fifth Avenue, New York, N.Y. 10010
Library of Congress Cataloging-in-Publication Data
Okumura, Hiroshi, 1930–
[Hojin shihon shugi. English]
Corporate capitalism in Japan / Hiroshi Okumura ; foreword by Michio
Morishima ; translated by Douglas Anthony and Naomi Brown.
p. cm. — (Classics in the history and development of economics)
Includes bibliographical references and index.
1. Corporations—Japan—Finance. 2. Capital stock—Japan. 3. Industrial
management—Japan. 4. Capitalism—Japan. I. Title. II. Series.
HG4245 .O4813 2000
338.7'4'0952—dc21
99–053113
©Hiroshi Okumura 2000
Foreword ©Michio Morishima 2000
Translation ©Douglas Anthony and Naomi Brown 2000
Softcover reprint of the hardcover 1st edition 2000 978-0-333-57532-1
All rights reserved. No reproduction, copy or transmission of this publication may be made
without written permission.
No paragraph of this publication may be reproduced, copied or transmitted save with written
permission or in accordance with the provisions of the Copyright, Designs and Patents Act
1988, or under the terms of any licence permitting limited copying issued by the Copyright
Licensing Agency, 90 Tottenham Court Road, London W1P0LP.
Any person who does any unauthorised act in relation to this publication may be liable to
criminal prosecution and civil claims for damages.
The author has asserted his right to be identified as the author of this work in accordance with
the Copyright, Designs and Patents Act 1988.
This book is printed on paper suitable for recycling and made from fully managed and sustained
forest sources.
10 9 8 7 6 5 4 3 2 1
09 08 07 06 05 04 03 02 01 00
Contents
General Editor’s Foreword ix
Introduction: Banking and Industry in Japan
Michio Morishima xi
Author’s Preface (1983) lix
PART I WHAT IS CORPORATE CAPITALISM?
1 The ‘Companised’ Society 3
‘The company state’ 3
Companies and culture 6
The ‘companisation’ of education 9
The abnormal growth of company consciousness 11
2 The Logic of Corporate Capitalism 13
Organisations and people 13
Loyalty to the company 15
‘The status of the company’ and ‘the status
of the human being’ 18
3 The ‘Companism’ System 21
Japanese-style management 21
Internalising into the company 24
The utility of the fiction of the corporate person 27
PART II THE JAPANESE COMPANY
4 The ‘Corporatisation’ of Shareownership 35
The dispersal of the private shareholder 35
The phenomenon of ‘corporatisation’ 37
The significance of companies owning shares in companies 40
Mutual shareownership 42
Institutional ownership and corporate ownership 44
5 Dividends and Share Prices 48
The erosion of dividends 48
Dividend policy in Japan 50
Why dividends do not increase 52
v
vi Contents
The share price mechanism 55
Demand, supply and share prices 57
Growth in the practice of issuing shares at market price 58
Exploiting high share prices 61
06 Takeovers 64
The joint-stock company and takeovers 64
The safe shareholder strategy 66
Cornering shares: the Japanese way 68
‘Companism’ and the prevention of takeovers 70
PART III MANAGERS
07 Who Rules Japan? 77
An invisible structure 77
The power structure of the business community 79
Managers of large firms 81
Large private shareowners 83
From private capitalism to corporate capitalism 85
08 Managers and Shareholders 88
The structure of top management in Japan 88
Relationship with shareholders 91
Managers and share prices 92
09 Managers and Employees 95
Promoting managers from within 95
Managers as workers’ representatives? 97
Employee participation in management 98
10 Representatives of the Company 101
The basis of managerial authority 101
Control based on corporate shareholders 102
Representative of the company 103
Representative directors 105
11 The Privilege and Position of Management 108
Who determines management? 108
Who becomes manager? 109
A manager’s wealth and income 111
PART IV RELATIONS BETWEEN FIRMS
12 Fixed Relations 117
Problems with the inter-firm relationship theory 117
Contents vii
Trading between firms in Japan 118
The theory behind trade among firms 120
The factors making relationship rigid 122
13 Mutual Control and Mutual Dependency 125
Theory on mutual trade 125
Japan’s reciprocal business 127
Trading within the industrial group 129
Mutual shareholdings 130
Elements which support ‘companism’ 131
14 Externalisation and Formation of Keiretsu 133
Externalisation by large firms 133
The realities of industry’s keiretsu 134
The aim of forming a keiretsu 135
The tools of the keiretsu 137
Logic of externalisation 138
15 Exclusionary Character 141
Trade friction 141
The Japanese government’s response 142
Opposition to financial liberalisation 144
Competition among firms 146
16 Institutional Framework 149
Relationships between companies 149
Anti-monopoly law 151
Japan’s large corporation systems 153
Regulation of mutual shareholding 155
Index 159
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General Editor’s Foreword
Hiroshi Okumura has influenced a number of Japanese economists
well known in the Western academic world, such as Professor
Masahiko Aoki of Stanford University and many others including
myself, through his works on Japanese enterprise groups, parent
company–subcontractors relationships, the Japanese type of takeover
bid, the main bank system, and so on. Based on these concepts,
Okumura has characterised the Japanese economy as a type of ‘corpo-
rate capitalism’. He has shown that the famous familistic management,
the permanent employment tradition, the bonus system, etc. are all
natural properties attributable to corporate capitalism. He has power-
fully illustrated that even work ethics in such an economy differ
from those in usual capitalist economies presumed in the orthodox
textbooks.
In spite of these achievements Okumura is very critical of the
Japanese economy viewed in his way. He has recognised the vulnerabil-
ity of corporate capitalism; especially its inconsistency with contempo-
rary Japanese society. We may describe corporate capitalism as a state
of affairs where employees of big firms are forced to do everything they
are told by their bosses. However, it imposes a big burden upon indi-
vidual workers as well as small firms, and if workers quit from their
present companies, especially in the case of large firms, they severely
suffer economically. The economy was considered to deserve admira-
tion while the Japanese still maintained the virtues of feudal days, but
as soon as those who had gone through the old education system were
retired from the business world, corporate capitalism began to stagger,
as Okumura foresaw.
In spite of his warning, such great names of Japanology as Ronald
Dore and Hugh Pattrick supported the Japanese way of business man-
agement. This may perhaps be because where Okumura saw feudal evil
practices the Westerners observed oriental gracefulness. In any case, it
is of course true that corporate capitalism must be examined to reveal
its non-optimality.
Okumura is a surprisingly prolific writer. Besides the present volume
there are many others which are concerned with various aspects of
ix