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Home > Books & Journals > Book Review Last Updated: 14:22 03/09/2007
Book Review #14: December 17, 2001

"Stock Market Capitalism: Welfare Capitalism--Japan and Germany versus the Anglo-Saxons"

by Ronald Dore

Reviewed by Takahiro Miyao

Title: Stock Market Capitalism: Welfare Capitalism--Japan and Germany versus the Anglo-Saxons
Author: Ronald Dore
Publisher: Oxford University Press
Date/Time: 2000
Pages: English text 264 pages (Paperback)


As the Japanese economy is weakening, criticisms against Japanese-style management and praises for American-style management are getting stronger. In the midst of those trends, it will take courage to present a view in favor of the Japanese model as in this book. In fact, the author has done it with courage as well as persuasiveness. There seem to be at least two factors to explain its persuasive power.

The first factor is that it presents not just a contrast between Japan and the U.S., but a broader picture with Japan and Germany on one hand and Anglo-Saxons on the other. This, together with the fact that the author is from Europe, provides quite an effective perspective for comparing different styles of capitalism. Common factors between Japan and Germany include less emphasis on stock markets, more employee-oriented management, and cooperative systems in the business world. At the same time, the author spells out what Japan can learn from Germany, such as legal arrangements for protecting workers.

The second factor is that the author possesses a strong view, actually a belief, as to what kind of society is desirable. According to the author, a social framework devised to reinforce habits of cooperation and to avoid conflict and confrontation is a prerequisite for a desirable society, and the market-orientation and financialization of the Anglo-Saxon type are undesirable phenomena. The author seems optimistic about Japan's capability to maintain its desirable value system, at least compared to Germany, because of its strong sense of cultural and racial identity and its tendency to cooperate for national interest as well as its proximity to Asian countries with non-Western culture.

A remaining question is whether these points, even if they are all true, will help predict the future of the Japanese economy. The author concludes that "Japan clearly needs not to take too long to recover national self-confidence, to stabilize its asset prices and its expectations of future asset prices, and to get its savings down in line with its investment needs. Should it do so, .there is no reason to suppose that those strengths should not be apparent again, and once again deliver respectable growth rates." But we are yet to learn whether those preconditions (recovery of self-confidence, stabilization of asset prices, etc.) can be met without fundamentally altering Japanese ways of doing business and whether Japan can be returned to a respectable economic growth path even if all the preconditions are actually met. One should be reminded that too strong a belief often clouds one's objective vision for the future.

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