The regulated market economies of Germany, Japan and east Asia are facing unprecedented challenges from Anglo-American neo-liberal orthodoxy. But, argues John Plender, some of the benefits of co-operative, high-trust capitalism can be retained at company level through employee ownershipby John Plender / February 20, 1998 / Leave a comment
Japan is trapped in an economic morass. The Asian tiger economies are falling piecemeal into the arms of the IMF. Germany suffers from political stasis and record unemployment. Scandinavian welfarism has run into a financial road-block. Against this background the notion that there are different and equally viable forms of capitalism, reflecting divergent national preferences and institutional arrangements, is under unprecedented attack. Anglo-American neo-liberal orthodoxy, with its emphasis on contractual property rights, deregulation and flexible labour markets, is increasingly trumpeted as the pre-eminent model.
This is a dramatic change. Not so long ago, volumes of academic research were devoted to explaining how national institutional or cultural differences helped generate comparative advantage for many of the countries now deemed to be in trouble. (To take one example, the greater capacity of the Germans and Japanese to create a skilled and co-operative workforce was held to explain their competitiveness in making cars compared with the British.) There is also a growing economic literature showing that countries with higher levels of trust have less crime, a more efficient bureaucracy and higher educational achievement. Such studies also suggest that companies with a broad sense of trust perform better than those where trust is restricted to family.
Do these high-trust qualities-found in so-called stakeholder countries such as Japan, Germany, Switzerland, Sweden and Norway-no longer count for anything? Has the extraordinary might of the Japanese in consumer electronics or that of the Germans in mechanical engineering suddenly come to an end? Are these socially cohesive models of capitalism, which performed so successfully for most of the postwar period, now at the end of their useful lives?
Before trying to answer these questions it is worth noting a paradox in the triumphalist position of the American neo-liberals who boast of new productivity miracles-miracles, incidentally, which have yet to show up in official figures. Despite the self-confident proclamation of an industrial renaissance, protectionist rhetoric in the US is actually increasing. Many fear a yen depreciation against the dollar. Therein lies a clue to the real source of the enhanced competitive strength of US manufacturers against the Japanese: it owes as much to the collapse of the dollar in the ten years to 1995 as to the undoubted innovative capacity of US companies.
Nor should judgements about Japan be made out of historical context. True, it takes inspired economic mismanagement for the world’s largest capital exporter to inflict…