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The Japanese FirmSources of Competitive Strength$
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Masahiko Aoki and Ronald Dore

Print publication date: 1994

Print ISBN-13: 9780198288152

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780198288152.001.0001

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The Japanese Firm under the Wartime Planned Economy

The Japanese Firm under the Wartime Planned Economy

(p.350) 13 The Japanese Firm under the Wartime Planned Economy
The Japanese Firm

Tetsuji Okazaki

Oxford University Press

This chapter aims to stimulate discussion and research in the future by focusing on institutional changes taking place in a period that has been relatively ignored by researchers. The chapter points out that in the 1920s the Japanese economy was much more like a classical economy: the labour and capital markets were more competitive, industrial relations were more adversarial, and managers acted as agents for capitalists. The great transformation started to occur in the 1930s and during the Second World War, when government bureaucrats endeavoured to expand Japan's economic capability. To that end, they instituted a quasi-central planning mechanism — called the ‘New Economic Order’ — by curtailing shareholders' controlling power, promoting workers' identification of interests with firms, organizing industrial associations, promoting exclusive bank–firm relations, etc. Although the centralized control of the economy was doomed to fail because of the neglect of price incentives, as well as the devastating effects of the war, institutional shake-ups taking place during the 1930s and the Second World War might have had far-reaching impacts on the institutional arrangements that would eventually have emerged after the war and become instrumental in the remarkable economic development that followed.

Keywords:   Japanese economy, classical economy, labour, capital market, industrial relation, managers, capitalists, Second World War, quasi-central planning, New Economic Order, bank–firm relations, economic development

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