Japan: From Egalitarianism to Plutocracy

“ichiokusouchuuryuu(一億総中流)” or “100 million middle class [citizenry]” was the pride and glory of Japan following its mesmerizing growth which lasted a solid two decades from roughly 1955~1975. Over 87% of respondents during the late 1980′s identified themselves as middle class, and Japan became the first and remains the only country that achieved compatibility between high economic growth without exacerbating wage-differentials for an extended period of time.

As Harvard sociologist professor Ezra Vogel states in his book Japan as Number One, Japan’s “ichiokusouchuuryuu” was made possible by “the success in income distribution […] from a booming economy with full employment […] in national polls about ninety percent of the Japanese public consider themselves to be middle class.” (Vogel, 1979)

The key words that Vogel uses here are “success in income distribution” and “booming economy with full employment.” In other words, Japan’s export-driven GDP growth was climbing so rapidly that those in primary sectors (the agricultural sector) were siphoned into secondary (industrial) and tertiary (service) sectors in large numbers. With exports booming, demand for labor was consistently high, allowing what we now identify as characteristic of Japan’s management style: a seniority-based wage system, lifetime employment, company-based labor unions, and lavish corporate welfare/benefits.

These four proved critical in maintaining full employment and keeping wage-differentials down. I’ll examine each one in detail below:

A seniority-based wage system: Wages were initially low upon entering a company, but everyone’s wages rose in direct correlation to their years of service. Any differences in wage between coworkers on the same “wage rung” was purely a a sign from the company to the employee to get his act together.
Miniscule wage-differentials was made possible by a corporate mentality of a “family” or “clan.” For example, Mitsubishi employees were said to have characteristics of a “Mitsubishi person” and Matsushita employees were said to have characteristics of a “Matsushita person.” Corporate flags, banners, and slogans strengthened the unity between employees and their employers.

Lifetime employment: Played a critical role in maintaining full employment. Needless to say, lifetime employment was made possible by consistent growth, atypical of a “normal” economy. Japan was priviledged to benefit from its geopolitical location as the bastion of democracy in the Far East; if America didn’t consider Japan an ally, America would not have provided the necessary groundworks (i.e. continued demand for Japanese goods and services) for re-industrialization.

Company-based labor unions: The name itself is rather misleading; company-based labor unions are characterized by amicable relationships between employees and employers. This is why many identify Japanese corporations as socialist in nature. Without company-based labor unions, there would have been the possibility of industry-wide strikes, which would have choked Japan’s export-driven economy.

Lavish corporate welfare/benefits: Provided the means for an egalitarian society. The Japanese government was never a “big government” to begin with, and corporations provided the bulk of social welfare in the form of corporate housing and corporate health insurance.
The lack of government intervention can be measured by Gini coefficient terms-Japan is the second most egalitarian country of the OECD nations before government redistribution, but the third most unequal nation after the US and Great Britain after income distribution has taken place. (Miura, Karyuu Shakai, 2005)

Today, the landscape has changed. Japan’s economy has “normalized” and experiences peaks and troughs, making the abovementioned Japanese management style infeasible. We now see a more meritocratic wage-system, no guarantees of lifetime employment for part-time workers, a lack of interest in unions by employees, and a shrinking of corporate welfare/benefits.

Without heavy corporate intervention in the provision of a social safety net, Japan will continue to lose its egalitarian nature. Unlike the welfare nation-states of Nothern Europe, the Japanese government continues to provide very little to its citizens. This is a recipe for disaster: Japan’s social fabric is being worn away, which, in the long term, will cause the Japanese economy to tank.

Japan’s relative povery levels (relative poverty: those who earn less than 1/2 the average income of a particular country) has been steadily rising ever since there has been an increase in liquidity in the labor market.

The cause? An Increase in the number of part-time workers.

Part-time workers are hired contractually; they are given no guarantees of lifetime employment. They are also excluded from corporate welfare and earn about half as much as their full-time counterparts. As of 2009, part-time workers exceeded over 40% of Japan’s labor force.

This wouldn’t be problematic if the Japanese government took an active role in retraining part-time workers (most of whom have no specialized skills) and provided unemployment benefits. Without a “bigger government,” Japan’s social capital will continue to erode.

CitiBank recently wrote an article about how Japan was becoming a plutocracy, a system in which power is vested in those with the fattest wallets. The etymology of the word plutocracy can be traced to the Greek words ploutos for wealth, and kratia for power.

We are seeing the setting of Japan’s egalitarian sun, and the dawn of a society where the few with money are the few that rule.

//By Ryo TAKAHASHI

19 Responses to “Japan: From Egalitarianism to Plutocracy”

  1. Shogo Okuda says:

    I think that Japan after World War II had an unstoppable momentum, which led to Japan’s rapid industrialization and booming economy. Ambitious plans such as the ‘Income Doubling Plan’ enacted by Hayato Ikeda is an example. Started as a response to Miike Coal Mine incident and Anpo in the 60s, the Japanese economy increased by more than double in the decade. Japan has lost that sense of momentum now that Japan has became one of the largest economically powerful countries in the world. It is also true that internal government system has changed dramatically from the 90s as well. The problem is that while the ‘system’ has changed, corporate characteristics that you have discussed is still in place. The skilled workers go to foreign firms. The less skilled and often times, women who leave their work for pregnancy have no choice but to come back to work as a part-time workers. But this said, looking at the Japanese history back in the days of Samurai and Zaibatsu. and the current wages of executives of Toyota, Japan is maybe not an unequal society as Japanese think.

  2. seomoz says:

    Hi, colleague! I love your blog, it’s so friendly! I think it’s pretty popular, isn’t it? I would like to invite you to my favorite Pay-Per-Click system, I believe you can earn with your blog a lot here. My crazy russian friend earns $3.000 per day here! Look, it doesn’t obligate you to anything http://klikvip.com/landings/en/landing2/index.php?aff=35357

  3. Javier Brem says:

    RSS feed is not working in chrome, Kindly fix it.

  4. Rick says:

    RSS feed is not working in chrome, Kindly fix it.

  5. Anthony says:

    Hi, colleague! I love your blog, it’s so friendly! I think it’s pretty popular, isn’t it? I would like to invite you to my favorite Pay-Per-Click system, I believe you can earn with your blog a lot here. My crazy russian friend earns $3.000 per day here! Look, it doesn’t obligate you to anything http://klikvip.com/landings/en/landing2/index.php?aff=35357

  6. Rick says:

    Hi, colleague! I love your blog, it’s so friendly! I think it’s pretty popular, isn’t it? I would like to invite you to my favorite Pay-Per-Click system, I believe you can earn with your blog a lot here. My crazy russian friend earns $3.000 per day here! Look, it doesn’t obligate you to anything http://klikvip.com/landings/en/landing2/index.php?aff=35357

  7. Jeff says:

    I think that Japan after World War II had an unstoppable momentum, which led to Japan’s rapid industrialization and booming economy. Ambitious plans such as the ‘Income Doubling Plan’ enacted by Hayato Ikeda is an example. Started as a response to Miike Coal Mine incident and Anpo in the 60s, the Japanese economy increased by more than double in the decade. Japan has lost that sense of momentum now that Japan has became one of the largest economically powerful countries in the world. It is also true that internal government system has changed dramatically from the 90s as well. The problem is that while the ‘system’ has changed, corporate characteristics that you have discussed is still in place. The skilled workers go to foreign firms. The less skilled and often times, women who leave their work for pregnancy have no choice but to come back to work as a part-time workers. But this said, looking at the Japanese history back in the days of Samurai and Zaibatsu. and the current wages of executives of Toyota, Japan is maybe not an unequal society as Japanese think.

  8. Brian says:

    Hi, colleague! I love your blog, it’s so friendly! I think it’s pretty popular, isn’t it? I would like to invite you to my favorite Pay-Per-Click system, I believe you can earn with your blog a lot here. My crazy russian friend earns $3.000 per day here! Look, it doesn’t obligate you to anything http://klikvip.com/landings/en/landing2/index.php?aff=35357

  9. Gilmar says:

    Gilmar…

    [...]Japan: From Egalitarianism to Plutocracy « JapanCommentator[...]…

  10. list proxy free update,list socks 4, list socks5, traffic exchange…

    [...]Japan: From Egalitarianism to Plutocracy « JapanCommentator[...]…

  11. top mistakes says:

    Your blog is pretty cool to me and your subject matter is very relevant. I was browsing around and came across something you might find interesting. I was guilty of 3 of them with my sites. “99% of site owners are doing these 5 errors”. http://tinyurl.com/cuyfkfj You will be suprised how easy they are to fix.

  12. site says:

    I have got 1 idea for your web page. It appears like right now there are a number of cascading stylesheet troubles while opening a number of web pages inside google chrome and internet explorer. It is operating okay in internet explorer. Probably you can double check this.

  13. Hey there, merely started to be mindful of a person’s weblog as a result of Bing, and discovered that it is definitely insightful. My business is planning to beware of brussels. We will be pleased for those who continue on that from now on. Lots of people shall be helped away from your creating. Regards!

  14. Awesome issues here. I’m very glad to peer your article. Thanks so much and I am having a look forward to contact you. Will you kindly drop me a e-mail?

  15. proxy number says:

    Useful information. Lucky me I found your web site by accident, and I’m shocked why this accident didn’t came about earlier! I bookmarked it.

  16. Rosalinda says:

    How many of you need extra money ? Today i quit my day job,
    now i earn online, you can earn too. Two months ago i was
    searching internet for money making methods and
    found interesting roulette system. I gave it a try and now make 100 £ / day.
    If you want more info just search in google – platinum roulette system

  17. It’s an amazing post in support of all the online people; they will obtain advantage from it I
    am sure.

  18. At this moment I am going away to do my breakfast,
    when having my breakfast coming yet again to read further news.

  19. Beatriz1992 says:

    This article is on 18 spot in google’s search results,
    if you want more traffic, you should build more backlinks to your posts, there is one trick to
    get free, hidden backlinks from authority forums, search on youtube: how to get
    hidden backlinks from forums

Leave a Reply