ABSTRACT
Inclusive CME: post-World War II Japan In this chapter, I examine the financial outcomes when landed interests, labor, and capital have similarly powerful bargaining positions, as in post-World War II Japan. Immediately following the war, labor’s power swelled. Despite early support for unions, American Occupation authorities soon did an about-face as they sought to stymie increasing communist influence. Within five years of the end of the war, Japanese labor had become weaker than its German counterpart, especially in the political arena. It was during this period of flux that bargains over financial institutions were struck. Farmers’ power also vaulted to new heights following the war: land redistribution as well as several institutional mechanisms – the electoral system, increasingly malapportioned representation, universal male suffrage, and the executive-legislative balance – cemented Japanese farmers’ unprecedented political power. Unlike labor, they held on to their new gains, and bargained over the structure of the nation’s financial institutions from a position of strength. Indeed, farmers have played a critical role in Japanese postwar financial architecture in two ways: (1) immediately after the war they pushed the financial system in a direction that privileged intermediation through government-operated banking facilities; and (2) as a key actor within the consensus political system, they have wielded sufficient power to veto changes to the status quo (which they helped to create immediately after the war). With financial institutions complementing one another (Table 3.2), farmers’ capacity to influence the initial structure of one, or more, of these institutions has constrained the possibilities for the rest of the financial system. And insofar as Roe (2003) finds that long-term financing arose as a stable complement to employment stability, but not necessarily as a result of labor’s bargaining power, farmers may fill the causal void Relative to the prewar period, the power of owners of large firms suddenly diminished and became constrained by the rise of these groups and the institutions that cemented the new distribution of political power. Occupation authorities came to their rescue, however, by weakening labor’s bargaining position and pushing for outcomes that would be beneficial to business owners.
