Japan’s Dual Industrial Structure as a Welfare System: “The Lexus and the Olive Tree ”—and “the Vulture ”

Abstract

During high-growth period of 1950-1973 (Golden Age of Capitalism) and its subsequent two decades, Japan came to be known for efficiency and perfectionism in manufacturing as exemplified by low production costs and high quality of automobiles and electronics it produced. Japan's renowned manufacturing technology, flexible production with just-in-time parts delivery, is now in use throughout advanced world. Yet, now that Japanese economy has been mired in a prolonged slump over more than a decade since bursting of asset bubble in 1990, world's perception of Japanese economy has drastically changed from admiration to indifference even to pity. 'What has brought Japan's juggernaut to its knees? 'Why can its government, once so much touted for effective industrial policies and administrative guidance, no longer cope with current economic problems, especially bad bank loans, which stand at anywhere between $430 billion (official estimate) and $1.9 trillion (private estimate)? A litany of reform proposals have been put up in recent past, but so far no decisive and effective implementation has taken place. In order to explain leitmotiv of this paper, I draw upon title of a book, The and Olive Tree, a recent best-seller written by Thomas Friedman (1999) of New York Times, a twice-winner of Pulitzer Prize. He used the Lexus as a symbol of an age-old human drive for material betterment and higher standards of living and the olive tree as a symbol of an equally age-old human quest for communal identity, stable sustenance, and social cohesion. The former represents technological efficiency and latter human attachment to, and concern of, livelihood security and cultural iden-