Japan's political economy in comparative perspective: Macroeconomic policy and wage coordination

Abstract

Abstract.  Japan has received conflicting assessments in the comparative political economy literature. This article seeks to identify the location of Japan's political economy within a comparative framework, building on recent analyses of macroeconomic policy and wage coordination. The author examines empirical records and shows that Japan's regime is best considered ‘Keynesian centralization’, rather than ‘monetarist (semi)decentralization’, in light of its effective wage coordination and its anti‐inflationary but flexibly accommodating macroeconomic policy. When there was national consensus on macroeconomic conservatism, Japan implemented restrictive policy and resembled monetarist centralization. However, Japan's monetarist centralization did not lead to distributional conflicts and high unemployment because its decentralized but coordinated wage bargaining and weak labor made it possible for employers and unions to achieve national diffusion of wage restraint without facing solidaristic wage demands by low‐paid workers.