The Stable Long-term Employment System and the Postwar Economy of Japan

Abstract

In the present article, the stable long-term employment system (SLES) is placed in a scope of perspective which is much broader than that of the usual arena of microeconomics. This article, together with the previous one, constitutes a new theoretical exposition and re-interpretation of the postwar Japanese economy, as well as of the employment system itself. To begin with, it provides a rudimentary argument for a microeconomic foundation of macroeconomics in the Japanese context, by relating the microeconomic effects of SLES on “communal saving” and investments to major macroeconomic variables and by stressing the SLES-induced coordination of aggregate savings and investments. Also, it provides an analytical framework for the SLES-induced acceleration of growth in investments, exports and gross national product. Further, it explores a possible explanation of the “Japan Paradox,” viz., the economy's dynamic transfiguration from “capital poor” to “capital rich” within a few decades after the devastations of World War II. Still further, the article tries to relate SLES with the aggressive marketing, cross-shareholding, labor market discrimination, “producer sovereignty,” and some other socio-economic distortions. Finally, it suggests a pragmatic first step toward moderation particularly of the prevailing labor-market discrimination, for the sake of more amicable economic relations with the trading partners, as well as for greater welfare of the very nation.