Sustainable Capitalism: Revelations from the Japanese Model

Joel Slawotsky

Volume 63

This Essay utilizes the Japanese governance model as it provides a useful comparative illustration. Unlike the United States, the Japanese model engages in a stakeholder value system wherein the interest of shareholder profits lies at the bottom. As will be seen below, while the United States has its share of corporate scandal, such corporate abuse is not solely relegated to the United States but exists in Japan as well. Moreover, notwithstanding claims that a shareholder model results in income inequality, according to the Organisation for Economic Co-operation and Development, while the United States has the fifth highest household disposable income gap, Japan is close behind in sixth place. In addition, despite the global economic slowdown and market volatility, the U.S. stock indexes are just slightly below record highs, while in contrast, Japan’s major index is down about 80% since peaking in 1989. Finally, a review of macroeconomic statistics reveals that in contrast to an ever growing—albeit at a slow pace—U.S. economy, Japan’s economy has been shrinking, and its overall economic standing has slipped.

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