The political economy of the Japanese credit market : social norms versus financial globalisation

Since the 1970s, Anglo-Saxon financial hegemony has enhanced international capital mobility, promoting financial disintermediation in many countries. This thesis explores why disintermediation in Japan has stalled since the mid-2000s despite its financial deregulation during the 1980s and 1990s by examining an ideational conflict within Japanese elites between the market liberalisation and anti-free market camps, particularly between the American and Japanese credit rating agencies and between the two industrial associations. I adopt a neo-Gramscian approach in tandem with sociological, psychological and philosophical concepts and emphasise the concept of ‘systemic support’ as a solution to the research puzzle. Although the original, narrow definition of systemic support is government and bank support for financially strained financial institutions and companies, its broadened definition incorporates dominant elites’ support and protection of subordinates in exchange for obedience. Since the late-1990s, many scholars have focused on the possible convergence of Japanese capitalism to Anglo-Saxon capitalism and paid insufficient attention to the persistence of social norms. In contrast, I argue that Japanese society’s anti-liberal, anti-free market norms centred on systemic support are a form of counter-hegemony, and this has resisted Anglo-Saxon financial hegemony and disintermediation and prevented capitalist dominance from severing social ties (e.g., management-labour cooperation). Japanese style stakeholder capitalism is based on a management-labour alliance against capitalists and interlocking business relationships, supported by the confederation of anti-free market elites including bureaucrats, corporate executives (who share similar characteristics to bureaucrats), and conservative politicians. Under the Hashimoto (1996-8) and Koizumi (2001-6) administrations, market liberals advocating shareholder capitalism gained influence, and systemic support weakened temporarily. However, since 2006, both anti-free market elites and subordinates (regular workers and small business owners) conflicting with the market-friendly, short-term profit seeking mental framework of Anglo-Saxon capitalism, have driven an anti-neoliberal backlash. Consequently, systemic support has resurged, but this has generated growing contradictions in Japan