Greater flexibility, greater growth: A comparative study of labor and capitalist models in Japan, Germany, and the United States

After the end of the Second World War, three major economic powers emerged. Japan in Asia, Germany in Europe, and the United States in North America, quickly became the economic engines of their respective regions. Japan, with its catch-up and producer centered economy, grew so fast and so large, that there were worries in America that the Japanese would end up winning the economic war. West Germany, supported by the capitalist world, became a miracle economy, and the economic power of the European Union. In the past fifteen years however, these two economies have faltered and stagnated. In Japan, the nineteen nineties are referred to as the lost decade . In Germany, unemployment continued to grow throughout the decade, and in the former East Germany remained at near catastrophic levels. Much has been written about the reasons for this, referring to the quick and somewhat chaotic reunification of Germany, and the focus of the Japanese on catching up to the West. Yet these are not adequate explanations. The problems lie deep in the systemic level of both economies, particularly in the area of labor policies, both in formal written laws and policies prevalent in Germany, and the informal cultural guarantees that are seen in the Japanese systems. The area of the non-liberal capitalist model, particularly the banks and capital investment also contributes to the continued economic stagnation of these two states. Comparing these to the liberal economic policies in the United States, this thesis will show that greater flexibility in both the capitalist and labor models allow [sic] for greater success in the globalized economy