THE REAL VARIETIES OF WELFARE CAPITALISM

Japan's welfare state is puzzling. On most measures, Japan's welfare state is small. Its social spending levels are low; its tax revenue is small; and its benefit levels are meager (Figure 0.1). Japan's social spending programs are among the least redistributive in the advanced industrial world (Table 0.1). At first glance, Japan's small welfare spending appears to confirm the conventional scholarly wisdom that attributes the development of a generous and redistributive welfare state to a strong social democratic party – supported by well-organized and centralized labor unions. Yet despite its meager social spending, Japan has nonetheless managed to achieve a fairly egalitarian income distribution. This situation stands in marked contrast to other countries with similarly small welfare states, including the United Kingdom and the United States, which remain the least egalitarian of the advanced industrial democracies. Japan's “small” welfare state does not, in short, mean that Japan possesses a laissez-faire form of capitalism. On the contrary, the Japanese state interferes frequently and extensively with the market. Just as Sweden uses social policy as a form of industrial policy, Japan uses industrial policy as a form of social policy.

This book offers a new way of thinking about welfare states and the politics that produces and sustains such states. Most studies of welfare states focus exclusively on a narrow range of social spending programs and rarely ask how different countries draw upon a combination of nonwelfare policies to protect their citizens' well-being.