Race for the Exits: The Unraveling of Japan's System of Social Protection

For most of the post-World War II era, Japan's economy and welfare system were the envy of much of the world. But in the 1990s, things began to unravel: the economy stalled, and Japanese social-security programs suddenly appeared inadequate. Japan's unique system of "convoy capitalism" came to seem outdated, the promise of "life-time" employment was no longer a solid one, and the growing gap between rich and poor suggested that Japan was becoming a heartless society. A populace that had come to expect annual economic growth between six and nine percent was confronted with a one percent growth rate. Schoppa examines how Japanese companies and governments responded to the crisis by using Albert Hirschman's model of "exit, voice, and loyalty." He acknowledges that it is too early to say whether as a result of these negative developments Japan will experience fundamental reforms. In the meantime, however, what is striking is how unemotional the Japanese have been in accepting their national economic problems: "voice" has not taken the form of calls for revolutionary change, and a degree of "exit" from politics has not shaken the political system. Schoppa also deals in some detail with the decline in fertility rates, as Japanese women have started working more outside the home -- a break with tradition that may do more than anything else to bring real reform to Japan's economy and society.