Welfare and Capitalism in Postwar Japan

Party, Bureaucracy, and Business

Welfare and Capitalism in Postwar Japan

This book explains how postwar Japan managed to achieve a highly egalitarian form of capitalism despite meager social spending. Estevez-Abe develops an institutional, rational-choice model to solve this puzzle. She shows how Japan’s electoral system generated incentives that led political actors to protect, if only for their own self-interested reasons, various groups that lost out in market competition. She explains how Japan’s postwar welfare state relied upon various alternatives to orthodox social spending programs. The initial postwar success of Japan’s political economy has given way to periods of crisis and reform. This book follows this story up to the present day. Estevez-Abe shows how the current electoral system renders obsolete the old form of social protection. She argues that institutionally Japan now resembles Britain and predicts that Japan’s welfare system will also come to resemble Britain’s. Japan thus faces a more market-oriented society and less equality.


“This outstanding book deserves the attention of a wide audience. By locating the Japanese welfare state into a comparative framework on the basis of strong theory and extensive empirical work, Estevez-Abe reshapes the way we discuss social programs, spending, equality and distribution, interest groups, the bureaucracy, political institutions, elections, political parties, and the careers of politicians. She argues well and convincingly. She dares make a prediction: because of institutional changes in the Japanese system, the Japanese welfare system will come to resemble that of the UK. Whether they agree or not, her argumentation compels the attention of everyone doing comparative politics.”
-Peter Gourevitch, University of California, San Diego

“Research on the Asian cases is now providing new insights into the political logic of the welfare state. In this powerful revisionist account of Japan, Margarita Estevez-Abe explains how relatively modest levels of social spending have nonetheless contributed to a relatively equal distribution of income and extensive protection against market risks. She does this by focusing on a variety of state interventions not typically considered social policy instruments, from rural public works programs to state-managed competition in particular markets. Moreover, she nests this discussion of market institutions and the varieties of capitalism in a consideration of Japan’s formal political institutions as well. This is a first-rate piece of political economy that will have important implications across the welfare state literature.”
-Stephan Haggard, University of California, San Diego

“In this subtle and powerful book, Estevez-Abe solves what for many social scientists is a profound mystery about Japan by showing how Japan’s recent economic collapse stems from the same policies that generated the earlier rapid growth that made Japan famous. The Japanese government gave big businesses support and leeway to invest and grow, but this very protection stifled innovation. This is far more than a ‘Japan book.’ Estevez-Abe shows how electoral competition guided the LDP’s policy mix and explains which firms got government backing, with what trade-offs for economic performance and wealth distribution.”
-Frances Rosenbluth, Yale University

“An amazing book. It offers an original characterization of the political economy of the Japanese welfare state, a detailed thematic story of social policy decision making over decades, and an audacious proposition that electoral systems explain (almost) everything. I have some quibbles with all three arguments and I certainly hope the prediction that the Japanese welfare state will soon look like the British welfare state will not come true, but I know that Japanologists and comparativists with any interest in social policy, economics, and politics will have to take this formidable book into account.”
-John Campbell, University of Michigan


Winner, 2009 Masayoshi Ohira Memorial Award