Organizer: Mark Tilton, Purdue University

Chair: Patricia Boling, Purdue University

Discussant: Steven Vogel, University of California, Berkeley

Since the end of the Cold War, both Germany and Japan have confronted problems of economic and political transformation. In both countries, how much to adopt more "Anglo-American" or "globalized" economic practices has been sharply contested. A number of scholars have argued that there are enough similarities between German and Japan to constitute an alternative "Nippo-Rhenish" or "organized" model of capitalism. Is there also a German-Japanese model of political and economic reform?

Each of three papers will focus on an aspect of Japanese policy change, but will also compare Japan with Germany. Each examines one of three separate steps in a process of (1) making political reforms that (2) result in economic policy reforms that then in turn (3) transform corporate practice. (1) Blechinger-Talcott focuses on the political world of anti-corruption policies. (2) Tilton looks at how reductions in the flow of illicit funds from public construction projects have unexpectedly opened the door to antitrust reform. (3) Moerke looks at the significance of legal and policy changes for transforming Japan’s system of corporate governance. All of the papers then weigh the similarities and differences with Germany. The panel continues a conversation from a panel reviewing Machiavelli’s Children at the 2005 AAS meeting, in which the case was made for comparing Japan with other European nations besides Germany. This panel returns to the German comparison and will consider the insights that can be gained from it.

Verena Blechinger-Talcott, Berlin Free University, Germany

This paper addresses anti-corruption policy as a case study for how change is happening in Japan. Politicians, businesspersons and bureaucrats all have stakes in the rules and regulations governing political finance and public works contracting. The paper will examine recent changes in anti-corruption policies in Japan, including campaign finance reform, the public debate over political ethics, Japanese implementation of the newly developing global anti-corruption regime, and bid rigging in public works contracting. The paper will explore the relationship between the occurrence of scandals and the ability of governing coalitions to carry out difficult reforms. It will ask whether corruption scandals produce political change and anti-corruption initiatives, or whether these initiatives themselves produce greater publicity for existing corrupt practices and thus increase the incidence and severity of scandals.

The paper will also consider the German comparison. How are German patterns of corruption distinct from those of Japan? Do bid rigging and kickbacks from construction projects occur in Germany as well? If such corruption is not as prevalent, what is it about German politics or administrative practices that prevents it? Are there other forms of corruption that are more important in Germany? And stepping back to consider the larger picture: What is the larger pattern of business influence on politics in Germany and Japan, and how important are corruption and other forms of money politics? What do patterns of corruption and anti-corruption policy tell us about the existence of a German-Japanese model?

Mark Tilton, Purdue University

In April 2005 Japan passed a significantly tougher new Antimonopoly Law. This was something the Japan Fair Trade Commission (JFTC), which enforces Japan’s antitrust law, had wanted for decades, and that the U.S. had pushed hard for in the early 1990s. But this time around the more stringent penalties and enhanced powers for the JFTC went through with relatively little fuss. The Keidanren and the construction industry were opposed, and few in the LDP supported the reform, but Koizumi pushed it through anyway. Why? What changed in recent years that made it possible to push through reforms that a decade earlier had been impossible? How significant is the policy change? Interviews with policymakers in May 2005 suggest that anti-corruption reforms and construction budget cuts reduced the importance of political contributions from the construction industry to the LDP, and thus made the construction industry’s opposition less of an obstacle than previously.

Germany, and Europe generally, went through the process of strengthening antitrust policy twenty years earlier. How does Japan’s new Antimonopoly Law stack up compared to German and E.U. policy? How different were the processes that led to the new policies? The paper will make the case for the usefulness of a German comparison, pausing to consider an alternative comparison with the other exemplar of the "Nippo-Rhenish" model, France.

Andreas Moerke, German Institute for Japanese Studies, Japan

In the context of comparison with the U.S., Japanese corporate governance is often seen as much like that of Germany. Undeniably, Japan and German corporate governance have their similarities, such as ownership concentrated among a stable network of related firms; a major role for banks because of relational financing, ownership and personal links; and a strong voice for workers on boards of directors. But there are enormous differences in legal structures and the role of business associations.

Currently both countries are going through remarkable changes in corporate governance: amendments to the Commercial Code in Japan and to several laws in Germany, the new opportunity to choose between the traditional and the U.S. type of board in Japan; and shifts in ownership structures. The paper will examine the current status of Japanese corporate governance (in comparison with that of Germany) and ask just what it is that is driving these changes. Previous research points to the globalization of the economy and the financial system that push towards more market-based and shareholder-oriented corporate governance. However, the paper will go further and investigate the role of economic and social actors in pushing the process forward in both Japan and Germany, the significance of these changes for the larger economies, and the likely direction of future changes. The paper will consider the larger question of what insights a German comparative perspective provides into Japanese corporate governance.