The Wealth of Nation (1776), “political economy was a”branch of the science of a statesman or legislator” and a guide to the prudent management of the national economy, or as John Stuart Mill, the last major classical economist commented, political economy was the science that teaches a nation how to become rich” (G. Robert). Also political economy is the social science that studied the power of market and state, and the relation between them.
Also study how the tension and conflict between them affects the country and the world (D. Balaam and M. Veseth). According to what I have learned from the lectures, political economy is the relation between the state and market. When the state takes control on the market and decide to do many things in the economy, the market can’t grow and develop quickly. But if the state decided to decrease its interactions and provided a stable market situation, the market starts developing very fast.
Back to the topic, political economy of Japan and Germany are different, each one of them has its own specialty and way to develop. Both Japan and Germany are counted as the most developed countries in the world. Also their GDP and standard of living are among the best and highest in the world. In this essay we are going to examine and compare the political economy of Japan and Germany. Germany German after 19th century starts with modernization. After a hundred year they became the largest economic in Europe.
During the World War one and two, they were focusing more on military, and they took a big part of the both wars. German loses the Second World War, and they lost many people and also German’s industrial power, but after the lose they came back to their economy. West of Germany developed very fast economically and the reason of that was the Marshal Plan which was the support from USA to help Europe economy after the world war two. This development was not just German, it includes many countries from west Europe and East Asia.
West of German starts growing when economic minister Ludwig Ehrhard came. West of German was involved with the Marshal Plan that was leaded by USA, they received loans about billions of dollars, and if we compare it with the current currency it’s about 14. 5 billions. That makes the German to come back to their economical development. Germany’s political economy has some similarity with Japanese political economy. But Germany is more likely to American political economy, because both of Germany and America use capitalist style in their political economy.
German system is social market capitalism. The government is interacting with the market lesser than Japan. German is focusing on investment and export just like Japan’s political economy. Also one of the important firms that showed off very affectively in German’s economy is banking system. Banking system in German has three different types and they are working differently and they are Public banks, Co-operative banks and Private banks. State and the Government are owned the public banks. Public banks are working with the long term and development of infrastructure.
Co-operative banks are like Credit unions and Co- operatives. Credit unions give loans to the people based on a bond. Co-operatives give money to people and but the different with credit union is that Co- operatives are more democratic, their members can decide how to run the bank. The third and the last type of banking system in Germany is Private Banks. Private Banks have branches in all of the country with the same services and same quality. These types of banks in Germany are very active and significant for German’s economy.
Germany’s society became on of the most successful societies in the world in a postwar. Workforce and labor forces in the industries were very highly skilled. “A 1994 study found that the average western German household had combined assets (property, savings, automobiles, insurance, stocks) of about $200,000; the average level of asset in the former East German, however, was only about $54,000” (D. Conradt) west of Germany educated before the east because they became independent before the west from the soviet influence.
Also they decided to focus on economy more than military and political issues. “The German government, however, has not intervened significantly in the economy to shape its structure except in the support it has given throw subsidies and protection to dying industries…” (G. Robert). German‘s government or state are helping economy to expand and they don’t intervene to let the companies to improve their imports and exports. Also the social market economy of Germany starts from the west of German by CDU Christian Democratic Union in 1949.
Both of states social market and private sector of German are working together to improve and develop the welfare state of Germany. During the construction that happened after the World War two German thought about reducing the unemployment rate, but after ten years they got lesser amount of unemployment then what they expected. Year after year unemployment rate decreased because of the good industrializing works. Japan Japan is one of the largest countries in the world by GDP, and is the world’s second largest country in developed economy.
Japan has the largest industry for electronic goods, and Japan is the third largest automobile manufacturing country in the world. Japan is competing with China and Korea also other countries. Japan is focusing on the technological and robotic market more than other markets with high-tech development. Japan the same as Germany were under the bad effect of the world wars. They lost many things including their infrastructure. The war affected on Japan that they lost many things and they couldn’t gain them. About 40% of their infrastructure was lost. But after the world war two, they focused on economy and developed very fast.
The high educated solders and people of Japan decided to rebuild Japan and work in the industries, and the got away from the military and army development. After the postwar period foreign investment was not part of Japan’s external economic. Domestics and foreign investments were strongly controlled by government regulations. Japan’s state decided to make the companies to work together and help each other to make the industry develop very fast. So governments intervene of the market is exist more than some other top countries of economy in the world. Working as a team, Japan’s state and market sectors led their nation to become the second largest country in the world. However, the “iron triangle” of Japanese political economy that links business, politicians, and the bureaucracy remained constant while the world inside Japan changed. The system that ones dominated does so no longer. ” (D. Balaam and M. Veseth) the state of Japan support creation of groups to help the companies that are not developed enough to increase their skills and to make a country more developed with more skilled industries.
Japan’s political economy can’t be focusing only on one topic but the most suitable one to define Japan’s political economy is developmental state capitalism because the Japan’s state wants to play the main rule in any development in the country. Japan became one of the most producer and exporter in the world and that because of the people of Japan. They are very helpful with each other more than any other nations. They educated very well that they love their country and they support every kind of development that decided by the state for the country.
Japan’s state and market are depended on the skills that the people of Japan has. Being collectivism and not individualism is one of the aspects that Japanese education concentrated on. Their people are working together and helping each other to success. One of the main reasons why Japan is very successful in their economy is because of their highly skilled and educated people. Also another reason of hard working people is because of their religion so as Japanese people. Most of their people are religious, this kind of behavior makes industry to work hierarchy and develop very fast.
Agriculture of the Japan came from the villages; their villages didn’t change like other countries to migrate from villages to cities. The state help and support the agricultures also that makes Japan to be one of the best countries in the agriculture view. Japan like other countries faced unemployment. They couldn’t fix that problem because of the large population that Japan has. But year by year unemployment reduced till now unemployment rite is about 4. 1 percent from the work force or labor force in the industries. Conclusion Both German and Japan are top countries in their economy.
Also they have the best political economy perspective because if they don’t have so their economies were not that successful to be one of the tops in the world. Political economy makes the relation between the market and state, and find the way how they interact together and how the state intervene to the market. As I mentioned in the above paragraphs, the society is very important for the market and economy. If the society was not prepared and skilled enough to work in the market to develop their industry, their will be a big stop for the country to develop. So education to have high skilled people is very important.
German and Japan are focusing on the national saving and export of the market. But their political perspective that they use are different to each other. Germans are working on the society and market to have a good outcome but Japan is working on society and the political view of the country. From these perspectives we know that government intervention in German is very small that they just want to have a suitable and stable market system to have a fair competition between the companies and industries, but Japan’s state intervention is more than German’s state, the Japan’s government is the one who decide to most of the decisions.