In the past decade remarkable changes have taken place in the relations between big business and government in Western Europe. Large corporations have always been intimately linked to their governments—sometimes carrying out national policies, frequently influencing those policies. Recently, however, more and more national enterprises have become multinational enterprises whose aims diverge increasingly from those of the states in which they originated. In addition, the growth of the European Economic Community has outdated customary ways of doing business for large corporations while creating new opportunities for them.
A number of significant insights and interpretations result from this timely book. The interests of the big firms of Western Europe are becoming increasingly worldwide and less concerned with Europe; inter-European collaboration among them has been largely disappointing in furthering European goals; emphasis on creativity and innovation in big business has given way to the diversion of financial resources to declining industries; and lip service to promoting transnational collaboration notwithstanding, governments have preferred to back national standard bearers in key industries. No less important, the political role of large economic groups has been enhanced and that of parliament weakened or altogether circumvented.
In this timely work, Scott Kennedy documents the rising influence of business, both Chinese and foreign, on national public policy in China.
China's shift to a market economy has made businesses more sensitive to their bottom line and has seen the passage of thousands of laws and regulations that directly affect firms' success. Companies have become involved in a tug of war with the government and with each other to gain national policy advantages, often setting the agenda, providing alternative options, and pressing for a favored outcome.
Kennedy's comparison of lobbying in the steel, consumer electronics, and software industries shows that although companies operate in a common political system, economic circumstances shape the nature and outcome of lobbying. Factors such as private or state ownership, size, industry concentration, and technological sophistication all affect industry activism.
Based on over 300 in-depth interviews with company executives, business association representatives, and government officials, this study identifies a wide range of national economic policies influenced by lobbying, including taxes, technical standards, and intellectual property rights. These findings have significant implications for how we think about Chinese politics and economics, as well as government-business relations in general.
More than 630 million Chinese have escaped poverty since the 1980s, reducing the fraction remaining from 82 to 10 percent of the population. This astonishing decline in poverty, the largest in history, coincided with the rapid growth of a private enterprise economy. Yet private enterprise in China emerged in spite of impediments set up by the Chinese government. How did private enterprise overcome these initial obstacles to become the engine of China’s economic miracle? Where did capitalism come from?
Studying over 700 manufacturing firms in the Yangzi region, Victor Nee and Sonja Opper argue that China’s private enterprise economy bubbled up from below. Through trial and error, entrepreneurs devised institutional innovations that enabled them to decouple from the established economic order to start up and grow small, private manufacturing firms. Barriers to entry motivated them to build their own networks of suppliers and distributors, and to develop competitive advantage in self-organized industrial clusters. Close-knit groups of like-minded people participated in the emergence of private enterprise by offering financing and establishing reliable business norms.
This rapidly growing private enterprise economy diffused throughout the coastal regions of China and, passing through a series of tipping points, eroded the market share of state-owned firms. Only after this fledgling economy emerged as a dynamic engine of economic growth, wealth creation, and manufacturing jobs did the political elite legitimize it as a way to jump-start China’s market society. Today, this private enterprise economy is one of the greatest success stories in the history of capitalism.
In this integration of law and economic ideas, Herbert Hovenkamp charts the evolution of the legal framework that regulated American business enterprise from the time of Andrew Jackson through the first New Deal. He reveals the interdependent relationship between economic theory and law that existed in these decades of headlong growth and examines how this relationship shaped both the modern business corporation and substantive due process. Classical economic theory—the cluster of ideas about free markets—became the guiding model for the structure and function of both private and public law.
Hovenkamp explores the relationship of classical economic ideas to law in six broad areas related to enterprise in the nineteenth and early twentieth centuries. He traces the development of the early business corporation and maps the rise of regulated industry from the first charter-based utilities to the railroads. He argues that free market political economy provided the intellectual background for constitutional theory and helped define the limits of state and federal regulation of business behavior. The book also illustrates the unique American perspective on political economy reflected in the famous doctrine of substantive due process. Finally, Hovenkamp demonstrates the influence of economic theory on labor law and gives us a reexamination of the antitrust movement, the most explicit intersection of law and economics before the New Deal.
Legal, economic, and intellectual historians and political scientists will welcome these trenchant insights on an influential period in American constitutional and corporate history.
Kuo contrasts the economic evolutions of Taiwan and the Philippines as the product of government and industry relations. The two nations shared many economic similarities-yet Taiwan moved from clientelism to state corporatism, while in the Philippines clientelism remains deeply entrenched.
Kuo's case studies in the textile, plywood, and electronics industries support these general arguments. He finds that clientelism invariably leads to economic problems, while a laissez-faire approach is unpredictable. The best formula for industrial success in a developing nation is close cooperation between business and government.
This illuminating study of the evolution of Chinese capitalism chronicles the fortunes of the Song family of North China under five successive authoritarian governments. Headed initially by Song Chuandian, who became rich by exporting hairnets to Europe and America in the early twentieth century, the family built a thriving business against long odds of rural poverty and political chaos.
A savvy political operator, Song Chuandian prospered and kept local warlords at bay, but his career ended badly when he fell afoul of the new Nationalist government. His son Song Feiqing—inspired by the reformist currents of the May Fourth Movement—developed a utopian capitalist vision that industry would redeem China from foreign imperialism and cultural backwardness. He founded the Dongya Corporation in 1932 to manufacture wool knitting yarn and for two decades steered the company through a constantly changing political landscape—the Nationalists, then Japanese occupiers, then the Nationalists again, and finally Chinese Communists. Increasingly hostile governments, combined with inflation, foreign competition, and a restless labor force, thwarted his ambition to create an “Industrial Eden.”
Brett Sheehan shows how the Song family engaged in eclectic business practices that bore the imprint of both foreign and traditional Chinese influences. Businesspeople came to expect much from increasingly intrusive states, but the position of private capitalists remained tenuous no matter which government was in control. Although private business in China was closely linked to the state, it was neither a handmaiden to authoritarianism nor a natural ally of democracy.
The industrialization process in Mexico began before that of any other nation in Latin America except Argentina, with the most rapid expansion of new industrial firms occurring in the 1930s and 1940s, and import substitution in capital goods evident as early as the late 1930s. Though Mexico’s trade relations have always been dependent on the United States, successive Mexican presidents in the postwar period attempted to control the penetration of foreign capital into Mexican markets.
In Industry, the State, and Public Policy in Mexico, Dale Story, recognizing the significance of the Mexican industrial sector, analyzes the political and economic role of industrial entrepreneurs in postwar Mexico. He uses two original data sets—industrial production data for 1929–1983 and a survey of the political attitudes of leaders of the two most important industrial organizations in Mexico—to address two major theoretical arguments relating to Latin American development: the meaning of late and dependent development and the nature of the authoritarian state. Story accepts the general relevance of these themes to Mexico but asserts that the country is an important variant of both.
With regard to the authoritarian thesis, the Mexican authoritarian state has demonstrated some crucial distinctions, especially between popular and elite sectors. The incorporation of the popular sector groups has closely fit the characteristics of authoritarianism, but the elite sectors have operated fairly independently of state controls, and the government has employed incentives or inducements to try to win their cooperation.
In short, industrialists have performed important functions, not only in accumulating capital and organizing economic enterprises but also by bringing together the forces of social change. Industrial entrepreneurs have emerged as a major force influencing the politics of growth, and the public policy arena has become a primary focus of attention for industrialists since the end of World War II.
The Martínez del Río family was a vigorous contestant in the highly politicized economy of early national Mexico. David Walker’s case study of its successes and failures provides a unique insider’s view of the trials and tribulations of doing business in a hostile environment. The family’s ordeal in Mexico—a series of personal dislocations and traumas—mirrored the painful contractions of an old society reluctantly giving birth to a new nation.
Using previously undiscovered primary source materials (including the private correspondence and business records of the family, public notary documents, transcripts of judicial proceedings, and the archives of Mexico’s Ministry of Foreign Relations and the British Foreign Office), Walker employs family history to analyze problems relating more generally to the development of state and society in newly independent Mexico.
The processes of socioeconomic formation in Mexico differed from those of Western Europe and the United States; accordingly, entrepreneurial activity had markedly contrasting implications for economic development and class formation. In the downwardly spiraling economy of nineteenth-century Mexico, economic activity was a zero-sum game. No new wealth was being created; most sectors remained stagnant and unproductive. To make their fortunes, empresarios, the Mexican capitalists, could not rely on income generated from authentic economic growth. Instead, they exploited the arbitrary acts of the interventionist Mexican state, which proscribed the free movement of factors within the marketplace. Speculation in the public debt took the place of more substantive undertakings. Coercive state power was diverted to create artificial environments in which otherwise inefficient and unproductive enterprises could flourish. But however well the empresarios might imitate the outward forms of industrial capitalism, they could not unlock the productive capacity of the Mexican economy. Instead, they and their allies and rivals engaged in destructive struggles to manipulate the state for personal gain, to the detriment of class interests, economic growth, and political stability.
Many people believe that conflict in the well-disciplined Japanese society is so rare that the Japanese legal system is of minor importance. Frank Upham shows conclusively that this view is mistaken and demonstrates that the law is extensively used, on the one hand, by aggrieved groups to articulate their troubles and mobilize political support and, on the other, by the government to channel and manage conflict after it has arisen.
This is the first Western book to take law seriously as an integral part of the dynamics of Japanese business and society, and to show how an informal legal system can work in a complex industrial democracy. Upham does this by focusing on four recent controversies with broad social implications: first, how Japan dealt with the world’s worst industrial pollution and eventually became a model for Western environmental reforms; second, how the police and courts have allowed one Japanese outcast group to use carefully orchestrated physical coercion to achieve wide-ranging affirmative action programs; third, how Japanese working women used the courts to force employers to eliminate many forms of discrimination and eventually convinced the government to pass an equal employment opportunity act; and, finally, how the Ministry of International Trade and Industry and various sectors of Japanese industry have used legal doctrine to cope with the dramatic changes in Japan’s economy over the last twenty-five years.
Readers interested in the interaction of law and society generally; those interested in contemporary Japanese sociology, politics, and anthropology; and American lawyers, businessmen, and government officials who want to understand how law works in Japan will all need this unusual new book.
Japan has had one since before the Pacific War. Germany has always had one. Britain has had one after another. Shouldn't the United States get one?
Though hotly debated throughout the 1980s, this was the wrong question, leading to years of delay and confusion. The United States already had an Industrial Policy, said Otis Graham, but one which was uncoordinated and often harmful. This policy morass, which continued in the 1990s under George Bush despite the erosion of America's competitive position, owes much to a misunderstood history of government economic policy. Elements of both parties, but especially Reagan Republicans, have obscured our real choices with historical myths.
What should the United States have done when the nation saw its industries rapidly becoming globally uncompetitive? What reforms do we need now, asks Graham, to redirect our public policies for competitive strength? Industrial policy reform is an important part of a public-private set of remedies, but it hinges upon an improved use of policy history and of historical perspective generally. He proposes an explicit if minimalist approach by the federal government that would pull together and reform our de facto industrial policies in order to equip the United States with the institutional capacity to formulate industrial interventions guided by continuous learning, strategic vision, and bipartisan participation by both labor and management.
Losing Time is important reading for policy-makers, community leaders, academics involved in public policy, economics, and history, and readers generally concerned about their future.
Common misconceptions about Japan begin with the notion that it is a “small” country (it's actually lager than Great Britain, Germany or Italy) and end with pronouncements that the Japanese think differently and have different values-they do things differently because that's the way they are.
Steven Reed takes on the task of demystifying Japanese culture and behavior. Through examples that are familiar to an American audience and his own personal encounters with the Japanese, he argues that the apparent oddity of Japanese behavior flows quite naturally from certain objective conditions that are different from those in the United States.
Mystical allegations about national character are less useful for understanding a foreign culture than a close look at specific situations and conditions. Two aspects of the Japanese economy have particularly baffled Americans: that Japanese workers have “permanent employment” and that the Japanese government cooperates with big business. Reed explains these phenomena in common sense terms. He shows how they developed historically, why they continue, and why they helped produce economic growth. He concludes that these practices are not as different from what happens in the United States as they may appear.
When, how, and why did the state enterprise system of modern China take shape? The conventional argument is that China borrowed its economic system and development strategy wholesale from the Soviet Union in the 1950s. In an important new interpretation, Morris Bian shows instead that the basic institutional arrangement of state-owned enterprise—bureaucratic governance, management and incentive mechanisms, and the provision of social services and welfare—developed in China during the war years 1937–1945.
Bian offers a new theory of institutional change that explains the formation of China’s state enterprise system as the outcome of the sustained systemic crisis triggered by the Sino–Japanese war. This groundbreaking work combines critical analysis of government policies with case studies of little-studied enterprises in heavy industries and the ordnance industry. Drawing on extensive research in previously unavailable archives, Bian adds a valuable historical perspective to the current debate on how to reform China’s sluggish and unprofitable state-owned firms.
The concept of the “visible hand” in big business enterprise, so persuasively and brilliantly argued in Alfred D. Chandler, Jr.’s prize-winning The Visible Hand: The Managerial Revolution in American Business, is tested and extended in this book. These essays show that the growth and complexity of managerial hierarchies (“visible hands”) in large business firms are central to the organization of modern industrial activity. Leading American and European historians retrace and compare the historical evolution of the contemporary giant managerial hierarchies in the United States, Britain, Germany, and France.
The first group of essays—by Chandler, Leslie Hannah, Jürgen Kocka, and Maurice Lévy-Leboyer—explores the rise of modern industrial enterprise in the West. They suggest the mechanisms and causes of the shift from the invisible hand of market coordination to the visible hand of managerial hierarchies, and attempt to pinpoint cultural and economic reasons for the persistence of transitional forms of organization in Europe. Other essays—by Morton Keller and Oliver E. Williamson—describe the legal and regulatory responses to the rise of big business and the implications of the history of the managerial revolution for students of economic development and industrial organization. The final essay, by Herman Daems, provides an overall analysis of the reasons managerial hierarchies replaced market mechanisms and agreements among firms as devices for coordination and the allocation of resources in advanced market economies.
This fresh study of the managerial revolution presents recent theoretical reflections in institutional economics and industrial organization in the light of new historical findings.
In December 1978 the Chinese Communist Party announced dramatic changes in policy for both agriculture and industry that seemed to repudiate the Maoist “road to socialism” in favor of certain “capitalist” tendencies. The motives behind these changes, the nature of the reforms, and their effects upon the economy and political life of countryside and city are here analyzed by five political scientists and five economists. Their assessments of ongoing efforts to implement the new policies provide a timely survey of what is currently happening in China.
Part One delineates the content of agricultural reforms—including decollectivization and the provisions for households to realize private profits—and examines their impact on production, marketing, peasant income, family planning, local leadership, and rural violence. Part Two examines the evolution of industrial reforms, centering on enterprise profit retention, and their impact on political conflict, resource allocation, investment, material and financial flows, industrial structure, and composition of output. Through all ten chapters one theme is conspicuous—the multiple interactions between politics and economics in China’s new directions since the Cultural Revolution.
Taiwan is a classic case of export-led industrialization. But unlike South Korea and Japan, where large firms have been the major exporters, before the late 1980s Taiwan's successful exporters were overwhelmingly small- and medium-sized enterprises (SMEs). The SMEs became the engine of the entire economy, yet for many years the state virtually ignored the SMEs and their role as exporters.
What factors account for the success of the SMEs and their benign neglect by the state? The key was a strict division of labor: state and large private enterprises jointly monopolized the domestic market. This gave the SMEs a free run in export markets. How did this industrial structure come into being? The author argues that it was an unintended consequence of the state's policy toward the private sector and its political strategies for managing societal forces. Indeed, Taiwan's unique industrial structure was shaped by both the witting and the unwitting interactions of the state and the private sector. Moreover, as the author shows, this industrial policy was a product of the internal politics of the economic bureaucracy, and the formulation and implementation of economic policy hinged on mechanisms for solving differences within the state.
This book will become the bible of regulatory reform. No broad, authoritative treatment of the subject has been available for many years except for Alfred Kahn’s Economics of Regulation (1970). And Stephen Breyer’s book is not merely a utilitarian analysis or a legal discussion of procedures; it employs the widest possible perspective to survey the full implications of government regulation—economic, legal, administrative, political—while addressing the complex problems of administering regulatory agencies.
Only a scholar with Judge Breyer’s practical experience as chief counsel to the Senate Judiciary Committee could have accomplished this task. He develops an ingenious original system for classifying regulatory activities according to the kinds of problems that have called for, or have seemed to call for, regulation; he then examines how well or poorly various regulatory regimes remedy these market defects. This enables him to organize an enormous amount of material in a coherent way, and to make significant and useful generalizations about real-world problems.
Among the regulatory areas he considers are health and safety; environmental pollution, trucking, airlines, natural gas, public utilities, and telecommunications. He further gives attention to related topics such as cost-of-service ratemaking, safety standards, antitrust, and property rights. Clearly this is a book whose time is here—a veritable how-to-do-it book for administration deregulators, legislators, and the judiciary; and because it is comprehensive and superbly organized, with a wealth of highly detailed examples, it is practical for use in law schools and in courses on economics and political science.
Whose life is worth how much? To some people it seems immoral even to ask, but to others—to the worker, say, who is offered a dangerous but lucrative job—it is a practical question. Should government interfere with a worker's decision, a personal negotiation with destiny? If so, when and how?
Risk by Choice presents a comprehensive, nontechnical analysis of these questions and of government risk regulation policies in general. W. Kip Viscusi shows that the goal of a risk-free workplace is a chimera, leading to expensive regulatory programs that do little to lessen health and safety risks. He argues that when workers are aware of the hazards they face, market forces operate to promote efficient levels of risk. Government should intervene only when these forces fail to work—principally when workers do not understand the risks—and then should design policies that complement market forces rather than supplant them. Based in part on the author's experience as a member of the White House group that reviewed government regulations in many areas, this book offers the most extensive discussion available of the economic foundations of risk regulation, as well as new information on OSHA and the White House regulatory oversight process.
This book assesses the changing nature of state intervention in the economies of the affluent democracies. Against a widespread understanding that contemporary developments, such as globalization and new technologies, are pressing for a rollback of state regulation in the economy, the book shows that these same forces are also creating new demands and opportunities for state intervention. Thus, state activism has shifted, rather than simply eroded.
State authorities have shifted from a market-steering orientation to a market-supporting one. Chief among the new state missions are: repairing the main varieties of capitalism (liberal, corporatist, and statist); making labor markets and systems of social protection more employment-friendly; recasting regulatory frameworks to permit countries to cross major economic and technological divides; and expanding market competition at home and abroad.
Because the changes from market steering to market support are so controversial and far-reaching, state officials often find themselves making choices that produce clear winners and losers. Such choices require a capacity to act unilaterally and decisively, even in the face of substantial societal opposition. As a result, state activism, autonomy, and occasionally imposition remain essential for meeting the challenges of today's globalizing economy.
In Varieties of State Regulation, Yukyung Yeo explores how, despite China’s increasing integration into the global market, the Chinese central party-state continues to oversee the most strategic sectors of its economy. Since the 1990s, as major state firms were spun off from the ministries that managed them under the central planning system, the nature of the state in governing the economy has been remarkably transformed into that of a regulator.
Based on over 100 interviews conducted with Chinese central and local officials, firms, scholars, journalists, and consultants, the book demonstrates that the form of central state control varies considerably across leading industrial sectors, depending on the dominant mode of state ownership, conception of control, and governing structure. By analyzing and comparing institutional dynamics across various sectors, Yeo explains variations in the pattern of China’s regulation of its economy. She contrasts the regulation of the automobile industry, a relatively decentralized sector, with the highly-centralized telecommunications industry, and demonstrates how China’s central party-state maintains regulatory authority over key local state-owned enterprises. Placing these findings in historical and comparative contexts, the book presents the evolution and current practice of state regulation in China and examines its compatibility with other contemporary government practices.
This intellectually bold but accessible book seeks to go beyond limitations of the reigning neoclassical and institutional paradigms in explaining the organization of economic activity. It does this by construing “non-economic” factors such as institutions, cultures, and social practices as conventions, which coordinate economic actors by defining specific “frameworks of economic action.” In these conventional frameworks, the standard distinction between economic and non-economic no longer exists. The authors explore in detail four basic frameworks—or “possible worlds of production”—which underpin the mobilization of economic resources, the organization of production systems and factor markets, patterns of economic decision making, and forms of profitability. The case studies examine how these possible worlds act to support innovative production complexes in a variety of sectors in several countries.
Michael Storper and Robert Salais show that economic actors coordinate actions with one another and interpret what others are doing in ways that are constructed by convention. The principal challenge to economic policy today, they argue, is to reconcile internally coherent conventions with the external tests of product and financial markets, which tend increasingly to escape jurisdictional borders. There is no single model of growth and efficiency that brings these two sides together around the world today, even in narrowly defined product markets. If policies are to deal effectively with an increasingly unified global system of flows of commodities, money, and people, they must be aware of the diverse, economically viable action frameworks found in different industries, regions, and nations.
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