Social norms and (de-)financialization: Japan’s and China’s divergent paths in consumer credit

Abstract

Since the 1980s, American-led financialization promoting capital and labour mobility has influenced Asia, but the Japanese and Chinese trajectories in financialization of consumption (consumer credit development) have diverged, with the 1995-2013 contraction in Japan contrasting with the skyrocketing growth in China since 2010. I argue the divergence can be attributed to the varying levels of compatibility between American financial norms and their social norms, the different timings of their integration into the global economy (the influence of 'embedded liberalism' or neoliberalism), and the interests of key actors of each country. Anti-liberal Japanese elites reversed the financialization of consumption to preserve anti-capitalistic 'industrious norms' and strong attachments to intermediary organisations, which are the cornerstones of their dominance. In contrast, economic rationalism embedded in Chinese society since late imperial China, when capital and labour mobility was enhanced by removing fixed intermediary organisations considerably under autocracy, has facilitated China's financialization of consumption.

What do indebted employees do? Financialisation and the decline of industrial action

“…Interestingly, the negative effects in both countries are similar in size, while the household ratio in the United Kingdom is considerably larger than in Japan. As discussed earlier, this is not an entirely unforeseen finding and is probably related to the fact that in Japan personal indebtedness is viewed very negatively and bankruptcy constitutes a social stigma (Gotoh, 2021;Naoi et al, 2019). By this logic, in societies where such social norms are dominant, smaller amounts of household debt are likely to generate disproportionately large disciplining effects for the indebted.…”

“…Lastly, in certain societies or regions, high personal indebtedness is viewed as a personal failure to successfully manage your finances and households tend to be very risk‐averse concerning their financial decisions since personal default constitutes a social stigma. For example, scholars argue that this is the case for Japan (Gotoh, 2021; Naoi et al, 2019). In this respect, in such cases, comparatively smaller amounts of debt can generate substantially large disciplining effects on workers.…”

Varieties of moral hazard in the global automobile industry

“…Industrious norms (an internalized work ethic, respect for labor and a negative view of financial profit) and systemic support have been carried forward to contemporary Japan (Gotoh, 2021). After WWII, U.S. occupation forces used agricultural land reform, dissolution of zaibatsu, a purge of top management, and a wealth tax to eliminate major Japanese capitalists, including landlords and executives of zaibatsu conglomerates and large firms.…”