Japan and German Political Economy

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Bashir Faruq
900043
May 5, 2013
Japan and German Political Economy

Introduction
According to Adam Smith in 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...
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