By Rob Steven
The last two or three years have seen one of the most spectacular changes ever in the functioning of international big business.
Almost all of the world's top 10 banks are now Japanese. The bulk of foreign investment moving into developing countries is Japanese. Japanese capital had replaced US capital (which itself replaced British capital after the second world war) as the world's leading owner of overseas assets, with a current net value of over $200 billion compared to US overseas assets of minus $200 billion (i.e. $200 billion overseas debt!).
I spent last year in Japan studying the international might of Japanese capital, and went back a few weeks ago to update my information. The speed of it all is staggering.
This power of Japanese big business, which is now spreading all over the world as Japanese capital buys up overseas assets (companies, land, resources), was originally built up in Japan on the backs of ordinary people. The Japanese economic miracle thus basically represents a miraculous degree of control over, and exploitation of, the ordinary people who have created Japan's wealth.
To understand that power, which is spreading worldwide now as it overshadows the power Western capital has over Western workers, requires looking at the central pillars on which it rests in Japan. Each of these is part and parcel of what is exported each time Japanese money buys something overseas.
'Regulars' and 'irregulars'
The first is the careful distinction Japanese employers make between their "regular workers" and their "irregulars". The first group, found mainly in large corporations, have job security, payment by length of service, fringe benefits including medicare and housing, and are allowed into the union with which the company negotiates.
The second group receive none of these benefits, and get wages which are not much more than half those of the first group. Although there is a lot of propaganda to the contrary, only about one third of the Japanese working class belongs to the first group. The benefits they get are thus at the expense of the second group, which comprises part-timers (mainly women), day labourers, subcontracted workers, ex-regulars who reached
retirement age (55-60) but who are not yet at the pension receiving age of 65, and a whole range of workers in small firms which normally work under contracts from larger firms.
In spite of, or perhaps because of, the growing power of Japanese capital, this separation of workers into regulars and irregulars is being extended to new heights.
For example, a practice that existed in the prewar period is once again spreading like wildfire: labour bosses hire workers and then lease them out to other companies. Because this system robs workers of all rights to negotiate with the actual users of their labour, it was singled out by the postwar union movement as the major target and was eventually outlawed. However, the 1986 Labour Dispatch Act once again sanctions the existence of companies whose sole function is to gather vulnerable workers and then to "dispatch" them to hungry employers who negotiate only with the dispatching company.
Japanese capital has already begun to export this type of company overseas. But it is also extending the overall division of workers into regulars and irregulars directly (in Japanese subsidiaries) as well as indirectly (local companies are under pressure to imitate the Japanese system) all over the world, including New Zealand. Nissan is not an unusual company in Japan, but simply follows the "Japanese Way".
Subcontracting
The second pillar on which the power of Japanese capital rests and which it is exporting everywhere is its subcontracting system. For example, Toyota relies on some 3600 small firm subcontractors (whose workers have no unions, get abysmally low wages and are very much like irregulars within Toyota) to make the parts which it assembles.
The company can thus expand and contract production with the utmost flexibility and without any possibility of objection from the workers whose livelihoods bear the entire burden of the competitive advantage the parent company gets.
Even the employers of the small firms which must dance to the tune of companies like Toyota or Nissan are fairly powerless to do anything except ensure that the burden falls more heavily on their workers than on themselves.
Wherever Japanese companies have established themselves overseas, they have been fostering this same system. Increasingly, they are importing the parts for their knockdown car assembly kits from subcontractors in countries like South Korea, Thailand and Indonesia, where workers' conditions are immeasurably worse than
in Japan.
But in some cases they are using local parts-makers (particularly in the US), although they are imposing on them the same sorts of conditions they do back home, for example, the "just-in -time") system, whereby the parent company will accept delivery of the parts only "just before" they are needed, so that last minute cancellations are possible and so that storage costs have to be born by the subcontractor.
Merit pay
The third pillar on which the power of capital in Japan rests is the system of payment for the person rather than for the job that the person does. This applies mostly to differentials among "regulars", since once a person is classified "irregular", the single most important thing about them, as far as their wages and conditions are concerned, is set,
Among regulars, the most significant thing about someone that affects their wages is how long they have been a regular worker in the company. Payment is thus by length of service, but this really means that wage differentials measure personal loyalty to the firm. Other measures of loyalty which lead to pay differentials include such things as contributions in quality control circles (QC).
QCs show how in practice the three pillars combine to produce a system in which, when workers have to defend themselves, they stand alone, isolated from one another, but when they carry out capital's functions they cooperate closely.
In QCs workers cooperate with one another to find ways of improving the productivity of the group, with a large amount of group pressure being placed on everyone to do their best. But when it comes to dividing up the rewards, workers are forced to compete, and those whose suggestions (which everyone carried out) led to the greatest increase in profits receive the highest rewards. Often the suggestion might be no more than that everyone works later, faster, gives up holidays, and so on. But everyone has to cooperate in implementing it.
The system can be very misleading, because the cooperation among workers can appear progressive unless one notices that it is cooperation for capital. Cooperation is not allowed when workers' interests are at stake.
Not simply are there divisions between regular and irregular workers, between parent company and subcontract workers, but within the parent company workers must compete, not on the basis of acquiring skills to do jobs, which are paid regardless of who
does them, but on the basis of how successfully they can project their personal qualities, in particular their loyalty. That is, how good they are at "greasing up" to their employers.
Workers who learn to think and act like managers (but who still do the jobs of workers) are paid the most, while those whose loyalty is questionable never really receive living wages.
It might come as a great surprise to most New Zealanders to learn that well over half of the Japanese working class must put up with wages and conditions that are far worse than the average conditions of New Zealand workers; they work longer hours (over 50), have fewer rights on the job, receive lower real living standards and have less than half the rate of unionisation.
These are the conditions on which the power of Japanese capital has been built. And they are the conditions which are being spread around the world as Japanese capital shifts gear and makes the world its sphere of operation.
Reprinted from the New Zealand magazine Labour Notes. Rob Steven was, until recently, a lecturer in Japanese politics at the University of Canterbury.]
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