Institutions and Industrial Governance in India: Learning to Cooperate the Japanese Way

Abstract

Development theorists and practitioners recognize the importance of durable and adaptable institutions for economic and social transformation. The decline of the Euro-centric modernization models and the collapse of the centrally planned ‘socialist’ bloc draws our attention to Japan, a nation that has successfully combined the market system with indicative planning. This study examines Japanese social institutions underlying economic governance and their applicability to developing countries, such as India. The discussion centers around the social basis of cooperation between the state, capital, and labor and the challenges encountered in industrial governance in India. I provide evidence of Japanese-induced cooperation in a Japanese auto joint-venture in India. Cooperation fosters group participation in a structured environment, creating job satisfaction and social solidarity. It also provides the basis for self-regulating capitalism and pre-empting India's inegalitarian consequences of high growth. This advances, even if modestly, institutional ‘solutions’ to some of India's endemic industrial governance problems. The study also re-affirms the importance of non-market institutions such as the state and non-state institutions such as social networks at a time when they are being hastily marginalized by economistic neo-liberal policies. Reinventing institutions of cooperation and constructing social networks for industrial governance remains the most promising avenue for Indian development.