We are educated that Japan is a capitalist country but I remember Japan started bringing out the color of capitalism in the beginning of 1990. Pay-per-performance and stock option were adapted in Japanese company’s reward system and Japanese companies started placing way more weight on meritocratic system than socialistic estimation system that didn’t evaluate individual abilities such as “Goofs can receive the same amount salary” and “promotion prioritizes a person who has worked for longer time(seniority system). ”
If degree of maturity of Japanese capitalism were a student, Japanese capitalism is still elementary school student.
I think tech companies that had grown without restriction came to the forefront raised the curtain of capitalism in the beginning of 2000. And also a factor that announcement of top taxpayers ranking had abolished in 2005 removed people’s mental obstruction against high income earning ,and made Japan spur on capitalism. (Japanese people are worried about being in the public eye by standing out)
Gorbachev who is ex-president of Soviet Union said that “Japan was the most successful socialistic country.” Japan is known as hybrid society between capitalism and socialism, which is called “Japanese socialism”
When talking about “socialism”, it may remind you of the strong impression of “East countries” such as “Former Soviet Union” and “Cuba” but “socialism” is originally an antonym of “capitalism” and it is basically a concept about economics or what fortune should be rather than political thoughts. In short it is not antagonism between democracy and totalitarianism (dictatorship).
Socialism is a doctrine in the process of aiming to anarchical communism without admitting private property and retained earnings tax policy is quite socialistic.
“Anarchical communism” is a concept that as long as there are governors, we have someone to take charge of a supervisor. As long as there are supervisors, we can’t remove the difference of status and absolute equality is brought by a state not requiring the government.
In 2017, Party of Hope hammered out a policy to lay a tax on retained earnings owned by Japanese companies and it receives mounting public criticism.
According to Wikipedia, “retained earnings” is explained like
The retained earnings of a corporation is the accumulated net income of the corporation that is retained by the corporation at a particular point of time, such as at the end of the reporting period. At the end of that period, the net income (or net loss) at that point is transferred from the Profit and Loss Account to the retained earnings account. If the balance of the retained earnings account is negative it may be called accumulated losses, retained losses or accumulated deficit, or similar terminology.
In Japan, we Japanese people tend to associate “retained earnings” with company’s behavior that it greedily saves up earnings in plenty. Actually, retained earnings arrived in 406 trillion yen in 2016. The substance of this hammered policy is that companies that save up a lot of money should distribute it to workers and if not, lay a tax on their saving money. The substance really sounds like social justice but public criticism is questioning if this policy is against the principle of capitalism.
Investment is one of the methods of raising funds to run a company. Shareholders invest to a company with expectation of profit return from money they invested. If this logic is correct, remained profit generated from invested money belongs to a shareholder. Of course the profit defined here is the last remained money after deducting the payment of tax, salary to workers, manufacturing costs and other possible costs from total sales.
How do companies use such profit created with investment from shareholders? There are roughly two ways. The first is that they distribute profit to shareholders as a dividend. The second is that they invest land, equipments or prepare money to strength the present businesses or start new business.
In short, retained earnings is the rest of profit after distributing dividends to shareholders from the last remained profit. Both distributed dividends and the rest of profit ordinarily belong to shareholders. Public criticism points an accusing finger at double taxation against profit (retained earnings) whose allocated tax has already been deducted and there are also complains that it is unfair to ray a tax on “retained earnings” which is ambiguous definition on accounting.
The retained earnings tax policy is enforced generally when needing to reluctantly confiscate national ’s private properties because the national finance faces bankrupt and default. (to deal with external debt). Its theory is the same as individual bankruptcy that your hope to go bankrupt with a owning house and cars is not accepted. Going bankruptcy, you need to renounce your all properties.
Japanese people are fundamentally incompatible with capitalism because of strong rejection sense to “difference”. So many people think that equality needs to be created on a society that place not importance on extreme competitiveness ,and no superrich is appeared from the Japanese sense of equality.
Therefore, Japanese mentality is basically biased to socialism. Both of socialism and capitalism are doctrines made not by east asian people. So people’s recognition on state doctrine is only the difference weather socialism came from the East and capitalism came from the West. We don’t have reality to what kind of doctrine our state belongs to.
Culturally, Japanese trait is not the one to make it clear whether something is right or wrong. In the first place, Japanese people refrain from exposing openly a principle or a doctrine and we don’t declare we are the nation of socialism even if we recognize it. So Japan take the appearance of capitalism as a formality to keep pace with other countries in order to hide a color of socialism.
Japan has only partial adoption of capitalism as a kind of module but it sounds strange that we define Japan as a capitalist country. Implicit egalitarianism or totalitarianism is more matched to our state.
The idea of “collecting money from rich companies” may be able to get support from the people. In all ages, populism for the number of votes is the eternal truth of politics that hasn’t changed since long ago but there is perfectly difference in character between strategical temporary populism which is done by Donald Trump and that which is done by Japanese politicians involved with deep-rooted socialistic tendency that essentially prefers to financial equality.
Although retained earnings accumulated after the payment of tax is clearly defined as shareholder’s equity, the idea of the policy that confiscates the earnings from companies forcibly is equivalent to the case that although you buy a lottery that states you can win 10 million dollars and you win it, the authority changes its attitude and tries to lay a tax on your reward of 10 million dollars which should be exempted from taxation. (In Japan, lottery reward is tax-exempted).
It is not really approvable to change rules of investment that needs to be worked in the most basic part of capitalism by the authority’s forcible intervention even in the name of creating equality society. If the government intervenes it once, it will shift its target to another part of “a module” of capitalism to collect more money.
One thing I can Cleary say is that no politicians who understand perfectly the system of capitalism administrate politics. You might understand why Japan can’t get out of depression and why mass communications try to incite people to think we have good times now with flattery and decorative words.