Hide Ishiguro’s apt comments are most welcome: my analysis was certainly somewhat abbreviated at many points. However I would like to defend myself against the implication that I was supporting the traditional right-wing view in Europe. The essence of the bourgeois viewpoint, in Britain at least, is to blame Britain’s ills on the working class, ignoring the rotten condition of the British capitalist class, and to bestow (envious) praise on the Japanese managerial stratum, while ignoring the Japanese working class. I do not for one moment support this view. Wages play only a small part in determining a country’s competitiveness—if Britain is falling behind now it is not because of high wages for the British workers. My discussion of wages was meant as a criticism of Japanese capitalism from within, not as a Chauvinist comment on Japan’s international position.

It is true (ia) that there is much less concentration of industrial wealth in private hands in Japan than in Britain. However, two points need to be made. First, effective control can be wielded without majority share ownership: Ishida runs Toyota (cars), Ishibashi runs Bridgestone (rubber) and Inayama runs Yawata (steel) as firmly as if they had a 1oo per cent interest. Secondly, the number of people at the top who effectively take decisions is just as small in Japan as in any other capitalist country. Concentration in the sense of personal ownership may be less but concentration in the sense of control is every bit as great.

Measuring disparity (ib) is, 1 agree, difficult. However, Matsushita, although he holds no more than 5 per cent of the shares in the family firm, still manages to haul in a tidy income—£493,991 in 1965, or £1,335 per day. One of his residences is a nice 27-roomed mansion in the country outside Osaka. Besides, the expense account system which Hide Ishiguro refers to has reached an unparalleled level of development in Japan, as the size and prices of the colossal entertainment areas in every Japanese city attest. Naturally, there are no statistics on this, but all commentators admit it is both proportionately and absolutely the biggest expense account economy in the world. This is a privilege of the upper echelons of the society.

The growth rate (ic) is indeed related to the low defence expenditure. It is also related to low expenditure on other things—such as housing, transport and social services. The last oecd report on government expenditure on social services per capita as a percentage of gnp put Japan the last on the list of 20 countries given—underneath Turkey! Investment in housing is a much lower percentage of gross investment than it was at the turn of the century (and if housing is removed from comparative investment figures, all the international comparisons on investment are considerably altered). Japan has also had very low replacement costs in the post-war period so far.

I agree (2) that measuring the degree of exploitation is extremely difficult, but I think the phrase I used is fair enough as an indication. Not only is average per capita income lower in Japan than in Italy, the labour share (the share of wages in the national income) in manufacturing industry (in enterprises employing more than 30 workers) fell steadily over the decade 1955–64. In the last year for which I have comparative international statistics to hand the labour share in Japan was lower than the uk, Denmark, Netherlands and West Germany (as well as Canada and the usa). I agree that it is difficult to make a precise comparison, because of the greater proportion of total wages which is made up of bonuses and other extras in Japan. But it is important not to be mystified by employers’ propaganda about fringe benefits. Japan had the fastest rate of increase—without comparable automation—in labour productivity (industrial production÷employment), while wage costs (wages÷labour productivity) fell the most of any industrialized country for the decade 1950–60. This must, of course, be related to the cost of living in general, which is much lower than in the Western industrial countries. But again low expenditure on rent, for example, merely conceals the fact that in 1962–63 there was exactly double the density of people per room in Japan compared with the uk and that the floor area available per person was considerably less than in Italy. Per capita calory consumption, according to the 1964 fao Yearbook, was well below Italy—indeed the gap between Japan and Italy was over seven times that between Italy and West Germany—and was extremely unbalanced. Massive investment in industry is not proof that the gap in income distribution is small. Investment is still ‘savings’—for the capitalist class. The fact that Japanese entrepreneurs may display more restraint than, say, their Italian counterparts does not affect the class nature of the society. The wealth accumulated is not being redistributed, nor is control over it being extended. The fact that it is not being immediately consumed is largely irrelevant. If it is not distributed in dividends (shares anyway playing a very small part in business capital) it can easily be handed out in perks, expense accounts and other fringe benefits for the top echelons of business.