Western understanding of the post-war evolution of states in advanced capitalist societies envisions a moment of fundamental transition beginning in the mid 1970s and indexed by reduced government spending, the privatisation of public services and increased inequality among local governments. Regulation theory sees the process as a transition from a Keynesian welfare state to a Schumpeterian workfare state necessitated by the shift from a Fordist to a post-Fordist regime of capital accumulation. Japan, a member of the OECD, and the world's second-largest economy, fits neither the political-economic trends nor the model put forward by Western regulation theorists. Japan has not experienced the decline in state spending, the privatisation of public activity or the rising inequality among local governments that characterises Western OECD nations. The Japanese have selectively incorporated Keynesian and Schumpeterian ideas, but in a spirit much closer to that of writers associated with the German historical school, and always within a framework rooted in Japan's own historical traditions and exigencies. We document Japan's departure from the Western model of state restructuring and explore the theoretical implications.
