Beyond state and market: the role of labor regimes and class dynamics in the East Asian miracle

Abstract

While conventional wisdom focuses on the roles of the state and the market in achieving high growth in East Asian countries, this paper offers an account focused on class dynamics. First, the paper connects post-World War II class dynamics in Japan and South Korea to the distributional outcome, i.e., the gap between labor productivity growth and real wage growth. Statistical evidence and econometric tests suggest a positive relationship between a balance of power in favor of workers and a higher growth rate in output. Secondly, the paper puts forward a labor regime framework for explaining the connection between the class dynamics and the distributional outcome, and finds it to have played a central role by using historical data and an autoregressive distributed lag (ADL) model. We further analyze China’s economic growth and conclude by stressing the importance of class dynamics for better understanding growth and distribution in capitalist development.