This event was recorded on November 17, 2022.

The Debate over New Forms of Capitalism in Japan and the US

US-Japan Short Takes Series

Thursday, November 17, 2022

9:00 AM - 10:00 AM US Eastern Time

via Zoom only

Register here

Event summary

Law Professors Gen Goto and Curtis Milhaupt discussed similarities and differences between Japanese Prime Minister Kishida’s signature policy of a “new form of capitalism” on the one hand, and business leaders’ talk in the US about promoting “stakeholder capitalism” over “shareholder capitalism” on the other.

The speakers tended to emphasize US-Japan differences over similarities. In Japan, said Professor Goto, the impetus for the “new form of capitalism” policy came from a desire to secure economic growth, despite the initial talk about distribution. In the US, increasing economic and social inequality was the main driver behind discussion of stakeholder capitalism. The Japanese still look to governmental action, such as requiring greater disclosure from corporations concerning their ESG (environmental, social, and corporate governance) activities and climate policies; in the US, government policy is seen as ineffective due to political division over climate change, and much of the ESG impetus comes from institutional investors and markets.

Two common threads, however, were continuity over change and skepticism about ESG as a good measure for the social role of corporations. In Japan, Kishida’s “new form of capitalism” was seen largely as a continuation of “Abenomics” under prior administrations, while in the US the recent emphasis on stakeholder capitalism can be seen as the latest phase in a decades-long debate. ESG, although here to stay, is relatively new and suffers from a lack of consistent definitions and transparency. It is often used as a marketing tool, although it may have been effective in focusing attention on the social role of corporations.

Professor Goto’s suggestion for moving forward was that Japan should keep its policy focus on the economy and growth. Professor Milhaupt advocated that the US think more seriously about providing company executives with economic incentives to improve the social role of corporations, and focus more on accurate measurement and transparency for ESG.

About the event

In many advanced countries, traditional forms of capitalism have increasingly come under criticism as contributing to economic and social inequality and failing to serve the needs of society. To address these shortcomings, Japanese Prime Minister Fumio Kishida is proposing a “new form of capitalism” for the country. In the US, business leaders talk about promoting “stakeholder capitalism” over “shareholder capitalism.” Law Professors Gen Goto and Curtis J. Milhaupt will discuss the similarities and differences between these two sets of ideas and the implications for corporate governance and society.

This event is co-sponsored by the APEC Study Center at Columbia University.

About the speakers

Gen Goto is a professor of law at the University of Tokyo in Japan. He has been a visiting scholar at Harvard Law School and has taught at the National University of Singapore Faculty of Law and Radzyner Law School of IDC Herzliya in Israel. Professor Goto earned his LL.B. at the University of Tokyo. In addition to his academic work, he has assisted the Japanese government on law reforms as a researcher for the Japanese Ministry of Justice (2010-2013, working on reform of the Companies Act) and as a professional member of the Financial System Council of the Japanese Financial Services Agency (2011-2013 and 2016-present, reform of the Insurance Business Act and other financial regulations).

Curtis Milhaupt, is a professor of law at Stanford Law School, and an internationally recognized expert on comparative corporate governance, the legal systems of East Asia (particularly Japanese law), and state capitalism. Prior to his Stanford appointment in 2018, Professor Milhaupt held chaired professorships in comparative corporate law and Japanese law at Columbia Law School. In addition to numerous scholarly articles, he has co-authored or edited seven books, including Regulating the Visible Hand? The Institutional Implications of Chinese State Capitalism (Oxford, 2016). He is a research associate of the European Corporate Governance Institute and an elected member of the American Law Institute. He has been affiliated with think tanks such as the Bank of Japan’s Institute for Monetary and Economic Studies and has been a member of several international project teams focused on major policy issues in Asia, including one charged with designing an “institutional blueprint” for a unified Korean peninsula. Prior to entering academia, Professor Milhaupt practiced corporate law in New York and Tokyo with a major law firm.

About the moderator

Bruce Aronson is senior advisor to the Japan Center of the U.S.-Asia Law Institute and an adjunct professor at NYU School of Law. He has been a tenured professor of law at universities in the United States (Creighton University) and Japan (Hitotsubashi University in Tokyo). Before beginning his academic career, he served as a corporate partner at the law firm of Hughes Hubbard & Reed LLP in New York. Professor Aronson twice received Fulbright grants to be a senior research scholar at the University of Tokyo and at Waseda University, and was a visiting scholar at the Bank of Japan. Other experience in Japan includes working at the law firm of Nagashima Ohno & Tsunematsu. His main area of research is comparative corporate governance with a focus on Japan and Asia. Publications include a textbook, Corporate Governance in Asia: A Comparative Approach (with J. Kim, Cambridge University Press, 2019).