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This paper is complementary to the recent cross-country studies of Jeffrey Sachs (1979), and William Branson and Julio Rotemberg (1980), which document the contrast between nominal wage inertia in the postwar United States and real wage inertia in Europe and Japan, and examine the theoretical and policy implications of this contrast. Here I begin with another procedure for documenting the difference in nominal wage behaviour among the United Kingdom, United States and Japan, and then concentrate on explaining its causes rather than its consequences. Real wage inertia plays no role in my analysis, reflecting my finding that the real wage rate in quarterly postwar data for the United Kingdom and Japan displays more variability than in the United States. The basic argument of this paper comes down to three main points: (1) Macroeconomic instability in the United States has been aggravated by the unusually sluggish behaviour of nominal wages during the postwar era. Whether measured as the standard deviation of wages relative to hours worked, or the ratio of the respective response coefficients of wages and hours worked to changes in nominal GNP, wages in Britain and Japan are five to ten times more responsive than in the United States. Thus, of any given fluctuation in aggregate nominal demand, a larger fraction takes the form of a change in real output and employment in the United States than in the United Kingdom or Japan. (2) The drastic decline of American wage responsiveness in the postwar period as compared to the years between 1892 and 1940, together with the 1948 invention of the three-year staggered wage contract in the American unionised industrial sector, seems to be more than coincidental. It is not only the long duration of US contracts, but also their staggered nature, that makes wage changes relatively unresponsive to expansions or contractions in nominal GNP growth. (3) Japanese labour market institutions look much more like those suggested a... [ABSTRACT FROM AUTHOR]

The article explores the main areas in contention in relation to Great Britain's competitiveness policy vs. Japanese industrial policy. Industrial policy embraces all acts and policies of the state in relation to industry, be they economic, social or environmental. To the extent that the authorities controlling competition policy possess a certain amount of discretion, they may well practice an implicit industrial policy. Anti-dumping regulations would not normally fit in the definition, because their main purpose is to promote fair competition in all sectors exposed to the dangers of international competition. It refers to enhancing the strength of national industries' relative to their foreign competitors, it follows that certain industries or firms will be afforded special treatment either to enhance their export performance or their domestic performance relative to the foreign counterparts operating within the same territory. Japan's post-war industrial policy is a product of government intervention in the private sector during the war and the period of turmoil that ensued.