This paper, based on an economic model with genba-oriented firms proposed by Fujimoto (2016) , analyzes certain attributes of active genba-oriented firms that actively commit to both productivity improvement and effective demand creation.

A genba (in Japanese), or a manufacturing site, is defined here as a place where design information that carries value-added is created and flowing to the market, including factories, development centers, service facilities and sales shops. A genba-oriented firm refers to an ideal type for firms that emphasize genba’s capability-building abilities and motivations for survival and thereby pursue two objectives simultaneously ─ a certain level of mark-up ratios for the firm’s survival and a certain stable number of regular employees for contributing to the community in which genba is embedded. Among such firms, an active genba-oriented firm is the one that pursue the two goals mentioned above by actively carrying out productivity improvement through genba’s capability-building and demand creation through its marketing and development efforts at the same time. This conceptualization is based on empirical investigations of a number of actual small and medium size manufacturing enterprises (manufacturing SMEs) in Post-War Japan.

In order to depict behavioral patterns of the genba-oriented firms, Fujimoto (2016) suggested PXNW model that explores the compatible relations among a commodity’s prices (P), quantities (X), wage rates (W) and employment levels (N), following assumptions of classical economic models (e.g., Sraffa 1960) including flat supply curves (full cost principle), as well as those of monopolistic competition with products that are differentiated by their designs.

The PXNW model indicated that genba-oriented firms have to carry out both process innovations (physical productivity increase) and product innovations (effective demand creation) at the same tome in order to achieve the dual goals of mark-up ratios and employment retention while improving wage rate. This model, however, the differences between active genba-oriented firms and passive ones were explained by such exogenous factors as the firms’ willingness to make efforts for capability building and demand creation.

In this article, by contrast, we modify the original PXNW model by making these firms’ productivity improvement and demand creation efforts as endogenous variables. More specifically, we assume that the active genba-oriented firms, compared with the passive ones, tend to spend larger portions of their profits on enhancing productivities and demands for the future, introduce the concept of cost for demand creation that was ignored in Fujimoto (2016), and make the mark-up ratios as endogenous variable, as opposed to exogenous ones in Fujimoto (2016). In this way, the paper explores the conditions on which firms are engaged in productivity improvement and demand creation simultaneously ─ the conditions for active genba-oriented firms to exist.

The new model with additional endogenous variables brings about the following insights. (1) When effective demand decreases due to global competition and other reasons, and under the condition on which wage rates decreasewith production volumes, ①active genba-oriented firms emerge when productivity elasticity of wage rateis moderately high, ②whereas passive ones emerge when productivity elasticity of wage rate is veryhigh.

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In this article, we survey Michiaki Obata’s recent three books as one coherent achievement, thereby examining his contributions to overhaul Marxian political economy in Japan. The three books are The Critique of Methodology of Marxian Political Economy (Ochanomizu-shobo, 2012), The Critique of Theory of Value (Kobundo, 2013) and The Critique of Theory of Crisis (University of Tokyo Press, 2014). In the three Critiques, Obata argues Marxian political economy is reaching its deadlock in our age of globalism, mainly focusing on Kozo Uno’s development. For all inadequacy, we believe Uno’s stages theory is an epoch-making fruit of establishing Marxian political economy as general social science, which can be essentially discriminated from the content of Karl Marx’s Capital. We regard Obata’s advance to its overall reform as a foundation for recovering loss of persuasiveness of Marxian political economy. Nevertheless, much work remains to be done: (1)theorising the transformation of business cycles, (2)designing historically transformative principles of political economy by distinguishing empirical factors from theoretical but extrinsic conditions, (3)reorganising stages theory to reinterpret historical diversity of capitalism. In order to tackle these issues, more effort must be devoted to theoretical and empirical research of Marxian political economy on the basis of abundant preceding studies.