The present paper illustrates behavioral patterns of “genba-oriented firms” or “factory-oriented firms” by analyzing a simple model of classical (Ricardian or psst-Ricardian) economics, paying a special attention to the difference between the neoclassical profit-maximizing firms and what we have observed in the real economy, particularly in small and medium size manufacturing firms (SMEs) in post-War Japan.

A “genba,” or a manufacturing site, here, refers to a place at which value-added is generated and flowing. It may be regarded as an economic agent that is embedded in a local community and is thereby collectively committed to its own survival and stable employment of the community members. In other words, a genba-oriented firm, unlike a neoclassical profit maximizing one, is assumed to pursue two objectives at the same time: (i) achieving a certain level of its mark-up (i.e., profit) ratio; (ii) maintaining a certain number of its regular employees.

For a preliminary economic analysis of a genba-oriented firm, this paper proposes a four quadrant graph with four variables, price (P), quantity (X), number of employees (N) and wage (W), called the PXNW model. This model assumes a horizontal (i.e., classical) supply curve with the production price determined by full-cost principles; a decreasing demand curve that assumes product differentiation and monopolistic competition; a linear labor requirement curve that is mediated by a Ricardian labor input coefficient; a flat labor supply curve; a wage-cost curve that is mediated also by the same Ricardian labor input coefficient.

By analyzing this PXNW model, we can show that, when the production prices are stable (e.g., a normal situation during the Cold-War period), a genba-oriented firm can move from one steady-state (i.e., achieving both goals of the mark-up ratio and employment) to another more favorable one (i.e., with a higher real wage level) if it can improve physical labor productivities and create effective demands at the same time. Likewise, when the production prices are decreasing (e.g., under the global competition against low-wage emerging countries during the post-Cold-War period), a genba-oriented firm can also move from one steady-state to another more favorable one if it can improve labor productivities and create effective demands at the same time.

Thus, the present classical economic model suggests that a genba-oriented firm can achieve its goals in profit ratios, employment and real wage increase, it has to carry out both process innovations (i.e., productivity increase) and product innovations (i.e., demand creation) at the same time. This analysis indicates that a certain classical economic model may better explain what was happening in the real economy during the Cold-war and post-Cold War periods when that economy is occupied by genba-oriented firms.

Svenska fattigvårdsförbundet is known as the influential pressure group which had played an important role in establishment of new poor law of 1918. Its activities for child welfare has also attracted attention because of its remarkable contribution to the development of child welfare in Sweden. But man has not sufficiently scrutinized for which purposes this organization was established or how and what kind of activities this organization had developed. In this article we try to grasp whole aspect of this organization through examining the problems this organization took and the activities that unfolded. In that way we want to elucidate which role Svenska fattigvårdsförbundet had played in the formation of the Swedish welfare state. In this part of this article we grasp what kind of activities this organization had unfolded mainly before enactment of new poor law.