Japan must break free of the heartlessness of Wall Street and create a new brand of “tenderhearted capitalism” to lessen the pain of the worst economic crisis since the Second World War, the economics minister told parliament today.

Kaoru Yosano’s comments were matched by an even more striking public attack on western-style capitalism by Yasuhiro Nakasone – the former prime minister responsible for privatising Japan Railways, Japan Tobacco, Japan Airlines and NTT, the former state telecoms corporation.

“The laissez-faire principle of US economic policy has lacked humanity and was heartless capitalism,” Mr Nakasone told reporters, “the current crisis has revealed that this US-style capitalism has its limits.”

Eventually, he said, Japan will shift towards a Japanese brand of “benevolent and humanistic capitalism”.

The anti-capitalist rhetoric comes amid record-breaking declines in Japanese industrial output, which plunged 8.5 per cent in November from the previous month in a nosedive that was far worse than expected.

The phrase “tenderhearted capitalism” sent an instant thrill of horror through the stock market, with brokers forwarding a transcript of Mr Yosano’s speech with a reminder that, even during the days of supposedly “heartless” capitalism, shareholders in Japanese companies were never high on the list of management priorities. Many foreign observers are convinced that Japan already operates a system of capitalism which bears little relation to the Anglo-Saxon version practised on Wall Street and in the City.

Investors were quick to charge that countless recent incidents on the Japanese stock exchange and the attitudes of companies listed there had, in the words of one senior Tokyo fund manager “undermined any sense that Japan took capitalism seriously at all”. Hundreds of anti-takeover defences, cross shareholdings networks and a constant leakage of price-sensitive information have topped the list of complaints levelled against corporate Japan by foreign shareholders.

But both Mr Nakasone’s and Yosano’s comments come as large parts of Japanese society have made an apparent political jump to the left – a shift that has not yet been tested at the polls, but has found expression in the recent mass popularity of fiercely anti-capitalist literature and the works of Karl Marx himself.

Despite the appearance that Japanese companies command high levels of employee loyalty and enjoy reputations as responsible employers, recent interviews with factory workers at Toyota suggest that many disagree. Japanese is, after all, a language that has a special legal word for “death by overwork”.

“The idea that the strong win and the weak lose has no place in Japanese society,” Mr Yosano said, adding that it was only by developing a breed of “kindly capitalism” that the country could expect to return to its former prosperity.

The surprise outburst has stoked fears among investors that both the government and corporate sectors of Japan may, in an attempt to pander to the new mood of anti-capitalism, be planning to unravel all of the country’s recent market-led reforms in favour of a more overtly socialist approach. One highly visible sign of that has been the sudden interest from politicians and business leaders on the concept of “work sharing” – a system of company-wide pay and working hour reductions ostensibly for the sake of preserving jobs.

The concept, say its many critics, disguises the fact that companies which have supposedly preserved numerous jobs through work sharing have also cut many thousands more by quietly sacking contract workers and temps.

Mr Yosano’s use of the emotive phrase “society’s winners and losers” comes as Japan Inc is fighting desperately to save its reputation as a benevolent backbone of civil society and is casting about for ways to cut costs while appearing responsible.

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