Tue, Apr 03, 2012 - Page 9 News List

The next decade will see Japan re-emerge from the shadows

By Will Hutton  /  The Guardian, LONDON

It is a small thing, but it says a lot about the country. At Tokyo’s Narita airport, when you take off your shoes at the security screening check, the guard hands you a pair of leather slippers. The message is obvious: This airport cares for your well-being and recognizes your need.

In Japan, taxi doors swing open automatically; toilet seats are electronically warmed and cleaned; and the extraordinary variety of food is presented exquisitely. There is a passion for satiating every imaginable human want and a joy in embracing the science, technology and innovation that might help deliver just that.

For 40 years, between 1950 and 1990, this passion was a key ingredient driving one of the most remarkable periods of growth in economic history. However, for the past 20 years, Japan has been stricken by stagnation. In the late 1980s to 1990s, it suffered a financial crisis nearly as severe as the UK’s. The economic model — the Ministry of International Trade and Industry guiding Japanese companies, the keiretsu networks of loosely conglomerated firms and associated banks, the great global brands — suffered an implosion.

Yet this remains a US$5 tillion economy, the third largest on the planet. The Japanese themselves are desperate to recover the elixir of growth and understand that economic conservatism — in Japan just as in Britain — leads to disappointment and heartbreak.

In 2009, the Democratic Party of Japan (DPJ) was elected by a landslide, pledging a root and branch reform of every bureaucratic, corporatist and anti-democratic element in Japan’s broken system. It also pledged to recast economic policy to serve the people. Despite some epic mistakes, notably its handling of the Fukushima Dai-ichi nuclear power plant disaster, it still holds an opinion poll lead over its rival, the Liberal Democratic party (LDP).

However, forces within the government are very much open to pondering where it should go next. I was invited by the DPJ government to go to Tokyo to contribute to this ongoing conversation.

Cabinet members wanted to discuss what a 21st-century social contract might look like, respecting both necessary labor market flexibility and security. They wanted to understand the contribution that open innovation ecosystems and an entrepreneurial state can play in driving forward innovation and investment. Above all, they asked: How could Japan reinvent its stakeholder capitalism of the second half of the 20th century so that it was more democratic? And they thought there might be something in my ideas in the books The State We’re In and Them and Us. In short, how could Japan do good capitalism?

It is the question — not only in Japan but, I would argue, in Britain. In Japan the devastating earthquake in Tohoku 12 months ago has made it even more acute: 340,000 people are still without homes; at least 19,000 died; and the nuclear power station at Fukushima very nearly suffered a meltdown.

At the time of the crisis, Japan hoped that, with the DPJ in power, there would be a decisive change from the way such matters had been handled in the past — obfuscation, delay, inactivity and anxiety to protect corporate interests. Yet the new government bounced off the secrecy of Tokyo Electric Power Co, the bureaucratic ministries, a muzzled media and the enveloping tentacles of the employers’ organization, the Keidanren, as if nothing had changed. Then-Japanese prime minister Naoto Kan became party to delivering inadequate and late information via the impenetrable state and corporate networks; many Japanese became devotees of BBC World News as the only purveyor of truth. Kan was forced to resign last summer.

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