Paper presented to the International Conference

"East Asian Modes of Development and Their Crises: Regulationist Approaches"

(Tunghai University, Taichung, Taiwan, April 19-20, 2001)


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Japanese Regulation and Governance in Restructuring: Ten Years after the 'Post-fordist Japan' Debate

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(Draft Only)

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Tetsuro KATO

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Professor of Political Science
Graduate School of Social Sciences
Hitotsubashi University
Kunitachi, Tokyo 186-8601, Japan
Tel & Fax +81-42-580-8276
E-mail: katote@ff.iij4u.or.jp
URL: http://www.ff.iij4u.or.jp/~katote/Home.html

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Japanese Regulation and Governance in Restructuring: Ten Years after the 'Post-fordist Japan' Debate

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Tetsuro KATO

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Contents:

1 'A Lost Decade' for the Japanese Economy

2 Types of Capitalism: Rob Steven's Recent Model

3 The 1946 Constitution as the Core of Institutional Forms

4 Possible Hegemonic Projects under Restructuring

(1) Widening Social Gaps

(2) New Nationalism

(3) New Globalism

(4) The Third Way ?

5 Japanese Governance in Transition: the Problem of Amending the Constitution

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Abstract: Japanese regulation in the 1980s was once admired as an alternative model of 'Post-fordism' or 'Toyotism.' But in the 1990s, which is now called 'a lost decade,' confronted by the world-wide changes after the end of the Cold War, Japan could not adapt to the globalization and new information technology. In politics, the long single-party domination by the Liberal Democratic Party (LDP) finished in 1993, but a new political system could not appear in spite of several rearrangements of so-called 'new parties.' The word 'restructuring' is used both in economics and politics. But there is no clear goal to aim for. The point at issue is not regulation in economic terms, but rather governance to articulate the economic structure with political discourses. The amendment of the 1946 Constitution will be the focus of arguments in the early 21st Century.

* I would like to thank Prof. Rob Steven (the University of New South Wales, Australia), now in serious sickness, for his inspiration to this paper and Prof. John Crump (the University of Sterling, UK) for his helpful comments and editorial assistance in English.


@@@@@1 'A Lost Decade' for the Japanese Economy

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About ten years ago, I published a jointpaper with Rob Steven entitled Is Japanese Capitalism Post-fordist? (Japanese Studies Center, Melbourne, May 1991), in which we criticized a tendency to admire the Japanese economic system as an ideal model after fordism. We especially focused on arguments represented by Martin Kenny and Richard Florida in their paper 'Beyond Mass Production: Production and the Labor Process in Japan' (Politics & Society, Vol.16, No.1, 1988).

At that time, Japan was at the peak of its bubble boom and many American scholars interpreted 'Toyotism' or 'Fujitsuism' with excitement as a more rational and flexible system of production and management than American Fordism. Many European scholars also responded positively to the 'flexible production' or 'lean production' which they found in the Japanese system.

We organized an international debate in the Japanese journal Mado and edited a book with the title Is Japanese Management Post-Fordism? (both in Japanese and English, Mado-sha, 1993, Tokyo). Some Regulationists, including Alan Lipietz, Benjamin Coriat and Kiyoaki Hirata, took part in this debate and the other commentators were Andrew Gordon, John Crump, Luis Alberto Di Martino, Makoto Itoh, Roh Sung-Joon, Yuukichi Takahashi, Bernard Eccleston, Stephen Wood, Bill Taylor, Karol & John Williams, Colin Haslam, Michio Goto and Taro Miyamoto.

The main point at issue was the evaluation of the Japanese economic system. Martin Kenny and Richard Florida argued that the Japanese system was 'post-fordist' because it displayed such characteristics as:

1. a shift from mass production to small-run multi-product production
2. a shift from unskilled to multi-skilled work
3. a shift from status-defined hierarchical management to labor participation
4. a shift from wages based on job evaluation to wages based on personal evaluation
5. a shift from mass consumption to demand management by means of the 'just-in time' approach
6. a shift from shop-floor resistance to labor-management cooperation through lifelong employment
7. a shift from crisis-ridden industrial relations to a crisis-free cooperative community.

Against the arguments advanced by Kenny & Florida, Rob Steven (who at the time was based in New Zealand) and I insisted that the reality of Japanese corporate society is very different and should be called 'pre-fordist' or 'ultra-fordist'. Our reasons were:

1. that since the Japanese system is a historical product of Japanese development, its 'non-fordism' does not necessarily imply 'post-fordism'
2. that domestic, small-run, multi-product production is combined with mass production overseas by Japanese multi-national corporations employing Asian workers for low wages (Japan's New Imperialism)
3. that so-called multi-skilled workers in Japan may have acquired their skills via 'learning by doing,' but consequently have very weak veto powers based on their skills against job switches ordered by their managers
4. that since the lifelong job security applies at most to only about one-third of Japanese working people (regular male workers in big companies), and since seniority wages are paid for personal loyalty to the company rather than for the job, the crucial point is 'flexibility for whom?'
5. that the essence of 'just-in-time' production (the kanban system) is not the geographical proximity of the 'child' to the 'parent' companies but the capacity of the 'parent' companies to shift burdens onto the subcontracted 'child' companies and their workers
6. that labor-management harmony based on the 'enterprise' (in-house) unions is a historical product of oppression by the government and reflects the weakness of Japanese class-based movements
7. that since the Japanese system has many internal contradictions, transplanting Japanese management to other countries will not be easily realized without provoking resistance and that it will face crisis in the future.

Ten years later, the situation regarding the Japanese economy has changed completely.

In the international context, the Japanese economy cannot revive because of its huge burden of bad debts and is always criticized at G5/G7 summit meetings. A decade after the collapse of the asset-inflated economy, Standard & Poor's credit rating of Japan's long-term bonds has been cut from the highest triple-A rating to double-A. Japan and Italy are now the only members of the Group of Seven advanced industrial nations to have lost the triple-A rating. This downrating means that Japan has slipped down the ranks of the so-called advanced nations.

In the domestic context, the expression 'a lost decade' is now very popular. What this refers to are such features as the highest unemployment rate in the postwar period (about five percent) ; no progress of restructuring to adapt to 'global standards' either at the macro or the micro levels; delayed introduction of 'Information Technology' to offices and schools; no resistance by unions to the cutback of middle age workers; reduction and abolition of fringe benefits by management, again with little resistance; and so on.

Japanese management, which was once admired as post-fordist by many foreign scholars, is now seen a major domestic barrier to reviving the economy. Instead of being regarded as post-fordist, it is now frequently perceived as old-style fordism or even a pre-fordist system.

As a consequence of historical developments, I believe that our criticisms of the post-fordist arguments and our perspective on the incipient crisis of Japanese system were relatively correct and that we can be proud of this. However, theoretically speaking, we also have to recognize that our estimation of the Japanese system in the 'pre-fordist vs. post-fordist' debates was somewhat one-sided.

Firstly, our (or perhaps I should say my) position at that time tended to postulate a single line of development within 20th century capitalism. This envisaged from pre-fordism, fordism and post-fordism as successive historical stages, followed by 'socialism' or at any rate a more desirable system for ordinary people. However, the reality after the collapse of the existing socialism and the end of the Cold War has been not the peaceful development of capitalism without a socialist alternative, but struggles between capitalist economies, or more exactly speaking, among 'capitalisms' within a global world market.

Secondly, when we argued the impossibility of transferring the Japanese system to other countries, we mainly had in mind the advanced countries of the West, like the USA or EU states, with their long tradition of unions. On the other hand, we reserved our judgement on Asian countries because the Asian economies were still developing in the 1980s and some countries (South Korea, Singapore etc.) deliberately imported parts of the so-called Japanese system.

After a decade of Japanese post-fordist debates, we have to reconsider these two problems seriously.

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2 Types of Capitalism: Rob Steven's Recent Model

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On the first point above, the historical stages and types of capitalism, I will engage with the notion of 'capitalism.'

The Regulation approach has a threefold explanation of the historical stages of capitalism. At the level of the 'accumulation regime,' there were an extensive regime of accumulation in the 19th century and an inclusive regime in the 20th century. At the level of the 'mode of regulation,' there was the development from a competitive mode of regulation to a monopoly mode in the middle of the 20th century. At the same time, at the level of the 'mode of development,' there was a change from pre-fordist to fordist patterns, and in the 1970s and 1980s many advanced countries began to pursue new models of after-fordist development (not only post-fordism, but also neo-taylorism, volvoism, toyotism, fujituism etc.). Such historical developments and/or changes accompany particular combinations of institutional forms, including the wage relation, the monetary system, competition among capitals, the state form, and the form of enrollment into international systems.

While this theoretical model is useful for understanding the advanced economies in Europe and the USA, especially during the age of competition between capitalism and socialism, its drawback is that it essentially presupposes a single line of capitalist development. Bearing this in mind, some other approaches might be useful for understanding the Japanese system. For example, A. Gerschenkron's so-called 'late-development effect' (Economic Backwardness in Historical Perspective, Harvard University Press, 1962) was sometimes used to explain Japanese and Asian development. Japanese marxists who were close to the Japanese Communist Party traditionally insisted that there was a combination of three elements in pre-war Japan: namely the absolute monarchy, monopoly capitalism and feudal landownership. This interpretation originated from the 1932 Comintern Thesis on Japan.

One Japanese marxist scholar, Prof. Sumio SHIGETA, found that the word 'capitalism' was not widely used in the 19th century and was popularized only after the publication of J. A. Hobson's The Evolution of Modern Capitalism: A study of Machine Production (1894), Werner Sombert's Der moderne Kapitalismus (1902) and Max Weber's Die protestantische Ethik und der 'Geist' des Kapitalismus(1904). He checked all the important works by Karl Marx in German and argued that Karl Marx had no strict concept of 'Capitalism.' Marx used the term only once in the second volume of Das Kapital and mainly used the adjective 'capitalist,' as in 'capitalist mode of production,' 'capitalist ownership' etc. This suggests that the concept 'capitalism' is itself a historical product. SHIGETA's summary is as follows.

Karl Marx's Terminology of "Capitalism" (in German)

Mehrwert

Kapital(total)

Vor(Nach)wort

Bd.1

Bd.2

Bd.3

buergerliche Produktion

31

2

0

2

0

0

kapitalistische Produktion

368

334

4

100

98

132

moderne Produktion

0

1

0

0

0

1

buergerliche Produktionsweise

5

2

0

1

0

1

kapitalistische Produktionsweise

66

289

4

63

21

201

moderne Produktionsweise

0

6

0

4

0

2

buergerliche Gesellschaft

22

16

2

8

0

6

kapitalistische Gesellschaft

3

12

1

3

6

2

moderne Gesellschft

1

9

1

4

0

4

kapitalistisches System/Regime

0

16

0

7

1

8

Kapitalismus

1

1

0

0

1

0

@(Sumio SHIGETA, Discovery of Capitalism [in Japanese], 1983)

Even today, Ronald Dore, a famous British specialist on Japan, sometimes compares British-American capitalism with Japanese-German capitalism. He says that the British-American company belongs to the stock-holders and is financed through the stock-market, while Japanese-German capitalism is different because the company signifies a community of employees, including workers and managers, and is mainly financed by banks, based on mutual shareholding among 'group' corporations. He also compares the work ethic of British-American individualism, which puts priority on the pursuit of profit, with the Japanese-German emphasis on harmony, entailing respect for industry itself and a tendency to look down on money. As a consequence, Dore's conclusion is that two different capitalisms exist.

My former co-author, Rob Steven, recently made a more sophisticated model of Anglo-capitalism versus Japanese capitalism in his draft paper on 'Competing Capitalisms and Contrasting Crisis: Japanese and Anglo-Capitalism,' the full text of which can be found in Appendix 1 of this paper. In this paper, he first argues that we have to recognize the difference between 'capitalism' and 'market economy,' and says that the essence of capitalism refers to the relationship of ownership and control over production. He then introduces five indexes to differentiate capitalisms from one another:

1. the degree to which the market is the mechanism through which the productivity of labor, and hence the exploitation of labor, is increased
2. the degree to which the market is used to drive the system through the different 'moments' of the circuit
3. the degree to which the social surplus is distributed to individuals
4. the degree to which individuals are the agents of accumulation
5. the degrees to which individuals are exclusively associated with the functions of either capital (control over the labor process and the accumulation process) or labor (the requirement to produce more than is received in wages).

By means of these five points, he makes a comparative chart between Anglo- and Japanese capitalisms:

Anglo-Capitalism

Japanese Capitalism

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Market competition among producers, resulting in the survival of capitals that achieve high labor productivity via 'smarter' work methods and in the bankruptcy of those that do not

Market competition is limited and distinctive systems of managerial control and extra-economic coercion are also used extensively to lift the exploitation of labor

2

Market competition and variations in profit rates allocate capital from one moment to the next

Relationships of mutual dependence (keiretsu system) greatly affect allocations from one moment to the next

3

Since the purpose of capitalism is to enrich individuals, very large proportions are distributed to individuals, either as 'dividends' or high salaries for executives

Purpose of capitalism is to protect the nation: much more of the surplus is retained by institutions, & much less is distributed to individuals, either in the form of 'dividends' or ' salaries'

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Individuals then decide where to invest this money, giving them leverage over the accumulation process

Institutions rather than individuals have the greatest leverage over the accumulation process

5

Functions of labor and capital fairly exclusively performed by different groups of individuals (classes); with potentially high levels of class conflict

Almost all individuals perform both functions (in varying combinations), so that 'class' does not take the form of groupings of individuals; class conflict is thus minimal

Steven also shows the different form of crisis found in these two capitalisms. He writes:

Anglo-capitalism is pre-disposed to what might be called 'crises of individual greed and fear' which are transmitted rapidly and violently through market mechanisms and which can produce very powerful political reactions. These reactions are more explosive because Anglo crises affect the fortunes of individuals much more devastatingly than do Japanese crises and because the ways classes are formed tends to mobilise groups of individuals into collective political action more easily than in Japan.

For Japanese capitalism, in which the power of capital is institutionalized much more thoroughly, where it takes much longer for individuals to be affected and where class formation is blurred, the crises tend to be much more systemic, with the major contradictions occurring more between different parts of the system than between groups of individuals.

Since Anglo crises are more likely to result in organized political struggles, they are also more able to produce major social changes. Japanese crises, on the other hand, do not produce the same degree of social conflict and therefore tend to result in much less social change. (see Appendix 1)

Although I do not say that Ronald Dore's and Rob Steven's analyses are completely right, I accept their idea that Japanese capitalism should be seen as a different type of capitalism from the orthodox Western model. The corollary of this is that capitalism should be seen not in purely economic terms but also as a socio-political complex of various institutions.

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R The 1946 Constitution as the Core of Institutional Forms

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To turn now to the second problem, for Western scholars, many Asian economic-political systems might be seen as a deviation from standard capitalism. Even in the Regulation approach, Alan Lipietz raised the concept of 'peripheral Fordism' and Bob Jessop sometimes refers to 'Atlantic Fordism,' which derives from his original supposition of 'spatio-temporal fixes.' The line of thinking here is that, while Fordism with the Keynesian Welfare State might be realized mainly in the Atlantic area, how should we describe 'Pacific Fordism,' which has now become the world center of mass-production but with very limited social welfare. In 'Atlantic Fordism,' especially within the countries of European Union, scholars can easily identify deviations or, to put it another way, a periphery in contrast to the European center. On the other hand, when we turn to the Pacific, how are we to define the 'Pacific standard'? There is no fixed organization or regional center which could serve to combine Asian economies in a way that would incorporate mainland China and India. Even in the case of the US system, one can legitimately ask whether a division might exist between the Atlantic East system, dominated by the WASP elite, and the Pacific after-fordist system in California, where Silicon-Valley exists. Basecally, the spatio-temporal condensation and configuration are very different in the Atlantic and the Pacific regions.

Here I concentrate on the 'Japanese Fordism,' which flourished from 1955 through the 1980s, since I have no reliable knowledge of and materials on the other Pacific countries. I will stress that the Japanese financial system and management are the historical products of the postwar era. They were neither the simple product of market mechanism nor of the dictatorship by the US occupational force. Rather, their origin lay in the particular social relationships in postwar Japan.

The key aspects of what Ronald Dore calls 'Japanese capitalism' are not derived from the long tradition of Japanese industrialization. Indeed, historically one cannot find very strong loyalty to the company in prewar Japan, at least from the workers. Many records of strikes and absenteeism exists, even though the Emperor system mobilized national loyalty and oppressed the union movement. At the center of the capitalist economy, there was very strong control by stock holding companies (Zaibatsu) like Mitsui, Mitsubishi, Sumitomo etc., and not by managers. The key characteristic of prewar Japan was not the lack of a wide stock market or bank financing, but rather the strong combination between the Zaibatsu and the Emperor state, including the military clique. Even after the 1945 defeat, Japanese capitalism has had a strong tendency towards close connections between the business world and the state bureaucracy. Furthermore, official economic and industrial planning played an important role in its development.

We can interpret this, in the context of the Regulation approach, along the lines that the state structure was crucial for creating the new wage relations and the monetary system as institutional forms. Moreover, the postwar stage of Japanese capitalism, namely Japanese fordism, was the result of changes in the state form, from the Emperor (Tenno) system to Japanese-style democracy with a constitutional symbolic monarchy.

Although I will not describe the political history of postwar Japan, I will say a little about the relationship between economic regulation and political (or hegemonic) governance. In Asian developing countries, the economic system is strongly combined with the political system. Especially in the first stage of industrialization, the state played an important role in establishing the market mechanism, the monetary system and even wage relations. After the take-off from the colonial or semi-colonial stage, state building encompassed both nation-building and the creation of a national market. Thus, political governance is very important for understanding Pacific or Asian capitalism (or capitalisms). The term I employ here is governance, not government. The former can include regional or local government, civilian control of the military clique, the autonomy of civil society, international and regional organizations, NGOs and NPOs, the social tradition of mutual aids in the community, so-called corporate governance and family ties. Governance appears as an arrangement of various institutional forms. As such, it exerts effects on economic institutions and performance. From this standpoint, we can see the 1946 Japanese Constitution as a national hegemonic project which aligned both economic and political institutional forms during the process of fordist development.

I thus take the Japanese Constitution as the core of governance which made Japanese economic growth possible, because the Constitution is the longest living institutional form and framework found during Japanese development. In addition, the amendment of 1946 Constitution now becomes an important issue for the restructuring of the national state in Japan. I intend to show here only the economic effects of the Constitution (reference should be made to the important text in Appendix 2):

1. The Preamble and famous Article 9 (Renunciation of War) set the framework for Japan's trajectory after 1945. They placed restrictions on the nation's military orientation, although after the US-Japan Security Treaty of 1951, the Japanese Self- Defense Forces played some role. I do not say that Japan was a peace-loving country during the Cold War, but military expenditure was restricted to about one per cent of GDP and this made possible huge investments in order to refurbish industry. Hand in hand with this trend there was the establishment of 'norms of production' and the 'mode of consumption.'
2. The symbolic Emperor system (Article 1, Symbol of the State) remained in spite of the resistance by the Left in 1945/46. This symbolic Emperor system had the ideological effects of rebuilding national identity and making it a national goal to catch up with the Western countries, even though the Emperor was politically controlled by the Cabinet and had only symbolic power.
3. The recognition of private property in law (Article 29, Property) was the basis of capitalist development, but the right of private property was sometimes limited by 'public welfare' considerations in order to establish the new infrastructures necessary for rapid economic development.
4. Japanese people could expect 'the minimum standards of wholesome and cultured living' (Article 25, Welfare Rights) as one of their human rights, although in realizing the benefit of this were minimized by the interpretation put on this provision by the government.
5. Under Articles 27(Right and Obligation to Work, No Child Labor) and 28(Unions), all people have the right and obligation to work. Minimum standards for wages, hours, rest and other working conditions were fixed by law.
6. As the Constitution was the supreme law of the nation (Article 98), almost all economic and political institutions should be constrained by its spirit, although in reality there were many distortions brought about by political and bureaucratic interpretations of the Constitution.
7. Article 96 (Amendments) was politically very important. Amendments of 1946 Constitution require the votes of two-thirds or more of all the members of each House of the Diet. As the major conservative party which was at the helm of economic growth, the Liberal Democratic Party (LDP) could not succeed in getting two-thirds of the Diet seats even at the peak of its power in the 1960s. Accordingly, in the face of American pressure, it sometimes used the peace-oriented Constitution to excuse Japan from not sharing the burdens of military partnership, even though the LDP kept revision of the Constitution as official policy in its party program.

Of course, the Constitution was at times only a paper document which had no direct effect on economic policies and performance. Nevertheless, for people who wanted peaceful development and democracy in the workplaces, the Constitution was a powerful weapon for getting better working conditions and 'wholesome and cultured living.' However, in the conditions prevailing at the beginning of the 21st century, which are characterized by the end of continuous economic growth, Japan faces a turning point for maintaining the 1946 Constitution.

4 Possible Hegemonic Projects under Restructuring

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(1) Widening Social Gaps

One important element contributing to the prevailing mood of doom and gloom and leading to calls for restructuring of the system is the widening social gap since the 1990s. Until the 1980s, Japan was well known as a 'middle class society.' There were not marked differences of income between 'rich' and 'poor' and over 80 % of the people felt that they belong to the 'middle strata.' Even blue collar workers lacked class consciousness, typically seeing themselves not as belonging to the 'working class' but as 'a member of my company.'

However due to restructuring of the economy after the Cold War and the rapid development of information technology, we find the growth of social differentiation. Prof. Toshiaki TACHIBANAKI of Kyoto University published a book on the economic gap existing in Japan in 1999. This book shocked many people in that it destroyed the myth of a 'harmonious middle class society,' demonstrating statistically that this was not so both with reagards to incomes and assets. In April 2000, two popular monthly magazines in Japan, Bungei Shunju and Chuou Kouron published special issues with very similar contents. Bungei Shunju pointed to the existence of 'A New Class Society Japan,' while Chuou Kouron 'The Collapse of the New Middle Class.' Both focused on the increasing gap between 'winners and losers' and on the hereditary status of 'winners' and 'riches.'

Regarding the social elite, we now see in all fields the phenomenon of the NISEI (second generation). In the business world, there are some young executives of big companies, but they are mainly the sons of the founders or former presidents. In politics, both in the House of Representatives and the House of Councilors, seats are mainly occupied by the so-called NISEI Giin (second-generation Diet members). Not only in the ruling LDP but also in the Democratic Party (the biggest opposition party) the major leaders are the children of former Diet members or important local politicians. As such, they have inherited the constituencies from elder members of their family. The students of Tokyo University are now mainly recruited from elite families, because they are the ones who can receive sufficient favorable treatment to win in the competition for places at this foremost educational institution. All these mean the decline of social mobility, the collapse of the myth of the 'equal society,' and the widening of social gaps between 'winners and losers.' Additionally, the rapid introduction of information technology is spreading the so-called 'digital divide' between computerized and non-computerized people.

While no-one in Japan has a clear image of the happy millennium or of a hopeful future, it is possible to detect a number of different orientations with in the population.

(2) New Nationalism

First, there is what might be called the 'New Nationalism.' It is a strongly conservative feeling, found especially among aged people and embracing such attitudes as the return to more disciplined schools and workplaces, respect for the Nation, loyalty to the national government, obedience towards the elder generation, emphasis on family bonds, the belief that women should be more at home to take care of children and domestic work and that, as wives, they should be submissive towards their husbands.

Such nostalgia for the 'good old days' appears not directly in the political discourse, but nevertheless sometimes bubbles to the surface from a deep stream of conservatism. For example, when asked about the growth of violent crime among school children, Prime Minister Yoshirou MORI expressed the view that the Kyoiku Chokugo, the Imperial Rescript on Education of the Meiji Period, should be revived. He also said that Japan is the divine nation which has the Emperor (Tenno) at the center. Of course, he apologized the next day, claiming that his remarks had only a symbolic meaning and that he would obey the sovereign power of the people according to the Constitution. Despite this, his utterances might be interpreted as expressing his deeply held sentiment to go back to the Meiji Imperial Constitution, which described the Emperor as 'sacred and inviolable.'

In economic policy, the New Nationalists tend to avoid any kind of change and to depend on public expenditure. They sometimes show their feeling of dislike for American pressure, but they have no ideas to reconstruct the Japanese economy.

One important point that is worthy of attention is that even among the young generation there seems to be evidence of a widening sentiment of New Nationalism. This manifests itself as the dream of a stronger Japan which can take up a position more clearly independent of the US. It also includes a chauvinistic attitude towards foreigners, especially Koreans or Chinese, the desire for a powerful new leader to emerge, and so on. As an example of the first of these, the governor of Metropolitan Tokyo, Shintarou ISHIHARA, used on one occasion a discriminatory word Sangokujin (literally, the 'Third Country People'), which just after the Second World War had the meaning of the criminal or inferior Koreans and Chinese. Significantly, his use of this expression evoked no widespread resistance from young people; nor did it lead to a diminution of his appeal. This orientation is of course anachronistic, and might not be realized as the official line of policy. Nevertheless, such feelings and sentiments are very strong now in Japan's current state of gloom and depression.

(3) New Globalism

The second orientation might be called 'New Globalism.' It is popular among intellectuals and is the official policy line promoted by the bureaucrats. From a neo-liberal standpoint, they stress the need for restructuring and change, the reconstruction of state expenditure on a healthy basis, adaptation to the global market and global standards, promotion of the 'Information Technology Revolution,' maintaining the US-Japan partnership, making companies more rational and flexible, reducing working hours so as to revitalize leisure industries and tourism, and so on.

A clear statement of this line is found in an official report issued by the Prime Minister's Commission on Japan's Goals in the 21st Century in January 2000. This report was entitled The Frontier Within: Individual Empowerment and Better Governance in the New Millennium. It is notable for the many beautiful words it devotes to the global society and the national identity of Japan in the future.

It started from recognition of 'the end of Japanese Model':

After World War II Japan made a seemingly miraculous recovery, achieved amazing growth, quickly joined the ranks of economically developed countries, and became a member of the Western camp. Japan achieved and has maintained peace, stability, and prosperity. By and large, the Japanese remember the postwar period as a success story. The political, economic, and social systems built up then were also accepted as components of a successful model. It cannot be denied that they contributed to political and social stability. Nevertheless, this successful postwar model or, more precisely, unquestioning belief in this model, has now leached Japan's vitality. Many of the vested interests and social conventions that grew up over the postwar period have made Japan's economy and society rigid and stale.
This model was, in a word, the 'catch up and overtake' model, followed not only in the postwar period but ever since the Meiji era (1868). Japan must now seek a better model. But the world no longer offers ready-made models. The time when answers could be sought from without has passed. Most societies face the same challenge. The globalization that is expected to envelop the world in the twenty-first century brings with it great benefits but also many problems, posing the same challenge to every country. No doubt countries will respond in diverse ways. The same can be said of the aging of society. Japan will face that challenge sooner than any other country in the world. The whole world is watching to see how Japan will deal with it.
No model of immediate use to Japan exists. While studying cases from around the world, we must find solutions to such problems within Japan. In so doing, it is more important than ever to bring the latent mettle, talent, and potential within Japan into the open. Doing so is the key to Japan's future.

Then, it focused on global issues:

The major trends that the world faces in the twenty-first century are (1)globalization, (2) global literacy, (3) the information-technology revolution, (4) advances in science, and (5) falling birthrates and aging populations.
Globalization has progressed beyond the stage of being a 'process.' The markets and media of the world have become increasingly integrated, and@people, goods, funds, information, and images are moving freely across@national borders on a major scale. The fences between countries have become@lower, and the effects of developments in one part of the world are immediately being felt elsewhere; the world is indeed becoming an ever smaller place. This trend will accelerate even further in the twenty-first century. As a result, the universality and utility of systems and standards in various fields, including the economy, science, and academic training, will be held up to global yardsticks for questioning and evaluation. Every country will have to review, reevaluate, and adjust its existing systems and practices on the basis of a global perspective. It will be an age of megacompetition in systems and standards. The effects will extend from politics and diplomacy to the economy, society, and everyday life; closed systems that are complete unto themselves within a single country will grow hollow and impoverished.

This report even talked about 'Governance' in Japanese style. It might be worth while citing a long sentence. In 'From governing to governance,' the report wrote:

In Japanese society so far, opportunities for examining the question of social governance have been limited. This is because the state, the bureaucracy, and organizations have always been given precedence and society as a whole has advanced in lockstep. 'Public' has been more or less synonymous with 'official,' and public affairs have been seen as something to be determined by the authorities. Citizens, too, have accepted this and, in fact, relied on it.
A top-down, or public-sector to private-sector, image of governance exalting the bureaucracy and looking down on citizens has long prevailed in Japan. It has been hard for the Japanese to see governance as implying a kind of contractual relationship between the people, who entrust government with authority, and government, which is so entrusted. Nor have they ever envisioned governance in terms of individuals acting on the basis of self-responsibility and various actors jointly creating a new public space in the context of a pluralistic society led by spontaneous individuals.
Citizens, or individuals, entrust self-realization to various organizations and institutions, but are the systems so entrusted functioning adequately? Are there equal opportunities for participation? Are the rules clear? Are the rights of the entrusters adequately guaranteed? Is self-realization fully achieved? Are those entrusted truly meeting expectations, and how is this to be assessed? Is dialogue and the flow of information between the entrusters and those entrusted a two-way process? Questions like these, which address the essential nature and quality of governance, have seldom been asked, as symbolized by the fact that no apt Japanese word for governance has been devised.
In meeting the various challenges outlined above, Japan needs to build governance in the true (but new to Japan) sense and enable it to mature. This requires new rules and systems between individuals and organizations, whether government, companies, universities, or nongovernmental organizations. Disclosure and sharing of information, presentation of options, transparent and rational decision making, steady implementation of policy decisions, and ex post facto policy assessment and review are needed so that rules can be articulated, policy distortions caused by minority interests prevented, and fair and efficient public services provided. This means, in short, establishing governance built up through joint endeavors, governance based on rules and the principle of responsibility and grounded in two-way consensus formation, rather than governance premised on one-way rule. This new governance is not adequately expressed by the Japanese word traditionally used, Tochi. While we do not repudiate everything about the old governance, we suggest calling the new governance Kyochi, a word that emphasizes cooperation (Kyo) rather than governing, rule, or control (To).

However, the hottest issues in the debates which this report sparked off in the mass-media were to do with 'global literacy' and 'transforming education.' The report interpreted 'global literacy' as meaning to speak English as the second official language and to use the internet. As for 'transforming education,' this was taken to mean the freeing up of education in the marketplace, with public schooling restricted to only three days per week. (see Appendix 3)

This utopian globalism may become the dominant line of the Japanese government in the 21st century, but it will take a lot of time to overcome the previously summarized line of New Nationalism or Conservatism.

(4) The Third Way ?

I would like to be able to point to the third way, which we could identify as 'New Internationalism' or 'New Reformism' to emphasize its critical distance from both the 'New Nationalism' and 'New Globalism.' However, regretfully, it has to be admitted that there is no such clear third stream. Nevertheless, we can identify some critical ideas emanating from former left or marxist intellectuals and I will introduce three keywords which have appeared in the discussions among left or radical academics and social movements.

The first keyword among the reformists is 'Postwar Responsibility.' We should emphasize that this is not the same as the so-called 'War Responsibility.' The responsibility for the Asian War was a hot issue in Japan in the 1990s due to the problem of Korean comfort women in the Second World War and their entitlement to compensation. The postwar responsibility means not only the responsibility of the Japanese state for what it did to Asian countries during the war, but also the responsibility of the nation for the results or the effects of the war.

Let us take the case of the division of Korea into two states as an example. Japan has no responsibility in international law for the division between North and South Korea. However, every Japanese, even the young postwar generation, has some responsibility for this turn of events because Japan supported the US in the Korean War, concluded a peace treaty only with the South, and so on. This concept of postwar responsibility thus means neither the responsibility in law or diplomacy, nor the responsibility of the government in international relations. Instead, it is more individual, ethical or moral responsibility of Japanese people as members of the global society.

Perhaps the most appropriate way of envisaging postwar responsibility is to see it as a kind of social movement to keep alive the memory of the War and to transmit that memory to the young generation. For example, students sometimes ask me why young Japanese who were born after the Asian-Pacific War should apologize to Korean people when they travel in Korea. I say: 'You are a Japanese. Koreans have some antipathy for Japanese which originated in the history of the two countries in the 20th century. Yes, you have no obligation to apologize to them in law and you can easily leave it there. However, if you would like to communicate with them or wish to know the reason why you were asked for an apology, you have to study the history and to learn about the relationship between Japanese and Koreans.' It is in contexts such as this that we can use the expression 'Postwar Responsibility.'

The second is 'Safety Net' Theory, which seeks to defend public welfare, the education system and family ties, and to revive local communities, all in the face of the global market mechanism. This school of thought insists that the market system may be good as a means for providing competition among the public sector, private sector and the voluntary sector as well, but that a counter mechanism should necessarily be built in in order to save the 'losers' or the 'weak people' and to keep the market free and flexible. The argument here is that, since market winners may get advantages from the mechanics of the system, they should also pay to keep the market free, shouldering such burdens without complaint. In this fashion, the government could then redistribute the levy on the winners to those who lose in the market and to weak people who cannot enter into competition. One could say that this 'Safety Net' school has an orientation of reviving the Keynesian welfare state.

Finally, in the field of politics, the Rakusen Undo or 'Negative Campaign against the dirty candidates in elections' started last year in anticipation of the general election. This type of movement originated in the South Korean Election in Spring 2000, where many dirty candidates who were associated with criminals, corruption, discrimination, slips of the tongue and sexual harrassment were defeated by the negative campaigning of citizens' volunteer movements aimed at the mass media, especially by using the internet. Some Japanese citizens' movements opened homepages for negative campaigning against Prime Minister MORI, against the shadow boss of the LDP Hiromu NONAKA (former Chief Secretary of the LDP), or against candidates who were involved in corruption or sexual scandals. I do not think that the Japanese negative campaign could have the same effect as in Korea, but its style of politics was new and remarkable. What I mean new are such features as focusing not on a good candidate but on a bad one; independence from political parties; its evaluation not of the party to which the candidate belongs but of the individual political activities of the candidates; and of course the effective use of the internet to achieve political objectives. The political potential of the internet is well illustrated by my own homepage in Japanese (URL: http://www.ff.iij4u.or.jp/~katote/Home.html). This is one of the biggest websites on Japanese politics and has already received over 160,000 hits.

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5 Japanese Governance in Transition: the Problem of Amending the Constitution

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Finally, I will explain what I see as the most important issue for 21st Century Japan and consider how it effects the three political orientations or possible hegemonic projects that I have been discussing. This is the problem of revising the 1946 Constitution.

In a public opinion poll conducted by the Yomiuri Shinbun newspaper, about 60 % responded positively when asked about revising the 1946 Constitution. In both Houses of the Diet, the Research Council on the Constitution had already been established and debate between the political parties had begun. All this represents a big change from late 20th Century Japan, when the amendment of the peace Constitution was almost a taboo subject.

The New Nationalist current of course welcomes the change of public opinion and has insisted on openly recognizing the Self Defense Forces as the National Army, which is forbidden by the famous Article 9 of the current Constitution. Although they do not clearly insist on redefining the status of the Emperor from his current standing of 'symbol of the state and the unity of the people' to 'the head of the state,' Prime Minister MORI and other likeminded conservatives aim it. They use the 'public welfare' as a reason for restricting human rights and freedom and focusing on the duties of the nation, in contrast to individual rights. However, since they are overly concerned with the historical process by means of which the current Constitution was 'forced on Japan by the US' during the Occupation period, they cannot get mass support from the young generation, for whom such old history is a closed book. These conservatives are called the 'Amendment circle' (Kaiken-ha).

The New Globalists are not strongly oppose to the New Nationalists, but neither are they very anxious to revise the Constitution. This is because they fear that it might provoke some serious reactions from neighboring countries and from the domestic Left. They believe that they can realize their policies without clearly amending the Constitution. Nevertheless, they are also sensitive to public opinion and to what the mass media have to say. If the majority of Japanese are willing to revise the Constitution, the New Globalists too would be happy to draw up a new constitution which more clearly recognized the Japanese Self- Defense Force's, or even the Japanese Army's participation in the Peace Keeping Operations of the UN and which altered for some addition to human rights in fields such as maintaining the environment, accessing public information, defending privacy etc. This dominant current will shift from time to time according to the results of elections and the drift of public opinion.

One could say that they are ready to discuss amending the Constitution, but are not very active in raising this issue in politics. Those holding this attitude are sometimes called 'Discussion circle' (Ronken-ha).

The third alternative of defending the Peace Constitution rigidly was the majority position until the 1980s, but has subsequently become weaker both in academic circles and in public opinion generally.

There is a division within this camp between the fundamentalists and the revisionists. The fundamentalists, mainly former communists and socialists, insist on the world historical significance of the Article Nine, which denies not only war but all military forces, and they oppose any kind of amendment. Those adhering to this are called the 'Maintenance circle' of the Constitution (Goken-ha).

On the other hand, the revisionists are prepared to argue about the problems (the same as Ronken-ha). Although they insist that they will not revise the 1946 Constitution, they can envisage adding some new articles and phrases (like the right of the environment or the right of information), just as has been done to the American Constitution ever since the 18th century.

I cannot go into further details here on the debates surrounding the Constitution. What I will say is that this problem will figure as the most serious issue confronting in the first decade of the 21st century. Not only that, but these struggles for hegemony in the field of discourse will both be reflected in and have their effects on economic restructuring.


References:

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Aglietta, Michel, A Theory of Capitalist Regulation: The US Experience, London, New York, Verso, 1979.

Berger, Peter , Hsin-Huang and Michael Hsiao eds., In Search of an Asian Development Model, New Brunswick, Oxford, Transaction Books, 1988.

Boyer ,Robert and Toshio Yamada, Japanese Capitalism in Crisis, London, Routledge, 2000.

Dore, Ronald, British Factory, Japanese Factory: the origins of national diversity in industrial relations, Berkeley, University of California Press , 1973.

Dore, Ronald, Taking Japan Seriously: a Confucian perspective on leading economic issues, London, Athlone Press , 1987.

Dore, Ronald, Flexible Rigidities: industrial policy and structural adjustment in the Japanese economy, 1970-80 , London, Athlone Press , 1986.

Dore Ronald and Mari Sako, How the Japanese Learn to Work, London, Routledge, 1989.

Dore, Ronald and Masahiko Aoki eds., The Japanese Firm : the sources of competitive strength, Oxford, New York, Oxford University Press , 1994.

Dore, Ronald and Suzanne Berger eds., National Diversity and Global Capitalism, Ithaca, N.Y., London, Cornell University Press , 1996.

Gerschenkron, A., Economic Backwardness in Historical Perspective, Harvard University Press, 1962.

Jessop, Bob, 'Globalization and the National State', in S. Aaronwitz and P. Bratsis, ed., Rethinking the State: Miliband, Poulantzas and State Theory, Minneapolis: University of Minnesota Press (in press).

Jessop, Bob, 'Narrating the future of the National Economy and the National State? Remarks on Re-mapping Regulation and Re-inventing Governance', in G. Steinmetz, ed., State/Culture, Ithaca: Cornell University Press, 1999.

Jessop, Bob, 'Capitalism and its Future: Remarks on Regulation, Government, and Governance', Review of International Political Economy, 4 (3), 1997.

Jessop, Bob, 'The Regulation Approach: Implications for Political Theory', Journal of Political Philosophy, 5 (3), 1997.

Jessop, Bob, 'Twenty Years of the Regulation Approach: the paradox of success and failure at home and abroad', New Political Economy, 2 (3), 1997.

Jessop, Bob, New Spatial Divisions and Social Transformation, London: Routledge, 1997.

Kato, Tetsuro and Rob Steven, Is Japanese Capitalism Post-Fordist?, Japanese Studies Center, Melbourne, 1991.

Kato, Tetsuro and Rob Steven, Is Japanese Management Post-Fordist?, Mado-sha, 1993.

Kato, Tetsuro and Rob Steven, 'Is Japanese Capitalism Post-Fordist?', in Johann P. Arnason and Yoshio Sugimoto eds., Japanese Encounters with Postmodernity, Kegan Paul International, London and New York 1995.

Kato, Tetsuro, 'A Preliminary Note on the State in Contemporary Japan,' Hitotsubashi Journal of Social Studies, Vol.16, No.1, 1984.

Kato, Tetsuro and Fukuji Taguchi, 'Marxist Debates on the State in Post-war Japan,' Hosei Ronshu (A Journal of Law and Political Science),No.105, Nagoya University, August 1985.

Kato, Tetsuro, 'The Age of "Japamerica": Taking Japanese Development Seriously', Hitotsubashi Journal of Social Studies, Vol.21, No.1, 1989.

Kato, Tetsuro, 'Japanese Perceptions of the 1989 Eastern European Revolution,' in Ian Neary ed.,War, Revolution Japan, Japan Library, Sandgate 1993.

Kato, Tetsuro, 'The Political Economy of Japanese KAROSHI (Death from Overwork),' Hitotsubashi Journal of Social Studies, Vol.26, No.2, December 1994.

Kato, Tetsuro, 'Workaholism: It's not in the Blood', Look Japan, February 1995.

Kato, Tetsuro 'From a Class Party to a National Party : Japanese communist party survives through the worldwide decline of communist parties', AMPO, Vol.29, No.2, March 2000.

Lipietz, Alan, Mirages et Miracles, Paris, Editions La Decouverte, 1985.

Passow, Richart, Kapitalismus: Eine begriflich-terminologische Studie, Jena 1918.

Report of the Prime Minister's Commission on Japan's Goals in the 21st Century, The Frontier Within: Individual Empowerment and Better Governance in the New Millennium (January 2000, http://www.kantei.go.jp/jp/21century/report/overview.html)

Steven, Rob, Competing Capitalisms and Contrasting Crisis: Japanese and Anglo-Capitalism (Draft, http://members.jcom.home.ne.jp/katori/RobSteven.html)

Steven, Rob, Japan and the New World Order: Global Investments, Trade and Finance, London, Macmillan, 1996.

Steven, Rob, Japan's New Imperialism, London, Macmillan, 1990.

Steven, Rob, Classes in Contemporary Japan, Cambridge, Cambridge University Press, 1983.


Appendix1: http://members.jcom.home.ne.jp/katori/RobSteven.html

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Competing Capitalisms and Contrasting Crises: Japanese and Anglo-Capitalism

Rob Steven (The University of New South Wales, Australia)

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This paper attempts to theorize the differences between Japanese capitalism and what is loosely called Anglo-capitalism, which refers to the broad features which systems like the US, Britain and Australia have in common. It also tries to show how each system is vulnerable to a type of crises which stems from its distinctive features, and that recipes for solving crises in the one are likely to have at best a limited impact on crises in the other, at worst to exacerbate these crises.

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When is Capitalism Capitalism?

Whilst I do not want to argue in an eessentialistf sense for what constitutes the essence of capitalism, I do want to suggest that the following are necessary features of all capitalist systems, and I think I would also want to argue that they are sufficient features of any system I would call capitalist. They resemble, but are not identical to, the Marxian notion of ethe capitalist mode of production.f This latter is too riddled with features of Anglo-capitalism to serve the more general purpose I require.

1. The production of most goods and services is for exchange rather than for the direct use of the producer. There is no assumption here about the kind of market, if any, through which the exchange takes place. Neither is there any assumption about the numbers of buyers or purchasers of the goods concerned. Considerable variation is possible, from the use of the full eauction modelf of the market to rigid long term contracts. Neither is more capitalist than the other.

2. The term ecapitalf refers to a relationship of ownership and control over the various means of production in those majority enterprises which produce for exchange. There are many concrete forms in which this ownership and control can be found, and these variations, typically from high levels of individual ownership and control to various forms of predominantly institutional or group ownership and control, also contribute to the distinctiveness of different systems.

3. The overwhelming majority of direct producers are wage labourers, which means that it is possible for them to contribute more to the production process than what they are paid for, or alternatively to contribute less than what they are paid for. The problem with the neo-classical theory of wages as equivalent to the marginal product of labour (wages are equal to the contribution made) is that it rules out by definition the possibility of exploitation, except when ecollusionf undermines competition so that unions end up exploiting employers. What was so useful about Marxian wage theory was that it provided a conceptual distinction between money wages, real wages and what was called the evaluef of wages. This latter concept was an attempt to measure the purchasing power of wages (real wages) on the same scale as the productivity of the labourer in order to measure the degree of the exploitation, if any, to which the worker is subjected.

4. The mechanism through which the social surplus (difference between the total product created by the society and what is consumed) is appropriated from the direct producer is the wage system, specifically the pricing of wages and the goods consumed by those who work for wages. Marx was not alone in emphasizing that it was the cheapening of the goods consumed by workers, that is, increasing the productivity of labour through new technologies which allowed labourers to work smarter rather than simply harder, that contributed most to the expansion of the social surplus. There is no single or even dominant method through which all capitalisms lift the productivity of labour, and a large part of the distinctiveness of each system lies in the way it drives this process.

5. There is no single mechanism through which the surplus is distributed, and many of the most distinctive features of different types of capitalism stem from their dominant forms of surplus distribution. Again the price system is central to this process, although what is bought and sold (eg. managerial skills, land, gold, video-cassettes), who are the buyers and sellers (eg. institutions, individuals, groups of individuals) and the degrees to which the market is used to mediate the transactions are all variables that can result in wide divergences among capitalist systems. Obvious examples are seven-figure executive esalaries,f booms and slumps in the prices of assets like shares and land and epost-Fordistf managerial systems that rely more on shop floor initiatives than top down directives.

6. Each of the above features contributes to the notion that capitalism is a system of class relations. However, its essential political character takes an economic form, so that politics is as it were eonce removedf. Although the political relationship rests primarily on ownership and control of the various means of production, the eeconomic formf of the system is expressed in at least three key emomentsf which must work together in an appropriate balance, or as Marxist put it, the total social capital must continue to move uninterruptedly through its full circuit. The key emomentsf in the circuit are:

M (money) capital, which purchases means of production and wage labour, which are then used in

P (a production process) which creates

C (a new commodity) which is then sold for

Mf (more money than was initially laid out) which enters the circuit again from the beginning.

7. The mechanisms through which ethe total social capitalf moves through the circuit, or more concretely, through which the activities of banks, manufacturers and traders are connected and kept in balance, vary considerably among systems. They range from reliance on profit signals expressed through the market, to long term ecronyf relationships with little reliance on the market, to state-level planning.

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If one accepts the above reasoning, it should be clear that many of the features commonly associated with ethe essentials of capitalismf\especially by neo-classical writers and those Marxists for whom an efficient market is the very lifeblood of the system\tend to be peculiar to particular capitalisms. Anglo-capitalism, which relies heavily on the market to perform a large number of functions, is normally put forward as the ideal type, while Japanese and Russian or even eSovietf capitalism are seen as somehow deficient. I will argue that this is a mistake, that the market is simply one possible mechanism through which the more eessentialf functions of the system are performed and that the degree to which the market is used is one of a number of variables which distinguish capitalist systems from one another. The main variables I will focus on in this paper are:

1. The degree to which the market is the mechanism through which the productivity of labour, and hence the exploitation of labour, is increased;
2. The degree to which the market is used to drive the system through the different emomentsf of the circuit;
3. The degree to which the social surplus is distributed to individuals;
4. The degree to which individuals are the agents of accumulation;
5. The degrees to which individuals are exclusively associated with the functions of either capital (control over the labour process and accumulation process) or labour (the requirement to produce more than what is received in wages).

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The Auction Model\A Critique

The tendency to idealize the market as a mechanism through which virtue rather than power is expressed is deeply embedded in the basic building block of neo-classical economic theory: the notion of consumer choice as an expression of taste and therefore of the sacrosanct concept of demand. A demand price, in neo-classical theory, expresses how badly someone wants a good or service, what the person is prepared to pay for it, or for purists it expresses the quantity of utility the person will derive from it given their tastes or evaluesf. The notion of supply is constructed in a similar way on the basis of the disutility of parting with something and the compensation wanted. A supply price is the price at which one is willing to part with a good or service. A good is then sold on the market at a price which corresponds to the intersection of the demand and supply ecurvesf: the price the buyer is prepared to pay coincides with the price the seller wants.

This theory of price is at best vacuous, at worst misleading. It is vacuous because it is circular:

i) Why did that car sell for $1,000?
ii) Thatfs what was paid.
iii) Why was that paid?
iv) That was the price where demand and supply coincided.
v) What was the demand price?
vi) The price the buyer was prepared to pay.
vii) And the supply price?
viii) The price the seller was willing to accept.
ix) How do you know that the buyer and seller were willing to accept this price?
x) Because it was the price that was actually paid.
xi) So the price that was paid is the price that was paid, I see.

The notion of choice adds absolutely nothing to the explanation, which requires the circumstances shaping and constraining the choices to be filled in. Maybe the seller was desperately hungry and had to accept virtually anything, or perhaps the buyer had a sick relative in need of immediate hospitalization and was vulnerable for that reason. It is simply trivial to say that human beings choose to act in the ways they do, for example, it is virtually tautological to say that people who are poor in a capitalist society choose either to work for wages or they choose to be unemployed.

But the attempt to explain an action by claiming it was chosen is also very misleading, because the primary function of adding the notion of choice is to justify the action as the right one because it was chosen. To say that prices are determined by (the neo-classical conceptions of) demand and supply is therefore to say that all prices and transactions determined by competitive markets are the right prices. It is a political prescription for all forms of collective organization and collusion, especially by governments and unions, to refrain from interference in the competitive activities of business. Keynes actually recognized that if the notion of demand was to have any real explanatory power, it had to be interpreted as effective demand, that is, in terms of the power to exercise a preference. The market is thus a space in which power is wielded, in which there are winners and losers, and prices express the power possessed by those who participate in the market.

That capitalism is about power is perfectly consistent with what I have been arguing, and that the market should be used to enforce the power of the various individuals and classes in capitalist society is quite normal. What I am taking issue with is the auction model of the market as an institution which does more than this: the view that a competitive market is somehow more fair than other institutions or mechanisms through which the exchanges take place that are necessary to the functioning of capitalism: the buying and selling of skills, goods and services.

I only have time to present the substance of my argument in summary form. This argument is that on each of the five above-mentioned variables (bottom of page 2 to top of page 3) that distinguish the different kinds of capitalism from one another, Japanese and Anglo capitalisms are opposed. In summary:

Anglo-Capitalism

Japanese Capitalism

1

Market competition among producers, resulting in the survival of capitals that achieve high labor productivity via 'smarter' work methods and in the bankruptcy of those that do not

Market competition is limited and distinctive systems of managerial control and extra-economic coercion are also used extensively to lift the exploitation of labor

2

Market competition and variations in profit rates allocate capital from one moment to the next

Relationships of mutual dependence (keiretsu system) greatly affect allocations from one moment to the next

3

Since the purpose of capitalism is to enrich individuals, very large proportions are distributed to individuals, either as 'dividends' or high salaries for executives

Purpose of capitalism is to protect the nation: much more of the surplus is retained by institutions, & much less is distributed to individuals, either in the form of 'dividends' or ' salaries'

4

Individuals then decide where to invest this money, giving them leverage over the accumulation process

Institutions rather than individuals have the greatest leverage over the accumulation process

5

Functions of labor and capital fairly exclusively performed by different groups of individuals (classes); with potentially high levels of class conflict

Almost all individuals perform both functions (in varying combinations), so that 'class' does not take the form of groupings of individuals; class conflict is thus minimal

Comparative Crises

In no case does the peculiarity of either system give it an advantage over the other, although each tends to have its own peculiar vulnerabilities and predispositions towards crisis. A major part of this paper that is still to be written, even in summary form, concerns the different types of crisis and the different forms of crisis management that are appropriate. Anglo-capitalism is pre-disposed to what might be called ecrises of individual greed and fearf which are transmitted rapidly and violently through market mechanisms and which can produce very powerful political reactions. These reactions are more explosive because Anglo crises affect the fortunes of individuals much more devastatingly than do Japanese crises and because the ways classes are formed tends to mobilize groups of individuals into collective political action more easily than in Japan. For Japanese capitalism, in which the power of capital is institutionalized much more thoroughly, where it takes much longer for individuals to be affected and where class formation is blurred, the crises tend to be much more systemic, with the major contradictions occurring more between different parts of the system than between groups of individuals. Since Anglo crises are more likely to result in organized political struggles, they are also more able to produce major social changes. Japanese crises, on the other hand, do not produce the same degree of social conflict and therefore tend to result in much less social change.

What is so striking about the current recession in Japan is that crisis management has been so ineffective, and that this has resulted in stronger and stronger demands for more public works spending and more market liberalization, remedies which might well have some relevance in the United States, but which have repeatedly had no impact on Japan. What I believe to be the fundamental problem is Japanfs very high level of specialization in consumer goods production through heavy reliance on extra-economic coercion and low wages. Japanfs production system is out of kilter with its consumption system.


Appendix 2:http://www.uni-wuerzburg.de/law/ja00000_.html

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The 1946 Japanese Constitution

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Preamble@@We, the Japanese people, acting through our duly elected representatives in the National Diet, determined that we shall secure for ourselves and our posterity the fruits of peaceful cooperation with all nations and the blessings of liberty throughout this land, and resolved that never again shall we be visited with the horrors of war through the action of government, do proclaim that sovereign power resides with the people and do firmly establish this Constitution. Government is a sacred trust of the people, the authority for which is derived from the people, the powers of which are exercised by the representatives of the people, and the benefits of which are enjoyed by the people. This is a universal principle of mankind upon which this Constitution is founded. We reject and revoke all constitutions, laws, ordinances, and rescripts in conflict herewith.

We, the Japanese people, desire peace for all time and deeply conscious of the high ideals controlling human relationship, and we have determined to preserve our security and existence, trusting in the justice and faith of the peace-loving peoples of the world. We desire to occupy an honored place in an international society striving for the preservation of peace, and the banishment of tyranny and slavery, oppression and intolerance for all time from the earth. We recognize that all peoples of the world have the right to live in the peace, free from fear and want.

We believe that no nation is responsible to itself alone, but that laws of political morality are universal; and that obedience to such laws is incumbent upon all nations who would sustain their own sovereignty and justify their sovereign relationship with other nations. We, the Japanese people, pledge our national honor to accomplish these high ideals and purposes with all our resources.

Article 1.@Symbol of StateThe Emperor shall be the symbol of the State and of the unity of the people, deriving his position from the will of the people with whom resides sovereign power.

Article 9. Renunciation of WarAspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.

In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.

Article 25. Welfare Rights@All people shall have the right to maintain the minimum standards of wholesome and cultured living.@In all spheres of life, the State shall use its endeavors for the promotion and extension of social welfare and security, and of public health.

Article 27. Right and Obligation to Work, No Child Labor@All people shall have right and the obligation to work.@Standards for wages, hours, rest and other working conditions shall be fixed by law.@Children shall not be exploited

Article 28.UnionsThe right of workers to organize and to bargain and act collectively is guaranteed.

Article 29. Property@The right to own or to hold property is inviolable.@Property rights shall be defined by law, in conformity with the public welfare.@Private property may be taken for public use upon just compensation therefor.

Article 96. AmendmentsAmendments to this Constitution shall be initiated by the Diet, through a concurring vote of two-thirds or more of all the members of each House and shall thereupon be submitted to the people for ratification, which shall require the affirmative vote of a majority of all votes cast thereon, at a special referendum or at such election as the Diet shall specify. Amendments when so ratified shall immediately be promulgated by the Emperor in the name of the people, as an integral part of this Constitution.

Article 97. Inviolable Human Rights@The fundamental human rights by this Constitution guaranteed to the people of Japan are fruits of the age-old struggle of man to be free; they have survived the many exacting tests for durability and are conferred upon this and future generations in trust, to be held for all time inviolate.

Article 98. Unconstitutional Law@This Constitution shall be the supreme law of the nation and no law, ordinance, imperial rescript or their act of government, or part thereof, contrary to the provisions hereof, shall have legal force or validity. The treaties concluded by Japan and established laws of nations shall be faithfully observed.

Article 99. Binding for all PowersThe Emperor or the Regent as well as Ministers of State, members of the Diet, judges, and all other public officials have the obligation to respect and uphold this Constitution.


Appendix 3: http://www.kantei.go.jp/jp/21century/report/overview.html

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Official Report of the Prime Minister's Commission on Japan's Goals in the 21st Century, in January 2000

"The Frontier Within: Individual Empowerment and Better Governance in the New Millennium"

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Contents

I. Realizing Japan's Potential

II. Global Trends and Their Implications

1. Globalization

2. Global literacy

3. The information-technology revolution

4. Advances in science

5. Falling birthrates and aging populations

III. Central Elements of Reforms

1. From governing to governance

2. Empowerment of the individual and creation of a new public space

IV. Japan's Twenty-first-century Frontier

1. Promoting a pioneer spirit

(1) Transforming education

(2) Enhancing global literacy

2. Making a strength of diversity

(1) Putting individuals in control of their lives

(2) Regional autonomy and self-reliance

(3) Energizing the nonprofit sector

(4) Establishing immigration policy

3. Strengthening the underpinnings of good governance

(1) Diversity and transparency in policy choices

(2) Lowering the voting age to 18

(3) Strictly limiting the government's role

(4) Promoting rule-based governance

4. In pursuit of enlightened national interest

(1) Global civilian power

(2) A comprehensive, multilayered security framework

(3) Neighborly relations (rinko)

V. Japan's Aspirations, Individual Aspirations etc.

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'Global Literacy'

The advance of globalization and the information-technology revolution call for a world-class level of excellence. Achieving world-class excellence demands that, in addition to mastering information technology, all Japanese acquire a working knowledge of English-not as simply a foreign language but as the international lingua franca. English in this sense is a prerequisite for obtaining global information, expressing intentions, and sharing values. Of course the Japanese language, our mother tongue, is the basis for perpetuating Japan's culture and traditions, and study of foreign languages other than English should be actively encouraged. Nevertheless, knowledge of English as the international lingua franca equips one with a key skill for knowing and accessing the world.

To achieve this, it is necessary first to set the concrete objective of all citizens acquiring a working knowledge of English by the time they take their place in society as adults. We should think about organizing English classes according to students' actual level of competence rather than their grade in school, improving training and objective assessment of English teachers, greatly increasing the number of foreign teachers of English, and contracting language schools to handle English classes. We should also think about requiring the central government, local governments, and other public institutions to produce their publications, and home pages, in both Japanese and English. In the long term, it may be possible to make English an official second language, but national debate will be needed. First, though, every effort should be made to equip the population with a working knowledge of English. This is not simply a matter of foreign-language education. It should be regarded as a strategic imperative.

Globalization also means the advent of an age in which people will not be overly concerned with established systems, customs, and vested interests. They will have broad access to opportunities for new undertakings not limited by national boundaries. To accomplish this, however, people must possess the ability to access and converse with the rest of the world, meaning that they can freely and immediately obtain information, understand it, and express their own ideas clearly. The possession or lack of this ability, which we may call "global literacy," will determine whether or not one will enjoy a better life in the world of the twenty-first century. And mastery of global literacy by the people of a country will determine whether that country's power in the international politics of the twenty-first century will wax or wane-and is also likely to determine whether the country rises or falls. Countries whose standard of global literacy is low will not attract superior human resources. Meanwhile, people will flock to those countries whose standard is high; this is a phenomenon that is bound to occur.

The basic components of this new literacy are the mastery of information-technology tools, such as computers and the Internet, and the mastery of English as the international lingua franca. In addition to these basics, communication skills-encompassing the ability to express oneself in two-way exchanges, particularly debates and dialogues involving multiple participants on each side, along with clarity in the exposition of ideas, richness of content, and persuasiveness-will also be important elements.

Today's Japanese are lacking in these basic skills. Their English-language abilities as measured by their TOEFL scores in 1998 were the lowest in Asia. The Japanese themselves are painfully aware of the inadequacy of their communication skills. Though they would like to convey their country's good points and its real situation to the rest of the world, many of them feel unable to do so adequately.

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<'Transforming Education'>

If we are to emphasize the kind of education that taps the latent strengths of individuals and society and that fosters and encourages excellence, we must break down the homogeneity and uniformity of present-day education. To achieve this, it is essential to reexamine education in the broad sense, that is, the development of human resources. The idea of leaving intact the framework of the present educational system, created in and after the Meiji era to promote modernization, and simply tinkering around the edges is not good enough.

The state has two roles to play in education broadly defined. One is to require citizens to acquire the knowledge and skills necessary to live as sovereign members of society. The other is to perform the service of helping free individuals acquire means for self-realization. In short, the two are compulsory education and education as a service. Present-day Japanese education, however, has conflated the two. An inordinate burden is placed on children who cannot keep up with course content, while children who assimilate it easily and want to stretch their minds further are forced to mark time. In the twenty-first century the two kinds of education should be clearly distinguished; compulsory education should be rigorously implemented as the minimum required of citizens, while education as a service should be left to market mechanisms, with the state offering only indirect support.

For example, the primary and lower secondary curricula could be compressed, with three days a week devoted to carefully selected compulsory education; the other two days would be given over to review of compulsory subjects for children who were having trouble keeping up, while children who were achieving well would be allowed to choose freely among scholarship, arts, sports, and other forms of personal cultivation, and specialized vocational education. Using state-issued vouchers, these children could study either at schools or at privately run institutions outside the official school system.

Education is a joint endeavor of the home, the community, and the school. Recently, however, the educational functions of the home and the community have deteriorated markedly. It is necessary to reestablish a shared awareness of the importance of discipline and training in the home. It should be made clear that the primary responsibility for children's education and behavior rests with parents and guardians.

In regard to higher education, in order to cultivate human resources capable of world-class work it is essential that universities and other institutions of higher education improve their international competitiveness. The establishment and administration of institutions should be made as free as possible and a competitive environment, including making educational and research facilities multinational, should be introduced as far as possible. Possible measures include abolition of controls on the establishment of universities, faculties, and so on; assessment of educational and research performance; the use of English as a language of teaching and research; and the active recruitment of foreign faculty members. Medical schools, law schools, and other means of improving educational functions to enhance the specialized skills of doctors, lawyers, and other professionals are also necessary.

In the 1990s the increase in foreign students slowed, and there was even a tendency for numbers to dip below the previous year's. The government's goal of accepting 100,000 foreign students at the beginning of the twenty-first century became unattainable. A great deal has been said about this, and a number of measures have been taken to improve the environment for foreign students, but the basic problems are Japanese higher education's reduced international competitiveness and attractiveness. Unless radical changes are made, Japan's foreign-student policy will not bear fruit.


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