I was recently taken to play pool in a large billiards hall in a Tokyo suburb by my two Japanese nephews, "the two Tetsus." Both are working for Japanese companies, having graduated from Japanese universities, but they had lived abroad for most of their schooling-Tetsuro, or "big Tetsu," in Australia and Tetsusaburo, or "small Tetsu," in the US. Until recently, returnees from abroad were a source of embarrassment and often failed to reintegrate into Japanese society because they had lost their place in the tight hierarchies which used to define a person's status. But Japan is now a very different place from the country I left in 1990, when I ended eight years working for the BBC in Tokyo. My two pool-playing nephews, both in their mid-20s, are part of Japan's lucky generation, granted greater freedom than any generation before. They and the other young people at the pool tables are part of a Japan of quirky inventiveness and chic fashions; a Japan admired in the west for fashion designer Issey Miyake or the Ninagawa theatre group, as well as the weird counter-culture of Muji ("no-brand") clothes and the films of Juzo Itami (such as Tampopo).
In the past few years the western media have painted a gloomy picture of Japan: the Kobe earthquake, the Aum sect's attempt to commit mass murder, and the repeated failure to escape economic stagnation. Just in the past few weeks, Japan has lost its Triple A credit rating, and now risks a further collapse of stock prices which could bring down more banks and businesses. But the 1990s have also been a surprisingly productive period. A quiet transformation is under way, something resembling the emancipation of the individual.
Japan's third opening
The 1990s witnessed the gradual breakdown of structures which made Japan strong in the 20th century-the "iron triangle" of big business, conservative politics and an elite bureaucracy. The decline of that system follows the end of rapid growth and the puncturing of Japan's "airbag society"-the safety net of guarantees for those who conform.
The two Tetsus show how Japan is changing. Most of their friends failed to find career jobs straight after graduation. Some have been working part-time, or taking less well-paid jobs in sectors such as the travel business. Once, all that mattered in the job market was which university a student had attended. Now, with rising bankruptcies, everyone must be ready to sell their skills in the marketplace.
Small Tetsu, not long ago a teenage rebel in California, chose to join the family firm, one of the world's leading makers of soy sauce. But he is determined not to be a company man. After our pool game, he played me the recording he has made of himself playing his own songs on electric guitar. As a junior employee, he is allowed only a few days holiday at a stretch. But he has most weekends off, and often manages to extend them by an extra day or two, for surfing, biking and being with his girlfriend. Big Tetsu went into a shipping firm. But his passion is rock-climbing, and he spends his spare time on imitation rocks indoors, practising for the real thing.
A typical "jobs fair" which I visited, high up in a Tokyo skyscraper, was crammed with would-be job changers. I asked one, Naoko, a woman in mid-career, if she wasn't concerned about losing the benefits which go with lifelong employment? "Yes," she replied, "but I think they will stop anyway." Freer competition is forcing companies such as Nissan and Nippon Steel to shrink their operations or shift into new sectors. Many college leavers prefer to find their first job with a firm which expects them to move on to another employer. On both sides, the job for life is dying.
It is a world away from the far-flung suburban house where I spent the summer of 1970 as a student. There was a long walk to reach it from the remote station on a commuter line on the eastern edge of Tokyo. I remember the open rice-fields with all the smells of the countryside and the red lanterns of the tiny yakitori and sweet potato stalls which lined the narrow paths. I also recall the sense of community and the lack of privacy. My neighbour, the mother of several children, used to come in to take my clothes and return them washed, in neatly-ironed piles, despite my half-hearted protestations. I was given a generous welcome as a young gaijin, the first foreigner those people of Nishi-Funabashi had ever known. The "economic miracle" was under way, but the Japanese would have to endure another decade or two of unremitting hard work before they would earn any real choice about what to do with their lives.
In 1999, a blueprint for change was published by a "commission on Japan's goals in the 21st century," ordered by the late prime minister, Keizo Obuchi. The proposals, put forward by a panel of experts from academia, business and the arts, under the title The Frontier Within, reflect a fear that "as things stand Japan is heading for decline." The report argues that Japan needs a big shake-up of its social structures and identity just as far-reaching as those at the two previous turning-points in Japan's modern history: the Meiji Restoration in 1868, when the feudal Tokugawa dictatorship was swept away and Japan modernised itself; and the period after the second world war, when Japan abandoned militarism and its dreams of empire in favour of democratic government. The authors of the report say that they are proposing nothing less than a historic "third opening" of Japan.
The report calls for an end to Japan's restrictive immigration policy, and to the idea that Japan is by nature a homogeneous, mono-ethnic society. It says that the country should encourage many more foreign workers to settle in Japan permanently, and give them adequate social rights; otherwise Japan risks cutting itself off from the benefits of globalisation. The report also calls for an end to the top-down, bureaucratic decision-making culture. Instead, it says, Japan must copy western forms of political accountability. One change, borrowed from Westminster, came into effect last year. For the first time, the opposition has a chance to question the prime minister in parliament every week, in a Japanese version of prime minister's question time. Another change has reduced the scope for improper use of money to gain votes, although the practice of votes-for-favours is still endemic.
Further, the report suggests that English should be made a second official language in Japan, because of its importance as a tool of international communication. Underlying these proposals is the idea that Japan needs to cultivate more originality and individualism.
The suggestion that Japan needs to repeat the massive upheaval of the Meiji Restoration is an exaggeration. In the 1860s, Japan had been shut off from the rest of the world for more than 200 years. It had to choose from scratch a new system for its government, law, army and education-and it chose mainly from the models which it found in Britain, Germany and France, as well as drawing on elements from Japanese tradition. The emperor was restored to a central place in the nation's life, while the new meritocracy reinvented Japan as a modern power. The Meiji revolution produced many outstanding figures from the middle-ranking samurai, such as the educator Fukuzawa Yukichi and the statesman Ito Hirobumi. Such radicalism will not come so easy today.
Politics is stuck
Mahathir Mohamad, the Malaysian prime minister, recently accused Japan of becoming "too westernised." It is a sentiment sometimes heard in Japan too. When I visited a Japanese "problem school" near Narita airport, east of Tokyo, I understood why many Japanese educators are worried by change. The Yokoshiba Junior High School was in the news because of recent incidents in which two 14-year-olds assaulted teachers. The head teacher fears that the school may now have the worst of both worlds. The traditional merits of discipline and a high general standard of learning are being eroded, but the old weaknesses-the lack of self-expression skills and individuality-are still all too obvious in the classrooms. Old habits of rote learning die hard; and the national exam system does not encourage open-minded inquiry or debate.
However, a longstanding directive that schools should aim to produce "a model person" is now being scrapped. And the 21st century commission is suggesting limiting regular curriculum subjects to three days a week, to encourage intellectual independence.
But it is politics which remains the most damaging stronghold of the old-style Japanese paternalism and hierarchy. Japan's old guard of political leaders, with their business links and feudalistic "support groups," have been the last to understand how global forces are undoing the social and economic control which they have always cherished. I visited a constituency in the picturesque "snow country" of Niigata last year, once the local power base of the late prime minister, Kakuei Tanaka. In power during the early 1970s, he was the epitome of "money-power politics." He was sentenced to four years in jail for accepting bribes while in office (1972-74), but the courts allowed him to stay free on appeal, and he went on controlling the nation's politics from behind the scenes. Tanaka's political legacy has been continued by his daughter, Makiko Tanaka, who in turn has become a leading figure in her father's Liberal Democratic Party (LDP). Despite a brief period in opposition in the early 1990s, the LDP is again in government, although these days it needs a coalition partner to remain in power.
About half of all LDP members of parliament have inherited their seats from a parent or relative, and such dynasties are only too keen to publicise themselves. I followed Makiko Tanaka during the June 2000 general election campaign. She used the old Tanaka family magic, in a show of earthy wit and banter in front of the audience of elderly farmers, seated on tatami mats in a public hall.
So far Japan has proven largely immune to the kind of democracy in which power regularly changes hands between competing sides. But even in Niigata I found portents of change. The white hair of most of Makiko Tanaka's audience is representative of the country as a whole. Japan faces such a drastic ageing of the population that on present trends the population is projected to fall from over 120m now to under 100m by the year 2050. These days, in Niigata as elsewhere, voters are most concerned about seeking care and comfort in their old age. They no longer demand the kind of pork-barrel spending-on new bullet train projects and the like-which fuelled the money-politics of the past.
It was grandiose public spending projects which led to the countless bribery scandals in postwar Japan, in which politicians earned huge kickbacks from the building firms favoured with contracts. The biggest recent example in the construction sector is the massive Tokyo Bay development-including a man-made island in Tokyo Bay, linked by a bridge to the mainland. Begun in the late 1980s, shortly before the collapse of Japan's bubble economy, much of the space for rent on the multi-billion dollar development now stands empty. The venture has also left the Tokyo city government with debts which will take decades to pay off. The scandal over the huge kickbacks paid to LDP politicians for the work brought the downfall of Shin Kanemaru, then deputy prime minister. When police raided Kanemaru's home they discovered the loot in the form of piles of gold bars.
But a decade of economic stagnation and the collapse of the stock market and the property market has choked off the most overt corruption. The government's deficit-financed spending surges to boost the economy-which did so much for the construction industry-are now constrained by the fear of adding further to the long-term national debt.
Japanese exceptionalism
Many writers on Japan deny that it is changing. They have staked their reputations on the belief that it cannot do so, either because of its opaque political system or its supposedly mercantilist economic command structure. One version of this thesis is the book The Enigma of Japanese Power, by the Dutchman Karel van Wolferen. Writing at the crest of Japan's economic expansion, he updated a much older western analysis. This holds that Japan's decision-making processes are so impenetrable that no one can be said to be in charge, so painful reform is impossible. Only outside pressure can change Japan's rigid structures. It was indeed foreign pressure which provoked both those earlier convulsive changes in Japan's modern history-the Meiji restoration and the formal switch to democratic government after the second world war. Powerful global forces are again reshaping Japan in a way comparable to those earlier times.
None the less the belief in an enduring Japanese national purpose remains powerful-and plausible. There is even a word for it in Japanese, coined in the age of ultra-nationalism in the early 20th century-kokutai. Throughout the last century, both Japanese leaders and western interpreters of Japan accumulated evidence that the country was unique, and impervious to change. It had an extraordinary self-confidence and cohesiveness, and was almost the only Asian country to survive 19th-century western colonialism with its independence intact. In the age of Emperor Meiji it threw off its feudal, superstitious past, and matched the industrial power of its foreign teachers in record time. All this was possible because, from the time of the entry of the American "black ships" into Edo harbour in 1853, the Japanese responded to outside challenges with national programmes of action in which the needs of individuals were subordinated to collective goals.
The slogans supplied by the nation's leaders characterised each phase of Japan's national struggle. In Meiji times the slogan was "Rich Country, Strong Army." When in the 1930s the goal became to create a "greater east Asia co-prosperity sphere" the population was encouraged to believe in other slogans, such as "Eighty Million Hearts Beating As One." In the decades of breakneck postwar economic growth, the mighty MITI-the Ministry of International Trade and Industry-produced a series of "visions" of a knowledge-based society living off world-beating industries, in order to mobilise the whole society behind a new Japanese national plan.
The rise and fall of 20th-century japan
Japan's performance on the world stage in the first 50 years after Commodore Perry's ultimatum to Japan in the 1860s to "open up, or else" was astonishing. In the early years of the 20th century, Japan was honoured by the then world power, Britain, by being invited into a formal Anglo-Japanese alliance. The British cheered the "plucky" Japanese when they won a surprising military victory over Tsarist Russia in 1905. This, however, turned out to be a prelude to Japan's slide into militarism as it attempted to seize an empire of its own on the Asian mainland. The image of a fanatical, alien Japan was reinforced in the west by Ruth Benedict's bestseller, Chrysanthemum and the Sword. Its description of the samurai ethic behind the contempt for life among Japanese soldiers was a caricature, but it accurately described a hierarchical society in which the individual's voice was drowned out.
After the devastation of their country in the second world war, the Japanese changed character again. They first accepted the formal democratic structure of the victors and then repeated their earlier trick of catching up with the best of the rest. At the beginning of the US-led occupation of Japan, one of the main aims was to break up the zaibatsu industrial conglomerates, in the belief that over-industrialisation had contributed to nationalism and militarism. But the Korean war and the cold war stopped such ideas. By 1962, Japan's economy had overtaken Britain's. In 1975 it became the only non-western country to be invited to the newly-formed top table of the G7 industrial democracies.
In the last part of the 20th century, Japan appeared set on global economic domination. Its economy grew to be statistically larger than those of the 30 countries closest to it-including India, China and Russia-and various icons of western prestige fell into Japanese hands: the Rockefeller Centre in New York, Columbia Pictures in Hollywood and so on. Japan's mastery of the modern world's new alchemy-micro-electronics and high-tech manufacturing skills-led its advance. It achieved a series of dazzling world records: the fastest rate of economic growth ever seen, the largest trade surplus, the world's richest creditor nation, the biggest wave of overseas direct investment. Government ministries boasted that no large enterprise would ever collapse, because of the cross-ownership and mutual support of the keiretsu or "group enterprise" system. Japanese civil servants devised a series of five year national development plans, mapping out each phase of growth.
Growth was underpinned by a network of credit institutions which funnelled money at preferential rates to chosen industries. The Japanese were expected to feed this system by saving 20 per cent or more of their incomes, despite the very low rates of interest on offer. People did this as a hedge against the high costs of housing and health care in old age, and because of the absence of adequate state provision. The system was skewed towards producers rather than citizens.
By the mid-1980s, the manufacturers were struggling to produce goods in Japan because of high wages and the strong yen. But they had more cash than they knew what to do with and joined in the property and stock market boom. By the end of the 1980s, the weight of money competing for limited land and other assets was so great that the 300 acres of the Imperial Palace grounds in Tokyo were on paper worth as much as the whole of California; and the land of Japan was valued at more than that of the whole of the US. The bubble was set to burst.
Before it did so, Japan faced the wrath of the US in what threatened to become an all out trade war. Many Japanese argued, with some justice, that the Americans were to blame for their own troubles because of their spendthrift consumer culture. None the less efforts were made in the direction of opening and internationalisation-kokusaika. There were dozens of initiatives designed to help foreigners penetrate the mysteries of Japanese society.
I played a cameo role in one of them. As a foreign journalist I was invited to join a kokusaika committee in the ministry of home affairs. At the heart of our discussions were the many forms of discrimination against non-Japanese-especially against other Asians-in employment, housing, law enforcement and so on. But in the formal atmosphere of the committee proceedings it was hard to broach the real problems and discussion centred around symbolic measures such as sister-city schemes (with western not Asian countries). Some of my Japanese colleagues on the committee also grew impatient. A memorable moment came when one of them, a university professor, suggested to the astonished officials that the surest way to achieve internationalisation in the ministry was to send some of its top officials to New Zealand, each with a knapsack, some food and some money and allow them to fend for themselves for six months. The idea wasn't adopted.
Japan's fall, when it came, was devastating and ten years later it has still not played itself out. The stock market crashed in 1990-91, forcing many banks and businesses into bankruptcy. The corrupt cartel in Japan's construction industry was exposed. Nomura Securities, Japan's leading brokerage firm, was found guilty of manipulating stock prices for the advantage of preferred clients, mainly politicians, and of paying off yakuza gangs. Senior officials of the elite ministry of finance were found guilty of accepting hospitality from the financial institutions they were supposed to supervise, in return for favourable treatment and privileged information.
Following the latest crisis of confidence, the finance minister, Kiichi Miyazawa, has acknowledged that Japan's finances are "close to collapse." The country now has the biggest burden of public debt in the industrial world. Yet fear of recession has led the government to continue adding to the debt mountain. A more responsible leadership would force the banks to account for their bad loans, which amount to at least 10 per cent of GNP, and accept that some more big banks may have to fold. But this regime-led by the widely ridiculed prime minister Yoshiro Mori-is still trying to protect its friends. The prospect of Upper House elections in July makes the LDP more reluctant than ever to act. In a functioning democracy, the remedy would be for the opposition to take power, with alternative policies. But in the murky world of Japanese politics the opposition suffers from the same risk aversion as those who have driven the country into this cul-de-sac. In local politics, where money counts for less and the party machines have less control, citizens' groups carrying the banner of clean politics and consumer rights have won many victories.
A new Japan?
The usual macro-economic policy responses no longer work. The latest idea-to actively create inflation-looks set to follow all the other failures. And, as we have seen, politics does not function properly either. The only long-term answer appears to be incremental change from the bottom up-through the means of an increasingly vibrant civil society.
But in the short-term, the humiliation of Japan's ruling elite has been accompanied by dramatic and positive micro-economic change. Land prices have fallen for eight years in a row, which is bad news for Japanese people with negative equity but creates a much sounder basis for new generations of would-be homeowners. The bursting of the bubble also opened the economy to the outside world. In 1997, Yamaichi Securities became the largest Japanese company in postwar history to collapse. When it folded, with debts of over $20 billion, the US firm Merrill Lynch took over many of Yamaichi's branches across Japan. Since then, foreign firms have led the way in bringing retail stockbroking to ordinary Japanese and creating a more competitive market in financial services. An influx of foreign direct investment, and the fast growth of commerce via the internet, have transformed the choices of the Japanese people and helped to bring down Tokyo's astronomical prices.
It is Japan's paradoxical good fortune to have become richer by becoming poorer. The laws of economic gravity have been shown to work, and the people of Japan have started to gain some power over their own lives from an over-mighty corporate state. The unemployment rate, at 5 per cent, has overtaken that of the US, but unrest has not broken out. New sources of tension may arise in east Asia from China, from Korean reunification or from an eventual US military withdrawal. But a resurgence of Japanese nationalism looks a remote possibility. When prime minister Mori resurrected the word kokutai with nostalgia during the last election campaign, the Japanese responded with bafflement or scorn. Japan is experimenting with new ideas, but world domination is not one of them.
Mahathir Mohamad complains: "Japan has discarded lifetime employment, co-operation between the government and the private sector? Even Japanese youths want to be blondes, work less and play more." He is right. And it means that today the Japanese are freer than ever before from the chains of company loyalty, dependence and conformity.
