The Enigma of Japanese Power (7 page)

At home, in the meantime, the relationships that count do not normally involve major problems, notwithstanding the great rivalries. The bureaucrats tinker with the economy, making adjustments to facilitate its further growth. The politicians and almost everyone else keep out of their way. Parliamentary representatives, largely chosen for their pork-barrelling skills, attend mainly to the business of getting re-elected. Since this depends largely on their ability to spread the national wealth politicians are perpetually indebted to the bureaucratic guardians of the budget. The industrialists continue to expand their foreign market shares, and enter new markets with the help of the bureaucrats. They are kept in line by their peers; and they pay the politicians. Nobody is boss, but everybody, in some way or other, has leverage over somebody else, which helps ensure an orderly state of affairs.

In addition to the bureaucrat-LDP-business triad, there are several other powerful, semi-autonomous bodies. The press is one of them; the gigantic dailies copy each other’s approach, coming up with a well-nigh uniform stance on most issues of the day. Speaking mostly with one voice, they tend to have much influence on popular sentiment concerning domestic issues and on attitudes towards international relations.

Another influential body, the National Federation of Agricultural Cooperatives, presides over a multitude of local co-operatives, regional federations and special business organisations catering to the 8 per cent of Japan’s workforce employed in farming. It maintains a symbiotic relationship with the Ministry of Agriculture. The ministry, in co-operation with the LDP, keeps the price of domestic rice at around five times the world price. In return, LDP candidates in many rural areas are given almost unconditional support.

There are other organisations over which the bureaucracy’s control is rather limited. Gangster syndicates run huge protection rackets and are allowed considerable powers of intimidation in the entertainment districts that exist in nearly every locality. The police maintain an unacknowledged symbiotic relationship with the gangster syndicates in the interest of keeping crime under organised control. The police themselves form another semi-autonomous body with far-reaching discretionary powers. Japanese public prosecutors decide for themselves, often on relatively arbitrary grounds, when and when not to prosecute.

Power in Japan is thus diffused over a number of semi-self-contained, semi-mutually dependent bodies which are neither responsible to an electorate nor, ultimately, subservient to one another. While all these bodies share aspects of government, it is impossible to find one among them that gives the others their mandate. No one has final responsibility for national policy or can decide national questions in emergencies. Japan here differs from societies, such as that of the United States, where power is fragmented among numerous councils, agencies, boards, courts and the like. In the latter there still is a line of command; there are ways of getting through to a centre, of having that centre make and implement policies. Japan is different again from West European societies, even those with very strong interest groups that diminish the power of the centre. At European cabinet meetings, initiatives are taken and decisions are, ultimately, made. In Japan the various ‘governing’ bodies remain themselves ungoverned.

Which brings us back to the elusive Japanese state.

The public, of course, perceives a ‘state’ in the presence of the tax collector, the police and a vast body of regulations. But the Japanese state vanishes once one considers the question of accountability. It is interesting that the average Japanese does not consider the puppet state of Manchukuo to have been ‘our colony’; it was the Army’s colony, not Japan’s. The Japanese tend not to see themselves as being symbolically part of a state whose responsibility they therefore share.

There is an apparent paradox here, for the enthusiasm with which ordinary Japanese greeted the conquests of imperial Japan, and the extent to which they identified with the national purpose, are well documented. However, they are not by their own lights fraudulent in disowning the Army, since they do not see it as having represented their state. It was just a group, one of many, which in retrospect caused a great deal of trouble.

The state means different things to different people, but it should at least show some ‘existential consistency’. It should continue to be there from one moment to the next, and not suddenly trickle away like sand through one’s fingers. Washington was perplexed when in May 1981, on the day following a visit to the US president, the then prime minister, Suzuki Zenko, told Japanese newspapers that he had not meant what everybody understood to be a clear statement about an ‘alliance’ with the United States in the joint communiqué he had just countersigned. The immediate foreign reaction in such a situation is to suspect disingenuous motives; it hardly occurred to anyone that Suzuki, the ‘premier’, might not represent a state. In the imbroglio that followed in Tokyo the foreign minister resigned. But his successor, Sonoda Sunao, hardly improved the situation when he stated that joint communiques were not binding on their signatories.

The minimum to expect from the state is that it should behave as a unified body, at least to the extent of speaking with one voice. Where is the state if the Ministry of Foreign Affairs chastises a foreign correspondent, as happened with a colleague of mine, for the inaccuracy of a dispatch written on the basis of information obtained from the Ministry of Agriculture? Or if one ministry, as has happened fairly often, denies before diplomatic negotiators what another ministry has just conceded?

The frustration of many a foreign negotiator, meeting the umpteenth mediator sent his way, can be summed up in the single cry ‘Take me to your leader’. Japan does not have one. It is pushed, or pulled, or kept afloat, but not actually led, by many power-holders in what I call the System.

Foreigners have often sensed in Japan something not generally covered by the notion of ‘state’. ‘Japan Inc.’ is the term that has become popular in an attempt to grapple with the question. But the metaphor is misleading in that Japan has nothing comparable to a chairman of the board, a president or even a board of directors as a means of providing a unified view on which to base important decisions.

On the other hand, Japanese official spokesmen who do not like the notion of ‘Japan Inc.’ will sometimes point to Western Europe and contend that, since much more industry is nationalised in, for instance, Britain or France, it is in those countries rather than in Japan that government and business interests have truly amalgamated. Such spokesmen have succumbed to the temptation, lying in wait for all commentators on Japan, to compare apples with oranges.

Certainly, where the size of its bureaucracy is concerned, Japan is not impressive compared to the West, where the welfare state has created a notoriously swollen officialdom. There are only 4.4 Japanese public-sector employees per 100 inhabitants, which is one-third the figure for Great Britain and just over half that for both the USA and West Germany. But this is irrelevant in the context of the Japanese System. In the mixed economies of Western Europe, even in France, the private and public elements are still fairly well delineated. State interference can be administered in measurable doses, monitored and singled out for praise or protest if need be. By contrast, Japanese bureaucratic participation tends to resist analysis.

The mingling of the private and public domains in Japan is nevertheless not a mysterious process. Various practices facilitating bureaucratic participation can be singled out. Japanese government bureaux have extraordinary powers of awarding licences and other permissions for commercial pursuits, and of withholding advantages like subsidies, tax privileges or low-interest loans at their own discretion. Ministries can resort to ‘administrative guidance’ to force organisations in their realm of endeavour to adopt ‘voluntary’ measures. It is by such means that the Ministry of International Trade and Industry has moulded, joined and in other ways shaped industrial sectors to make them collectively fit for optimum performance on the foreign and domestic markets. The Ministry of Finance and the Bank of Japan also exercise powerful control, thanks to the once nearly exclusive dependence of Japanese corporations on bank loans for capital. Even though a majority of the large firms have by the 1980s made so much profit that they are awash in self-generated capital, the relationship between these bureaucratic and industrial bodies of Japan remains close to a degree without parallel in the Western world. By issuing binding instructions to the commercial banks, the Bank of Japan still maintains a very large voice in allocating the funds for all really big investments.

The bureaucrats also preside over a proliferation of public and semi-public corporations serving all manner of economic and political purposes – including, incidentally, the provision of post-retirement sinecures for the bureaucrats themselves. Deriving funds largely from Japan’s postal savings system (the largest financial institution in the non-communist world), the budget for these public policy companies is not subject to parliamentary approval and thus allows unnoticed spending in furtherance of specific bureaucratic goals.
²⁰

Some three hundred bureaucrats annually join the business world as directors or senior advisers of corporations they monitored during their government career. Since the retirement age is fifty-five, such bureaucrats will have another twenty years or so in which to help ensure ‘smooth communications’ between industry and the ministries or the central bank This crucial phenomenon is called
amakudari
, ‘descent from heaven’. A personal acquaintance with government officials and a close familiarity with bureaucratic priorities are almost indispensable in reaching agreement to ‘adjust’ policy. Thus the
amakudari
bureaucrat surpasses any official channels in his effectiveness in maintaining the flow of information between bureaucracy and enterprises.

In the higher reaches of the System, bureaucrats, former bureaucrats in top business positions, former bureaucrats turned politician and the former bureaucrats or bureaucratised businessmen who head the business federations are as one, as they mingle and busily monitor the economy and maintain social control. One has only to replace the term ‘bureaucrat’ with ‘administrator’, and the traditional divisions of the industrialised state disappear almost altogether.

Most post-war business bosses are best characterised as administrators rather than as entrepreneurs. The most powerful one-third of LDP Diet membership consists mostly of former ministry officials, and their methods and attitudes are those of administrators. Japan’s top administrators, in whichever formal category they are found, have also been selected by the same filter: the law departments of the former imperial universities, especially the University of Tokyo (more popularly, Todai) and, to a much lesser extent, the University of Kyoto.

A good deal of antagonism exists in the higher reaches of the System, but it rarely, if ever, pits the official organs of state against the industrial organisations. Groups of businessmen side with groups of bureaucrats against other groups in both domains. The rifts run diagonally through the truncated pyramid. Whereas the great rivalries and territorial wars among the different ministries are highly significant, true confrontations between bureaucrats and recalcitrant corporations are rarely heard of (and when they are, are talked about for years after). Only much lower down, among the newer firms and especially the vitally important sector of small subcontracting firms, can one find genuine entrepreneurs.

Between the small and medium-sized enterprises at the bottom of the industrial hierarchy and the ministerial-corporate top lies the highly disciplined array of firms that has made Japan famous in the post-war world. These ‘private’ corporations, in the Japanese version of ‘capitalism’, are only semi-autonomous. Most of the large firms belong – with varying degrees of closeness – to conglomerates, of which there are six colossal ones: Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa and Dai-ichi Kangyo Bank.

These conglomerates, known as ‘corporate groups’ or
gurupu
, contain highly diversified industrial companies that are clustered around their own banks, together with real-estate agencies, insurance firms and the famous trading houses. The entire structure in each case is tied together by interlocking directorates. Between 60 and 70 per cent of all shares outstanding on the Japanese stock exchanges are held by Japanese corporations and financial institutions. They keep these shares within their conglomerate family, in a pattern of reciprocal shareholding. Because the shares are considered to be ‘political’ shares rather than investment, they are never sold. To keep over half of a company’s shares in such cross-holding deals eliminates the possibility of take-overs by outsiders.

No one is in charge of a
gurupu
, and no one is ultimately responsible for it. The
shachokai
, or presidents’ council, which meets regularly, is an institution for mutual control, in that the participating presidents of all the major firms in a corporate group attend not as stockholders of their own companies, but as representatives of the stock their company holds in all the other member companies.
²¹
One of the functions of these meetings is to discuss joint investments and the creation of new sister companies in new industries.

Another popular term for the corporate group is
keiretsu
, but this label was originally used for yet another type of conglomerate in which the members are even more closely related to one another. These are the hierarchically ordered systems of subsidiaries, suppliers, subcontractors and distributors associated with a particular major manufacturer. Each large member of a
gurupu
stands at the apex of a vertical
keiretsu
that may encompass several hundreds of companies. There are also newer and smaller corporate groups that have sprung up around post-war giants that did not belong to one of the six major conglomerates.

The precise organisation and degree of control over members varies from group to group, but the obligation to extend mutual aid and to keep as much business as possible within the group is taken for granted.

The
gurupu
have succeeded the
zaibatsu
, which before 1945 were organised around holding companies and were ordered to disband by the United States occupation authorities. The post-war groups are more effective because the occupation purge provided an opportunity for reorganisation in which much dead wood was eliminated.
²²
More important, the substitution of the banks for the old holding companies established a network of financial pumps (their survival guaranteed by the central bank) without which the ‘economic miracle’ would have been considerably less impressive, or perhaps not have taken place at all. Rather than doing away with the controlled pre-war and wartime industrial system, the occupation actually reinvigorated it.

Japanese industry is even more tightly controlled than the foregoing suggests. Individual members of the corporate groups are also organised by industrial sector in overlapping, guild-like, but again strongly hierarchical structures. Obligatory conformity to unwritten rules limits their policy-making options. The industrial collectivities have nearly complete extralegal powers to apply sanctions whenever individual members step out of line or do not seem to understand what the others consider good for them. Ultimate sanctions such as enforced bankruptcy are rare, since a slight signal of displeasure is generally heeded.

The awesome combination of intertwined hierarchies nourishes a myriad of subcontractor firms reaching right down to the small sweatshops, at which level one may still find whole families working a ten-hour day. It is at this sub-level of Japan’s often discussed ‘dual structure’ that one is reminded of ‘capitalism’ in the sense that Westerners use the term. These small enterprises are still run by entrepreneurs who shoulder formidable risks. However, they are dependent on the market only to a limited extent. Their chief function is to provide what amounts to cheap labour for the firms higher up in the hierarchy. Collectively, they serve as a shock-absorbing cushion in periods of economic downturn and help to explain Japan’s high bankruptcy rate, since they regularly go under in large numbers, only to reappear in different manufacturing roles.

It is impossible, from out of this huge system, to extricate anything that can really be called a state. The existence of a state is implied, of course, whenever Japan passes laws and adopts measures for foreign consumption-when, for instance, the bureaucrats lower tariffs on imports. In practice, though, that means almost nothing. The workings of the System inevitably negate effects that would be normal anywhere else in the industrialised world. The System overrules the state at every turn.

One must be careful at the same time not to see the System as monolithic. This is no oriental despotism in modern guise. The despot is nowhere in sight, nor is there any ever-vigilant Big Brother. Indeed, any component of the System that might aspire to such a role would promptly find the other components lining up against it. The preservation of its own power is the first priority of every System component. This is achieved by ceaseless restraint, mutual scrutiny and interference among the components, preventing any one of them from growing strong enough to dominate the rest. The Japanese know from bitter experience that things can go desperately wrong when, as happened in the 1930s, this balance is upset.

In their dealings with the outside world, the various components of the System strive in more or less the same direction towards the attainment of similar goals. It is this that creates the impression of a gigantic conspiracy at work. Yet domestically they work partly against each other and help to curb each other’s power. The elementary flaw in the ‘Japan Inc.’ metaphor has always been that it evokes images of a smoke-filled boardroom where deals are made and conspiracies are hatched for economic conquest. Were this but true, things would be much easier for foreign governments, since one can at least negotiate with a board of directors.

Their unity of purpose in disseminating a particular world-view and propaganda encouraging the maintenance of existing power relations within the System, as well as defusing the discontent of trade partners, is greatly underrated by Japanese and foreigners alike. On the other hand, their ability in a crisis to sacrifice existing power relations for the sake of a unified policy programme is vastly overrated.