Japan Inc. on the Brink: Institutional Corruption and Agency Failure

337 Pages·2014·1.21 MB·English

by  Susan Carpenter

Japan Inc. on the Brink
Also by Susan Carpenter:
SPECIAL CORPORATIONS AND THE BUREAUCRACY: Why Japan Can’t Reform
(Palgrave Macmillan, 2003)
WHY JAPAN CAN’T REFORM: Inside the System (Palgrave Macmillan, 2008)
JAPAN’S NUCLEAR CRISIS: The Routes to Responsibility
(Palgrave Macmillan, 2012)
Japan Inc. on the Brink
Institutional Corruption and Agency
Failure
Susan Carpenter
© Susan Carpenter 2015
Foreword © James Clunie 2015
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The Japan Policy Research Institute
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Contents
Acknowledgments xiii
Foreword by James Clunie xiv
Annual Average Exchange Rates xvi
List of Acronyms and Abbreviations xvii
Introduction 1
Revealing the genuine Japan Inc. 2
Special Corporations: too hot to handle 4
A welcome endorsement 5
Accentuate the positive: the Japan Inc. syndrome 6
The creation of a Wizard of Oz economy: why did
commentators get it wrong? 8
The constraints on first-hand observation and investigation 10
In defense of Japan’s major dailies: detailed coverage
but not in English 15
What you see is not what you get 17
Seeing is believing 18
Research methodology 19
Objectives 19
1 Back to Basics? 22
Kishi’s legacy is Abe’s legacy 22
Deputy Prime Minister Taro Aso: Abe’s side-kick 25
Birds of a feather 26
Abe’s political agenda 27
Japan Inc.: in the beginning 30
Collaboration between the bureaucracy and big business:
the beginning of a beautiful relationship (ministerial
guidance and protectionism) 33
Expansion and outward investment in East Asia: the
beginning of an antagonistic relationship 34
A recession spurs corporate diversification into heavy
industries 36
The alliance between MCI and big business: the conception
of post-war industrial policy 37
vii
viii Contents
Fascism comes to the fore 39
The Second World War intensifies ministerial powers 40
The ‘main bank’ system 41
Reverse reforms: maintaining Japan Inc. 41
‘The 1955 system’: Kishi, the renegade power-broker 44
Kishi the money-man 46
2 The Sign of the Times: Japan Inc. (1955–1974) 48
Money doesn’t grow on trees 49
Fiscal Investment Loan Program 50
The hollowing out of rural Japan: building frenzy 52
Nixon’s shock: the end of the Gold Standard and fixed
exchange rates 52
Big shock: 1973 oil embargo shakes up MITI’s industrial
policies (but not for long) 53
Temporary hysteria 54
MITI at the controls 54
Nuclear power: the pillar of Japan’s energy supply 55
MITI’s industrial policies restructured but not MITI’s
mind-set 56
MITI’s Fujitsu vs. IBM: David and Goliath 57
US–Japan relations: unwilling bedfellows 58
To market, to market 60
The struggle to take control of distribution 63
Hello Japan Inc.! 63
3 The Route to Heaven-on-Earth 65
Amakudari in IAIs and affiliated institutions: theme
and variation 68
Amakudari in IAIs: bid-rigging 70
Japanese dailies go after amakudari 72
Amakudari: a no-win situation? 75
4 Pork-Barrel Politics in the Prefectures: The Winners 77
Prime Minister Kakuei Tanaka: Mr. Japan Inc. and the art
of pork-barrel patronage 77
Noboru Takeshita: a Tanaka protégé 81
Big bucks for big business 82
The world’s biggest nuclear power plant: Tanaka’s treat 83
It’s not nice to fool Mother Nature 83
The most dangerous power plant in the world 84
Aomori Prefecture’s no. 1 industry: nuclear power 85
The utilities sweeten the pot for political parties 86
Contents ix
The price of pork-barrel patronage: the towns that can’t
say ‘no’ 87
Pork-barrel patronage: the beggars 91
5 The Japanese Economic Miracle: Japan Inc. on Center
Stage 95
MITI’s Large-Scale Retail Store Law protects Japan Inc. but
not Japanese consumers 95
Isao Nakauchi the renegade retailer 97
Nakauchi goes full-speed ahead 98
Kanebo Ltd.: the oldest listed company on the Tokyo
Stock Exchange 100
Kanebo’s unrelenting diversification 101
Japanese tourists proliferate: the buying spree 102
Japanese corporate culture: the secret ingredient? 104
The Matsushita effect 104
Kazuo Inamori: the Matsushita effect 106
The DPJ and the Matsushita effect 108
Thank you Plaza Accord? 108
Bubble, bubble: all you need is cash 110
6 The Roaring 80s: The Bicycle Economy Out of Control 112
Beer boom: signs of an over-heated economy and overkill 114
Confection madness: signs of an over-heated economy 115
Japan’s wine boom 115
Orange juice glut: too much of a good thing 117
Dazzle in Tokyo, the Big Apple and London Town: the
sky’s the limit 118
Aoki Corp. at the Algonquin and regional banks: more
bubble stories 118
Sushi anyone? 119
Pop goes the bubble: fallout 120
7 The Metamorphosis of Sanraku Inc. 123
Mr. Suzuki and Sanraku’s new corporate strategy 124
If Suzuki had been a fly on the wall 126
Mercian’s corporate culture: true to form 128
Getting to know you 132
Suzuki hits the ground running: catching up with Suntory 132
Peachy keen on OLs 133
The Beaujolais Nouveau debacle: Suzuki’s worst nightmare 134
Getting to know the third party in the party: non-tariff
barriers 137