Japan: The Problems of Success

Everyone I met in Japan last fall, during my tenth long trip to that country in 18 years, talked economics and only economics. Even the theoretical mathematician and the elderly abbot of the famous Zen temple were obsessed with the dollar/yen exchange rate, the export surplus, and the cost of petroleum. Japan is indeed undergoing traumatic economic changes. Yet the basic issues facing Japan are not economic. They are changes in social structure and social values. Social policies that have served Japan superbly well for a century are rapidly becoming untenable. These policies were designed to change Japan from a poor, and poorly educated, rural society with low life expectancies into a wealthy, highly educated, industrial society with high life expectancies. Their very success is rendering them obsolete and is turning them into dangers to Japan's social cohesion and her ability to compete economically.

This is true with respect to the Japanese seniority-wage system, under which incomes of all three kinds of employees - manual workers, clerks, and managers and professionals - are determined solely, or at least primarily, by length of service, with an employee at the entrance level getting about one-third of what the same employee, regardless of his job or title, will receive as income after 25 years of service, that is, in his forties. But equally obsolescent is Japan's traditional linkage of education to career opportunities, under which people who finish their formal schooling with "middle school," that is, at age 15, are slotted for a lifetime as manual workers in manufacturing, farming, or service work; with high school graduates becoming clerks or technicians for their entire working life; and with university graduates becoming managers and professionals - and with practically no crossover from one group into the other. The employee's lifetime commitment to one employer and one place of employment - often, and misleadingly, called "lifetime employment" - may equally turn into a serious threat to social harmony, rather than remain its strongest pillar. And equally untenable by now is the policy, as old as "modern Japan," of preventing social dislocation by using economic measures to shield the social order of the "old Japan" while building a radically different "new Japan."

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