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December 2001

Towards Japan's Revival Through Collaboration

Shumpei KUMON (Executive Director and Professor, GLOCOM)

English translation of the keynote speech by Professor Kumon at GLOCOM's 10th anniversary forum on November 19, 2001

Nature of Japan's Crisis

Dr. Shumpei KumonJapan is clearly in a crisis. Not just the economy, but the system, whose foundation was built in the 1940s after the war, is on the verge of collapsing. In this system, the second industrial revolution and subsequent modernization process since the Meiji period are maturing and coming to an end, while the third industrial revolution is beginning to enter its break-through phase. The problem is that Japan's system of manufacturing production, or export-oriented, assembly-type industrial system, is facing a crisis as a result of its tremendous success in the post-war period.

On the other hand, the United States had already entered the maturing phase of the second industrial revolution in the latter half of the 20th century, and started to offer high-quality services, not machines, to the public. For example, legal services provided by lawyers, and various services by the higher education system, the health care system, and especially the financial and securities industry as well as the airport and seaport system are all excellent and innovative. Japan has not fully realized the importance of such developments. Actually, Japan lagged behind the U.S. about 50 years in entering the break-through phase of the second industrial revolution, and now must finish its "homework" to offer high-quality services to the public.

At the same time, Japan has to face the third industrial revolution. In the global context, however, the third industrial revolution already went through the initial phase of emergence in the late 20th century with the growth of the computer industry as the leading sector of the economy, and is now entering the break-through phase in the early 21st century giving rise to a new leading industry, while the computer industry itself is maturing through networking. The central question is what will be the leading industry overtaking the computer industry in the break-through phase of the third industrial revolution. Most probably, it will not be the telecommunications industry, which is suffering a severe slump now. Then what are candidates for new leading industries?

New Leading Industries

In order to answer that question I think that we have to pay attention to a process that is simultaneously taking place parallel with the industrial revolution. That is the information revolution that goes beyond industrialization, giving increasing importance to people's intellectual power or informational power, rather than economic power. Furthermore, it is a process of intellectual empowerment to be led by various collaborative groups, rather than by individuals. It is inevitable for the new industrial revolution to develop under the strong influence of this new social revolution. If that is the case, then the next-generation leading industries, in my opinion, should be some new services to support communication and collaboration activities, or "wisdom games," by various groups.

These might be called, "collaborative industries," including for example a "learning industry" to support interactive or group learning rather than the traditional education industry, and a kind of "health care industry" to support group-oriented healing activities, rather than the traditional treatment of patients by professionals. Some of those industries could be financed through the creation of their own "money" to circulate among group members, rather than relying on the traditional means of financing through banks or securities markets. In other words, they could be supported by "community networking" and "community money."

On the global level, there will be some industries that support worldwide movements to take advantage of digital opportunities and promote the intellectual empowerment of people all over the world. Those activities can be carried out not by governments, enterprises, or citizens by themselves, but only through collaboration among those three groups, especially, local governments, SOHO businesses, and netizens.

Three Clues for Revival

Dr. Shumpei KumonFrom this viewpoint, we can think of three clues for Japan's revival. First, we need to construct what may be called "CANs" (community area networks) everywhere in the nation as the fundamental info-communications infrastructure for local communities. This should be done not by the traditional type of public investment, but by "collaborative" investment, as suggested above. CANs will take the form of an autonomous, distributed, and collaborative network with all-optic wire and wireless systems, where the network itself is "dumb," but can be utilized by "smart" people who freely define services to be provided on the network. Those people might well work in communities with iCCs (Internet community centers), where they can share not only computer systems but also various services for learning and business, as well as NPO, start-up activities. This type of CAN will probably be based on all-optic LAN-type networks to be connected with each other, and will become a next-generation "utility" which might be regarded not as a public utility but rather as a group utility.

The second clue for Japan's revival can be obtained by studying "comparative institutional analysis," which has been developed by a group of economists including Stanford University Professor Masahiko Aoki. In this analysis, it is emphasized that there exist a variety of institutions and there is no single institution dominating the world as a global standard, and that institutions are not fixed but can be evolving over time, as have been proved by modern Japan. While Japan tried to introduce American-style management after the war, the result has been Japanese-style management, which is quite different from the American model. A similar evolutionary process must be taking place in the next phase of the information revolution. Therefore, we need to avoid "false alternatives" such as openness or closedness, and globalization or localization (anti-globalization). There might be third or fourth alternatives, and we had better provide open places for experiments to facilitate institutional evolution as the main point of designing structural reform.

The third clue may be found in trying to build a new framework for Japan's international contributions in place of the traditional framework for ODA. It has to go beyond the "basic human needs" approach or the "PKO-PKF" approach. The main purpose here is to increase intellectual empowerment on the global level, and for that purpose we need to build a global framework for collaboration. I have realized that this kind of approach seems meaningful and promising, as I have been acting as the representative of Japan's NPOs on the DOT FORCE project that was initiated by the G7 meetings in 2000.

Finally, I wish to emphasize that a new order for information society with vitality and enjoyment, which will revitalize Japan, can be brought about by collaboration among governments, enterprises and citizens, not by each of those groups by themselves. Only through such collaboration locally as well as globally, can we avoid extreme ideas of "utopia" or "distopia" regarding modern society, and lead ourselves to the matured stage of modern civilization.

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