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June 19, 2003

The New Century Demands Japan's "Spirit of Capitalism"

Takenori INOKI (Professor, International Research Center for Japanese Studies)

What sets the course for the future of humankind is neither natural resources nor technology. It is the state of mind. Good sense of ethics capable of resolving difficulties can only be established on intellect and intelligence. Achieving it requires high-quality education currently lacking in Japan.

It is still only two and a half years into the 21st century. It is not easy to predict the direction of Japan's and the world economy, but it may not be unproductive to think about some of the effects that may materialize out of potential issues present in human society.

The future is not provided to us as a fatalistic fact. Since people's thoughts and behaviors differ depending on the level of awareness of potential problems, a bold expression such as "change the future" would not necessarily be considered too arrogant. Reinhold Niebuhr, an American theologian, left us the famous phrase "God, give us grace to accept with serenity the things that cannot be changed, courage to change the things which should be changed and the wisdom to distinguish the one from the other."

What should guide the future, then, is neither natural resources nor technology, but something psychological, such as ethics and morals. The external environment for human behavior could be divided into 'hard' factors composed of physical matter and 'soft' factors including mental climate. As it is not possible to examine every element here I would like to discuss this psychological framework, which I believe to be of significant importance.

Active spirit advances civilization

Economy, politics, and culture are all galvanized by individuals. Where there is will, things change and evolve. Civilization has been developed by the will of people and the importance of this active spirit cannot be overemphasized. Yukichi Fukuzawa, a great Japanese scholar of the last century, pointed this out in a number of his writings, including the famous book, "An Encouragement of Learning." The fundamental principle has not changed since.

Progress of civilization depends on free speech and free economic activity. Fukuzawa, in responding to the question of what would be the basis of progress, replied: "providing efficient transportation for people to move around." It means Fukuzawa believed that the power to progress would be formulated through direct interactions among people, and between matter and people.

Fukuzawa thus denounced those who tried to avoid the mundanity of real daily life and sought solitude. According to his view, a person not accepting others would not be accepted by others, which eventually leads to animosity. To avoid such a consequence Fukuzawa stressed the need for people to be competitive in a fair manner so as to be responsible for the outcome of one's own actions.

In recent years, however, the necessity for people to communicate face-to-face has decreased, especially in the fields of economy and technology. Progress of telecommunication technology has not only brought convenience and benefits for economic activities; it has reduced opportunities for people to communicate directly in person, which may have reduced active spirit among the society.

This "active spirit", or "positive will", is not something which is either there or not. It exists in various forms depending on the type of society. The styles of active spirit differ depending on where in the organization the people with such spirit are located. Distribution and structure of these people within a society must therefore not be neglected.

Factors to diminish "active spirit"

It must be recognized that there are a number of factors that could diminish this active spirit. Rich countries that used to be able to carry those suffering from poverty have lost much of their strength during the past quarter of a century, and Japan seems to be among the hardest hit.

For example, according to the National Survey on Lifestyle Preferences conducted by the Cabinet Office, people's will power has contracted significantly in the past 25 years. People's satisfaction level regarding their daily lives has fallen in accordance with the regression of the economy. Looking at the survey closely, it could be noted that among the list of people's concerns is "healthcare," followed by "income and consumer life," while "labor conditions" is lower in the list and "family" is dropping.

This means that Japanese people have become sufficiently affluent and that their interest has shifted from working harder to earn more to finding better ways to spend their leisure time. The trend during the past 25 years is obvious: active spirit has declined.

Another factor that diminishes active spirit is increased efficiency in handling information, both gathering and dissemination. A generation ago it was difficult to assess the abilities and the level of accomplishment probable for a person in respect to the endeavor and devotion the person is willing to expend. As there was insufficient data concerning competition, ambitious young people could challenge just about anything with high spirit.

Today, however, information on competition in certain areas is quickly and accurately accessible, making it possible to make assumptions on one's possibilities, resulting in young people becoming less adventurous. Better reproduction technology has made it possible to enjoy the best in the world of knowledge and skill levels inexpensively. Videos of best tennis players can be obtained easily for imagery rehearsals. CD's are readily available to simply listen to, or analyze, best performances of classical music. Knowing the levels of top performers this way before beginning a challenge enables young people to assess their talent objectively, but then it could discourage them from pursuit. It has become possible to predict what a life might be like 30 to 40 years down the line after going through fierce competition in school entrance exams and employment by a prestigious enterprise.

Availability of vast amounts of information and advanced reproduction technology has thus in a way created a very arduous and harsh environment for young people preparing to acquire skill and knowledge. It would have been easier to be ignorant. Knowing what is likely to lie ahead with little uncertainty has made it difficult to make a step into the future. Knowledge and information in this manner curbs people's activities. Progress of information technology could have a debilitating effect on the minds of those planning to challenge the uncharted future.

Economic disparity caused by reproduction technology

There is another phenomenon emerging as a consequence of advanced reproduction technology: inequality of income distribution seen typically in the fields of arts, sports, and intellectual industry. For example, musicians in the 18th and 19th century, no matter how talented, had to endure low income and living standards. But In the 20th century, income differentials between thriving and starving artists have tremendously widened despite only slight, if any, difference in their artistic capabilities.

As the late Sherwin Rosen of the University of Chicago has pointed out, one of the main causes for such differential is the development of reproduction technology. This is easy to understand by contemplating the difference between musicians who have the privilege of being recorded and distributed in the market and those who do not. Inequity of distribution in this form always arouses jealousy and resentment. That said, discontent does not increase in parallel with inequity. There are few who might be jealous of a wealthy person such as Bill Gates. Most would rather consider him a person who fulfilled his dreams someone in a different world. The feeling is somewhat akin to a certain romantic emotion where fans adore superstars in movies and sports.

On the other hand, jealousy among those located in similar circumstances tends to become intense, especially when success can only be won by fierce competition. David Hume, a Scottish philosopher, provides a simple example. A soldier would not be jealous of generals as much as he would be of sergeants and lieutenants, and established writers would not experience resentment from hack writers as much as from closer colleagues. This is because a large inequality or disparity cuts off the sense of relationship between them, making it difficult, or less meaningful, to make comparisons.

As society aims for more "equal-opportunity" there will be more people at the same start line, making it necessary for more fierce competition to choose a winner. And when there is only small difference in talent among the competitors that lead to large disparity of rewards at the end, discontent and jealousy intensify. With regard to the examples above, Bill Gates would be a general who would not be a target of resentment, but there would be jealousy among sergeants and lieutenants.

If equal opportunity tends to cause jealousy, then society needs a device to cool it down. In this sense, equal opportunity is not sufficient as an ideal realized. From a different perspective, in addition to this relative inequality among participants there is poverty, which by itself arouses antisocial sentiment. This tendency is not unique to people living in today's industrialized world. In ancient Greece, Aristotle in his "Politics" writes, "poverty is the parent of revolution and crime." In other words, a state of economy could guide people to either behave well or force them into malicious doings.

Establishment of moral and intelligence

In a democratic society each person is challenged for the ability to pass judgment on every political issue. Such issues include those that are new or test one's ethics, such as energy, environment, and life sciences. Each is complicated enough to require high levels of fundamental knowledge to make an unbiased and appropriate decision.

It would be only a fiction to assume ordinary citizens participating in discussions on public affairs or politicians making final decisions to have sufficient knowledge to tackle every issue on the table. There is also a limit for media and experts to supplement the gap. If understanding of an issue is insufficient, a decision based upon it becomes questionable at that point, not reaching the level worthy of scrutiny from an ethical point of view.

For example, exact data and thorough discussion based on viable theories is necessary in assessing the relationship between emissions of CO2 and global warming, and how critical a level the warming has reached. A general sense of possible crisis is important information for the general public in a democratic society. It is all right if people can make policy choices without prejudice based on undeniable data and established theory, and upon understanding and analyzing what is being presented. But if a choice is to be made based on the words of a few with their own "sense of crises", the decision would then become inappropriate and the public would be degraded to a target of information manipulation.

What is essential for a democratic society in which people can make ethical choices is a system to provide sufficient knowledge and information. In other words, intelligence and information are required in order to establish an ethical base to resolve a difficult issue. We can only believe what mass media reports as to the seriousness of an accident at a nuclear power plant. What was the danger involved with mad-cow disease and what was wrong about the government's handling of the issue? How much knowledge and information are we provided to correctly answer these questions?

Unfortunately, Japan's education system lacks the ability to teach new science and technology. Thus, it is difficult to reach an agreement based on thorough understanding on issues such as requiring brand new technologies or whether or not to proceed with mega-projects. Agreements are often reached under influence of media and activists as a result of low level of scientific and technological literacy in general.

Issues such as depletion of natural resources and global warming are projections based on limited amounts of data that can serve the purpose of warning of possible threats in the future. And these warnings are undoubtedly useful in inducing self-examination of our daily lives.

Nevertheless, if a warning is put forward too strongly it turns to a lecture of eschatology. There is a difference between possibility and probability. Anything can happen in this world either by accident or by design. But the relevance of an issue lies in its probability. It is important to differentiate possibility and probability through data analysis and common sense.

Catastrophe needs to be avoided. But the cost to prevent it completely would in most cases be prohibitively huge. It is impossible to make every building in Japan capable to withstand the strongest earthquake imaginable. Another consideration is that perfect crisis management tends to conflict with fundamental rights of people. A crime free society may be ideal, and it may even be possible by immensely enhanced police force. History, however, shows that this type of state would not be compatible with freedom of people. If a choice must be made between a state where ethics is a concern and a state where there is no room to think of ethics, the former would be less bad. Improving intelligence levels to seek a better society despite being beleaguered by ethical issues is the approach required as the basis of "the spirit of capitalism" in the new century.

(The original Japanese article appeared in the June 17, 2003 issue of Weekly Economist)

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