Josei ITOH
Vice Chairman, Keidanren
History teaches us that the transitions that occur in each century necessitate a major turnabout in society. The changes that will occur in the 21st century are no exception. Since the end of the Cold War, the world has been faced with the need to rethink capitalism. Now, some fifty years after the end of World War II, we find ourselves in a major period of transition. We need to go beyond the economic and social systems that have supported the growth achieved in the past. Families are having fewer children and society is aging. Thus, it is time for Japan, its companies and its people to re-examine themselves.
Japan's prosperity, seen as a gloriously successful example of capitalism with socialist elements, was once the focus of international attention. Yet, as the rate of economic growth slowed, the nation's image began to lose its former splendor. The inflexibility and inefficiency of the bloated administrative and fiscal sectors of the government and the overburden of regulations are sapping the vitality of society and are arousing a sense of uncertainty among the citizens regarding a solution. In order to restore vitality and earn back the trust of the people, it is essential for the political leadership to take the initiative in promoting a radical reassessment of the role of government and to accelerate the process of structural reform with the aim of creating a small and streamlined government.
A firm commitment is also needed by Japanese corporations to undertake internal reforms. With the globalization of the economy, management practices that place the priority solely on the expansion of one's own company are no longer in step with the times. Companies must now earn the trust of their stockholders while creating new business operations, increasing earnings by cutting costs and other means and enhancing ROE.
At the same time, it is also imperative for firms to achieve harmony with society and be accepted by the community as good corporate citizens. To do so, they must maintain a spirit of fairness and adhere to accepted standards of corporate ethics.
Also required is a revolution in the perceptions of the people. In the background of the postwar economic development over the past fifty years, Japanese society itself has been characterized by cooperation rather than individualism, by dependence rather than independence. As we move ahead, though, striving for the realization of an economy based on self-reliance, it will be necessary for us to break out of the old mold. We must ground our conduct in the principle of self-responsibility. We must express our individuality and creativity and stand on our own two feet.
Though advocating reform is not difficult, it is not necessarily easy to carry through. The time has come, though, for our nation to establish a long-range vision that will make Japan a vigorous, albeit an aging, society in the 21st century. We are confident that, by striving to create a new nation characterized by strength of will and courage, we will be able to give birth to another Japanese "miracle" in the 21st century, just as we did when we rebuilt the country after World War II.
Fortunately, we now find ourselves in a period in which both the baby boomers and their children are active in Japanese society. Today we still have time to implement reforms; tomorrow, though, will be too late.