1 Developmentalism, corruption,
Party (LDP) in 1955, true party competition had disappeared from Japan- ese politics. The LDP consistently won a majority in parliament, and the opposition camp was divided, first, between the Socialists and the Commu- nists. The fragmentation worsened with the split of the Democratic Social- ists from the Japan Socialist Party and the creation of the Clean Government Party. The LDP dominance in the political arena was sup- ported by an unlikely alliance of big businesses, small businesses, and farmers. The big businesses provided political funding, whereas small busi- nesses and farmers provided organized votes for the LDP. The bureau- cracy maintained policies, which favoured these groups, including active and tacit public endorsement of cartelization, protection from foreign imports, low-interest governmental loans, and lax labour protection. In their respective policy domains, bureaucrats created an increasing number of public and semi-public corporations to which policy implementation was delegated.2These public corporations also provided employment for the retiring bureaucrats.
The 1955 system, an iron triangle, was an unsustainable system, which burdened fiscal spending. The only viable check against the expansive tendency of the bureaucracy was the Ministry of Finance (MOF), espe- cially its Budget Bureau, which controlled the budgeting process. The LDP politicians were mostly tied up with narrow sector-based interests and were little interested in the overall fiscal well-being of the govern- ment. Nevertheless, rapid economic growth in the 1960s and ever-growing tax revenue made the budgeting process less contested and parliament became a ‘rubber stamp’ institution. Increasing political intervention in the budgeting process after the mid-1970s as a result of the slower eco- nomic growth resulted in the MOF giving up its chastity, the balanced- budget principle, and issuing an increasing volume of deficit bonds.3
Japan’s ‘1955 system’ ended in 1993 when a coalition of former opposi- tion parties, a new conservative party, and LDP defectors chose Morihiro Hosokawa of the Japan New Party (JNP) as prime minister. With the electoral reform, which abolished the medium-size district system for the House of Representative seats, a move towards a more effective multi- party system, or possibly even a two-party system, was expected. The tri- angular alliance of the LDP politicians, bureaucrats, and large businesses had ruled Japan for most of the post-war period. The end of the system was symbolized by the decision of Japan’s Federation of Economic Organization (Keidanren) to withhold all political donations to the LDP.4
Despite the symbolic significance of the electoral reform, two of the more important tasks of the political reform (broadly defined) were put off. Administrative reform became an important issue in the late 1960s due to Japan’s increasing budget deficit, but it was blocked and sabotaged by the bureaucrats. The politicians’ ability to enact reforms in order to reflect the changing needs of their mass constituents was thus limited.
Campaign financing and fund-raising activities by individual politicians 24 Yoichiro Sata
were redirected to the political parties, in order to increase party cohesion and transparency. However, loopholes remain.5
Many scholars have attempted to explain Japanese politics in the framework of pluralism or some derivation of it. To begin such a discus- sion, however, ‘pluralism’ has to be clearly defined. Those scholars com- monly focus too narrowly on organized interests, thereby confusing corporatism with pluralism. Of particular concern is the role of representa- tives in interest aggregation, since most democracies in the world are representative democracies. In many democracies today, the roles of elected representatives and non-elected bureaucrats are diffused. The Japanese case will be examined in relation to the hypothetical ‘Image III’
model of the politician–bureaucrat relationship proposed by Aberbach, Putnam, and Rockman.6
The first part of this chapter will review the so-called ‘1955 system’ of the triangular alliance. The second part will critically re-examine the politicians’
triumph known as the zokuphenomenon. The third part will assess the new leadership styles of Prime Ministers Nakasone (1982–86), Hosokawa (1993–94), Hashimoto (1996–98), and Koizumi (2001–present) in light of the normative representation model. Divergence of the Japanese political system from this model, and the implications of the current political change in relation to this normative model will be discussed in the conclusion.
The 1955 system
Post-war consensus
Japan’s dramatic post-war economic success caught the attention of foreign businessmen, scholars, consultants, and government officials.
Earlier political-economic analysis of this Japanese success story employed the famous stereotype of Japan as a consensus-oriented society. Beginning with the ‘Japan, Inc.’ theory of James Abbegglen, followed by Ezra Vogel’s Japan as Number One, the initial American response was a posit- ive evaluation of the cooperative relationship among Japanese businesses, government, and workers.7 Chalmers Johnson’s MITI and the Japanese Miracle focused on the role of the bureaucracy in this developmental process by describing the leadership role of the Ministry of International Trade and Industry (MITI).8
Johnson’s work indicated potential conflicts between Japanese busi- nesses and MITI, and MITI’s coercive leverage over the industries in such disputes. Nevertheless, the consensus paradigm long dominated American academic discussion due to the lack of studies on other ministries and cross-sectional studies. Rapid economic growth during the 1950s and 1960s also masked and postponed undercurrent conflicts by giving an increasing share of the growth to every party concerned in the form of government spending.9However, discrimination between narrowly organized interests Japan: developmentalism and corruption 25
and broader unorganized interests became apparent as the ‘catch-all’ strat- egy became unsustainable in a budget crisis.
Muramatsu and Krauss criticize Johnson for ignoring the role of politi- cians in forming the pro-economic growth consensus.10 Prime Minister Yoshida’s policies of close security dependence on the USA, emphasis on economic recovery, and neglect of the ideologically divisive issue of consti- tutional reform were carried on by his successors with some modifications, according to Muramatsu.11 Muramatsu and Krauss argue that Japanese politicians ‘helped to create the general framework of goals in the post- war Japanese state and bureaucrats’ role in the political economy’.12
In order to discuss the politician–bureaucrat relationship, Aberbach, Putnam, and Rockman provide a useful framework. They show a diffused nature of ‘policy-making’ and ‘policy implementation’ by suggesting four hypothetical models of politician–bureaucrat relations. ‘Image I’ assumes a clear division of labour between politicians, who make policies, and bureaucrats, who ‘merely implement them’. ‘Image II’ assumes some dif- fusion of the two roles, but still maintains a division between bureaucrats, who ‘bring facts and knowledge’ (expertise), and politicians, who bring
‘interests and values’ (political sensitivity). ‘Image III’ sees further dif- fusion of the two roles. The only distinction is that ‘whereas politicians articulate broad, diffuse interests of unorganized individuals, bureaucrats mediate narrow, focused interests of organized clienteles’. ‘Image IV’, the
‘Pure Hybrid’, is the complete deterioration of such distinction.13
Diffusion of government authority and private organizations is preval- ent in Japan. Interest groups and the bureaucracy have been major sources of candidates to the legislature, although professional (second-generation) politicians are increasing. Administrative agencies provide channels of bureaucratic representation to the interest groups through semi-public organizations attached to ministries and agencies (gaikaku dantai). Post- retirement recruitment of the bureaucrats into these gaikaku dantai, private corporations, or industrial organizations ensure these communica- tion channels.
Muramatsu and Krauss’ description of the politician–bureaucrat rela- tions in Japan resembles Image III. Despite their criticism, Muramatsu and Krauss are not so much in disagreement with Johnson. The general policy framework, for which Muramatsu and Krauss give credit to the Japanese politicians, did not contradict more specific bureaucratic goals.
Furthermore, the promoters of the general conservative policy line were politicians with bureaucratic backgrounds. It is hard to believe that the war-devastated Japanese people did not care about economic develop- ment. The Japanese people were divided on the security issue. However, politicians made only a minimum arrangement (security treaty with the USA) and have postponed the ideologically divisive constitutional amend- ment issue until today. Thus, the politicians’ contribution to forging the consensus was that they did not raise the constitutional reform issue.
26 Yoichiro Sata
It is pointless discussing whether it was bureaucrats or politicians who designed the grand strategy of security ties with the USA and rapid eco- nomic development. Given the international circumstances at the time, Japan did not seem to have any other realistic alternatives. Japanese politicians convinced voters of the ‘inevitability’ of the US–Japan security arrangement, and the economic development of the 1960s confirmed the
‘correctness’ of Japan’s pro-US diplomatic orientation.
Consensus ends, but realignment still postponed
By the mid-1960s, however, this economic development came to threaten its own foundation. The rapid urban migration due to the industrialization curtailed the LDP’s traditional support base: rural farmers and small retailers. Downplaying the ideological constitution issue kept the Socialists in check, but increasing urban problems (pollution, overcrowding, lack of social infrastructure, etc.) changed the dimension of conflicts.14Instead of the Socialists, whose radical worker origins bound them to ideological matters, the Buddhist-backed Clean Government Party (CGP or Komeito) and the Japan Communist Party exploited urban dissatisfaction.15
These opposition parties mainly advanced in local political arenas. The two largest parties (the ruling Liberal Democrats and the opposition Socialists) were, however, unsuccessful in turning these urban dissidents into supporters. The LDP still largely relied on the organized votes of farmers and small retailers, and large corporate donations. The Socialists could not expand their support base beyond their client labour unions.
Meanwhile, the advance of the Communist Party and the Clean Govern- ment Party in local elections demonstrated their successful appeal to the urban voters. Nevertheless, their success in national parliamentary elec- tions was limited, thanks to Japan’s electoral system. The advance of these parties was short-lived, and support for them first stabilized, and then declined.
Some analysts credited the LDP with the passage of a tough anti-pollu- tion law in the early 1970s.16 They also cited the slowly but steadily improving urban infrastructure and the recovery of the LDP support in the mid-1980s as proof of the LDP’s successful transformation into a catch-all party.17
However, these accounts need careful examination. Japan’s electoral system systematically favoured rural voters. Under the medium-sized dis- trict system, two to six members were selected for the lower house seats from each district by single ballot voting. On one hand, this system caused competition between two or more candidates from the ruling LDP in some large districts. That enhanced the tendency towards candidate-centred election campaigns, and contributed to the high amount of campaign spending. At the same time, the system slightly favoured the two largest parties (LDP and JSP) by rewarding them with more seats than they could Japan: developmentalism and corruption 27
win under a proportional representation system. More importantly, the delay in reapportionment during the rapid urban migration and the courts’
reluctance strictly to adhere to the ‘one person, one vote’ principle also helped these two parties.18 Thus, one could argue that had the Japanese electoral system been more equally representative, urban problems could have been addressed much earlier and in a more thorough manner. Stein- hoff believes that the rise of protest activities over environmental concerns was an indication of the LDP’s unresponsive posture and the lack of alternative party channels, which could translate the dissenting voices into parliament seats.19
Initially, the LDP could deal with the redistribution issues (welfare, social infrastructure, etc.) by simply spending more. The rapid economic growth of the 1960s brought in an ever-increasing amount of tax revenue every year without a tax rate hike. Thus, the LDP became a catch-all party.20 This positive-sum consensus ought to have collapsed due to the slowing down of the national economy caused by the 1973 oil shock.
However, despite the slower growth, the policy formed under the period of rapid economic growth was tightly institutionalized, and bureaucrats, politicians, and constituents had developed vested interests in the old system of increasing government spending.
Japan’s rapid economic growth also caused the problem of structural adjustment overseas, particularly in the USA. The American workers in displaced industries advocated protectionism, and Japan’s advance into higher-technology industries further contributed to the problem. The long tenure of the LDP and its increased dealings with both the bureaucracy and interest groups produced increased policy expertise among the senior LDP politicians.21Different sectors competed for their ‘fair shares’ of the limited budget increases as well as the ‘given increases’ (tozenzo) based on past achievement. Unable to prioritize budget items, the Ministry of Finance (MOF) and the LDP extensively relied on national deficit bonds, which were issued with artificially deflated interest rates, thus prolonging the ‘positive-sum game’ at the expense of the general taxpayers.22 While influential groups were awarded ‘large-scale allocations’, opposition inter- ests were co-opted with ‘side payments’.23
Zokupolitics under the budget crunch
By the end of the 1970s, however, it was obvious that Japan’s debt reliance had reached a dangerously high level (30 per cent of the annual budget was financed by deficit bonds). In the 1980s, the Nakasone administration placed zero-ceilings on most budget items in order to curtail the expendi- ture. It also tried to reduce the number of government agencies and semi- public corporations by abolishing or privatizing them. However, the high-growth, high-spending system had already become so rigid that bureaucratic resistance was intense. Bureaucrats, who wanted to defend 28 Yoichiro Sata
their turf, increasingly mobilized politicians with special policy expertise (zoku).
The increased policy expertise of the LDP zokupoliticians was cited as proof of the LDP’s dominance over the bureaucracy.24 However, this interpretation of the LDP and Japanese politics needs a more critical examination. As was the case in setting Japan’s basic policy framework of security ties with the USA and emphasis on economic development, the diffused nature of policy-making makes it extremely difficult to determine who is the dominant actor.25 Zoku politicians’ participation in decision- making was evident in the 1980s, but the extent of their influence needs further clarification.
Inoguchi and Iwai suggest two types of zokuinvolvement in decision- making. The first type, which they call the ‘watchdog type’ (banken-gata), entails the involvement of a small number of powerful politicians who defend the interests of specific industries and the ministry which has juris- diction over those industries. The second type, ‘hound dog’ (ryoken-gata), is the involvement of a large number of politicians for the purpose of pro- viding pork barrels to their district interests.26 The hound dog type is further divided into two sub-types: ‘leashed’ and ‘unleashed’. The former entails the existence of a centre of mobilization (usually senior banken politicians), while the latter entails a natural gathering of ‘mobs’.27
Inoguchi and Iwai’s ‘unleashed hound dog’ type matches the Image III of Aberbach, Putnam, and Rockman: ‘politicians articulate broad, diffuse interests of unorganized individuals, bureaucrats mediate narrow, focused interests of organized clienteles’.28 Politicians do not always support the bureaucrats’ interests; this is different from the ‘watchdog’ model. Politi- cians adjust ministerial interests in such a way that the aggregated whole roughly represents broader national interests.
Inoguchi and Iwai present three case studies of what they consider the
‘unleashed hound dog’ style of policy-making. The cases include the Com- merce and Industry and Postal zoku’s battle against MOF’s attempted tax- ation of office automation equipment, non-senior rice-district politicians’
battle against MOF and the Ministry of Agriculture’s (MAFF) attempted price cut in government purchases of rice, and a battle against MOF to ‘de- freeze’ the local bullet train development, which was indefinitely postponed under the budget cut of the 1980s.29 Nevertheless, politicians involved in these issues were given too much credit for their success because all these issues were largely inter-ministerial battles as well. In the case of taxation of office automation equipment, the electronics industry and MITI were siding with the Commerce and Industry zoku. The rice price battle was slightly different because MAFF and the farmers took different positions.30 However, the unleashed LDP politicians were still standing for the nar- rowly defined organized interest of the farmers’ union (Zenchu). The bullet train development also was a pet plan for the construction industry and real estate speculators (big contributors to the LDP).
Japan: developmentalism and corruption 29
The problem of the strong party/weak administration (toko-seitei) argu- ment is twofold. First, the administration is never a solid entity. Each min- istry’s interests in government spending, almost without an exception, face resistance from the MOF. Second, ministries requesting budget allocations gain the support of politicians by providing services to their districts and channelling contributions to them from contractors. Thus, the picture of confrontation between the politicians and ministries is often inaccurate.
With the exception of tax policy zoku, zoku’s role is to defend the client ministry and the industry’s interests in budget battles against MOF, other ministries, and other zoku. The Japanese government’s inability to cut the budget deficit indicates a relative decline in the power of the MOF vis-à- visthe LDP. Qualitative observation of Prime Minister Tanaka’s penetra- tion of the MOF bureaucracy supports this thesis as well.31Nevertheless, in regard to other ministries, evidence of LDP dominance is mostly lacking. Even the MOF seemed to be regaining its strength as the long- wished tax reform finally succeeded in 1988, and the consumption tax rate was raised in 1995.
Thus, Inoguchi and Iwai’s examples do not support Aberbach et al.’s Image III. Japanese politicians may sometimes overcome bureaucratic opposition, backed by strong organized interest groups. Nevertheless, in many cases, the politicians’ effectiveness can be attributed to the division within the bureaucracy and their ability to mediate the bureaucratic dis- putes. Thus, these examples do not support the thesis that the LDP politi- cians ‘articulate broad, diffuse interests of unorganized individuals’.
Muramatsu and Krauss are aware of the different nature of LDP influ- ence:
All types of interests seek help from both political parties and the bureaucracy; but the more institutionalized interest groups – eco- nomic, agricultural, and educational organizations – tend to go more to the bureaucracy and the less institutionalized interest groups with newer policies to promote prefer a political party. In other words, one of the functions of the party system is to promote emerging interests.32 Although Muramatsu and Krauss seem to overestimate the LDP’s response to the emerging ‘quality of life interests’ (anti-pollution move- ments, social infrastructure lobbies, consumers, welfare interests, etc.), their distinction between ‘elites’ and ‘other’ pluralist elements is import- ant.33Muramatsu and Krauss also note the increasing specialization of the zokupoliticians.34This indicates that the LDP’s increasing influence is not based on its ability to aggregate differing interests, but on its close working ties with the bureaucracy in most cases.
With the predominance of the bureaucracy divided along the jurisdic- tional lines of the immediate post-war period, plus the politicians’ role closely confined to these lines, Japan’s political system suffers from 30 Yoichiro Sata