San José State University|
Department of Economics
& Tornado Alley
During the 1970's and 1980's there was a persistant fear that Japan had developed a superior and invincible economic system which combined the private enterprise with government guidance. The collapse of the bubble economy around 1990 calmed those fears at least temporarily.
The system of Japan Inc. has its roots far back in Japanese history but it was the year 1960 which led to their implementation. There were three traumatic events which occurred in 1960 and raised fears that Japanese society might be disintegrating. Those events were:
Jpanese Prime Minister Kishi had visited Washington D.C. and given his approval to the proposed treaty. He made an arrangement with U.S. President Dwight Eisenhower for Eisenhower to make a visit to Japan after the treaty was ratified by the Diet (legislature). The Liberal-Democratic Party under the leadership of Kishi had the votes in the Diet to ratify the treaty so members of the Socialist Party and other leftists in the Diet decided to block passage by barricading the Speaker of the House of Representatives in his office and thus preventing him from calling the session to order to vote on the ratification. Kishi called in the police to remove the blockading legislators. When enough room was cleared the Speaker was picked up physically and carried to the podium where he immediately called for a vote on the treaty. Since the leftist members of the legislature were not present the ratification passed easily.
For some strange reason the leftists felt the procedure for the ratification had been unfair. (The blockading of the Speaker in his office was carried out because it was clear the measure would pass.) Public demonstrations were organized which turned into riots in which public property was burned. In the riots one demonstrator was killed. When James Hagerty, the advance man for Eisenhower's visit, came to Japan he was blockaded in his car and demonstrators beat upon his vehicle. Hagerty had to be rescued from the demonstrators. President Eisenhower cancelled his proposed visit to Japan. It was a public relations disaster for Kishi who resigned his prime ministership in disgrace. He was replace by Ikeda who subsequently emphasized economic goals including that of doubling the personal income of the Japanese people.
There appeared to be the potential for a national catastrophe at Miike so the government prevailed upon the miners' union and Mitsui to submit the strike issue to binding arbitration. This meant that both parties agreed to accept whatever a third party decided concerning the issue. The arbitrators accepted the company's arguement that it needed to lay off coal miners at Miike. The miners' union accepted the judgement and the miners went back to work.
The Miike strike raised the fear among Japanese companies that the issue of job security could lead to major disruptions in their operations. Voluntarily the large companies accepted the principle of life time employment for their workers. This led to harmonious labor-management relations in Japan thereafter. However only about 30 percent of the Japanese workers actually had lifetime employment. The rest worked for small companies or were employed in family businesses where life time employment simply could not be guaranteed.
(To be continued.)
HOME PAGE OF Thayer Watkins