The Knowledge Value Revolution and Internet Fair 2001 Japan

Speech at OECD Forum 2000

27 June 2000

Taichi Sakaiya, Minister of State for Economic Planning

and for Internet Fair 2001 Japan


1.The Knowledge Value Revolution Incited by IT

As we stand at the advent of the 21st century, human beings face a revolution of historical proportions. This revolution has been created by IT, the widespread diffusion of information technology. In North America and some other Western countries, nations have already entered the new era of what I first termed the "knowledge value" society in a book I wrote in 1985. I defined that term as "a society where the value of knowledge is the primary source of economic growth and corporate profits." In the not too distant future, this type of society will also become established in the other Western countries and several Asian nations. In particular, Japan presently finds itself in the midst of an explosive advance of the knowledge value revolution.

2.The End of Modern Industrialized Society

The industrial revolution, which began in England in the late 18th century, systematically utilized large-scale machines to replace workers with machinery and other production resources, and gave birth to the modern industrialized society characterized by the mass production of standardized goods. During modern industrialized history, human beings have witnessed several dramatic technological innovations, including the development of electric machinery and the internal combustion engine at the end of the 19th century and the spread of the chemical industry during the 1920s; these developments have brought about important economic growth and changes in lifestyles. These innovations were all oriented toward making things larger, faster, and in greater volume, and they further advanced the development of a modern industrialized society characterized by the mass production of standard goods.

3.Reversal in the 1980s

The two oil shocks of the 1970s and the emergence of diverse environmental problems changed the course of human civilization, as human beings came to recognize the finite nature of natural resources and to limit their consumption. We have a gentle wisdom: the ethic that it is correct to conserve items that are in short supply, and the aesthetic that it is fine to enjoy items that are available in abundance.

As a result of this new orientation, from the 1980s the direction of technological progress shifted from making things larger, faster, and in greater volume toward creating greater diversity, conserving resources, and emphasizing softnomization. In fact, the scale of tankers and passenger planes and the scale of oil refineries and steel blast furnaces have not increased since the 1980s. Contrary to the widespread prediction of the emergence of massive, omnipotent computers, what has actually come to pass is the miniaturization and dispersal of computing power, that is, the widespread diffusion of the personal computer. In the end, software that can regulate equipment, materials, and organizations has become far more important than massive hardware.

4.Distinction Between Control Technologies and IT

During the 1980s, the technological progress of human beings set off in a new direction. Control technologies were greatly advanced by the spread of the personal computer, facilitating the production and distribution of diverse goods at a comparatively low cost. The merits of standardized mass-production declined, and businesses now provide diverse services to match diversified demand. Today, financial products are traded instantaneously, complex calculation and transaction methods are used, and the trading of futures and derivatives has become commonplace. With the development of the "time industry" that essentially processes our leisure time for our enjoyment, businesses that provide people with astonishing new experiences are growing at a rapid pace. Overall, the knowledge value revolution was launched by computer control technologies.

Nevertheless, these developments were really just a prelude. From the 1990s, information technology spread at a phenomenal pace in the U.S., the U.K., and the nations of northern Europe, leading to a still more important transformation. While information technologies use computers as important tools, their new structure is entirely different from manufacturing and distribution control technology. If control technologies comprise "software" to regulate equipment and materials, then information technology has come to comprise a type of "human-ware" that links people together.

5.Information Structure: A Solid Cube

The structure of information in today's industrialized society may be described as comprising two parallel plates: the plate of heaven and the plate of earth. The heavenly plate is best represented by mass media such as terrestrial television broadcasting, whereby uniform information can be transmitted over a wide area, like rain falling down from the sky. In contrast, the earthly plate is best represented by personal communications such as the telephone, whereby individuals who know each other's telephone numbers can communicate on a one-to-one basis. For many years, there was a vast empty space in between those two plates. While the dramatic growth of mobile telephones has provided the convenience of communications regardless of time or location, mobile communications still essentially lie within the realm of the earthly plate: it still takes place on a one-to-one basis.

The IT revolution is now filling in the great divide between the plates of heaven and earth. In addition to terrestrial broadcast stations that transmit information to 10 million people at once, there are now broadcast satellites that reach one million people, communications satellites that reach 100,000, and cable television outlets that reach 10,000. The development of these media has provided information consumers with a greater variety of choices, so many that it is now possible to request the production of new television programs by emphasizing one's own preferences.

However, the truly decisive development is the spread of the Internet. With the Internet, after about a month's practice and at a relatively low cost for many individuals, most everyone can now gain access to a massive volume of information and also transmit information to a vast number of unspecified persons. Today, we can easily identify the one person out of every thousand who shares our interests, and was formerly buried among the masses. It is no longer impossible to locate the one out of every million people who wants to buy special goods that we want to sell. The vast gap between the plates of heaven and earth is being filled, and the structure of our information environment is becoming a solid cube. Broadcasting and telecommunications are being technologically and functionally fused together into a perfect union.

6.Japan's Distress During the 1990s

Following the Meiji Restoration of 1868, the Japanese nation devoted all its energies to becoming an industrialized society based on the mass production of standardized goods.

In fact, Japan's industrial and economic policies went beyond efforts to standardize production facilities and increase the scale of production to also encompass the nation's schools. The educational system was built up to foster highly patient and cooperative people with minimal originality and creativity, perfectly suited for working in standardized mass-production industries. The media and other information sources were centralized in Tokyo, and products manufactured to the same standards spread throughout the nation under the dispatch of identical information.

As a result, by the 1980s Japan had achieved the most complete modern industrialized society based on the mass production of standardized goods in the entire history of human beings. The nation acquired superior production capabilities and unprecedented competitiveness in mass-production industries such as automobiles and electric appliances.

As a result of this prowess, however, the knowledge value revolution in Japan was delayed. This was because the nation had meticulously developed a government administrative organization, industrial structure, financial system, employment practices, educational system, and information environment that were appropriate for the standardized mass-production society. The stagnation of the Japanese economy and the confusion in Japanese society during the 1990s were simply the suffering required to reform the nation's outdated social systems, and the grave recession from the latter half of 1997 through 1998 became the opportunity for launching major reforms.

7.The Rapid Advance of the Information Revolution in Japan.

The administration led by the late Prime Minister Keizo Obuchi, which took office in July 1998, resolutely implemented numerous dramatic reforms including restructuring the government administrative structure, reforming the financial system, changing the government's policy for the support of small and medium-sized enterprises, and bringing greater mobility to the labor market.

Meanwhile, the Obuchi Administration advocated the fostering of information industries, the formation of a cyclical society, and the response to the aging of society as its three key policy areas for building a foundation for new growth, laying special emphasis on the development of information industries. The present administration led by Prime Minister Yoshiro Mori has retained this position and is now further strengthening this fundamental policy direction.

The Japanese information industry is presently expanding at a breathtaking pace. The number of mobile telephones has already surpassed 50 million units, and the spread of broadcast satellite and communications satellite equipment has been outstanding. Some 27 million Japanese, more than one out of every four persons, are now connected to the Internet. The government is reexamining information-related laws and regulations, and has adopted the policy of promoting price reductions and the integration of broadcasting and telecommunications.

8.The Growth in Mobile Equipment and Measures to Address the Digital Divide

In Japan, the growth in mobile equipment has been especially remarkable. Various types of large-screen mobile terminals providing Internet access are already on the market, and the number of such terminals is projected to surpass 10 million within this year. Moreover, a great many easy-to-operate units that provide simple Internet access are being developed for the elderly and other individuals who have difficulties in learning how to use new devices. Some of these units are on display at the site of Internet Fair 2001 Japan in the Knowledge Fair, and I encourage you to take a look at them.

9.Internet Fair 2001 Japan

If information technology has truly developed into a type of "human-ware" that links people together, then the most important issues will be to enhance human convenience and the creation of content to make life more enjoyable.

To these ends, the government of Japan will be holding the "Internet Fair 2001 Japan" on-line for one year from the end of 2000 through the end of 2001. All of Japan's prefectures will be participating in this Internet Fair, and several hundred corporations and non-profit organizations are also expected to take part. The Fair will likely feature virtual events on diverse themes, and I think that most of the key areas will also be translated into some languages, notably English. The government of Japan hopes that foreign public organizations, corporations, and non-profit organizations will also join the Fair. The exhibitors will be permitted to present advertising and to sell goods. We expect that this Internet Fair will promote the creation of content on the Internet, enhance the convenience and enjoyment of the Internet lifestyle, and open up the path to broader participation in a society of new human relations based on shared interests.

In the 19th century, human beings created fantastic international events, including the World Fairs and the Olympic Games, and today we all benefit from the legacy of their efforts. Similarly, we who were born during the 20th century should take advantage of the new information technologies to create some new cultural framework that we may pass down to future generations. The government of Japan intends to publicly disclose all of the know-how and experiences we accumulate in the process of holding the Internet Fair, to share them with the rest of human beings.