Considerations for the Japanese Socioeconomy in the 21st CenturyJoint by Fundamental Concept Committee and Planning Committee of the Ecomonic Council

Since January of this year, the Economic Council has been studying the "Japanese Socioeconomy in the 21st Century and Policies for Economic Rebirth" as an alternative to its current economic plan. Before considering specific details, however, the Council concluded that it was necessary to demonstrate boldly the direction of such basic thinking and obtain broad view of the opinions of citizens. Based on this premise, this paper attempts to provide the ingredients that will fuel lively debate among citizens about the new era.

As a next step, the Council will fully consider the opinions from all members of the society about this paper and will use those opinions as the basis for more detailed and in-depth study.

1. Domestic and International Change in Long Term

(1) Trends toward the new era

We are at a major crossroads, both in Japan and overseas. The hangover of Japan's successful experience in achieving high growth has maintained the inertia of traditional systems, causing major misalignment between trends and current systems. In the 1990s, the nation has been facing with long-term economic stagnation, triggering anxiety among people.

Considerable progress in this new stage of history will become possible if we can confront the trends of the new era, change our concepts and modify our socioeconomic system.

I. Post the era of "mass production of standardized goods"

Having successfully played catch-up with major developed countries and having been reached matured socioeconomic stage, it is difficult for society to develop further under this current system, which is based on mass production of standardized goods. There are two features of the new era, as described below.

(a) Shift toward the era of diverse intelligence

  • (i) Today, in the time of considerable material wealth, people are expressing strong desire for personalization and diversification. Owing to new technologies, diversity of goods and services has also reached new heights. In the future, economic value will be generated as people create and utilize new knowledge and intelligence, derived from such areas as information handling, programming and designing. Such economic value will be a driving force of economic growth, corporate profitability and people's quality of life.
  • (ii) In this intelligence-based society, changes in value derived from fashions (social subjectivity) are dramatic. Creation of new social subjectivity will result in a evolution of social framework that will generate variable social values. If such a trend extends to the global stage, the power to transmit information-which is strong enough to drive social subjectivity on a global scale-will become a major international competitiveness.

(b) Shift toward network-based socioeconomies

From the mid-1980s, computer technologies, which had previously boosted progress in terms of scale and speed, responded to the downsizing movement among corporate organizations by shifting to emphasize networking, in addition to promoting compactness and high speed. As the 1990s began, growing applications for and spreading popularity of the Internet gave renewed impetus to the networking boom, to the extent that the world is now joined together in terms of information accessibility.

The formulation of the "global information socioeconomy " which integrates the whole world from the aspect of information is a major trend.

II. New stage in globalization

  • (i) Since barriers to trade of goods, services and capital transactions have been lowered, such activities are now conducted according to common market principles. Moreover, economic progress in developing nations and the adoption of market economies in many former socialism countries have increased the number of countries and people participating in the world market in the worldwide level.
  • (ii) International capital flows have given rise to instability and other problems. We have entered a new phase, in which systems must be put in place to correct such deficiencies to ensure that the benefits of globalization are realized.
  • (iii) We need to promote swift responses by ensuring harmony among each domestic system and raising efficiency of society. At the same time, there is growing need to focus our attention on diverse world trends and prepare for external risk factors.

III. Population to be peaked out

  • (i) The population of Japan, which has grown fourfold in 130 years since the Meiji Restoration, will start declining in 10 years. The prediction of a population decline in itself gives a feeling that the nation will run out of steam.
  • (ii) It will be difficult to maintain various aspects of society, which have functioned with the support of a growing population. These include the employment and social security systems, as well as basic urban and national land policies. A major turning point, never before experienced, looms. These factors will have a major impact on industry, employment and labor.
  • (iii) The notion of "many people, scarce land" will change, and the concept of land will shift from "asset" to "resource." This will necessitate raising the liquidity of land and utilizing it more effectively.

IV. Sustainable development overcoming concerns of environment, resources and energy

  • (i) Environmental problems are becoming profoundly intertwined in our daily business and living activities, while the problems of resources and energy are restricting economic activity more and more.
  • (ii) It would be difficult to solve these problems and achieve sustainable social development if we retain conventional systems characterized by mass production, mass consumption and mass disposal. There is the pressure throughout the world to replace those conventional systems and build a "cyclical socioeconomy" that will allow sustainable development.
  • (iii) The past 20 years has been a period of excess supply of natural energy resources. Whether this will continue or not is an unsettled matter.

(2) Ten factors to affect our socioeconomy

Major historical transitions have a number of unavoidable effects on various aspects of society. When attempting to envisage the new era, one must recognize these effects as fundamental changes, and be actively concerned with such changes.

(Effect on industry and corporations)

I. Structural reorganization of industry and corporations

  • (i) Due to ongoing globalization, market mechanism is becoming more widespread, thus fostering competition. In conjunction with this, the industrial structure is being reshaped on a global scale, with labor- and capital-intensive industries shifting to developing nations, while industrialized countries become more dominated by industries that center on the creation and utilization of diverse knowledge and intelligence. This international division of industry means that Japan will lose many industries. To retain its position as a developed country, Japan must become a socioeconomy that is appealing to many people, including the creators of "knowledge."(1)
  • (ii) "Manufacture of goods" has played an important role in Japan's economy to date. Drawing on accumulated technologies and know-how, Japan can further develop its manufacturing skill and know-how even as international division of industry progresses. This will require transfer and development of manufacturing-related technologies and know-how to areas that can survive in the era of global competition.
  • (iii) To date, it has been advantageous to share various types of information within certain corporation groups, but the expansion of information networks will make ample information accessible from outside sources. To this end, inter-company business relationships, previously limited to within fixed corporate groups, will become more diversified, and corporations themselves will take on a more "distinctive" character that is not molded by alliances or business circles.

II. Network-based socioeconomy and productivity improvement

  • (i) Thanks to the effective utilization of information networks, the cost of supplying goods, especially on the distribution side, will decline, and decision-making processes will accelerate. These and other factors will help raise efficiency in terms of price and time. There will be demand for ideal organizations and systems that will foster such efficiencies.
  • (ii) The information network industry is expanding rapidly and will play a crucial role to create infrastructure in the society. Those who produce "knowledge" and those who transmit knowledge to networks will also play decisive roles.

III. Economic dynamism

  • (i) In the era of diverse intelligence, economic values will become variable, causing dramatic business rises and declines and potentially some large-scale collapses. By contrast, a new "economic dynamism" will emerge, fueled by the rapid growth of venture businesses. Contrarily, this will mean that without creativity and ingenuity, a socioeconomy will not progress. To minimize the social costs of large-scale business collapses, the smooth transfers of capital and labor will be important.
  • (ii) While maintaining such socioeconomic dynamism will require more emphasis on "rewarding successful people," an inherent major problem will be how wide the "safety net" should be adjusted.

IV. Expansion of new businesses

  • (i) As the aging, low-birthrate society gathers momentum, markets for the elderly will expand. Meanwhile, an industrial structure that helps empower the elderly and women in the labor market will be required.
  • (ii) The nation's supply-side system, based on mass production of standardized goods, must inevitably be replaced from the viewpoint of environmental protection, since this system is accompanied with mass consumption and mass disposal. As a result, markets for environmentally friendly goods and services-such as long-lasting goods, repairing services and products that are demountable and recycled-will expand. Environment-related businesses that respond to such changes will also grow.

(Effects on lifestyles, culture, and society)

V. New lifestyles

  • (i) With ongoing globalization, diverse value perceptions will be introduced and temporary frictions will arise. Then, however, diverse new lifestyles will be created, combining those various perceptions with the lifestyles of individuals and the cultural lifestyle that is uniquely Japanese.
  • (ii) For people with different values to empathize with each other in workplaces, schools, and in public life while remaining cohesive as national citizens, a new set of minimum social norms shared by all will be necessary.(2)
  • (iii) Today's urban structures-formed as a result of usage-specific regulations covering industrial, residential, and commercial regions-were effective in an industrial society based on mass production of standardized goods. Such structures obstruct information-gathering and increase commuting time, and are not suited to the era of diverse intelligence. A fundamental change of thinking about ideal urban structures is necessary.

VI. Diversity and areas to belong

  • (i) Interval of product life cycle will grow shorter, and seniorage systems and treatment, which depend on pyramid-style population structures, will become impossible to be maintained. As a result, employment systems will diversify. Individuals' sense of belonging to the company will also diversify, and the notion of personal job selection in which the masses are destined to one company throughout their lives (lifetime employment), will become difficult to maintain.
  • (ii) The development of information networks will eliminate distance and time limitations and steadily facilitate communication and information exchange among individuals. Compared with conventional media, where information flows in one direction, individuals will be able to take advantage of two-way information media to transmit information to their companies. This will help create new and broader forms of human relationships.
  • (iii) As a result of these factors, communities to which the personal belongs as total personality, as seen in blood-, region-, and work-centered societies, will disappear, to be replaced by a "multiple-belonging society" in which the "individual" is the core.
  • (iv) People without the ability and the intention to transmit information will become followers of various groups, and from time to time may engage in behavior dictated by group psychology. Creating the right balance between social restrictions to this behavior and maintaining diversity (order versus freedom) will become a major issue.
  • (v) However, if personalization and diversity permeate throughout society, the increasing potential for the excessive variability through the easy formation of socially subjective systems will be somewhat reduced.

VII. Procuring income reflecting risk sharing

In the age of diverse intelligence, it will become possible to secure large incomes by creating value and taking risks. At the same time, a large income gap will emerge between the successful and the unsuccessful. To date, regulations and other factors have helped create income gaps between types of industries, but income gaps resulting from such "unfairness of opportunity" will change to reflect challenge and risks.

VIII. Effective utilization of diverse human resources

  • (i) In order to utilize effectively limited human resources amid a declining population, labor productivity will need to be raised via job skills development and the smooth transfer of labor resources to high-productivity sectors. At the same time, diversity of the labor force (involvement of women and the elderly, increase of migrant labor, etc.) will also need to be raised.
  • (ii) In order to judge the employment situation of people including those searching for jobs, it will be important to measure through self-realization how much satisfaction they have got once people become active in their voluntary job-seeking efforts.

(Macroeconomic effects)

IX. Pursuing prosperity under growth constraints

  • (i) The declining work force and environment problems will cause increased limitations on economic growth in the macro sense. By contrast, thanks to the elimination of various inefficiencies in the current system, economic growth will be possible even with a declining work force. And if we can achieve sustained productivity improvement, we can sufficiently raise per-capita affluence levels.
  • (ii) With the diversification of values, happiness will be measured in the society with such factors as "disposable income," "disposable time,"(3) "selectivity potential," and "life security."
  • (iii) With the decline in work force, per-capita stock of land and other accumulated real assets will rise. By removing congestion, this can also help increase affluence.

X. Increasing propensity to consume

  • (i) If "individuals" take priority over families, people will be less inclined to leave their property to their descendants. At present, considerable emphasis is placed on personal savings as preparation for old age, but once anxieties about the future are removed, their disposition to consume will rise.
  • (ii) While the elderly are regarded as having a relatively high propensity to consume, consumption disposition will also grow. Increasing consumption disposition will also shrink the excess savings (foreign trade surplus) of Japan as the ratio of elderly rises.

(3) How to consider freedom - five conceptual changes

In post-war Japan, justice has been defined by three terms: "efficiency," "safety," and "equality." A fourth term, "freedom," should be added to the list. Although some conflict exists between these concepts, from time to time "efficiency," "safety," and "equality" will be sacrificed for "freedom." The following five new concepts must be recognized in order to further this line of thought.

I. Economic rules and order form the infrastructure of "freedom"

  • (i) Economic rules and order must be positioned as elements of infrastructure boosting free activity, and a complete conceptual change toward "being basically free" is necessary. We must be conscious that all regulations carry with accountability.
  • (ii) Excessive lateral thinking and division of responsibilities are obstructing dynamic behavior, which originates each person's creativity and ingenuity. Due to these, Japanese society is seen as peculiarly closed and intransparent in the midst of globalization. We must discard lateral thinking and accept "diversity," while at the same time remaining fully aware that an "individual" is an independent existence based on self- responsibility.

II. "Equal opportunity" and "fair assessment"

  • (i) To date, people with vested interests were in a position where they enjoyed advantageous conditions and unfair opportunities. In the new socioeconomy, equality of opportunity is a prerequisite.
  • (ii) On the other hand, "fair assessments of the present" dependent on the outcome is important. To date, priority has been on "equality of outcome." Concepts based on "equality of outcome" as an objective in itself should be discarded.

III. Acknowledging variability and self responsibility

  • (i) For corporate activities, we should discard the conventional notion that self-induced change is risky. In this era of dramatic change, we should be aware that pursuing stability and choosing not to change carry even greater risks. Once variability is acknowledged, "resolution" at any moment will be important, for which self responsibility will become crucial. Insurance (and hedging), as well as expansion of laws and judicial system covering fair competition, will be necessary to alleviate this situation.
  • (ii) Also it is important to maintain constantly efficient allocation of resources and secure "flexibility of social systems," such as smooth transfer of the elements of production (labor, capital, etc.), so as to prevent adjustment costs associated with variability of values from rising. We should be aware that even if such production elements can be fixed in the short term, this will become difficult in the long term, and ultimately large and urgent adjustments will be unavoidable and will carry risks.

IV. Neutrality concerning age, gender, and nationality

  • (i) We should discard fixed notions about age, gender, and nationality
  • (ii) In Japan, we place too much emphasis on age when considering certain stages of life, such as entering school, working and retirement. It will be difficult to apply such fixed notions in a low-birthrate, aging society.
  • (iii) We will need to discard the perception that in families "men work outside and women stay inside" and stop emphasizing male-female differences by accepting that both men and women have roles to play in the family, thus creating a society in which men and women participate together, able to fully demonstrate their individuality and capabilities.
  • (iv) Foreigners, who abide by rules to enter and stay in Japan, will be able to coexist with Japanese people and pursue comfortable social lifestyles.

V. Thoughts about economic growth

  • (i) In Japan's era of high-level growth, the achievement of maximum growth helped solve various problems, and people were strongly aware that growth itself was the objective. Although growth remains important today, growth in itself cannot become the goal.
  • (ii) Since the value of goods will often fluctuate due to fashion trends (social subjectivity), it will become difficult to measure such factors as production value and prices in traditional way. Needless to say, using conventional calculation of per-capita production value increases will remain an important way to measure increases in material wealth. In the future, GDP growth will become just one of the multiple yardsticks, on a par with disposable time and selectivity potential.

2. Socioeconomy at the Beginning of the 21st Century

(1) Revival of economic dynamism-Socioeconomy where individuals can pursue "dreams"

In today's Japan, the incentive for individuals to pursue their particular dreams has grown weak, and society is filled with feelings of anxiety. We must create a "socioeconomy with dreams" and restore "peace of mind" by bringing to life self-reform ability, vitality, and individuality and by reviving economic dynamism. The objective will be for self-supporting individuals to effectively demonstrate their "originality" and their "individuality," with each person being properly acknowledged for his/her knowledge, intelligence, skills, and courage, while creating a "socioeconomy of choice" where people can lead comfortable lives.

I. Transparent and fair market economy

  • (i) Utilization of market mechanisms that assure free economic activity will be a basic principle for establishing a socioeconomy that emphasizes "originality" and "individuality" and allows individuals to pursue "dreams." By placing foremost priority on these principles, all types of frameworks and systems will take shape without opposing such principles.
  • (ii) Sovereignty of the consumer has been established through free entrance into market and emphasis on easy-to-understand and active provision of information from suppliers.
  • (iii) Fair rules are established, allowing anyone to participate in markets with peace of mind, and violators of those rules will be clearly made responsible and accountable.

II. Opportunity to challenge and the "safety nets" (4)

  • (i) Systems allow individuals to pursue the "dreams" with peace of mind and also allow those who have failed to settle their accounts and take up challenges once again. One of the examples is system that has diverse and multiple choices, in which people can take advantage of their various experiences and find their own ideal place.
  • (ii) The safety net will be efficiently set up, covering the entire social system, within the scope of "fair evaluations." Anxiety-free lives will be assured as a result. To ensure that the safety net allows individuals to pursue challenges with peace of mind, it must help individuals deal with various risks that threaten their lives and protect the personal rights.(5) It must not be a means for protecting vested rights by all means.

III. Diverse areas to belong and personal choices

  • (i) If individuals are to pursue "dreams" proactively, their areas to belong will diversify and they will choose it individually. Belonging solely to the workplace, which is a characteristic of modern industrial society, will be revised while diverse areas to belong outside of workplace will occur.
  • (ii) To this end, the role of the family will once again rise, while new "loyalties by choice" will take shape, in the form of interest-oriented entities such as regions, nonprofit organizations (NPOs), and sports clubs.
  • (iii) NPOs will play an important role providing broad support for society, not only through the services they provide but also business field they create and so on.

IV. The role of government and concepts of "public" and "private"

  • (i) The government will be refined to new functions that are suited to society (such as establishing market rules, crisis management, safety nets and addressing external economic factors). In line with its changing functions, the government will ensure flexible movement of human resources. The attitude that "public welfare" can be left to the "bureaucracy" will be discarded, and a set of "public principles," in which each person contributes to society in general, will be established.
  • (ii) Appropriate principles of "individuality" will be established, in which individuals maintain multiple areas to belong (although singular is also acceptable). (At present, notions of "self interest" and "self regard" to describe the private are regarded as vulgar, whereas corporations and government agencies are thought of as "public" entities.)
  • (iii) As emphasis will be placed on individuality, regional decentralization will become fundamental in the relationships between the nation and its regions. Accordingly, each region will strengthen its distinguished characteristics. In the process, each region will enhance its own appealing characteristics, which in turn will create a characteristic nation.

(2) Dealing with a 21st century-style socioeconomy

  • (i) We must aim at a socioeconomy that allows people to pursue "dreams" and create society in which major changes that confront the 21st century can be addressed. Such social reforms are expected to take place in various nations worldwide. If Japan take the lead in developing original systems and presenting models of such developments to the world, it will make a contribute to human civilization.
  • (ii) From these perspectives, Japan will actively meet the needs of the 21st century-style socioeconomy by successfully addressing the following three phenomena.
    a) Era of diverse intelligence
    b) Low-birthrate, aging society
    c) Sustainable and environmentally friendly development.

(3) Acting as a core member of the global community

  • (i) Globalization has reached a new stage, in which a new set of rules and order common worldwide will become necessary. Japan will make an active contribution to global community as a core member, by creating a socioeconomy that welcomes freedom and is fair and resilient to risk, while at the same time participating in the making of new rules that apply fairly and safely to countries with different cultures and objectives. In making this contribution, Japan can secure an honorable position in global community as a nation of integrity. ("New rules" shall include rules covering the transfer and transplantation of goods, capital, and people, as well as rules concerning the global environment and rules for solving disputes.)
  • (ii) Relations with other Asian nations will assure growing mutual dependence in the future, and Japan will be actively involved in the development and stability in the region.

3. Policy Issues

We have discussed the basic concepts for considering the ideal socioeconomy. Now, it is time to paint a more accurate picture of Japan in the early 21st century and systematically create a schedule and propose policies. Here, we will present policy issues that should be considered in the future.

(1) Low-birthrate, aging society

I. Framework and supporting policies to help employ the elderly

  • (i) Under Japan's retirement system, employment is generally guaranteed up to a certain age, and the employment contract is terminated at the time of retirement. From the viewpoint of promoting employment of the elderly, should the current retirement system be retained, or should we consider a system that prohibits age discrimination?
  • (ii) Should we reassess the customs of seniority-based salaries and promotions, since they partially obstruct the entry of elderly people with the will to work and skills from entering into the work force?
  • (iii) While employment, wages, and factors concerning public officials while coordinated with trends in the private sector, from the perspective of addressing the low-birthrate, aging society, should the central government be playing a leadership role?
  • (iv) How should we address the relationships between incomes and pensions for the elderly?

II. Is the declining work force acceptable?

  • (i) Even if growth rates decline in line with the decreasing work force, that in itself does not always mean that prosperity will fall. Should we raise labor productivity and create both male-female participating society in an effort to help women and elderly people with the will to work and skills to demonstrate their capabilities?
  • (ii) In the future, it will be necessary to ensure recovery in birth rates and institute measures to halt the population decline. To this end, to what extent should we establish a socioeconomy that facilitates both child-raising and employment opportunities? (Should we verify the benefits of measures adopted by overseas countries in the past, such as payment of child-raising benefit and childcare leave?)
  • (iii) We believe that it is not necessary to accept migrant workers(6) for the sole purposes of securing quantitative labor and pursuing economic growth. But we should actively consider aiming to become a vibrant socioeconomy that is open to the world, by orderly accepting migrant labor from overseas countries, based on the following premises: a) Anticipation of ultimately contributing to the solution of problems of acute labor shortages depending on sector, due to the low birth rate b) Promotion of technology transfers to developing countries and expansion of Japanese culture c) Contribution to conceptual diversity and maintenance of market principles.

III. Social infrastructure and urban development conducive to the low-birthrate and aging era

  • (i) It is important to raise efficiency (productivity) not only in the workplace but in the socioeconomy as a whole. To this end, perhaps we should upgrade social infrastructure to reduce work preparation time (commuting, etc.) and social business time (government office procedures, sending goods, etc.).
  • (ii) Should we promote "urban development in which people's needs are within 213513walking distance in the town"? This will require the essential elements of life-work, home, leisure, and health-to be accessible through connectivity, integration, and networking.
  • (iii) How should we provide the social infrastructure that will allow safe and unrestricted activity by the elderly, handicapped, and children, such as barrier-free facilities and traffic safety measures?
  • (iv) Should we create environments where the elderly and single household people can easily live? Should we develop technologies to that end?

(2) The country and citizen's lifestyles

I. The country amid diversification

  • (i) In order to create cities that are suited to the era of diverse intelligence-cities that are accessible, sophisticated, and networked-should we promote advanced utilization of land for various purposes, while fostering broader usage integration in urban planning? Should we consider changing regulations that is usage specific to environmental specific factors?(7)
  • (ii) In the era of globalization and diverse intelligence, should we strengthen the international competitiveness of our cities and collect intelligence and information from throughout the world? Should we decrease urban living costs and operating costs to achieve these goals? Finally, should we build the necessary physical infrastructure and endeavor to develop software, for 24-hour utilization of facilities?
  • (iii) Should we promote population shifts to the regions and dispersion of industry? To this end, should we promote regional dispersion of intelligence infrastructures and information transmission functions and the promotion of industry and the active introduction of foreign capitals, which will help reactivate regional economies? At the same time, should we foster equal opportunity in order to attain regional independence founded on inter-regional interaction?
  • (iv) Should activation of hilly and mountainous areas be founded on self-help efforts or should we formulate necessary promoting measures that are also founded on self-help efforts? In addition, should we clarify those who will be the main workforce under each regional circumstance and make drastic considerations related to ideal information, traffic, leisure, education, medical treatment and social involvement in regions with declining populations?

II. Transportation and information systems

  • (i) Should we focus on globalizing and lowering the cost of information access in the 21st century, based on market-economy principles driven by the private sector and promote creation of network in the centerof the Japanese archipelago, featuring the world's largest capacity and highest speed?
  • (ii) Should we promote strategic transportation policies based on intermodal concepts, in order to address changing circumstances, such as declining investment reserves in the long run, intensified competition beyond national borders and diversification of citizens' awareness?
  • (iii) Should we comprehensively promote infrastructure creation and software/services policies to reinforce urban traffic systems and raise convenience for consumers, thus fostering alleviation of inner-city congestion and comfortable urban lifestyles?
  • (iv) Should we encourage traffic systems, energy systems, and advanced traffic services with information technologies that the elderly can easily use and are environmentally friendly? Moreover, should we establish telecommunications equipment and services that the elderly can easily use?

III. Activation of regional economies

  • (i) Should we increase the independence of municipal governments so they do not rely on the national government and extricate regional economies from their dependence on public works investments? To this end, how should we promote entrepreneurship and invitation of corporations in regional area?
  • (ii) How should we foster characteristic and independent development of industry and culture? Should we comprehensively promote regional autonomy, including financial resources issue, whereas increase creativity through competition between regions?
  • (iii) Noting the importance of economic zones featuring information and technologies suited to the era of diverse intelligence, should we promote mergers of cities and even consider such scenarios as provincial federation and prefectural amalgamation in relation to our studies of ideal regional entities?
  • (iv) On the issue of relocating capital functions, should we study ways to make cost benefit analysis more transparent, from the perspective of economic activity suited to the era of diverse intelligence?

(3) New socioeconomy structures

I. Post "company person"

  • (i) We will enter an era in which each individual will choose his/her area of belonging. Should we create social systems and disposable time that encourage individuals to participate in multifaceted social groups, such as homes, families, regions, NPOs, and workplaces?
  • (ii) Should we focus on culture in order to create a socioeconomy where people are happy and active?

II. Areas to hold retain government involvement

  • (i) Amid globalization of industrial structures, should we be focusing on international division of industry suitable for market mechanisms? Should we in principle discard policies designed by government to domestically retain designated industries that have lost their international competitiveness? Should we make exceptions for industries affecting the lives of citizens?
  • (ii) In protecting the environment, and protecting cultural treasures and traditional industrial arts, should we preserve necessary items by using the most efficient means possible?
  • (iii) Considering the importance of nurturing venture businesses and corporate technological development, should we strategically support them through such means consistent to the market mechanism as establishing technological infrastructures and support mechanisms for venture businesses?

III. Corporate organization and employment system

  • (i) How should we set up an environment for corporate organizations that promotes highly transparent corporate governance through inspection by stockholders in the markets? Will renewal of corporate management culture be necessary, driven by the effective functioning of stock-option systems and M&A markets?
  • (ii) When considering employment systems, should we change non-neutral systems to labor choice such as one that prioritizes long-term employment and one which restricts labor shifts through personal choice? And should we set up an environment where people can work flexibly?
  • (iii) How should we promote multilayered external labor markets, through further reforms of regulations covering the laborer dispatch and job referral sectors?
  • (iv) How should we make it possible to develop skills throughout one's working life, so that individuals can gain job stability while contributing to socioeconomic progress?

IV. Human resource development

  • (i) In order to foster human resource development suited to the era of diverse intelligence, should we fundamentally replace current lateral thinking and set up education systems that expand people's creativity and originality? Should we broadly introduce the principles of competition into the supply side of education and encourage the supply of distinctive forms of education, while expanding the choices available for recipients of education? Moreover, should we promote expansion of teachers' qualifications and better disclosure of information related to schools?
  • (ii) Should we upgrade practical information-related education and foreign-language education from the initial stages of education, in order to nurture people who can meet the challenges of the network society and globalization?
  • (iii) In addition to nurturing people on the supply side, should we upgrade education that nurtures consumers who are fully aware of self responsibility and risk?
  • (iv) Should we relax regulations covering establishment and expansion of universities, while we establish systems that will help students and researchers in the event of university closures?

V. Scientific technologies

  • (i) How should we structurally reform current R&D systems, to promote qualitative improvement of R&D and produce world-class research results in fields including social science?
  • (ii) How should we clarify strategic objectives for promoting scientific technologies and emphasize R&D investments?

VI. Harmony with natural environment

  • (i) How should we build sustainable socioeconomic systems, by reinforcing our reform efforts aimed at integration of the natural environment and the economy, including through the incorporation of environmental protection (reduction of CO2 emissions, etc.) within market functions?
  • (ii) How should we establish a cyclical socioeconomy with less impact on environment, such as, through incorporating recycling into the social system, renewed promotion of closed-system efficiency of resources and energy, and procurement of sound circulation of materials?
  • (iii) Should we research and implement the most efficient methods to protect the nation's land and the environment under changes in the socioeconomy and financial conditions? Should we actively promote personal training and skills development for this objective? If so, should we separate environmental preservation from industry or should we consider environmental preservation through industrial activities?

(4) Government finance and the safety nets

I. Proposing a path of financial reconstruction

  • (i) In considering the financial balance of national and local governments in this time of major financial deterioration, should we propose a path of resuming medium- and long-term financial sustainability and recommend measures, such as administrative streamlining, expenditure reduction through effective administration, and outsourcing of public services, in order to eliminate anxiety about financial meltdown?
  • (ii) Should we study national assets and state-run organizations to establish systems that enable each ministry to benefit from sale or privatization of tehm maintaining minimum essential assets and organizations?
  • (iii) Should corporate accounting elements, such as balance sheets, be applied to governments and public services activities?

II. Safety nets

  • (i) Should we build a sustainable and reliable public pension system for the future, through adjustments of benefits and burdens, so that future generations do not bear excessive loads? And should we encourage combination of public, corporate and private pension plans so that people can plan their retirement years with peace of mind? If so, should we consider abolishing (fully privatizing) the remuneration-based portion of the public pension system?
  • (ii) Should pensions and medical insurance designed based on family unit be organized based on individual unit? Should we foster smooth human interaction with other countries by promoting bi-national agreements covering the pension system?
  • (iii) How should we build frameworks that allow individuals to choose their nursing services; whereas family base care or community base care?
  • (iv) Regarding nursing care and medical services, should we introduce the principles of competition and prioritize efficiency while giving due attention to service features?
  • (v) Could we set limits for benefits for the unemployed and low income earners at the minimum level, while providing sufficient support for individual skills development?
  • (vi) In order to facilitate career changes and mid-career employment, should we realize double-tracked life course selection, such as by establishing an external labor market and facilitating skills development throughout people's working lives? (Pension portability, etc.)

(5) Position within global community

  • (i) In WTO rounds and other forums for multi-national deliberation, should we demonstrate leadership in such areas as promotion of freer trade and setting basic rules for shifting labor forces and principles for environment protection?
  • (ii) How should we support establishment of investment environments and competitive systems for developing nations? Should we actively contribute to reinforcing the international financial system, including through reform of risk controls, while promoting internationalization of the yen? How should we work in the field of international economic cooperation, not only via ODA but also through harmonious combination with other public fund, private fund, and NGO activities?
  • (iii) Should we promote accumulation of internationally competitive intellectual information, by accumulating domestic and overseas socioeconomic data, gathering information, and disseminating and sharing socioeconomic statistics?
  • (iv) How should we address internationalization of the Japanese language in order to dramatically raise our international information transmission power?
  • (v) Should we build a center that provides the world with hardware and software on the latest urban environmental technologies, obtained through our work in such areas as plans to relocate capital functions, protection of national land and recovery from earthquakes disaster?


  • Note 1: Even in societies where intellectual creativity and resolute risk-taking produce value, there are many people who do not benefit from it. When setting value standards in the ideal society, special care should be taken to avoid interfering with the well-being of those people.
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  • Note 2: When freedom and independence of the individual receives priority, there is concern that the binding as citizens and as nation will become thin.
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  • Note 3: This refers to free time that excludes working hours, commuting time, and other forms of preparation time.
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  • Note 4: In this report, the "safety net" refers to a system designed to help people who are exposed to risks that they cannot address alone and that threat their living stability, as well as to help those who have suffered considerable losses. In addition to social security-pensions, health insurance, employment insurance, and livelihood aid-it includes the social environment (diversified selectivity, bankruptcy legislation, etc.) that enables people, including those who failed to receive deposit or consumer protection, to take up new challenges.
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  • Note 5: "Rights" means the rights of individuals to protect their lives.
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  • Note 6: "Migrant labor" primarily means people who have moved their living base from overseas to Japan and have been working in Japan for a certain period of time. It also includes migrants who plan to live in Japan permanently. Relatively little has been discussed about this issue, but from the long-term perspective it will need to be discussed more in the future.
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  • Note 7: From the perspectives of living environment protection and planned usage integration, purpose-specific zoning regulation should be strengthened even further. For judging compliance with environment standards, it is required to assess environmental evaluations for each building project. This, in turn, will be problematic in that it will increase considerable time and cost.
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