JFTC Essay Competition

Summaries of the Award-Winning Essays of JFTC Essay Competition 2009

Grand Prize

The Correction of Global Capitalism and Japan's Mission –
Toward Overcoming the Two Crises Caused by the Economic Crisis

Kiyoshi MIURA (Japan, age 30)
(the original text is Japanese)

Considerations on the necessity of correcting global capitalism demand a proper understanding of the current economic crisis. That is because many of today’s sensational debates which lack levelheaded observations on the true nature of global capitalism are not only of no use in overcoming the crisis, but are also the same unpersuasive arguments that have emerged and disappeared many times in the past. It is important to make clear that the current crisis is really a combination of two different issues which require different solution strategies.

The first concerns the cause and course of events whereby the financial crisis, which emerged as the subprime loan problem, developed into a global economic crisis, and this paper grasps the greatest cause of those developments as a sudden loss of the sense of security in society. Moreover, since this sense of security was lost as a result of globalization, the prescription to overcome the crisis must be to devise means of regaining that sense of security without losing the fruits of globalization. The second is that certain aspects of global capitalism have actually been amplified as a result of the economic crisis. There is a strong likelihood that problems such as the shift of the economic center of gravity toward the newly industrializing economies, the emergence of state capitalism on a global scale and the decline in the political momentum to resolve environmental challenges will become even more severe in the process of overcoming the crisis, and may have to be addressed separately.

Japan has the qualifications and capabilities to play an important role in solving these problems and correcting global capitalism. To fulfill that role, however, Japan, first of all, is required to boldly settle its own contemporary and acute problems such as ageing of society with declining birth rate, provide an attractive alternative model of capitalism and take a leading role in global rulemaking based on that experience. At this time when the world is trying to learn from the Japan’s experience of the collapse of bubble economy, it is the Japanese, above all, who must have the courage to take the lead in calmly analyzing the past failures, preserving what should be kept, and changing what must be changed.

The Prize for Excellence

Restoring Stakeholder Trust – Lessons from Japan's Consensus Capitalism

Michal OLEWNIK (Poland, age 31)

What capitalisms are there? What kind of capitalism is best (and will it prevail)? What objectives should ultimately drive a company?

These questions arise in wake of the financial meltdown, which has revived a public debate about government's role in business, reflecting a pattern of institutional changes affecting industrial societies in recent decades - ideological oscillations between "welfare" (i.e. Japanese) and "stock-market capitalism" (i.e. Anglo-Saxon).

My discourse revolves around the notion of what a company is/should be, in a world struggling with the heritage of unrestrained market fundamentalism, i.e. "marketization plus finacialization", "shareturner" dominance, distrust of business, alienation of government, wealth disparities, and lost stakeholder dignity.

With changing opinions on deregulation, finance, management time horizons, and executive roles, shareholder capitalism no longer resonates within organizations, which realize, they function best when fairness becomes an instinctive priority - when committed people work in cooperative relationships based on respect, rather than competitive, adversarial patterns promoting reckless behaviors (nurtured by Anglo-Saxon short-term thinking) that harm the long-term health of whole economies. This becomes paramount in an age of knowledge work, outsourcing, global supply chains, and activist interest groups, with stock price appreciations being - in the end - an outcome of management practices that embrace ALL stakeholders.

With its penchant for state intervention and industrial policy, Japan's capitalist model has proven to be effective in times of organizational turmoil, where public trust in government and business has to be restored. Workforce commitment (thru lifelong employment), supplier commitment (thru mutually obligating trading liaisons), clever organizational forms (thru patient, long-term capital), and a ubiquitous spirit of compromise, inspire Japanese corporations to contribute to the common good, giving a perfect example for Anglo-Saxon firms, which face an imminent ideological shift to a stakeholder-focused economy.

What follows for Anglo-Saxons, is learning how to respond appropriately to government initiatives, and participate in the progress of the global community towards a society, which measures its welfare using more pluralistic criteria than stock price.

What follows for Japan, is advancing a concerted effort of institutional convergence of East Asian nations on components of its unique welfare capitalism, by demonstrating, i.a. that Japanese companies can be successful by embracing stakeholders first, and regarding business as a respectable pursuit that provides social goods. Developmentalism, sanmi-ittai and keizai kyoryoku, all set the necessary contexts for an emerging East Asian community, united by macroeconomic policy, governance, business philosophy, trade, investment, and (ultimately) single currency.

The Prize for Excellence

A Prescription for Global Capitalism - Can Japan Revive Economic Chivalry?

Hajime MOTEGI (Japan, age 37)
(the original text is Japanese)

The globalization of the economy began in the second half of the 1980s, sparked by the advances in information technology. It has since expanded the movement of goods, services, capital, and labor across national boundaries at an unprecedented pace. Today, our way of life would not exist without the benefits of the globalized economy. On the other hand, the negative aspects of globalization, such as international propagation of economic crises, have simultaneously become a major problem. The nations of the world have time and again implemented necessary economic policies at times of every international crisis, but we still have not found a fundamental solution. The essay notes the importance of public sprit, in the sense of the "economic chivalry" advocated by Alfred Marshall and the "business flair with noble spirit" of Eiichi Shibusawa, as a prescription for rectifying global capitalism, and discusses its possibilities.

Looking at the status quo of globalization, business corporations are pursuing narrow-minded moneymaking while governments are attempting to cope with the situation through emergency stop-gap policy responses. These conditions are similar to those 100 years ago, when Marshall and Shibusawa noted the importance of public spirit. Why, then, have we not fostered economic chivalry and a noble spirit in business? It may seem paradoxical, but I believe that the public spirit of industrialists may have been lost due to the amelioration of the disparity between rich and poor that characterized Japanese society in general before World War II. It was extremely difficult to become a capitalist in pre-war Japan. Given such social restrictions, industrialists took pride in their own vocation and felt responsibility not only to their employees, but also to their employees' families, local communities, and Japan’s national interests. In the formation process of Japanese capitalism, there were many industrialists who expounded the importance of public spirit. I think the key to rectifying global capitalism today lies not in implementing economic policies based on institutionalized economics, but rather in correcting the understanding of economics held by each economic entity-that is to say, in conducting economic activities with public spirit. As Japan once pursued the noble spirit in business based on the code of the samurai, the nation holds no small potential for reviving economic chivalry.