OCTOBER 1983 - VOLUME 4 - NUMBER 10
Coucils of Business Elders
The powerful lobbies behind Japanese politicsby John G. Roberts
In 1976, the venerable Oriental Economist mist polled 100 of Japan's leading politicians, businessmen, scholars, journalists, labor leaders, consumer representatives, and bureaucrats. They were requested to list "the most influential people in Japan." Listed third, after a future prime minister and the incumbent chief of state, was Toshiwo Doko, President of Keidanren, the Japan Federation of Economic Organizations.
Keidanren leaders insist that they have no power at all because they have no mandate or mechanisms for enforcement. That disclaimer could be used just as well by the Republican Party, ChaseManhattan Bank, or the Vatican. Keidanren is the citadel of Japanese capitalism and as a political force, an economic regulator, and a national faith, it is supremely powerful among Japan's non-governmental organizations.
Keidanren is one of four or five major economic organizations in Japan which should be seen as separate fingers on the same hand responding to the brain of big business. The others are Keizai Doyukai (Japan Committee for Economic Development), the Japan Chamber of Commerce & Industry, the Japan Federation of Employers Associations (Nikkeiren), and the Industrial Problems Study Group (Sanken), a secretive council of the most influential leaders of the other organizations.
These organizations have their roots in the prewar period. But they gained political ascendancy during the first few years of the American occupation, when the discredited leadership of the wartime zaibatsu were swept out of power by U.S.-directed purges. From the economic and political chaos emerged a few dozen well-educated, tough, and unscrupulous leaders who, together with like-minded politicians and bureaucrats, literally wrenched control over the Japanese economy from the weakening grasp of the zaibatsu and their gentlemanly retainers.
Since the war, these economic leaders collectively have been called zaikai, which literally means "financial circles" but adds a connotation of hidden power exerted decisively in important matters such as removing or installing a prime minister by invisible maneuvers. Although they are known to associate with crooked politicians, organized crime, and gangsters when necessary, they themselves are accorded a certain need of public respect that politicians seldom achieve.
How do they gain their power? Simple. Promises of money (never in writing); cash (no checks please); and in the case of bureaucrats, cushy post-retirement jobs.
Though this may sound cynical, the Japanese political system is so structured that, personalities being equal, the candidate who spends the most money wins the election, whether it be prime minister or town assemblyman. The role of the economic organizations is to use the money power of big business to promote friendly politicians and to guide (or nudge) them in the direction desired by zaikai. As former Prime Minister Ikeda once said, "The government is the captain and zaikai the compass of the ship."
Long before Keidanren or another of the business groups announces an important policy, the matter has been discussed at great length in obscure but important clubs whose existence is scarcely known to the general public. Every business and political leader belongs to at least one major club of big business supporters, plus many smaller ones representing the various family, school, military, or corporate affinities that are the cement of Japanese elite society. As these men drink, dine, and laugh together, attended and entertained by talented geisha, they reach a deeper "belly-to-belly" understanding on matters too delicate to discuss elsewhere. Agreement may be reached on political or administrative policies of the highest order, which become publicly known only when formally announced by an economic organization or by the government itself.
Sizing up Keidanren
As described by its own publicists, Keidanren is a private, nationwide organization representing the interests of the business community. Its exclusive membership includes 110 industrial associations and federations, and about 800 corporate members. About 100 foreign companies or their affiliates (Coca-Cola, Pepsico, IBM, Borg-Warner, Philips, and Olivetti among them) have been admitted as members.
Leadership in Keidanren is even more exclusive. The posts of chairman, vicechairmen, and committee heads are filled by chief executives of very large enterprises. Often they head companies in the heavy industries, electric power, and banking fields, or are representatives of former zaibatsu groups - Mitsui, Mitsubishi, Sumitomo, and Fuyo.
Leaders of successful industries such as steel, automobiles, and electronics qualify for top posts, and the 30 special committees are chaired by men (only men) important in related industries. One of the most successful is the Defense Production Committee which is Japan's prime arms lobby. Typically, it is headed by the chairman or an elder of Mitsubishi Heavy Industries, which has a near-monopolistic position in military hardware.
For some 30 years the committee has been doggedly bucking public sentiment, Japan's constitutional prohibition against an army except for defensive purposes, and the solid opposition of- left-of-center parties to Japanese rearmament and lifting the legal ban on arms exports. With powerful assistance from Washington, they have largely succeeded, not only in influencing government policy, but in swinging public opinion inexorably toward militarism.
Monopoly, Pollution, Corruption
In the 1950s, Keidanren's antimonopoly law research group, headed by a vice president of Toshiba Corp., came up with a report recommending further relaxation of the antimonopoly law to permit holding companies. This move in effect opened the way to a complete revival of the zaibatsu system. It was Keidanren that clinched the merger of Japan's two largest steel companies, Yawata and Fuji, to form the monopolistic Nippon Steel Company, the world's largest steelmaker. An ex-chairman of Nippon Steel, Yoshihiro Inayama (popularly known as "Mr. Monopoly" for his strong views on business concentration) is now chairman of Keidanren, and an older chairman of Nippon Steel, Shigeo Nagano, heads the Japan Chamber of Commerce & Industry.
One of Keidanren's responsibilities is to assess the proper amount of funds to be contributed to the political world by zaikai. It is reported that such information is kept in a ledger entitled "table of fund allocation classified by enterprise and industry," which is rarely seen by anyone except the vice president in charge of political funds. This trusted retainer, Teizo Horikoshi, who came from the Bank of Japan, has been in the staff position of secretary general of the organization since its inception. Sometimes called "the man who runs Keidanren," he is in fact the man who keeps the secrets of who got what and when. His connections and travels indicate that he plays a clandestine liaison role between zaikai and the military dictatorships in Taiwan and South Korea, both known to have contributed very generously to Japanese politicians who keep their interests at heart.
Keidanren did not take up the environment as a problem until about 1970, having considered air and water pollution as "inevitable" concomitants of industrial progress. When the new environmental improvement committee swung belatedly into action, it attacked the principle that the polluter should pay the victims. This was at a time when the "itai-itai" disease (cadmium poisoning) and Minamata disease from organic mercury (see p. 19) were causing fearful disabilities and death among Japanese in polluted localities. The companies causing the damage not only concealed the facts but continued to pour out the same poisons from their factories. Keidanren was noncommittal.
Naturally, the top executives of the companies responsible were influential members of Keidanren. To this day, victims have great difficulty in obtaining compensation or even authorization for free medical treatment provided by the government. Keidanren pays lip service to the social responsibilities of capitalists, but is reticent about consumer protection and the welfare of the general public. Ardent admirers of Reaganomics, zaikai are constantly trying to pare down the capacity of government agencies to ameliorate social neglect.
While Keidanren fights for the welfare of zaikai, it is not indifferent to the interests of big business in general, and is in fact a leading forum for multinational business. Keidanren, for example, has lobbied strongly against the Vredling Proposal, a law under consideration in Western Europe that would force multinationals to share information about future investments with trade unions.
This internationalism comes easily, considering the fact that the present Keidanren chief is beholden to American banks for financing the postwar rebirth of the steel industry (not to mention electric power and other basic industries), and that two of his predecessors were former presidents of Toshiba, Japan's electrical giant whose largest stockholder since its founding in 1904 has been General Electric.
Toshiba is a member of the Mitsui Group, which has numerous American financial connections. Mitsubishi was already in partnership with Westinghouse and Getty Oil before the war. Sumitomo has long been linked with AT&T and ITT, Nippon Oil with Caltex, etc, etc. Keidanren serves, in fact, as a lobby for American multinationals, and like the other major economic organizations, its leadership embraces some of the most conspicuously loyal "American lobbyists" in Japan.
Keidanren is by far the most influential of the Japanese big business groups. But there are five more that play an important role in politics.
Japan CED: From Brave Beginnings
The Japan Council on Economic Development (CED) was formed in 1946 by non-zaibatsu businessmen on the rise - typically of managing-director level - and in its earlier years it was represented as a vehicle for a more flexible, progressive capitalism. This was in line with its American role model and affiliate, Council for Economic Development. It took positions opposing Keidanren on such important issues as environmental pollution, political corruption, labormanagement rapprochement, and public responsibilities of private enterprise. But its liberal-minded cast has eventually worn off and CED founders have become champions of cold war anti-labor propaganda.
Japan CED was subsidized by the Ford Foundation and greatly assisted by its American progenitor. It is stronger on research and theoretical work than on action, and serves as a sounding board for ideas a little too unorthodox to please Keidanren. The latter, as an organization deeply and personally involved with politicians, cannot criticize the ruling party as frankly as CED can from its ivory tower.
Nikkelren: The Labor Specialists
While Keidanren runs a very skillful and competent public relations agency, Nikkeiren, the Japan Federation of Employers Organizations, could better be called the propaganda ministry of zaikai. Few foreigners other than government or labor officials have contact with it, however. Founded in 1948 by hard-nosed bosses adept at breaking strikes, Nikkeiren is zaikai's headquarters for formulating labor policy and ideological counterinsurgency.
Its membership reflects its purposes. It serves zaikai mainly, but also includes many smaller businesses among its 30,000-odd corporate members. Because government employees have been the most militant even though deprived of the right to strike, several public corporations, such as the national railways and the telecommunications monopoly, sit on Nikkeiren's board of directors.
The overriding tasks of Nikkeiren have been to cripple labor militancy by any means, to halt the spread of industry-wide unionism and replace it with the company-union system, to promote productivity, and peg wage increases strictly to the rise in productivity. To create a climate of opinion propitious for attaining this utopia, Nikkeiren has established a pervasive influence over the masscommunications media.
JCCI: Help for Small Business
The Japan Chamber of Commerce and Industry (JCCI), founded in 1878, was once part of Keidanren, but its headstrong president Aiichiro Fujiyama, a wealthy second-generation capitalist, walked out of Keidanren in the 1940s and set up the JCCI and its much larger "branch," Tokyo CCI, as his private barony. Its members are mainly 445 local chambers of commerce representing all types and sizes of companies.
The present head of JCCI Shigeo Nagano prizes the organization as a showcase for his grandiose ideas about free world cooperation, a Pacific Economic Community, and especially a second Panama Canal, which he believes would greatly enrich the Asian Pacific as well as Japan.
Recently, JCCI has come more and more strongly under the influence of its zaikai members, who use it effectively both to lobby the government for their own interests and to win support for friendly politicians. With ideology not distinguishable from zaikai's other organizations, it serves to indoctrinate hundreds of thousands of minor entrepreneurs with conservative, privateenterprise, anti-union ideas and attitudes along with practical information.
Sanken: The Headquarters
The newest and least understood of zaikai economic organizations is the Industrial Problems Research Council, known as Sanken. Emerging from the Japan CED and the JCCI in the mid-1960s, it was a select council of individuals representing the salient oligopolies and their favored economic organizations.
Like Japan CED, Sanken was initially thought to represent a more progressive line than Keidanren and Nikkeiren, and also had the advantage of operating secretly through direct personal contact with top-level Japanese and foreign counterparts. In the beginning it had only seven members, all relatively young and none with zaibatsu backgrounds. It was regarded as a challenger to the older, more orthodox Keidanren leadership, and quickly made its mark with several bold initiatives such as a 100 billion yen fund for the development of overseas resources, sweeping political reforms, liberalization of trade and investment, and deficit-financing issuance of national bonds. Later, its membership was expanded to 24, including the top leaders of all four economic organizations, an unprecedented situation which won Sanken the nickname of "General Headquarters of Zaikai." In principle, there is one representative from each major industry, but very few who are still active heads of enterprises. Sanken has been touted as a united front of zaibatsu and anti-zaibatsu, moderate and militant, prewar and postwar leaders - men with the experience and willingness to analyze current problems and agree upon long-range policies accordingly.
Together, these groups exert a tremendous amount of political power in Japan. Their regular meetings with business groups from the U.S. and Western Europe also serve an important function, creating personal links in times of recession and increasing competition. But their pervasive intervention in the Japanese economic and political decision-making process provide solid proof that, behind the myth of a harmonious "Japan, Inc." and its much discussed industrial policies are hard-nosed businessmen, anxious to make a profit, and out for nobody but themselves. This, after all, is the essence of capitalism - appropriate in a country that boasts the second most powerful capitalist economy on earth.
John G. Roberts is a freelance journalist and editor who has been based in Tokyo for more than twenty years. His articles have appeared in Time, Newsweek, The Far Eastern Economic Review, and The Nation. He is the author of several books on Japan and the Far East, including Mitsui: Three Centuries of Japanese Business.