The Future of Japan's Economic Organizations

Any organization that exists over a considerable period of time faces the challenge of adapting to a changed environment. Keidanren, Keizai Doyukai, and Nikkeiren were founded over a quarter of a century ago in response to conditions that no longer exist. Keidanren was to mobilize the strength of a weakened and fractionalized Japanese business community; Keizai Doyukai was to give young executives an organizational base for contemplating the long-term reconstruction of the economy and the building of a "revised" capitalist system; "fighting" Nikkeiren was to coordinate management's efforts in battling a politically oriented labor movement. Today each of these organizations is in search of a new role.

It often happens, of course, that organizations do not adapt but either go out of existence or become increasingly irrelevant. It is sometimes suggested, for instance, that there is little to justify Nikkeiren's continued independent existence, that it should be disbanded and have its relevant functions absorbed by Keidanren. Uemura himself has suggested that this would be a sensible development, but an unlikely one.^[59] Persons long involved in an organization develop a loyalty that need have little to do with the organization's functions. Employment for considerable numbers of people and impressive titles and honor for the organization's leadership combine to create vested interests in the organization's continued existence. Nikkeiren, as is true for the other organizations, is determined to find a new role—one, in this case, that will enable it to respond to the criticism that it is in fact nothing more than "the labor committee of Keidanren."

The present is a transitional period for these organizations, but the directions in which they are moving seem clear. Keidanren, perhaps most importantly, has had rapid growth in its international operations. It has a

[59] Uemura interview, January 1972.

skilled professional staff in its international economic affairs department and has greatly expanded its activities as liaison between Japanese and foreign business groups and in helping organize large-scale Japanese investment programs in Iran, Brazil, and elsewhere around the globe. It either conducts or sponsors businessmen's conferences with virtually all European countries, the United States, Canada, and Australia. It has committees on relations with Southeast Asian countries and increasingly with Latin America. In 1970 it established a committee on cooperation with Africa.

Its leaders are spending increasing amounts of time abroad. In a one-year period from October 1970, President Uemura made five overseas trips. Significantly, three of them were to the United States. He visited the United States in October 1970 to discuss the textile issue; led an economic mission to Iran in April 1971; went to Washington for the Eighth Annual U.S.-Japan Businessmen's Conference in June; returned to the United States in September to attend the dedication of the new Japan House in New York, to which Keidanren makes a substantial annual contribution; and then led a delegation to the European common market countries in October.^[60]

Keidanren has also expanded its research on pollution, oceanography, and other such questions that can be effectively researched by a comprehensive economic organization. These new directions also, of course, reflect broader changes in the society. As pollution control, consumer protection, and energy resources have become more central issues of concern in Japan, Keidanren has moved quickly to establish new staff sections and new committees to help formulate business positions for dealing with them.

Keidanren has been moving away from trying to represent a unified business community on specific issues and has been putting a greater emphasis on considering broad questions of the long-range future of the Japanese economy. This trend, as well as the element of competitiveness that marks the relationship between Keidanren and Keizai Doyukai, were reflected in Doyukai president Kikawada's remark: "Keidanren's role as a petitioner for business is declining . . . and it is moving in the direction of thinking of the total economic structure rather than solely of the benefits for its member firms. It's improving."^[61]

Many long-time domestic observers of Keidanren agree with these observations of Keidanren's changing role. But foreign observers, who have only recently discovered Keidanren, tend to see it as a remarkably cohesive power center of Japanese business, a view that is more appropriate to the Keidanren of the late 1950s. This time lag in perception has

[60] Information on President Uemura's activities provided by former Ambassador Toshiro Shimanouchi, counsellor to the president.

[61] Kikawada interview, January 1972. The president of the Fuji Bank, Iwasa Yoshizane, made a similar point about Keidanren's development. Iwasa interview, January 1972.

created misconceptions in many a foreign businessman's mind of the organizational unity of the Japanese business community and the ability of a small leadership group to rally a consensus on any particular issue. Depending on the issue, it has led to unwarranted expectations that the business leadership would "do something," or unjustified suspicion that this leadership was indeed coordinating some strategy worked out in the councils of Keidanren.

Keidanren's increasing involvement in questions of long-term economic growth has done much to break down the clear distinction between Keidanren and Keizai Doyukai that once existed. This breakdown has been furthered by the increasing participation in Keidanren by Doyukai activists. Until rather recently most zaikai members tended to concentrate their activities in one or the other of the organizations. Today there is a considerable overlap of membership. Two of Doyukai's past presidents, for example, Iwasa Yoshizane and Mizukami Tatsuzo, are among the most active Keidanren leaders.

As a consequence, Doyukai's role has undergone a subtle change. Doyukai was founded by young executives and represented a different constituency than the more established Keidanren with its ties to the prewar Economic Federation. However, Keidanren, in its official twenty-year history, explains the reason for Doyukai's existence as follows:

The representatives of enterprises or associations in Keidanren are in principle limited to one person each, and these people gather and exchange views at Keidanren from a position of representing an association or enterprise. . . . Thus statements representing the association or enterprise are made at Keidanren, but these same people and other managers have the desire to organize a group as individuals. Keizai Doyukai is organized to meet that desire and wish.^[62]

Doyukai is now defined as an organization to give Keidanren members (and others) an opportunity to discuss issues from a more individual position.

Keizai Doyukai, however, is intent on expanding its functions and proving its usefulness as an independent organization. It has developed, paralleling a similar trend in Keidanren, a role as a kind of de facto philanthropic organization in Japan. It sponsors a variety of activities, usually supported by foundations in the United States, from support for English language teaching programs to joint research programs with a number of American organizations. Doyukai's changing functions are best described by the organization itself:

As Japan has achieved a remarkable economic development, Keizai Doyukai has diversified its activities and has undertaken not only the problems of the Japanese economy as a whole, but also such other issues as area development and urban

[62] Keidanren, 20 nen , p. 8.

renewal, small- and medium-sized enterprises, agriculture, research and development, and education.^[63]

Like Keidanren, Nikkeiren also has greatly expanded its international role, largely because of its position as the representative of Japanese employers in the International Labor Organization. Internationalization of the economy has also lead it to develop new activities in the area of labor-management relations. It has been sponsoring for the last few years, for instance, an annual cruising seminar for people at the foreman level on labor-management relations, giving them a tour of parts of southeast Asia as well as an onboard education. It recently has established a management training center at the foot of Mount Fuji.

Nikkeiren was founded with the slogan: "Employers, be righteous and strong!" and took great pride in the fact that "at the time of the 'Red Purge' in 1950, [it] assisted in expelling well over ten thousand communists from enterprises, thus finally realizing industrial stabilization."^[64] It was to business what Sohyo^[*] (the General Council of Trade Unions of Japan) was to labor in the 1950s, and the bitter confrontation between the two organizations forms an important part of the history of the labor-union movement and labor-management relations in the postwar period. In the light of that history it is all the more remarkable to hear Nikkeiren's managing director say at the organization's annual conference in 1964: "I and others want to call on Sohyo also to work harmoniously on labor problems. Sohyo members as Japanese want to work for the development of the Japanese economy. Shouldn't we persevere and keep on trying to move near a harmonious relationship with Sohyo and not attack it as an enemy in [labor] struggles?"^[65]

Speaking in 1972, the president of Nikkeiren, Sakurada Takeshi, accented the organization's new posture with the following remarks in regard to that year's coming spring labor offensive:

There would be no other way for employers than to tackle this spring offensive with modesty and seriousness, and to conduct the labor-management negotiations with sincerity, regarding this as a place to educate and be educated. . . . Even when the negotiations fail and dispute [strike?] action is started, the private enterprises must stick to the stand that the "disputes are also the means for education" and wait for the restoration of peace without losing the attitude that both labor and management mutually educate and are educated through the disputes.^[66]

Nikkeiren still spends much of its energy in giving assistance to industrial associations and enterprises in their bargaining with labor during the spring struggles, and it still serves as an important organization

[63] Keizai Doyukai, Keizai Doyukai, Japan Committee for Economic Development (Tokyo, 1971).

[64] Nikkeiren, "An Outline of the Japan Federation of Employers' Associations," pamphlet (Tokyo, November 1971).

[65] Quoted in Zaikai tenbo^[*] , p. 29.

[66] Quoted in Nikkeiren News , no. 48 (June 1972): 1.

in management's dealings with the labor union movement. But as labor has become increasingly concerned with actions to maximize its benefits under the present economic system and less concerned with political action to change that system, the "fighting" nature of Nikkeiren with the emphasis on political confrontation that the term implied in the 1950s has given way to a greater emphasis on research and management-training functions. It has for several years now argued for replacing the seniority and lifetime employment system with "a personnel management system which values individual employee's ability and competence in order to overcome labor shortage and to make Japanese enterprises more competitive in the international market."^[67] It has an active research program dealing with issues of wages, promotion and retirement systems, social security and other welfare programs. It has established an Institute of Labor Economy, which does research in such areas as productivity and international wage comparisons, and periodically issues statistics on labor questions.

As big industry regained its strength and grew and set up its own research organs, Nikkeiren found itself playing an increasingly important role for small- and medium-sized enterprises in providing expertise on questions of labor-management relations. Nikkeiren, unlike Keidanren and Keizai Doyukai, has a network of active local branches. While the organization's role as the representative of big business in political struggles with the labor movement is declining, its function as a source of information and advice in dealing with problems of labor relations on the part of smaller firms appears to be increasing significantly.

The official twenty-year history of Nikkeiren provides perhaps the best expression of the organizational adaptation as well as its specific direction of change:

Seen only in terms of [management's] strategy against the labor unions, Nikkeiren may look as though it is becoming just the labor section of Keidanren. But this is nothing more than a one-sided view. It is very clear that now the main focus for Nikkeiren's overall activities is shifting from strategies for opposing the spring struggles and the labor unions to areas of much broader labor-management relations and the development of individual capabilities through its activities in job analysis (shokumu bunseki ), educational development, mutual understanding (ishi sotsu^[*] ), and the like.^[68]

There are commonalities in the direction of change of all three economic organizations. They all are becoming increasingly involved in international affairs and are expanding research functions in areas where no one enterprise or industrial group performs. Keidanren and Nikkeiren are less involved in the day-to-day representation of Japanese business and employer interests and more active than in the past in the analysis of

[67] Nikkeiren, An Outline , p. 5.

[68] Nikkeiren, 20 nen [A twenty-year history] (Tokyo, 1968), p. 12.

long-term trends and in research on problems of concern to the business community in general. In performing such functions Japan's economic organizations are acting in much the same way as comparable European organizations. Keidanren and the other economic organizations are likely to continue to perform important roles for the Japanese business community, but they will not be the consensus-mobilizing and representative roles that were so important earlier in the postwar period. Important as these organizations are, they no longer appear to play the role attributed to them of being "indispensable in achieving consensus and in presenting a united front on issues and problems."^[69]