Why was last Sunday a sad day for Japanese democracy? Because it was demonstrated that a TV celebrity who also happens to be the prime minister of Japan managed to hijack the cause of reform, placed meaningful policy discussion out of bounds, and was given the opportunity to continue blocking the real repairs that Japan does need. Koizumi’s achievement is amazing if you consider that genuine privatization of postal savings is unthinkable. We need to be very clear about this right away; what I write here is not controversial opinion, it is a reality anyone can see. The money collected by the post office has a peculiar function that is crucial in helping to keep the Japanese economy going through the zaisei yushishikin – which officials can treat as a “second budget”. If you expose the huge amount of money involved to real market forces – which is what privatization means – Japan’s financial system would collapse along with many of its agricultural institutions, and practically the entire construction sector would go bankrupt. Just one further detail: In combination, this fund, administered by Ministry of Finance officials, together with Japan Post itself, are the biggest holder of Japan Government Bonds, which helps to ensure that this form of government financing remains insulated from real – unreliable – market forces. The few who have immersed themselves in these details are not worried about the possibility of a calamity, seeing that as the legislation put forward by Koizumi is designed to be implemented in the dim future twelve years hence it does not begin to represent believable policy.

But if any opposition candidates told the public that Koizumi and those who had remained loyal to his plan were not offering a policy at all, their voices were drowned by the din created by the media in which “reform”, “reform”, “reform” echoed from all sides. Anything they tried to get across about genuine policy, and about Japan’s real problems was also lost in the frenzy created by Koizumi and his election tacticians; a frenzy that was supposed to reflect the Japanese public’s deep desire for reform. In forty years of watching Japanese elections I have seen many funny as well as disturbing things, but found that Japanese voters usually have some sense of balance and common sense. Last Sunday’s must have been the most nonsensical postwar election ever to have taken place in this country. Mostly due to the incredibly superficial imagery on TV and the strange Japanese enchantment with the term “reform”.

That began twelve years ago when, during the last political upheaval that brought a temporary end to LDP hegemony, a new notion took hold of a large part of the Japanese population: fundamental change in the way that Japan was being governed was not only necessary, but also possible. Before then, most politically astute Japanese had not thought that their rather rigid political system would ever allow fundamental change without a shock from outside. “Reform” became the talk of the day for at least nine months. The very word “reform” seemed to gain some magic resonance as it circulated in all publications and reverberated among the public.
And so it became an amulet; something treated as if it has a magic power of its own; with the assumption that solely by being mentioned it helps itself become reality.

Koizumi Junichiro seized the amulet when he became prime minister and he has been flaunting it ever since. In no other country will you hear so much talk of reform as here. In the months following Koizumi’s rise to the top the amulet was constantly visible; TV and newspapers were worshiping it every day. This caused a heady atmosphere. Japan was going to change for the better, change totally. There was only one curious aspect to all this. No one at the time ever bothered going into details on the thousands of occasions when the issue of reform was raised. Reform of what? And precisely how? It did not seem to matter. Commitment to “reform” was enough by itself; it had become Japan’s sacred political cause.

Four years later, what has Koizumi as prime minister managed to accomplish with respect to policy initiatives that seemed to be obviously necessary in 1993, initiatives that would turn Japan, in the words of Ozawa Ichiro, “a normal country”? Preciously little. He has essentially followed the agenda of Ministry of Finance officials who have long waged a campaign to restrain the worst excesses of public spending paid for by the “second budget”. His postal savings plan is in line with this agenda as well, making sure that in the longer term they can maintain and enlarge control over that money.

To be fair to Koizumi, whatever desire for genuine reform he might once have had, he faces the same impediment that has curbed the ability to be effective of almost all his predecessors. Japanese prime ministers simply do not in practice have the mandate that they have in theory and that comes with the job in most European or other Asian countries. The same goes for cabinet ministers who rarely have a real say over the portfolios they hold and are considered temporary visitors in their ministries. Outsiders are frequently misled on this point as elected Japanese officials are treated with an impressive show of deference, which compensates for their lack of true power over policy. It was thought to be among the priorities in 1993 to repair that situation, so that Japan could become a “normal country”. And it has been an important issue in the political thinking of the top Minshuto politicians.

Because Koizumi is more flamboyant than almost all other LDP politicians, and because he is a relative outsider who does not mind breaking the unwritten rules of the traditional Japanese political elite, he indulges in political gestures that give spectators the impression of steadfastness and daring. Their results do not help Japan one bit. In the six party talks concerning North Korea – one of the most important strategic issues in Japan’s neighborhood – Japan plays an entirely subordinate role. Koizumi’s North-Korean initiative went haywire because he had not thought it through, and had not made it part of a much broader strategy that would have included a marshalling of forces so as to ensure a broad national grasp of his goal. Diplomacy with Japan’s neighbors has virtually come to a standstill under Koizumi, as relations with China, Russia, and South Korea have all deteriorated. Koizumi appears to thrive in a peculiar realm of Japanese politics where gestures and symbols substitute for policy substance, and so he worsened relations with China by stubbornly repeating his visits to that relic of State Shintoism, the Yasukuni shrine.

His “great victory” of last Sunday is likely to confirm the valor of steadfastness to himself, which is a good reason for Japan’s political players to be alert to new surprise actions that will not help Japan one bit. Those players, also inside the LDP, will help themselves and their country by keeping in mind that this victory was the result of a trick that worked because it came entirely unexpected; a sign of how vulnerable Japan’s democracy has become. Koizumi decreed that only one subject counted and the country, dazed by fake reform frenzy, went along with this deception. He played the media better than any prime ministers before him, so that he could make news stories revolve around the question of whether he or disloyal party members would win. Real policy issues as well as the opposition parties that might have raised them were shoved aside in national media attention, fatally undermining the process for which elections are held to begin with – at least outside dictatorships. The trick could have been designed by Karl Rove, the political strategy genius but totally unconscionable wrecker of democracy who is behind George W. Bush’s election maneuvers. It may all seem permissible as part of the mean art of politics, but it causes the demise of public influence over what happens in a country.

Many, perhaps most, elections in other countries are not much about policy either; the commonly heard joke in Japan about elections being political beauty contests happens to be, unfortunately, the truth in much of Europe and the United States. Democracy appears to be deteriorating everywhere. For much of the time this does not have terribly negative consequences as long as there are no emergencies and things continue to run smoothly. But isn’t new policy necessary in Japan? Since 1993 Japanese people with an interest in the future of the country seem to have been convinced of it.

So what should the Minshuto, the smaller parties, the LDP dissenters and the rest of us be thinking about while Koizumi makes his moves to give, perhaps inadvertently, the bureaucrats a longer lease on their beloved status quo?

One area that ought to be the subject of serious thought and discussion concerns the working relations between bureaucrats and politicians. Many have long understood that this is the core problem. Elected politicians have the duty ultimately to determine what a government should do. But in Japan they have had great difficulty to achieve an effective partnership with the unelected bureaucrats; professionals who know more about their area of responsibility than the politicians do. Once Japanese politicians attain knowledgeable leadership over these officials, genuine policy initiatives will become possible. A most direly needed one is tricky and complex; it concerns Japan’s support of the dollar because of which Japan loses its savings to the United States. Many of the problems that are known to the public, such as the coming pension crisis and slow growth, are connected with this unexamined policy of the Ministry of Finance. When Japanese politics reaches the stage when it can shed the bonds of vassalage to the United States and become a truly independent (and normal) country, it can begin to devote attention to the spreading of Japan’s accumulated wealth among the population. It should, even before then, begin to respond to the world as a significant and responsible political entity. There is today virtually nothing in Japan’s foreign policy thinking that reflects the momentous political changes that its giant neighbors — China and Russia — have undergone in recent times. Also the role of the United States in the world has in the past four years changed dramatically. True political leaders, when they make their appearance, will have to inspire the gaimusho urgently to develop new diplomacy to cope with an entirely new reality produced by those changes.

The best hope for all this to be accomplished is still a genuine opposition party. If Minshuto keeps itself together, fights its tendency to become a mirror image of the LDP, and continues its way toward a two party division in Japanese politics, it could fulfill that task. It would do well to start using the term “repair” instead of “reform”, whose amuletic function has rendered it meaningless. This is not the time for opposition ambitions to evaporate. Because contrary to present appearances there is actually little politically significant life left in the LDP. It used to win elections because of its subsidies and infrastructure spending. It now must seduce the voters with gross illusions, while it is badly divided and out of touch with its traditional base, all of which means that its huge breath last Sunday could be its last. Maybe the next elections will yet save Japanese democracy.

Japan’s prime minister Junichiro Koizumi is a master illusionist. Playing the media better than any of his predecessors, he has managed to create the widespread impression that voters will have chosen reform if they return him and the LDP candidates supporting his favorite project to the Diet next Sunday. Years before he became prime minister an idea was implanted in his mind that true reform in Japan would begin with an overhaul of the postal savings system. Ever since he has believed that they ought to be privatized, and he has frequently repeated that he would stake his “political life” on an attempt to accomplish this. In the four years that he has headed Japan’s official government he was creeping toward this seemingly receding goal until the Lower House of Japan’s parliament passed related bills, which were subsequently voted down by the Upper House on the 8th of August. This prompted Koizumi to challenge his own party, and Japan’s political elite more generally, dissolving parliament and calling for a snap election. In the current campaign he insists that his plan of privatizing postal savings is the sole issue deserving of debate. He makes it appear as if the future of Japan depends on it, and refuses to be drawn out on other subjects, including some that would appear to deserve more urgent attention.

The Japanese postal savings system is in effect the world’s largest bank. True privatization of it is unthinkable because of the role its assets play in making the informal part of Japan’s political economy go round. That part – relationships and transactions, which are never scrutinized and are beyond legal control – is huge, and gives the Japanese economy its peculiar and enigmatic strengths. Household savings have long been a core element of what used to be called the Japanese economic miracle. Their interest yield is minuscule, but the post office has always offered marginally better rates, which has made its savings system the most popular. The savings are controlled by the Ministry of Finance – a rival bureaucracy to the ministry of Post and Telecommunications. They used to be administered by its Trust Fund Bureau and went straight into the zaisei toyushiin, more popularly known as ‘the second budget’. Today the money follows a less clear course through other channels, known as the Fiscal Loan Fund but continues to be allocated at the discretion of Ministry of Finance officials through a myriad of largely unaccountable administrative entities. Among many other functions, it is crucial in sustaining the Japanese Government Bond system – which should not be called a market because it is deliberately insulated from market forces.

The national financing function of the postal savings system dates from the later war years when, along with the supposedly commercial banks, it helped ensure an unimpeded flow of funds to the munitions industry. That arrangement formed the basis of an intricate system of financing that served postwar Japan’s legendary rapid reconstruction. Once that was accomplished, the huge amounts that were allocated through the “second budget” found new purposes under the control of Japan’s postwar political genius Kakuei Tanaka – the most influential politician of two generations, who was most powerful when working behind the scenes. Tanaka ran an “army” of parliamentarians and political operatives that excelled in guaranteeing electoral success through public spending on infrastructure. In its post-Tanaka development this tradition has bestowed upon Japan numerous unnecessary tunnels, bridges and three-lane highways leading to nowhere or into unmovable mountain-sides. These porkbarrel benefits are still significant for many campaigning politicians, especially LDP candidates. Hence the “background story” today is that Koizumi must fight vested interests within his party who hate to see a reduction of porkbarrel spending. There is, however, much more to what is done with this “second budget” than waste. It guarantees flows of money to parts of the country that otherwise would have little to stimulate regional economic activity. But most importantly, Japan’s excessive public spending helps solve a little known and even less understood problematic aspect of its political economy. It is forever in need of ways to create yen so as to balance its gigantic dollar holdings, most of which can find no other destination than to circulate in the American economy. The creation of accounts for contractors, who subsequently pass on the money they theoretically receive for construction tasks to the accounts of subcontractors – there are roughly half a million of those in Japan – ensures that a lot of yen enters the economy.

Considering its many functions, some of them essential to the informal, extralegal ways in which things are done in Japan, exposure of this system of financing to anything remotely resembling a market would certainly constitute a revolutionary overhaul. But it would also cause the collapse of the construction industry and of vital financial and agricultural institutions. A collapsing Japanese financial sector would be like an earthquake whose tsunami would inundate Wall Street, London, Frankfurt and much more. Not surprisingly therefore, there are no serious plans for what Koizumi claims to be the first huge step toward an overhaul of the country, even as he avers that it will help solve all other problems.

A quick glance at Koizumi’s privatization scheme that the Upper House rejected is enough to put any worried minds at rest. It aims to split the post office into four entities (mail delivery, savings, post offices and postal insurance), but not before 2017. Any legislation of this type designed to be implemented twelve years hence does not constitute policy in any serious democracy. Furthermore, there exists no genuine private sector to begin with, with respect to large-scale financing. This is conceptually challenging, but elementary to understanding of how Japan is put together – the supposedly private sector banks, for instance, have never been in the business of profit making.

What then are we witnessing? An incredible show, the deeper significance of which may have escaped Koizumi himself. How to explain his role? One needs to keep in mind that Japanese prime ministers do not for practical purpose have the mandate that comes with the job in most European or other Asian countries. The Japanese political system has not in our memory, and perhaps never, made room for a genuine functioning prime minister; or for that matter cabinet ministers with a real say over the portfolios they hold. That is not the impression that outsiders get. Anyone who has observed Japanese cabinet ministers up close must have noticed how they are treated with exceptional deference by those around them. But this bowing and scraping is in stark contrast to the infinitesimal influence these politicians have in their own ministries, where they are usually considered mere temporary visitors. It is as if worshipful attention has to make up for the lack of factual power.

For the Japanese prime minister this is true in a magnified manner, since he gets much respectful international attention on top of what he gets at home. And in the case of Koizumi this odd discrepancy has led to trying big things in a way that gives the impression that he likes to jump into the water just to discover whether he can swim. His North-Korean initiative went haywire because he had not thought it through, and had not made it part of a much broader strategy that would have had to include a marshalling of forces – including the media – so as to ensure a broad national grasp of what he tried to achieve. Most controversial have been his stubbornly repeated visits to the Yasukuni Shrine, seen by China (and Korea) as a demonstration of misplaced respect for war leaders branded as war criminals, which has led to a worrisome deteroriation in Sino-Japanese relations.

If institutional obstacles deprive you of the power that the title of your office suggests you ought to have, you cannot ever test that power. You are also tempted to indulge in symbolic actions on a par with the ritual devotion you receive from your surroundings. Japan’s public political life is hardly ever concerned with the real substance of relations and transactions among those who share power; it is put together of gestures, symbols, and scandals. Koizumi thrives in this environment. He has never been suspected – this is very important – of involvement in a scandal. He has projected utter sincerity about urgent issues in his daily press conferences, and seems to be steadfast, even though he has not found a way to steer a new political course. He is the first Japanese prime minister who is also a TV celebrity, and is much more flamboyant than the average Japanese politician.

Helped by the wishful thinking of many in the media he still comes across as a reformist politician even after four unproductive years. Reform is what Japanese want. The almost magical term has resonated with the public since a period of party political upheaval in 1993 when the idea gained ground that fundamental change in the way things were arranged in Japan was not only desirable but also possible. But exactly what any genuine reform might actually entail is rarely put before the public, with frustrated voices of the more thoughtful opposition politicians hardly ever getting through the din of supposed public opinion created by the media. So far Koizumi has served the agenda of activist officials within the Ministry of Finance. These believe that they have been instigating reform ever since they felt the need to restrain the public spending excesses caused by the the Tanaka army corps. The postal money project fits in with this restraint and with their overriding aim to keep savings under their control.

The question now is whether the electorate will wake up in time to the fact that they actually do have a choice next Sunday. The events of 1993 gave rise to politicians who have come to understand how they might gradually reform what urgently does need attention. The Japan Socialist Party, which with its mainly ritualistic opposition had been a dismal failure for 38 years of Japanese politics has now been displaced by a party created by these reformist-minded politicians: The Minshuto (DPJ). Its more eloquent politicians convey a relatively good grasp of Japan’s real problems, as they speak of the horrendous pension problems and – a first for Japanese elections – the need to address the deteriorating relations with Japan’s neighbors.

This group of genuine reformists can conceivably form a coalition to end the virtual monopoly the LDP has enjoyed for half a century, and thereby re-introduce the prewar two-party system, as well as reclaim significant power for the prime minister. The election on Sunday can either bring this about or postpone it indefinitely.

They are up against grand theater. As his current challenge demonstrates Koizumi is capable of putting on quite a spectacle. He has shocked a public by shattering the (supposed) harmony within his party; helping to spread the notion that the great policy task he must fulfill also overrides basic Japanese social commands. Koizumi has brilliantly managed to accomplish something all politicians try when faced with onerous problems. He has changed the subject. The story now is about loyalty, about steadfastness, about followers turning against their master. Adding to the spectacle are the so-called “assassins”, handpicked candidates – ten of them female, chosen with an eye to their looks – to run against the heretics. The only thing lacking is a dramatic love theme, but otherwise it could be grand opera. Koizumi loves opera and, as I had ample opportunity to discover in conversations before he became prime minister, he is thoroughly familiar with many opera plots. This may be his own finest production. By using harsh tactics against opponents within the LDP he causes the public to believe that he is fighting vested interests. Whereas in fact and probably unintentionally he will if successful be prolonging their grip on Japanese politics.

     Amid the appearance of a resurgent, newly aggressive America, the really significant international development of 2003 was the destruction of the conditions that until now had made American hegemony possible. The almost universally accepted dominance of the United States had been the pivot of a relatively stable and peaceful world order, but that order now stands on the verge of disintegration.
     Hegemony implies consent on the part of weaker powers, which enables the dominant power to avoid overt coercion _ the mark of imperialism, from which it must clearly be differentiated. It reveals itself in the dominant country’s influence over other countries’ world views, particularly in regard to international political and economic relations.
     While the United States has often been accused of arrogance and has not always been accepted as a model of good governance, generally American hegemony enjoyed a global welcome. The United States was understood to constitute the world’s primary force for order, an order initiated in the cauldron of World War II, built in the shadow of superpower rivalry and gradually consolidated in the warmer, more hospitable setting of detente with the Soviet Union. It became the fundamental reality for any government with an eye for international affairs.
     For all its defects, this world order came closer to a tolerably stable society of states than anything that the world has seen for at least three centuries. The United States was recognized as its main architect, and few doubted that its dominance was crucial to sustaining that order.
     China, Russia and indeed all major countries had felt relatively comfortable within this geopolitical system. There had been no signs that any of them would prefer its demise, fantasies about rogue states notwithstanding. After the upheavals of the first half of the twentieth century this geopolitical system had greatly reduced fear and made good neighborliness an international norm. In spite of cynical governance and tyranny dotted around the world, and much local slaughter, notions of democracy and human rights had gradually seeped into governing bodies, opposition groups and media systems in countries which previously had lacked even the terminology with which to formulate them.
     This widespread acceptance of American hegemony was predicated both on a belief in American strength and on trust in American intentions and reasonableness. More specifically, European and most Asian governments believed that Washington would always consider its own long-term interests to be interwoven with the continuation of the world order which it dominated. In other words, they trusted the United States not to lose its head.
This trust came to an end in 2003, with the current administration’s decision to engage in “preventive war” _ and, in the process, to break with America’s own traditional principles and to violate valued international agreements, including the United Nations Charter. Governments worldwide cannot fathom how this action could serve any conceivable American national interest, since its consequences have only endangered American security.
     Perhaps driven by a psychological need to reject craziness as a motive force and to find reason in all things, some commentators have pointed to supposed national interests such as oil supplies, troop withdrawal from Saudi Arabia or simple war profiteering. None of those stands scrutiny as an ultimate reason, and none begins to match in importance what the United States has lost.
     In fact if not in name, the Atlantic Alliance has been abolished. The former Cold War allies now find themselves offered only a system of vassalage, with the consultation stipulated in the North Atlantic Treaty now replaced by command. The Middle East, now even more unstable, has become a rich recruiting ground for terrorists, and nuclear proliferation is once again a global threat. With its dire limitations now manifest, Washington is steadily losing the informal control it once possessed over various international agencies. The international faith in America’s strength has suffered much as a result of the occupation of Iraq, since its political authority never lay in its mere muscle power.
So far the response of Europe’s elite circles to the end of American hegemony have been ambivalent, with many confirmed Atlanticists as much in a state of denial as is the majority of the American public.
     But in the past few months the European general public has become well-nigh unanimous in its distrust of the United States. Asian governments, elites and populations alike have become fearful of what they see as destructive American capriciousness. In South Korea, once a staunch ally with an emotionally pro-American populace, it would be hard to find even a handful of people who still trust Washington. Like France, Germany and Russia, along with Brazil and other less influential nations, Asian governments have been forced to rethink their long-term diplomatic and strategic goals.
     The vast majority of Americans, including the political elite, never realized the extent to which Asians and Europeans had come to see each other, and to see world events, through American filters. Even as they decry the Bush administration’s unilateralist tendencies, most of its American opponents appear not to have grasped the damage being done to the world system.
This is due to the age-old triumph of theory over experience. Ingrained assumptions derived from “realist” and “neorealist” doctrines that have informed academic studies of international relations, simply block the view of the authors of preventive war policy as well as their critics. These doctrines were rooted in a world that passed out of existence with the Second World War, however, and since then have been accepted on faith rather than on any clear-minded assessment of recent world conditions.
     The balance-of-power metaphor which is central to the “realism” legacy, and which was relevant to Cold War containment policies, appears to have been the spur for the current American policy-makers who seek to establish the United States as an unchallengeable military power in perpetuity. Heirs to a tradition of American exceptionalism, they reject the inevitability of an emerging challenge of counter power — the core of realist doctrine — and have focused on creating the conditions that will prevent the theory from becoming fact.
     The received wisdom around the world is that there has never been a country as powerful as the United States is today. This is true; but because of a misreading of global realities, national paranoia, and party political exploitation accompanying a reaction to terrorism mislabelled as an actual war, the United States has rapidly moved beyond its peak and has already begun to shrivel as a world power.
     The creation of a genuine empire to substitute for hegemony is beyond its grasp. It does not have the material or bureaucratic wherewithal to maintain one, its ruling elite does not have the intellectual capacity to run one and the American public will put a stop to it the moment it realizes that the current administration is trying to build one.
     Contrary to accusations by Bush supporters, very few Europeans engage in self-righteous finger-pointing or see recent developments as an opportunity for schadenfreude. Many have tried to suppress their dawning realization of catastrophe by talking up America’s capacity for self-repair, while continuing to hope that in the international arena things will somehow go back to normal.
     But the betrayal of a trust creates irreparable breaks, and it is very unlikely that a stable world order founded on American hegemony can ever return, even if Washington resumes a multilateral foreign policy.
     We are all in a fix because of the American plight. It means not only the regression of a great political culture, but also the onset of chronic global insecurity the likes of which we have not seen since 1945.

When considering George W. Bush, the most important fact to keep in mind is that he is not well-suited for his job. He is in the running to be the most destructive president in American history. Any rivals for that epithet (possibly James Buchanan, whose ineffectiveness during the slavery crisis in the late 1850s broke the country in two, and caused the carnage of the Civil War) were not most powerful men in the world. Also important to remember is that this momentous fact is not emotionally tolerable for the vast majority of Americans. Opinion polls frequently do not quite reflect what they claim, but if a New York Times/CBS News poll says that 67 percent of the pollees approved of George W. Bush’s job performance, while 70 percent said he had strong qualities of leadership, this means something. In May 2003, many, perhaps most, Americans still believed that the simple good-vs-evil approach to world affairs fits American circumstances. To outsiders who have followed events since September 11, such trust in the president is only explicable by the fact that the American public suffers from a condition for which “misinformed” would be a euphemism.
    To a European like myself much of the country appears to be in denial; comparable to a patient who refuses to accept the reality of medical tests that establish critical illness. If members of the Democratic Party, which is supposed to form the country’s political opposition, have thoughts running in this direction, only few have voiced them in public. Under different circumstances, in normal times of partisan political rhetoric and electoral opinion, people would hardly think twice about portraying an adversary as incompetent when measured for qualities deemed necessary for holding high office. Such political criticism would normally be taken with a grain of salt. But with George W. Bush it cuts too close to the bone.
     The United States is farthest advanced in the take-over of the media by the entertainment industry, and a display of presidential incompetence can only be made palatable within the safe and predictable conventions of late night comedy shows. Hence the program “Saturday Night Live” regularly broadcasts skits on the theme that Bush is a chimpanzee. But presidential incompetence shown in news programs would be too disquieting, and whatever is disquieting does not entertain.
     Only an underground of political opinion, using the internet as its main public communication tool, have since the beginning of his rule elaborated on the subject of George W. Bush not being suited to the tasks he must perform. And only a few newspapers, aghast at schemes for the conquest of Iraq and creeping domestic police-state methods, were in early 2003 beginning to portray these developments as America’s plight brought on by an incompetent leader.

     the unfit president

    The reason that George W. Bush is not suited to his job is that he does not know enough. To the extent that one’s language reveals the order of one’s mind, his mind is a shambles. Being the president of the United States has come to mean being the most powerful man in the world. We all would expect that the person in that singular position possesses sufficient knowledge of the world, and sufficient curiosity, to allow him at least being serious and thoughtful about how his conduct affects hundreds of millions of people. There has been no evidence that George W. Bush possesses either.
     Even while some of George W. Bush’s predecessors may, like him, have lacked a sense of balance and proportion, one could normally, in situations requiring seriousness, detect a grasp of gravity when this was called for. There is much evidence in his televised appearances to conclude that in this regard Bush has remained stuck in an adolescent phase of personal development. A telling moment came when in an interview for Talk Magazine (August 1999) he ridiculed a woman whose plea for mercy while on Texas’ death row he had ignored. This woman, Karla Faye Tucker, had become nationally known as she had aired her plea during a CNN interview. Bush is an enthusiastic supporter of the death penalty and convinced that all so sentenced deserve to die, but the decision to let someone die rather than commute the sentence would still seem to require a demeanor of solemn seriousness. Instead of rising to that level, when asked to recount the episode, Bush mocked Tucker as he pinched his face into a parody of tearful fear and whimpered “Please…don’t kill me.”
     Another chilling glimpse of Bush’s apparent inability to fathom the momentousness of his own acts was inadvertently shown on TV in several countries as the BBC aired coverage of preparations, live from the satellite feed coming from the Oval Office of the White House, before his speech on March 17, 2003 declaring his intention to invade Iraq. George W. Bush was getting his hair combed, as he sat at his desk looking at his text, the contents of which announced the de-facto re-ordering of strategic reality. At an unguarded moment he started making funny faces at his handlers, eyes darting back and forth, and he pumped a fist, uttering “feel good”. When he challenges Iraqi opposition to the American occupation with what amounts to an invitation to attack American troops with his now notorious “bring them on” phrase, one is made to wonder whether this president has any idea at all of what he has brought upon himself, his country and the world.
     Needless to say, some of what I have said in the above is likely to make some Americans angry. Many have sensed some of what I have summed up here as they watched their president on TV. But bringing themselves to believe what their intuition tells them, and turn their discomfort into careful thought, is difficult. Many cannot afford to do so. Not only because of what their immediate neighbors may think, or because of their desire never to be thought of as unpatriotic, but also for personal psychological reasons; for the sake of their self-preservation as citizens of what they must continue to believe is a democracy. After all, George W. Bush has not been bestowed upon the American population in the way that in earlier epochs, in pre-democratic parts of the world, a populace quaking with fear would have to put up with a new monarch, perhaps the mad or wastrel son of a dead king. He has not, officially at least, inherited the office.
     There has not been an American president who was as scarcely literate as the present most powerful man in the world. Some earlier presidents, like Andrew Jackson, were accused of illiteracy, but upon closer examination they were models of expressiveness when compared to George W. Bush. Eisenhower, an extremely shrewd and accomplished president, was sometimes criticized for a similar kind of verbal chaos as produced by Bush. But it was immediately clear that underneath this was thoughtfulness and responsibility. I am not talking here of the all-too-common phenomenon of a politician making grammatical mistakes, or getting the meaning of some words mixed up. The pressure cooker atmosphere of the media-circus politics of our times, with its ubiquitous TV cameras and microphones, have made those slips byproducts of everyday political life. I am talking about an inability to stay coherent after even a couple of unscripted sentences. George W. Bush is incoherent much of the time when he is forced to emerge even a little above the stratum of utter platitudes. Many of his sentences do not mean anything at all. Some apparently say the opposite of what he in all likelihood meant to say.
     George Bush the first, president from 1989 till 1993, was notorious for his linguistic inabilities and the dearth of meaning in his pronouncements. But Bush the second is a great deal worse. I am not talking here about intelligence per se. A friend – whom I consider one of the most knowledgeable analysts of American politics – reminds me that “our historians have never been able to establish a clear correlation between intelligence and proficiency as president”. True, but there are other qualities of the mind toward which George W. Bush continues to demonstrate an easily perceived indifference. Strikingly absent is curiosity, and being open to the possibility that your “gut instincts” may mislead you. Bush’s language reveals a sloppiness about distinctions, connections and nuance, and lack all subtlety. Then there is the black/white nature of his views, the “with us or against us” approach. For his supporters this is a plus, they see steadfastness on behalf of American interests; but for those with a more cosmopolitan perspective it places the president of the United States sadly outside the realm of diplomacy.
     Even more disturbing: none of what I have said here was ever a deep secret. George W. Bush’s illiteracy and incoherence, his lack of diplomatic and communication skills has been plain for all to see. It has been right in front of us on TV screens, throughout his presidential election campaign and ever since. It is openly acknowledged that he is an “intensely scripted” president; most of the words you hear him say being put in his mouth by other people. Even then, his handlers are happy when he gets through a statement or a short speech, read from a teleprompter, without stumbling. Initially American newspapers gave the story away in their dead-pan reporting on whether or not it came from the heart when Bush said this, that or the other, or whether it was prepared by his coaches. When after September 11 he cried on screen on one occasion, I read in at least half a dozen places that “his tears were real”.
     The Europeans in whose midst I lived for much of the presidential election campaign period, and in the months following the September 11 attacks, almost unanimously commented on the eeriness of watching the current American president address any weighty issue at all. There is no reason to believe that Europeans have been born with superior abilities to diagnose the qualities of politicians. Bush’s ineptitude as displayed on TV screens must have been as evident for Americans. The difference has been that Europeans have been spared much of the propaganda that has accompanied the TV images, telling Americans to disbelieve what they kept seeing. The United States’ broadcast media have persistently offered commentary that is dissonant with what the viewer’s eye and mind perceive in the screen images of the president. Implicitly, if not openly through positive comments, American TV has contradicted what common sense would dictate. This has to do with the sway that the American Right has gained over broadcast media. But it has also probably been the result of a widespread feeling among commentators and those who “bring the news” that, as everyone already knows of Bush’s awkwardness with the English language, it would be unseemly to rub it in any further.

    compensating propaganda

    In the lifetime of most of us there has probably not been an instance of propaganda as effective as that which was successful in eradicating doubts about George W. Bush’s competence from American TV viewers’ minds. For comparable effectiveness in directing the political thinking of an entire nation we must go back to Germany or Japan in the early part of World War II, or to newly communist countries before unfulfilled promises and political suppression could create widespread doubt. Some significant national doubt was beginning to gather around the presidency of George W. Bush when it was eight months old. But in the aftermath of the terrorist massacres it was pushed back and out of the national consciousness.
     The attacks were a godsend to the floundering Bush administration. There was no question that in living memory there had been no president less respected when he was sworn in. The thought that he was not elected, but appointed to the presidency by a partisan Supreme Court was still very much alive in the minds of numerous Americans before September 11. But in its hour of sudden vulnerability, in its fear of an alien force hiding unseen within its own towns, the American nation required a steadfast and competent president. And the vulnerable American imagination was prepared to believe that one had just been created.
     It required a considerable amount of compensating propaganda. A positive picture of the president had to be constructed in a great hurry because of the initial impression, on the day of the terrorist attacks, of his lacking in courage. On that day of America’s greatest shock since the attack on Pearl Harbor, the president appeared to have vanished as he zigzagged through the country between Air Force bunkers, first in Louisiana, then in Nebraska, before returning to the White House at 7 pm. It was New York’s mayor Rudy Giuliani who served as an emotional anchor for the American public in the immediate aftermath. To explain Bush’s absence when the country needed to hear and see him, a lie was concocted that the secret service and his advisers had specific evidence that he and the presidential jet plane had been terrorist targets.
     For days following the destruction of the World Trade Towers and part of the Pentagon, when most people could not concentrate on other subjects and found it difficult to stay away from TV screens, one major question was discussed only in closed circles: can the president cope with this? Never asked explicitly on the screens, it was foremost in the heads of millions. When in the evening of September 11, George W. Bush finally showed his face on those screens he gave the impression of being confused and frightened. He used trite expressions that were not in keeping with the gravity of the situation, could not build his sentences coherently or intone them with a sense of genuine conviction, and sometimes gave the impression that he did not fully understand the words he used. The turning point came with a gracefully written speech to a Joint Session of Congress on September 20, which gave the impression that he had understood what had happened. But it still took a massive propaganda effort, which dovetailed with the wishful thinking of the American people, to reverse the first damaging impression of the president as a scared rabbit.

    the mysterious metamorphosis

    A major theme dominating American media for months after September 11 was that of George W. Bush “growing in his job”. Typical were the comments of the executive editor of the conservative Weekly Standard, Fred Barnes, who announced Bush’s “emergence as a full-blown war president”. A few honest journalists have remarked that it is impossible to know how Mr. Bush has really changed, because the White House has been extraordinarily adamant in controlling what officials or friends say about him. They had to discover that most of those who are in a position to know what the president feels or thinks keep it to themselves. But before long, as far as the mainstream media were concerned, George W. Bush had mastered foreign policy.
     Something mystical had happened to the person without critical skills, without intellectual curiosity, and with only a dim grasp of the world beyond the realm of rich America, which he had never looked at from the outside. After his post-September 11 speech to Congress, the president began to be compared to Winston Churchill, to Franklin D. Roosevelt, and to Abraham Lincoln. After his much commented upon Axis of Evil speech, one commentator even ranked him above Julius Caesar. Much of that came from the American Right propaganda mills, but these superlatives, spilling over into the mainstream media, were a give-away that something quite outrageous was going on. None of the presidents since Lyndon Johnson — who risked his own political position to achieve goals benefiting the public — could ever be compared to the statesmen that were invoked, and Bush represents an absolute low when measured against these immediate predecessors. The media comparisons with the truly great presidents simply bring out what a dismal imitation of such presidents he is.
     Much of this praise was a result of commentators who believed a metamorphosis of their president to be a minimum requirement for the nation to digest the reality of the terrorist massacre. The great new threat to the country required a leader with more than average talents, and one with no talents at all was intolerable to the minds of most media people. When reality becomes intolerable there comes a moment when critical thought must be suspended. Once that tricky moment has passed, self-deceit becomes extraordinarily effective and contagious. American self-deceit became even deeper and more widespread after the Taliban regime had been ejected from Afghanistan, accompanied by the illusion that Bush had performed brilliantly as commander in chief. As rightist columnists were asking, if you like the war Bush has fought, how can you continue to insist he’s stupid? On television Bush had become a great hero. And once that was the official reality, commentary turned into hero-worship. Bush was a brilliant player on the world scene, and a master of political insight, according to the manufactured reality offered by the United States’ mainstream media.
     Self-deceit does not offer guarantees against creeping doubts, and gradually while George W. Bush demonstrated in April 2002 that he held no diplomatic control over Israel’s Ariel Sharon; while he managed to turn a powerful global wave of sympathy for the United States into a powerful wave of protest; and as his administration’s unsuccessful maneuvering centered on the UN Security Council in March 2003 was America’s loss, more and more media self-deceit has been needed to keep the mystique of the decisive leader going.
     In the way that media and politically powerful Americans teamed up in late 2001 to condemn questioning of George W. Bush’s way with the world, the political system became somewhat reminiscent of a fascist leader cult. Polls that are supposed to test the popularity of the president by asking the public whether he is doing a good job, are taken as proof that he is truly an effective commander and on the right track. High popularity figures bestow an extraordinary quality on the president in a similar manner to how multi-billionaires acquire extraordinary status simply from the fact that they possess astronomical amounts of money. To be sure, an unknown but seemingly increasing number of Americans are expressing concern that the actual policies of the George W. Bush administration, especially those of attorney-general John Ashcroft with his “homeland security” cult, are reminiscent of fascistic government.

    good, evil, and Bush’s God

    How does Bush, the man who was protected by his parents and their friends against harsh experiences in life, fare under all this? We get a pretty good idea through his pronouncements. George W. Bush, like all of us, requires a set of notions implanted in his brain, always ready to be called upon to cope with new information about developments around him. But in contrast to people who are curious about the world, these notions in George W. Bush’s brain are not very subtle. They must be stark, unrelenting, hard, not leaving room for doubt. They are there, in Bush’s case, to prevent him from being less than fully sure of things. That assessment of simplistic assumptions with which the American president does his thinking is inescapable when we look at how he explains his view on world affairs to his associates as well as his enemies.
     The world, as far as he is concerned, is divided into two parts. One part is good and the other evil. It is black and white. Grey shades can be ignored. What follows from such an approach, Bush made clear to all governments in the world after he had announced that he was going to fight the evil part: You can be “either for us or against us”. At first, this may have struck many people as a predictable way of exaggerating a point to get people’s attention and to make a strong impression of resolve. Politicians do that all the time. But when you have listened continually to the statements of George W. Bush, it is no longer plausible to put it down to political rhetoric that need not be taken all that seriously. He means it. As far as he is concerned, evil is something within his capacity to reduce or eliminate.
     A rational head of government would not presume that he could meddle with the world on that fundamental a level. But George W. Bush apparently brought himself to believe that he has been given the task of doing battle against, and conquering, the “evil ones”. Bush does not distinguish between “terrorism” and “evil”. The words are interchangable for him. In other words, terrorism is not in the end a political problem that must be dealt with in a politically judicious manner. Terrorism equals evil and can therefore only be approached with the aim to eradicate it. Two days after the September 11 massacre, he uttered a telling because unprepared line: “Americans do not yet have the distance of history but our responsibility to history is already clear – to answer these attacks and rid the world of evil”. In other words, he has set himself a task comparable to tasks adopted by founders of religions.
     Several reports have spoken of Bush’s own wholly transformed sense of himself and his presidency, believing that “he has come face to face with his life’s mission, the task by which he will be defined and judged.” A Democratic senator of New York, Charles Schumer, who met with the president repeatedly after September 11 told a reporter that “He has told me several times that he is staking his entire presidency on this — that the mark of whether he’s successful is whether he can succeed in his goal of wiping out terrorism.” It would be difficult to consistently give people around you — assistants, friends and opponents — the impression that you genuinely believe such a thing unless you actually do.
     The next question, much debated in the United States as the invasion of Iraq was drawing closer, is whether George W. Bush sees his mission as one handed to him by God. Stories about this, many of which have a propagandistic origin, go two ways. For those sober-minded people who find such superstition disturbing, there is the reassurance from a sympathetic Bush watcher “I’ve searched for a Bush declaration, explicit or implicit, that his policies come from God. I haven’t found one.” Yet the same author, the managing editor of the Republican Right magazine The Weekly Standard, describes approvingly a scene shortly after September 11 in the Oval Office with a Catholic cardinal, a Sikh, an imam, a rabbi, and two evangelical Protestants praying together with Bush, after which the president agreed with James Merritt, the head of the Southern Baptist Convention, who averred that God had chosen Bush to lead the United States in a fight to protect the world against terrorism. “I believe you are God’s man for this hour,” Merritt said. “God’s hand is on you”. George W. Bush’s belief in his closeness to God has been widely reported with encouragement from his entourage, especially at a time when this helped contradict the impression of the president being a warmonger.
     American TV culture was an indispensable element in George W. Bush’s rise to the presidency. But without another very powerful political force he would never have made it. This force, the Christian Right, was hardly significant until the late 1970s but together with a couple of other allied movements it has radically altered the American political landscape since then. As some political thinkers in the United States have noted, the islamic fundamentalism that nourishes some terrorist groups has its unacknowledged counterpart in a peculiar American brand of protestant evangelism.
     George W. Bush discovered their power when helping with his father’s election campaign. It was around that time that he decided to become a “born again” Christian. An alcoholic, he announced that he had had a change of heart, would forego his drinking, and adopt the Lord Jesus as his guide for the rest of his life. This happened, supposedly, through the example of the “gentle and loving demeanor” of Billy Graham during a Bush family gathering in 1985. This preacher/operator long ago managed to turn himself into a national celebrity through skilfull showmanship and opportunism, and is supposed to lend moral authority to United States presidents when they are in trouble. Another preacher/operator, Tony Evans, the head of a church in Dallas, Texas, and one of the founders of the Promise Keepers movement, is believed to have been a more important influence. This movement is mixed up with Dominionism, a belief in the end of times with ‘people of God’ seizing earthly power so as to help rescue the world. Bush’s friendship with Evans would seem to fit in with the theory of the current American president as God’s instrument on earth.
     The newly active American fundamentalist Christianity must not be confused with more traditional protestantism. It takes the form of loosely organized sects that appeal to the proliferating lost souls in a materialist and insecure society. Anguish about a vaguely defined moral decline, the sexual liberation of the 1960s, abortion and the social acceptance of open homosexuality, has created a large segment of the population susceptible to religious teachers who sell a puritan brand of Christianity emphasizing control of individual passions. They blame the misfortune and loss of control, which many Americans have undergone because of economic developments, on individual weakness in the face of temptation.
     From what we can gather, George W. Bush has come to believe in some of their tenets and is passionate about the one thing concerning which born-again Christians are supposed to be passionate — their newly found or rediscovered faith. Jesus, he says, has been the “philosopher” who influenced him most. When he had the opportunity, in Beijing, to address, over TV, the largest number of Chinese who ever listened to a Westerner directly, he told them that progress could only come if they converted to Christianity. At the G8 summit held in Canada in June 2002, Bush opened a press conference with Russian president Vladmir Putin by saying, “We need common sense judges who understand that our rights were derived from God and those are the kind of judges I intend to put on the bench.” During a radio talk around Easter time 2002, he averred that “history is of a moral design” and that “justice and cruelty have always been at war, and God is not neutral between them. His purposes are often defied but never defeated”.

    missed greatness

    The metamorphosis attributed to George W. Bush after September 11, the metamorphosis into a great president, one that the country needed in its hour of horror and vulnerability, is a hoax. He squandered the opportunity offered him on a silver platter to become known as a president who actually improved the world — hence, a great president. The opportunity came in the form of an approval rating that his most popular predecessors could only have dreamed of. This sudden popularity resulted from the psychological need of the American populace to have their threatened nation personified in a leader, but these origins do not detract from the implied message: you do what you think best for the country, we will be behind you!
     American presidents, like prime ministers in most democracies, usually have their hands tied. They may have great visions for improving society, but they are hemmed in by hundreds of special interests, by powerful opponents waiting for an opportunity to trip them up on a detail of policy, and by an inability to forge unified intent for a good cause. George W. Bush was in a position, for perhaps a year, to overcome these obstacles. He could have gathered a braintrust around him, with the aim to design domestic and international programs for social, medical, educational, and infrastructural improvements that have remained dreams for other presidents. Who would have stood in his way? Not the Democrats, for sure, who rallied around him as if he were a genuine war president deserving of more bipartisan support than even Franklin Roosevelt could count on in World War II. Not the newspapers and TV, which accept White House propaganda uncritically.
     All of this could have been made part of a campaign against the long-term causes of terrorism; to “drain the morass where mosquitos breed”, as some writers put it. Any American effort to create a safer world requires cooperation from others. The more cooperation the better. An international effort fighting tuberculosis, malaria, AIDS, illiteracy, and conditions producing poverty would have added further international goodwill toward the United States in spades. Measures at home would all have contributed to a national atmosphere of pride and unity. Pension protection, better health care coverage, environmental measures, more and better trained and better rewarded teachers, programs for renovating impoverished neighborhoods and a host of improvements in the country’s crumbling infrastructure, they were all within George W. Bush’s reach. He could have become a great president by such acts with relative ease. But it was not in him to take the opportunity. There has been no metamorphosis.
     George W. Bush and his entourage are not in the business of national improvement. They are by most accounts self-absorbed, self-serving, self-righteous individuals. Even a superficial look at their records will tell you that they do what they do for themselves and not for the public good. Tracing their business careers makes you wonder whether the notion of “public good” can have much meaning for them. The policy objective that did receive full presidential attention was a highly controversial tax cut almost exclusively benefiting the richest segment of the population.
     The George W. Bush White House has remained opaque to American citizens. Very little of what goes on in cabinet meetings and among surrounding policy makers is known to the public. This administration is more secretive than any that specialists can remember. What does emerge from fawning books is not very reliable because of their propagandistic intent. But there has been a brief but revealing glimpse of the inside of the Bush government, when the first chief of the project for religious involvement in social spending, John DiIulio, quit after six months, and explained his reasons for doing so to a correspondent of Esquire Magazine. [note] The picture that emerges from DiIulio’s account is of an administration obsessed with politics and reelection. “Politics” in this American meaning of the term does not have any bearing on the art of government, but is restricted to tactics and “dirty tricks” with the aim of gaining and keeping the advantage over opposition politicians.
     When George W. Bush appointed historian and University of Pennsylvania professor DiIulio to head his new initiative, he had high hopes for him as contributing to the brain power of his administration. But “one of the most influential social entrepreneurs in America” — as Bush himself characterised DiIulio — concluded that “There is no precedent in any modern White House for what is going on in this one: a complete lack of a policy apparatus…” DiIulio could think of only a couple of White House staffers who concerned themselves with actual policy substance and analysis. Among the many staff discussions he had heard, there were “not three meaningful, substantive policy discussions”. “[O]n social policy and related issues, the lack of even basic policy knowledge, and the only casual interest in knowing more, was somewhat breathtaking”. Under heavy fire from the Bush entourage, DiIulio was forced to make a public retraction, but that, if anything, enhanced his credibility; here was a solid Republican who considered himself still a strong supporter of George W. Bush, and his revelation came more in sorrow than in anger.
     “Everything—and I mean everything” according to this informant is “being run by the political arm”. This last reference is to Karl Rove, who has frequently been referred to — only half jokingly — as George W. Bush’s boss. Rove designed the campaign, complete with a “deluge of misinformation”, that brought Bush to the presidency. At the center of the political operation — meaning the strategy department — he is a master in techniques and tricks for keeping the Democrats off-balance, and keeping the American press confused about much, except the fact that the Bush presidency is invincible. Colleagues and enemies alike consider him a wizard in sensing where public opinion may be going, and for steering it, so as to correct its course.
     While Rove makes sure that no awkward questions linger around the homefront, aided by the short memories of public and media people, the reclusive Dick Cheney has, ever since September 11, been engaged in steering foreign policy straight toward the long-planned invasion of Iraq, which has been sold to the public as an unpleasant but necessary move to protect the nation from more terrorism. These two activities must substitute for effective governance, and hide the unpalatable fact that the George W. Bush administration is not competent. Notwithstanding its secrecy, the George W. Bush administration has by now made a name for itself among layers of career officials, and also among Republican sympathizers, for irresponsibly ignoring problems that it does not “feel like dealing with right now.”
     In recent decades, an American president, and the question as to whether he is worth re-electing has been judged to a large extent by the state of the nation’s economy. Or at least this is what the majority of commentators have decided as the crucial determinant, which then attains the familiar force of a self-fulfilling prediction. Under normal circumstances the actual effect of presidential economic management tends to be marginal. But there are such things as systemic neglect and business uncertainty caused by feeble policies, which may add up to a situation properly identified as mismanagement. According to one knowledgeable critic, the American economy under George W. Bush has experienced the worst performance “of any newly inaugurated president since Herbert Hoover”. It lost 2 million jobs since January 2001. The $1.35 trillion tax cut of 2001, supposedly implemented to stimulate demand, has had no effect. The stock market had by the summer of 2002 lost $6.65 trillion in value since Bush took office, and the federal budget has gone from a projected surplus to a huge deficit that will haunt many administrations to come.

    the manichean antidote to complexity

    When George W. Bush spoke to the world on TV on March 17 to announce that he would go ahead with the invasion of Iraq, he reiterated reasons that any person taking the trouble to check them out could know to be fallacious. Iraq under Saddam Hussein did not pose the greatest threat to the United States or to “peace”. It did not “continue to possess and conceal some of the most lethal” [meaning nuclear] weapons ever devised, and it had not trained operatives of al Qaeda. By a far stretch of the imagination Saddam could perhaps have supplied terrorists with chemical and biological weapons, but he knew that to do so would be to commit suicide. The assertion that “one day” Saddam Hussein could supply terrorists with nuclear weapons was preposterous. Saying that to wait any longer to overthrow him would be “suicide”, equally so. There was more in the speech that does not stand up to scrutiny. The terrorist threat to America and the world would not be diminished the moment that Saddam Hussein was disarmed. As American officials themselves conceded with their alerts, the invasion was likely to increase that threat. The governments represented on the United Nations Security Council did not “share our assessment of the danger”, and America did not try “to work with the United Nations to address this threat”, it did not want “to resolve the issue peacefully”.
     I imagine that many viewers with me, at some point pondered the crucial question whether this president has brought himself to believe what he tells the world. One need not be a psychologist to be familiar with such a trick of the psyche. Trying to figure out what goes on in the mind of the most powerful man in the world is a perfectly legitimate pursuit; arguments that this is unseemly or disrespectful ought to be rejected out of hand. We do not know enough about George W. Bush, and White House secrecy leaves us guessing at the precise process behind his making one of the most momentous decisions that any president has ever made. But we do have quite a lot to go on.
To place what we can know in perspective, we would do well to remind ourselves of the broader setting within which the current American administration must operate. George W. Bush has from the very beginning had to deal with a world more chaotic and more varied in its complexity than have any of his predecessors since World War II. This has not been an enviable situation. As the presidential entourage set out to fashion its stance toward the outside, its rule of thumb was to do things, wherever possible, in precisely the opposite way from how the Clinton administration had dealt with them (except in the matter of making the world safe for American business). This became clear in its handling of Israel/Palestinian conflict, its closing the door on North Korea, its early responses to China as the potential new enemy, and — indeed — its relegating of the potential Al Qaeda threat, which the Clinton administration had focused on, to a status of marginal importance.
     A large part of growing up consists of learning how to deal with complexity. While complexity in literature or music may be a feast for brain and emotions, complexity in social situations and, even more, in the political realm can cause great discomfort, as it introduces doubt and challenges our ability to cope with our environment. A reality that contained the horrors of Hitler and Stalin was reassuringly simple in one respect: It defined an immediate threat to political civilization, and as such a solid base of political certainty upon which to formulate action and opinion. Throughout the Cold War period there was something to hang on to for curbing political doubt. A satisfying substitute for the Soviet Union as plain all-round counter example of what Europeans and Americans (should) believe in has not been found. But the George W. Bush administration faked one. Saddam Hussein, a horror to Iraqis, was not a threat to Western civilization or even his neighbors, but there has been psychological profit in portraying him as such.
     In the face of the complexity of a world essentially at peace, with villains mostly encaged by the borders of their own countries, George W. Bush was aided by a group of intellectuals who had much earlier agreed that there did exist a continuing “clear and present danger” to the United States, and by extension Western civilization. This group has imagined an array of threats from which to choose, including putative threats to Israel, and has spent years formulating audacious strategies for the United States to establish unchallenged control over them. But perhaps the most valuable service this group, the neocons, has rendered George W. Bush is the elimination of complexity from the world in which he is the most powerful man.
     The neocon recipe for dealing with the world is to act as if it were not complex, as if there is, as they term it, a clear and present danger; a successor danger to Soviet communism. The supporters they have gained, the cheering section of the American Right, the pundits paid by wealthy Republicans, have seduced a large segment of the American public to accept a corollary of this recipe: that steadfastness in the face of this supposed danger will make the world’s complexity go away, as if scared of American military might. And while Karl Rove has been papering over domestic complexities, international complexity has been swept away by something that after September 11 came to be known as “moral clarity”.
     The neocon language has made a perfect fit with George W. Bush’s notion of evil. He relishes speaking about it, and about the need to eradicate it.
     The imagery of a titanic struggle between good and evil is known as “manichaean”, named after a Persian religious movement that started in the 3rd century AD and spread to parts of the Roman Empire. The founder of that movement, named Mani, believed himself to be the final prophet in a line that included Adam, as well as Buddha, Zoroaster and Jesus. He wanted to integrate what he believed to be truths from different religions in such a way that they could be translated and formulated in various forms to serve different cultures. Mani’s movement taught that the true self of human beings shared in the nature of God, but humans were corrupted by the deeply evil nature of the world in which they live. From a past in which opposing substances — spirit and matter, light and dark, good and evil — were separated, we move through a present in which they are mixed toward a future in which they will be separated again. Believing oneself to be literally engaged in battles to eliminate evil from among the good is known as a Manichaean fantasy. This fantasy apparently inspires the most powerful man in the world.
     Another term associated with the habit of thinking about the world in terms of black and white, good and evil, utterly right and utterly wrong, is “paranoia”, used both for clinical purposes by psychologists and in more general parlance to describe those who believe that the world is full of hostile elements plotting against them. Ideas of persecution in the paranoid personality tend to go together with delusions of grandeur. The two mental states are well-known sides of the same coin. Sufferers of this mental affliction take themselves to be pure and morally superior and see others who disagree with them as immoral, corrupted and, indeed, evil. A perceptive American historian, Richard Hofstadter, analysed convincingly what he saw as a broad national affliction, in “the paranoid style of American politics”. The fantasy of eradicating evil from the world, and the notion that God is on his side in such a mission would certainly qualify as symptoms of delusions of grandeur on Bush’s part. He likes to be compared to Churchill, and in the early aftermath of September 11 asked to be briefed about how that great British statesman conducted himself when Hitler began World War II. As for the delusion of being surrounded by hostile characters, it rather naturally takes up residence within people who are not compentent to fulfill their jobs. Foreign heads of government and their advisers have found it difficult to take Bush seriously as a political thinker, and he has been treated as a joke within their salons. This cannot have escaped him.

    the problem with evil

    Manichaean vision and paranoia have worked well for Bush after September 11. Many Americans are psychologically comforted by an absolutist moral stance. The term “moral clarity” resonates beyond the circles of supporters of the good-vs-evil approach to foreign policy. As influential commentators, editors and other public intellectuals keep using it, the term has become a slogan, a quick reference in commentary to indicate that the commentator is on the ‘right side’. Ruling out nuance and complexity, “moral clarity” has also been widely used by neocon editors inveighing against the possibility that the president might defect from his manichean mission.
     The problem with the manichaean mindset is that it can only reach judgments through one criterion, which is the notion of evil. And because evil is, except for its blatant manifestations, extraordinarily hard to recognize and define in most cases, it is inappropriate for day-to-day use as a practical political concept. The term “evil” may serve well in political discourse only for extreme instances of badness, for extraordinary abuses of power. The top officials of the Khmer Rouge who systematically eradicated Cambodians who were known to use their brains (recognizable by their wearing spectacles, for example) and who destroyed an existing society down to its roots were recent examples of unmitigated evil. I would label Saddam Hussein evil as well, along with the North Korean regime, on the basis of their systematic murder, their indifference to the starvation and death and terror for which they are responsible. The murder of six, seven million Jews, homosexuals, gypsies and political opponents by Nazi Germany or Stalin’s massacres can only be categorized as evil.
     Talking about evil in the way that has become a habit for George W. Bush diminishes its momentousness. The resulting ubiquitous references to it in the media has already deprived the term of its horrifying connations. This means that the American president and the commentators who support his manichean approach have now made it more difficult to identify true evil. Perhaps one reason why it was so easy for George W. Bush to use the term lightly is that the American public has hardly known it as a serious political concept. It was long ago banished from the discourse that American “political science” has bestowed upon the world, because it was believed to be a pejorative term, heavy with “unscientific” value judgment. As this case demonstrates, if you throw out an unwanted presence through the door, it may come back through the window and be out of control.
     The talk of “eradicating evil” and of “moral clarity” has deepened the murk, preventing proper interpretation of global affairs. What is now known as the “Bush Doctrine” of American foreign policy holds that enemies are defined not only by their readiness to commit terrorist acts, but also by accepting potential attackers in their midst. In other words, those who fail to resist the agents of evil are evil themselves. Such an approach fails in the face of political reality. It fails to allow for probably the majority of people who tolerate terrorists in their midst and who do so out of fear. Palestinian teenagers who throw themselves with bombs taped to their bodies into an Israeli eatery are not evil, but deluded, seduced by evil, filled with belief that there is no better way for them to do good. The onlookers who have not stopped such a tragically deluded teenager are not necessarily evil at all; they are most likely very scared, having been intimidated by strong forces around them much of their adult lives. It is palpably untrue to say that “those who are not with us are against us”. Most people in the situations at hand have no choice.

    the folksy Dubya

    A potent American image is that of the common man or woman who does not use fancy language, who may be blunt and a bit awkward, who seems simple, but who is straight and therefore can be trusted. It fits with the streak of anti-intellectualism in the culture of the United States. It fits with the command that one should not make elitist judgments, which many American intellectuals also obey. Ordinary folk are associated with hard work and honesty. People who use words outside the vocabulary of daily conversation, and who pronounce these words in a carefully correct manner with an accent that suggests they have been highly educated, are suspect. They might trick you. George W. Bush has been packaged by his political handlers to look like the simple fellow who is morally sound and who won’t tell lies, unlike some other politicians – Bill Clinton, for example. The most powerful man in the world is like “the man next door”, less remote than the elite politicians of Europe. This imagery dovetails with the great illusion among Americans that their society knows no classes.
     Of course many politicians and other figures who are in the public eye adopt a character as if they are actors on a stage. They sometimes grow into that personality and the public knows no other. The stage-Bush is known as “Dubya”. The nickname is derived from his middle initial, with which he can be distinguished from his father, president George H. W. Bush, and implied a jovial, ordinary, regular guy, who likes plain speech instead of fancy scholarly talk. Dubya is a likeable chummy character, and purposely a bit dimwitted, with the idea that this is a good thing as it makes him one of the people. The Dubya character was created when he ran for governor of Texas. As with all poor actors, George W. Bush frequently spoils his show by overacting the character he has adopted for public purposes. There are instances where he has conversed with other world leaders using phrases lifted from Western movies. And he wears his ignorance with defiant pride. Sometimes his true intemperate personality shines through as he appears to forget the purpose of the speech or the message at press conferences that he may be giving and just appears to be an angry spoiled-boy character who is not comfortable with himself.
     Still, the common-man packaging of the American president helped in the early stage of his presidency to lessen the unease among the public which had been prompted by his struggles with the English language and his frequent embarrassingly inappropriate comments. Thanks to this successful fakery Bush can say and do things that would undermine the credibility of other highly placed politicians. When visiting Japan he used the word “devaluation” instead of “deflation” in remarks about what Japan should be doing about its economy, a linguistic confusion that on Feb 18 2002 caused a sudden dip in the value of the yen on exchange markets.
     The media have been extraordinarily forgiving, as they filter Bush’s actions and speech in such a way that the common-man image of the Dubya character may prevail. The American Right never tires of contrasting its president with the unreliable elitist and immoral Bill Clinton. The fact that George W. Bush was born rich and went to expensive schools is an easily overlooked complication, as is his reputation for laziness in more discerning circles. The fact that Clinton came from a poor background and never knew his real father and – very much unlike Bush – worked hard to elevate himself socially, is another forgotten fact. Clinton did not have a father who was director of the CIA, an ambassador, vice president and president. According to one biographer, he was the “Family Hero,” looking after his mother and siblings, fighting his stepfather who beat his mother and creating a reputation of family uprightness for the outside world. Clinton earned his way into Georgetown University through his high grades and school leadership positions. Bush was admitted to Harvard and Yale in spite of his poor intellectual achievements, on the strength of his father’s position and connections. It was Clinton who conformed to the national ideal of the boy hero who made it on his own account under humble circumstances through hard work and strength of character.
     The reality of George W. Bush’s life is in dismal contrast with the classic American picture of common folks deserving of our trust. Whereas many rich boys make something of themselves independently, Bush the second had a pampered youth and relied on his parents. He coasted through Andover, his elite high school without having to worry about studying. He spent his college years active as a fraternity student, whose main achievements were beer drinking and partying. His parents could be counted on to save him from himself and get him out of tight spots. He skipped military service and was not sent to Vietnam because his father arranged that he serve with the Texas National Guard instead. He frequently absented himself from duty and was released from duty two years before the end of his commitment. He is known to have been arrested by police at least three times for drunk driving and other misdemeanors. At least one arrest for cocaine possession was expunged from the record by a judge as a favor to his father. Much of this information comes from a well-researched book, ‘Fortunate Son’ by J.H. Hatfield. Heavy Republican and family pressure was appplied to the original publisher of the book, St. Martin’s Press, who promised to destroy all printed copies. The book was then picked up by another publisher; which did not prevent its much harassed author to commit suicide. Without the September 11 massacre and the need for national reassurance about the presence of a strong leader, the inconsistencies between imagery and knowable facts would probably not have been allowed to recede from people’s minds.
     As a businessman George W. Bush’s record is mediocre or simply bad. He squandered other people’s money on investments, and ran several businesses (Arbusto, Spectrum 7, Bush Exploration and Harken) into the ground. He became rich in his own right through insider trading and deals with powerful businessmen who were friends of the family. He was given a baseball team, the Texas Rangers, to manage, as a stepping stone to becoming governor of Texas. But he himself did not have to manage much. Right wing heavyweights in the Republican Party saw him as their ideal candidate for president because he would do what they told him, while being more acceptable to mainstream voters because of his relatively soft and seemingly compromising demeanor. When Bush became the most powerful man in the world he had considerably less experience than the average middle-class American male of managing his own life and maintaining a responsible position in society. It is fair to say that he never faced a substantial challenge before he became faced with September 11, his response to which is currently helping to decide the geopolitical fate of the planet.
     Our television age has seen many examples of manufactured “great personalities” with mythology instead of personal history behind them. But the case of George W. Bush must count as one of the most spectacular instances of successful fiction. For some time now, the American presidency has been bought with the help of corporate sponsors, but candidates were still expected to demonstrate certain talents. George W. Bush, however, did little more than buy the presidency, and the deal was clinched only after his father sent his trusted political operatives to Florida, intimidated Albert Gore and his team and resorted to legal sleights of hand. Many political observers consider it inconceivable that he could have become president in an age when actual political discussion on radio and in newspapers, rather than TV soundbites, shaped political opinion.
     The real personal history of the most powerful man in the world is striking for its repeated instances of getting away with things that would have created permanent black marks against the names of normal people. This may be relevant for the way that George W. Bush regards the world. If he does realize that some actions have dire consequences, this will not be because of his upbringing. From witnesses who have observed him up close, friends and enemies alike, we hear that he believes himself to have the right to get his way. In an interview and book that were meant to be flattering he is quoted as having said: “I’m the commander, I do not need to explain why I say things. That’s the interesting thing about being the President. Maybe somebody needs to explain to me why they say something, but I don’t feel like I owe anybody an explanation.” Where his admirers see a determined leader guided by “moral clarity”, the rest of the world flinches from what appears to be an excess of rectitude.
     The historian and political analyst, Michael Lind, who knows Texas, the land of his birth and upbringing, like his backpocket, traces some of these attitudes to the Texans among whom George W. Bush grew up. These Anglo-Celtic southerners, after conquering and expropriating other ethnic nations (Mexicans and Indians) for centuries became a “people as militaristic as the ancient Spartans”, with a culture that is intellectually sterile and still marked by premodern superstitions. Lind: “Combine primitive Saudi-style oil-patch economics with primitive [Israeli] West Bank settler-type religion, and you have the milieu from which George W. Bush emerged and in which he feels most at home. As fate would have it, at the beginning of the twentyfirst-century, ….leadership of the most advanced technological economy and the leading liberal society on earth has fallen to a reactionary politician from a premodern religious subculture rooted in a backward region with a primitive extractive economy. In siding uncritically with God’s Chosen People in the Holy Land and hoping to use military force to try to control as much mineral-rich territory as possible, George W. Bush has been acting like a man of his century–the seventeenth century.”

     the tragic figure of George W. Bush

    The potential consequences of power of such immensity as held by George W. Bush are difficult for us to digest. One way to handle this, denial, is to present such consequences in reduced and more easily grasped form. Great political power is by its nature something that belongs on the tragic plane of existence where out-of-the-ordinary things happen. But as such it cannot be emotionally tolerated by most of us on a daily basis, and is therefore routinely brought down to the trivial plane of existence where emotions and intellect are not too heavily taxed. And so it is with this president. “Dubya” has signed the death warrants of more people – over 130 – on death row than any other governor in the United States, but the way he portrays himself, as a common cog in the machine of justice, is plausible to many Americans. Dubya gave the OK for the devastation of Afghanistan causing the deaths of untold thousands. (In the British Guardian, the journalist Seumas Milne estimated that about ten thousand Afghan soldiers may have died in the war and cited University of New Hampshire Professor Marc Herold’s estimate that about four thousand civilians have also died – to make a total of 14.000). Dubya initially encouraged Ariel Sharon in Israel to wage war against the Palestinians living in Israel, and has called him a “man of peace” (a label that even hawkish Israelis would not apply to the man who has been found responsible for massacres at Palestinian refugee camps in the 1980s). And to top it all, Dubya followed the agenda of schemers who aim to establish direct control over the Middle East; and with that has ignited a chain of events that may thunder over the world for decades to come, and make all our lives less safe. But still he is supposed to be just an ordinary Joe.
     The George W. Bush story has the ingredients to make a Shakespearean drama. Power, corruption, along with personal weakness so extraordinary that it becomes a source of fascination. The story is of course not finished, and is replete with potential for a tragic denouement. But a playwright who tries to tackle it would face the major challenge of the core of this drama: the inner Bush, with deeper truths than what the biographical details summed up here reveal.
     His eyes do not invite trust. But we are told that the person behind them is amiable, easy to get on with, and loyal to his friends. Crown Prince Abdullah, the effective ruler of Saudi Arabia, who spent some five hours with Bush on the presidential ranch in Texas, told a Saudi newspaper that while finding him woefully ignorant of important matters requiring his judgment on the Middle East, he also detected noble qualities in Bush.
     It is possible to see George W. Bush as a product of circumstances – his family background, family expections, and imagined political obligations – deserving pity. When he mocked an American reporter for asking the French president a question in French, or when he asks the Brazilian President Fernando Cardoso “do you have blacks too?”, we see a man completely out of his depth when faced with a journalist and a Latin American colleague with vastly superior minds (Cardoso is a sociologist and an author and speaks four languages). His inability to speak coherently for any length of time without a prompter may be the consequence of a health deficiency. One author who has extensively studied Bush’s lines in speeches and in interviews offers the suggestion that he is an amnesiac. Memory loss of a particular kind would explain the language jumble he produces, mixing up earlier rehearsed answers to possible questions and only getting small memorized portions correct. Of course such a person should not ever have become president, but, again, he can be seen as a pitiable tool in the hands of those who put him where he is. That makes him a tragic figure.
     But when we as outsiders think of George W. Bush we must think of him as the man in whose mind tilts the fate of the world, and we should not more than momentarily be swayed by pity for his largely unknown inner self.
     The colossal irony of our time – one that gives us the impression of having landed in a Shakespearean drama – is that at our present juncture of world history, when a post-Cold-War order was still being sorted out, we do have a “most powerful man” in our midst, but one lamentably unfit for the job that he holds. It might seem an exaggeration to say that one could hardly have found a person more unsuited to wield the most power in the world than George W. Bush. But it is close to the truth.
     In democracies we count on the fact that those who are placed highest above us in the political system have reached a high degree of maturity and a knowledge and understanding of the world that is above average. Bush has frequently been on the world stage thanks to satellite TV. As his every word is pored over and scrutinized by policy makers and analysts everywhere, he adds to the accumulating suspicion among other heads of government that there is no substance to the man. This president has not been able to brainstorm with America’s former Cold War allies about approaches to shaping a desirable world under threat of terrorist attacks, not because these allies suffer from illusions of a peaceful paradise, but because he cannot participate in negotiations that require historical, long-range, and peripheral vision. He has gut-feelings and a political instinct of sorts, but these are not a substitute for strategic intelligence. At the same time, there are no states equal to the United States, which means that Bush never has to deal with an equal. From his inauguration onward Bush’s entourage has not tired of making the world feel that the United States president deals with it exclusively on his own terms.
    During the presidential election campaign of 2000, American conservatives and Republican doubters who worried about George W. Bush’s competencies were reassured by rightwing organizers that there was no need for worry since Bush would be surrounded by able and experienced advisers. This expectation was also supposed to relax European concerns. It is, however, a fallacy to believe that such advisers can compensate for the incompetence of the man in the official center, and that they form a kind of substitute government. Figurehead “leaders” are not uncommon in the world. Japan presents a perfect example. But the United States does not have institutions that compensate for the weakness of such governments. There is nothing besides George W. Bush to mediate the advice that comes from Karl Rove, Colin Powell, Donald Rumsfeld, Dick Cheney, Condoleezza Rice, Paul Wolfowitz and Richard Perle.

    There could hardly be sadder evidence for this than the inability for the United States government to develop a policy for stopping the Israeli/Palestinian carnage. When the black and white, good vs evil frame of reference of the “war on terrorism” was projected onto that situation, everything became messier and more savage than it had been before. Bush’s inability to understand the complexity of the situation concerning Israel and the Palestinians, and his demonstrated incompetence as a result of it, presages worse to come. The “roadmap” to peace is not believable because Ariel Sharon does not believe in it. In this one area of international politics where strong American pressure could have a wide-ranging beneficial effect, the George W. Bush administration is not willing to apply it.
    In spite of the checks and balances that have evolved in the American political system to ensure democratic governance, George W. Bush is taking the Americans, and all of us along with them, back in time, close to the days of Kings against whose possible madness there was little defense. Some of America’s fearless intellectuals, unimpeded by self-censorship, are beginning to give voice to proximate thoughts. Norman Mailer: “Since the administration can hardly be unaware of the dangers, the answer comes down to the unhappy likelihood that Bush and Company are ready for a major terrorist attack. As well as any number of smaller ones. Either way, it will strengthen his hand. America will gather about him again. We can hear his words in advance: “Good Americans died today. Innocent victims of evil had to shed their blood. But we will prevail. We are one with God.” Given such language, every loss is a win.”. Paul Krugman, who has been an almost solitary voice of common sense in the New York Times, reported finally “more people than you would think” from Defense, State, and Treasury Departments “don’t just question the competence of Mr. Bush and his inner circle; they believe that America’s leadership has lost touch with reality.

     Has anyone else following the aftermath of September 11 been struck by the similarity to Orwell’s 1984 – in which a never-ending far-away war against ever changing enemies serves as a rationale for political and social repression? In the past five months numerous Americans, and not a few Europeans, do not dare speak their minds and many more do not dare to think things through to a point where the urge to speak one’s mind becomes unbearable.
     There was no genuine war after September 11. There could not have been. And no country, not even one as powerful as the United States after it lost the Soviet Union as its only rival, can hijack such an important concept without in the long run bringing disaster upon itself. That great beacon of political common sense in the twentieth century, George Orwell, educated at least two generations of reasonable observers of political reality in the danger of using words wrongly in this way.
     A huge crime was committed; the biggest mass murder ever seen directly by hundreds of millions all over the globe when Manhattan’s tallest towers collapsed into a grave of molten steel. A vast police action, backed by emergency powers, to uncover and destroy any network of the guilty, primarily to prevent a recurrence, would be a rational and responsible strategy. A war, on the other hand, requires an enemy that can roll over, declare it is ready to surrender and sign a peace treaty. Victory over “terrorism” is not possible in the absence of such an enemy, and the alternative: extermination of always changing and always new groups using violence to attain their ends can never be achieved. A political program that nevertheless attempts this can only destroy the remaining reasons for believing in what the United States has long stood for.
     If no more terrorist attacks occur, something to be fervently hoped for the sake of all our future, the American public will probably wake up to the fact that their country is not at war. All those who still applaud new steps in the “war strategy” will have to come to terms with the fact that, while the regimes of Iraq and North Korea are truly evil, any comparison to the threat of the axis powers who menaced the civilized world during World War II is the product of minds that have lost themselves in political opportunism of unspeakable indecency. Americans must wake up to this reality if they are to save what once was truly a shining example to the world. They should remember that the regime in Orwell’s dystopia kept the people meek with slogans like “ignorance is strength”.
    The world can only hope that the vast majority of decent Americans will save the political system of their country. This is the country after all, toward which people like myself should feel forever grateful for having preserved political civilization at least twice in the 20th century. We must hope, for all of us, that when this awakening comes Americans will sober up to a point where they can undo the developments that have made the current situation possible.
    The legal and security measures taken in recent months may change the United States into a country that its admirers no longer recognize. But the rot goes deeper. To prevent further decay, they must regain the power they have lost to special interests that have labored to obscure the true national public interest. They must quell the power of those on the religious right, whose personal insecurities and fear of their lack of control over social realities have led to a pervasive inchoate hatred. They must reverse the policies that have led to a massive transfer of wealth from the middle class to a minuscule moneyed elite; an elite that has lost all justification for its claims to be an aristocracy of skill, good judgment, and concern for the public good.
    They must also realize how their transnational business bureaucracies, their public officials, their journalists and their professors have promoted a version of capitalism that is, inadvertently, deepening poverty and heightening social dislocation among the least advantaged in the world. Americans might then with Europeans and others attempt to reverse gears, repair the damage, and strive to seize the genuine opportunity that was created when the Berlin Wall came down — an opportunity to build a more equitable, more peaceful and more humanly rewarding global civilization.
     It is sad sign of the times that I feel impelled to add that what I have just said are not the ravings of a European flush with anti-American sentiments. The European countries and their Union may be accused of political spinelessness and irresponsible complacency, but Europeans on the whole cannot be accused of callousness toward the American experience of September 11. In the week following many stood still, silently, on roads, highways, in supermarket aisles — or, as I did, sat motionless at their desks for three minutes, in sympathy with … no, in shared grief with the victims of the attacks and their mourning families.
     Many Europeans and, as I know for sure from numerous conversations, many Japanese and other Asians, want to say: Americans please draw back from the abyss that demagoguery has opened up before you, and come back to the world of shared concerns — a humane world we have been working on, notwithstanding tragic lapses, at least since the Enlightenment. Come back and help recreate a world in which a phrase like “values dear to our hearts” still has meaning.
     An improved global order cannot come about if the label of “anti-American” is automatically and unthinkingly slapped on any serious analysis of anti-democratic trends, of political excesses and abuse when, as so often happens, the United States provides the clearest examples. Cries of “anti-American” amount to intimidation, as do the labels “leftist” and “bleeding heart liberal” thrown at those whose conscience and intelligence drives them to rethink political purpose amid their country’s technocracy and corrupted media.
     In all the sadness and anger after September 11, the world expressed a hope through much commentary that the tragedy might lead to a serious rethinking of America’s political and economic purposes. To support this hope is not to endorse the notion that Americans “had it coming” — of course, no American action in the world has made the terrorist attacks morally comprehensible. But that does not excuse Americans for failing to rethink national purposes in a world that they dominate.
     The hope may still be realized, but only if the millions of Americans of goodwill wake up and speak out.

     The awful events of September 11 may have jolted the United States into becoming serious again. Its earlier seriousness, with which it rescued political civilization at least twice in the twentieth century, rather quickly dissipated after the end of the Cold War. Because of that savior role, and because of the basic decency of its people, I have always liked the United States. But just before the terrorist attacks I had been planning a series of columns about the necessity for “soft anti-Americanism” (if only to prevent the virulent type that serves no one), prompted by appalling situations in the world the US political elite was helping to create often without the knowledge of most of its citizens.
     The Cold War enforced a world order of considerable stability. For one thing, it kept the United States on its toes. Washington had to be concerned about the world in a broad sense. Before the Cold War ended, one could trust an adviser or two to tap the president’s shoulder and warn him to be serious in view of the life threatening situation that came with that rivalrous situation. But whenever I visited the United States a few years after the collapse of the Soviet Union an image used to come to my mind of a corset having been removed – something that had kept various parts of society and the body politic in place and gave the country its moral shape.
     The loss of seriousness was discernable in a neglectful foreign policy as well as domestic developments; the downslide of one appeared to be coupled to that of the other. A country engaged in a Cold War cannot undermine the institution of the presidency as by indulging in a Lewinsky scandal, and cannot engage in the kind of partisan viciousness and hypocrisy we saw in the impeachment period. It could also not have allowed that virulent form of capitalism that has steadily been undermining political systems and the social order. The absence of a rival superpower appeared to have removed American obstacles to the most massive transfer of wealth ever from a middle class to a heavily moneyed overclass. The loss of seriousness, moreover, permitted disdainful treatment of countries or groups that had some bone to pick with the United States. It allowed for the continual bombing of Iraq without any thoughts about possible consequences. It allowed for the acting out of utopian fantasies of unfettered global markets, justifying a political program aimed at the transfer of power from local governments all over the world to transnational investors. International economic policies inspired by corporate interests have helped cause vastly more economic misery, in Russia and the poorer parts of the world, than most Americans could even imagine.
     Clinton was America’s first non-serious president. Many have wondered whether his successor knew what it meant to be serious, especially when during his first eight months in office, he unilaterally withdrew from international treaties and showed indifference to what the putative allies might think.
     A crime against American citizens, and the citizens of some 80 other countries, so extraordinarily devastating that we still have difficulty to imagine its dimensions in full; the melting steel of the two buildings that dominated the Manhattan skyline becoming a mass grave; a huge chunk burned out of the administrative centre of the strongest armed forces on earth; and all of it seen, again and again and again, on tv screens everywhere in the world; …. it could indeed constitute the shock that will make the United States serious again. Hundreds of commentators have said this in different ways. America’s new mission – a collective effort against world terrorism – is not possible if Washington disregards the political thinking in Paris, London, Berlin, Tokyo, Moscow; and if it does not enter into new kinds of conversations with Islamic countries, and Islamic clergy. American diplomats with experience, a neglected resource, are likely to be listened to again if they can be brought back. A knowledge of history will perhaps once again be considered as something that can help you with understanding the world rather than something that holds you back.
     Wondering whether this sledgehammer blow to America’s sense of invulnerability does indeed inspire a turnabout to seriousness, we should first turn our attention to the man in the pivotal position. There is no question that in living memory there has been no president less respected when he was sworn in. The thought that he stole the presidency with the help of a partisan Supreme Court was still very much alive in the minds of numerous Americans when terrorists struck. For some time now, the presidency has been bought with the help of rich sponsors, but candidates were still expected to demonstrate certain talents. G. W. Bush, however, did little more than buy the presidency, and the deal was clinched only when his men resorted to intimidation of the opposition and legal sleights of hand. Can such a president ever enjoy the authority of wartime presidents like Franklin Roosevelt or Harry Truman?
     A torrent of wishful thinking has deluged the United States at the moment. The media consume considerable amounts of propaganda. Independent thought is not given much of a hearing, and while the authorities keep repeating that they are dealing with an entirely new kind of war, and that the world finds itself in a wholly new situation, there is no indication of fundamentally new questions being discovered and being asked. The President must be seen as a commanding commander in chief, assisted by knowledgeable advisers. The country is unified behind him – for the first time since Vietnam even ready to sacrifice soldiers of flesh and blood. American skeptics, too, must try to believe that they have a competent president. Not to believe it risks being labeled unpatriotic. But trying to believe such a thing is a hard task, not envied by politically aware people outside the United States.
     On the day of the attack and on the following days when most people could not concentrate on other subjects and found it difficult to stay away from TV screens, one of the major questions was discussed only in closed circles: can “the most powerful man on the planet” cope with this? Not ever asked explicitly on screen, it was foremost in the heads of millions. When after a great delay Bush finally showed his face on TV he gave the impression of being confused and frightened. He could not build his sentences coherently and intone them with a sense of genuine conviction, and sometimes gave the impression that he did not fully understood the words he used. In their neutral and often dead-pan reporting the American media are giving the story away as they focus on whether or not it came from the heart when Bush said this, that or the other, or whether it was prepared by his coaches. I must have read that “his tears were real” in at least half a dozen places. It is openly acknowledged that he is an “intensely scripted” president, which means that most of the words you hear him say are put in his mouth by other people.
     Unless the means to overcome a terrible plight are not in question, presidential words are crucially important. They frame the thoughts that will eventually determine a choice of action, and they must communicate what is essential to the nation without raising unfulfillable expectations. Marking the “prime suspect” Osama bin Laden as “wanted dead or alive”, is not prudent if you do not have a good chance of catching him. Naming a “prime suspect” may furthermore transform a criminal into a folk hero.
    The ultimatum to the Taleban is equally unwise as it cannot be met without ending the Taleban’s shaky hold over a system of warlords that forms the current political reality of Afghanistan (rather reminiscent of the Tokugawa system in its very beginnings). It appears that Bush’s entourage already considers the Taleban’s demise as a provisional aim. But while bringing momentary relief to the long suffering Afghan population, this would turn Afghanistan back into the battleground that gave birth to the Osama bin Laden phenomenon to begin with, and risk the replacement of Pakistan’s military dictatorship with jihad-prone elements (who would, then, possess nuclear weapons).
     Probably the most fateful words in the earliest response from the Bush administration were those that declared the United States to be in a state of war. A war is fought between states. It has a clear purpose: you inflict so much damage on the hostile state that it surrenders and can be made to sign a peace treaty. Under current circumstances there is no state that can surrender; there is not even a clearly delineated enemy that can be located. Victory in what President Bush is now calling the first war of the twentyfirst century can only be achieved through the eradication of all terrorists. But that is not possible. Furthermore, the likely means to “eradicate” terrorists will cause so much additional hatred among Islamic populations that terrorists will multiply. (It is worth noting that the United States has for many years now waged a misconceived “war against drugs”, which has been a dismal failure and made the problem significantly worse, also in Europe, through much increased crime and social disruption). Characterising the attacks on the World Trade Center towers and the Pentagon as the beginning of a war is, most likely, precisely what the perpetrators wanted to achieve. They desire a holy war against the forces that in their thinking have corrupted the purity of a particularly retrograde version of their faith. Their mission concerns power within the Islamic world; it is part of a longstanding campaign to replace relatively moderate Islamic governments, and secular governments in countries with an Islamic population, by governments that adhere to medieval social and judicial rules.
     If the attacks had been characterised as a heinous crime rather than as the beginning of war, a different set of defenses would have presented itself. When a major crime is committed, especially one without precedent, authorities guarding populations concentrate their attention first on the motives of the criminals and their organizational methods so as to help prevent a recurrence. Such an emphasis in the effort to counter terrorism may still win the day if the world is lucky and if wise American and European counsel prevails. French President Chirac clearly objected to the term “war”, although he was quite polite about it. Unfortunately, the readiness to call the crime a declaration of war rather than a crime appears to have become a test as to how much countries or commentators are “behind” the United States.
     The Europeans can not be accused of callousness in the face of the tragedy that has struck so many families in New York and Washington. Many of them stood still, silently for three minutes, on city squares, on expressways, in supermarkets, or wherever they were, at noon on September 14th. But doubts about the competence of the man in the White House remain widespread. When British Prime Minister Blair praised the United States in London’s House of Commons for not striking out first and thinking afterwards, he gave voice to a palpable fear, shared by probably a majority of European politicians, of things that might still happen. Blair’s visit to Washington was a demonstration of support as well as a mission to counterbalance possible madness. He appears to have given the cautious Colin Powell more political ground under his feet. Important, because it has become fairly clear that the entourage of Bush advisers and ministers is temperamentally and intellectually divided on the question of what should be on the military agenda. Bush, therefore, may still have some deciding to do.
     Bush has had a pampered youth. Things were very much arranged for him; he was presented with the governorship of Texas on a platter. Right wing heavyweights in the Republican Party saw him as their ideal candidate because he would do what they told him, while being more acceptable to mainstream voters because of his relatively soft and compromising demeanor. It is fair to say that he never faced a substantial challenge in his life. All of a sudden, now, he is faced with a challenge the response to which may well decide the geopolitical fate of the planet. Figurehead “leaders” are not uncommon in the world. But the United States does not have institutions that compensate for the weakness of such governments. The American president can, in emergencies, truly become “the most powerful man in the world”.
     Will G. W. Bush help turn the United States once again into a serious country; a country that defines its responsibilities as reaching far beyond the petty interests of a domestic elite, and the interests of its own Big Business?
After the disappearance of its Soviet rival on the world stage, the United States more readily resorts to intimidation in the conduct of its international affairs. Intimidation has been a normal mode for the strong, throughout history. But on top of that it appears to be the preferred mode of political intercourse among those who are most responsible for putting Bush where he is. Intimidation played a major part in Gore’s defeat last December. Defence secretary Rumsfeld and vice president Cheney are natural intimidators. Paul Wolfowitz, the influential deputy defense secretary, appears to believe that by punishing governments that play host to terrorists you can dissuade both of them from further terrorist activity. And he is apparently in favor of eliminating Saddam Hussein; unfinished business for the Bush family.
     If Bush, through wise counsel, can bring the United States back to being serious about the world, we should see fantasies about eradicating all terrorism being replaced by sober assessments of how to limit the elbow room of jihad-prone groups and how to prevent their proliferation. We should see a gradual widening alliance of Muslims and their clergy preaching the traditional tolerance of Islam and warning against the corruption of extremism. We would see a peaceful modus vivendi with the governments of Islamic countries, hopefully leading to more domestic political diversity that defuses Islamic extremism. We should see a priority placed on anything having to do with control over and destruction of biological and chemical weapons. All this would not preclude military action if such can stop new terrorist assaults.
     But if the current president of the United States is led to believe that he should not risk being viewed as a coward in his newly found Christian mission of eradicating evil, and if he orders coordinated strikes against Iraq and the Taleban, as well as sundry “punishments” for extending hospitality to terrorists, and a man-hunt for Osama bin Laden – all with much “collateral damage” – we will live in a fearful world, in which the moral glue for the old alliance of relatively democratic countries will have disappeared.

Assumptions held by Western economists, policy makers, and commentators about the nature of the world’s second largest industrial power are so much at variance with observable reality there, that they ought to disturb our peace of mind. The realization that the discrepancy results from conceptual filters with which reality is normally apprehended, ought to have far-reaching consequences for those ready to rethink what is to be done about the world’s international economic order.

CREDIT ORDERING

A quick look at Japan’s commercial banks affords an immediate glimpse of routine misinterpretation. In the eyes of Western governments and businessmen these are profit seeking institutions, operating in a private realm under the supervision of the Ministry of Finance (MOF). This would lead one to expect that they are regulated under civil law. But civil law and the commercial code do not at all control the activities of Japanese banks. Administrative law does, and in Japan this is entirely a tool in the hands of ministry bureaucrats. The Banking Law has a mere 66 clauses, leaving the operational details for the banks to be settled by the ministry officials in informal instructions (tsutatsu) that they present to banks and other financial institutions. Japanese bureaucrats draft almost all laws to begin with, and make sure to keep them extremely vague, providing maximum room for changing interpretions in keeping with what they think they need for different occasions. They can fix the rules, to give one example, in such a way that depositors are forced to buy government bonds. The Bank of Japan is a fundamentally different institution compared to Central Banks elsewhere in the industrialized world; it is not a referee. There are no impartial regulators scrutinizing important transactions; wrong-doing in this realm is not subject to legal process.
A couple of striking characteristics among major Japanese lenders and among major borrowers ought to to awaken the world to their actual place in the Japanese political economy: The first are poorly trained in calculating credit risk, and hardly interested in the subject, while the latter appear to have a disdain for cost-of-capital considerations.
     We should right away be prepared to accept that the Anglo-American legacy of market-centered economic thought does not readily provide the type of questions to make the Japanese political economy intelligible. At the same time, if we come to the Japanese economy with questions prompted by its own peculiarities, we may discern exciting but as yet hardly employed new ways of looking at the political economies of the world in general.
     A crucial institution is one that has no recognized name as yet, but which economic guardians have brought to a high level of sophistication, and which can explain much of Japan’s recent economic vicissitudes. We could call it credit ordering. It entails highly coordinated credit creation, preferential credit allocation, and systematic credit denial. Because it does not rest on intellectual underpinnings formulated by Japanese theorists or businessmen, it has remained well-nigh invisible as an institution in orthodox perspectives. Credit ordering ensures the hierarchical order necessary for the survival of Japanese industrial organization. The post-1945 version of it was shaped to a large extent by wartime financing methods and wartime restrictions on entrepeneurism. It has evolved for the purpose of building productive capacity, has helped provide entire industrial sectors with the wherewithal to engage in massive expansion unrelated to demand or profitability, as well as in campaigns for expanding international market share. And it has almost entirely socialized credit risk.
What makes credit ordering work is its embeddedness in an industrial structure whose major relationships and transactions are in the final analysis by and large not based on economic considerations of profit-making, but rather on political considerations of mutual protection and long-range expansionary goals.
     Two huge intersecting organizational structures ensure order among Japan’s large corporations: the set of horizontal keiretsu and the web of federations in every branch of industry. They perform powerful complementary functions that are extralegal and frequently at odds with official regulations (such as the anti-trust legislation that is supposed to be enforced by Japan’s Fair Trade Commission). The keiretsu that tie companies in different industries together, and form huge corporate safety nets, have become relatively well-known since 1989. But the many federations that tie companies in the same industry together, ensuring relative stability, order and hierarchy among firms in the same field, have remained largely unexamined. There are no all-powerful keiretsu centers that exist to dictate corporate policies to members. But the assertive tendencies of each firm are strongly curtailed by the informal commands of group integration, mistakenly represented in Japanese parlance as loyalty (they have no choice). A few very powerful companies (Toyota, for example) need not worry much about fellow keiretsu members. Keiretsu companies own each other.
     Power is diffuse to a point where accountability is practically non-existent. The fact that no one is ultimately in charge of the keiretsu clusters, and that no one person or company is ultimately responsible for them, makes them sufficiently amorphous to permit industry-wide bureaucratic guidance. For purposes of industrial policy-making the government bureaucracy and business bureaucracy are completely entangled. Guidance does not emanate directly from government ministries, but is channeled mostly through the intersecting organizational structure of industrial federations. Sometimes dominated by one or a couple of giant corporations, these federations monitor and control all industrial sectors, coordinate production plans in specific sectors, help with collective technology acquisition, and give direction to Japanese industrial development at the highest levels. They can block projects of huge companies for all manner of non-economic reasons. What they decide on behalf of groups of companies has the force of law. Their high officials are usually retired bureaucrats from government agencies in whose bailiwick the association plays a role. Since Japan does not have an independent judiciary, and denial or refusal of membership means virtual exclusion from the economic mainstream, all Japanese companies fall under the extralegal jurisdiction of these associations. It is therefore not surprising that becoming the chief of an industrial federation is the highest goal nurtured by many presidents of prominent companies.
     Credit ordering is the main agent of cohesion in this system, and of course helps determine the nature of the Japanese consumer economy. Rigid sluices in the financial system have ensured that the comparatively large pool of household savings is available for large-scale industrial investment. Prices in the Japanese consumer economy are almost wholly fixed, and allow for a very heavy de-facto tax with which Japanese households help subsidize export industries and those known as “strategic.” Consumer credit remained virtually unknown until the 1970s, and continues to be restrained and rigged by customary practice in favor of sellers.
     The main organizations animating Japan’s economy frequently behave with utter disregard for conventional market considerations, and have repeatedly demonstrated that profit-making is not their primary concern. Hence, imperfections of the market, to use orthodox terminology, are so plentiful and omnipresent in Japan that markets can only perform a subsidiary function, forcing the conclusion that sound economic theory with a claim to universality cannot accept the market as the pivotal institution of economies.

In the currently dominant Western perspective, the Japanese political economy is badly weighed down by collusion, interference in markets, and meddling bureaucrats. Triumphalist voices, having ascertained a grand victory for true “capitalism” in the final decade of the twentieth century, now tend to point at current Japanese problems as definitive evidence that operating an economy in a deviant market-disdaining manner is bound to fail. This conclusion ignores half a century of industrial development that transformed a war-devastated industrial base into one which within a mere 20 years became the second most powerful in the world; a process which received emphatic applause from the rest of the world, for longer than any other country has enjoyed.
     The problems of Japan’s financial system are of course real. But what should have gained special attention of the world’s economists is the extraordinary story of the survival of this system. Japan’s financial mandarins, financers and top industrialists together have so much informal control over the economy that first they could insulate a horrendous inflation in capital assets from the consumer economy, then prevent economic collapse when the stockmarket lost about 40% of its value in half a year, and continued to avoid the calamity that would almost certainly be the result in a Western setting of a banking system that is by and large technically bankrupt, saddled as it is with the equivalent of perhaps a trillion dollars or more in problem loans (no one knows exactly).

“CREDIT RIGHTS”

Historically informed economists will observe reflections of German, French, and other continental European financial structures in the Japanese case. And one can point at evidence of German inspiration for relations between banks and industry before the 1940s, which helped Japanese authorities formalize an earlier variant of the, then as yet un-named, keiretsu system. But the Japanese political setting has allowed for an intertwining of economic interests, and an institutionalization of informal symbiotic relations, so much farther developed than anything to be found in Europe, that we do well to consider the Japanese case as a qualitatively different system.
     The common metaphor among Japanese analysts for the guarantees that important financial institutions will not go under, is a “convoy” of merchant ships guided by the warship of the MOF. But this falls short of conveying the complexity, ubiquity and effectiveness, of credit ordering, and its interaction with the intersecting webs of industrial organizations and industrial bureaucracies. Also the terms “network capitalism” or “alliance capitalism”, which sometimes have been used to describe the Japanese political economy, fail to do justice to reality, as theories thus labelled still implicitly presuppose the existence of separate private and public sectors. A clear view of how things work in Japan can only be had if one gives up that assumption.
     Where in this Japanese system could one conceivably draw a line between private and public sectors? The umbrella organizations placed above the industrial federations, such as Keidanren, Keizai Doyukai, and Nikkeiren, are also in Japan commonly refered to as “private sector” institutions, and the first two are known, occasionally, to take bureaucrats to task for shortsightedness or questionable priorities. Conflict is fairly widespread throughout the system, but it does not pit alliances of entrepreneurs and business bureaucrats against ministry bureaucrats. The alliances that do exist consist of government officials and economic organizations within their bailiwicks.
     The notions of “private” and “public” are not analytically meaningful in the Japanese context. Neither sector ever emerged over the centuries of Japanese political evolution.
In that perspective it can be more easily understood how keiretsu companies have, for all practical purposes, long considered their access to financing, regardless of their profitability, as a matter of course. It is appropriate to speak of “credit rights” enforced by the MOF. And, significantly, the legitimacy of the MOF in the eyes of Japanese industry directly depends on the continued ability of its officials to keep the political economy going in predictable ways by guaranteeing these “rights”. Since Japanese officialdom operates almost entirely beyond the political control of elected parliamentarians and cabinet, these “democratic” institutions cannot be a source of legitimacy.

COSTLESS CAPITAL

In administering the banks as money pumps for rebuilding a war-devastated industry, and for gaining huge international industrial power, Japan’s authorities have not been held back by theory, as they faced the challenge of overcoming what elsewhere would be considered as insurmountable economic limitations. In applying their credit ordering institution they have done what worked in practice. Extraordinary industrial organization and interdependence, which have effectively eliminated possible dissenting independent voices about what constitutes economic reality, have helped the financial mandarins accomplish feats that Westerners would not have dared believe possible.
     In the second half of the 1980s (during the so-called bubble economy) Japan’s large corporations were supplied with close to costless capital by a doubling, tripling and even quadrupling of real estate values, with very few major transactions actually taking place. High land prices appeared to justify the rise to astronomical levels of Japanese equities, and vice versa. The common assumption among Western commentators, governments and businessmen that all this was due to waves of wild speculation by independent investors vividly illustrates the systematic misinterpretation of Japanese economic reality in the West. The point of this exercise was to enable industry to offset the dire effects of the dramatically risen value of the yen, as it launched the largest wave of plant and equipment investments in history. Speculators were exploiting the situation, to be sure, but they were marginal and many were ruined.
     Costless capital did of course not come from altogether nowhere. Credit ordering operations during the bubble simply accelerated the steady transfer of wealth from the household sector to the industrial sector, which had been the earlier condition for “miraculous” industrial growth. The bubble was fed by household savings that found their way to the stockmarket through insurance companies and trust banks. Japanese corporations still have the assets that these investments financed. But after the mandarins decided on a guided deflation, and the market “collapsed,” Japanese households and the financial intermediaries saw trillions of yen wiped out.
The politically determined overcapacity of Japanese industry, further expanded through the bubble economy, has reached a point where major adjustments are necessary to draw the Japanese economy out of the doldrums.
     But while the “convoy system” has recently been somewhat reconfigured, as the officials have had to allow a small number of second-tier Japanese financial institutions to be declared bankrupt, it continues to support a large number of institutions that, measured by conventional Western standards, would be considered altogether unviable. The spectacular mergers that have taken place in the late 1990s among large Japanese banks (beginning with the creation of the Sakura bank out of the old Mitsui and Taiyo Kobe banks and continuing through the recent IBJ-Fuji-DKB merger) must be seen in this light. This process in Japan is different from that which drives the big bank mergers in other countries, in that it primarily serves a political rather than an economic purpose — that of preserving the credit ordering system. Official declarations that a more market-oriented approach has become desirable do not herald fundamental structural change. Abolishing the system under MOF control is not conceivable. It would risk industrial collapse.

Systematic credit denial is as significant to Japanese economic order keeping as credit creation and allocation. Outside the main bank-supported and systemically coordinated industrial machine there is little opportunity for a solitary entrepreneur, dependent on long-term domestic investment, to flourish. Small companies in service sector areas considered marginal, such as hair-dressers, fashion businesses and retailers have access to more expensive funding, but will find it difficult (depending on the sector) to expand significantly without linking up in some way with a keiretsu or smaller cluster. Small retailers are for a large part either wholly or partly ensconced in so-called distribution-keiretsu: dealer associations with which manufacturers (especially in the consumer electronics sector) control their domestic market shares. Manufacturer members of horizontal keiretsu are themselves often stellar centers of huge planetary systems of sometimes a hundred or more subcontractors; structures known as vertical keiretsu.
     Since a capital market comparable to those of the Western industrialized countries does not exist, few medium-sized and small companies can establish a market niche allowing them the freedom to make their own decisions. The relations that these smaller companies have with their “mother” firms is the sole determinant of their credit worthiness. The upper tier of well-known names of Japanese industry rests on a thick pile of shock-absorbing layers of anonymous factories and sweatshops, which go bankrupt in large numbers and reappear for different part-making requirements in times of economic downturn and shifts in manufacturing focus. Trading companies within the keiretsu, rather than the banks, tend to mediate for, or directly supply credit to, this category. These organizations, for which “business brokers” would be a more accurate label, are huge industrial information centers capable of calculating risk in nearly every area of economic pursuit and they further strengthen centralized control over credit allocation.
     Could those subcontractors, without access to easy credit, be seen as forming a fledgling private sector? If so, it is subjected permanently to the politically well-connected firms, and is likely to be permanently deprived of a political voice.

THE MISSING PRIVATE \ PUBLIC DIVIDE

Nations are not naturally endowed with private and public sectors. For these notions to correspond to significant categories in a political economy, a country must have undergone a legal evolution that cannot be taken for granted. The rise of the bourgeoisie that ended the feudal order in Europe was crucial to this development. In Japan no bourgeoisie ever emerged, even though its urban centers were huge, and the sites of highly sophisticated culture. Edo (later Tokyo) in the 18th century was probably 8 times as large as the largest European cities. But Japanese cities were created by warlords for their own strategic and financial reasons.
     We must condense a complex story, and it is perhaps most instructive to compare the political function of European and Japanese guilds. The European guilds that kept social order, gave status to its members, and regulated economic activity, became the basis for new oligarchic power, a power that existed in opposition to, or at least mostly independent of, the older landed aristocracy outside the cities. Economic development in Tokugawa Japan brought forth a large number of merchant houses, which organized themselves in guilds that were self-regulating to a high degree, became very rich and indirectly powerful. But they were never protected by laws and could never extricate themselves from the power hierarchy to become a potential hotbed of political opposition. The bakufu (military government) authorities recognized their right to exist, and allowed them certain privileges, which frequently grew into monopolies. In return for extra-legal protection, the groups of merchants made sure that economic activity remained controllable and could be checked at any time by the authorities. The effect of these arrangements was that the merchants ended up helping to prevent commercialism from spreading to areas of Japanese life where the bakufu authorities did not want it to go.
     The burgeoning civic institutions within the fortified cities of medieval Europe gradually helped establish a legal order in which property rights could be enforced, and the accumulation of wealth could be safeguarded. In Japan, by contrast, the judiciary had been entirely in the hands of the military authorities, and did not evolve civil law notions of ownership, private property and contract. No contractual thinking developed to provide a political grip separate from the structure of powerholders. In the absence of an institutional background for the emergence of notions of a separation of the powers of government and private wealth (along with notions of individual and citizenship rights), the Meiji Period authorities did not create a division of public and private sectors as they systematically built up Japanese industry. No functioning legal system would have supported such a division.
     To give more depth to this perspective, it is necessary to understand that the Tokugawa rule makers had, by a stroke of political genius, seen to it that society itself became, as much as was possible, a part of the political system. Japanese households, or “ie”, were consciously turned into political units by incorporating them as special legal entities. The closer to the center of bakufu power, the more that was the case. With that, the bosses who unified Japan four centuries ago prevented a division between a potentially recalcitrant society and the governing system. On the level of the individual person, Japanese of samurai status could not own significant property, like land or tools. The “ie” owned things. Individuals could not be said to have much of an identity except as members of an ie. Europeans owned their businesses, whereas the households of their Japanese counterparts were themselves the business — the ie was a corporation. The head of the ie, who had almost unlimited legal power over all its members, was also responsible for their conduct. And the head was automatically part of the political system through a bond of obedience with his superior. At first this political control of society through the ie system covered mainly samurai households. But this kind of highly effective social control was later also applied to well-to-do village households, and city households engaged in business.
     The reformist Meiji authorities made samurai style organization the norm for all of society. There was hardly an alternative. Lacking the institutions which in Europe had evolved to form a genuine private realm, the worker in a city, the artisan or the merchant was only ever aware of power emanating from his own superior or guild in the ruling system. If urban Japanese had any sense of the possibility of an alternative political organization, they might imagine a group of rebels, perhaps a rebel army. The Japanese individual could, however, not bring to mind any example of an alternative political organization that could become a “state”. The state, as it evolved in Europe, with its political arrangements that treated individuals as citizens whose conduct could be judged in the light of universal legal ideas, was simply unimaginable.
     This inherited political structure that blocked the emergence of a bourgeoisie along with conceptions of citizenship and a public sector, was fortified by a powerful ideology. The politically incorporated household was portrayed as something with overarching mystic qualities; as a blessing emanating from a long line of ancestors and endowed upon the persons currently inhabiting it. And the ie was believed to last indefinitely into the future. The political bosses of the Meiji Period were of course not ready to jettison this marvelous tool for maintaining order in exchange for a more European approach to the nature of families. Whatever they imported in the way of modern ideas, it did not include anything that might politically have emancipated Japanese households. And it is not surprising that the Meiji oligarchy extended the legal ie organization to all layers of the population. Until 1945 the ie was obliged by law to produce moral subjects.
     The Meiji authorities blended something even more powerful into the mix of ie mystique. They came up with the notion of the state as a gigantic family grouped around a benevolent emperor. Militaristic propaganda in the twentieth century spoke of “one hundred million hearts beating as one heart”.
In short, whereas in 17th and 18th century Europe the authority structure headed by kings was robbed of its sacredness, in Japan, almost simultaneously, the opposite happened; anyone with the temerity ever to think of the authority structure as less than sacred became prevented from doing so by having been made part of the sacredness himself. Contemporary Japanese law has dropped the formal concept of ie altogether. But the ideology of large business organizations, their “constitutions” and philosophy of founders, and whatever else they hold up for new employees to study and take to heart, tend to be replete with notions directly descended from ie ideology.

Samurai were often broke, and gradually began marrying their daughters to the sons of merchants. But as a result of this intermarrying, the factual Japanese aristocracy did not disappear when the samurai status was officially abolished. By the time the formal status structure disappeared, Japanese aristocracy had already blended in with a hierarchy of economic power. With the adoption of institutions inspired by the examples from the West, private and public sectors were established in theory, but were not allowed to shape the political economy. The “private” and the “public” were perhaps separable entities in the minds of some Japanese thinkers, as they theorized about things, but they did not become living political concepts.
     Japanese zaibatsu became powerful organizations, which frequently showed that they wanted to serve different purposes than those in the minds of central government authorities. At the same time, however, they benefited from the always present readiness of government authorities to encourage oligarchic economic power.

What is officially termed the private sector in Japan today can more profitably be viewed as a collectivity of guilds. Or, in another, similar, way of looking at it: corporations function as if they have franchises from the government to do what they are doing.
     Japanese authorities still enter into relationships with pressure groups through which, ultimately, they can continue to control situations. In exchange the central authorities give the pressure groups subsidies and special privileges. A spectacular continuation of the kind of relationship that existed between the official government authorities and the guilds in Tokugawa and Meiji Japan, is the mutually beneficial relationship enjoyed today between police and yakuza (gangsters). The gangsters are given an informal monopoly on certain activities that are on the edge of legality or just inside the illegal zone, and in exchange for that they serve the police by controlling crime. More organized crime means less unpredictable crime.
     Foreign observers of the Japanese economy continue to focus on signs of change in the way that bureaucrats interact with companies. The imagery that has informed the discussion about Japanese reform has been largely about a meddlesome government sector interfering with a private sector. And the Japanese press dutifully reports on things like the number of retired bureaucrats given cushy jobs by corporations each year. This is a very misleading topic, as it solidifies an erroneous impression that nosy bureaucrats cannot leave hardworking entrepreneurs alone. The often mentioned phenomena that symbolize the “cozy relationships” between bureaucracy and business (amakudari, tsutatsu and gyosei seido) essentially regulate internal communication within a structure that in actual fact forms an almost seamless whole, even while it may be shot through with (mostly unacknowledged) conflict.

MALFUNCTIONING

The fact that in Japan no bourgeoisie emerged, no sense of citizenship evolved, and that the political economy never in practice differentiated between public and private sectors has had dire consequences. The notion of the “public good” is not meaningful to the power clusters within the political economy.
     Few doubt that in recent years the Japanese political economy has been malfunctioning. This is widely understood also among the Japanese political elite, but it is accepted fatalistically. Considering the fact that the politically determined overcapacity is no longer useful for establishing international market share, the fact that the world cannot absorb huge increases in Japanese productive output, and considering the weight of a financial sector much of which is technically bankrupt, a major shift from the producer-centered policies that are now set in stone to policies benefiting consumers would be an obvious task for any Japanese government.
     With the quadrupling of the exchange value of the yen against the dollar over the last 25 years, Japan’s exporters have seen their foreign profit-margins dwindle severely, necessitating systematic subsidizing of Japanese industry by the keiretsu banks. (Until 1990 these banks showed positive results on their books only because of the inflationary real estate and stockmarkets). But the implicit national priority of unlimited expansion of industrial power has remained the national priority. No debate invoking the public good is sorting out possible priorities for Japan’s future.
     There is probably no other advanced industrial country in which for the past ten years so much has been said and written and promised on the subject of fundamental economic and political reform as Japan, and announcements from within government and business bureaucracies about a necessary drastic overhaul go back at least another decade. There has been a corresponding number of accounts about frustrated efforts and false starts. Adjustments are not forthcoming because there is not one political entity that functions as a true government, one capable of identifying new priorities.

The absence of a center of political accountability allows for economic mismanagement on a huge scale, made visible in the gradual destruction of the Japanese countryside, its rivers and coastline through the indiscriminate pouring of concrete. The Japanese construction mafia — construction bureaucrats, politicians and about half a million related companies — is a most tragic example of a Japanese interest group that has become so powerful that it systematically undermines the public good.
     Policies and government spending in the context of a housing policy (an obvious choice in a country with substandard housing) that would not be destroying the countryside, that would still bring employment, and that would have brought truly useful improvements in local infrastructure, have been considered, but there is no effective government to design and implement them.

INADEQUATE TERMINOLOGY

The case of Japan is highly instructive for those who are serious about rethinking the question of what is to be done about international systems relevant to economic activity.
     To begin with, it poignantly illustrates the utter inadequacy of generally accepted terminology and its underlying assumptions with which economists, policy makers and general commentators attempt to make economic issues intelligible to one another. Japan provides a huge warning against the widespread application of familiar economic conceptual categories to unfamiliar phenomena, unexamined political circumstances, and unanticipated cause and effect chains, which has been the hallmark of the globalization discussions. The reality of the world’s second largest industrial power does not remotely resemble the mental imagery evoked by argumentation of mainstream economics and the standard defense of globalization as a political mission. Japanese experience thus supports the conclusion some have drawn from events of recent years that the widely applied conventional frame of reference for understanding world-wide economic developments does not lead to adequate understanding of these developments.

The ubiquitous accounts of a “changing Japan” in popular media as well as academic literature tend to take for granted that change means convergence. Almost all non-Japanese commentators, negotiators and policy makers tend to believe that convergence of Japanese practices with general practices in Western capitalist market economies is desirable; and quite a few start from the premise that it is inevitable. It is important that we realize the presence of such an assumption, as well as its ideological roots, because it has tended to filter the world’s observations of Japanese economic and administrative developments — giving much weight to scattered instances of change that are presented as proof of convergence. But a Japanese metamorphosis into an economic system even remotely resembling the Anglo-American model is no longer possible. Convergence would require something akin to a revolution in Japan, and the process of getting from here to there would undermine the entire global order, given Japan’s position as the world’s number one net creditor nation, principal financier of the US trade and current account deficits, and principal investor in SouthEast Asia. There is no question but that Japan will remain opaque, and have an administered market, have inextricably intertwined government and business bureaucracies that are not ultimately subject to impartial legal scrutiny.
     Vastly complicating any effort to come to terms with Japanese reality is the fact that notions of convergence are inadvertently encouraged by Japanese officialdom in an almost continuous effort to placate American sentiments. Washington has been nagging Tokyo to change its ways for decades, and the diplomatic response has been a plea for patience rather than an explanation that the asked-for changes are not forthcoming because they are impossible. These officials have difficulty in explaining their own political economy to each other in the absence of a shared adequate terminology.
     Japanese officials and commentators know that the language they use is borrowed and does not cover reality, but they do not know exactly where boundaries of terminology and reality cease to overlap.
The true nature of the Japanese political economy is not understood at all by a majority of Japanese citizens, which suits the powerholders fine because their system would be undermined if its built-in hierarchical preferences were made official, and thereby a clear target for potential protest. Japanese political and economic explanations are never forced to be realistic by an evolving public debate on social and political desirables. Academics, media commmentators and officialdom in Japan excell in forcing round pegs in square holes as they explain Japanese developments almost entirely in terms of conventional market-centered economics.

The Japanese experience is a forceful reminder that economies cannot be adequately understood if they are studied in isolation from the political circumstances that helped shape them, and as if they have no historical dimension. To the extent that the current international agenda of liberalization, deregulation, and privatization rests on ahistorical tenets held as if they were self-evident and unchallengeable, it must be critically re-examined.
     More specifically, the application of methods for solving economic problems dictated by theory based on situations in Western economies, which were erroneously believed to be universally applicable (because “scientific”), must be examined for the inadvertent stagnation or severe setbacks in economic development programs they may cause. The Japanese experience teaches us that it is altogether possible for successful economies to emerge without the institutional underpinnings that are needed for the relatively safe operation of free-market capitalism. The ideological force of free-market fundamentalism has blinded otherwise sophisticated policymakers, businessmen, and current affairs analysts to the world’s burden of a set of economies in which basic investor purposes and basic institutional supports are variables. In 130 years of spectacular industrial development, Japan has managed without the emergence of an institution resembling the Certified Public Accountant known to Europe and the United States. We find hardly any bankruptcy law in Japan and only underdeveloped contract law.

THE ASIAN CRISIS

The Asian financial crisis looks entirely different when seen against the background of this Japanese experience than of what mainstream opinion has made of it. The latter pointed at “irresponsible” banking, “unacceptable” informal relations between the private sector and government, and the lack of transparency as having caused structural weaknesses of the financial sector. Formulas for preventing further crises have centered in large part on the elimination of what was popularly refered to as “crony capitalism”, which entailed establishing improved supervisory/prudential standards. The stricken countries were by and large portrayed as having brought disaster upon themselves through their delinquency with regard to banking practices.
     It would be analytically more profitable to consider the much decried informal relations between government and business as part and parcel of a formula for success. The South Korean political economy has followed the Japanese example most closely, and both helped inspire, to varying extents, the development policies of the others. Just like Japan, the Asian tigers wanted to be industrially strong rather than rich, but unlike the Japanese authorities, who have always made sure that their economy would never be at the mercy of jittery and capricious foreign investors by closely controlling foreign investment, the authorities of Thailand, South Korea and Indonesia, followed a fundamentally different strategy of attracting capital from abroad. Most significantly, protective walls surrounding the credit systems of these countries — which have always been kept in place as a matter of course in Japan — were removed under pressure of Washington and international organizations.
     It is not that governments of the crisis countries left serious supervision and sound rules for prudential banking too late in their economic development, but rather that they practiced structural favoritism and had a disdain for short- to medium-term market signals for the sake of gaining industrial strength in the shortest time possible. Providing entire industrial sectors with the wherewithal to expand massively has been a primary concern for these scarce capital countries, and thus their financial systems were designed to allocate capital on an insider basis for the purpose of improving productivity and growth of capacity. The rapid growth of Thai and Malaysian productive capacity would not have been possible without strategic credit allocation that comes with prevailing government favoritism for chosen private enterprises. The chaebol in Korea, like the keiretsu in Japan, would not have developed their tremendous industrial capacity if not for privileged access to credit in which questions of future profitability hardly mattered. The close connections between authorities and businessmen were essential to the allocation process. Capital allocation has taken place mainly through a protected banking system that tolerates very high levels of debt. Costs and risks are under such conditions regarded with entirely different eyes than they are in the West.
     Notions that have prevailed in the discourse on the Asian crisis, those of moral hazard and transparency, take on a different coloring when placed in the context of Japanese-style credit ordering. Japanese industrial and financial systems offer hardly anything except “moral hazard” by accepted definitions.

REVERSE CONVERGENCE?

While we may exclude the possibility of Japan changing into a European or American style political economy, there are good reasons to consider a convergence the other way round. In that context the Japanese experience ought to become highly valued because it can tell us much of what is in store for the West if present trends continue.
     While the removal of obstacles to further “globalization” is presented in terms of “expanding free trade” (witness the mainstream response to the protesters in Seattle), the real agenda of globalization advocates in recent years consists of a push for international treaties aimed at a huge expansion of corporate rights. Japan constitutes a magnificent laboratory for the study of symbiosis between business empires and the political system. While Western governments have greater freedom than the putative government in Tokyo in determining their priorities, the identity of purpose between government and corporations in the United States and much of Europe is beginning to take on a Japanese coloring. The necessity for American politicians on the national level to please big business so as to cover the costs of getting elected already bears close comparison with what has determined Japanese elections since 1955.
     When ever-expanding bureaucratic entities of colossal size, and unaccountable power, gradually take over the public realm it is time to rethink common metaphors. The fact that gigantic business empires and financial organizations that operate on behalf of a relatively small number of parties exercise considerable power is nowadays generally acknowledged. But its justification remains couched in terms whose connotations date from the 19th century. Continuing to portray mega-merged business empires with imagery of entrepreneurship and risk-taking is absurd. A study of Japanese business could place them in a more satisfying perspective.
    Japan can furthermore provide much inspiration for political and economic thinkers who, in the post-Cold-War world, have been confronted with the sudden task of gaining perspective of the interplay between states and markets. What transnational businesses with a financial wherewithal comparable to or greater than many medium-sized countries can do to local markets deserves scrutiny with much improved conceptual tools.
     Perhaps the greatest threat represented by the recently strengthened concentrations of business power is their potential for diminishing the effect of true markets. Again, Japan provides us with chapter and verse of how markets can be controlled, and eliminated to a point where they no longer plague business with uncertainty.
     Privatization in some European economies has blurred the line between private and public sectors significantly. Further privatization may help diminish private and public sectors as politically relevant categories. Needless to say, Japan is the place to find out what kind of world that creates. The Japanese experience ought also be a warning to those practicing political science who present interest group representation as the most likely future form of democracy. If Japan is anything to go by, such “corporatism” will, in the long run, destroy the “public good”, since the various groups that make up a corporatist elite are not interested in such a thing. Constitutionally they can only be interested in their own “personal good”. The claim that everyone belongs to one group or another, and that it is possible to form a political system representing everyone by incorporating all these interest groups, is fallacious, as Japanese experience strongly suggests.

WHAT IS TO BE DONE?

A thorough overhaul of the conceptual apparatus with which we regard and interpret the economic reality of our world is obviously needed. Current orthodoxy and the vision of a globalized economic order ruled by unregulated markets assumes a homogeneity of economic motivation and future economic practice that does not and cannot exist. The neoliberal imagination that takes separate private and public sectors for granted, and comes with preconceived thought about the market as a singular abstraction — as a source of superior knowledge and of political judiciousness, as the best impartial judge we can have, and as a healer of sick economies — must be seen for what it is: an obstacle to knowledge. We require a much better intellectual basis for a policy discourse concerning economic development, and concerning forms of economic harmonization not detrimental to the well-being of local populations among a diversity of political economies.
     Indignation with economic systems that deviate from what international organizations and Western governments have rather recently decided as proper or healthy, and the moralistic tone that has characterized Western commentary on crisis countries, are out of place. The implication that industrial systems with endemic favoritism deviate from established standards that determine economic health begs the question of the validity of these standards. The search for causes of malfunctioning in irresponsible governmental attitudes and bad business habits, hinder the search for workable long term solutions.
     Western businesses normally develop a tacit understanding of, and accommodation with, the reality of political economies in other parts of the world; they must in order to be successful and to maintain their risks from regional involvement at manageable levels. This was illustrated by the fact that foreign lenders in the Asian crisis countries insisted on short-term lending, and subsequently were quick to pull out; they understood that they could not be part of local systems, and would not be protected through the advantages that these systems offer insiders.
    But the continued emphasis among international organizations and Western officials on moral hazard, on transparency, and so on, prevents the policy discourse from moving in a more profitable direction.
Even if relevant local laws were passed, in political cultures lacking the institutional infrastructure to support them such laws are meaningless. The wished for transparency will require reliable indigenous ratings agencies, which now do not exist, and large numbers of registered accountants who can feel safe in the knowledge that their profession is protected. After some 120 years of industrial development Japan has not produced an institution that functions like the CPAs in the West. It is highly unlikely that such a category can be trained in the Asian crisis countries within even a couple of generations.
     For the well-being of local populations it is necessary that policy makers and international organizations develop an explicit understanding of discrepancies that are part of unalterable reality. Only then can policy aims be formulated to help prevent the process of globalization to cause major economic dislocations and distortions.

There is one objective that could and should draw together the elites of “emerging markets”, less developed economies, Western governments and international organizations, for formulating a practical policy discussion. That objective is the fostering of an economically strong and politically significant middle class. Without losing from sight the need for fundamental assistance to the desperately poor in countries negatively affected by globalization, economic policies aimed at lifting the recently poor and less poor into an enlarged middle class with money to spend, and with political aspirations, would seem to be the best hope for all developmental areas of the world.
     Such a class, strongly motivated to help engender further development, can have a very significant psychological and moral impact as it demonstrates that all people can gradually gain an ability to help shape their destiny.
That priority makes immediate sense from an economic development point of view. The great weakness of the type of economy inspired by Japanese example, in which investments are made for industrial strength rather than profit, is that after a period of rapid growth a major liability emerges when foreign markets are no longer able to absorb what the pumped up production apparatus delivers. At the outset of the high growth periods, attractive investment opportunities exceed available capital. But when available capital increases rapidly, the economic system pioneered by Japan becomes problematic. Japan has been burdenen by this for a couple of decades, but has never addressed the problem because it lacks the political mechanism to do so, and has thus not provided any example of how the other political economies it inspired could proceed to make adjustments.
     A middle class with the means to buy consumer products will make the Asian economies less dependent on exports, and therefore less vulnerable to external vicissitudes. Before its crisis, Indonesia had drawn attention because of its growing economic prosperity, and had received applause because its distrubution of wealth was beginning significantly to help the growth of a lower middle-class. Aside from bringing potentially disastrous political instability, the misguided handling of the crisis there (and elsewhere) pushed tens of millions of people below the poverty line. More often than not, a policy to counter that particular outcome of the financial crisis demands Keynesian type programs, and therefore much more government spending than is believed to be responsible in current conventional thinking about the relationship of states and markets.
Support for small and medium-sized businesses would be an obvious choice in the context of such a policy. Large numbers of small entrepreneurs are most likely to provide solid employment prospects to the lower echelons of society.

Finally, a huge problem deserves everyone’s attention: How to preserve a large measure of economic self-determination for newly developed countries. Globalization has so far significantly increased the dependence of economic entities in less developed countries on foreign interests. Exploitation, the potential for which comes with the greater reach of international investors, is a built-in threat for these countries.
     To see this in proper perspective, one must forget arguments implying ill-intent on the part of foreign economic interest, but rather conceive of exploitation as following from the logic of international economic processes.
     A substantial danger for the long term is the transformation of countries with promising economic prospects into subcontracting positions for more powerful political economies. While a subcontracting function of part of a developing industry can be conducive to growth and a limited degree of technology transfer, accompanying infrastructural developments may in the long run serve the foreign investor more than they do the domestic economy. The relationship between the SouthEast Asian economies and Japan is a telling case in point.
     While acknowledging the fact of economic interdependence and its benefits, policies that ensure a high degree of self-determination are ultimately desirable.

The study of Japanese political and economic affairs should be enriched with a special subcategory for scandals. Not because Japanese people produce more, or juicier, scandals than others. Some other countries are pretty good at it as well. But there is a need for systematic analysis of Japanese scandals because of their important function of keeping the Japanese power system running smoothly. The current security brokerage scandal is, again, a wonderful example of this.
     The major, central, role of the Japanese scandal is to help curb excess. Excess in any kind of behaviour that is otherwise considered normal. For example, it is considered normal in Japan that the astronomical amounts of money politicians spend to get re-elected is provided by corporations. But there are limits to this normality. It is not considered a good thing that one politician gets ten times more than he needs to get re-elected. Conversely, it is not considered a good thing that one single company funds every well-known politician. In either case there is the risk of producing a threat to the way things are done. This threat may turn into an instrument causing the breakdown of the way things are done. Let us use the term “System” interchangeably with the way things are done to make it easier to talk about this phenomenon.
     The most important characteristic of the System is that it is “extra-legal”; it operates outside the framework of what is permitted and not permitted as determined by law. Behaviour within the context of the System is sometimes illegal, sometimes not. It keeps to certain rules, to be sure. But these rules are informal rules; they are, to use a term commonly used in European languages, “unwritten rules”. In other words, the System is not ultimately regulated by rules that all of us can appeal to. The rules were not made to protect or give advantage to ordinary people. They serve a minority — the political elite. Let us call the people who decide the way things are done “the members of the System”. They are the most active among the political elite.
     Japanese scandals are more than useful in helping to prevent destructive excess. They are probably indispensable. It is not difficult to see why. Any system, whether informal or highly legal, transparent or opaque, must have some mechanism to keep members in line. In a system governed by laws, an outsider supervisory body is necessary to ensure that these laws are obeyed. In a system governed by the way things are done such a check cannot exist, which means that the chances are pretty good that occasionally things may get out of hand. The System is prone to excess for the very reason that it is not ultimately regulated by law. Because a trend in the way things are done that brings advantages to some members of the System is difficult to stop as long as it doesn’t bring great disadvantage to other members of the System. In an informal political system with unwritten rules scandals must, at least to some extent, play the role that courts of law and supervisory agencies play in a system governed by the rule of law.
     By preventing destructive excess, Japanese scandals make it possible for the System to survive. This is where Japanese scandals differ most from normal scandals in the United States and in Europe, which tend to bring about a purge, a “cleansing” of practices to a point where the conditions that facilitated illegal or improper behavior no longer exist. Cozy, extralegal ways of doing things develop among political elites anywhere in the world. Scandals in Europe or the United States tend to destroy them. Scandals in Japan ensure the future of such informal relationships.
     Besides protecting the System by curbing the threat of excess, Japanese scandals generally benefit private interests of powerful organizations within the System. Scandal time in Japan is a time during which various power groups try very hard to accomplish their own goals. Things are in a flux during scandal time, and many goals cannot be achieved when things are static.
     Japanese scandals also teach us that whereas the members of the System often cannot control processes, they generally do control outcomes. (I think the same is the case with control over the Japanese economy: the focus of bureaucratic management is on outcomes; there is seldom an attempt to direct the details). Japanese scandals are managed to a high degree, but still a lot that is unexpected can happen, including developments unpleasant to those who participate in the managing of the scandal. Scandals may bring anguish and pain for important members of the elite. At times scandals may give the impression of not being under control. My favorite comparison is with a garden hose. If you turn on the water before you get hold of the nozzle, the hose may flap about and drench bystanders who were not expecting to get wet. The Recruit case was a good example. While it was being used by various groups like the Keidanren, the Ministry of Post and Telecommunications, the enemies of Nakasone, and by Takeshita, all for their own ends, the scandal went temporarily out of control and forced the resignation of Takeshita (largely because of the wrong choice for justice minister when he reshuffled his cabinet).
The security brokerage scandal began when the tax bureau of the Ministry of Finance, under a new administrator, decided that the securities industry should not be allowed to get away with subtracting the now infamous compensations from their taxes — in the way they are allowed to subtract their entertainment expenses. The next phase is blurred, but once the scandal got going it became abundantly clear that it was providing wonderful opportunities for officials in the Ministry of Finance.- Their purposes have so far been well-served, because two elements were brought back to what is in their eyes “the right order”. One is Nomura, and the other their own securities bureau.
     In the past ten years or so Nomura has become extraordinarily powerful. In fact, there is nothing like Nomura in the world. It is roughly 25 times bigger than the biggest American securities firm. This segment of the Japanese financial industry is run by a de facto cartel, composed of the four big securities houses. All the smaller ones are, as it were, subcontractors operating under the protection and in accordance to the unwritten rules provided by the cartel. The undisputed leader of this entire apparatus is Nomura. Even though the three other big firms are powers in their own right, they take their cues from Nomura in important matters. This set up is an excellent illustration of oligarchic power verging on monopolistic power. With the one important restriction that ultimately the whole arrangement can only function under the wings of the Ministry of Finance.
     The incredibly fast development of Japan’s financial institutions during the 1980s, along with the massive inflation in capital assets (real estate and stocks), produced major power re-alignments within Japanese business, which for example made Keidanren and the banks relatively less important vis-a-vis the securities industry, construction and real estate companies. And, as always with such rapid power re-alignments, this stimulated an uncomfortable sense among the members of the System that normalcy had been disturbed, requiring at least some adjustment. In the 1980s, the security houses gained a measure of influence and prestige they had never had before. And it was reasonable to expect that it would only be a matter of time before they would be forced to undergo an experience intended to cool down their zealousness, restrain their arrogance, and remind them of the proper relationships within the Japanese System. This has just happened, and for Nomura, as the leader of the cartel, it has been, of course, the most unpleasant.
     Similarly, Ministry of Finance officials appear to have decided that the time had come to cut the securities bureau within their own organization down to size. Until it began to reflect the new importance of the the securities industry in the 1980s, this bureau had been relatively insignificant when compared with the tax, banking and budget bureaus. The old internal balance in the Ministry of Finance can, at least to some extent, now be restored.
     But these forced adjustments among the components of the Japanese power system may even have been relatively minor goals of the Ministry of Finance. Something else has happened that has been critically important for the Japanese economy as a whole. Although the securities companies appear to be the main sufferers in the current scandal, they are, ironically also its main beneficiaries. One way to interprete recent events is to see them as one gigantic rescue operation for the securities industry cartel. And that can be considered part of an even larger operation that has been going on for over a year and a half: the restraining of the so-called “bubble economy”.
     I do not believe that there ever was a real bubble economy, in the sense of a speculative bubble that could burst. There was always too much control — informal control — for any “bursting” to be a likely result of the wild, but managed, inflation of capital assets that took place in the second half of the 1980s. But the absurd increase in the nominal value of Japanese real estate and stocks did create considerable distortions in the economy and, very worrisome to the Ministry of Finance, it had brought into being fairly strong and opportunistic “bubble companies” that were not part of the informal networks to which members of the System belong. The dramatic plunge of the stockmarket a year and a half ago may not have been started by the Ministry of Finance. But once the downturn began, the ministry monitored and controlled it, and was ultimately able to use it to accomplish its goal of reducing the excesses of the “bubble economy”, and bring all elements of the financial system back in better order. Indeed it was able to use the downturn to expand its area of control to elements such as non-bank financial institutions.
     But this stockmarket downturn created major losses for firms which had always played the game according to the unwritten rules blessed by the bureaucrats. And compensations for these losses seemed very appropriate if you look at it from the inside of Japan’s “miraculous” financial system. The amounts that the big investors expected to be paid were, however, much larger than ever before. They were so huge that if the securities firms had continued paying them, they would probably have sunk into deep trouble. And this would also have caused a further depression of the stockmarket.
     To recapitulate: the recent threat of excess to the way things are done consisted of excessively large amounts of money and the recently excessive prominence of the securities industry. Both have now been taken care of.
     In the Recruit scandal the threat of excess also consisted of massive amounts of money as well as large-scale use of new and less easily controllable methods of securing protection and influencing bureaucratic decision-making. Again, in the scandals involving Tanaka Kakuei (his money making methods and Lockheed), excess consisted of the very systematic use of huge amounts. Other than that, Tanaka Kakuei and Ezoe Hiromasa did what others also did and still continue to do. Their sin was that they were better at it than other members of the System. They knew how to exploit the opportunities for self-advancement offered by System much more effectively. They were geniuses. And the members of the System are scared of geniuses of that kind, because the latter threaten to dominate the way things are done, thus endangering the internal balance.
     The routine compensation payments by Nomura and the others has not come as a surprise to anyone who is familiar with the workings of Japan’s financial system. It has not been much of a surprise, either, to those who may know little about the financial world, but who have a generally good idea of how Japan is run. The security houses were doing what they were expected to do. Just like, in the Recruit scandal, the other main victims Shinto Hisashi and Miyazawa Kiichi had been doing exactly what was expected of them. All of these organizations and persons have been conforming to the way things are done.
     Even more than staying well within the conventions of the System, the security companies were helping to make the System run more smoothly. They were helping to sustain conditions ensuring the collaboration of big corporations in large-scale pool efforts for creating and controlling a vast expansion of Japan’s asset base (stocks and real estate), allowing for vast increases in Japanese productive capacity. They were crucial in helping to reduce the cost of capital for Japan’s large companies to almost nothing, thus enabling Japan’s corporations to make the investments necessary to be competitive notwithstanding the high value of the Yen from the mid 1980s onward.
     The most important question to ask therefore is why there is a scandal to begin with. What, actually, is the scandal all about?
As in the case of the Recruit scandal, nothing much illegal took place. The Ministry of Finance has confirmed that compensation is only illegal if it has been previously promised. And even though the compensations were expected as a matter of course, everyone can easily say that such promises were never made. So, there is no legal case.
     But after years of agreeing with the practice of compensations, the Ministry of Finance has now decided that what the security industry did was improper. If that is true, the next question we must ask is: improper by whose standards? Did the security houses violate, in a major way, the rules of Japanese social convention? This question brings us to a subtle, and most interesting point. For the answer is both yes and no. Yes, in the sense that many ordinary Japanese think that something is wrong and unfair if only large investors get guarantees in a market in which the public also participates. But the answer must be “no” if we measure the behaviour of the security houses by the conventions of the world in which they operate. After all, their behaviour lived up to the way things are done.
     It is rather clear that the Japanese political elite and Japan’s ordinary people use different standards for judging what is appropriate and inappropriate conduct. What is very special about this situation is that while the common people have a fairly good idea of their own standards, they really do not know much about the standards of the elite that main-tains the Japanese System. And the members of the System are not at all honest about their own standards when they present their views to the public. Ordinary Japanese have but a vague idea of how their country is really governed. This difference between what the elite knows and what the ordinary Japanese know is a vital characteristic of the Japanese political system, and of Japanese society generally.
     The division is traditional. In Tokugawa days the relevant phrase was: “people must not be informed, but made dependent upon the authority of the government” (tami wa shirashimu bekarazu, yorashimu beshi). And still today, there are two classes of Japanese: one small minority of “knowers”, of people who are clued in, and the large mass of political innocents, of people who may suspect that there is a different honne behind many a tatemae, but who cannot quite put their fingers on it.
     If I had to choose the biggest villain in the various Japanese scandals that I have looked at closely, I would take the press. This choice my sound strange, since the Japanese press normally receives a good amount of applause for the revelations it provides in times of scandal. But it doesn’t deserve this applause. Japanese newspapers help perpetuate the division between the minority of “people in the know” and the majority of political innocents. They never consistently and seriously analyse the way things are done in Japan. They do not explain to the Japanese public what it ought to know about how the country is governed. They could make the point, but do not, that …. yes, it strikes one as improper that the securities houses lent 36 billion yen to a boss in the Inagawa-kai, but that Japanese big companies and politicians and the police have been doing business with the gangsters as a matter of routine. They could point out that… yes, protecting big investors at the expense of small investors is discriminatory, but that the Japanese financial system has a long history of discriminating against the small saver and the small borrower. Japanese have normally had meager returns on their savings (for long periods even less than the inflation rate), which were channeled directly into big industry. And consumer credit remains, even now, fairly primitive. All this has been important to realize the “economic miracle”.
     The newspapers assume a critical attitude once in a while, especially during scandals, but this attitude is phony. Editors and journalists help the bureaucrats in what I call the “management of reality”. Reality is generally an elusive thing in Japan because there are too few Japanese intellectuals or journalists who relentlessly separate fact from convenient and politically expedient fiction. Again, in the current security brokerage scandal the newspapers are not engaged in pointing out the contradictions.
     Without the press there would not be Japanese scandals. And Japanese scandals help keep the Japanese press under control too. Big scandals generally cause a firestorm that rages through the media world. Almost nothing else seems to exist for the time that they last. Scandals are wonderful opportunities for the media to blow off steam, to become very indignant, and to give journalists and editors, all worked up by faked indignation, a sense that they are doing their duty of protecting Japanese society by exposing wrongdoing. But all they do is protect the System, of which they are, of course, a part.
     The press helps the Ministry of Finance to accomplish its aims by upholding the fiction of public outrage. Without an impression of public outrage there would, of course, be no scandal. This is one of the most subtle forms of manipulation of the “innocents” in the Japanese political system. Editors along with the bureaucrats in Japan are not in the habit of reflecting, or responding to, public opinion. They manufacture public opinion, simply by repeatedly telling newspaper readers the same things about what they believe the public thinks or should think, after which the reader begins to believe that this is what his or her opinion ought to be.
     The Japanese public of today is considerably less innocent than in the Tokugawa or Meiji periods. In my experience Japanese who use their heads have a pretty good idea about how power is exercised in their own immediate environment, and they display a healthy cynicism about what the authorities in the central government and the big business world are up to. But the public has too much good sense to become outraged. Lacking the means to throw out the government, to change the System, or to express themselves in any other way besides joining a few hundred likeminded people for a snakedance down the street, most intelligent Japanese know that what they think makes no difference in any way.
     To portray Japanese scandals as signs of “Japanese democracy at work” is unwholesome and an insult to the dignity of the Japanese individual. Scandals help prevent the realization of Japanese democracy by protecting, and thus strengthening, the system of informal relationships ruled by the way things are done over which the public has no influence at all. To make it appear as if the current security brokerage scandal is going to change the way business is done in Japan demonstrates either dishonesty or ignorance. Only those who look at the world from an unhistorical perspective can believe that the current scandal is bringing Japan a step closer to genuine legal rather than bureaucratic control.
     There is talk of new legislation, and it has been suggested that Japan create its own Securities and Exchange Commission (SEC) after the American example. But what significance can that possibly have? Any new or amended laws will be administered by the officials of the Ministry of Finance. And they are accountable to no one. They can enforce or refrain from applying the law as they themselves see fit. Such bureaucratic discretion is crucial to the survival of the Japanese System. As for a Japanese SEC, if it were to come into being it will be manned and directed by amakudari bureaucrats from the Ministry of Finance, and will have wonderful relations with the securities industry cartel.
     There is a growing number of serious observers, here and abroad, who believe that the real rulers of Japan, the cockpit of the state as it were, is the Ministry of Finance. I do not think so, because I do not believe there is a cockpit. But the current security brokerage scandal demonstrates once again just how powerful the Ministry of Finance is compared with the other members of the System. And I think that although it does not constitute a center of political accountability, the Ministry of Finance may well be, for all practical purposes, the single most powerful among the groups that share power in Japan. It therefore deserves to be studied more.
     Japan’s Ministry of Finance is in many ways a good ministry, and a capable ministry. It certainly knows how to preside over economic expansion. But it does not represent the Japanese people. Whatever new regulations and legislation it may now introduce, none of it will be designed to protect the majority against behaviour serving the vested interests of a business minority. And none of it will be used for such a purpose.
     There is an urgent need for the class of “people in the know” to expand. If the “knowers” included a growing multitude of serious and concerned citizens who are not part of the System, Japan would get the intelligent general political discourse it so desperately needs. The advantage of a systematic study of Japanese scandals, as part of such a discourse, is that it throws much light on the relations among the various groups that share power in Japan. There is another, more subtle, advantage of thoroughly analysing Japanese scandals. If a proper analysis became widely known among Japanese people, the scandals would perhaps no longer fulfill the function of protecting the structure of informal relationships and informal transactions. It might help to give Japanese democracy a chance.