leader of the LDP; he pulled the party together
and promised to rid it of corrupt politicians.
It was enough. In 1990 the LDP was securely
back in absolute power after a landslide victory.
The dream that a charismatic female politician,
Takako Doi, who led the Japan Socialist Party,
might effect a decisive change in Japanese politics
on two counts – forcing the LDP into opposition
and advancing the cause of what was very much
the second sex in Japan – quickly faded again. The
majority preferred to stick with the party that had
presided over Japan’s growing prosperity.
But the Japanese miracle began to fade in
- Financial scandals continued to undermine
the standing of ministers and leading members of
the LDP. Some of the most renowned names
among securities companies had manipulated
stock-market prices by agreeing to compensate
some favoured clients against losses. Production
plummeted, loans based on inflated house and
land prices turned into bad debts, the Stock
Exchange registered huge losses and the whole
financial fabric appeared threatened.
Kaifu was regarded as a weak prime minister
by the barons of the LDP factions, a good
stopgap while scandals still hung in the air.
During his two years in office Kaifu nevertheless
was very popular among the Japanese people as a
clean politician. This mattered little to the LDP
and in October 1991 Shin Kanemaru, the most
powerful of the barons and chairman of the
Takeshita faction, forged the necessary alliances in
the corridors of power so that the premiership
should fall to Kiichi Miyazawa. Miyazawa had
been minister of finance at the time of the Recruit
financial scandal and had resigned in December
- His return to politics was intended to mark
the end of any recriminations. Cabinet posts were
distributed among the factions. Miyazawa faced
new challenges. The trade surplus with the US
was the cause of considerable tension while
America remained bogged down in recession, and
President Bush’s visit to Tokyo in January 1992
did little to repair the image of the US, unable to
compete with Japan in manufactures such as auto-
mobiles where it was once the world leader.
Miyazawa, who abandoned most of Kaifu’s
reform programme, was saddled in 1992 with a
new investigation of a financial scandal that
promised to be bigger even than the Recruit
affair. Known as Sagawa, it concerned the hand-
outs made to some hundred politicians, mainly
LDP, including two Cabinet ministers. Sagawa
Kyubin was a parcel-delivery firm that went into
bankruptcy with huge debts. It was one scandal
too many. The political power-broker Shin
Kanemaru was forced to resign in October 1992.
A breakaway faction of the LDP formed the
Renewal party. Elections in July 1993 resulted in
a political upheaval. The LDP fell from power.
Morihiro Hosokawa headed a new seven-party
coalition government committed to reform until
his fall in April 1994.
The contrast between Japanese politics –
faction-ridden, endemically prone to scandal – and
Japan’s success as an economic superpower sub-
verts the claim that in all regions of the world
democracy is essential for prosperity. Indeed,
prosperity has undermined the growth of a
healthy democracy in Japan and in the more pros-
perous nations of Asia – Taiwan, Singapore and
Thailand, not to mention Hong Kong. There is
a parallel here with China, where Deng too
believed that the great majority of the people
would accept the communist political system as
long as it delivered rising standards of living; con-
versely, democracy would be in danger where
standards fell. Will Japan break this cycle and
combine democracy and prosperity?
Unlike the inhabitants of many countries in
the world, the Japanese enjoy civil liberties, and
their government is neither dictatorial nor
authoritarian. If it were, the politicians would not
have to distribute so much largesse and favours
to ensure their reselection. They have to keep on
the right side of the people. Politics is marginal
to the ordinary Japanese, except for necessary
favours, his own job prospects, education and the
outlook for his children. Material progress and
security are what matter. Fo those who won
places in the right schools, universities and com-
panies, there were jobs for life. The company took
care of you, and you owed it absolute loyalty. It
was good for those who were ‘in’ – once they sur-
vived the fearsome competition. There is a place,
too, for those who are ‘out’, but there is also
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