Japan enjoys an enviable reputation in the world, and most nations would love to have its problems, or at least what they know about them. A visiting MP from the United Kingdom, dazzled by the bustling prosperity and bright lights of twenty-first-century Tokyo, famously proclaimed, “If this is a recession, I want one.” There is no gainsaying that Japan is a remarkable success story and has suffered far less social upheaval and glaring disparities than other advanced industrialized nations. In the global imagination, Japan is incredibly cool, mostly because of its pop culture of games, anime, manga, fashion, and cos play, in addition to washoku (Japanese food), cutting-edge technologies, vibrant traditions, and “lost in translation” off-beat wackiness. There is little violent crime, people are usually considerate and polite, streets are clean, and things seem well organized. In what other country would a rail company apologize for a train departing 20 seconds early?

This positive montage of images is accurate as far as it goes but is somewhat misleading and tidies away lots of other aspects of a society going through some major upheavals. Had the British MP travelled to Japan’s provincial towns, his bubbly optimism would have confronted the depressing sight of shattagai, downtown shopping arcades where the shutters are permanently down on storefronts because of bleak economic conditions. There is a sense of crisis among many Japanese about their own futures and that of their nation. According to polls, Japanese are pessimistic and not especially happy compared to other nations. There are many reasons why, and one may be that how Japanese respond to a question may differ from how people in other nations respond. People are conditioned by their cultures and in some societies it may be more natural or acceptable to admit happiness or feel obliged to seem content. Japanese society is a pressure cooker, where people are driven by norms, expectations, and rules of conduct that are inculcated from a young age and reinforced in schools, the local community, and the workplace. Much is implicit, requiring people to read the situation and left wondering if they have done so correctly. None of this is unique to Japan, but with the exception of South Korea, I know of no other society that is quite so relentlessly intense or actively reinforces self-doubt to such a degree. It’s not that people are not joyful or lacking in exuberance, but lots of this fades over the years as parents, teachers, neighbors, friends, colleagues, and bosses give meaning to the common expression: the nail that sticks out gets hammered. The hammering can be incessant and often self-administered as people work to fit in and not attract attention. This helps explain why there is often severe culture shock for returnees, those who have come back to Japan after living overseas. There are even special programs to ease the strains of re-entry for them.

The education system requires intensive swatting that places a premium on rote memorization to pass exams that very early on play a very influential role in deciding one’s future. The fierce competition to get into the best junior high schools, high schools, and universities takes a toll on youth, justified by the common belief that such mind-numbing memorization and dedication will pay off in terms of the most desirable job offers. Self-sacrifice for the common good is a much-lauded virtue, one that helps employers pressure workers into working overtime for free (sabisuzangyo) and working excessive hours at the expense of their private life and health, sometimes to the point of death from overwork (karoshi). Over the past 30 years of living here, I sense these pressures are receding somewhat and there is more tolerance for diversity, respect for private lives and individual aspirations, but it is easy to come up with counterexamples. Strictly enforcing hair color rules in schools? Really? One Osaka high school student sued the prefectural government in 2017 because her school demanded that she dye her naturally brown hair black if she wanted to attend classes. Others have been excluded from yearbooks if they colored their hair. Advocates of such strict regulations that can cover skirt length, perming hair, and makeup argue that these rules help students avoid “getting lost” and prepare them for work and the need to abide by social norms.

Perhaps, in addition to such specific causes of unhappiness, there is a collective inclination to melancholy arising from mono no aware – an appreciation of the transitory nature of our world. This aesthetic is celebrated every spring with cherry blossom-viewing parties featuring various degrees of boisterous inebriation, poetic musings, and an ineffable foreboding because everyone knows that soon the blossoms will scatter in the wind. This is not to buy into the argument that Japan has a unique national character or that culture is destiny, but rather to suggest that such factors are relevant to better comprehend how Japanese see themselves and how some of them seek to explain Japan to others.

In my experience, people here are not generally prone to a “let the good times roll” mentality because this is a society that has experienced more than its share of devastating adversity – natural and manmade disasters – so when things are going well it’s time to imagine it won’t last. It is a land rich in expressions that convey resilience precisely because there has long been a need to have such a spirit. In the weeks after the March 11, 2011 monster tsunami that pulverized villages along the northeast coast of Tohoku, a relatively poor region known for a hardscrabble life, I often heard the expressions gaman zuyoi (stoic perseverance) and nana korobi yaoki (knocked down seven times get up eight times).¹ Such expressions were invoked so much that it began to annoy my relatives in the region who complained that it was just a way for the government to justify reducing relief and recovery assistance and leave them to their own devices. Possibly so, but I suspect that there is also local pride in what these expressions evoke: “we are tough and will bounce back.”

There is a temptation for non-Japanese to invoke concepts that make sense to them to make sense of what is going on in Japan. For example, there is a rich literature that analyzes Japan in terms of modernization, using Western examples as benchmarks to evaluate what they observe. Certainly, Japan has been influenced and inspired by Western practices and institutions, especially since the intensification of globalization that has ensued from the heyday of imperialism in the late nineteenth century. And some Japanese also have tried to make sense of their nation’s tremendous socioeconomic transformation from Tokugawa era (1602–1858) feudalism, in terms of Marxist and modernization theories. Useful no doubt, but in this short book, I aim to zoom in on the key forces, developments, and events that have characterized Japan’s post-WWII trajectory. Rather than getting too caught up with modernization, the inevitable tensions with tradition and the predictable paradoxes to which this gives rise, we will focus on some of the major themes and contested issues of the past 70 years to show how they have shaped Japan and its place in the world today.

The ongoing transformation of Japan is the third in the modern era following the Meiji Restoration in 1868 and the US Occupation of 1945–52. Those reinventions of Japan were top-down and were both swift and sweeping, accomplished by decree, and unimpeded by significant opposition.² The US imposed liberal norms, democratic values, and civil rights that limited state power, while trying to empower women.³ This prompted Prime Minister Yoshida Shigeru⁴ to quip, “Demokurushi” (making a wordplay on the Japanese pronunciation of democracy) meaning, “But it is painful.” As we will see, the contemporary overhaul is fitful, incremental, and contested in a nation where egalitarian, pacifist, and democratic values have become deeply entrenched following defeat in the Pacific War (1931–45). The most sweeping changes are evident in current Prime Minister Abe Shinzo’s national security policy. The Abe Doctrine involves easing and bypassing constitutional constraints on Japan’s armed forces and overturning the nation’s embrace of postwar pacifism despite widespread public opposition. Article 9 of the constitution that renounces war and maintaining armed forces has become a talismanic touchstone of national identity. But to some conservatives, it is a humiliating reminder of defeat and subordination. What was inconceivable 20 years ago has happened rather quickly since 2013, although those on the hawkish end of the spectrum feel it is overdue, urgently essential, and just the beginning.

At the dawn of 2018, the Japanese media was abuzz about Abe’s plans to: (1) revise the pacifist constitution; (2) retrofit two large flattop vessels currently used for helicopters into aircraft carriers for deployment of stealth fighters; (3) expand purchases of stealth fighters, cruise missiles, and antiballistic missile systems; and (4) enhance contingency planning for conflict in the Korean peninsula in the National Security Council, a body that didn’t even exist before 2013. The aircraft carriers, and cruise missile armed aircraft, would give Japan offensive military capabilities that the nation has sworn off for the past seven decades due to constitutional curbs.

This momentous shift on security under Abe is driven by China’s regional hegemonic ambitions and North Korea’s nuclear weapons program. Advocates argue that enhancing the nation’s military capabilities is prudent given the evolving threat environment, while critics charge that this pivotal U-turn is unconstitutional, recklessly sacrificing non-militarist values that have served Japan well since WWII and transforming Japan into a full-blown military ally of the US with all the dangers that entails. Advocates counter that the US–Japan alliance has been lopsided, with the US committing to the defense of Japan without any reciprocal obligation. In light of President Donald Trump’s “America First” policy, the Abe camp asserts that Japan risks weakening the alliance if it doesn’t reciprocate, precisely at a time when the US security umbrella has become even more essential.

Battles over the US alliance and Japan’s security policy have persisted since the late 1950s. This political fault line extends to ongoing battles over wartime history, with liberals condemning the devastation inflicted on Asia and Japan, and supporting a forthright reckoning that conservatives oppose. Japan’s rampage in Asia looms large over contemporary debates about the wisdom of abandoning the pacifist principles favored by liberals. Revisionists like Abe counter that this focus on Japanese depredations is masochistic, and they seek to restore pride in the nation by rehabilitating the wartime past. These cultural wars about national identity regarding history, security, and constitutional revision have intensified under Abe, whose economic policies are far less contentious.

The Japanese economy has been in the doldrums since the early 1990s, due to a combination of the asset bubble implosion, inconsistent macroeconomic policymaking, an aging society, and low productivity in the service sector. Social and economic problems festered, deepening the economic hole Japan needs to climb out of. Zigzagging on fiscal stimulus and austerity sharpened and prolonged the downturn, a legacy that is targeted by the bold policies of Abenomics – massive monetary easing, fiscal stimulus, and structural reforms. The jury is still out on Abenomics despite a soaring stock index and low unemployment because it is not clear whether it is overcoming deflation, improving household welfare, boosting productivity, or propelling sustainable growth. This is urgent business as Japan’s demographic challenge of an aging and shrinking population confronts the government, firms, and households with grim prospects. Reviving Japan’s economic dynamism is thus essential to address these interrelated problems.

Japan’s enormous challenges – economic, demographic, security, and globalization – are driving the “third transformation,” a work in progress involving a series of reforms that considered on their own seem of little consequence, but taken together represent an ambitious undertaking to reinvent Japan.⁵ Since the early 1990s Japan has been in a prolonged period of transition in which subtle changes co-exist with prominent continuities. Reform has not been a linear process, onward and upward, relying more on pragmatic compromises and fine-tuning than shock therapy and sweeping measures. Yet, Japan in 2018 is very different from the way it was in 1988 during the frothy bubble era; over these fleeting three decades of my residence in Tokyo, many of Japan’s seemingly ineradicable verities, assumptions, and practices have been reconsidered, revamped and, in some cases, cast aside.

There is an ebbing confidence about future prospects and a degree of fatalism about the nation’s galloping demographic decline. The greying of Japan, and its shrinking population, constitute the nation’s biggest and most intractable set of challenges. The fact that adult diapers have been outselling baby diapers since 2012 vividly conveys the dynamics. As of 2018, 27 percent of the population is over 65 years of age, and this ratio will nearly double by 2050, posing serious fiscal challenges in terms of spiraling budgets for national pensions, medical insurance, and elderly care. Dire population projections suggest that by 2050 the overall population could possibly shrink to 100 million from 127 million in 2000. How will so many fewer workers support the pensions and health care of so many more retirees? The ramifications of a shrinking domestic market for Japanese businesses are also alarming.

The stark implications of this demographic time bomb are covered extensively in the media, heightening the malaise that has gripped Japan since the stock and land asset bubble popped in the early 1990s. The subsequent implosion in values wiped out trillions of yen and cut a swathe of destruction through corporate Japan, leaving millions of households saddled with negative equity, precipitating the “lost decades.” While the economic pain is undeniable, there have been many positive “losses” as well. In the aftermath, the Japan, Inc. system of close and cooperative relations between business and government, and the presiding elite lost considerable credibility and the public began to lose faith. The flailing response to the massive economic problems discredited the ways and means of a system that no longer seemed to have the answers for Japan’s emerging problems. People demanded more transparency and accountability in government affairs, and by 1999 every major municipality, and the national government, had passed information disclosure legislation that enabled the media and people to better monitor what the government was doing. As scandals emerged about embezzlement and misappropriation of funds, taxpayers were outraged that cosseted bureaucrats were enjoying the highlife on the public purse. It also became clear that politicians and officials were routinely complicit in the rigging of public works contracts (dango) by construction firms in exchange for lucrative rake-offs. The waxing loss of faith in government also propelled a flowering of civil society, especially after the 1995 Kobe earthquake due to the government’s incompetent disaster response.⁶

Previous reverence for public officials evaporated on the strength of so many damning revelations. It dawned on people just how risky it is to leave things up to a governing elite enjoying a cocoon of power and privilege, shielded from scrutiny. What had been business as usual under Japan, Inc. no longer met public expectations, thus raising the bar for good governance. Certainly, shady practices persist in twenty-first-century Japan, but new norms are being established, contested and mainstreamed in ways that are part of the quiet transformation. Gradually, the governing elite is being nudged and dragged into heeding these new norms and expectations even as it tries to evade them. The role of civil society provides another barometer of change. Non-profit organizations (NPOs), non-government organizations (NGOs), and volunteerism were an afterthought in responding to the Kobe disaster, but now are fully integrated into disaster emergency response preparations, and played an essential role in the March 2011 tsunami relief and recovery efforts.⁷

But while much remains to be done, the magnitude of what has already been achieved provides the most accurate barometer of Japan’s ongoing third transformation. Japanese people, organizations and policymakers are responding to various challenges in diverse ways, though vested interests continue to protect their turf and fend off reforms. Japan. Inc. remains resilient, finding inspiration in adversity while advocating neoliberal reforms to awaken the animal spirits of capitalism by paring back regulations and taxes on business, reducing civil liberties, welfare and workers’ legal protections, and making people more self-reliant (jiko sekinen). This amplifies risk in a society that is risk averse and promotes greater reliance on families rather than the state in times of need. The Japanese are divided and ambivalent about the ongoing renovation and unsure how to proceed, disappointed in the Establishment, but without viable alternatives. In the chapters that follow I paint a necessarily brief account of Japan’s improbable rollercoaster journey from the devastation of 1945 through to the ongoing third transformation under Prime Minister Abe Shinzo. In doing so, I hope to give readers a stronger sense of Japan’s rich postwar history and an appreciation of the pluck of a people and nation looking to bounce back – nana korobi yaoki – and become a more influential force in global affairs. While the mainstream consensus forecasts a genteel decline, technological innovation and medical breakthroughs offer glimmers of hope. Moreover, Japan, Inc. is not constrained by national borders and in expanding its footprint abroad and growing overseas, it may reinvigorate the nation and prove the doomsayers wrong. After all, in the mid-nineteenth century and again in 1945, Japan overcame bleak prospects and exceeded even the wildest expectations, so it may be too soon to start humming the nation’s requiem.