Japan Incorporated is a term denoting the almost magical harmony among government, business and labor that enabled this country to emerge as a great economic power in the postwar world. But since the change in the international atmosphere signaled by the oil price rises of 1974, division at every level has made the Land of the Rising Sun look more like Japan Unincorporated.
Now the internal bickering here casts a long shadow over an event important to the political futures of governments in most of the advanced countries, including the United States. That is the economic summit due to begin in Bonn on July 15.
The most striking mark of Japan's discord is the fragmentation of the ruling Liberal Democratic Party. Prime Minister Takeo Fukuda is under challenge from the current party leader and former finance and foreign minister, Masayoshi Ohira. Ohira has the backing of several party factions, and a vague promise from Fukuda that he will step down, perhaps at the next party congress in December.
Fukuda could do all that by dissolving the Diet, and winning a big electoral victory before the party congress. But to ensure such a victory, he first needs to meet the economic problems associated with Japan's soaring yen and giant trade surpluses.
The soaring yen is a problem because it increases the prices of exports, promotes uncertainty and thus keeps in depressed condition the Japanese industries-notably chemicals and shipbuilding-that have never recovered from the recession of 1975. The huge surpluses-$14 billion last year-are a problem because they foster the rise in the yen, and also generate protectionist feeling against Japan in the United States and Europe.
Theoretically, the Bonn summit offers a way out for the Fukuda government. Under the pressure of the Europeans and Americans. Fukuda could adopt a new policy line. The new line would feature a further opening of the Japanese market to foreign exports, stimulus of the economy to promote imports, and aid to underdeveloped countries.
In that way, the Japanese surplus would go down, and protectionism would ease in Europe and the United States. That Americans and Europeans could then come back with policies stablizing the yen and promoting smoother Japanese recovery.
But the internal political pressures go against such a trade. The Ohira group has opposed American demands for more imports of beef and citrus fruits and dragged its feet on foreign aid. It favors expanding the economy but leaves to the government the nasty choice between public works that would be popular but slow in taking effect, and a cut in business taxes that would have quick impact but be very unpopular.
In these conditions, the Fukuda government is showing little give on the international side. All signs are that the regime will not meet American demands for concessions on fruits and meat. As to stimulating demand and foreign aid, the government policy is one of "watch and wait."
The Japanese government feels it can afford that posture because the other advanced countries are not united against it. In the Japanese view the Carter administration is vulnerable to the charge that is promoted international inflation by failing to shore up the dollar through action against oil imports. The Japanese claim the French and Germans their concern, and they think it is too late for Cater to do anything about oil imports and inflation between now and the Bonn summit.
So Bonn shapes up here in Tokyo as chiefly an ocassion for papering over differences. "In the present chaotic conditions," Fukuda said in an interview the other day, "no other country should criticize any other country." His minister for external economic affairs, Nobuhiko Ushiba, said of the Bonn summit. "If can't be a sucess, we should make sure it is not a failure."