On Growth Two

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23. Masahiko Aoki

Professor Masahiko Aoki was born in 1938 in Nagoya, Japan. In 1962 he was graduated in economics from the University of Tokyo. In 1967 he obtained a PhD in economics at the University of Minnesota. He lectured at Stanford (1967-1968), at Harvard (1968-1971), and at present he is an associate professor at the Institute of Economics at Kyoto University. He has published several books of which An Economic Theory of Planning and Organizations drew international attention. This interview was conducted at his office in Kyoto.

You were once a radical student. Then you went to the United States. Since you joined the faculty of Kyoto, how do you see yourself now? As a member of the Establishment?

Well, I am a defiant professor, if you like to call it that. But, seriously, my political and scientific view has been developing in terms of the intellectual influences and important events I have been exposed to. But I consider it possible to view my activities and thoughts as coherent, not in the strict sense, but more loosely. I was very active in the student movement some fifteen years ago. If I were a student today in Thailand or Indonesia I would do the same.¹ If I were a student today in Japan, I might be engaged in different activities, community movement, for instance.

What made you a defiant student in the past?

We revolted those days because we felt students should be more self-reliant and independent. That is how the radical student movement arose. But we soon discovered that within the left-wing movement, too, there was an authoritarian structure; the Communist Party dominated the student movement. Our group therefore revolted against the Communists as well, because the party was under the influence of Moscow at that time and it changed its policy each time Moscow changed its policy. Yesterday they were against the atomic bomb and today they are for it. They criticized US atomic explosions and they supported Soviet tests. For various reasons we had a big clash with Communist leaders; the first fistfight in the Communist

1 Professor Aoki was referring to the Thai student uprising in 1973 that lead to the toppling of the military authoritarian regime, and to the 1974 student riots in Jakarta against Japanese economic imperialism, as well as the corrupt practices by the regime of General Suharto and his cohorts.

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Party headquarters occurred in those days. As a result, I was expelled from the party. We began organizing another radical organization, independent from the Moscow or any other party line. At the time we were reasonably successful and toppled the government.

After the peak of the student movement in 1960, students started to fight each other, like the sectarian quarrels of the past. A feeling of defeatism prevailed among students. I felt that mistakes of the past were repeating themselves among us. I considered our organization only a tool of a movement, not an objective in itself. After the movement itself subdued, we had a meeting of student leaders in my apartment. A few of my friends and I refused to continue these sectarian quarrels. I was accused of fleeing the battlefield. This was quite a shameful thing for a Japanese to be accused of, but I took it as a compliment, as I wanted to be a self-reliant man rather than a conformist. So I quit the movement. I am still rather proud of this decision. I think it was they who were the cowards. I wanted to settle down to think about what was wrong with Marxism, I mean, orthodox Marxism distorted by its self-proclaimed successors. I still harbor great respect for Marx himself as one of the greatest thinkers of the nineteenth century. But I could not put up with the arrogance and lack of originality of Marxists, whether in power or underdogs. I tried to enter the Graduate School of the University of Tokyo in order to be master of my own time. But it took me two years to get in. The first year I was in jail and the next year I flunked in the oral examination.

You were known as a political agitator perhaps?

I don't know. Anyway, I finally entered the university. But I found it very hard to live in Japan. I don't mean materially, but spiritually. I wanted to develop my ideas freely. In Japan they like to put a label on people, classify people according to stereotypes. I wanted to detach myself from the past, so I went to the US and started as a student all over again.

Where?

I went to the University of Minnesota first. The reason was that a professor named Leonid Hurwicz was there. He inherited good ideas from the famous controversies among economists of the 1930's over the economic possibilities of socialism. He was studying decentralized, controlled economic systems using price mechanisms. As I had been dismayed by the inhumanity and inefficiency of overcentralization in Eastern socialist countries, his approach was very appealing to me. In Minnesota, I studied the question whether the economy could be decentralized even under the

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presence of the so-called ‘spillover’ effects. Economists usually use the term ‘external effects,’ that is, effects of economic activities bypassing market mechanisms such as pollution and traffic congestion. That was also the theme of my doctoral dissertation. So I am not committed to the dichotomy of centralization versus decentralization anymore. There must be an optimal combination of the price mechanism and collective controls depending upon situations. Therefore, I am now interested in democratizing public action through citizen participation and so forth.

And after Minnesota?

In 1967 I began teaching at Stanford. This was an interesting period, since the student movement against the Vietnam war was in full swing. Also, the hippie movement was flourishing, especially in California. I guess the Beatniks tried to oppose a very individualistic way of life in its good sense of the word to the conformism molded by commercialism and the dominance of giant organizations. Looking back, you might say that the hippies made the approach upside down. That is, they experimented with a collective and communal way of living. Since we Japanese are chasing after Americans, thinking that theirs is the way to make progress, my encounter with countercultures in the US was very valuable and made me rediscover the value of our Eastern tradition of leading a human and serene life.

What are you relaying to your students at Kyoto these days, outside the economic field? Do you share your experiences in American communal life with them?

Oh, no! The so-called counterculture in Japan was imported from the US and is being made use of by commercialism. It is disgusting and phony. The same holds in the US too, except perhaps for the very beginning of the experiment. Now I enjoy building up a new framework of economics together with the students. This kind of attempt is being made everywhere, in the US, the UK, Hungary, and so on. We want to explore the possibility of economic arrangements that are more conducive to the creative and conscious development of individuals. For that purpose, my whole experience in the past is very useful.

Are at least some professors on your faculty on your side?

Not really. Ironically, this is one of the reasons that Marxism is still very, very influential. But it has become a rigid doctrine here. Most professors who adhere to Marxism lost the true spirit of Marx. They are nothing more than interpreters of Das Kapital, like medieval priests interpreting the Bible,

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and are very authoritarian in their relations to students. You can inherit the spirit of Marx without being a Marxist. One has to be innovative and creative and study present conditions.

In your studies are you using a model like Forrester and Meadows used in their study of ‘limits to growth?’

Although some of my friends are using the system of dynamic approach, I myself am not. I am interested in the interactive exchange between institutions and human motivations and it is very difficult, if not impossible, to incorporate this within systems having a dynamic framework of the Forrester type.

Do you feel that the rise of materialism is affecting the Japanese people?

Very, very much. I am a little sad about this. Take Kyoto itself. Not long ago, Kyoto was a very beautiful place, as it had been for centuries. Not only our temples were beautiful, but houses, too, were attractive until ten years ago or thereabouts. As a result of the new material abundance, they are tearing down the old structures and constructing apartment buildings using plastics. The older houses were built by hand of wood and paper and beautiful tiles. Now, plastic tiles and plastic boards are used and the entire city becomes depersonalized, dehumanized. Kyoto is losing its character and charm. Perhaps we still have some beautiful classic temples, but there is no real life around them. Life in Kyoto becomes a replica of Tokyo.

But does the rise of materialism affect the culture, the soul, the hearts of the youths themselves?

Materialism is mainly pursued by people in their forties, or perhaps their late thirties, the people who were brought up or spent their youth in poverty or misery, in wartime or in the days following World War Two. I myself remember times when it was difficult to get food. My parents experienced hard times and had to go to the countryside to get food for us. Rice was much too expensive to buy at that time. These experiences deeply affected people. So, when Japan finally entered an economic boom, these were the people who wanted their own house, refrigerator, car, and so forth. Of course, they have to be responsible for their families. But it all seems a little too much. The younger generation now has mixed feelings about it all. Some are very materialistic, but there are also youngsters who are not enthused by all this abundance, since they were brought up with it. They are the ones who are now seeking different values. They are becoming interested in Oriental Philosophy again, in Buddhism, in traditional culture, like teen-agers and the young in their early twenties everywhere in the affluent world. But I

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cannot have hundred percent confidence in them, either. They take material abundance for granted. I wonder if they would be strong enough to withstand a food crisis, for example. I hope so.

Gunnar Myrdal lambasted the Club of Rome study by Forrester and Meadows as ‘nonsense.’

I have a lot of sympathy for the MIT report.

On ‘limits to growth.’

Yes. After all, it has become quite obvious that there are very serious limits to growth. We cannot go on forever the way we have been treating our planet so far. Of course, it is the big corporations and multinational firms who want to grow and grow, because the hierarchical structure of these commerical giants demands continuous expansion. Their management is built around constant expansion, how to enlarge their activities and profits. Their main function is making plans for new products and new outlets. If they were to stop growing, their management would become like generals in times of peace: they would turn into static symbols.

And the managers have to satisfy the shareholders.

Yes. Growth has to satisfy the motivation of the men involved in corporate activities, like the shareholders and even middle management. If a firm expands, and the top management functions are restricted to planning alone, another kind of administrative job will be delegated to the middle management. Or to the workers. Workers should receive higher and higher wages, and if a corporation or firm grows, increased income turns into a symbol of integration. Therefore, companies are motivated to grow and grow. You can clearly see that if we keep our economic institutions as they are, the economy will tend to continue to grow in spite of an increasing abuse of resources, pollution, dangers to the environment, and so forth. It is a myth of neoclassical economics to say that consumers always direct the way in which the economy turns, and that the economy grows because consumers want to save in order to be able to spend more in their later years than in the present. I do not think this is true. The corporations shape and mold our lives.

How does one determine the wishes of the consumer?

The consumers adapt themselves to their environment. If you cannot have a healthy environment in the cities, then you tend to buy it by making a trip abroad somewhere. Or you live in the suburbs or buy a piece of land somewhere away from the metropolis rather than make a personal contribu-

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tion toward turning the city into a livable place again. So city life continues to deteriorate. The basic problem, however, is how to control corporate activities by giving more power to the people. I am very much interested in community controls, giving more power to communities and regional government. For instance, if a corporation were not allowed to build new factories without reaching an agreement with the local people, I believe the pollution problem would be mitigated a bit.

The old left tends to think in terms of the classic power relationship between capital, management, and workers. However, I am prepared to believe that some of our labor unionists tend to favor their own interests against the rest of the members of a community.

When the now-world-famous pollution of Minamata Bay took place by mercurial emission of the Chisso factory, it was disclosed that the labor unionists were on the side of the company against fishermen dying from mercury poisoning.

Unbelievable!

Of course, I am on the side of underprivileged workers in their struggle against low wages, poor working conditions, and so forth. But when an issue becomes a public matter, in a highly developed country like Japan, the old class-struggle scheme does not tell the whole story. I would rather support community action covering all kinds of less advantaged people. I am not against economic growth as such. But growth should contribute to the improvement of the standards of less advantaged people; less advantaged because of factors beyond their own control such as health, age, or sex. Japan is too much centralized; it is still a very bureaucratic country. Two-thirds of our taxes are still collected by the central government; one-third by local governments, while in reality, two-thirds of our public expenditures are spent by local governments and only one-third by the central government. That means, the way it is, that one-third of the funds are transferred from the central government to local governments. But, with this system of transfers, the central government exerts very strong control over how the money is to be used. All transferred money is specified in detail, and categorized. Everything comes to local governments not in straight grants, but as categorized subsidies. This means that the local governments do not have that much say or power. Usually, the interests of the central government or those of a wider area are imposed upon local people.

For instance, in our prefecture of Kyoto, the governor has been in power for almost twenty years. He was backed by the Communist Party as well as by the Socialist Party. He was an ex-professor of Kyoto University, in-

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cidentally. He did not maintain very good relations with the central government. Therefore, he could not get enough funds from the central government, which was a blessing in disguise, since now we don't have that many superhighways in Kyoto.

I propose that after the central government collects the taxes, they should redistribute these public funds to local governments without any ties, so that the local governments are free to use the funds as they see fit. If this kind of pluralist approach were taken, I think it would contribute considerably to the welfare of local people. Individual citizens could participate in choosing the kind of community they would want to live in. At least they could exert pressure on their local leaders and thus be heard. The key to all this is to decentralize our central power. I feel that the same of principle should be applied to international relationships.

But the world is more than ever before in history a single unit. Local decisions affect the fate of all of mankind more than ever before. Look at the decision by Arabs to manipulate their oil to their own purposes and advantages.

I do not think that any big power should have the right to control the petroleum of the Middle East. It is the Arabs who live there. They are justified in controlling the supply of petroleum according to their own interests, and other powers should respect this inherent right. Our relationship with the People's Republic of China in this respect is an interesting one. China insisted on the principle of nonseparation of economic issues from political issues. Our businessmen seem to accept this principle at least on the surface. I feel Japanese businessmen should accept the same principle in dealing with the Arabs, the East Asian countries, or anyone else. But most of them still behave arrogantly, especially toward East Asia.

B.F. Skinner seems to be impressed with how the Chinese are programming their society.

Is that so? I have seldom been in agreement with him when it comes to prescriptions for social ailments. He seems to me too manipulative. But, of course, I am profoundly interested in the development of Chinese society. They are trying to build an agriculture-based society, subduing industry to agriculture. In the context of an environmental crisis created by over-industrialization, I think China represents the most interesting social experiment in this century. We Japanese are driving in fancy private cars equipped with stereo, but we cannot afford good sashimi anymore.

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How do you see future relations between the Chinese and the Japanese? While youths in China are presently being brainwashed by the hundreds of millions into accepting Stalinist and Marxist philosophies, Japanese youths wear jeans and are being flooded by American rock ‘culture.’

I do not know. I admit that the Chinese product is rather monolithic. But the Chinese are not only Stalinists; they also inherit the traditions of the Chinese classics. For instance, if you read the famous book by Mao on dialectics, you may be amazed by its parallel with the I Ching. Japanese youths will not be as monolithically oriented as their Chinese neighbors; this is not possible nor is it desirable. But at the same time, we should respect the moral commitment of our Chinese contemporaries, which was miserably lost among us while we were keeping ourselves busy pursuing material abundance.