For Japan as a whole the second alternative, nonprice competition, is more desirable, especially now that the goal of catching up with the West has been accomplished. But in order to succeed at this endeavor, it will be necessary to recast the whole set of systems that were designed for the catch-up period. The new systems will have to shift their focus from the achievement of equality of results to support of those who take risks and display creativity. The system of automatic wage hikes in line with increasing seniority will have to be overhauled, and the egalitarianism of the school system will also have to be modified. Making such reforms will mean fundamentally changing the social values to which we have become accustomed.
Resistance is likely to be great.
People will be quick to agree with the need for reform in principle but will resist the particulars that affect their own areas of activity. Already over the past decade we have witnessed many loud calls for reform, leading to numerous reports and recommendations, but there has been little by way of implementation. One reason for this lack of follow-through is the fantastic success that Japan enjoyed in the economic sphere for the previous several decades. Since the existing systems and practices were so successful for so long, they have become quite hard to change. It may be possible for the Japanese economy to get out of its current hole by overcoming the credit crunch arising out of the bad-debt problem and correcting the earlier mistakes in fiscal policy.