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Japan’s PM Kishida Outlines Vision For A New Form Of Capitalism

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Japanese Prime Minister Kishida Fumio called for a new form of liberal democratic capitalism, balancing economic growth and distribution, in a special address to business, government and civil society leaders taking part in the World Economic Forum’s virtual event, the Davos Agenda 2022.

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“A key focus of my administration will be the revitalization of Japan through a new form a capitalism,” he said. Unfettered state capitalism without adequate checks and balances produces problems such as widening income gaps, rural-urban disparities and social tensions, he added.

Kishida emphasized that the time has come for “historic economic and social transformations”. He said Japan will pioneer a new form of public-private partnership, with leaders of government, industry and labour all working together to develop paradigm-shifting policies. “There has been an overreliance on competition and self-regulation to constrain the excesses of market forces,” he added. “This must change.”

These reforms will build on emerging strength shown by Japan’s economy. However, he reiterated that current policies are not sufficient to ensure that growth is sustainable and inclusive.

The prime minister called for Japan to lead the world in green transformation. He said investment in green technology “will be more than doubled” and become an engine of growth. He also announced that a carbon pricing system will be introduced as soon as possible and Japan will continue to support the Asian emissions trading market.

“Japan remains committed to the Paris Agreement and will achieve carbon neutrality by 2050,” he said. Private and public sector leadership will work tightly together on the demand and the supply side to support the transformation. One focus for Japan’s clean energy strategy is to reform the energy sector, which accounts for more than 80% of greenhouse gas emissions. Smart grids, upgraded power and distribution networks as well as low-carbon energy sources like solar and wind energy are all part of the solution, he said.

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Another important pillar for Japan’s transformation is digitization. “While Japan has traditionally lagged in digital uptake, COVID-19 has given Japan a chance to leap-frog its digitization efforts,” Kishida said. To support this, the government will invest heavily in next-generation networks, optical fibre and 5G-related infrastructure – extending it to 90% of the population over two years.

Kishida also laid out plans for increased corporate disclosure to encourage investment in human capital. “Investment in people is often regarded as a cost, but it is a source of medium to long-term corporate value,” he said.

The prime minister pointed out that Japan continues to take a cautious approach to COVID-19, with borders closed until the end of February. “Changes will be made to border policies as more data comes in,” he said. The government is taking a realistic view and he stressed that a zero-tolerance policy towards COVID-19 is neither possible nor appropriate.

Klaus Schwab, the World Economic Forum’s Founder and Executive Chairman, thanked Japan for taking an active part in collaborative global efforts to combat shared challenges. “The capabilities of the Fourth Industrial Revolution open up new possibilities and opportunities,” Schwab said. “The future will be much greener, more digital and human-centred.”

One thought on “Japan’s PM Kishida Outlines Vision For A New Form Of Capitalism

  • January 18, 2022 at 11:50 pm
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    As long as Wall Street’s objective is profit, more profit, and even more profit causing a never-ending cycle that cannot be sustained, while a great idea, changing capitalism’s core values and approach is going to be extremely challenging. In my opinion, we have to change the definition of profit from one of strictly being tied to money and instead become some kind of combination of money and altruism. For example, today a bank’s stock price is solely based on their roi and whether or not they’ve met and or exceeded analysts expectations. As long as this is the formula for defining success, not much is going to change. But if you took that bank and said in addition to profit we will also factor in charity, hiring practices, pay equity and corporate culture (just as an example), then the bank is not going to be completely obsessed with their bottom line freeing them up to do the right things. But that’s just a dream. Sadly we live in a very black and white world in which profit is King and making more profit each and every year is dictatorial

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