Is Japan Leaving the Age of Reform?

The last 30 years of Japanese politics can be defined in a single word: kaiku (改革), meaning reform (with the connotation of radical change). The term gained familiarity following the economic downturn that began in the early 1990s and the end of the Cold War, which had structured international politics for close to half a century. Such events brought political actors to the sober realization that a fundamental change in Japanese society was needed.

However, this era, which we could call “the Age of Reform” – at least the old way of doing things – is increasingly insufficient to meet Japan’s current economic circumstances.

In 1993, Japan’s long-ruling Liberal Democratic Party (LDP) underwent an internal power struggle in which political reform over electoral systems and political funds became a demarcation line. The party eventually split over the issue, which contributed to the launch of a short-lived non-LDP eight party coalition government that made such reform a major goal.

Although the LDP came back to power in 1994 by granting the premiership to the Socialist Party – their supposed main rival – Hashimoto Ryutaro, elected in 1995, also took up the mantle of reform. Hashimoto’s program – the so-called “administrative reform” – was focused on making Japan’s administrative state more efficient. He integrated the existing ministries and shrunk the total number from 22 to 12 plus one Cabinet Office, and also significantly strengthened the prime minister’s role to initiate top-down decision making.

Japan’s Age of Reform came to its climax with Koizumi Junichiro’s “structural reform,” which aimed to control public spending – by slashing public works and capping social security. His government also privatized Japan’s Postal Service, which Koizumi saw as a source of wasteful spending and a patron system for his rival faction within the LDP. By making full use of the bully pulpit, Koizumi held a de facto referendum on the issue of Postal Service privatization in 2005 and won decisively, by attacking both the opposition and the LDP members who voted against his measure.

The early 2010s saw an itch for reform on the regional level as well, especially in large metropolitan areas. The iconoclastic Osaka governor Hashimoto Toru embodied this trend. Elected in 2010, Hashimoto embarked on a civil service reform that sought to reduce entitlements, saying that the prefecture was catering to “bankruptcy.” He even affirmed the right of the executive to wield dictatorial power to realize radical changes. The popularity that Hashimoto gained led to the inception of Nippon Ishin no Kai, which branded itself as a “kaiku” party that implemented change even if it meant accepting some hardship.

Similar governing styles that focused on cost-cutting measure were seen in other municipalities too. In Nagoya, Kawamura Takashi became mayor in 2009, promising tax cuts and reducing his own salary as an executive. At the same time the Democratic Party of Japan (DPJ) government on the national level was embarking on a program to weed out nonessential government projects.

The second Abe Shinzo administration – and the Suga Yoshihide administration that completed the remainder of Abe’s term from 2020 to 2021 – had also embraced “kaiku” and expanded the scope of problems that needed fixing. In line with past reformist projects, Abe sought to reinforce the power of the premiership by gaining more control over the appointing process for high-ranked bureaucrats and introducing a centralized top-down structure in national security policymaking by inaugurating the National Security Council.

The “iconoclastic” tendencies of the second Abe administration found their fullest display through his “extraordinary monetary policy” – one of the pillars of his signature Abenomics – that reimagined the way Japan implemented economic and fiscal policy.

Abe inspired a backlash by reinterpreting Article 9 of Japan’s Constitution to allow the Self-Defense Forces to operate with the U.S. military in crisis situations, and attempted to revise the pacifist constitution. However, the younger public approved – many younger Japanese yearned for drastic changes in keeping with the theme of the Age of Reform.

In retrospect, the Age of Reform and its inclinations toward government efficiency and charismatic leadership could be understood as a particular moment that was deeply influenced by the economic environment, in particular the decades-long deflationary period. The stagnant economy left no extra resources to be redistributed; thus, the reformist politicians of the day attempted to extract resources by strong-arming government bureaucracies.

However, there are reasons to believe that decades-long Age of Reform is coming to an end.

The 2024 LDP internal election saw the defeat of two reform-minded conservatives – Kono Taro and Koizumi Shinjiro – leaving the relatively less reformist politicians – Ishiba Shigeru, who represents traditional rural Japan, and Takaichi Sanae, who stands in opposition to social change – to compete in a run off.

The diminishing appeal of Kono was mainly a result of his leadership in the push to digitalize government services, which had faced a rocky rollout in Japan. Kono’s campaign promise to reduce the deficit and reform social security also did not improve his fortunes. And while Koizumi was surging in the polls early on, he lost momentum following the controversy of his proposal to liberalize job dismissal regulations. In other words, both Kono and Koizumi argued for reform, so many Japanese politicians had done since 1993 – but this time it hurt, rather than helped, their electoral prospects

The decline of Nippon Ishin no Kai’s prospects and its seeming shift in priorities also signal the receding popularity of calls for “reform” that involve decreasing the size of government. While the party has been a long-time advocate for implementing reform that involves pain, they appear to be reversing their position by cooperating with the LDP-Komeito coalition to introduce “free tuition” to both public and private high school students on a national scale – a significant escalation of the role of government in education. 

The ongoing inflation could explain the shift in preferences among the Japanese electorate and political parties. Both the Democratic Party for the People (DPFP) and Reiwa Shinsengumi – two parties that are steadily increasing their approval rates – premise their economic policies on abundance, not scarcity; they argue that Japan should and can shoulder more debt, and has room to increase more spending. Both parties also attack government bureaucracies, but not out of a desire to take away their privileged position – they believe that the government is inhibiting itself from lavish economic policies that would increase spending and allow tax cuts.

Other parties including the LDP are willing to consider tax cuts or direct handouts to the electorate – policies that would worsen Japan’s immediate fiscal condition, but would ameliorate the burden for a public grappling with rising grocery prices.

At least on the national level, the old age of “kaiku,” with its implications of a slimmed-down government, seems to have receded into the background. However, the electorate is still interested in a radical change in the realm of fiscal policy and a charismatic leader that can make this a reality.

In that sense the Age of Reform is in part continuing, but is morphing into a new form that is suited to Japan’s inflationary period.