During the 1970's and 1980's there was a persistant fear that Japan had developed a superior and invincible economic system which combined the private enterprise with government guidance. The collapse of the bubble economy around 1990 calmed those fears at least temporarily.

The system of Japan Inc. has its roots far back in Japanese history but it was the year 1960 which led to their implementation. There were three traumatic events which occurred in 1960 and raised fears that Japanese society might be disintegrating. Those events were:

• The controvervial ratification of the U.S.-Japan Defense Treaty. After World War II the U.S. agreed to provide military protection for Japan in return for having military bases in Japan. Japan benefited from the arrangement because it releaved the Japanese government of having to tax the economy for defense. But by 1960 there were fears in Japan that the Cold War between the U.S. and the Soviet Union might lead to a hot war in which Japan would be a battle ground. Leftist elements in Japan decided to fight against the renewal of the defense treaty.

  Jpanese Prime Minister Kishi had visited Washington D.C. and given his approval to the proposed treaty. He made an arrangement with U.S. President Dwight Eisenhower for Eisenhower to make a visit to Japan after the treaty was ratified by the Diet (legislature). The Liberal-Democratic Party under the leadership of Kishi had the votes in the Diet to ratify the treaty so members of the Socialist Party and other leftists in the Diet decided to block passage by barricading the Speaker of the House of Representatives in his office and thus preventing him from calling the session to order to vote on the ratification. Kishi called in the police to remove the blockading legislators. When enough room was cleared the Speaker was picked up physically and carried to the podium where he immediately called for a vote on the treaty. Since the leftist members of the legislature were not present the ratification passed easily.

  For some strange reason the leftists felt the procedure for the ratification had been unfair. (The blockading of the Speaker in his office was carried out because it was clear the measure would pass.) Public demonstrations were organized which turned into riots in which public property was burned. In the riots one demonstrator was killed. When James Hagerty, the advance man for Eisenhower's visit, came to Japan he was blockaded in his car and demonstrators beat upon his vehicle. Hagerty had to be rescued from the demonstrators. President Eisenhower cancelled his proposed visit to Japan. It was a public relations disaster for Kishi who resigned his prime ministership in disgrace. He was replace by Ikeda who subsequently emphasized economic goals including that of doubling the personal income of the Japanese people.

• The leader of the Socialist Party was giving a televised public speech when a young extreme nationalist assassinated him by stabbing him with a sword. The assassin was quickly subdued but the Socialist leader was too severely injured to be saved. This took place in view of the television audience and shocked the Japanese nation.
• The Miike (mi-i-ke) coal mine of the Mitsui keiretsu was the subject of a long bitter labor strike over the issue of job security. Japan had since the Meiji Revolution depended primarily upon coal as its source of energy. The life of the coal miner was hard but there was generally no worry about being unemployed. Mitsui had a contract with the miners' union that said that miners would not be laid off. However about 1960 Japan was starting to use petroleum as a source of energy and saw its market for coal diminishing so it laid off 1200 miners. The miners reacted to this loss of job security by calling a strike. When Mitsui tried to bring in new workers to replace the striking miners the strikers attacked them and tried to prevent them from working. Mitsui reacted by bringing in armed strike-breakers who killed some of the striking miners. The government feared the strike would turn into a bloodbath of violence so it sent 15 thousand policemen to maintain peace. Labor union leaders reacted to the government action by sending in 15 thousand union members to support the striking miners.

  There appeared to be the potential for a national catastrophe at Miike so the government prevailed upon the miners' union and Mitsui to submit the strike issue to binding arbitration. This meant that both parties agreed to accept whatever a third party decided concerning the issue. The arbitrators accepted the company's arguement that it needed to lay off coal miners at Miike. The miners' union accepted the judgement and the miners went back to work.

  The Miike strike raised the fear among Japanese companies that the issue of job security could lead to major disruptions in their operations. Voluntarily the large companies accepted the principle of life time employment for their workers. This led to harmonious labor-management relations in Japan thereafter. However only about 30 percent of the Japanese workers actually had lifetime employment. The rest worked for small companies or were employed in family businesses where life time employment simply could not be guaranteed.