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Institutional disorder and reform
Futures Essays:
This cannot be done suddenly. It can be done gradually as in Sweden, which for this very purpose started a timely Futures Studies Programme.
4.
References
5.
1. I. P. Priban, “Strategic Planning” in M. Goldsmith, ed, Forward Planning in the Service Sectors (London, Macmillan, 1975) 2. P. J. Loftus, “Labour’s Share in Manufac-
INSTITUTIONAL
3.
6.
Management
of Change
143
turing”, Lloyds Bank Review, April 1969 pages 15-25 OECD Informatics Studies 3: Computersand tclccommunication,Paris, 1973 R. A. Charuie. “Technological Innovation and Econo&c. Growth”, a report to the Committee on Science and Technology, US House of Representatives, 1967 C. S. Sherwin and I. R. Isenson, “Project Hindsight”, S&UC, 23 June 1967, pages 1571-1577 Royal Ministry for Foreign AflZn in cooperation with the Secretariat for Future Studies, To Choose a Future, 1974
DISORDER
AND REFORM
Neville Abraham A MAJOR paradox facing the UK now is that while greater state intervention in big business has come to seem inevitable, the results, measured against the professed objectives of successive governments, have generally been lamentable. To some extent this paradox is a reflection of the vast increase in people’s expectations and the consequential effect on their elected representatives to do something about this or that. These pressures have become virtually irresistible, resulting in continuously changing economic objectives as the trade-off point between unemployment and inflation becomes more elusive. In this essay I want to try to get at some of the causes of failure-constitutional as well as economic-and then go on to sketch out a few possible areas for reform.
Constitutional
disorder
In the UK and elsewhere in the West, big business and government have remained both different and apart. Mr Abraham is Corporate Policy Adviser of the Whitehead Consulting Group, London, UK. His book, Big Btiness and Government-the New Disorder, was published by Macmillan Press in December 1974. FUTURES
April 1975
In many countries the political system, and therefore the structure of government, is nationally oriented and centralised, whereas the industrial world is an international one and devolves on to numerous centres of influence. Despite facades, governments proceed piecemeal, trying simultaneously to fulfil divergent, indeed conflicting, aims. Business, on the other hand, has tended to develop more single-mindedly and with apparently greater unanimity. Western political systems require leaders to be changed relatively quickly, whereas industry assumes and accepts more permanent leadership, both in corporations and unions. As governments have come to pursue essentially corporate objectives, the traditional institutional machinery through which they work looks increasingly obsolete. Parliamentary methods, for a variety of reasons, are inadequate to deal with large and complex economic institutions, and they are being challenged by new centres of influence. A towering strength of the UK system, exemplified by the Watergate debacle in the USA, is that the Government is actually in Parliament. But the principle of ministerial responsibility and accountability, for so long a fundamental prerequisite of responsive political leadersihp, can act
144
Futures Essays: Management of Change
today as a major constraint against effective government action : ministers-and therefore MPs-cannot keep up with the mass of government business. As the demands on government increase, the fiction of exclusive ministerial responsibility becomes increasingly difficult to sustain. Industrialists, however, know that in reality hardware, systems and management take years to build, and they deal directly, more and more, with the permanent officials within government. Senior civil servants in the UK are often highly intelligent and politically sensitive operators but, like their political masters, they have too little experience of working in business organisations. The Civil Service has kept itself apart from the outside world and in the UK businessmen are often ignorant about and prejudiced against recruiting from it. This never used to matter, but in an interventionist climate it does. With the Service still gearing itself to recruiting mainly the young for a life-long career, misunderstandings and conflicts between government and industry can be expected to continue. Big business organisations also have constitutional problems. Formally, the position is that the private business board is not accountable to anyone save the shareholders, and then only in financial terms. Managers have thus been relatively free to act, and provided expansion was for the most part financed internally from profits, and disaster or corruption avoided, board,p could perpetuate themselves without outside interference. These days the pressure on senior managers is very much greater. Trade unions, governments, and other external groups have increasingly weakened the idea that corporations exist only to make profits, and are demanding more accountability from business managers. Such pressures expose the reality that objectives (even when they are made explicit) can be ambiguous, in conflict, and often widely misunder-
stood, not least among managers themselves. Many big businesses have responded by increasing delegation and dispersing authority, making it easier to live with a multiplicity of objectives, management styles and national cultures. They have not found it easy in the face of growing pressure from centralised government organisations and giant unions. At the heart of the problem lies the ambiguity surrounding the constituency of the top manager; is he just a representative of shareholders or must he perform some kind of balancing act between conflicting interests ? To put the question another way, should we regard management in terms only of financial efficiency or as another branch of politics ?
Economic
disorder
Private manufacturing industry is caught in a trap sprung by the persistently low level of capital investment. Huge amounts of money are required to put up plants and the risks have been considered too great. For many companies the problem is one of sheer survival rather than the distribution of an adequate return, a problem which inflation accounting will bring sharply into focus. Shareholders have reacted predictably by getting out of manufacturing and investing in commodities, agricultural land, property development and antiques. Unfortunately, such investments do not provide future consumer goods, nor do they help to attain economic objectives like full employment or economic growth. With the emergence of large and rich financial institutions the divorce of management from ownership of productive assets is virtually complete. It is clearly in the interests of shareholders of financial institutions that their investments be quickly liquidated if a particular company is heading for trouble. But the economic problem does not disappear as a result; the FUTURES
April 1875
Futures Essays:
loss of jobs, skills and exports that could ensue is not easily tolerated by democratically elected governments. Hence the incursion of state finance into the private sector. The Government has become an important shareholder in a number of private companies and is likely to become an even bigger one in future. Will this new form of state capitalism prove more successful ? The experience of the nationalised industries suggests otherwise. As a group of corporations, these businesses invest more than the whole of UK manufacturing industry and provide steady employment for some two million people. Yet in terms of financial efficiency their performance is no better, and sometimes worse, than the private sector, for the huge capital investment in most of these industries has been returning the taxpayer less than nothing. Deficits of state concerns cannot be blamed solely on their managements. Neither are they necessarily the consequence of public ownership per se. They are the inevitable result of wayward ad hoc political intervention. Repeated government interference and scrutiny, ambiguities in the statutes, divergent expectations and objectives (usually changing rapidly) and an absence of political commitment, have made it virtually impossible for senior to choose their priorities managers and stick to them, or to be assessed on their achievement. Prices have been kept too low, deficits have built up, long-term investment has been decided on short-term considerations, and management has become increasingly confused about what is expected. When there are no criteria on which to judge performance, there can be no responsibility for outcomes. Governments of course have a difficult (not to say impossible) job and ministers of industry are expected to be stewards of taxpayers’ funds and guardians of the national interest. They cannot be blamed for seeing FUTURES
April 1975
Management
of Change
145
workers and consumers as voters, on whom they ultimately depend. Inevitably the least difficult course is to sacrifice longer-term financial considerations. And so the one major Western criterion for resource allocation is going by the board. Financial efficiency is lacking in both the private and public sectors. We seem unwilling to revive it, or to replace it with some other criterion of efficiency. Resistance muddled economic perto change, formance and low morale will inevitably result, with attendant pressures for major political changes that are likely to affect personal and institutional freedom.
The shape of a new deal In terms of the context of big business management and regulation, a concordat would seem to be required between the main political parties and their financial supporters. Such a concordat would attempt to define that area of the national interest which is not to be continuously subject to the caprice of party politics. As a basis, three ground rules might apply: (a) Political direction in central government proceeds mainly by way of generally applied constraints and inducements, enabling people to seek their own ends. For instance, the private and public sectors should be treated much more alike than hitherto. (b) Government should further specialise and differentiate according to task, give more emphasis to long-term planning, and become less dependent on the centre, by means of new and developing public agencies. (c) Both within government and corporations, full responsibility should be seen to be placed on people who can be easily and publicly identified. Such ground rules cut across many important political traditions in the UK and in particular assume all-
146
Futures Essays: Management of Change
party commitment to maintaining a mixed economy. The advantages should be obvious: neither exclusive state control, nor laisse~-faire> are realistic options for the future of the developed Western economies. The former is likely to result in more secretive decision making, greater resistance to change, poor resource allocation and low morale. The institutional apparatus wouId become inflexible and unresponsive, and in time personal and institutional freedom would be lost. But laissez-faire too has been found inadequate and socially increasingly unacceptable. The consequences of a return to a free-for-all would be much too unpleasant and no elected government would survive for long. The challenge therefore becomes one of equating greater state activity with a more responsive political system. Longer-term commitment to a mixed economy would help to meet it, provided that new types of institution were created and worked successfully. For instance, greater financial responsibility towards both the private and public sectors might be achieved by forming a new mixed-enterprise agency. Such an agency would have to be partly funded by government but independent of it: in the public sector it would act as a buffer between government and viable nationalised enterprise; in the private sector it would be the vehicle to attract institutional support for action to be taken regarding important ailing companies in danger of extinction. However, capital is a scarce commodity, ~het~r in the public 5~ private sector, and profits are, ultimately, required to replenish it. The new agency’s objective would therefore be the long-term financial improvement in big business performance, which it would seek to achieve first by buying a small share (say 1%) of the equity of those businesses employing Iarge amounts of capital (LZOOm or more) or people (50 000 plus), and then actively taking steps to ensure that shareholder pressure was
maintained on managements to perform acceptably. Such an agency* should not be confused with the proposed National Enterprise Board, which is almost certain to be lOOo/o publicly owned. The NEB will be accountable to Parliament through ministers and try to further government policies like job creation, regional balance and export development through large financial holdings in private sector companies. Undoubtedly there will be benefits from this approach though it is as yet difficult to see how improving financial efficiency will turn out to be one of them. Constitutional reform is also overdue in the corporate sector. It should be recognised that the board is responssible and accountable not only to shareholders but also to workers and customers. This cannot happen without significant reform in the board’s composition, and its legal and management responsibilities. Employee cooperation and participation is vital, especially at the place of work, and this assumes much greater disclosure of information and more autonomous work groups. The status of employees should be put on a par, legally, with that of shareholders. The reform of the composition of the board has received much attention recently. In Europe the ‘%upervisory” is separated from the “executive” in an attempt to detach the “political” function of balancing interests from the financial “efficiency” function of making profits. The danger however is that responsibility will be further diffused and that performance may suffer. It might be better in the UK to maintain the single management board, but to regulate its freedom of action. One way of doing this would be to increase the importance and independence of non-executive directors: the old-style part-timers putting in * For a fuller discussion,see my article in The Banker, July 1974. FUTURES
April 1975
Futures Essays: Management of Change
one day a month should be supplemented by new-style independents with specialist responsibilities for accounting to employees, shareholders and government, or other constituencies. They should, too, have general responsibilities concerning the election of the the appointment of the chairman, chief executive, the pay and perks of directors and the public presentation of the annual report. The new appointments should be at least half-time jobs, subject to regular election by the interests represented. They would be empowered to conduct their own investigations and report back to the board. Aside from these independents, the board should be responsible for planning and selecting its own succession. There is no reason why this could not apply equally to a nationalised corporation, other than the desire of governments to control board salaries. But if these were made part of the special responsibility of the new inde-
JAPAN Nobumitsu
pendent directors (themselves directly accountable to employees, shareholders and government interests), the powers are unlikely to be abused. The need for institutional change has probably never been greater. It is alas in nobody’s particular interest in the UK to institute effective change on the scale required. The longer the delay, the more unmanageable and unpleasant the upheavals are likely to be-given the onset of simultaneous inflation and unemployment on an international scale. As governments take on the gravest economic and political problems the West has seen for a quarter of a century, it is worth remembering that, only if institutions become more responsive to the longterm needs of their many clients will they, and the system in which they work, survive. To see that this happens is, ultimately, the inescapable responsibility of management and democratic government.
IN BUSINESS Kagami
IN JAPAN, business and management are still regarded as the most important agents in creating new wealth and in initiating any necessary changes in order to accommodate the rising aspirations of the people for better life. And most people feel some sense of identity with the business community at large. Despite this relatively favourable business atmosphere, the tasks and challenges that now confront Japanese businessmen are manifold and even ;epr insurmountable. To name a
1. Rising costs of energy and other essential raw materials and the increasing difficulties of securing them. Mr Kagami is Head of the European office of the Nomura Research Institute, London. FUTURES
147
April 1975
strong inflationary pres2. Extremely sure due to the sharp rise in import prices and the continuing high rate of wage increases. 3. Problems of pollution and deterioration of the environment resulting from rapid industrial development. 4. Growing social unrest and discontent accompanying the increased affluence of society. 5. Increasing external tension with foreign countries due to the dramatic success of Japanese industry abroad both in terms of exports and direct foreign investment. These issues are by no means new or unique to the country, but their dramatic significance has been heightened by the oil crisis, mainly because of
This cannot be done suddenly. It can be done gradually as in Sweden, which for this very purpose started a timely Futures Studies Programme.
4.
References
5.
1. I. P. Priban, “Strategic Planning” in M. Goldsmith, ed, Forward Planning in the Service Sectors (London, Macmillan, 1975) 2. P. J. Loftus, “Labour’s Share in Manufac-
INSTITUTIONAL
3.
6.
Management
of Change
143
turing”, Lloyds Bank Review, April 1969 pages 15-25 OECD Informatics Studies 3: Computersand tclccommunication,Paris, 1973 R. A. Charuie. “Technological Innovation and Econo&c. Growth”, a report to the Committee on Science and Technology, US House of Representatives, 1967 C. S. Sherwin and I. R. Isenson, “Project Hindsight”, S&UC, 23 June 1967, pages 1571-1577 Royal Ministry for Foreign AflZn in cooperation with the Secretariat for Future Studies, To Choose a Future, 1974
DISORDER
AND REFORM
Neville Abraham A MAJOR paradox facing the UK now is that while greater state intervention in big business has come to seem inevitable, the results, measured against the professed objectives of successive governments, have generally been lamentable. To some extent this paradox is a reflection of the vast increase in people’s expectations and the consequential effect on their elected representatives to do something about this or that. These pressures have become virtually irresistible, resulting in continuously changing economic objectives as the trade-off point between unemployment and inflation becomes more elusive. In this essay I want to try to get at some of the causes of failure-constitutional as well as economic-and then go on to sketch out a few possible areas for reform.
Constitutional
disorder
In the UK and elsewhere in the West, big business and government have remained both different and apart. Mr Abraham is Corporate Policy Adviser of the Whitehead Consulting Group, London, UK. His book, Big Btiness and Government-the New Disorder, was published by Macmillan Press in December 1974. FUTURES
April 1975
In many countries the political system, and therefore the structure of government, is nationally oriented and centralised, whereas the industrial world is an international one and devolves on to numerous centres of influence. Despite facades, governments proceed piecemeal, trying simultaneously to fulfil divergent, indeed conflicting, aims. Business, on the other hand, has tended to develop more single-mindedly and with apparently greater unanimity. Western political systems require leaders to be changed relatively quickly, whereas industry assumes and accepts more permanent leadership, both in corporations and unions. As governments have come to pursue essentially corporate objectives, the traditional institutional machinery through which they work looks increasingly obsolete. Parliamentary methods, for a variety of reasons, are inadequate to deal with large and complex economic institutions, and they are being challenged by new centres of influence. A towering strength of the UK system, exemplified by the Watergate debacle in the USA, is that the Government is actually in Parliament. But the principle of ministerial responsibility and accountability, for so long a fundamental prerequisite of responsive political leadersihp, can act
144
Futures Essays: Management of Change
today as a major constraint against effective government action : ministers-and therefore MPs-cannot keep up with the mass of government business. As the demands on government increase, the fiction of exclusive ministerial responsibility becomes increasingly difficult to sustain. Industrialists, however, know that in reality hardware, systems and management take years to build, and they deal directly, more and more, with the permanent officials within government. Senior civil servants in the UK are often highly intelligent and politically sensitive operators but, like their political masters, they have too little experience of working in business organisations. The Civil Service has kept itself apart from the outside world and in the UK businessmen are often ignorant about and prejudiced against recruiting from it. This never used to matter, but in an interventionist climate it does. With the Service still gearing itself to recruiting mainly the young for a life-long career, misunderstandings and conflicts between government and industry can be expected to continue. Big business organisations also have constitutional problems. Formally, the position is that the private business board is not accountable to anyone save the shareholders, and then only in financial terms. Managers have thus been relatively free to act, and provided expansion was for the most part financed internally from profits, and disaster or corruption avoided, board,p could perpetuate themselves without outside interference. These days the pressure on senior managers is very much greater. Trade unions, governments, and other external groups have increasingly weakened the idea that corporations exist only to make profits, and are demanding more accountability from business managers. Such pressures expose the reality that objectives (even when they are made explicit) can be ambiguous, in conflict, and often widely misunder-
stood, not least among managers themselves. Many big businesses have responded by increasing delegation and dispersing authority, making it easier to live with a multiplicity of objectives, management styles and national cultures. They have not found it easy in the face of growing pressure from centralised government organisations and giant unions. At the heart of the problem lies the ambiguity surrounding the constituency of the top manager; is he just a representative of shareholders or must he perform some kind of balancing act between conflicting interests ? To put the question another way, should we regard management in terms only of financial efficiency or as another branch of politics ?
Economic
disorder
Private manufacturing industry is caught in a trap sprung by the persistently low level of capital investment. Huge amounts of money are required to put up plants and the risks have been considered too great. For many companies the problem is one of sheer survival rather than the distribution of an adequate return, a problem which inflation accounting will bring sharply into focus. Shareholders have reacted predictably by getting out of manufacturing and investing in commodities, agricultural land, property development and antiques. Unfortunately, such investments do not provide future consumer goods, nor do they help to attain economic objectives like full employment or economic growth. With the emergence of large and rich financial institutions the divorce of management from ownership of productive assets is virtually complete. It is clearly in the interests of shareholders of financial institutions that their investments be quickly liquidated if a particular company is heading for trouble. But the economic problem does not disappear as a result; the FUTURES
April 1875
Futures Essays:
loss of jobs, skills and exports that could ensue is not easily tolerated by democratically elected governments. Hence the incursion of state finance into the private sector. The Government has become an important shareholder in a number of private companies and is likely to become an even bigger one in future. Will this new form of state capitalism prove more successful ? The experience of the nationalised industries suggests otherwise. As a group of corporations, these businesses invest more than the whole of UK manufacturing industry and provide steady employment for some two million people. Yet in terms of financial efficiency their performance is no better, and sometimes worse, than the private sector, for the huge capital investment in most of these industries has been returning the taxpayer less than nothing. Deficits of state concerns cannot be blamed solely on their managements. Neither are they necessarily the consequence of public ownership per se. They are the inevitable result of wayward ad hoc political intervention. Repeated government interference and scrutiny, ambiguities in the statutes, divergent expectations and objectives (usually changing rapidly) and an absence of political commitment, have made it virtually impossible for senior to choose their priorities managers and stick to them, or to be assessed on their achievement. Prices have been kept too low, deficits have built up, long-term investment has been decided on short-term considerations, and management has become increasingly confused about what is expected. When there are no criteria on which to judge performance, there can be no responsibility for outcomes. Governments of course have a difficult (not to say impossible) job and ministers of industry are expected to be stewards of taxpayers’ funds and guardians of the national interest. They cannot be blamed for seeing FUTURES
April 1975
Management
of Change
145
workers and consumers as voters, on whom they ultimately depend. Inevitably the least difficult course is to sacrifice longer-term financial considerations. And so the one major Western criterion for resource allocation is going by the board. Financial efficiency is lacking in both the private and public sectors. We seem unwilling to revive it, or to replace it with some other criterion of efficiency. Resistance muddled economic perto change, formance and low morale will inevitably result, with attendant pressures for major political changes that are likely to affect personal and institutional freedom.
The shape of a new deal In terms of the context of big business management and regulation, a concordat would seem to be required between the main political parties and their financial supporters. Such a concordat would attempt to define that area of the national interest which is not to be continuously subject to the caprice of party politics. As a basis, three ground rules might apply: (a) Political direction in central government proceeds mainly by way of generally applied constraints and inducements, enabling people to seek their own ends. For instance, the private and public sectors should be treated much more alike than hitherto. (b) Government should further specialise and differentiate according to task, give more emphasis to long-term planning, and become less dependent on the centre, by means of new and developing public agencies. (c) Both within government and corporations, full responsibility should be seen to be placed on people who can be easily and publicly identified. Such ground rules cut across many important political traditions in the UK and in particular assume all-
146
Futures Essays: Management of Change
party commitment to maintaining a mixed economy. The advantages should be obvious: neither exclusive state control, nor laisse~-faire> are realistic options for the future of the developed Western economies. The former is likely to result in more secretive decision making, greater resistance to change, poor resource allocation and low morale. The institutional apparatus wouId become inflexible and unresponsive, and in time personal and institutional freedom would be lost. But laissez-faire too has been found inadequate and socially increasingly unacceptable. The consequences of a return to a free-for-all would be much too unpleasant and no elected government would survive for long. The challenge therefore becomes one of equating greater state activity with a more responsive political system. Longer-term commitment to a mixed economy would help to meet it, provided that new types of institution were created and worked successfully. For instance, greater financial responsibility towards both the private and public sectors might be achieved by forming a new mixed-enterprise agency. Such an agency would have to be partly funded by government but independent of it: in the public sector it would act as a buffer between government and viable nationalised enterprise; in the private sector it would be the vehicle to attract institutional support for action to be taken regarding important ailing companies in danger of extinction. However, capital is a scarce commodity, ~het~r in the public 5~ private sector, and profits are, ultimately, required to replenish it. The new agency’s objective would therefore be the long-term financial improvement in big business performance, which it would seek to achieve first by buying a small share (say 1%) of the equity of those businesses employing Iarge amounts of capital (LZOOm or more) or people (50 000 plus), and then actively taking steps to ensure that shareholder pressure was
maintained on managements to perform acceptably. Such an agency* should not be confused with the proposed National Enterprise Board, which is almost certain to be lOOo/o publicly owned. The NEB will be accountable to Parliament through ministers and try to further government policies like job creation, regional balance and export development through large financial holdings in private sector companies. Undoubtedly there will be benefits from this approach though it is as yet difficult to see how improving financial efficiency will turn out to be one of them. Constitutional reform is also overdue in the corporate sector. It should be recognised that the board is responssible and accountable not only to shareholders but also to workers and customers. This cannot happen without significant reform in the board’s composition, and its legal and management responsibilities. Employee cooperation and participation is vital, especially at the place of work, and this assumes much greater disclosure of information and more autonomous work groups. The status of employees should be put on a par, legally, with that of shareholders. The reform of the composition of the board has received much attention recently. In Europe the ‘%upervisory” is separated from the “executive” in an attempt to detach the “political” function of balancing interests from the financial “efficiency” function of making profits. The danger however is that responsibility will be further diffused and that performance may suffer. It might be better in the UK to maintain the single management board, but to regulate its freedom of action. One way of doing this would be to increase the importance and independence of non-executive directors: the old-style part-timers putting in * For a fuller discussion,see my article in The Banker, July 1974. FUTURES
April 1975
Futures Essays: Management of Change
one day a month should be supplemented by new-style independents with specialist responsibilities for accounting to employees, shareholders and government, or other constituencies. They should, too, have general responsibilities concerning the election of the the appointment of the chairman, chief executive, the pay and perks of directors and the public presentation of the annual report. The new appointments should be at least half-time jobs, subject to regular election by the interests represented. They would be empowered to conduct their own investigations and report back to the board. Aside from these independents, the board should be responsible for planning and selecting its own succession. There is no reason why this could not apply equally to a nationalised corporation, other than the desire of governments to control board salaries. But if these were made part of the special responsibility of the new inde-
JAPAN Nobumitsu
pendent directors (themselves directly accountable to employees, shareholders and government interests), the powers are unlikely to be abused. The need for institutional change has probably never been greater. It is alas in nobody’s particular interest in the UK to institute effective change on the scale required. The longer the delay, the more unmanageable and unpleasant the upheavals are likely to be-given the onset of simultaneous inflation and unemployment on an international scale. As governments take on the gravest economic and political problems the West has seen for a quarter of a century, it is worth remembering that, only if institutions become more responsive to the longterm needs of their many clients will they, and the system in which they work, survive. To see that this happens is, ultimately, the inescapable responsibility of management and democratic government.
IN BUSINESS Kagami
IN JAPAN, business and management are still regarded as the most important agents in creating new wealth and in initiating any necessary changes in order to accommodate the rising aspirations of the people for better life. And most people feel some sense of identity with the business community at large. Despite this relatively favourable business atmosphere, the tasks and challenges that now confront Japanese businessmen are manifold and even ;epr insurmountable. To name a
1. Rising costs of energy and other essential raw materials and the increasing difficulties of securing them. Mr Kagami is Head of the European office of the Nomura Research Institute, London. FUTURES
147
April 1975
strong inflationary pres2. Extremely sure due to the sharp rise in import prices and the continuing high rate of wage increases. 3. Problems of pollution and deterioration of the environment resulting from rapid industrial development. 4. Growing social unrest and discontent accompanying the increased affluence of society. 5. Increasing external tension with foreign countries due to the dramatic success of Japanese industry abroad both in terms of exports and direct foreign investment. These issues are by no means new or unique to the country, but their dramatic significance has been heightened by the oil crisis, mainly because of