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Most economic pundits still support the idea of free competition in the market as the key principle of the society. As Japanese society becomes increasingly Americanized, however, a number of “fakes” have appeared in the market.

Among the fakes exposed by the media in the past half year are structural designer Hidetsugu Aneha, who falsified quake-resistance data for designs of apartment complexes and hotels; Takafumi Horie, former president of Internet startup Livedoor Co., who stands accused of violating the securities and exchange law by falsifying financial reports; and Norimasa Nishida, president of the hotel operator Toyoko Inn, who gave illegal orders for the removal of mandatory parking space for the disabled at hotels after they had passed building inspections.

These fakes are all “outsiders” in Japanese society. Nevertheless, their opinion and conduct are basically the same as those of the “insiders.” In other words, the conduct of the insiders, if stretched a bit, coincides with that of the outsiders.

The situation makes me think of the Moebius strip. Take a long rectangle piece of paper, give it a twist, and join the ends. When you examine the strip, the outside of the strip eventually becomes the inside of the strip, which will become the outside once again.

So it looks as if the Japanese society is wrapped around by the strip, on which it is difficult to distinguish the inside and the outside. The icon of the information-technology revolution, for example, turned out to be nothing but a con man.

In becoming insiders, the outsiders gave society a twist of illegality and immorality but were eventually exposed to have violated law. Before the exposure, their wrongdoing was hailed as an embodiment of “venture spirit.” Their “global perspective” “cost-busting” strategies and tactics exploiting “structural reform” were built on the “venture spirit” advocated by insiders.

Their activities inevitably led to illegal and immoral conduct. Laws and morals are nothing but rules based on past value systems. Once reckless challenges for unexplored horizons are recognized as legitimate activities running ahead of the times, doubts arise over interpretations of the existing rules whenever interests clash.

Thus in the free-competition market, where challenges for new horizons are encouraged, lawsuits are bound to multiply over the interpretation of laws and morals.

However, court proceedings to seek judgment on unprecedented cases on the basis of old rules often become a power game in which participants take advantage of all available financial, informational and organizational resources. The game of free competition, which should be fair in principle, becomes a brutal “survival-of-the-fittest” battle. Without trying to protect their national characteristics, Japanese unknowingly are plunging into a power game at which they are poor.

In my view, these self-injurious acts were hailed in the name of “structural reform” because the economy has been eroded by democratic “principles.” As public opinion has paramount importance in politics, market indicators have come to assume similar importance in the economy. In the stock market, for example, the most important indicator is the market capitalization of a stock.

Prices of stocks and all commodities depend on long-term expectations on the supply and demand sides. To attain the establishment of the principle “vox populi, vox Dei” in the market place, expectations for the long-term future must be established in a “reasonable way” — or in a way acceptable to the public.

Information technology will have revolutionary effects only when its use makes it possible to establish long-term expectations in a reasonable way. However, historical events, as part of a chain of once-only events, are always irreversible. Therefore using information technology to make probability estimates for future events is foolhardy.

Following the proliferation of demagoguery in democratic politics, fakes brazenly violating law have mushroomed in the market economy. This phenomenon stems from the structural reform of recent years.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
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