-- or families of firms in large scratch-each-other's back networks --
supported this or that faction in the LDP, producing a highly
successful, structurally corrupt model of economic development that
showed remarkable resilience through Japan's high growth economic
period. Japan had the outward facade of democratic practice, but it
probably wasn't a true democracy until the decisive August 2009 win of
the then-Yukio Hatoyama led Democratic Party of Japan over the LDP.
Since then, Japan's government has been tied in knots -- and real
democracy looks much less efficacious than the 'internal pluralism' that
the LDP managed during the era of Japan's fake democracy.
Chinese industrial conglomerates are emerging as huge zaibatsu or keiretsu
look alikes -- based not around banks and trading houses as in the case
in Japan but around Chinese military divisions around the country.
Chinese Communist Party -- which is about to promote and demote from
its current roster of leaders in the 18th Party Congress set for 2012 --
has many similarities to Japan's LDP, including its embedded
corruption. But as in the case of Japan, the results of self-dealing
corruption largely remain in the country rather than escaping to Swiss
bank accounts as often happened with the style of 1950s era corruption
seen in Vietnam or the Philippines.
So, the lesson is that
internal pluralism is probably better than no pluralism -- and at least
in the case of Japan, more effective in achieving growth and economic
prosperity than genuine democracy. But it also means that China, like
Japan, is going to carve up its market in favor of internally competing
domestic champions, with foreign firms relegated to the periphery.
pluralism may sound good -- but it's echo effects are essentially to
block the outsider and maintain arrangements not through fair and overt
competition but rather through back room deal-making.
going to be a real problem when the world is waiting to see a slightly
more selfless China emerge, one that is willing to lose some arenas of
competition to preserve the stability of the global order. Internal
pluralism doesn't get China where the world needs it to be.