THE RISE OF THE “THIRD SECTOR” IN JAPAN Yasuo Takao Perhaps one of the most important changes to have arisen around the globe in the post-Cold War era is that which has occurred in the relationship between states and citizens. While acknowledging the limits to welfare state expansion, the welfare state has been under siege for some time owing to government policies that have targeted social services for spending cutbacks. But there has been a remarkable upsurge in the third, or nonprofit, sector, which Lester Salamon has defined as comprising “a mas- sive array of self-governing private organizations, not dedicated to distribut- ing profits to shareholders or directors, pursuing public purposes outside the formal apparatus of the state.”1 This has arisen out of what he describes as an associational revolution in which these third sector organizations are pav- ing the way for alternative governance that is more accountable in the effort to meet human needs. Despite the diverse ways in which people organize social life, it has been possible to distinguish two broad complexes of organizations in modern soci- ety: the market or the private sector and the state or the public sector. Begin- ning in the 20th century and extending well into the present, the state has provided an ever-increasing number of services in advanced industrial de- mocracies. The emergence of the welfare state produced a great variety of ways in which the private and public sectors relate to one another as well as myriad ideologies and associated political activities ranging from anti-state Yasuo Takao is Senior Lecturer in the School of Social Sciences, Cur- tin University, Perth, Western Australia, Australia. This project was funded by the Australian Research Council. The author gratefully acknowledges the assistance of Masaharu Hori, Morris Low, Vera Mackie, Tessa Morris-Suzuki, and Susan Takao. Asian Survey, 41:2, pp. 290–309. ISSN: 0004–4687 Ó 2001 by The Regents of the University of California/Society. All rights reserved. Send Requests for Permission to Reprint to: Rights and Permissions, University of California Press, Journals Division, 2000 Center St., Ste. 303, Berkeley, CA 94704–1223. 1. Lester M. Salamon, “The Rise of the Nonprofit Sector,” Foreign Affairs 73:4 (July/August 1994), p. 109. 290 YASUO TAKAO 291 liberalism to totalitarianism. By the early 1980s, however, many observers began to speak of the welfare state in terms of its limitations. Concurrently, observers increasingly recognized that a third sector possessing its own unique organizational features was on the rise.2 There seem to be many rea- sons for the sector’s appearance. One of the most compelling is that organi- zations in this new sector compensate for those areas in which the private and public sectors have failed to meet societal needs.3 Thus, the third sector rep- resents not just a major institutional innovation produced by the retrenchment of the welfare state but also an inevitable development evolving out of the failures of the two existing sectors. Yet, these arguments do not provide a fully adequate explanation for this significant development. For one thing, civil society has to have reached a certain level of maturity to produce the private, nonprofit organizations (NPOs) or nongovernmental organizations (NGOs) found in the third sector. Independent citizens and the great diversity of society are absolutely critical for such a sector to develop.4 More importantly, it must also be remembered that the range of experiences associated with this development seen in differ- ent countries represent considerable variation in cultural tradition, develop- mental paths, and social norms. In Japan, the debate over alternative governance in civil society has heated up in recent years. The mass media began to recognize the importance of third-sector-oriented organizations when nearly 1.3 million people volunta- rily participated in relief operations following the 1995 Kobe earthquake. The number of NPO-related articles that appeared in the three main national newspapers—the Asahi, Yomiuri, and Mainichi—increased continuously from 178 in 1990, 850 in 1992, 1,455 in 1994, 2,151 in 1995, to 2,868 in 1997.5 Is Japan in the midst of a unique associational revolution or are devel- opments there a sign that the country is taking part in one that is global in 2. Helmut K. Anheier and Wolfgang Seibel, eds., The Third Sector: Comparative Studies of Nonprofit Organizations (Berlin: DeGruyter, 1990); Benjamin Gidron, Ralph M. Kramer, and Lester M. Salamon, eds., Government and the Third Sector: Emerging Relationships in Welfare States (San Francisco: Jossey-Bass, 1992); Estelle James, ed., The Nonprofit Sector in Interna- tional Perspective: Studies in Comparative Culture and Policy (Oxford: Oxford University Press, 1989); and Katheen D. McCarthy, Virginia Hodgkinson, and Russy Sumariwalla, The Nonprofit Sector in the Global Community (San Francisco: Jossey-Bass, 1992). 3. Paul J. DiMaggio and Helmut K. Anheier, “The Sociology of Nonprofit Organizations and Sectors,” Annual Review of Sociology, no. 16 (1990), pp. 137–59. 4. See, for example, Marilyn Taylor, Joan Langan, and Paul Hoggett, Encouraging Diversity: Voluntary and Private Organizations in Community Care (Gower House, England: Arena, 1995). 5. Adopted from Yamamoto Tadashi, “Nihon no shibiru sosaete no hatten to gabanansu e no eikyo” [Developments in Japan’s civil society and its impact on governance] in Kan kara min e no pawaa shifuto [Power shifts from “public” to “private”], eds. Yamamoto Tadashi et al. (To- kyo: TBS Britannica, 1998), p. 135. 292 ASIAN SURVEY, VOL. XLI, NO. 2, MARCH/APRIL 2001 scale? To answer this question, one must first consider some important as- pects of the market and the state in modern Japan. First, it must be borne in mind that the developmental paths of the market-state relationship in Japan stem from the country’s historical tradition and its status as a late-developing state, as shall be explored below. Equally important, the type and direction of change in the ties between the state and societal groups represent an alter- native to existing political ideologies. Third, citizens’ groups are motivated by neo-radical desires to take matters of governance into their own hands by means of grassroots initiatives. Finally, the demands of a now-prevalent eco- nomic rationalism have led the promotion of a small government philosophy that has resulted in the delegation of some governmental functions to the emergent third sector. The political debate over these matters led the National Diet to pass the Law for the Promotion of Specific Nonprofit Activities (the NPO Law) in March 1998. The emergence, dimensions, and activities of the third sector in Japan merit closer attention. Accordingly, this article first seeks to describe the circumstances under which third-sector-oriented NPOs have arisen in Japan. It then examines the nature of these organizations and the role they expect to fill, and finally, assesses their potential impact on political pro- cesses and social life. As used in this article, NPOs are held to be a collective body of autonomous private organizations whose primary concern is neither to achieve gains for an individual or group with respect to the distribution of income in the market nor to influence a government’s decision-making pro- cess in narrowly specific areas; rather, they are to advocate policies and col- lective self-help actions that constitute steps taken toward producing alternative governance. The available evidence regarding third-sector organizations in Japan sup- ports a number of claims. An economic rationalism point of view considers the role of organizations in the third sector from the viewpoint of cost-effec- tiveness. Despite the wish to implement cost-effective administration as part of the welfare state retrenchment process, Japan’s traditionally strong yet di- vided bureaucracy has had little success in efficiently delegating governmen- tal responsibilities to the third sector as an integral part of national policy. The bureaucracy’s efforts have been moderated owing to the challenges of numerous parliamentarians to bureaucratic control over the third sector. But the unpopularity of such regulated delegation has made it likely that Japan will see an ongoing upsurge of neo-radicalism. The individuals and groups already participating in organized activities stand ready to exploit opportuni- ties to take local initiative and voluntary action outside state control. How- ever, even though they may operate independently and be transparently accountable in their activities, the projects such organizations undertake nonetheless must correspond with and satisfy the specific interests and con- YASUO TAKAO 293 cerns of those institutions and others who provide them with funds. Thus, it seems certain that the increasing availability of official funding will have a significant impact on the roles played by third-sector organizations. NPO Expansion The appearance of third-sector organizations in Japan comes in the context of the increase Japanese society has experienced over time in the number of social groups within it and the nature of those groups in a position to influ- ence society. Pre-war Japanese society saw the presence of powerful private groups such as big conglomerates and notables’ political associations that supported and sought to benefit from state domination. The post-war U.S. Occupation attempted to transform the relations between state and society. Accordingly, trade unions and economic associations, which had been sup- pressed or otherwise controlled in the pre-war period, were now encouraged to participate and take a larger stake in society as part of the Occupation’s democratization process. The developmental priorities of the 1950s and early 1960s failed to live up to the expectations of citizens around the nation, and industrial pollution and its effects became a major problem. By 1970, there were as many as 3,000 local citizen groups dedicated to protesting pollution problems.