The Age of Imagination
Senior Fellow, RIETI
What is the most important problem facing those called economists in this present age? If I may be so bold as to present my own opinion: their "ability as integrators" and the "vivid imagination" that supports this ability. Of course, I do not mean to say that this should apply to all economists, nor that other specialized training should be disregarded. Having knowledge of one's field is a necessary condition for a scholar. However, it is not a necessary and sufficient condition for those economists who are in positions of leadership.
Vertical divisions in academia exist both in Japan and overseas
Economics is a profession like any other, and economists go through the process of building up careers and elevating their positions by receiving the recognition of well-known organizations. It is difficult for a person to be a scholar if they do not involve themselves in academic circles. This is because they must be recognized by academic societies. It is impossible in this day and age to publish theses in the form of letters, as was the case in Europe several hundreds of years ago when there were no such societies. Therefore, in order to establish a career as a scholar, one must belong to a society and submit theses to society publications.
However, the problem here is the fact that vertical divisions also rule these societies. Everyone criticizes Japan's bureaucracy for being vertically divided, but many of the scholars who do the criticizing are themselves part of organizations that are similarly vertically divided. It is already hackneyed to speak of interdisciplinary research being important in an era of change such as the present, but even if the expression is cliched, the reality is that much remains unchanged.
And under the circumstances as they are, it is difficult for a framework to exist that is receptive to niche ideas and notions that span fields horizontally. Benoit Mandelbrot of Fractal Theory fame is known as a person who craves the limelight, but this may be the result of the fact that he belonged to IBM, a private organization, and had no means of gaining recognition for a discovery that at the time did not fit into existing physics or mathematics. In that sense, the vertical divisions in academia do not seem to be any different overseas from how they are in Japan. Furthermore, increased segmentation in the name of pursuit of specialization, rather than integration, appears to be the current trend.
During my previous job as a management consultant, I had the opportunity to hire people called "information technology experts" in order to strengthen IT-related consulting. What I learned was that IT is in fact a very broad field, and what was more, the rapid development of the Internet was making it even broader. But despite this, "IT experts" were nothing more than "engineers with specialized knowledge in a certain area of the wide world of IT." Most of them were a far cry from the systems architects with the integration ability to translate corporate strategy into IT that we were looking for.
I started my working life in the office of Kunio Maeda, an architect who was a pioneer of Modern Architecture in Japan. He persistently told us young people who were striving to become architects that, "Architects are different from engineers. Engineers don't make small mistakes, but when they do make mistakes, they are huge. This is because they work within given boundary conditions, and have not been trained to set new boundary conditions. It is the architects who set those boundary conditions." In this way, he urged us to hone our abilities as integrators. The origin of the word "architect" is "integrator of technology."
Macroeconomics needs the ability to discover new boundary conditions
Within economics exist the branches of macroeconomics and microeconomics. Needless to say, the former is the realm that analyzes the relationship among the total quantities of a nation's economic activity, while the latter is an area of economics that focuses on the economic activities of individual economic subjects. However, I feel that the expression "macroeconomist" is apt to be misunderstood by nonprofessionals.
Unknowing amateurs get the impression that macroeconomists are architects that set boundary conditions as integrators, not only because of the nuance of the word but also because they actually see them making policy suggestions. However, in reality they are not that different from the engineers who are IT experts, and no matter how brilliant they may be as scholars, they are only experts in the vertically-divided academic field called macroeconomics.
Now is probably a time when boundary conditions in many academic fields are about to undergo simultaneous change. We need to re-examine past boundary conditions and set new ones. This will probably be a process of discovery that is neither deductive nor inductive. I believe that the ability to discover new boundary conditions, in other words, the use of imagination, is being demanded even in the world of macroeconomics.
A little over 30 years ago, architects began becoming involved in urban planning. At the time, they were ridiculed and told that, "Just because fountain pen manufacturers can make fountain pens (buildings), it doesn't mean that they can write novels (make cities)." But only 10 years later, a professor of urban planning said in a speech commemorating his retirement that, "In the end, it has become clear that not even urban planners can design cities." In other words, what this professor meant to say was that as a complex structure of multi-layered social subsystems - the city - as seen from the "intangibles theory" (ie the theory of a city as software), cannot be pieced together by urban planners who do not understand the realities of the various subsystems on a micro level, for example the activities of the subsystem called the corporation.
But compared to a group of segmented specialists, it is possible to train urban planners to become integrators with vivid imaginations that can set new boundary conditions. The same may be said for macroeconomists, who are integrators making policy suggestions. And what is needed for this is to train them to use their imaginations by sublimating their experiences and observations onto a macro level. Contrary to popular belief, the human imagination can in fact be trained. It just depends on whether a person is willing to undergo such training.
The microeconomic situation is varied and requires a cutaneous sensibility for it to be grasped. For example, there is a recent tendency among economists who are experts in finance to suggest that relationship banking is the direction to take, especially for regional banks. However, the loan-to-deposit ratio at such banks has fallen to less than 50%, and what is more, their main borrowers are local governments, construction firms, real estate companies and retailers, all of which are linked to real estate or property. It is incomprehensible how some can think relationship banking possible despite the fact that this in itself shows the weakness of Japan's regional economies. Was not the recent collapse of a major regional bank indeed the result of its efforts to promote relationship banking? This shows that the perspective and ability of integrators to use their imaginations in setting new boundary conditions is clearly lacking among economists.
How can the imagination be expanded?
There are countless similar examples. With a hyper-graying society and the approach of an age where the roughly 10 million baby boomers who had been the trendsetters on the consumption front become older than 60, the number of people who fall into the "indeterminable age generation" that does not follow Confucian teachings (of proper behavior for old age) will rapidly increase. In such an age, it is highly possible that the sort of consumption with the greatest growth potential will be linked to "maintaining youthfulness and healthiness in both body and mind while living with chronic lifestyle-related diseases." However, it is pointless to discuss the economic utility without changing the given boundary conditions of "public medical expenditure" that were established together with the "spectacular achievement" of health insurance for all at a time when Japan was poor.
I repeat myself, but in many areas, the things that are about to happen are bound to alter the boundary conditions that existing economics have depended on. In order to deal with such a situation not simply as an expert but as an integrator, efforts to expand one's imagination will become indispensable. A "place or field" that is similar in concept to that in physics will become necessary as infrastructure that makes this possible. It would not simply be the provision of a (physical) facility, but a time and space where a sort of power is at work, such as an electromagnetic or gravitational field.
For example, it would be a "place" with the dynamics that enable a person to hold aspirations different from traditional career aspirations; where scholars can easily decide to escape the vertical divisions of academia for a certain period of time; where natural interaction can exist without worrying whether ideas are orthodox or heretical; and where the flow and rhythm of time are different from those that scholars have become used to. It would be a "place" where people can have experiences that make them think that they would never have noticed their potential ability had they not come there.
The Research Institute of Economy, Trade and Industry, an independent administrative agency, has tried to be such a rare and unique "place," and it should continue to pursue this course.
March 30, 2004
Article(s) by this author
March 30, 2004［Column］
March 5, 2004［Policy Update］
April 15, 2003［Column］