Why Japanese Culture, Why Now?
Why Japanese Culture, Why Now?
A Perspective from the Global Economy and Social Dynamics
The Pendulum Theory of the Global Economy — Signs of a Reversal Toward Japan
Introduction
Until quite recently, I worked at a publishing company on a business magazine.
Through my work, I had the opportunity to hear stories from a wide range of fields. Among them, I found particular fulfillment in discussions on the global economy, especially because I have had a strong interest in economics and markets since high school. I was fortunate to be in an environment where I could directly listen to insights from experts, including those involved with investment funds.
I took notes every day, and whenever my understanding fell short, I immersed myself in related books to deepen my knowledge. Those days were a continuous process of learning.
Although today’s theme is Japanese culture, my interest did not originally stem from craftsmanship, regional economies, or population decline. These became areas of strong interest later on. The initial trigger was something else entirely: through the perspectives of leading Japanese analysts, I sensed significant potential in Japan’s future.
Today, I would like to talk about Japan’s prospects as seen from that original starting point—the movement of the global pendulum.
The Global Economy Is a Pendulum
When It Swings Too Far, It Always Swings Back
First, let me share a fundamental principle—one that might make life feel a bit less exciting.
The world moves like a pendulum.
In culture, politics, and economics alike, history shows us repeatedly that when things become excessively skewed in one direction, they inevitably swing back the other way. Many thinkers have described this dynamic: Karl Polanyi, the 20th-century economist who famously depicted the expansion of market economies as a “satanic mill,” and Thomas Piketty, who rose to prominence with Capital in the Twenty-First Century, are just two examples.
When a phenomenon becomes extremely unbalanced and reaches a critical point, a counter-movement inevitably occurs. And if that counter-movement itself becomes excessive, the pendulum swings back once again.
This pattern appears across history—in political systems, economic structures, religion, and even artistic movements. When momentum concentrates too strongly in one direction, the world is pulled with equal force toward the opposite side.
This “law of the pendulum” can be understood as a fundamental dynamic governing all human systems.
The Historical Pattern Revealed by the Concentration of Wealth
One of the clearest examples of this pendulum effect is the concentration of wealth.
History shows us repeatedly—through events such as the French Revolution or Martin Luther’s Reformation—that when wealth and power become overly concentrated in the hands of a small elite, the existing order collapses and wealth is released back to the citizenry.
However, once freed, wealth eventually accumulates again within a new power structure, triggering another collapse. For example, after the Reformation dismantled the concentration of wealth under the papacy, wealth later concentrated around monarchs, leading to backlash movements such as the Puritan Revolution.
This recurring cycle of concentration and redistribution of wealth is one of the major forces driving the pendulum of world history.
From this perspective, the dramatic political shifts we see today across many countries can be interpreted as signs that imbalance has reached a critical point and that a backlash is approaching.
The United States Today — Entering the Red Zone
The country that deserves particular attention here is the United States.
Let us first look at the degree of wealth concentration. The chart above shows the share of total U.S. assets held by the top 1% of wealth holders. Today, the top 1% in the United States owns roughly 30% of the nation’s total wealth. This figure is approaching the approximately 40% level seen around the time of the French Revolution—suggesting that the system has entered a “red zone,” dangerously close to structural breakdown.
Another important perspective is the price-to-book ratio (PBR), a measure of stock market valuation. PBR is calculated as share price divided by book value per share and indicates how highly investors value a company relative to its actual asset base.
Generally, a PBR significantly above 1 implies that the market is pricing in strong future growth. However, the current PBR of major U.S. listed companies—represented by the S&P 500—has exceeded 5.1. This is far above the historical average of roughly 2 to 3, and represents an unprecedented level.
In other words, today’s U.S. stock market may be pricing in future growth far beyond corporate fundamentals. Investor expectations have swung to an extreme.
Japan’s Position — On the Opposite Side of the Pendulum
So where does Japan stand?
As shown in the same PBR comparison, Japan’s corporate valuations remain low relative to the United States. For many years, Japanese equities have been regarded as “cheap,” with capital efficiency and profitability insufficiently recognized by the market.
Looking at GDP trends further reinforces this picture. While the United States and China have achieved dramatic growth over the past 30 years, Japan’s economy has stagnated, significantly lowering its relative global position. Japan, once the world’s second-largest economy in 1990, has lost a substantial share—clearly reflecting a swing to the opposite side of the pendulum.
In contrast to the extreme concentration of wealth seen in the United States, Japan now occupies the other end of the pendulum’s arc.
According to historical patterns, such extreme imbalance often precedes a reversal. From this viewpoint, Japan may be well positioned to benefit from the next corrective swing.
Put differently, Japan’s recent “stagnation” may become a hidden strength as the global balance begins to shift.
The Pendulum Has Begun to Move
In an attempt to force growth, President Trump has introduced a wide range of aggressive policies. Yet the limits of this approach are becoming increasingly apparent. Quietly but steadily, the pendulum has begun to move in the opposite direction.
Signs of this shift are already emerging. Japan’s stock market has started to show upward momentum.
Of course, risks remain—such as trends in U.S. consumption and currency fluctuations. Even so, when these factors are taken into account, it appears that Japan, which has remained on the “reverse side” of the pendulum for the past three decades, is finally entering a phase where it may benefit from the rebound.
Looking Ahead to What Comes Next
At the beginning of 2024, I heard this perspective from several experts and began to view Japan’s future through this framework.
I asked myself:
What exists on the opposite side of today’s dominant trends?
From that moment, I began a journey to rediscover the essence of Japan—not only economically, but socially and culturally—examining where imbalances exist and how Japan stands on the reverse side of them.
Next time, I would like to explore those social and cultural imbalances, and discuss how Japan once again finds itself on the opposite side of the pendulum.