Introduction

Capitalism has been the economic system that has created the greatest prosperity in human history. The entrepreneurial spirit, free competition, and the dynamism of the market economy have driven remarkable advances in science and technology while substantially improving living standards around the world. These historic achievements deserve the highest recognition, and I do not advocate abandoning capitalism itself.

Yet, in the twenty-first century, capitalism faces new challenges.

Rapid advances in artificial intelligence (AI), quantum technology, semiconductors, the space industry, and advanced energy technologies are accelerating the concentration of economic power in a relatively small number of corporations possessing enormous financial resources. At the same time, governments around the world have increasingly provided substantial financial support to private companies in the name of national security and economic security.

As a result, a fundamental contradiction has emerged within modern capitalism.

When companies succeed, most of the benefits accrue to private shareholders. When they fail, however, the costs are often borne by society through government subsidies, tax incentives, financial assistance, and other forms of public support.

Profits are privatized, while risks are socialized.

I believe that correcting this structural imbalance should be one of the central objectives of capitalism in the twenty-first century.

To address this problem, I propose a new framework that I call National Cooperative Capitalism.

National Cooperative Capitalism is not an attempt to replace capitalism with socialism. Rather, it seeks to preserve the principles of free markets and open competition while creating a more balanced alignment of interests among the state, private enterprise, and the public.

Furthermore, I regard this proposal not merely as a new corporate support policy, but as a redefinition of the role of the modern state. Traditionally, governments have primarily collected taxes and redistributed public resources. In the age of AI-driven civilization, however, governments should evolve into long-term investors acting on behalf of their citizens, supporting both corporate growth and national economic development simultaneously.

This paper therefore proposes National Cooperative Capitalism as a practical institutional framework. At the same time, it presents what I call the Investment State Theory—a new economic strategy designed for resource-poor nations such as Japan to thrive in the twenty-first century. Its objective is to preserve the vitality of the market economy while enabling businesses, governments, and citizens to share in the long-term benefits of economic growth. Through this proposal, I hope to contribute a new vision of capitalism to the global discussion.

Chapter 2

From a Subsidy State to an Investment State

Governments have long provided various forms of support to private enterprises.

These include subsidies, tax incentives, research and development grants, low-interest loans, credit guarantees, and infrastructure investment. In strategic sectors such as semiconductors, artificial intelligence, energy, telecommunications, space, biotechnology, and dual-use technologies, it is becoming increasingly difficult for companies to remain internationally competitive without government support.

Yet this reality exposes a fundamental problem.

When governments support companies with taxpayers' money and those companies succeed, the resulting gains are enjoyed primarily by existing shareholders. Although citizens finance these companies through their taxes, they do not adequately share in the benefits generated by that success.

This is not merely unfair; it also weakens the legitimacy of capitalism itself.

For this reason, National Cooperative Capitalism proposes that large-scale government support should, as a general principle, take the form of equity investment rather than non-recoverable subsidies.

A crucial distinction, however, must be emphasized.

The government should not simply purchase existing shares on the stock market.

If the government buys existing shares, the money goes only to the shareholders who sell them. The company itself receives no new capital. Such transactions contribute little to industrial development, research and development, or productive investment.

Instead, National Cooperative Capitalism proposes that companies issue new shares, which the government purchases at market value through capital increases.

In other words, the government participates in corporate recapitalization rather than purchasing existing ownership.

Under this approach, government funds flow directly into the company itself. Those resources can then be used to build semiconductor manufacturing facilities, expand AI research, develop quantum technologies, invest in advanced energy systems, modernize production facilities, and cultivate highly skilled human resources.

In this way, taxpayers' money is transformed from a simple public expenditure into a long-term national investment that helps build future public wealth.

Government acquisition of corporate shares differs fundamentally from conventional subsidies.

A subsidy is generally spent once and disappears. Equity investment, by contrast, converts tax revenue into a tangible public asset. As companies become more profitable, the government receives dividends. If necessary, it may also sell its holdings in the future.

For the government, therefore, such investments are not merely expenditures; they are assets capable of generating both future income and long-term capital value.

At the same time, companies receive funds as equity capital rather than debt. Because there is no repayment obligation, they can devote these resources to research and development, capital investment, workforce development, and strengthening their international competitiveness.

Accordingly, government participation in newly issued shares serves a dual purpose: it creates public assets for the nation while supplying growth capital for private enterprise.

This dual effect is the defining characteristic of National Cooperative Capitalism and distinguishes it fundamentally from conventional subsidies or temporary financial assistance.

When companies prosper, the value of the government's shareholdings also increases. Any dividends received likewise become a benefit shared by the public. As government equity holdings expand over time, dividend income can become a stable source of public revenue.

Assuming the average dividend yield of financially sound corporations, even a government portfolio valued at approximately ¥10 trillion could be expected to generate substantial annual dividend income. As the scale of public equity investment grows, this dividend stream would likewise expand, providing the nation with an additional and sustainable fiscal foundation.

Conversely, if an investment proves unsuccessful, the resulting losses would also be publicly disclosed and subject to democratic scrutiny.

In this way, National Cooperative Capitalism seeks to replace a system in which risks are borne by society while profits remain largely private.

The role of the state should therefore evolve beyond that of a government that merely distributes subsidies. Instead, it should become a long-term institutional investor acting on behalf of its citizens.

In my view, this represents a new vision of the state for the twenty-first century.

Chapter 3

The State Should Not Control Private Enterprise

National Cooperative Capitalism is not a system under which the government manages or controls private corporations.

Indeed, it is precisely the opposite.

The creativity and competitiveness of business are fostered by entrepreneurial freedom, swift managerial decision-making, and open market competition. If political authority were to replace these forces, corporations would gradually become bureaucratic organizations, losing the very strengths that have made capitalism successful.

Accordingly, government-owned shares should, as a general rule, not carry voting rights that are actively exercised in ordinary corporate management.

The government should act solely as a long-term investor representing the public interest, refraining from involvement in routine management decisions, personnel appointments, or business strategy.

This principle, however, should not be interpreted as an absolute renunciation of shareholder rights.

In exceptional circumstances—such as serious violations of law, major accounting fraud, corporate conduct that severely damages enterprise value, or situations posing significant risks to national security—the government should retain the right to exercise its voting rights as a shareholder in order to protect the broader public interest.

Even then, such decisions must never be left to the arbitrary judgment of politicians or government officials.

For that reason, government-owned shares should be administered by an independent Government Shareholding Commission.

The Commission should consist of economists, corporate executives, scientists and engineers, certified public accountants, tax professionals, labor representatives, and representatives of local communities. It should function as an independent institution whose operations are conducted with complete transparency.

The Commission should be legally responsible for:

• Managing government shareholdings;
• Selecting eligible investment targets and conducting periodic reviews;
• Determining whether voting rights should be exercised in exceptional cases;
• Publicly explaining the reasons for every such decision;
• Publishing complete records of all voting activities; and
• Reporting regularly to both the national legislature and the public.

Investment should not be extended to every company indiscriminately.

The primary recipients should be enterprises operating in strategic industries that will determine a nation's long-term competitiveness—such as artificial intelligence, semiconductors, quantum technologies, space, robotics, biotechnology, and next-generation energy—as well as internationally competitive companies that consistently generate foreign earnings through global markets.

In addition, exceptional investment may be justified in enterprises that support the nation's essential infrastructure—including disaster prevention, transportation, communications, energy, and healthcare—where public interest and national security require long-term stability.

However, the criteria for selecting such companies must be clearly established by law in advance, leaving as little room as possible for political discretion.

Only through complete transparency can government domination of private enterprise be prevented while allowing citizens to understand how their public assets are managed and on what basis investment decisions are made.

The objective of National Cooperative Capitalism is not to create a society in which government controls business.

Rather, its purpose is to establish a new partnership in which the freedom and competitiveness of private enterprise are fully preserved while citizens are also able to share in the benefits created by corporate growth.

The government is not a corporate manager.

It is a long-term investor representing the interests of the nation.

Only by maintaining this principle can the free market and national strategy cease to be viewed as opposing forces and instead develop into complementary pillars of a new form of capitalism.

Chapter 4

Toward a Society in Which the Nation and Its Citizens Share Corporate Growth

Providing capital to private enterprise is not merely a means of assisting individual companies.

When businesses regain vitality, the benefits extend throughout the entire national economy. New technologies emerge, internationally competitive products and services are created, employment expands, and tax revenues increase. At the same time, the development of strategic industries—including semiconductors, artificial intelligence, energy, telecommunications, space, and biotechnology—also strengthens a nation's economic security.

Investment in business is therefore also an investment in the foundations of the nation itself.

Yet if only a limited group of shareholders enjoys these benefits while the citizens who helped support those companies receive little in return, such a system cannot represent the most desirable form of capitalism.

For this reason, I propose that, over the long term, the ownership structure of strategically important corporations should gradually evolve toward the following broad balance:

• Approximately one-third: Founders, corporate management, and the company itself.
• Approximately one-third: Individual and institutional investors.
• Approximately one-third: Public ownership held by the state on behalf of its citizens.

This "One-Third Model" does not represent nationalization.

The first one-third preserves entrepreneurship, innovation, and managerial responsibility.

The second one-third enables individual citizens and private investors to participate freely in corporate growth through capital markets.

The third one-third allows the nation, acting on behalf of its citizens, to share in the long-term benefits generated by corporate success.

These three groups are not rivals.

They are partners, each fulfilling a different role while contributing to the sustainable growth of the same enterprise.

If corporations prosper, they themselves are not the only beneficiaries.

Individual investors gain through rising share prices and dividend income.

Companies are able to expand research and development, increase capital investment, and create new employment opportunities.

The government strengthens its fiscal foundation through the appreciation of its shareholdings and the dividends they generate.

Citizens, in turn, benefit from improved public services, including education, scientific research, disaster preparedness, healthcare, and social security.

This virtuous cycle is the central objective of National Cooperative Capitalism.

Under conventional subsidy programs, public funds allocated to corporate support are generally spent within a single fiscal year and then disappear.

Under National Cooperative Capitalism, however, the shares acquired by the government remain as national assets. As companies grow, the value of those assets also increases.

Moreover, dividend income flows continuously into the national treasury, creating a recurring source of revenue that can be reinvested in scientific research, technological innovation, disaster prevention, education, national security, and public infrastructure.

In other words, taxes begin to generate new assets, and those assets, in turn, generate new public wealth.

Naturally, not every corporate investment will succeed.

Business always involves risk.

For precisely that reason, investment should be concentrated on strategically important and financially sound enterprises, while every investment decision should be subject to rigorous examination and continuous evaluation by the independent Government Shareholding Commission.

National Cooperative Capitalism is neither a system in which the state controls business nor one in which business dominates the state.

Rather, it is a new form of capitalism in which corporations, citizens, and government cooperate while respecting their respective responsibilities and share together in the long-term benefits of economic growth.

Chapter 5

AI Civilization and National Strategy

The twenty-first century is an era in which technologies such as artificial intelligence, quantum computing, semiconductors, robotics, space development, biotechnology, and next-generation energy are rapidly reshaping national competitiveness.

Progress in these fields requires enormous investment in research and development together with a long-term perspective.

If left entirely to market forces, however, corporations may find it difficult to sustain such long-term investment because of pressure from financial markets that emphasize short-term profitability.

Conversely, excessive government intervention in corporate management may undermine both market competition and entrepreneurial initiative.

National Cooperative Capitalism is designed to address both challenges simultaneously.

Some critics may argue that government equity participation would inevitably weaken corporate creativity and dynamism.

History, however, does not necessarily support that conclusion.

Japan itself offers an important historical example in the form of the South Manchuria Railway Company.

Far more than a railway operator, the company developed urban planning, ports, mining, manufacturing, agriculture, hotels, and academic research, becoming one of the world's most comprehensive development corporations of its time.

Its first president, Shinpei Goto, is widely recognized for his remarkable ability to integrate long-term national strategy with effective corporate management.

The historical and political evaluation of Japan's administration in Manchuria remains, of course, the subject of legitimate debate.

That debate is not the purpose of this paper.

The point relevant here is institutional rather than historical: the participation of the state did not, in itself, inevitably destroy corporate creativity or managerial excellence.

Comparable examples can also be found in the United States.

During the financial crisis of 2009, the U.S. government acquired an equity stake in General Motors (GM) in order to support its restructuring.

GM subsequently recovered and continues today as one of the world's leading automobile manufacturers.

This experience demonstrates that government share ownership does not necessarily diminish corporate vitality.

The U.S. government eventually sold all of its GM shares after the company's recovery.

As a result, although the intervention succeeded as an emergency rescue measure, it did not evolve into a system through which the nation and private enterprise could share the long-term benefits of corporate growth.

It is precisely at this point that National Cooperative Capitalism differs fundamentally from previous approaches.

The government does not purchase existing shares in the secondary market.

Instead, it subscribes to newly issued shares at market value when a company raises additional capital.

Consequently, government funds flow directly into the company itself, where they can be used for research and development, capital investment, technological innovation, and the cultivation of human talent.

By contrast, when existing shares are purchased on the market, the proceeds are simply transferred to the selling shareholders. The company receives no new capital.

This distinction is of fundamental importance.

Furthermore, the purpose of National Cooperative Capitalism is not merely to provide financial support for corporations.

Its objective is to ensure a continuous supply of long-term capital to the industries that will determine national competitiveness in the twenty-first century—artificial intelligence, semiconductors, quantum technology, space development, biotechnology, robotics, nuclear fusion, and next-generation energy.

Government-owned shares should, in principle, be held for the long term.

Ordinarily, shareholder voting rights should not be exercised.

Only in exceptional circumstances—such as major accounting fraud, serious violations of law, or issues that pose significant risks to national security—should the government exercise its rights as a shareholder in order to protect the interests of the nation as a whole.

Under this framework, corporations are able to pursue research and development from a genuinely long-term perspective, while the nation strengthens its economic capacity through the growth of corporate value.

A corporation is not merely an organization that seeks profit.

It is also a public institution in a broader sense—creating employment, advancing technology, generating tax revenue, and contributing to national security as well as international competitiveness.

Accordingly, when the state supplies long-term capital to strategically important enterprises, it is doing far more than supporting individual companies.

It is simultaneously strengthening the nation's productive capacity, technological leadership, fiscal stability, and international competitiveness.

National Cooperative Capitalism is not a system in which the state dominates the market.

Rather, it is a new form of capitalism in which the autonomy of private enterprise and the principles of the market economy are fully respected while the state and private enterprise establish a long-term partnership dedicated to the prosperity of the nation as a whole.

Chapter 6

Conclusion: A New Direction for Capitalism in the Twenty-First Century

Capitalism has brought humanity unprecedented economic prosperity and technological innovation.

At the same time, however, it has also produced new challenges, including widening income inequality, excessive emphasis on short-term profits, environmental pressures, and increasingly intense industrial competition among nations.

Socialism, on the other hand, has generally failed to generate the dynamism of a market economy and has, in many countries, resulted in prolonged economic stagnation.

The challenge facing the twenty-first century is therefore not to choose simply between capitalism and socialism.

Rather, it is to establish a new institutional framework that preserves the vitality of the market economy while enabling the state to support national economic development from a long-term perspective.

National Cooperative Capitalism, as proposed in this paper, represents one possible institutional answer to that challenge.

The state should not dominate private enterprise.

Nor is it sufficient for corporations to exist entirely separate from the interests of the nation.

Instead, the government should provide long-term capital, while private enterprise exercises its creativity and managerial excellence within competitive markets.

The benefits of that success should then extend beyond corporations themselves and contribute to the development and prosperity of society as a whole.

Such a partnership, I believe, represents a form of capitalism better suited to the age of AI-driven civilization.

Chapter 6

Conclusion: A New Direction for Capitalism in the Twenty-First Century

Capitalism has brought humanity unprecedented economic prosperity and technological innovation.

At the same time, however, it has also produced new challenges, including widening income inequality, excessive emphasis on short-term profits, environmental pressures, and increasingly intense industrial competition among nations.

Socialism, on the other hand, has generally failed to generate the dynamism of a market economy and has, in many countries, resulted in prolonged economic stagnation.

The challenge facing the twenty-first century is therefore not to choose simply between capitalism and socialism.

Rather, it is to establish a new institutional framework that preserves the vitality of the market economy while enabling the state to support national economic development from a long-term perspective.

National Cooperative Capitalism, as proposed in this paper, represents one possible institutional answer to that challenge.

The state should not dominate private enterprise.

Nor is it sufficient for corporations to exist entirely separate from the interests of the nation.

Instead, the government should provide long-term capital, while private enterprise exercises its creativity and managerial excellence within competitive markets.

The benefits of that success should then extend beyond corporations themselves and contribute to the development and prosperity of society as a whole.

Such a partnership, I believe, represents a form of capitalism better suited to the age of AI-driven civilization

The framework proposed in this paper calls for the government to subscribe, at market value, to newly issued shares, thereby supplying capital directly to private enterprises.

As a general rule, the government does not intervene in corporate management and does not ordinarily exercise shareholder voting rights. By fully respecting corporate autonomy, the state supports long-term growth rather than directing day-to-day business decisions.

As companies prosper, employment expands, technological innovation accelerates, and tax revenues increase. In turn, a stronger fiscal foundation enables greater investment in education, scientific research, disaster preparedness, national security, and social welfare.

Moreover, as public shareholdings accumulate over time, dividend income becomes a continuing source of government revenue.

Taxes are therefore no longer simply spent and exhausted. Instead, they are transformed into national assets, which themselves generate future public income.

This transformation of taxation into productive public assets is the most distinctive feature of National Cooperative Capitalism and the point at which it fundamentally differs from conventional subsidy policies.

Providing capital to private enterprise is not merely an act of corporate assistance.

It is an investment in the nation's future.

The twenty-first century will require unprecedented levels of long-term investment in fields such as artificial intelligence, quantum computing, semiconductors, space technology, advanced energy systems, and the life sciences.

In these strategic industries, institutional cooperation between government and private enterprise will become increasingly important.

National Cooperative Capitalism neither rejects the market economy nor advocates a state-controlled economy.

Rather, it seeks to move beyond the traditional view that free markets and national strategy are mutually exclusive.

Instead, it proposes an organic partnership between the two, opening new possibilities for economic development in the twenty-first century.

This paper does not claim to present a completed or definitive theory.

Instead, it is intended as an invitation to discussion among scholars, business leaders, policymakers, and citizens throughout the world concerning the future evolution of capitalism.

If this proposal can contribute, even in a small way, to that international dialogue, I shall consider that achievement my greatest satisfaction.

Epilogue

From National Cooperative Capitalism to Brainism

The National Cooperative Capitalism presented in this paper is neither a system in which the state controls private enterprise nor one that rejects the principles of the market economy.

Rather, it is a framework through which the state provides long-term capital while respecting the autonomy and creativity of private enterprise, allowing both the nation and its corporations to share the benefits of sustained economic growth.

Yet a system for supplying capital alone is not sufficient.

The more fundamental question is where that capital should be directed.

As my answer to that question, I propose the concept of Brainism.

Historically, Physiocracy regarded agriculture as the principal source of national wealth.

Mercantilism regarded commerce and international trade as the foundation of national prosperity.

Brainism does not reject agriculture, industry, commerce, or the service economy in favor of any single sector.

Instead, it places knowledge itself at the center of national strategy as the common foundation upon which every industry depends.

The word "brain" in Brainism does not refer solely to artificial intelligence.

It encompasses the totality of human intellectual capacity: creativity, scientific research, technological innovation, education, managerial ability, institutional design, cultural imagination, and the intelligent use of AI itself.

Accordingly, Brainism is not a philosophy of AI worship.

Artificial intelligence is of enormous importance.

But AI is a means, not an end.

The essential question for every nation is not whether it possesses AI, but how it chooses to employ the intellectual resources—including AI—that it possesses.

In the twenty-first century, national strength will no longer be determined solely by territory, natural resources, or population.

It will increasingly depend upon superiority in knowledge-intensive fields such as artificial intelligence, quantum computing, semiconductors, robotics, biotechnology, nuclear fusion, advanced energy systems, and food technology.

Brainism does not diminish the importance of industry.

On the contrary, it elevates industry to a higher stage of development.

Manufacturing designed with AI, produced by robotics, strengthened by advanced materials, and supported by next-generation energy technologies will constitute one of the principal foundations of future national prosperity.

The same is true of agriculture.

Advances in life sciences, climate analysis, plant breeding, agricultural robotics, and food biotechnology will transform agriculture from a traditional industry into one of the most advanced industries of the future.

Commerce will likewise evolve.

Through information technology, logistics, financial innovation, and global strategy, commerce itself will become an increasingly knowledge-intensive sector.

Brainism therefore does not proclaim the end of the agricultural age, the commercial age, the industrial age, or the information age.

Rather, it seeks to reorganize and elevate them all through the power of knowledge.

In this respect, Brainism is fundamentally different from the vision of any individual AI entrepreneur.

Private entrepreneurs who promote artificial intelligence or space development make important contributions.

Yet the future direction of an entire nation cannot depend solely upon individual enterprises.

A nation requires an overarching philosophy capable of integrating education, science and technology, industry, public finance, national security, and social welfare into a coherent long-term strategy.

National Cooperative Capitalism provides the economic framework through which such a national strategy can be implemented.

Brainism provides the strategic direction that determines how that capital should be invested.

The state should not stand above private enterprise as its ruler.

Nor should corporations exist in isolation from the nation.

The state supplies long-term capital.

Private enterprise contributes technology, innovation, and entrepreneurial creativity within competitive markets.

Together, they create prosperity that ultimately benefits the entire nation.

The challenges confronting the twenty-first century cannot be solved simply by choosing between the traditional alternatives of free markets and state control.

What is required is a new institutional framework capable of integrating market dynamism, entrepreneurial creativity, long-term national strategy, and human intellectual capacity.

National Cooperative Capitalism and Brainism together represent one possible thesis for meeting that challenge.

This paper does not claim to offer the final answer.

Rather, it is an attempt to suggest one possible direction for thinking about how governments, private enterprise, and human intelligence should be connected in the age of AI-driven civilization.

The future of humanity will not ultimately be determined by the quantity of capital it possesses, but by the quality of the intelligence that guides that capital.

National Cooperative Capitalism is the institutional framework that supports that intelligence.

Brainism is the national philosophy that places that intelligence at the very center of national development.

Fumihiko Takeda is the founder and Representative of the Lincoln Club, an independent political and policy research organization that he established in Japan on November 19, 1993. The Lincoln Club is his own organization and is not affiliated with, or a branch of, any organization in the United States.

He graduated from the Faculty of Law (Department of Political Science) at Keio University in 1967. In 1974, he founded the Cooperative Center, an information service company that conducted research and analysis for Japanese government agencies and major newspapers. In 1977, he established the Institute for Ultimate Democracy and has since devoted his career to the study of democracy, constitutional reform, electoral systems, and institutional design.

From 2006 to 2014, he served as a lecturer at the Graduate School of Law, Keio University. He is the author of numerous books and articles on democratic governance and political reform, including works on direct democracy, constitutional issues, and election systems. His policy proposals have been discussed in major Japanese publications and public policy forums.