This is an attempt to revaluate the world of ideas of Adam Smith in an intellectual-historicalperspective. Instead of judging his system of ideas simply in terms of whether it is “modern” ornot, whether he is a founder of a system of “modern sciences” of society, or from a viewpoint oflogical or theoretical consistencies in his system, the author considers the whole complex of hisideas at those points where two different dimensions of thought meet together. Intellectualexperiments are made by putting his key concepts and main fields of intellectual inquiry at where ahorizontal anthropological plane of each individual field of thought is crossed by a verticalcosmological or theological axis of a hierarchy of values and orders. In this manner, by locatinghis notion of “economy” in the hierarchical order of “divine economy”, “cosmic economy” and“political economy”, as well as in the context of the history of the notion of economy that tracesback to the Aristotelian concept of “oikonomia”, we can get a definite notion of what “politicaleconomy” was about in its early days as a “modern” discipline, and also in what kind of climate ofopinion and against what intellectual background it made itself into what it really became. Thisis a frame of reference in terms of which the author is going to examine the whole world ofSmith’s ideas, so that he can understand what Adam Smith means to the present scene ofphilosophical thinking, and grope his way through an inquiry into what the Society of Mankindought to be in the 21st century.

Policy responses to LTCM rescue in 1998 was that only extreme leverage was the causeof the trouble and appropriate leverage and speculation which utilize short selling andderivatives gives liquidity and efficiency to the market. Leverage should be dealt byprivate counterparty discipline．Securities Exchange Commission are concerned with thegrowth of hedge funds without basic information on them. They basically regard hedgefund as useful to investors and securities market and has come up with the idea ofregistration of hedge funds, which hardly disrupt their investment activities. Hedge fundsare very American in that they naively believe that speculation motivated by greed givesmarket liquidity and efficiency.

In the last few years, we have witnessed two alterations in financial accounting and reporting rules concerningpension plans. In the United Kingdom, accounting rule FRS 17, which stipulates the immediate recognition of actuarialgains and losses, will come into force in 2005. Meanwhile, in the United States, FAS 132 was amended in 2004 tostipulate the detailed disclosure of financial expectations and results of pension plan operations and management policies.It is probable that one of these two changes will spread to financial reporting in Japan, as IASB has already adopted themin its new rules. The financial impact that the adoption of these two changes could have in Japan is ambiguous, anddepends in large part on investor behavior. Considering the similarity to current accounting standards and the consistencywith their underlying concepts, it is more likely for Japan to introduce a comprehensive disclosure rule for pensionssimilar to FAS 132 in the U.S than the immediate recognition of actuarial gains and losses similar to FRS17 in the U.K.

Japan’s industrial clusters are sometimes projected in inconvenient sites apart from existingagglomeration. MEXT’s Knowledge-intensive Clusters are dispersed to eighteen local regions,excluding the capital region which retains many of the country’s scientists and research facilities. In thecapital region, several state-of-the-art research centers are not networked well, making face-to-facecommunication difficult. Mobilization of knowledge-worker stocks is not always easy in such artificiallocations. They need to be equipped with quality of life and proximity to facilitate knowledge workers’sustainable interaction.Many of the current cluster projects target at life science, which tend to be more risky than ITand other industries. The United States mitigate such risks through venture business utilization andample fund provision by NIH and venture capital firms. Japan’s clusters need to effectively mobilizestartup companies and government budgets that are currently dispersed among related ministries.For region’s endogenous development, universities should provide necessary human capital andknowledge. Market needs must be closely monitored, and startups should be further mobilized.Supporting institutions should network the related parties and integrate the individual efforts. Japan’smatured and high-standard market would sophisticate life-oriented products and services. Life scienceand other technologies are to improve our quality of life.

After the World War II, Japanese automobile industry has accomplished significant growth. Automobilemanufacturers have introduced innovations and used economic growth skillfully, taking advantage of industrialpolicy and governmental protection and aid. They strengthen their competitiveness by building-up managementsystems consisting of market oriented R&D, Just In Time production systems which involve their affiliate companies,cooperative labor management, and stable finance systems.