Roots of Rebellion.(university culture)

It doesn't take a sleuth to find the intellectual roots of Japan's cabinet. Five ministers, all leading reformers, either attended or taught at Keio University, a private, unabashedly preppy institution that long played second fiddle to Tokyo University, Japan's equivalent of Oxford and Cambridge. When maverick lawmaker Junichiro Koizumi (Keio class of '67) hijacked his ruling Liberal Democratic Party to become prime minister a year ago, he hired fellow Keio men to help him deliver on his pledge to reform Japan's ailing economy. "Keio faculty comprise his brain trust," says political commentator Masayuki Fukuoka.

Indeed, Keio alumni (students and faculty) have led the assault on Japan's postwar development model based on regulated markets and big government. They inspired rule changes that opened Japan's cozy banks and brokerages to foreign competition in the late 1990s, and since last year they've led Prime Minister Koizumi's crusade to slash pork-barrel spending on roads, bridges and dams. They're also leading a revolution away from the dark-suited Tokyo U style, including in their ranks a rumpled former professor turned talk-show celebrity, and a surfer. "Whenever something new happens there are Keio people in the background," says Stephen Church of Analytica Financial Research in Tokyo. "They're the antiparty group."

Japan's reform debate has become something of a crosstown college rivalry. Until recently the perennial champs resided at Tokyo University, or Todai, an exclusive training ground for bureaucrats established in 1877 to manufacture officials for the new Meiji state. The school internalized 19th-century European theory (heavily "Prussian, Marxist and authoritarian," says Church). And Japan's defeat in World War II did little to update that perspective. Todai graduates engineered Japan's postwar manufacturing boom and by 1990 held most career-track posts in the all-powerful Ministry of Finance. Traditionally, Todai's springboard to stardom was its law, not its economics, department. "It is an important difference," writes Peter Hartcher, author of an exhaustive study of the ministry. "The economics graduate is far more likely to see regulation as a hindrance to be removed rather than an achievement to be preserved."

Once honored as modern-day samurai, Japan's bureaucrats have fallen into disrepute, dragging Todai down with them. They're blamed for the country's protracted recession and, increasingly, are viewed as corrupt, self-serving or (at best) inept. They're also still jealously attached to the old school, dismissive of the upstart. Says one senior bureaucrat at the Ministry of Finance: "Among a hundred students who passed both entrance exams, maybe one would choose Keio over Todai."

Maybe. But it's Keio that harbors the youthful vigor. Its tradition of independence goes back to founder Yukichi Fukuzawa, a Meiji-era Renaissance man who implored Japan to modernize by studying the West. By the 1980s, Keio scholars were following the rise of neoclassical economics in the United States and Britain. As Japan's asset bubble began to deflate, they embraced the ideas of the Reagan/Thatcher revolution: smaller government, freer markets and a painful industrial shakeout. Today, Koizumi's appointments merely ...