Japan on Sunday comprehensively crushed the decades dominant Liberal Democratic Party, which had been in power continuously since 1955, bar a period of eleven month in the early 1990s. The voters rejected the cronyism, corruption and monumental economic mismanagement, which the LDP had become synonymous with, in recent decades.

The Democratic Party of Japan swept to power in a landslide victory at a time when the world's second biggest economy is struggling with the worst recession since Japan's defeat in the Pacific War, in 1945.

The DPJ, led by 62-year-old Yukio Hatoyama, won 308 of 480 seats in the lower house Diet, public broadcaster NHK said.

Prime Minister Taro Aso said he would resign as head of the LDP, which lost almost two-thirds of its Diet members.

Hatoyama, who left the LDP in 1993, has promised to revive the economy, by boosting child-care spending to increase the sagging birth rate, cutting taxes and restricting the power of bureaucrats.

Hatoyama's grandfather founded the LDP in 1955 and became the first of that party’s 22 prime ministers.

“This election has been all about changing the government,”Hatoyama said at a press conference. “Everything starts now.”

As in Ireland, nepotism is a strong feature of the political system and the outgoing prime minister is the great-great grandson of a founding father of modern Japan and grandson of a founding father of the postwar system.

SEE: Ireland and Japan; the Human Cost of broken political systems

Over a third of Japan's workforce are temporary workers, with few rights, earning less than the Irish minimum wage of €8.65 ($12), in a high cost country. If Japan doesn't change course, public debt would increase to nearly 300% of GDP within the next five to ten years and leave the nation on the brink of bankruptcy.

Japan's Ministry of Health, Labour and Welfare today released data on national wages, which showed a 4.8 per cent fall in July from a year ago, compared with a 7 per cent drop in June.

SEE: Japan’s economy in valley of tears with record public debt heading for 300% of GDP

In a commentary last week, Deutsche Bank economist Jochen Möbert said that even though changes would probably materialise gradually, 1) it is likely that a more efficient political system would emerge; 2) the DPJ would presumably offer somewhat better economic policy than the LDP; and 3) as a party, the DPJ looks more capable of accomplishing reforms.

1. Regardless of the outcome, a second major party in Japan would improve competition on policy matters. So  far, political jousting has been carried out between the different factions of the LDP. With a view to their careers, LDP politicians always used to be well advised to throw in their lot with a strong faction usually consisting of between ten and one hundred politicians. The influence of a faction within the LDP rose with its success in party funding drives and with its influence on officials in the bureaucracy. With the emergence of a second major party, this opaque intra-party competition will become less important. More regular changes of government would strengthen Japanese democracy.

2. Japan’s high government debt of nearly 200% of GDP is weighing on upcoming generations, as is the demographic shift. Besides, while the latest supply-side labour market reforms created new jobs, they simultaneously required younger workers in particular to become more flexible by accepting temporary employment contracts; by contrast, most members of the older generation continue to enjoy the privilege of “lifelong company affiliation”. The reform backlog of recent years is partly also a reason why the younger cohorts of the workforce may go down in economic history as Japan’s “lost generation”. This is why greater intergenerational fairness features strongly in the DPJ’s reform proposals.

Möbert said the DPJ wants to review the legal provisions governing temporary labour contracts and with their close ties to the trade unions, he commented that it is to be hoped that DPJ members do not seek to over-regulate the labour market. One measure partly aimed at attaining intergenerational fairness is the planned six-fold increase in the child benefit. Furthermore, the DPJ would like to pave the way to better educational opportunities for more high-school and university students via government grants and scholarships. All the reforms are to be funded without taking on additional debt or raising taxes. Instead, efforts are to focus on reducing inefficiencies in Japan’s bureaucracy. However, the expected savings – insofar as the reforms succeed and the extra fiscal spending does not create even larger budget deficits – will probably lead to smaller pay-packets or less advanced job promotions for bureaucrats. The savings could potentially be substantial, though. Ever since the days when numerous management mistakes were made by government institutions in the banking crisis of the 1990s, the close links between the LDP and the bureaucratic machinery have been regarded as one of the main causes of Japan’s structural problems and inability to achieve reforms.

3. Breaking the grip of the bureaucrats is likely to be the biggest challenge facing the DPJ. The recent corruption scandal involving former DPJ leader Ichiro Ozawa nonetheless raises the question of whether the DPJ will do nothing but uphold the old system, only under a different moniker. It is claimed that Ichiro Ozawa continues to pull the strings in the background even without his party’s official mandate. Other peculiar Japanese traditions such as the de facto hereditary nature of party posts will presumably also fail to disappear under the DPJ. There are many politicians not only in the LDP but also in the DPJ who benefit from this system as children or relatives of former politicians.

Möbert said there are also indications that actually do suggest there would be a sea-change in Japanese politics under a DPJ administration. For example, a comparison of the CVs of the politicians in the upper house - -  based on 118 DPJ and 82 LDP politicians - - finds significant differences. The DPJ has fewer bureaucrats, fewer lawyers, more economists and social scientists, more women, more politicians with experience abroad, and its members are five years younger on average than those of the LDP. Furthermore, the DPJ even has two members in the upper house with a migration background. One member’s father is from Korea, while another member, a former missionary, has Finnish parents. For an island state such as Japan which has never been considered particularly fascinated by foreign cultures, this is very noteworthy. All in all, the DPJ thus seems to be the somewhat more modern party and the one more capable of reform.

But will a DPJ government be able to bring about a new political dawn? The Deutsche Bank economist said Japan can no longer afford the debt policy of the past decades. If Japan pursued a “status quo” policy, government debt would increase to nearly 300% of GDP within the next five to ten years and leave Japan teetering on the brink of bankruptcy. The economic environment could enhance the DPJ's ability to get things done.

Möbert said it's key for the DPJ to hold sway over the bureaucracy and, in particular, the LDP-leaning bureaucrats involved in the decision-making processes. Irrespective of gains on the bureaucracy front, the DPJ victory provides the prospects of a more transparent and more democratic political system.