Issue 242 of SOCIALIST REVIEW Published June 2000 Copyright © Socialist Review

Letter from Japan

Cardboard city has come to Tokyo as the recesion bites

Land of the falling yen

Japan has gone from being the miracle economy of the 1980s to being the sick man of capitalism today. David McNeill reports on what is going wrong

Japan's media pundits have coined the phrase 'the lost decade' to describe the 1990s. After the speculative party of the 1980s, the Japanese economy crashed in 1991 and stuttered along at GDP growth of 1.3 percent per year until 1998. Any hopes that the hangover was over before the millennium were wiped out by the news that the world's second largest economy had slid back into recession in late 1999. Corporate bankruptcies are currently running at about 1,500 a month, and this month saw the publication of Japan's worst ever unemployment figures: 4.9 percent of the population are now officially unemployed and 320,000 new graduates cannot find jobs.

Many readers will remember that Japan was the miracle economy of the 1980s. Millions of words were written predicting that Japan would overtake the US and Europe to become the world's number one. Dozens of academic books claimed that Japan's political economy, with its heavily regulated finance sector, interlocking shareholdings and stable bureaucracy, was a unique alternative to its more volatile 'Anglo-American' counterpart. Japanese 'lifetime' and 'seniority' employment practices won admiring glances from large sections of the liberal and reformist left, and New Labour flirted with the idea of a stakeholder society (heavily influenced by Japan) during the wilderness years before May 1997.

While it certainly has unique features, the fallout from the longest recession in its history has left Japanese capitalism looking as unstable and brutal as any other. Restructuring has thrown hundreds of thousands of the loyal baby boomers who staffed Japan's postwar climb to prosperity onto the scrap heap. Middle aged workers who might reasonably have expected another 15 years of employment are greeted with job offers in government-run employment centres bearing the label 'under 45 years old only'. Homelessness is at record levels and suicide now claims three times more people than traffic accidents--60,000 people took their own lives in 1998 and 1999 following the Asian financial crisis, many of them men in their fifties.

Japan is tearing down its employment system as fast as it can export jobs abroad. Thousands of manufacturing plants have shifted to China and other parts of south east Asia to capitalise on the limitless pools of cheap labour on offer there. Those who are left behind find themselves at the receiving end of a phenomenon Marx witnessed in England 150 years ago--being made to work harder for less money. Informal overtime has shot up and Japanese workers are taking less vacation time than their counterparts in the other advanced economies. Despite the fact that they were entitled to an average of 17.5 paid days off, workers only took 9.1 days in 1998. Earlier this year Japan's largest advertising firm, Dentsu, lost a court battle after the parents of a newly graduated employee who killed himself sued for compensation. Until his death the 24 year old man had been working 80-hour weeks for over a year.

Desperate measures

Despite Japan's supposedly unique political economy the ruling class has relied on some very old fashioned Keynesian remedies to bail itself out of this mess. Since the mid-1990s the government has cut interest rates to almost zero, and spent billions on a series of huge public works packages ($227 billion in 1998 alone) and bailouts to rescue banks loaded with bad debt from the speculative bubble. Even the Far Eastern Economic Review admits that 'construction companies, banks and small businessmen--important Liberal Democratic Party [the ruling conservative party] constituents--have been the main beneficiaries'. The cumulative effect has been to leave Japan with the highest level of government debt of the industrialised nations. The shake out of the banking sector has led to massive consolidation with the number of banking groups falling from 21 to eight in just three years.

Not surprisingly, the economic slump has created a deep political crisis reflected in successive ministerial changes (seven prime ministers in ten years) and disputes in the ruling parties. The LDP has split. It still dominates the political stage in coalition with various smaller groups who advocate varying degrees of mild reform which essentially leave the system which has served them well since 1955 intact. The Japan Socialist Party (JSP), which might otherwise have been a rallying point for progressive forces, collapsed after entering into a coalition with the LDP in the mid-1990s, later changing its name to the Social Democratic Party (SDP). The only apparent anomaly in this otherwise predictable picture is the success of the Communist Party (JCP) which won 14.6 percent of the popular vote in the House of Councillors in July 1999. However, despite traditional opposition to US military installations in Japan and rhetorical support for the international working class, the JCP is essentially a nationalist party which has drifted further to the right in the 1990s.

This can be seen most clearly in the controversy over the passage of a bill in August last year to legally designate the Hinomaru and Kimigayo as the national flag and anthem. The Hinomaru (or rising sun) was the flag borne by Japan's fascist armies as they rampaged their way across south east Asia during the Second World War, and the Kimigayo is the national anthem extolling the virtues of the emperor in whose name this was done. The bill, which will require the hoisting of the flag and singing of the anthem at schools and other public places, was the latest ploy of a confused but nevertheless significant movement by Japan's hawks to move out from the shadow of the US security umbrella and push Japan into a more assertive political and military role in the region. Despite widespread opposition to the bill, hardly surprising given the unique experience of Japan in the Second World War, it was passed after the JCP dropped its opposition.

Stoking nationalism

The return of a more overt form of nationalism in Japan was recently brought to centre stage by a speech given by Tokyo's notorious right wing governor, Shintaro Ishihara, to Japan's 'self defence forces' in which he said that they would be called on to defend people and property from illegal foreigners in the event of an earthquake. In his speech Ishihara used the word sankokujin, a derogatory term used to describe Koreans and Chinese after the Second World War, but which is only used today by unreconstructed racists. Koreans, who form the largest immigrant group in Japan, were enraged given the fact that thousands of them (many brought to Japan as slave labour) were killed by mobs after the last major earthquake in 1923. But criticism of Ishihara by ruling politicians was muted and he is still in his job.

Ishihara and his ilk are frustrated with Japan's failure to establish a leading political role commensurate with its economic strength. The end of the Cold War era, during which Japan was able to grow within the context of America's economic and military hegemony, roughly coincided with the collapse of the economy. The new framework demands that Japan asserts itself as an economic and political great power, despite the less than enthusiastic response this elicits from neighbouring countries. The political dangers are obvious. With the collapse of the reformist left parties and the extreme sectarianism of what passes for the revolutionary left in Japan, the right wing, of which Ishihara is merely the most vocal and populist exponent, has space to flourish. Young people, widely disaffected with a brutalising education system, rising unemployment and the shadowy world of Japanese establishment politics, are likely recruits. The right is already gearing up for a change to Article 9 (the so called peace clause) of the Japanese constitution which was written after the war while Japan was under US military occupation. Japan already has the world's second largest military budget, and repeal of the article, which prohibits the maintenance of a conventional army, would have an enormous political and military impact on the region.

While the current situation in Japan is in some ways a depressing one, it also provides the best opportunity for socialists in a generation. The economic crisis has destroyed the myth of a stable Japanese society and forced many ordinary Japanese to question the institutions they previously trusted. Few workers are still under the illusion that the Japanese company will look after them for life and many are hostile to the policy of cooperation with management followed by their company-based unions. Hatred at the methods and motives of politicians and bosses is healthily apparent, and there is more open debate and criticism of the establishment, especially the police and bureaucracy. The rise in the number of pressure groups and single action campaigns, and the increasing social pressure for changes to the education system, sexist employment practices and corruption are signs that ordinary people are fighting back. The recent May Day protests drew 1,700,000 workers to over 1,000 demonstrations across Japan and demonstrate that this fightback can be brought to the streets. The task remains to link these scattered and disorganised protests into an organised movement which can begin to challenge the foundations of Japanese capitalism itself.


Return to
Contents page: Return to Socialist Review Index Home page