The following is excerpted from Economic Reporting Review, the left-Keynesian
(I think) economics commentator, Dean Baker. [This is available by sending a
"subscribe ERR" email to [EMAIL PROTECTED] or go to
http://www.tompaine.com/news/2000/10/02/index.html ]
In the wilderness of mirrors which is bourgeois economics, how to explain
apparent paradoxes like the one Baker describes, is an insoluble problem. On
the one hand, Japan has huge surpluses on its external accounts and huge
overseas dollar holdings. On the other hand we are constantly told, even by
the Japanese themselves, that the whole economy is about to collapse under the
weight of a mountain of debt. On the one hand, Japanese economic growth and
productivity-growth rates exceed those of the USA; on the other hand, we are
assured that Japan has 'lost the economic battle', its industries are archaic,
it has been passed-by by the New Economy, and is now a 'failed economy' and
possibly will soon even by a 'failed state'. The fact that western writers are
now drawing comparisons between Russia and Japan is an index of how far its
image has fallen; Japanese public debt was recently downgraded by Standard &
Poor's to junk-bond status.
What are we to make of this? Is Japan really about to go down the tubes, like
Russia, and if so what are the implications? Here is what Dean Baker says,
followed by a couple of remarks.
----------------------
JAPAN
"As Japan's Economy Sags, Many Favor a Collapse,"
by Clay Chandler in the Washington Post, March 9,
2001, page A1.
This article reports on a comment by Japan's
finance minister, that "Japan's public finances
are very near collapse." This article implies
that a large segment of the Japanese population
would like to see its economy collapse. It refers
to statements suggesting the desirability of such
a collapse by a former government worker and
comments suggesting possible benefits from a
collapse by a researcher. But it is questionable
whether such views are widely held among the
Japanese population.
Many prominent economists recommended the same
sort of economic collapse for Russia after the
break-up of the Soviet Union. The subsequent
collapse turned Russia into an impoverished
nation, with a sharp deterioration in living
standards by almost every measure. Since there
are no examples of nations enduring such a
collapse and subsequently benefiting as a result,
it is difficult to believe that many Japanese
people would be anxious to engage in this sort
of economic experiment.
The Japanese economic system has managed to
achieve extraordinary economic growth over the
last four decades, with per capita GDP growth
averaging 4.3 percent. In the last decade, after
a collapse of its stock and real estate markets
in 1989, GDP growth has slowed. However, even in
this period of slow growth the economy has
continued to enjoy productivity growth of more
than 2.5 percent annually, approximately a full
percentage point higher than the rate of
productivity growth in the United States over
this period. Japanese workers have received the
benefit of this productivity growth in the form
of shorter workweeks. Japanese workers worked
approximately 5 percent more hours in a year than
U.S. workers in 1989; they now work approximately
5 percent fewer hours.
At one point the article asserts that Japan has
the highest debt in the world at 130 percent of
its GDP. Most of this debt is attributable to
bookkeeping peculiarities, which would not be
counted as debt elsewhere. Its publicly held debt
is approximately 40 percent of GDP, almost the
same as the 39.8 percent figure for the United
States at the end of 1999. It is also worth
noting that because interest rates are far lower
in Japan than in the United States, the interest
burden from Japan's debt is much less than in the
United States. Much of the debt could be
relatively easily eliminated if the nation
had a modest inflation rate of 3.0 percent a
year, as we have in the United States.
The article also asserts that Japan would have to
"achieve Herculean gains in productivity" in
order to maintain its standard of living as its
population ages. Actually, if its economy can
just continue its current rate of productivity
growth, its workers will see substantial
increases in living standards even if they have
to pay higher taxes to support a larger
population of retirees.
----------------------------------
My couple of remarks:
whether or not Japan is a failing state, there is no doubt that in the late
1980s Japanese capitalism lost a decisive battle with the US. It lost, not
because the USA was more efficient (it wasn't) or more productive, or more
technologically advanced or had a better educated workforce: in fact, the US
not only had none of those things, it was rapidly falling behind both Japan
and Germany, its 2 main capitalist rivals.
Japan and Germany were allowed to recover after 1945 because the US and
Britain feared the outbreak of communist revolutions in Europe and Asia. The
historical record is quite clear about this. Marshall Aid and MacArthur's
Occupation policy in Japan were designed to ward off the communist threat, and
to stimulate the recovery of German and Japanese capitalism, but not as
competitors, as American client-states within a US-dominated capitalist world
system.
Note that if the Soviet Union had not existed, the Pax Americana could not
have happened. The history of the First World War and its aftermath clearly
shows why: when imperialist rivalries lead to world wars, the competing
imperialisms continue to fight until either one side surrenders
unconditionally, or the effects of the war on the masses triggers a
revolutionary wave which forces the competing bourgeois states to agree a
truce: class war aborts bourgeois civil war. This is exactly what happened in
1917-21, when the onset of general revolution in Europe brought a speedy end
to hostilities, and the Bolshevik revolution triggered a general armistice
followed the Versailles settlement.
If the threat of anti-colonial war and general revolution had not existed in
1945, the victors would have imposed a Carthaginian peace on the vanquished
Axis powers. Punitive reparations, and the thorough deindustrialisation of
Germany and Japan and the destruction of their states, were indeed
actively-discussed policy options among the US and British elites after 1943
when it became clear that the Axis was going to be defeated. What was not
clear even then was just how dominant a position in Central Europe would be
taken by the overwhelmingly powerful and victorious Soviet Army; nor was it
clear just how powerful the anticolonial, revolutionary tsunami would be in
South Asia and China. The victory of Mao's PLA was just as unpredicted as was
the arrival of Soviet tanks in Berlin.
Creating a cordon sanitaire around the USSR and China entailed refurbishing
German and Japanese capitalism, but once this process began, the existence of
the communist enclaves became necessary: if the Reds hadn't existed, the US
would have had to invent them to legitimise its own hegemonic role. China and
the Soviet bloc thus became objectively incorporated into the global system of
production relations within which the post-1945 capitalist mode of production
developed.
This unstable dynamic of inter-imperialist rivalry which was co-opted into the
over-determining dynamic of Cold War rivalry, was the characteristic feature
and determining last instance of the Post-war Long Wave. It is clear from the
history that underneath the carapace of Cold War unity and alliance, the old
enemies were engaged in a bitter battle for long term economic supremacy. At
times, this battle saw the Germans and Japanese win temporary advantages which
greatly alarmed the US elites and led to wildly-promoted popular panics about
Japan in particular.
What saved the US was the West's victory in the Cold War, almost all of the
fruits of which were garnered by US capitalism. At the same time, Japanese
over-accumulation led to the present ongoing realisation crisis which has
fatally trapped Japanese capital. All options have been tried, but one: and
that one, is the option that was tried in the 1930s. Capital export and
'hollowing out' of domestic industry did not succeed in converting Japan into
a rentier-capitalist state on European lines, because Japanese capitalism is
too large, dynamic and powerful to find sufficient outlets for capital exports
in order to avoid deflationary crises resulting from over-accumulation and
over-production. Deficit-spending on public works schemes has also been tried,
as a way of siphoning off surplus capital, equally unsuccessfully. The only
other Keynesian option left would seem to be the one tried by Hitler, and his
economics and finance lieutenants, Speer and Schachtmann, in the 1930s, copied
then by Japan: put simply, a massive rearmament programme based on autarky and
temporary withdrawal from the world market. This form of deficit-spending
helpfully soaks up unemployment, increases social solidarity by putting
workers in uniform, and also creates the potential for a forced re-entry into
the world market, and a forced realignment through warfare, of inter-imperial
arrangements. No-one that I have seen has pointed to the ways in which Japan's
current vast deficit spending on public works schemes, is just a very poor
substitute for a rearmament programme, poor because it is the equivalent of
digging in holes and filling them in; rearmament does offer the possibility of
conquering markets later on. However its seems clear that at least one ruling
elite has a clear idea that rearmament may be the next necessary step for
Japan, and that is the USA and in particular the Bush administration. It is
hard to understand current US hysterias about China plus encouragement of
Japanese militarism and war production, in any other context: because the
victory of the West in the Cold War only marked a further step in the
dialectic of conflict and destruction which is at the heart of world
capitalism. It did not in fact usher in the end of history and a new era of
peace. But it seems clear that US strategy is to pre-empt interimperial
rivalries which could only result in counterproductive world war. Instead, the
post-1945 policy of co-optation has been revisited. The German and Japanese
client-polities, and their own spheres of influence and secondary satrapies
(the EU, the Asian tigers) are being reorganised and redirected, to be capable
of ongoing colonial war in the peripheries and of the reassumption of the
"White Man's Burden" of colonial administration. The complete collapse of
societies and failure of states in the peripheries make this both desirable
and necessary. The world's last great reserves, in particular of energy, are
mostly in the peripheries.
The new wave of open colonialism can surely only be spurred on by the
deepening difficulties experienced by Japanese capitalism, which is indeed
highly productive and efficient and *for that very reason* is in deep trouble:
only by rededicating Japanese industry, state and society to renewed
militarism and open colonialism, can any really profound Japanese economic
crisis find a pro-capitalist solution.
Such profound crises are inevitable. If not now, then later; if not Japan,
then Germany, but it is surely abundantly clear by now (a) that the era of
great Depressions is not over and that (b) capitalism's only response to
Depression is militarism and war.
Enormous social and political challenges confront the world's ruling elites,
who have yet to put in place all the prerequisites for a true
'ultra-imperialism', i.e. a capitalist world-state. There is also enormous
inertial momentum in the system. The Japanese crisis has been slowly building
since the 1980s; it is only now showing some signs of coming to a head. There
can be one or more decades of extremely complex and seemingly inscrutable, and
highly visibly contradictory processes which only slowly reveal the underlying
impasse which world capitalism has blundered into. But it seems to be in the
nature of such long-duration, complex attritive processes, that they are
accompanied by break-points, that is, moments of sharp and profound change
which produced quite new and unexpected geopolitical landscapes. the collapse
of the USSR one such earthquake, but there are other and still more shattering
events to come.
Mark
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