The Japanese Economy Reconsidered

168 Pages·2000·1.18 MB·English

by  Makoto Itoh (auth.)

The Japanese Economy Reconsidered
Also by Makoto Itoh
THE WORLD ECONOMIC CRISIS AND JAPANESE CAPITALISM
POLITICAL ECONOMY FOR SOCIALISM
POLITICAL ECONOMY OF MONEY AND FINANCE (with Costas Lapavitsas)
THE BASIC THEORY OF CAPITALISM
The Japanese Economy
Reconsidered
Makoto Itoh
Professor of Economics
Kokugakuin University
Tokyo
© Makoto Itoh 2000
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First published 2000 by
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ISBN 978-1-349-39823-2 ISBN 978-0-230-50324-3 (eBook)
DOI 10.1057/9780230503243
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Library of Congress Cataloging-in-Publication Data
Itoh,Makoto,1936–
The Japanese economy reconsidered / Makoto Itoh.
p.cm.
Includes bibliographical references and index.
1.Japan—Economic conditions—1945– I.Title.
HC462.5 .I86 2000
330.952—dc21
00–041488
10 9 8 7 6 5 4 3 2 1
09 08 07 06 05 04 03 02 01 00
Contents
ListofTablesandFigures viii
Preface ix
1 TheLongDownturnintheJapaneseEconomy 1
HighEconomicGrowthanditsDeadlock 1
TheBasicFrameworkofHighEconomicGrowth 1
WasitaKeynesianoraFordistRegime? 3
TheDeadlockofHighEconomicGrowth 6
SeveralPhasesofContinuousInstability 8
AnInflationaryCrisis,1973–75 9
RecoveryThroughExportsandStateExpenditure,1976–79 11
ALongerDownswing,1979–83 12
RecoveryFollowingReaganomics,1983–85 13
DepressionDuetotheSoaringYen,1985–86 13
RecoveryInducedbyaBubble,1987–90 14
ComplexDepressioninthe1990s 16
StrengthsandWeaknessesoftheJapaneseEconomy 17
Strengths 17
Weaknesses 20
TowardZeroGrowthCapitalism? 23
ComplexDepressionDuetotheBurstoftheBubble 24
ATendencyTowardIndustrialHollowing-outand
De-industrialization 25
DepressedConsumerDemandandExcessCapacity 27
FallingPopulation 28
v
vi TheJapaneseEconomyReconsidered
2 InformationTechnologiesandCompetitive
RestructuringofCapitalism 30
TheImpactoftheInformationRevolution 30
TechnologicalGrounds 30
ChangesinCapitalistFirms 32
ChangesattheWorkplaceandintheLabourMarket 34
TheRevitalizationoftheAtomisticMarketEconomy 37
DiversificationofModelsandProducts 37
TheRestructuringoftheRetailMarketSystem 38
AreConsumersinaStrongerPosition? 39
NeoliberalismandtheSpiralReversalofCapitalist
Development 42
TheHistoricalTendencyofCapitalismUntiltheBeginning
ofthe1970s 42
TheSpiralReversalofCapitalistDevelopment 44
TheSignificanceofandProblemsCreatedbyNeoliberalism 45
3 ChangesinIndustrialStructureandFamilyLife 49
IndustrialHollowing-out 51
ChangesinIndustrialStructureTowardaServiceEconomy 51
TheSoaringYenandChangesinIndustrialStructure 53
IndustrialHollowing-outPassingaWatershed 54
TheEconomyShiftsTowardtheTertiarySector 56
AnExpandingServiceSector 56
AGeneralTendencyTowardaServiceEconomy 56
TheInfluenceofMEInformationTechnology 58
TheImpactoftheSoaringYen 60
ChangesinFamilyLifeandChallengesofFeminism 61
TheM-CurveofJapaneseWomen’sLabourParticipation
RateanditsChanges 61
ChangesinFamilyLife 65
HowShouldtheTendencyTowardLowerPopulationbe
Analysed? 69
TheSignificanceofFallingPopulationandPossibleOptions 71
4 TheBurstoftheBubbleandthePoliticalEconomy
ofthe1990sDepression 76
TheSwelloftheBubble 77
TheTriggeringRoleofMonetaryandFiscalPolicy 78
Contents vii
EconomicRecoverywithExpandingDomesticDemand 80
TheRoleoftheFinancialSystem 83
TheBurstoftheBubbleandthePressureofDepression 87
TheProcessofBurstingtheBubble 87
ComplexLinkagesintheSpiralofDepression 90
FailureandConfusioninEconomicPolicy 94
TheFailureofNeoliberalism 94
PoliticalEconomyoftheFiscalCrisisoftheState 97
5 AsiaandJapanintheProcessofGlobalization 106
TheGlobalizationoftheCapitalistEconomy 106
WhatdoesGlobalizationMean? 106
ContemporaryFeatures 108
TheNewWorldOrderandGlobalization 111
TheGlobalizationofJapaneseCapitalism 115
TheAsianConnection 121
HighEconomicGrowthofAsianEconomiesintheVicinity
ofJapan 121
GlobalizationandDiversificationofEconomicSystems 123
TheMeltdownoftheAsianEconomicMiracleandAfter 128
ConcludingRemarks 134
NotesandReferences 138
Bibliography 145
Index 149
List of Tables and Figures
Tables
1.1 BasicIndicesoftheJapaneseEconomy(1973–98) 9
3.1 DistributionofEmployedWorkersbyIndustry(1930–97) 50
3.2 InternationalComparisonofDistributionofEmployed
Workers(1968–95) 52
4.1 OutstandingGovernmentBondsandtheRateofTaxation
(1973–99) 98
4.2 TheGovernment’sOutlookonEconomicGrowthand
ActualResults(1991–98) 100
5.1 RegionalDistributionofOutstandingOverseasDirect
InvestmentbyMajorCountries(1977–95) 118
Figures
1.1 CapacityUtilizationinJapaneseManufacturing(1973–95) 10
3.1 FemaleLabourParticipationRatesbyAgeGroup(1975–96) 63
3.2 InternationalComparisonofFemaleLabourParticipation
Rates(1987–90) 64
4.1 Nikkei225SharesAveragePricebyHalfYear(1983–97) 77
4.2 IndicesofLandPrices(1983–96) 78
viii
Preface
In1973,higheconomicgrowthintheJapaneseeconomy,characteristic
ofthelongboomfollowingWorldWarII,cametoanend.Theeconomy
enteredadramaticlongdownturnlastingtothepresentday.Theannual
averagegrowthratefellsharplyfrom9.2percentin1951–73to3.9per
cent in 1974–90. Despite this downswing, until the end of the 1980s
the Japanese economy was generally regarded as exceptionally stable,
strong, and exempt from the worldwide crisis that emerged at the
beginningofthe1970s.Itsgrowthratewasstillhigherthanthatofother
advancedcountriesby1–2percent.Therateofunemploymentseemed
muchlower.By1987,combinedwiththeeffectofcontinuousapprecia-
tion of the yen, Japan’s GDP per capita surpassed that of the USA in
international dollar-denominated comparison. Several Western scho-
lars,suchasVogelinJapanasNumberOne(1979)andJohnsoninMITI
and the Japanese Miracle (1982), presented Japanese success stories as
appropriate lessons for other countries. The Japanese style of business
andlabourmanagement,basedonJapanesesocialcultureandorches-
trated by clever bureaucrats with a longer perspective on industrial
policies,wasthoughttobethesecretofJapan’seconomicsuccess.
Inthe1990s,theJapaneseeconomycontinuedtorecordlargetrade
surpluses by maintaining its international competitive power on the
basis of workers’ cooperation with management. Thus, Japan has
accumulatedbyfarthelargestamountofforeignexchangereservesin
theworld– US$220billionbytheendof1997– andthelargestforeign
assets.Shehas,indeed,morethanachievedthelong-cherishednational
target set at the Meiji Restoration in 1868 (the beginning of her
modernization), namely tocatch up withWestern advanced countries
andbecomeoneofthemajoreconomicpowers.
ix