by Gavan McCormack
It is already nearly 20 years since Japan was declared 'Number One'.1 Vogel's book was not so much a statement as a prediction, for that is what Japan did indeed become, or at least seem to become, during the 1980s. But if the 1980s, especially the latter half of the decade, was the age of 'Japan triumphant', the 1990s has been a time of Japan stumbling, uncertain, withdrawn; the prospects for the approaching century are very opaque.
During the 1980s Japanese capital spread throughout the world. It was the time when land and stock values in Japan inflated massively, when credit in Tokyo was available at zero or better than zero rates. In the extraordinary collective lunacy of the 1980s, Japan's land, especially its urban land, inflated to the point where it was said that the real estate value of Tokyo alone was worth 'three times more on paper than all the land and buildings in America' or the Imperial Palace than California. Planeloads of Japanese carrying suit cases of money spread fear and greed around the Pacific rim: icons of the capitalist world such as Columbia Pictures, the Rockefeller Center and CBS Records were snapped up, there was talk of Japanese money buying all the private golf courses in the Sydney area, and Surfers Paradise put up all its street signs in Japanese. A cartoon of the late 1980s showed an elderly Australian couple driving north to Queensland. They pass one sign saying 'You are now entering Australia's Far North', proceed a little further on the same road and then encounter the next sign, saying 'You are now entering Japan's Far South…'. Japanese confidence was boundless, but it fed a resentment which exploded in acts such as the smashing of a Japanese VCR in Congress in 1987, and led some to declare it was time to play 'hard ball' with Japan since its capitalism was not playing by the same rules and should be stripped of its unfair advantages.
It was an ironic spectacle, since the very uniqueness which had been proclaimed by Vogel at the beginning of the decade the cause of Japan's success, from which other countries might learn important lessons, and which was thereafter celebrated in Japan itself as an expression of Japan's unique identity, institutions, and culture, something which others might aspire to copy but which they were unlikely to be able to attain, came by the end of the decade to be the cause of bitter cultural aggression. The focus of the Structural Impediment Initiative negotiations between the US and Japan gradually shifted from the nitty-gritty of trade and industry matters to culture, as the US side came to believe that the cause of its continuing deficit in bilateral trade was the unfair advantages accruing to Japan from culture; that culture itself therefore had to be changed.
If Japan's success was due to its peculiar, even unique, social and institutional structures, almost by definition other countries could not replicate it, nor could they compete, and the contradictions were bound to intensify; they were in a sense absolute. Uniqueness, proclaimed both by admirers and critics alike outside Japan, and by nationalists and neo- nationalists within Japan, was fraught with danger.
In Australia, much of the global confusion and ambiguity of attitudes towards Japan in the 1980s became crystallized in the 'MFP' affair. The word 'Japan' seemed to possess magical force as Australia begged Japan to deepen its involvement, encouraging it to consider schemes which ultimately became slightly megalomaniac. In 1987 Japan's MITI proposed to the Australian government the construction on Australian soil of a 'Multifunctionpolis'.2 The idea was as monstrous and confused as the word which gave it expression. The idea that the Japanese government was planing to build a 'future city', an antipodean technopolis, on Australian soil, stimulated a frenzy of competitive bidding to try to attract and win this mysterious 'prize'. Japan, however, was never planning any such thing. It was merely responding to the importunate pleas of Australian politicians for economic help with a rough export version of the patterns of domestic development that dominated its own thinking in the 1980s: the technopolis and the resort. As in Japan itself, all that the Tokyo bureaucracy was offering were rough sketches, which had to be developed and implemented, and above all funded, elsewhere. Most in Japan failed completely. In Australia, the idea met with strong public opposition, the Japanese were gradually squeezed out of any role in it at all, and in 1997, when the whole grandiose project, reduced to a suburban development with some fancy waste disposal schemes, was finally cancelled, hardly anyone even noticed.
After Japan's boom of the 1980s, the 1990s brought a series of shocks, physical, economic, social and political. The end of Cold War and the global shifts occasioned by the Gulf War exposed the moral and strategic bases of Japan's posture to profound doubt and debate, still ongoing and bound in due course to lead to a re-negotiation of the US and China relationships and probably constitutional reform. In 1995 the Kobe earthquake and the Aum Shinrikyò nerve-gas attack in the Tokyo subway tore the fabric of both social and economic life and shattered the sense of either physical or social security. In 1997, when a 14 year old child in Kobe (apparently) murdered an 11 year old classmate, severed his head and placed it on the gatepost of his school, declaring in a letter to a newspaper: 'I will never forget that it was the compulsory education system and the society that created it that rendered me invisible, and I will exact revenge', the shock was immense.3
Politically, the LDP, after nearly 40 unbroken years of power, sank from grace and then from power in 1993 following multiple corruption scandals. There was considerable hope in the first post-LDP government formed by Hosokawa, that radical reform might be possible, but by 1996 that hope had passed, and the October 1996 elections marked the end of a phase of hope for real political change, the return of the LDP, and the deepening of disillusion. Just as the need for profound debate on national direction and on measures to cope with crisis grew, so the capacity to meet it declined, as the political opposition collapsed and effective one-party rule was reconstituted in the Diet, lacking in any vision of national interest and with a hugely diminished capacity to contest whatever prescription might be offered by the bureaucrats, at a moment when the bureaucrats themselves have less confidence, less esprit de corps, and less public respect, than ever before.
Economically, the bubble which inflated so dramatically during the decade of the 1980s, burst as the 1990s began. Land and stock prices, and the exchange value of the yen, having blown out uncontrollably in the late 1980s, then collapsed. Growth since then has stayed at near zero, and at less than half that of the US during the years 1991-1997, and what growth there is is heavily concentrated on the construction and public works sector that is largely financed by debt.4 The stock exchange at the end of 1997 was still only at a level somewhat over half of what it had reached at the end of 1989 (while Wall St. scaled new heights, cracking 8,000 and heading into unknown territory), and real estate prices plunged to about 1/5 of their peak, with little sign that the bottom has been reached even now. The yen also sank, quite dramatically during 1996 when it lost about half of its value against the dollar. Commentators have coined terms to express the phenomenon of the 'triple low' - low yen, low stock prices and low land prices - but with low, and occasionally negative growth too, it is really a quadruple phenomenon. With the single exception of the destruction of war, there are few if any historical precedents for deflation on the scale experienced by Japan in the 1990s, when probably between 10 and 20 trillion dollars - equal to, say, around half of global GDP - was wiped off the national assets.
The New Year edition of the major daily papers is always an attempt to seek light on future directions and interpret the future. For 1997, the country's leading conservative financial daily, Nikkei, launched a series which ran for weeks; its opening message was 'Warning from 2020: Japan disappears....'5 An Asahi editorial a few days later echoed the same sentiment: 'If Japan remains on its present path, it is headed for extinction ('chinbotsu shite shimau..')6 The same mood is expressed in many fora. Internationally, commentators spoke of 'Japan passing' or of 'Japan-nothing' ('Nihon-nashi'), or of Japan 'disappearing from the world's radar screen'.7 Economically, politically, institutionally, even culturally, they began to say that Japan was in decline. The Harvard Business School's Michael Porter began his 1996 advanced class by saying 'US business has completely mastered the expertise of Japanese business and has nothing more to learn. In finance and securities especially, Japanese competitiveness is zero … Japanese business has no strategy.'8 At the national Japanese Studies conference in Melbourne in July 1997, the well-known California-based cultural critic, Masao Miyoshi, entitled his key-note address 'Japan is not interesting'. As everyone in the late 1980s thought Japan was unbeatable, so everyone in the late 1990s seemed to think that it was beaten.
And yet, Japan is not actually going to burst, collapse, or sink tomorrow. Its economy still soars like Mt. Fuji over the surrounding region, accounting for 17 per cent of the global economy or around 65 per cent of that of the whole of Asia, from Mongolia to NZ (ten times the GDP of China, or 18 times that of India); in per capita GDP terms, it actually became the world's 'Number One' in 1994 and remained so even in 1997.9 It is an economy about equal to Germany, France and the UK together and it currently runs trade surpluses at the annual rate of around one trillion yen. It produces annually around 13 million autos within Japan itself, and another 5 to 6 million elsewhere around the world.10 It pays twenty per cent of the budget of the UN, is the world's largest donor of aid funds, largest foreign asset-possessing power, a key member (and the sole Asian voice) in G7, and claimant to a permanent seat on the United Nations Security Council. Japan's hold on the economies of the East Asian region - which virtually all economists accept is the growth centre of the early 21st century - is such that a recent book could refer to the region as being locked within 'Japan's embrace'.11 How can such a country be described as 'nothing' or 'not interesting'?
It was the group of journalists and scholars known collectively as the 'revisionists' who first challenged the Vogel views during the 1980s and who have been consistently calling for pressure to be applied to level the playing field of international trade and commerce between Japan and the rest of the world. Through the 1990s it has been they who have remained perhaps the most convinced that Japan's troubles are minor and its strength scarcely diminished despite the bursting of the bubble. James Fallows argued in 1994 that the Japanese system was still in many respects superior to the American and therefore should be seen as the sort of 'model' first urged by Vogel.12 Taggart Murphy in 1995 declared that Japan had 'demonstrated as a society that it could mobilize human and physical resources in the service of national power and sustain that mobilization over the course of many decades' (while the US could not).13 Chalmers Johnson opined at the end of 1996 that Japan's national power remained so formidable that it still 'possesses almost total leverage over America's public finance, that it was still the world's leading manufacturing nation...'14 Eamonn Fingleton in 1997 went on record as believing that Japan would pass the US and become the world's largest economy by the year 2000.15
Chalmers Johnson has been the main proponent of the view that Japan has developed a unique 'capitalist developmental state', which defies the liberal, free market prescriptions of mainstream Western theorists and generates prodigious strength especially because it is guided by bureaucratic skills which concentrate systematically the country's best brains. Yet there are certain aspects of the Japanese edifice to which he pays less attention than perhaps is their due; it seems to me time to consider whether the very same structures and systems which under-pinned the miracle of the first four or five post-war decades might not now be the blocking a solution to the crisis attending the birth of a very different world order.
In fiscal terms, Japan's foundations are anything but firm. Public sector debt is the highest in the OECD.16 A level of public indebtedness running at around one quarter of a country's GDP would anywhere be regarded as serious, but in Japan's case it is about equal to national GDP, or nearly a quarter of global GDP.17 The Minister of Finance's Special Advisory Committee reported in December 1995 that the national debt was 'a huge time bomb, growing steadily and capable of exploding at any time.'18 A year later, his successor stressed that if the problem were not tackled, 'the economy and our way of life will collapse in the 21st century.'19 If it were a European country, Japan would not qualify for admission to the EU under the Maastricht Treaty, since that treaty limits national deficits to a maximum of 3 per cent of GDP whereas Japan's 1995 deficit ratio was 7.6 per cent of GDP (compared to 2.8 per cent, reducing to 1.9 in 1996, in the US). Put in other terms, Japan's public debt is (in per capita terms) about 6 times Australia's overall, public and private sector combined, foreign debt.20 Every Japanese child is born with the obligation to pay off a debt of ¥6.5 million, or pass it on to descendants in future generations.
The alternatives for dealing with this debt are few, and grim: either higher rates of growth (unlikely), higher taxes (certain, but politically of high risk), or - at least theoretical possibilities with strong historical precedents - chronic inflation or war. Growth rates such as were achieved thirty years ago would reduce the dimensions of the problem, but there are any number of factors causing economic growth to stagnate or even decline, including aging, industrial hollowing-out, and intensifying competition. Indeed the opposite could be said: the capacity to implement an 'expansionary equilibrium' such as the Japanese economy used to have no longer exists. MITI and NIRA predict a pattern of falling real salaries and an unemployment rate rising to 13 per cent by 2020.21 With public debt on a par with GDP and an annual fiscal deficit greater than annual GDP growth, it should be obvious that the system is not sustainable. No Japanese government has yet seriously addressed this complex and systemic crisis. Nor, I think, have the revisionists, who are inclined to see things first through the prism of the US-Japan relationship, and only secondarily to focus on 'Japan in itself'.
Secondly, the fact that Japan's 'guided capitalism' has paid extraordinary attention to the cultivation above all of the construction sector is not adequately explained. The real peculiarity of the Japanese economy, as I have stressed repeatedly in recent years, is that its core sector is neither agriculture, nor manufacturing, nor services, but construction.22 Construction activity - the building of dams, highways, express rail lines, nuclear power stations, and the concreting of rivers and coast - accounts for about 20 per cent of GDP and employs nearly seven million people (about the same as the auto industry). Relative to GDP, it is about twice the OECD average and eats up around ¥80 trillion per year, or nearly half of national government expenditure. In the doldrums of 1997, it was registering extraordinary employment growth, having created 1.42 million new jobs in the 1996-7 financial year.23 While the construction industry is indeed the industry which constructs, its primary significance in the political economy lies elsewhere - in the several circuits of private interest and advantage which it feeds: with vast sums flowing first to those who form part of the privileged national grid of politicians, bureaucrats, and business people with a private stake in 'public works', and second to millions of people in local communities throughout the country to whom it offers employment, thus serving also as a massive substitute welfare system. In much of rural Japan, public works is the major employer. Japan pours more into this sector than does the United States, although the United States has double the Japanese population and 25 times its land area; converted to investment per head of population, Japanese construction investment amounts to 2.6 times, and in terms of unit of land area, a staggering 32 times that of the United States.24
Seeking an analogy to convey a sense of this, the Kyoto University economist, Sawa Takamitsu, described it in terms of the construction of 'pyramids', Egyptian-style, more- or-less useless but capable of absorbing resources on a vast scale, while others, like Aoki and Kawamiya of the Japan Entropy Society refer to contemporary Japan as a 'potlatch construction economy', from the American Indian term for a ceremonial festival at which gifts are bestowed on the guests and property destroyed in a competitive show of wealth. The reclamation of huge stretches of the country's coastline - proceeding during the 1980s at the rate of 100 kilometres per year, the dumping of giant 'tetrapot' concrete grenades around the remainder, and the straightening out and damming of rivers have been characteristic of 'public works'.25
Straddling the world as industrial colossus, at home the Japanese economy is a junkie, hooked on massive infusions of public subsidy to its core industry. The 'construction state' complex functions more-or-less as the 'military-industrial complex' in the United States - sucking in the country's wealth, using it inefficiently, and producing mostly junk, debt, and social and environmental devastation. The country's ills are profoundly embedded in this sector, and the rationality, let alone the genius, of Japan's bureaucratic capitalism is less than evident in it. And yet what was it that US Treasury Secretary Rubin was reported to be most urgently urging upon the Japanese government on the eve of the Hong Kong G-7 summit in September 1997 but further 'pump priming' public works expenditure!26 By late 1997, even Sakakibara Eisuke, widely regarded as Japan's top public servant, was writing prescriptions for the drastic winding back of public works budgets, calling - however incongruously - for Japan to turn itself instead into 'an environmental state'.27
Furthermore, the country's banking system is also mired in bad debt and cover-up. The official figure of ¥40 trillion has been put on bad or unrecoverable debt within the Japanese banking system as a whole, but well-informed independent observers think it more likely to be at least double that figure, and perhaps as much as ¥100 trillion, or even ¥500 trillion (the latter according to the well-known commentator, Ohmae Ken- ichi28). The incorporation of even the highest levels of the banking and securities system in the web of criminality, collusion and deception was demonstrated when in May and June 1997 the president of Dai-Ichi Kangyo Bank, one of the world's largest, and the head of Nomura Securities, were arrested for payoffs to gangsters amounting to ¥50bn ($500m US) with perhaps another ¥100m to compensate for unwise gangster stock losses.29 The arrests followed not long after the suicide of a previous head of Daiichi Kangyo Bank.
By 1996-7, other OECD countries had made various adjustments, and despite ongoing problems, especially the chronic one of employment, none bore the deep and intractable quality of Japan, where the national economy teetered on the verge of a black hole of illiquidity. The still relatively unscathed construction industry has been seen by recent commentators as akin to a series of sand retaining dams protecting the rickety structure of Japan's financial institutions with their accumulated bad debts; more and more pressure is being added to the construction industry, and if it bursts, there really will be a deluge.30
Japan's bureaucratically guided capitalism also demonstrates an increasing propensity to corruption. While the collusiveness of the political economy may be conducive to efficiency under certain circumstances, the private benefits increasingly outweigh the public, and the mire of mutual corruption deepens. There should be no need to spell out the details of the many scandals of recent years, indeed of twenty years since the Lockheed and Grumman scandals of the 1970s. They have involved top figures in the key central government agencies, provincial governors and city mayors, top corporate executives, bankers and securities company heads. The Ministry of Finance, which is the majordomo of the Japanese government, is now enmeshed in a series of scandals involving the combination of collusion and loose or inadequate supervision, as in the Jùsen or Housing Loan scandal which involved trillions of yen of mostly small investors' funds or the Daiwa bank affair, in which that bank's New York branch somehow 'lost' $US 1.1 billion, but at a deeper level this Ministry bears much of the responsibility for deliberate inflation of the bubble of the 1980s, through its cheap money and inflated land and stock price policies, and for the diversion - and in the long run almost certainly the destruction - of much of the country's savings by funneling it into the construction sector. The Ministry of Finance provided the lungs that blew out the bubble, its favoured beneficiaries fattened, while the rest of the country was left spattered with debris when the bubble burst.
Had the GDP growth machine continued to function and land and stock prices to inflate, all of this might have remained largely hidden; but in the 1990s the machine stalled. Where once it would have been said that in the Asian region only Japan was modern, efficient, and not-corrupt, now it might be said that the corruption is nowhere more deeply entrenched than in Japan. Public confidence in the bureaucracy has plummeted.31 During 1997, the Minister and a number of top officials from the Ministry of Finance were obliged to resign to take responsibility when some of its corrupt and collusive ways were exposed. In the single month of November, four major financial institutions, including the regional Hokkaido Takushoku Bank and Yamaichi Securities, the country's Number Four securities form, collapsed. Confidence in the institutions supervised by the Ministry of Finance, including the banks, plummeted, the withdrawal of deposits and their transfer to foreign banks and securities companies began to gather pace. Manufacturers of steel safes reported unprecedented demand, which presumably meant that individuals were shifting their money out of the banking system altogether. When people begin to feel it wiser to lock their money in vaults and safes rather than entrust it to banks, something is seriously wrong. From being the wonder of the world in the 1980s when Vogel's book appeared, top Japanese bureaucratic and financial institutions have become a sort of laughing stock, even, in a sense, worse than 'nothing'.
However, despite the emptiness of the state coffers, the fragility of the banking sector, and the extraordinary distortions of the construction state economy, it may be, as Chalmers Johnson and others insist, that bureaucratic guidance has nevertheless succeeded in identifying crucial growth sectors in the global economy and concentrating Japanese industrial and technological resources on strategic engagement in them. It may be, but it becomes harder to make any such unequivocal claim. The drive that powered successive thrusts of the economy has weakened with each successive phase - heavy and chemical industries in the 1960s, autos in the 1970s, computers and electronics in the 1980s and 1990s - as countervailing forces, including market saturation and technological advances on the part of competitors, take effect.32 According to the Swiss International Management Development Institute, Japan's international competitivity, No 1 in the world between 1985 and 1992, has declined to No 9.33
Crisis can be met and overcome, provided there are reserves of creativity, energy, imagination, and the society remains vital and dynamic, as clearly was the case in the Japan of the 1850s and 1860s, and equally clearly in the Japan of the 1940s and 1950s, despite the physical ruin of war. But in the current demographic context, can that be expected? All advanced capitalist countries are aging rapidly as they move into post- industrialism, but none at quite the rate experienced by Japan. In 1990, people aged over 65 numbered 12% of the population, and that figure will steadily rise to 27.4% in 2025.34 The OECD forecasts that Japan will be the world's oldest country by 2025, which means the social burden of each working Japanese - in terms of taxes, health, and pension contributions - is going to escalate vertiginously, rising to between one half and two thirds of people's earnings by 2020.35 The livelihood expectations of the Japanese salaryman will change drastically as this prospect looms. Various think-tanks in Tokyo are predicting that Japan will by 2025 have turned from trade surplus to trade deficit and be forced to sell off its overseas assets, and that its overall balance of international assets will have turned into the red.36 Just as Japan rose to become global superpower over the past two and a half decades, so it will become a gerontocracy burdened with huge and intractable debt in the next two and a half decades.37 The once-vaunted jewels of the Japanese management system - lifetime employment, seniority promotion, and company welfare - will scarcely survive under such conditions.
The aging phenomenon will accentuate because increasingly the young generation is choosing not to reproduce. The birthrate in 1995 was just under 1.5 (per woman), and just over 1 in Tokyo (i.e. halving with each generation). At the current Tokyo birthrate, Japan's population is set to halve over the coming century. Current projections indicate that population, now around 118 million, will peak around 2007, and then begin to decline steeply, falling back to around 60 million within the coming hundred years. Also unprecedented is that nearly half of Japanese women in their 20s are choosing not to marry; the prospect of lonely imprisonment in some distant and boring suburban housing development, attached to a man who they will rarely see, is not very attractive to young women, many of whom seem to prefer virtual children, the booming Tamagotchi, to real ones.
The falling birthrate will also increase the difficulty of maintaining a high standard of living, because there will be fewer active producers and many more passive consumers, of goods and services. Takayama Noriyuki, professor of public economics at Hitotsubashi University, notes that there is no precedent in history for a country being able to maintain its level of affluence while its population is declining.38 Japanese children have an extremely bleak view of their future. In a recent international survey of general happiness with school life, Japan's 5th year primary school children ranked last among six countries. The belief of Japanese children in their capacity to improve society in the future ranks only marginally above that of Russian children, and at about one half the level of children in the US.39 Yet it is precisely these primary school children who will have to lead Japan in the crises of 2020.
While all today agree that an unprecedented crisis is unravelling, when it comes to prescriptions, little is agreed now save that some sort of drastic steps are called for. The Hashimoto government works on plans for a slate of 'administrative reforms' leading to a 2001 deregulatory financial 'big bang'. But, so entrenched are unreformed ways and structures that radical reform is highly unlikely.40 No amount of tinkering is going to address the real problem, which Akio Mikuni says is nothing less than subjecting the bureaucracy to the rule of law.41 A 'capitalist developmental state' is indubitably good at capitalist development, but whether it will be as good when the importance of the nation state itself is drastically pinned back and the growth perspective dimmed, or how it will cope with the requirements of sustainability and equity in a post-capitalist world, is much more problematic.
While 'administrative reform' and the 'Big Bang' constitute the gloss, or the floss, of current policy, in concrete terms the assumptions and the plans remain fixed in the tradition of public finance adopted in the early 1970s which gave rise to the bubble in the first place, centring on massive deficit funding of construction and public works (which is what the US also believes in and encourages, under the name of naiju kakudai, or expansion of domestic demand). Hashimoto and Ozawa, the two political leaders who from 1996 confronted each other in the Diet, are rival princely heirs to the corrupt Tanaka-Takeshita core of the old LDP kingdom which bears greatest responsibility for the construction-led expansion and the fiscal irresponsibility which created the present crisis. They it was, as much as anyone, who inflated the bubble, and there is nothing in contemporary debates to indicate that they have changed their spots.
It is true that the construction of some of the new super-express railway lines (the 'seibi shinkansen') and the project to construct a new capital were both postponed in post- budget deliberations in 1997, but other projects in the same vein continued, notably the building of vast stretches of useless and uneconomic roads (especially the swathe of 'supà rindò' which continue to cut through the Japanese forests and mountains), superfluous highways, dams, harbours, bridges, tunnels and airports, and early in 1998 even the frozen bullet train projects, certain big money losers, were revived.42 The planned Kobe Airport best expresses the madness of the current system: an utterly unnecessary airport to be built at prodigious expense on an off-shore artificial island a few kilometres across Osaka Bay from the just completed and already mammothly- uneconomic Kansai (Osaka) Airport. Bureaucratic autonomy and privilege, and the exclusion of democratic principles, may have been part of the formula of successful growth in the early post-war decades, but vested bureaucratic interest now constitutes a major blockage to the sorts of fundamental reform of which 21st century Japan stands in need. It is time to begin thinking of the bureaucracy not just as architects of GDP growth miracle of the 1960s and 1970s, but as the nomenklatura, feathering their own nests while leading the system to collapse.
For all the problems, modernity, especially the patterns of consumer life by which it is commonly defined, often seems more accessible, more realistic, in its Japanese mode. Japanese capitalism as model and goal has long constituted a powerful transformative force. The persuasiveness of the Japanese economic model was reinforced by the hyberbole which during the 1980s surrounded its apparent 'successes' ('Number One'), both in the Western literature and in much of the Japanese, all of which was refracted and even less critically analysed in the East and Southeast Asian region, and was then reinforced by the active intervention of Japan, as promoter and financier, in the replication of that system.
Beyond ideology, the 'way of affluence', is almost irresistibly seductive. The message that 'affluence' and sustainability might be irreconcilable contradicts central articles of contemporary faith, and is therefore unpalatable. It is my view, however, that the present bases of economic life in Japan are unsustainable, as well as being non-reproducible elsewhere. While China and Southeast Asia set their sights on replicating Japan's 'success' and aspire to share its 'affluence', the projection of the Japanese way into the 21st century and on a regional basis throughout East and Southeast Asia of the Japanese way is nothing short of a high road to catastrophe. If all countries followed the Japanese path, 'five or six planets' would be needed to serve as "sources" for the inputs and "sinks" for the waste of economic progress.'43 The point may be expressed in both general and specific terms: global capitalism, even as it is sometimes described as triumphant in the wake of the Cold War, is actually nearing the end of its historic role. As the Japanese scholar, Furusawa Kòyù, notes, global GDP rose by 33 times between 1900 and 1986, and if the 3 per cent growth predicted by the IMF were to continue through the coming century, it would expand again by 2.7 times to the year 2024, six times to the year 2057, and 12 times to the year 2090, while global energy output would have to multiply by 2.2, 4.5 and 8.0 times respectively.44 The absurdity implicit in such projections is plain, for where would the energy and materials come from to sustain such levels of productivity, and where would the wastes be disposed? The improbability that there can be any technological fix for this has profound implications. The message that capitalism, with its extraordinary capacity to feed expansion, can only be seen as part of the problem of the 21st century, not its solution, may seem bleak and heretical, but must be considered very seriously, for it is hard to imagine that long-term sustainability can mean anything else but a goal of zero growth and zero waste.
Japan, the 'success story' of East Asia, is embedded at the heart of the contradictions of the 20th century. Though all the region struggles to emulate and replicate what is seen as the Japanese 'success', the fact is that such replication is impossible. Japan's 'convenience kingdom' model includes 70 million automobiles (mostly unnecessary), 31,000 convenience stores and three million-plus hot and cold drink vending machines, whose power demands it is committed to build dozens more nuclear power stations to meet, encapsulating a culture based on the maximisation of energy consumption in a world that must move in precisely the opposite direction.45 Japan's rapidly diminishing self-sufficiency in terms of food is another way of saying it is abandoning one of the world's most sustainable agricultures and choosing the path of dependence on others to feed its people, likewise something which can not possibly form part of any model. Its industrial and commercial system of production, consumption and waste also requires a vastly disproportionate share of available resources of non-renewable materials such as oil, iron, coal, copper, lead and other materials which are swallowed to maintain growth. The continuing Japanese need to appropriate on this scale sharpens a fundamental contradiction between it and its neighbour countries. Far from it being a model to be emulated, it is a serious threat to the creation of an equitable, prosperous and sustainable future order.46 All the industrial countries share this quality of ecological indefensibility, but perhaps nowhere is there less appreciation of the dimensions of institutional and civilizational change that will be required to address the problem.
Japan's was the first non-Western economic miracle, and its historic significance is immense, but being the first often entails risks, especially the risk of developing a formula which successfully copes with the problems of one time, but becomes so successful that it is entrenched and in due course blocks the adaptation to the problems of an entirely different time. As Lester Thurow observes, Japan has been in many ways the 'winner' of the post-1945 capitalistic game. He goes on: 'But those who play a game well and win are usually the last to be willing to notice that the game has changed and that they will have to learn to play a different game. Japan is no exception to this basic rule.'47 Post-Cold War, post -industrial, information capitalism, post-modernism all present Japan (and indeed global civilization as a whole) with great new problems. A loose, relaxed, creative and playful48 culture may have the space to generate, develop, and then implement radically different ways, but the returns from a rigid, bureaucratically controlled, obsessively work-oriented system are likely to diminish steadily. From education to corporate, bureaucratic or political organization, the signs in Japan thus far are of a hardening of the system against such radical reorganization rather than of a capacity for profound renewal.
In sum, late 20th century Japan is at a turning point: apart from the emerging trading blocks, without friendly ally, without ideas or strategy, with little or no social consensus on what it really wants to stand for in the world, and with a diminishing - though still formidable - stock of economic and technological wealth. For a country of such importance to lapse into institutional sclerosis, and to alienate its youth as it seems now to be doing, is a matter of concern not just to people in Japan. The Japanese struggle to evolve a post-Cold War identity and role in the world on the one hand, and to open and transform democratically the thickly coagulated web of vested interest and advantage in which the stagnation and corruption of the present system is rooted on the other, is of enormous importance.
The regional and global crisis that began to unfold in the financial and currency markets of Southeast and Northeast Asia in 1997 was commonly viewed as something in which Japan was peripherally involved, in that Japanese banks were heavily exposed in loans to the region; but Japan is better seen as central. Japan constituted the engine of industrial growth and the source of investment flows which stimulated the regional transformation, and it also had many of the elements of a valued model. As the current crisis unfolds, however, the Japanese bureaucratic and political leadership, mired in its own, apparently intractable problems, can only fumble and procrastinate, forfeiting to the free market pundits of Chicago and the IMF the opportunity to offer any distinctive understanding, let alone moral and economic direction through the crisis.
The prominent Japanese economic critic, Uchihashi Katsuto, analyses the present juncture in the history of capitalism as one in which what he describes as 'pastoral capitalism' (the Japanese way) in which effort and discipline, skill and care, are rewarded and a sense of social solidarity nurtured, is being overwhelmed by Anglo-Saxon 'wild capitalism' in which reward and effort become de-linked and the speculative spirit is dominant.49 In this evolving scenario, Japan is becoming no more than a sub-system for global, in effect US, capitalism, its bureaucrats performing their final trahison by forsaking their direction of the national project and choosing to become compradors. The irony, if not the tragedy, is that at precisely that moment when globalism needs to be modified, so that flows of speculative capital could be disciplined and controlled, and sanctuaries beyond the market be created around social, ecological and human rights principles, Japan is so immobilized by its own crises, its bureaucrats discredited and demoralized, as to have no response to the crisis other than uncritical cooperation with the IMF in the process of demolishing the 'development state'. Uchihashi articulates the sentiments of a significant group of dissenting Japanese intellectuals. His moral and political commitments have much in common with the revisionists, yet his analysis of the present juncture differs sharply.
Between the corruption and cronyism which has enveloped Japan and the region on the one hand and the slash and burn, bubble and burst, of global casino capitalism on the other, the outlook, at least in the short term, is not bright. And yet, recalling the 1980s and the selfishness and complacency which fed the expansion of the bubble, the current sense of anxiety and confusion that permeates Japan may itself be seen as positive. Now, people are aware that much is amiss, and perhaps at no moment in the entire postwar period has such a sense been so widespread. The apparent bankruptcy of all known models is what makes the present, pace Miyoshi, so interesting, albeit so unpredictable. There is a whiff of late Tokugawa (1850s - 1860s) in the air, of institutions grinding down under the weight of their many contradictions, of economic, political, and social malaise deepening, with no obvious alternatives in sight. It is unlikely to lead to revolution, at least in the terms that Marx in his time thought it might come, yet in the sense of a profound upheaval, and of the world as we know it being turned upside down, such as did happen once in 1868 (and again in 1945), that is possible, even probable.
Endnotes
1Ezra Vogel, Japan as Number
One: Lessons for America, Cambridge, Mass; Harvard University
Press, 1979.
return to
text
2See my Bonsai Australia
Banzai, Sydney, Pluto Press, 1991, and 'Bubble and Swamp: MFP
and the Australia-Japan Encounter', in Anthony Milner and Mary
Quilty, eds., Australia in Asia: Episodes, Melbourne, OUP,
1998, pp. 37-60. return to
text
3From letter sent to Kobe
shimbun by the alleged killer. English text in The Daily
Yomiuri, 30 June1997 (internet).
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text
4'Richard Katz, Dead Fukuzawa
Society, Internet, 23 September 1997; and see table in Aoki
Hidekazu and Kawamura Nobuo, 'Jiko zòshoku suru kinyù
futan - kinyù-zaisei kiki no gen'in',
Chùkyò daigaku kyòyò
ronshù, vol 38, No 1, 1997, also in English the paper
by Aoki and Kawamiya presented at the October 1997 Melbourne
University conference on 'Environmental Ethics and the 21st
Century'. return to
text
5'2020 nen kara no keishò:
Nihon ga kieru', Nihon keizai shimbun, 1 January 1997. The
series was later reproduced as a popular book: Nihon keizai
shimbunsha, ed, 2020 nen kara no keishò: Nihon ga
kieru, Tokyo, Nihon keizai shimbunsha, 1997.. return to text
6'Kono kuni no "chisha" wa dare
ka', Asahi shimbun, 4 January 1997. return to text
7Glenn Fukushima, 'Has Japan
dropped off the world map?', New York Times, reproduced in
Honolulu Star Bulletin, 8 March 1997. return to text
8Quoted in Nagae Kiyoshi, 'Nihon
ga abunai', Aera, 13 January 1997, pp. 22-25. return to text
9Edit., 'Cautious but confident
in 1998', Japan Times, 1 January 1998. return to text
10Christian Sautter, 'Mue
douleureuse de la societe Japonaise', Le Monde
Diplomatique, June 1997. return to text
11Walter Hatch and Kozo
Yamamura, Asia in Japan's Embrace, Cambridge U.P., 1996.
return to
text
12James Fallows, Looking at
the Sun, New York, Pantheon, 1994. return to text
13R. Taggart Murphy, The
Weight of the Yen, New York and London, W.W. Norton, 1995, p.
153. return to
text
14Chalmers Johnson, 'New Year's
Predictions', Dead Fukuzawa Society [Internet], 1 January 1997. return to
text
15Eamonn Fingleton, 'Blindside
Revisited', Japan Policy Research Institute Critique, Vol
4, No 3, May 1997.
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text
16The OECD estimates Japan at
92.2 per cent at the end of fiscal '97, compared with 63.8 for the
US, 62 for UK, 65.7 for Germany, and 62.1 for France. ('Debt over
90% of GDP seen', Japan Times, 4 April 1997). return to text
17The Asahi early in 1997 put a
figure of ¥521 trillion [roughly $6 trillion] on Japan's public
sector debt; some accounts put it considerably higher. ('Shakkin
521 chò en ni', Asahi shimbun, 8 February 1997.) On
current projections, this sum will balloon to a staggering
¥1,480 trillion (Sanwa Bank Research Institute) or ¥2,200
trillion (NIRA) by 2020. (2020 nen kara no keishò,
p. 248) return to
text
18Quoted in Igarashi Takayoshi
and Ogawa Akira, Kòkyò jigyò o dò
suru ka, Iwanami shinsho, 1997, p. 8. return to text
19Toyoda
Shòichirò, Chair of the Fiscal System Council (as
well as head of Keidanren and of Toyota Motor Company), quoted in
Yumiko Suzuki, 'Tackle debt before tax base is overwhelmed, warns
panel', The Nikkei Weekly, 16 December 1996. Toyoda makes
the same point in 2020 nen kara no keishò, pp. 25,
162-4. return to
text
20In September 1995 Australia's
total foreign debt was around $140 billion ($A180 billion, or 39.3
per cent of GDP), or approx. $7,800 for every man, woman and child.
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text
212020 nen kara no
keishò, p. 87. return to text
22Gavan McCormack, The
Emptiness of Japanese Affluence, New York, M.E. Sharpe, 1996,
and 'Et si le Japon faisait faillite', Le Monde
Diplomatique, Aout, 1996, and 'Is Japan facing financial
Armagedon?', New Asia-Pacific Review, Vol 3, No 2, 1997,
pp. 10-15. return to
text
23According to the official
Management and Coordination Agency,, as quoted in
Gyòzaiseikaku shusaihan, 'Doken kokka wa hasan', part 3,
Yomiuri Shimbun, 7 August 1997. return to text
24See my texts cited above.
Also tables in Kakuichi Akira, 'Zaisei saiken o meguru futatsu no
michi', Keizai, December 1996, pp. 59-72, at p. 67. return to
text
25Detailed citations in The
Emptiness of Japanese Affluence, passim. return to text
26n.a., 'Nihon ni naijù
kakudai o yòkyù', Yomiuri shimbun, 20
September 1997. return to
text
27Sakakibara Eisuke, 'Moving
beyond the Public Works State', Japan Echo, Vol. 25 No. 1,
February 1998 (abridged translation of 'Doken kokka e no
ketsubetsu', Bungei Shunjù, December 1997, pp. 158-
165. return to
text
28Ohmae Ken-ichi, 'Banks about
to crash because of bad loans', San Jose Mercury News, 14
February 1997. return to
text
29Cesar Bacani and Murakami
Mutsuko, 'Revolt of the Managers: Current scandals may help
reinvent Japan', Asiaweek, 29 June 1997, Internet. return to
text
30For this image, see Aoki and
Kawamiya, cit. return to
text
31For a recent survey finding
that only 10% of people thought bureaucrats really served the
public Kevin Sullivan and Mary Jordan, 'Citizens put bite on
officials', Japan Times, 14 January 1997. return to
text
32Aoki Hidekazu and Kawamiya
Nobuo, 'Economic, Technological and Environmental Sustainability:
Impairment and the Possibility of Repair', unpublished paper,
Nagoya, 1997. return to
text
33Hamano Yasuki, 'Beikoku ga
teian suru "jòhò no hxxx,' Ronza,10
September 1997, pp. 16-21, at p. 19. return to text
34Ministry of Health and
Welfare. And see table in Nihon keizai shimbun, 1 January
1997. return to
text
352020 nen kara no
keishò, p. 227. return to text
36Sanwa Bank prediction of
bankruptcy in 2020: see '2020 nen kara no keishò', Nihon
keizai shimbun, 6 January 1997, and 2020 nen kara no
keishò, pp. 227-8. return to text
37Daiwa Research Institute,
quoted in Nagae, cit. return to
text
382020 nen kara no
keishò, p. 224. return to text
39'2020 nen kara no
keishò', 10 January 1997; 2020 nen kara no
keishò, pp. 40-48, passim.. return to text
40See Ronald Bevacqua,
'Administrative Reform: Searching for the "Hashimoto Vision"',
Japan Policy Research Institute, Working Paper No 36, August 1997.
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text
41Akio Mikuni, 'Japan's Big
Bang: Illusions and Reality', Japan Policy Research Institute,
Working Paper No 39, October 1997, p. 1. return to text
42Akio Ogawa, 'Bullet lines to
bankruptcy', Asahi Evening News, 26 January 1998. return to
text
43Wolfgang Sachs, Global
Ecology, London, Zed Press, 1995, p. 6. return to text
44Furusawa Kòyù,
'WTO taisei no daha ga kadai' (Breaking with the WTO system),
Shùkan kinyòbi, 13 December 1996, pp. 28-30.
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text
45n.a., 'Nippon no CO2', part
1, Asahi shimbun, 25 August 1997. return to text
46For fuller development of
these themes, see my 'Food, Water, Power, People: Dams and
Affluence in late 20th Century East and Southeast Asia', Kyoto
Journal, No 34, 1997, pp. 4-25, and 'Modernism, Water, and
Affluence: The Japanese Way in East Asia', forthcoming in 1998 in
Walter Goldfrank, ed, The Global Environment: A World Systems
Perspective (from University of California Santa Cruz). return to
text
47Lester Thurow, The Future
of Capitalism, Sydney, Allen and Unwin, 1996, p. 322. return to
text
48Oliver Sacks, neurologist and
newly appointed head of the Australian National University's
'Centre of the Mind', remarked in his inaugural lecture on 5 August
1997 that he saw the essence of creativity as 'playfulness - the
enhanced interplay of concepts and ideas that collide and fuse in
our minds to form free combinations in a very organic way.'
(The ANU Reporter, Vol 28, No 8, 20 August 1997.) return to
text
49Uchihashi Katsuto,
'Kutò suru Nihon shihonshugi', Shùkan
kinyòbi, part 1, 9 January 1998, pp. 9-13, and part 2,
16 January 1998, pp. 26-30. Also by Uchihashi: 'Nihon keizai, dai
tenkan no toki', Sekai, February 1998, pp. 40-47.
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text
This paper was originally published by the The Chimes, Exposure No. 1