The Economist: Japan Has to Improve, right?

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The Economist is convinced that Japan is going to be A.O.K. after all. Why? Well, after fifteen years of sluggish, incremental reforms, the economy has to be back on track, right? Right?

While I was intrigued with the possibility that my long-term language investments would maybe pay off financially in the future, I walked away from the article a little skeptical about the writer’s analysis. The arguments only differ slightly from the outlook in this year’s OECD report on Japan, which essentially said, if Japan increases labor productivity, maybe they can get up to growth rates on par with the rest of the First World.

This Economist article says the same thing — although with greater faith that today’s more stable financial base will allow reform to create more substantial increases in productivity. Sounds good, but the Japanese economic planners still show serious hesitation in enacting reforms that challenge the traditional power structure.

The editors also put a spin on the demographic crisis: less people means less inefficient resource allocation. On paper, that sounds possible, but there are too many people still stuck in the system. The population as a whole is not shrinking — there are just no young people. And there will still be no young workers to pay the taxes of their pensioned elders.

This line — “And the strengths that made Japan rich in the 1970s and 1980s — good education, advanced technology and smooth co-ordination within companies will again come to the fore” — also troubled me, because ” education ” is used as a monolithic concept. Japan does have an excellent primary and secondary education system for instilling fundamental social values and basic mathematics and literacy. But, these are skills most important for a mass-manufacturing economy, not a niche high-tech information economy. Training for the latter comes from a good university system, which Japan is nowhere close to having. Compared to India, Japan may have greater basic rates of education, but are they pumping out as many world-class, high-tech workers?

I really hate to be the eternal pessimist, but Japan’s economic outlook is still contingent upon the government’s active reform in various areas. And the neo-liberal implications of these reforms poses a direct threat to the “Japanese” system — in both general social stability and the centralized power structure. No one seems to think that there is a “Japanese” solution to the economic crisis; that is to say, the path to higher growth rates does not require changing some screws, but installing an entirely new piece of machinery. So, the Economist can assume Japan will make the rational changes necessary for resurgence, but judging on past behavior, there is no reason to believe that the last crucial renovations will be swift and forceful.

W. David MARX (Marxy)
October 8, 2005

Marxy wrote a lot of essays back on his old site Néomarxisme. This is one of them.

52 Responses

  1. Momus Says:

    “Economists are raising their forecasts of economic growth.”

    Damn, there goes both your “termial” and my “slow life” right there.

  2. marxy Says:

    Didn’t we all decide that “Slow Life” was a short-lived, superficial trend in Japanese consumer culture and not a fundamental change to Japanese social conditions (as compared to the authentic resonance of the concept in Europe)?

  3. Momus Says:

    You may have decided that, but I believe it’s an important blueprint for a dignified post-growth scenario for any nation (as well as a marketing term in Japan). A magazine called The Economist, naturally, could never write an article in which an absence of economic growth were seen as a virtue, but I think you make a good point when you say that there might not be a “Japanese solution to the economic crisis”. In other words, it’s that old quandry: how to make money and keep your soul? And if you have to choose between them, choose your soul, right?

  4. Momus Says:

    Anyway, I could also say “Didn’t we all conclude that “termial” was a spelling mistake and sour grapes to boot?” The point I’m making is that “slow life” and “termial” are positive and negative spins on the same basic position, and that if The Economist is right, we’re both blown out of the water.

  5. Momus Says:

    Another point I’d make is that economists are a bit like trend hounds, fashion journalists, etc. They focus on tiny incremental changes rather than basic solid underlying states, and make a big over-dramatic scenario out of them. And so it becomes “common knowledge” in Europe that Britain is doing really well, and Germany really badly, but then when you look at the figures it turns out that Germany’s growth is point three of a percent behind Britain’s this year. Similarly, The Economist can get a cover story out of an “amazing recovery” for Japan out of a few tiny indicators flipping a couple of points into growth. Thing is, though, capitalism is a touchy-feely, twitchy-jumpy sort of system where confidence matters. The statement that “foreign investors are rushing to Tokyo so as not to miss the fun”, whether it’s true or not, will become a self-fulfilling prophecy once it’s spread about enough, just like the rumour that rouched fabrics and twills are to feature in all the Spring/Summer 2006 collections.

  6. marxy Says:

    I agree that Slow Life is an interesting solution to declining growth rates, and I would be happy if the Japanese government started encouraging an economic structure that would emphasize shorter hours and more vacation time. But they don’t because the labor shortage will ultimately mean long hours to keep up growth rates.

    Just because Japan is not a proper free-market economy does not mean that money is not society’s ultimate value of worth. Japan has the worst of communist overcentralization and capitalist value systems.

    Slow Life seems to be much more in tune with the traditional American upper middle class anti-“nouveau riche” value system than anything in Japan. America has a whole infrastructure of liberal colleges that teach lifepaths other than corporate employment; Japan does not. Being “socialized” in Japan has one meaning – joining the current structure without complaint.

    Japan may not be in terminal decline, but no one is rosy in the short term. But just because we want Japan to be taking on neo-liberal reforms or shunning pecuniary-based value systems does not mean that it is or will. If anything, the shadow of Roppongi Hills grows stronger daily and blocks out the sun to all the Slow Life gardens.

  7. marxy Says:

    They focus on tiny incremental changes rather than basic solid underlying states, and make a big over-dramatic scenario out of them.

    I totally agree. Reading the Economist article, you can tell that it was written by someone who had to create a narrative out of small numerical changes on paper.

  8. Momus Says:

    Yes, but that’s also what you do a lot here, just in the opposite direction.

    But just because we want Japan to be taking on neo-liberal reforms or shunning pecuniary-based value systems does not mean that it is or will.

    Just out of interest, who is that “we”? Do you, personally, David Marx, want Japan to be taking on neo-liberal reforms? Or shunning pecuniary-based value systems? They’re not very compatible, are they? Or is one your head, and one your heart?

  9. Reality Bites Says:

    Just my humble opinion, but I think the world peak oil energy crunch will be very unfavourable to Japan’s economy.

  10. guest Says:

    Slow life in Japan was nothing more than a media buzzword in 2003-04. Google it and you won’t find a single mention of it this year in the top 50 hits.
    The buzzword of 2004-05 is otaku, specifically their role in driving Japan’s economic growth. So much for the slow life.

    Momus, when you got caught up in the slow life buzz in, yes, 2004, you slyly interwove quotes from Sakamoto Ryuichi to read thus:
    ‘The current economic system has required people to be busy trying to achieve growth — it’s as though they’re continually riding a bicycle. People have to do things fast to meet the demand for excessive efficiency. So there’s no way to avoid doing things faster and faster. That’s the system at the moment. I think it would be better if Japan became a beautiful third rate country. It would be nice if Japan was a place of delicious food, beautiful scenery, and abundant nature. If that were the case, I think it wouldn’t matter if one had little money.’

    When I followed the link, I found that what Sakamoto said was:
    Earlier, you spoke of everyone competing while travelling on the same track. Ultimately, that same track is a strategy. Once people are riding on that track, it appears to me that they get the feeling that they are competing freely. But the thing is, once you’re on that track, it’s so very difficult to get off. I think it would be better if Japan got off that rail and became a beautiful third rate country. It would be nice if Japan was a place of delicious food, beautiful scenery, and abundant nature. If that were the case, I think it wouldn’t matter if one had little money.
    Unfortunately it seems unlikely to happen now that the country is on that track. A period of 55 years since the end of the war, and Japan just can’t get away from being competitive. (Italics my own.)

    Can I ask why you edited out those last two sentences?

  11. Momus Says:

    Probably for the same reason you left out the bit directly before the bit you quoted:

    “Ordinarily, self-sufficiency is used in reference to food, but it isn’t just about food, it can also refer to the energy, electricity, water and other things we use every day. In short, it’s about rediscovering and restoring one’s own community and region.”

    Any quote is selective, you have to put the boundaries somewhere. I was presenting Slow Life as a positive ideal (and that’s Sakamoto’s intention too). I didn’t want to muddy the picture with caveats. I did, however, provide the link for people who wanted to read more.

    Slow life in Japan was nothing more than a media buzzword in 2003-04. Google it and you won’t find a single mention of it this year in the top 50 hits.

    That’s simply not the case. I googled it and the first two Japanese mentions were dated October 2005. But if you really dislike the phrase, let’s talk about “sustainable lifestyles” instead. Whatever we agree to call it, this stuff is not going away, I promise you.

  12. Momus Says:

    Here’s that google URL again.

  13. Momus Says:

    (Your own google link on “slow life japan” has a Japan Times article dated June 1st 2005 as its second hit on page 1, so you’re talking rubbish, I’m afraid.)

  14. Smiley Says:

    Not to interrupt your discussion here but the real challenge to Japan will be that it only produces 40% of its own food supply and with peak oil and the continual climb of prices the Japanese way of life will radically change. Can you say “urban to rural” shift? The short-term economic bumps are trivial compared to the long-term change of the next 20 years (in my humble opinion). Here’s a link:

    http://www.fromthewilderness.com/free/ww3/040705_japan_china.shtml

  15. Monroe Says:

    Recently, I’ve been reading David Harvey’s “A Brief History of Neoliberalism”

    Shortened Link —

    http://makeashorterlink.com/?G5A5252FB

    Original Link —

    http://www.oup.com/us/catalog/general/subject/Politics/PoliticalTheory/ContemporaryPoliticalThought/?view=usa&ci=0199283265

    Harvey provides, in my view, a profound corrective to much of the, as I see it, naive faith in capitalist productive structures Marxy seems to hold (the impetus, I’ve observed, behind much of this ‘Japan is in decline’ business which is built upon the implied belief that other capitalisms — i.e. American, are more ‘dynamic’ and therefore less vulnerable to stagnation).

    Not to leave Momus out, I think the book also puts living flesh on the bones of some of Momus’ reservations about the contradictions of finance led globalization and late stage capitalism in general.

    Marxy, I’ve been reading your blog for some time and I must admit that I find your descriptions of the Japanese economic situation to be unconvincing. Not because your analysis, in a general sense, is inaccurate but your prescription for a cure appears to ignore the global nature of the stagnation problem, masked in the US for now by capital infusion and other sleights of hand.

    I also find your apparent (at least, as far as I can see) lack of appreciation of the new condition China’s astounding growth has created for the global economy (in both productive and destabilizing ways) odd.

    M.

  16. guest Says:

    Your own google link on “slow life japan” has a Japan Times article dated June 1st 2005 as its second hit on page 1, so you’re talking rubbish, I’m afraid.)

    Did you bother to check the link in your zeal to prove me wrong?
    The link is to a review of French movie “La Grande Seduction” (three stars out of five).
    Can you guess when the film was made? Yes, 2003.

    There is nothing to suggest that slow life in Japan was nothing more than a media buzzword, as I pointed out earlier.

    I agree with Sakamoto. It would be great if Japan became a beautiful third rate country, a place of delicious food, beautiful scenery, and abundant nature (I have to disagree with him on those points; I think it already has delicious food, beautiful scenery and abundant nature). But unfortunately it seems unlikely to happen now; Japan just can’t get away from being competitive.

  17. marxy Says:

    I certainly am not a 100% true believer in the power of neo-liberal economic reform, but I have not been convinced that “do nothing” is a real solution. In other words, why is there not a public debate about solutions coming from the “planned capitalist” camp? So far, everything has been “enact free-market reforms” or “keep things as is” – the latter being a matter of faith that centralized market control will somehow win in the end, not a real strategy.

    The debate usually viers towards neo-liberalism, because the whole field of economics is based upon it. And while socialism has a whole field of scholarship and great men, Japan’s middle-ground “state-run capitalist” system has few remaining advocates. There are certain conditions for an economy like that to work, and I don’t particularly see them returning in the future.

    I am very open to hearing about alternative solutions that are plausible. I don’t see the bureaucrats dismantling the industrial complex to go to a “Slow Life”-type structure.

    What you seem to be saying is that all capitalism will fail in the near future, but what does that mean specifically for Japan?

  18. Monroe Says:

    I need sleep, so this may not be as crisp as I’d like.

    While I don’t believe that capitalism, viewed as a whole, is going to fail in the near future there are strong indications that the system is growing ever more unstable in ways many people are either unaware of or willfully ignoring.

    In the case of Japan, her dependence, for most of the post Pacific War period on export-led growth centered on the US consumer market is no longer viable.

    The US is kept afloat by capital infusions (mostly from East Asia) of at least 2.3 billion dollars a day starting in 2003.

    Because the United States still enjoys the status of being the primary world consumer, this foreign direct investment has been a good bet for the nations involved (Japan chief among them): it keeps Americans buying and maintains their own standards of living.

    This is clearly not sustainable forever and forms a of house of cards that grows higher and higher everyday as the Americans not only refuse to adjust to new realities but aggressively pursue unilateral adventures such as the Iraq war (now financed, in no small way, by Asian capital). Americans, by and large, do not believe they’re at all vulnerable though any other nation in a similar financial situation would’ve long ago been subject to IMF imposed austerities (with the usual disastrous consequences for workers).

    If Japan’s primary economic partner, the US, refuses to cooperate in a project of global financial restructuring and redistribution (and by “redistribution” I don’t mean simple hand outs to people but the Keynesian redistribution of investing surplus capital in productive projects) then she must accommodate herself to Chinese industrial power and cooperate more closely with S. Korea, Taiwan and other major and minor regional players to create an Asian common market for goods and services. Indeed, this is already underway if you observe closely though Japanese elites, with their America focus, are reluctant to move as decisively as the situation demands.

    Capitalism tends, inevitably, towards overproduction and stagnation (eventually, there are more new cars than people who can afford to buy them, for example). In the near term, this can only be addressed by large scale Keynesian measures.

    The very things neo liberals resist in favor of free flowing financial speculation and other techniques that only increase the level of instability.

    In short, although our present situation does not exactly mirror that of 1929 there are still important lessons we can learn about contemporary vulnerabilities from the collapse of the 1930s.

    As is the case with climate change, intelligent, and globally coordinated action is needed to manage the situation which, as I said, is much more serious than many know (even reports from Goldman Sachs are beginning to sound warning bells).

    A focus on Japan’s problems without an acknowledgement of the interdepencies is too narrow.

    M.

  19. jasong Says:

    Living here I can say that the buzz around “Slow Life” ended in 2003/2004 (just a hazy impression) — but that’s what buzzes do, end. It doesn’t necessarily mean that a movement has died out, though.

    Searching Google Japan in Japanese (which has gotta be at least as helpful as using English lang. resources about Japan — this site is about Japanese people, after all), スローライフ websites are alive and well, and organizations are continuing to operate on its tenets. Looking at businesses registered in Tokyo with スローライフ as part of their name, however, there are only two, one of which is an NPO (NPOスローライフ・ジャパン), http://www.slowlife-japan.jp (even their site is damn slow). They mention this new site: http://www.slownet.ne.jp

    This article (http://www.shouhiseikatu.metro.tokyo.jp/kurashi/0501/wadai.html) has the headline 「スローライフ時代」『ゆっくり』を始めませんか? “Slow Life Generation! Shouldn’t we slow down?” and gives a definition and a sometimes amusing list of opposites in each life category. My favourite —

    Communication: Internet, Computers, Cell Phones, Cell Phone email
    Slow Life: Talking in person, taking more time for mutual understanding, letters

    What’s wrong with using all of them?

    Anyway, it’s an article from Jan. 2005, so maybe a lot of people still don’t know about this movement…

    If you think books and their popularity (ie. sales and number of books written about a particular topic) are a good barometer of society, at a cursory glance スローライフ doesn’t fare too well on Amazon Japan, with the majority written in 2003/early 2004, and none of them with a ranking worth mentioning. But could this be because people have moved on from the buzzword and are simply writing books and following the lifestyle without referring to it by name (I’m sure one of you has an academic term for this phenomenon).

    Regarding the economy, who knows, but Japan is a survivor — that’s undisputible.

  20. calpispatrick Says:

    Slow Life is not dead, but has simply been repackaged with a new buzzword: LOHAS!

  21. Chris_B Says:

    Marxy,

    I wonder if you read the whole thing or just the leader on page 11. This was fairly typical if not slightly more in depth than most country survey articles in The Economist. If nothing else I’d say it provides a good primer level snapshot on current conditions.

    Momus,

    I’m pretty sure you didnt do any more than open the website.

    Monroe,

    One stat mentioned in the survey was that 45% of Japanese export trade is now with Asia. However since that stat wasnt broken out into goods/services/etc I am not sure it provides the counterpoint I would like to make regarding Japanese/US trade.

    Slow Life,

    Since this came up here a while back (I’d never heard of it before this site) I’ve asked lots of the OLs and younger employees in general where I work about it. Out of about 50 people, two had heard of the idea, one of those two knew nothing, the other told me it was invented by dirty (lit: kitanai) europeans or hippies and drug users. Admittedly this was a most unscientific survey and the methods were completely flawed but boy was it worth the effort just for that one response.

  22. nate Says:

    Last time we were talking about slow life, I was one of the big pooh-poohers of the fad. I remain committed to pooh-poohing, but I think the term is at least as present in the advertize-o-sphere, if not more so than it was last year.
    This summer there was a heavily promoted TV series titled “slow life”, with the tag line “slow dance, slow food, slow life”. I just saw some “slow life bath salts” while I was out shopping too.
    Japanese slow life as a trend is far from over… but it is almost exclusively attatched to “pretty little things for women to make and do”. Not once ever have I seen “slow life” associated with spending time with family… nor in any reference to work.
    Before I read these comments I was just thinking about how “slow life” the japanese trend is very anti-social, and a very lonely and isolating aesthetic. Daintiness to the exclusion of warmth and affection.

  23. marxy Says:

    Does Slow Life still have a shelf life as a trend? Yes.

    Is it being seriously considered by the central government as a possible solution to the economic problems? No.

    Would greater decentralization (a neo-liberal idea) allow local governments to pursue more Slow Life-based economic strategies and reduce dependence on construction subsidies? Yes.

    Is the central government remotely interested in giving away the right to micro-manage every single part of Japanese life? Not at all.

  24. jasong Says:

    Not once ever have I seen “slow life” associated with spending time with family… nor in any reference to work.

    Because the market you mention (“pretty little things for women to make and do”) is made up of people who generally don’t work full-time and already spend time with family (except their forever-working husbands).

    But if you do a search of “スローライフ 労働時間” there are plenty of references to changing work habits as part of the concept. In reality, though…

    Time for a slow dump.

  25. Momus Says:

    Quoth the neo-liberal with the name of a Marxist: Japan’s middle-ground “state-run capitalist” system has few remaining advocates. There are certain conditions for an economy like that to work, and I don’t particularly see them returning in the future.

    Monroe correctly pointed out your reluctance to think much about China as the new reference point not just in the Asian area but as the motor for world production and finance. But isn’t China precisely a “state-run capitalist” system? And if so, this “few remaining advocates” point is completely wrong — China is running the most important capitalist system in the world right now, and the future is all about what happens there.

  26. marxy Says:

    The state-run capitalist system works well for developing economies (like China now and the little Asian Dragons in the past), but the case of Japan seems to question how adequate it remains in a post-manufacturing, mature economy.

  27. Chris_B Says:

    marxy hit the nail right on the head there. having the central technocrats dictate the details of commerse stops working after manufacturing stops being the engine of growth. Japan seems to have figured this out, China will eventually, and about 10 years after that, the EU might get it as well.

  28. Momus Says:

    And can you tell us exactly when manufacturing will stop being the engine of growth, Chris, in global terms? When, in other words, human beings will stop depending on those old-fashioned things, production and consumption?

  29. marxy Says:

    You’re not getting it. Japan used to physical make things, but once salaries went up, they’ve started shipping those manufacturing jobs overseas (to China!). Japan still makes high-tech goods at home, but they’ve lost a lot of their competitive edge in these fields as of late. Toyota rules the car market, but so many of those jobs are outsourced (to America, for example), that Toyota doing well does not mean “Japan is doing well.” If Japan can keep making all the major electronic gadgets than that’s great for them, but the iPod saga does not speak a bright future.

  30. Momus Says:

    No, you’re not getting it. Globalisation does not mean that manufacturing ends, just that it gets shifted somewhere else, somewhere industrial that produces goods that have a very direct impact on your post-industrial economy. If government-directed economies handle that situation well, and if places like China are handling increasing amounts of global production, then you’re wrong to say this model of government is over, and Chris is wrong to say that China is about to give it up.

  31. marxy Says:

    A government can manage heavy manufacturing industries much better than they can create the necessary social conditions for “soft” production centers that require creative innovation from highly-trained human capital. Until now, Japan’s entire social policy was based on the idea that they needed highly-disciplined manufacturing-industry workers. Now they don’t.

    I can understand the appeal of socialism, but I don’t understand why a system of government based on picking winners in advance and letting them make all the money in olipolistic arrangements adverse to consumers is a good thing. One thing if the State owns everything, another if the government’s policy is to restrict private property to only a certain elite.

  32. Momus Says:

    You’ve changed your position. Now you’re saying you don’t like state control, before you were saying it was on the way out. Thank you for that concession.

  33. Momus Says:

    And when you get to this square, please ride the snake back down to the square where Monroe talked about the need for a “profound corrective to much of the, as I see it, naive faith in capitalist productive structures”.

  34. marxy Says:

    I understand the criticisms of free market capitalism, but again, I ask, what are the specific non-capitalist remedies to the problem of sagging growth rates? If economic competition becomes a secondary objective compared to raising the general level of welfare, then the adoption of political transparency, fewer bureaucratic regulations, and liberalized, international capital is unneccesary. But, Japan continues to pick the money over their well-being of its citizens (if I may add, like almost every other country outside of Western Europe), and if that’s the case, neo-liberal reforms are the quickest, easiest way towards new growth.

    So why does Japan stall in adopting these reforms? Because they are altruistically worried about the impact of neo-liberal free-marketering on society, like Momus and Monroe are? No, the centralized bureaucracy simply doesn’t want to lose its reigns on power. They don’t want the market to control prices and competition, because it would take away from their ability to manage every part of the Japanese social experiment. The Japanese bureaucrats are not “playing it smart” by avoiding American-style capitalism as much as their lust for power overwhelms their greed. Which vice will win in the end?

  35. Monroe Says:

    Marxy:

    I understand the criticisms of free market capitalism, but again, I ask, what are the specific non-capitalist remedies to the problem of sagging growth rates?

    ==========

    David Harvey addresses this rather thoroughly in “A Brief History of Neo Liberalism”. I strongly suggest you give it a read if you have a chance.

    Marxy:

    …why does Japan stall in adopting these reforms? Because they are altruistically worried about the impact of neo-liberal free-marketering on society, like Momus and Monroe are? No, the centralized bureaucracy simply doesn’t want to lose its reigns on power.

    ==========

    Again, I agree with your general description of (aspects) of the problem: indeed, Japanese elites are refusing to address long term difficulties for wholly selfish reasons. But then you go on to say:

    “They don’t want the market to control prices and competition, because it would take away from their ability to manage every part of the Japanese social experiment. The Japanese bureaucrats are not “playing it smart” by avoiding American-style capitalism as much as their lust for power overwhelms their greed.”

    This implies that “American style capitalism” is a sustainable model, instead of a time limited manifestation of conditions created by the end of the Second World War (remember, the crushing stagnation of the Great Depression was never really solved, just blasted to pieces by a global war; hardly the sort of thing to recommend). Americans, as I stated before, routinely over-estimate, for obvious reasons due to their centrality, the robustness of their situation, ignoring deep structural problems as they laud themselves and encourage others to follow their model.

    The immense deficits, neglected infrastructure and other thinly veiled challenges, lost in the self-congratulatory din, suggest this is not the wisest course.

    Neo liberalism is not a genuine solution to the slow or no growth problem; it does indeed super charge an economy, but does so through deepening financialization, speculative flows and other boom and bust nurturing measures.

    This is good for people who manipulate money, and, as we see in places like Bangalore, India, good for that class of workers best positioned to temporarily take advantage of the opportunities created by incoming investment.

    But the nature of speculative capital is to move on when the enhanced profits a particular place has provided are no longer evident. This leads to bust, unemployment and stagnation.

    There are two stock responses to this observation, particularly from Americans. One is to deny that it’s so and insist that financialization creates unparalled wealth and prosperity for nearly everyone. The other is to shrug one’s shoulders and sigh that this is “just the way it is” as if capitalism and the market were forces, like gravity, beyond human management and control.

    This is an example of the market fetishization so common amongst neo libs.

    Japan will not solve her economic problems by adopting such attitudes and practices.

    You asked what “specific non-capitalist remedies” would help Japan. Let me repeat myself and state again that we are past the time when it makes sense to talk about what nation X or Y should do, in isolation from other nations, to improve their situation. Japan must, as a start, adjust herself to the fact of the US’ completely unmanaged account imbalances and the rise of China as the world’s manufacturing hub and engine of much of overall growth.

    What’s required now is global coordination, and not of the sort offered by the neo lib “Washington Consensus”, designed to maintain American dominance via the IMF and other instruments that open countries’ markets to speculative capital with destructive results.

    We cannot return to the Bretton Woods created world that ended in the 1970s. Japan, in concert with the rest of the world, must however create a similarly well crafted global economic structure to maintain growth and encourage actual development across the planet.

    In short, new thinking is needed and neo liberalism, an exhausted and, increasingly discredited doctrine engineered in the 1980s to preserve growth in the face of stagnation, is not it.

    M.

  36. Chris_B Says:

    poor momus, either too drunk or having a senior moment, cant follow simple sentances. Oh! I forgot, he’s the Master of Misreading. Nice try at twisting my words, but no lollipop for you this time.

  37. Momus Says:

    Monroe just posted something tremendously important, I think. I really wonder how long the regulars on this board can avoid the truths in that post. Perhaps Japan is, for some, a sort of ostrich sandpit that preserves:

    a) a global pecking order that harks back to World War II
    b) a synthetic and idealised version of the kind of capitalism America as it always wished it had itself

    Marxy and Chris seem to know that b) isn’t true (they’re quite aware of the limitations of Japanese capitalism, though they mostly blame them on the government), but to be quite unwilling to accept that a) is also no longer the case, thanks to the rise of China and the dependence of the US on Asian banks. How does that sand feel around your head?

  38. nate Says:

    I haven’t seen someone so moved by a single book since peter singer made me go vegetarian.

  39. Monroe Says:

    Nate:

    I haven’t seen someone so moved by a single book since peter singer made me go vegetarian.

    =====

    It’s certainly true that Harvey’s book is, in my view, very illuminating and worthy of a wide audience.

    There are many other sources however, which I’ve been studying for some time (including the Wall Street Journal…quite instructive as to the actual goals and strategems of global capital, I’d also recommend the works of H. Lefebvre, P. Baran and P. Sweezy and Arrighi, among others) so it would be inaccurate to say I’ve experienced a ‘conversion’ or satori moment of some sort.

    It just so happens that Harvey provides — perhaps for the first time in a comprehensive way — a rigorous critique of what the so-called “anti globalization” movement (really more of an alternative globo movement) has been talking about in, often, a less disciplined and unified fashion.

    M.

  40. marxy Says:

    I liked David Harvey’s “The Conditions of Postmodernity” quite a bit, so when I get some free time after my thesis (around January), I’ll give that book a read.

    I tend to emphasize micro-economic phenomena more than macro on this blog, because I’m interested in how markets shape our individual lives/culture. Obviously, national governments determine how these individual markets operate to a certain extent – moreso in Japan than in the U.S.

    I’m definitely not a Reaganite neo-liberal, but as Galbraith and other American liberals, I tend to prefer a gov’t-referee’d capitalism to a full-out state-controlled economy. Free markets do not adequately regulate themselves as is sometimes claimed, but I think microeconomic theory shows well how monopolies, duopolies, and oligopolies take away from consumer welfare, and I don’t know why a government of a mature economy would still interfere in markets to reduce competition, thus raising prices and lowering consumer benefits.

    The whole benefit of socialism is that taking away the profit motive and centralizing production would increase efficiency and benefit consumers, no? In the Japanese state-capitalism example, olipolistic firms use state protection to jack up prices and strictly control the labor market. Still plenty of profit motive, but they’re insulated from real market forces that tend to give the consumers/workers better options.

    America’s economy is surely not the best model for the entire world, but I would not confuse Japan with an alternate model of “anti-globalized socialism.” It’s more like a less-Fascist form of corporatism, but if we’re going to kneejerk rah-rah because it’s not “evil American capitalism,” then fine, Japan is all gold.

  41. ME! Says:

    It’s the system – stupid! Time and time again a nation that copies and does not originate gets caught flat-footed! This time there are several factors hiting Japan at the same time, as mentioned by several above.

    However, no one is jumping ship. The Japanese have been underestimated on several occasions and I wouldn’t do that. They will wait and in time chart a course, they will not panick. However, this assumes that current trends of; suicide rates, child abuse, greying of the population and an almost complete abandonment of the political process by the young; will not sink the ship! Good Luck

  42. Momus Says:

    Let’s see, Japan copies, Jewish people are mean, and all the gays love Judy Garland, right?

  43. Momus Says:

    Patents filed in 1998
    EU 98,986
    USA 132,767
    Japan 357,379

    Patents filed per million inhabitants
    EU 263
    USA 482
    Japan 2824

    Patents filed per million Euro in R&D expenditure
    EU 0.701
    USA 0.65
    Japan 3.48

    Patents filed per thousand researchers
    EU 115
    USA 137
    Japan 591

    Source: http://scientific.thomson.com/knowtrend/ipmatters/euroiss/8199815/

  44. Monroe Says:

    Marxy:

    America’s economy is surely not the best model for the entire world, but I would not confuse Japan with an alternate model of “anti-globalized socialism.” It’s more like a less-Fascist form of corporatism, but if we’re going to kneejerk rah-rah because it’s not “evil American capitalism,” then fine, Japan is all gold.

    ===============

    I’m not sure, to be honest, who you’re arguing with here inasmuch as no one participating in the thread, near as I can tell, made the assertions you’re refuting (the “anti-globalized socialism” charge is particularly confusing).

    Clearly, Japan is not “all gold” and is in need of reforms. Also, I don’t believe American capitalism to be any more or less “evil” than other forms. As any attentive student of Marx should know, capitalism has its own internal logics that lead to both creative and destructive outcomes.

    It’s the destructive outcomes we need to manage.

    As for socialism…

    I note that no one, in the course of the discussion, except for you, offered this as an proposed alternative to our current predicament (which, as I stated before, is global in scope and not localized to specific nodes).

    So, you’re refutations of the socialist path appear to be, in the context of this debate, a bit of a straw man.

    M.

  45. Chris_B Says:

    Momus,

    Once again you draw conclusions beyond what was stated in regards to your ostrich post. In matters regarding government directed industrial and banking policy you are a mere armchair quarterback wheras I am a lowly waterboy who fetches refreshments for those on the field in that I actually work for one of the investment banks.

    I’ve seen firsthand the hiring patterns described in The Economist survey and have also seen the increase of market activity as well as new methods of doing business being adopted. This hardly makes me an expert, all I can offer is my observations.

    The undenyable fact is that the banking conglomorates follow the “guidance” handed down from the government. Initiatives come as they are permitted, not from the market itself. The execution of these strategies from on high often falters not due to government incompetance but due to factors in the market itself (ineptitude of management, lack of worker productivity, etc) so I’ve never been one to place the “blame” solely on the fine gentlemen in Nagatacho.

    In short, bugger off and go write about art or something else where facts wont get in your way.

    Monroe:

    You raise some interesting ideas here. It seems to me the interconnectedness of economies should be a given in any discussion on the matter.

  46. der Says:

    Not that contrary facts would matter in any way, shape or form, but just for the record (and because I’ve seen this bogus argumentation so often), I’d like to point out that the Japanese patent bureau follows such different rules (roughly, 3-5 patents for things that could only get one in EU or US) as to make a comparison of numbers meaningless. (As the article you, Momus, quote mentions in more polite form. But only in the actual text, the stuff you have to read.)

  47. marxy Says:

    So, you’re refutations of the socialist path appear to be, in the context of this debate, a bit of a straw man.

    While not necessarily on this specific thread, there have been some kneejerk stipulations on this blog in the past that Japan’s economy is “socialist” and in danger of going towards “capitalism.”

    As any attentive student of Marx should know, capitalism has its own internal logics that lead to both creative and destructive outcomes.

    Plain destructive is bad, but societies need some level of “creative destruction” to rectify social structures to fit ever-changing environments. Free-market capitalism has the advantage of doing this inherently, where planned economies need the bureaucrats to make the changes in a timely fashion. A perfect socialist system could perform adequate dismantling without a threat to centralized power – since the system is based on the premise of centralized power, but when you are posing as a democracy and bureaucratic power does not have a public mandate, policy makers will avoid any necessary social reforms that are a direct threat to their power and may lead to a different expression of constitutional aims. Japanese bureacrats are not “supposed to” running everything in the first place, and they are particularly sensitive about losing their unstable position of power.

  48. Momus Says:

    Der, if you read the whole article I linked you’ll see that the author is not saying that objections like the one you raised mean that Japan is behind Europe in innovation, just that it’s not as far ahead as it looks. It’s still ahead, though, and therefore this “Japan copies” argument is nonsense.

  49. der Says:

    Not sure that that shows it, but the argument is of course indeed non-sense.

  50. SydneyOz Says:

    Japan’s economic problems are deep and bound to get worse, however I’d like to concentrate on one: Japanese high tech.

    It’s clear that profit margins on new products are being driven down faster and faster these days. Product life cycles that used to be five years are now down to 18 months or less.

    Therefore, whoever develops and capitalizes (perhaps the latter is more important) on a new product first gets the big margins, and the latecomers fight over the low profit margin scraps.

    Traditionally, the US was first to capitalise and Japan took those low-margin returns. Unfortunately, now Korea and Taiwan, increasingly China, and in the future India, are all competing for those low-margin returns. Japan is in serious trouble if they don’t start innovating and then following through by capitalising.

    As an aside, the number of patents filed by Japan is irrelevant because their competitors routinely ignore them.

  51. marxy Says:

    Interesting. At least Japan has the portable electronics market, right? Right?

  52. r. Says:

    many handy patents here…
    http://www.maywadenki.com/