Japan’s main centre-right pro-capitalist party, the Liberal Democrats (LDP), under Shinzo Abe has won a landslide victory in Sunday’s general election for the lower House of Representatives. So the party that was invented by the Americans after the second world war to consolidate capitalist democracy in Japan and has held power for most of the succeeding 65 years, has been returned again after four years of being in the wilderness.
What excites the media is that the LDP and its junior coalition partner, the Komeito, have probably enough seats to obtain a two-thirds majority in the lower house. That means the government can ensure that its policies cannot be blocked by the upper house Senate, where the Democratic Party (DP), the defeated government party, holds a majority. The DP has been resoundingly defeated as the electorate have been hugely disappointed by the failure of the DP to carry out its promises of cleaner, less bureaucratic government and an end to the stagnation of the economy (called the ‘lost decades’) that Japanese capitalism has experienced since the end of the 1980s.
For the electorate, the DP turned out to be even worse than the LDP, as the economy juddered under the shock of the global economic slump, the tsunami and the risk of nuclear calamity. The DP just proposed more taxes and government spending cuts and its leaders bickered, leading to three prime ministers in four years.
But the media’s focus on the LDP’s likely huge majority means that it has missed a much more significant fact from the election. The estimated turnout is an all-time low since figures were kept in 1890! The voter turnout is estimated at 59.52%, below the previous record low of 59.65% in the 1996 election and the post-war record high in the 2009 election of 69.3%. I dug up the figures from the Japanese government and the decline in voter support in this election has been particularly awful this time especially if you consider that elections before 1945 were dubious, to say the least.
There is no space or time now for me to consider why Japanese capitalism has been such a miserable failure over the last 30 years. But let’s look at the key Marxist indicators for now. The great rise of Japanese manufacturing after the second world war was driven by a very high rate of profit. That rate fell fast during the 1960s and the Japanese ‘miracle’ came to an end in the mid-1970s. After the first worldwide post-war economic crisis of 1974-5, Japan began to struggle. Japan’s annual economic growth was 3.8% from 1974 to 1990, compared with 9.2% from 1956 to 1973. Japanese capitalism had exhausted its reserve army of cheap labour and a rising organic composition of capital kept profitability low.
Japanese capitalism now tried to boost that profitability by looking for higher profits in unproductive sectors like real estate and finance in a forerunner of the great credit boom that the US and Europe entered after 2002. Japan’s credit bubble burst in 1989 in a similarly disastrous way as in the global financial crash of 2007-8. Japan entered a recession that also coincided with a worldwide slump in 1990-1. But while the other major capitalist economies made a relative recovery after that slump, Japanese profitability declined further during the 1990s.
The main reason seemed to be an unwillingness on the part of the ruling elite in the banks, big corporations and government to entertain a deleveraging of the over extended financial sector. Just as the US and European governments did in 2009, they got the taxpayers and the state to bail out the banks and the big institutions. As a result, Japan was left with a huge public sector debt that weighs down on the productive sectors of the economy, sucking up new value and savings (as a proportion of national output, public debt is more than double that of the Europe and the US). Japanese capitalism became zombie capitalism.
In 1998, Japan’s political elite tried to ‘reform’ under a neo-liberal prime minister Koizumi who opted for the restructuring of the banks, privatisation of state agencies and higher taxes. This produced a short revival in profitability, at the expense of average living standards, reduced pensions and worse work benefits. The electorate then hoped that the new Democratic Party, an amalgam of former socialists, social democrats and liberals would be a new beacon to clean up Japanese politics, end corruption and restore growth. But the triple whammy of earthquake/tsunami, nuclear and global economic crisis knocked Japanese capitalism over again. By 2010, Japan’s nominal GDP was lower than that of 1994.
Now huge numbers of voters have become disillusioned with all parties and we have this all-time low turnout. The LDP is back in the saddle, pledged to spend more on government projects, not to raise taxes, boost exports by devaluing the yen, to restore the nuclear facilities, raise military spending and act ‘tougher’ with China. Indeed, the same old tired policies of the last 30 years.