JAPAN the eno of the mirace by JIRO FUJIWARA Postwar economic reconstruction Having lost 40% of its prewar productive capacity and all of its colonial territories (44% of the pre-war Japanese imperialist territory), the Japanese economy began to recover with the politico-military support of U.S. imperialism. It entered a phase of development in 1950. Through the defeat of postwar revolution, the Japanese bourgeoisie, like the bourgeoisies of the West European countries, placed the enormous burdens of the time on the toiling masses: heavy inflation, an increase in population of ó million (from the fronts and former overseas colonial territories), and massive unemployment. The Japanese economy secured its stabilization (wage freeze and heavy rationalization) through the so-called Dodge Line (a stabilization policy for the economy designed by the general headquarters of the U.S. army in Japan), and it recovered its position in the world market by fixing the exchange rate of the yen at 360 to the U.S. dollar in 1948-49, after the defeat of an attempted general strike in 1947. Subsequently, special procurements for the Korean War gave an important impetus to the development of the Japanese economy. After the Korean War, U.S. military control over East Asia, the partial defeat of East Asian permanent revolution, and the U.S. dollar hegemony over the international capitalist economy created the international framework for the rapid economic growth of the Japanese economy. This rapid economic growth was achieved in the greenhouse of U.S. military protection (supported by U.S. dollars) that was granted Japan in compensation for the loss of Okinawa, South Korea, and Taiwan. The Japanese government was able to mo40 bilize the potential politico-economic forces to support the expansion of capitalist enterprise free of the burden of a military effort of its own. Capital could pursue its own interests acting purely as an "economic animal. " Just after the defeat of Japanese imperialism, a great majority of government funds and of U.S. aid funds were put into the basic industries: steel, coal, electric power, etc. On the other hand, a radical postwar land reform expanded the potential domestic market. The dissolution of the zaibatsu (big prewar Financial combines) created the conditions for rapid technical innovation and economic growth, through the mechanism of capitalist competition. In prewar Japan the system was based on the economics of poverty: the poverty of the peasants, victims of the tenant system, and of the ill-paid urban workers. Technological rationality based on mass production could not be established because of the narrowness of the domestic market. After the second world war, the Japanese economy, having developed the technological system of mass production, was able to maintain a pattern of economic growth oriented toward domestic demand. Industrial production recovered its prewar level in 1950-51, lagging behind the West European contries by one or two years. But Japan did not succeed by that time in recovering its prewar export levels. Exports remained at only 36% of the prewar level (imports at 49%). Consequently, in spite of its rapid growth, the economy was several times forced to make adjustments because of the crisis of its international balance of payments. A high rate of economic growth began in 1955. The steel industry was improved and expanded by the
first steel production five-year plan (1951-55), which was supported by special governmental loans and investments and by special taxation measures. The automobile industry began domestic production of cars. The petrochemical industry began to make a quick advance, introducing technological innovations and building large petrochemical complexes. In the late 1950s, about half a million coal miners were discharged because of the "energy revolution." In the early 1960s, Japanese capitalism made a drastic transformation of its industrial structure, incorporating the shortage of raw materials into the structure and transforming this weakness into a source of relative strength. Rapid industrialization, involving the construction of many big complexes and heavy concentration of industry in the Pacific coastal areas in order to reduce transportation costs, produced a special coastal "belt" type of industrial structure. A huge shipbuilding capacity was developed. A great number of giant tankers and "bulk carriers" decreased the cost of transporting huge amounts of raw materials. Production facilities were enlarged enormously in order to utilize imported raw materials effectively. An industrial structure permitting massive consumption of raw materials was an absolute technical necessity for Japanese capitalism, which lacks domestic raw materials. All the leading industries with high growth rates, such as petrochemicals, synthetic fibers, steel, automobiles, etc., depended on heavy consumption of raw materials. A specific mechanism of capital accumulation permitted this industrialization through extensive technological innovation and rationalization. The vast majority of the funds for investment in plant and equipment was financed not by the companies' internal reserves (retained profits), but by borrowed money. The ratio of net worth to totai capital averaged 30% in 1960, 24% in 1965, and 19.3% in 1970, The unfolding inflation in particular made this borrowing very favorable for the big companies, which transformed borrowed funds into real wealth (plant and equipment) while repaying debts with devaluated paper money. On the other hand, the increase in financial burdens pushed up the break-even point and forced the big companies to maintain high levels of operation. Thus, the pattern of fast growth, external financing, uninterrupted technological innovation, high operating rates, and growing rates of export was also an expression of the potential weakness of Japanese capitalism. In the last analysis, the corporate borrowing was financed by funds extracted from the workers and peasants. The investments and loans of the public treasury, which amounted to half of the national budget annually, were financed not only by taxes but also by postal savings deposits (50%) and by welfare pension funds collected from the toiling masses (20%%). Under the Japanese pension system, the workers pay 6.4% of their wages into the funds and become eligible to receive benefits only after more than twenty-five years. These funds thus accumulate huge revenues that the government utilizes for financing the investments of capitalist companies. In 1972, accumulated pension funds amounted to 7.8 million yen (about US$2.6 thousand million). The backward social security system in Japan induces a relatively high rate of savings; the capitalist companies then use these savings of the toiling masses to finance their investments. Investment in the public sector takes up a high proportion of the national budget. The expansion and improvement of the social infrastructure (roads; railways, ports, berths, pipelines, land for industrialization, industrial water supply, etc.) is an indispensable condition for the expanded reproduction of capital. Japanese investments in the public sector have been closely tied to the reproduction of private capital. Public investments account for 17-20% of the national budget; of that amount, 65.5% goes for the support of industry and only 16.7% for public service facilities. Wages, of course, increased throughout the period of rapid economic growth; but the increase in labor productivity exceeded the increase in wages. While the average annual increase in labor productivity was 9% in 1955-60, labor unit costs decreased 2.8% annually during the same years. Labor's relative share in value added in industry was extremely low: It was 32.2% in Japan, 55% in the United States, and 53% in Britain during the late 1960s. At the same time, wage differentials have been very big. They vary especially according to employer size. If the average wage in companies with more than 500 employees is taken as 100, it falls to 80 for companies with 100-499 employees, to 70 for companies with 30-99 employees, and to 63 for companies with 5-29 employees. The average wage of women workers in 1960 was 42.8% that of male workers; in 1772 it was 50.2%. With the structures and patterns of growth described above, the Japanese economy realized a rapid growth: The gross nafional product was US$10.9 thousand million in 1950 (the seventh largest among the capitalist countries), $24 thousand million in 1955 (the sixth largest), $43 thousand million in 1960 (Fifth largest), and $200 thousand million in 1970 (second largest). Through this economic growth, the weight of heavy industry and chemicals increased significantly in the national economy: from 49% in
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JAPAN 1960 to 60.7% in 1970. They accounted for 75% of all manufacturing in 1970. Heavy industry and chemicals exports increased very aggressively after 1965. The export of manufactured goods was S3.6 thousand million in 1960, $7.8 thousand million in 1965, and $22 thousand million in 1971. Heavy industry and chemicals exports increased by 25-30% annually, accounting for 75% of total exports in 1971. Japanese international trade amounted to 1.5% of total world trade in 1950 and over 6% in 1970. The drastic industrialization of the Japanese economy resulted in a very rapid decrecse in the peasant and fishing population, the concentration of a large proletariat in huge urban centers, the generalization of pollution, and an increasing incidence of labor accidents. The weight of the peasants and fishermen in the whole working population decreased from 44.6% in 1950 to 37.7% in 1969 and 18.2% in 1970. The big majority of those 18.2% were semiproletarian. Those who remained fully self-employed farmers came to only 15.2% of the total of 5.259 million peasant families in 1971. Tha proletarian population increased from 38.7% in 1950 to 62% in 1970. The number of women workers jumped from 3 million in 1950 to 6.46 million in 1960 and to 12 million in 1970. If we include part-time employees, there were more women workers than male workers by 1973. About 70% of women workers are married; married women, as well as temporary male workers, are the first to be discharged during a recession. The heavy concentration of population in urban centers in a short time and the shortage of public investment in the social infrastructure have produced an explosive crisis in the cities. The three largest urban centers - around Tokyo, Osaka, and Nagoya - occupy 17.3% of the total livable land in Japan, but concentrate 41.5% of all the population and 49.2% of the total number of families. The three metropolitan areas produce 62% of all manufactured goods, having 52% of the total number of factories with more than 20 employees and 46.4% of all the automobiles (and 43% of all traffic accidents). The population per square kilometer of livable land, including rural areas, is twice Germany's and sixteen times that of the United States. The GNP per square kilometer of livable land in Japan is four times as great as Britain's, twice Germany's, and ten times that of the United
States. But the social security spending per capita in Japan is a fifth of that of the West European countries. Only 18% of Japan's roads were paved and only 14% of the population had access to adequate sewage service, as of 1969.
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A structural crisis The drastic industrialization of the society and the overconcentration of population in the giant metropolitan centers have produced many a "Minamata" (the city of mercury pollution) and unbearable psychological pressures on the toiling masses. The record of labor accidents reveals that 5, 000-6, 000 deaths result from some 300-400 thousand labor accidents annually. There were 3, 873, 167 workers injured and 61, 507 killed in labor accidents between 1963 and 1972! The 1964-65 recession was a symptom of the onset of crisis due to the high rate of economic growth. The recession was clearly a result of overproduction. The steel, electrical appliances, synthetic fibers, and other industries created antidepression cartels and reduced their production. The government recognized eighteen antidepression cartels, the highest number in the postwar period. The number of bankruptcies of small and medium-sized companies was 2, 117 in 1963, 4, 931 in 1964, and 6,060 in 1965. The increase in capital costs could not be covered by a decrease in labor costs because of the increasing shortage of labor. A tendency to increase prices in order to maintain a "normal" rate of profit, and an important advance in exports, contributed very much to the recovery from the recession. The expansion of exports, especially important because of the tendency to overproduction, was supported by tax and financial measures. The major penetration of Japanese exports into the world market started in 1965, and after that year the structure of the Japanese balance of payments changed. In the earlier postwar period a balance of trade deficit was covered with the income from special procurements and the inflow of foreign capital. After 1965, Japanese capitalism began to export as capital the proceeds of a balance of trade surplus; that is, it recovered the typical position of imperialist capitalism. Since the "Dollar Shock" of the early 1970s, almost all the advanced capitalist countries have been under the pressure of overproduction and have begun to manifest protectionist tendencies. The Japanese economy must expand its exports in order to keep its overgrown structure in balance, but it is becoming more and more difficult for it to export its goods to other advanced capitalist countries. Therefore, Japanese capitalism is forced to repeat its economic invasion of East Asia.
Japanese capitalism is now a giant economic power in relation to the semicolonial countries of East
Asia. The semicolonial countries' balance of trade with Japan is deteriorating very sharply. The Japanese balance of trade surplus with these countries was $1, 001.7 million in 1966, $2, 006.7 million
in 1972, and $2, 335.9 million in 1973. Yen credits to those countries, with annual interest rates of 4.75-5.75%, averaged $200 million in the 1960s, $563 million in 1972, and $962 million in 1973.
The total amount of Japanese "aid" to the neocolonialist countries was $2.7 thousand million in 1972 and 55.844 thousand million in 1973; Japanese direct capital investment was $844 million in 1972 and $3.07 thousand million in 1973. Its accumulated total surpassed $10 thousand million in 1974.
The present recession started to hit Japan in 1974.
Unemployment, according to official figures, is • over 1 million; industrial outpuf as of October-November 1974 is nearly 3% below the level of the previous year. Initial estimates calculated a simple slowdown of the rate of growth of the gross national product from the 9-10% levels to which Japanese capitalism had accustomed the world to a 1974-5 level of 3-4% and a 7% level in the late seventies. Today these estimates have been revised dramatically. For 1974, a decline in the rate of growth of the GNP of around 3% is foreseen. Fur 1975, the rate of growth will be 3.4%, it is predicted, and for the rest of the 1970s forecasts are scaled down to a modest 4.0-4.5% growth rate. But even these predictions do not take fully into account the cumulative effects of the worldwide economic recession upon the Japanese economy. The automobile, electrical appliances, shipbuilding, and other industries suffer from serious overproduction. Their operation rates have fallen to 50-70% of maximum, as have those of the textile industry. Domestic automobile sales are down 35% and output is down 13%. Wage decreases, part-time work, and layoffs are hitting the working class. Large textile firms, like Toyoba, have fired between 10% and 30% of their workers. A main production unit of the Yashica camera trust had to be closed, and just to stay alive the big automobile corporation Toyo Kogyo had to borrow $1,000 million from a group headed by the Sumitomo Bank. The government is trying to help the ailing monopolies in these sectors with huge subsidies. A plan has already been worked out for subsidizing the shipbuilding industry by furnishing Development Bank loans for up to 52% of shipbuilding costs and city bank loans up to 20% of these costs. At the same time, the Japanese economy is experiencing the worst rate of inflation of all the maior imperialist countries. The consumer price index was 25% higher in October 1974 than in October 1973, and the government estimates that for the whole year 1974 the rate of inflation will be 24% as against a predicted 9.6%. This huge rate of inflation has already made several Japanese commodities and "factors of production" (like building sites for factories) more expensive than those of the European and North American competitors of Japanese capitalists. Therefore, the capitalist government has given high priority to the "fight against inflation" and has introduced a policy of credit restriction that hes raised business bankruptcies to 1,000 a month since the beginning of fall 1974. It has cut imports to levels equal to or 15% below the levels of a year ago in volume. While the export offensive continues in full swing and has chalked up many successes in 1974 (exports are up 50%, whereas imports increased by 42% as a result of higher oil and other raw materials prices), the balance of payments is in deficit (probably to the tune of $5.5 thousand million for 1974), essentially as a result of a huge deficit in "invisible trade": freight and insurance costs, Japanese tourist expenditures, and export of capital. The biggest successes of the export drive (in the first half of 1974) were in textile fibers (+83%), iron and steel (+79%), other chemicals (+69%), and shipbuilding (+62%). Automobiles, televisions, and fertilizers were less successful. There is a very serious danger for Japanese capitalism that the growth of world trade will come to a near stop in 1975, and that its export offensive of 1974 will fail to expand. Already exports to Southeast Asia, which had grown at a 50% rate for each month from January until August 1974, were only growing by 35% in September and 17% in October. Under such conditions, recovery could only come through new measures of "reflation" and credit expansion on the internal market, which would make a mockery of the attempt to redure annual inflation from the present 24% to a 5-6% level. A major problem for Japanese capitalism is that practically all its imports and exports are paid for in dollars, and the increase in oil prices has created serious "dollar shortage" problems there, the dollar inflation notwithstanding. To ease that pressure, Japanese capitalists have been looking for "barter type" agreements, involving, for example, Australian uranium and Soviet Siberian natural ga: and oil (the so-called Tyumen oilfield project). Strong pressure from both China and U.S. Imperialism might still bring on the collapse of these projects. A new grand design? Japanese capitalism is now immersed in difficulties and contradictions, such as the labor shortage and increased labor costs, environmental deterioration and pollution problems, the problem of new industrial location, inflation-caused cost increases, and the decline of its international competitive capacity, all of which are the logical results of Japan's
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JAPAN fast economic growth. The bourgeoisie is now talking about the need for raw-materials-saving indusfries and a qualitatively advanced industrial structure, which means exporting the heavy industries such as oil, petrochemicals, steel, etc., to the semicolonial countries, utilizing the abundance of row materials and the cheap labor of the Southeast Asian countries, importing the cheap basic materials processed in those countries, and doing the final processing at considerable profits in the "mother country" of Japan. That is the "grand design" of Japanese imperialism — to organize the semicolonial economies of East Asia as a real economic periphery under the Japanese commanding center! This grand design will be realizable only if the Japanese bourgeoisie is victorious in the coming years in a political and economic confrontation with "its" working class. The bourgeoisie was able to accept the relatively high rate of annual wage increases in the past years of high economic growth. But now the situation has changed. In the present situation the continuation of the past rates of annual wage increases will cause serious damage to Japan's competitive position in the world market. The bourgeoisie is saying: "The coming three years will be decisive for us. We must introduce an incomes policy in these three years to limit the annual wage increase to 10% or 12%. If not, Japanese capitalism will be bankrupted. " However, under the economic crisis and the explosion of social contradictions, the Japanese proletariat has strengthened its militancy. The "general strike" of the 1974 annual wage increase campaign was misled by the reformist leadership, but the workers have shown their great potential militancy, which on the whole has not receded. In recent years the workers of the public sector have been the vanguard of the whole proletariat in its economic struggle, but now the rank-and-file workers of big private industries have begun to move and to 44 pressure the right-wing trade-union bureaucracies. At the same time we must see the present situation of the East Asian semicolonial countries. The export of Japanese capital to those countries has deepened the disequilibrium of their economies, destroying native industries, accelerating inflation, and now producing vast unemployment on an East Asian scale. The export of Japanese capital is producing anarchistic urbanization accompanied by pollution, new poverty, etc. Japanese imperialism is exporting its domestic contradictions to those East Asian countries, and as a result Japan is becoming surrounded by developing anti-Japanese struggles among the toiling masses of these coun tries. We have seen the explosions of anti-Japanese sentiment in Thailand, indonesia, Malaysia, the Philippines, and South Korea, and those movements will surely deepen their proletarian character. We cannot categorically exclude the possibility that the Japanese economy will realize a certain recovery from the present depression and further expand its exports, because of the betrayals of the SP and of the CP's "people's front" line. Even in that case, Japanese capitalism will never solve the serious dilemma of inflation and unemployment, nor long postpone its final overthrow by the prolefariat. The tendency of the Japanese economy to export capital to the East Asian semicolonial countries will not cease in the coming period. But the present march of Japanese capital will surely provoke the masses' memory of the military march of Japanese imperialism in the first half of the 1940s and enlarge the social base of revolt against it, setting the groundwork for the building of East Asian sections of the Fourth International. The social and economic crisis may be prolonged somewhat, but capitalism has entered its final crisis and decline; we are living in the age when we will win.d
U.S. recession: no end in sight HOUSE BEAR BAMANT The United States is in its deepest and longest