As economic crisis spreads: U.S./IMF demand Reaganism for Japan

By Fred Goldstein, Workers World, 30 April 1998

As the Asian crisis moves from the oppressed countries of Indonesia, Thailand, Malaysia, south Korea and the Philippines to the shores of imperialist Japan, working-class organizations in all countries should pay close attention. The situation calls for preparing strong defensive measures in the event of a sharp new capitalist downturn.

Before the crisis had clearly spread to Japan, capitalist economists, government officials and financial executives here focused their criticism on the so-called tiger economies. They attributed the collapse of these economies to deficiencies in financial regulation, reckless lending and bad judgment in investments.

They pointed to too many golf courses, high-rise buildings, fancy boutiques and restaurants, pet projects of political leaders, and so-called crony capitalism.

Bankers, they said, did not ask the right questions of the companies they loaned to, which already had too much debt.

Governments did not reveal how many total U.S. dollars the combined capitalist borrowers of their countries owed. So when the imperialist bankers went to get their money back during the downturn, there was not enough foreign currency to go around. There was not enough transparency.

In a major analysis of the crisis, the New York Times wrote last Dec. 22 that if there is one clear lesson from the turmoil that has so badly jolted Asia, it is that the financial systems in many fast-growing countries were no match for the huge, skittish pools of money they attracted.

This, in one version or another, has until recently been the official line on the crisis from Washington to Wall Street.

Such explanations were comforting to the capitalist analysts. While admitting there was overproduction in all sorts of goods, they attributed the cause to technical and administrative deficiencies and subjective factors. This shielded the mouthpieces of capital from having to deal with the big picture.

They argued that regulatory measures and other technical factors, while difficult to deal with, could be used to overcome the crisis—but that in the meantime millions of workers may have to suffer a few years of unemployment, poverty and insecurity as a result of capitalist irresponsibility.

The answer, they say, is stronger financial oversight and a series of temporary local recessions in which the inefficient capitalists are driven out. Let the free market run its course and all will be well again.

And it is the International Monetary Fund's job to get this done.

So how do they explain Japan?

Now a $3 trillion economy, the second largest in the world, is beset by the same ills. And the pundits have to find another explanation.

The emphasis has shifted from insufficient regulation in the oppressed countries of Southeast Asia to over- regulation in Japan.

U.S. and European financiers have been arguing against the Japanese model of government-bolstered capitalism. They are demanding financial and economic reform. They want Japan to implement free-market capitalism as the key to saving the economic situation in Asia.

Secretary of the Treasury Robert Rubin, Federal Reserve Bank head Alan Greenspan and all the other U.S. officials who call on the Japanese imperialists to save the situation in Asia are not worried about the vast suffering of the masses that is spreading month by month.

Their fear is about how the Asian situation will affect Wall Street. Its inflated stock market, merger mania and skyrocketing real-estate prices are signposts of extreme instability and vulnerability in the capitalist system.

The struggle between the U.S. free market model and the Japanese administered economy model is vastly overstated. This view fails to explain the underlying dynamic in the economic struggle between U.S. and Japanese imperialism in the post-World-War-II period.

ROLE OF STATE IN JAPAN AND U.S.

It is true that Japan's Ministry of International Technology and Industry—formed in 1949 but with roots as far back as 1881—has played a significant role in assisting the Japanese capitalists to expand their technology and markets, as have other government bodies, especially the Ministry of Finance. Over the decades MITI organized corporate cartels and gave tax breaks, investment capital and technical assistance to the bosses in everything from steel production to consumer electronics.

The world capitalist press was talking about the Japanese miracle all the way up to the end of the 1980s. The Japanese bosses, working in conjunction with MITI and the Bank of Japan, were supposedly responsible for this miracle.

At that time Japanese banks were buying up U.S. Treasury bonds in the hundreds of billions of dollars. They were investing in the United States, even to the extent of buying Rockefeller Center. Japanese superiority in consumer electronics, machine tools, ship building and other industries seemed invincible.

Tokyo was deriding U.S. capitalism as inferior to the much-exalted Japanese model. Sneering and gnashing of teeth went back and forth across the Pacific.

But the real basis of the Japanese miracle was not the Japanese ruling class's planning agencies. It was the defeat of the Japanese working class in great battles that lasted for 15 years after World War II.

CLASS WAR IN JAPAN

After the war the Japanese working class carried on a wave of struggle and organization against the demoralized fascist ruling class that had brought on the disaster. In 1945 workers began a movement to take over production as a means of reviving the devastated economy.

They gravitated toward the Japanese Communist Party. At first the CP supported these potentially revolutionary efforts. Only the intervention of Gen. Douglas MacArthur and the Supreme Allied Command of the U.S. occupation forces was able to put a stop to this movement.

From the summer of 1946 until 1960 the Japanese workers engaged in militant, class-struggle industrial unionism.

A militant mass demonstration marked Food May Day in 1946. Toshiba workers struck in 1948. In 1952 there was a 63-day coal miners' general strike.

Nissan workers resisted a lock-out in 1953. Miike miners fought a final battle with Mitsui in 1960.

The working class of Japan fought the combined efforts of the Japanese and U.S. ruling classes to bind them into a business-union-style straitjacket. Only a witch hunt finally forced them to submit. This consisted of a massive round up of communists and socialists during the late 1940s and early 1950s, combined with scab herding, police terror and the full weight of a revived Japanese imperialist ruling class.

Business unionism was imposed in the form of enterprise unions. The bourgeois labor leaders surrendered all workers' control over production—Saturn style—in return for guaranteed employment and a basic wage. At that time the bourgeoisie found this preferable to starvation wages, instability and class struggle.

It is no mere coincidence that the miracle is said to have begun in 1962. That was two years after the final defeat of the coal miners—one of the most militant and dynamic sections of the organized workers.

Shortly thereafter, Japanese industry and exports began the shift from textiles and sundries to industrial equipment. A drastic change in class relations between the bosses and workers in favor of the capitalists was the true basis for all the planning of MITI, the Finance Ministry, the Ministry of Posts and Communications, and so on.

The expanded surplus value wrung out of the workers' hides enabled the capital accumulation behind Japan's resurgence as a world power. In addition, the workers and the left were defeated politically, which cleared the way for revived Japanese imperialist expansion into Asia.

How did the United States, which seemed so humbled by Japan in the 1980s, overcome the miracle? How did Wall Street go from humiliation to gloating?

Not with the free market model—but because of Reaganite reaction with its tremendous anti-labor offensive.

REAGAN'S ANTI-LABOR OFFENSIVE

Beginning with the PATCO strike—planned under Democratic President Jimmy Carter—a wave of union busting and downsizing took place. This laid the basis for capitalist restructuring of industry and the enormous accumulation of capital necessary to implement the scientific-technological revolution, a major instrument of warfare in the class struggle.

As the labor leaders relinquished position after position, class relations in the U.S. underwent an historic shift in favor of the bosses.

Japanese capitalism had overtaken the United States by means of the class struggle against its own working class. And the U.S. capitalists regained their position in the world by the same ruthless means.

As for the claim that the United States has a free-market economy without government assistance, that is a complete deception.

The Japanese capitalist government intervened in the economy to promote industrial and consumer exports, and that is where the Japanese bourgeoisie excelled.

The U.S. Defense Department, the Energy Department, NASA and other government agencies intervened in the economy here to promote aircraft, space, nuclear technology and communications technology—which is where the United States had the upper hand.

The first computer was funded by the Pentagon to track missile trajectories. The Internet was developed by the Pentagon for war communications. Space satellites—the basis of global coordination of capitalist production—were developed by NASA. And so on.

The Japanese ruling class, however, has not yet launched a Reagan-Thatcher type reaction against the workers. This is what the United States is demanding.

If the Japanese ruling class is resisting, it is not because of any sympathy for the workers. It is afraid of its working class. It knows its class adversary's militant legacy.

It is also afraid of opening up its financial markets to the ever-stronger financial monsters of U.S. capitalism.

Of course, it would be a vulgarization of Marxism to disregard the relationship between a capitalist class and its state, particularly in the case of Japan. The roots of Japanese statism, unlike in the United States, go back to capitalism's late arrival there.

Nor would it be proper to overlook the impact of Japan's minimal military spending since the war—or the fact that the United States was in a much stronger position to take advantage of the collapse of the USSR because Japan's banking crisis began at that very moment in history.

But that would be the wrong place to start an analysis of the economic re-emergence of a defeated ruling class over a period of three decades. The fundamentals of the class struggle must form the framework of any truly scientific working-class analysis. The proper place to begin is the relationship between the bourgeoisie and the proletariat.

The drum beat of free-market financial reform coming out of Wall Street and Washington is nothing less than a demand that the Japanese ruling class open up a war on the Japanese workers—and allow Citicorp, Bank America, Merrill-Lynch, IBM, GM and all the rest of the pirates free access to Japan to garner some of the fruits of that war.

They want an end to guaranteed employment and worker benefits. They want Tokyo to downsize the Japanese work force and intensify exploitation. They want the Japanese bosses to start a whole new round of imperialist competition based on deepening exploitation of a crucial sector of the working class.

This is the way Washington wants to solve the Asian crisis. Workers everywhere must say—No way!