Victories of Japanese Capitalists
Lead Down a Blind Alley by Yohichi Sakai
A major turning point in the situation of the Japanese workers movement occurred in 1975. Sohyo, the more militant union federation, found itself facing both a deep recession and the conservative bourgeois government of the Liberal Democratic Party. It caved in.
This capitulation was reflected by Sohyo's passivity during the "Spring Campaign" of that year, the annual bargaining for higher wages. It was confirmed by the confederation's abandoning the struggle in defense of public-sector workers' right to strike in November 1975.
Since the 1960s, there were two distinct elements in the annual round of wage bargaining that takes place in the spring. One was the manufacturing enterprises. By the early 1960s, the bosses had imposed the total dominance of company unions in this sector.
The other element was the big national unions of the public sector, especially the railway workers, postal workers, and telecommunication workers. The only real struggles were in this latter sector.
To a considerable extent, these struggles were an extension of the youth radicalization that took place in the 1960s and early 1970s.
The youth were defeated, owing to their isolation from the workers movement, which remained under the control of reformist bureaucrats. The special mobile police force set up to deal with student demonstrations proved quite effective.
But in spite of the defeat of the campus and street protests, the youth radicalization continued to spread among young workers in the public sector and the small and medium-size factories in the private manufacturing sector. Its most advanced expression were the mobilizations of the railway workers and the young postal workers in 1971 and 1972.
These young workers clashed head on and on a wide scale with the management apparatuses in the work places, winning a decisive victory.
The older workers, who had been feeling the pressure of inflation and were looking for a way out of the prolonged stagnation that marked the union movement in the late 1960s, gave sympathetic support to the young workers. Finally, the union bureaucrats were forced to support them.
Thus, the union movement went on the offensive in 1972-73, at the same time as there was a big new spurt in inflation following the first oil price increase.
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The public sector unions gained the initiative, exercising a definite influence over the workers in the big manufacturing enterprises and over the farmers, who were campaigning to get the government to raise the price of rice. There was a general rise of militancy within the bureaucratically dominated channels of the trade unions.
Japanese Women Workers. (DR)
MOMENT OF TRUTH
FOR REFORMIST BUREAUCRATS
The result was particularly important wage gains in 1973. A sharp class polarization was developing. Thus, 1974 became a year of decisive choice for the reformist trade-union bureaucrats. They had the opportunity to lead labor in a general offensive to break the straitjacket in which it had been kept historically by the Japanese bourgeoisie.
The union leaders decided to try to pull the workers back. The result was much lower wage increases in the spring of 1975. And in November of that year, the retreat turned into a rout, when the union leadership sold out the public workers general strike. The strike was solid. But after five days, as soon as the government made the least threat of force, the leadership called it off.
THE CAPITALIST OFFENSIVE GAINS MOMENTUM
The 1975 capitulation by the Sohyo leadership began a sharp decline in the annual wage increases. In 1974, nominal wage raises (unadjusted for the high inflation rate) averaged 32.9%. In 1975, they were 13.1%; in 1976, 8.8%; in 1977, 8.8%; in 1978, 5.9%; and in 1979, 6%.
In the manufacturing sector the evolution of wages was as follows: In 1974, the increase in nominal wages was 31.4%, and the increase in real wages was 5.8%. In 1974, it was 15.1% (2.9% in real wages); in 1976, it was 7.5% (-1.6%); in 1977, 9.1% (1.0%); in 1978, 5.8% (1.90%); in 1979, 4.5% (0.95%); and in 1980, 6.5% (-1.6%).
Despite the strong position of the bourgeoisie vis-a-vis the workers in the manufacturing industries, wages had in fact increased significantly in the late 1960s and early 1970s. Aside from the example of Sohyo, the main reason for this was that the long boom had led to the exhaustion of the vast reserve of labor previously locked up in agriculture. This, of course, tended to push up the market price of labor.
For example, between 1955 and 1973, the agricultural workforce decreased from 16.86 million to 8.45 million. In the same period, the number of wage earners increased from 20.10 million to 36.45 million.
Thus, the deepening recession and the capitulation of Sohyo allowed the capitalists to reverse a long-term tendency of wages to rise.
ATTACK ON JOBS
At the same time, a campaign to "cut out the fat, "that is, to carry out an intensive capitalist rationalization, gained momentum in the private manufacturing sector. The number of workers fell from 14.43 million in 1973 to 13.26 million in 1978 (an 8.1% decrease). After an initial drop, owing to the upset of the change, labor productivity began to rise again, although at a lower rate than in the boom years.
Thus, in 1973, the increase in produc-
tivity in the private manufacturing sector was 15.3%. In 1974, it was 1.5%; and in 1975, it declined by 3.6%. But in 1976, it rose by 9.7%; in 1977, by 4.5%; in 1978, by 4.6%; in 1979, by 8.1%; and in 1980, by 6.5%.
In this same period, the rate of inflation declined sharply and steadily. In 1974, the official inflation rate, the GNP deflator, was 20.6%; in 1975, it was 7.8%; in 1976, it was 6.4%; in 1977, 5.7%; in 1978, it was 4.6. In 1979, it was only 2.5% and in 1980, 3.1%.
By this rationalizing and lowering of the real wage rate, the Japanese bourgeoisie succeeded in increasing exports dramatically. In 1974, the balance-of-payments deficit was 4.693 billion U.S. dollars. In 1976, the balance-of-payments showed a surplus of 3.68 billion U.S. dollars.
THE POLITICAL REORGANIZATION
The political reflection of this was that the bourgeoisie and the "Mainstream Forces" inside the LDP, began to recover their self-confidence in 1976. At the end of that year, T. Fukuda replaced T. Miki as prime minister, the new head of government being an advocate of a hard-line austerity policy in the style of Thatcher in Great Britain. Among other things, he wanted to extend the sort of rationalization that had been carried out in the private sector into the public one.
However, the economic depression cut so deep at home and the pressure from the U.S. was so strong internationally that the Fukuda government was forced to reflate the economy through governmental spending. Over the next three years, the budget deficit escalated. In 1979, it amounted to 39.6% of the total budget, a bit more than 6% of GNP. And the total public debt reached 30% of GNP.
Thus, Fukuda's attempt to impose a program of hard-line austerity failed. Then, in 1978, when the government ran into violent opposition to opening the new international airport in Narita, his cabinet was thrown into political crisis.
The airport was eventually opened in May, as a result of a major effort by the repressive forces. But the fight against the project had a big political impact on the rank and file in Sohyo. It shook up the feeling of hopelessness, that nothing could be done in the present situation.
CRISIS IN THE RULING PARTY
As a result of Fukuda's failure to achieve his economic objectives and the political problems he ran into, a faction fight developed in the LDP in the latter half of 1978. At the end of that year, Fukuda was defeated by M. Ohira, who became the new prime minister.
The primary objective of the new cabinet was to reduce the huge budget deficit. To accomplish that, it introduced a new sales tax bill. Along with that, Ohira wanted to establish a new financial structure suited to slower economic growth by rationalizing the budget and the public sector.
In September 1979, general elections were held. Throughout the campaign,
Ohira maintained his support for a new sales tax. The LDP suffered a serious electoral setback. The result was that the prime minister had to back off from his tax project
GROWING INTERNATIONAL PRESSURES ON THE JAPANESE BOURGEOISIE With respect to "order" at home and military security abroad, Ohira took a cautious line, as opposed to his notably office, he was faced with multiplying international crises that were more and more threatening to the Japanese ruling class.
There was the outbreak of the Iranian revolution, the second oil-price increase, the Soviet military intervention in Afghanistan, the Vietnamese military intervention in Cambodia, and the explosion of the crisis in South Korea.
In particular, the events in South Korea, which has close connections with Japan, created uneasiness in the Japanese bourgeoisie. A public division appeared between the followers of Ohira and those of Fukuda, who favored a more openly imperialist foreign policy. In May 1980, the lower house of parliament passed a motion of no confidence against the Ohira govern-
The prime minister dissolved it, and went to the country. He died in the midst of the election campaign.
Despite its economic successes, the Japanese bourgeoisie suffered from political weaknesses and divisions in the late 1970s. The LDP "Mainstream Forces" could not impose their policies and the party did not have a strong majority in parliament.
SHIFTS TO THE RIGHT
However, the 1980 general elections brought unexpected electoral gains for the bourgeois parties, the LDP and the New Liberal Club (NLC), a group that split from the LDP in 1976. The LDP got a safe majority in the lower house, 284 seats out of 5ll. In addition, the NLC got 12 seats.
The big losers were the Communist and Komei parties. The latter is an opportunist populist Buddhist party of the urban petty bourgeoisie. The CP's seats dropped from 41 to 29; the Komei's from 58 to 33. The Socialist Party made some small gains, going from 104 seats to 107.
What the gains of the big bourgeois parties reflected was a strong right-wing shift among the petty-bourgeois population, layers of which were looking for greater security in what seemed to them to be an increasingly unstable world.
Following the LDP victory, Z. Suzuki, previously an Ohira supporter, became the new prime minister. Under his leadership, the LDP factions were "reconciled. " Like his mentor, Ohira, the new head of government made it his primary objective to reduce the budget deficit.
THE ACHIEVEMENTS OF THE CAPITALIST OFFENSIVE
The Japanese economy emerged from the recession to all intents and purposes in 1978-79. Its recovery was based essentially on a tremendous expansion of exports and government spending. Another important factor was a slower but relatively stable growth of private consumption. Net business capital investment in manufacturing began to grow again in 1978, owing to the superior competitiveness of Japanese manufacturing industries that was based on the extensive rationalization and reduction of real wages achieved by the capitalists.
In the year of the second oil price increase, 1979, Japanese business in particular demonstrated its competitiveness. In 1981, it eliminated its balance-of-trade deficit at the expense of the U.S. and the EEC. In its January 26,1982, issue, the Financial Times of London noted:
"Last year Japan had a record $10.3 billion trade surplus with the EEC, 10% larger than in 1980, and accounted for substantially more than half of Japan's total exports to the community. " It continued: "With the U.S., Japan's surplus more than doubled during 1981, hitting the high level of $13.4 billion. "
In its January 27 issue, the Financial Times wrote:
"The Japanese share in the total world exports of manufacturing goods in the second quarter of 1981 was 19.6%; with the U.S. 21.5% and West Germany 13.3%. "
THE ACHILLES HEEL OF JAPANESE CAPITALISM
The DKB Economic Report of February 1982, however, pointed up a fundamental weakness in the Japanese expansion.
"Since bottoming out in the spring of last year (1981), the Japanese economy has been making a recovery, but the pace of expansion has been very slow.... What is more, the economy's growth has taken place almost entirely on the strength of external demand, with domestic demanc playing only a marginal role."
In 1980, Japanese net GNP growth was 4.2%. In January-September 198l, it was 3.4%. Of this, the balance-of-trade surplus accounted respectively for 3.6% and
The DKB report continued:
"The cardinal reason for the slowness of current business recovery is weakness of private final consumption expenditures... Such expenditures in real terms slipped 0.9% during the first 10 months of last year over a year-earlier period, with all 1981 most certainly having recorded a drop for the second consecutive year. The slow consumption largely reflected a low growth of income after inflation for wage earners as well as independent business operators. Net income of wage earners' households during the first
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10 months of last year increased 5.2% but due to a sizable 12.8% rise in nonconsumption outlays, such as tax and social insurance premiums, the disposable income rose by only 4.1%, which represented a drop of 0.9% after inflation."
What these figures show precisely is the bourgeoisie's success in imposing "wage restraints" and intensive rationalization in manufacturing, as well as in rationalizing the budget at the expense of the working people. The other side of this for the capitalists is the weakness of domestic demand.
The DKB report went on:
"Private expenditures on plants and equipment in real terms, on the GNP statistics basis, also have been weak; they dropped 0.0% in the second quarter of last year from the preceding period and 0.2% in the third quarter. " Also: "Private housing investment is still very depressed. ...Any rapid recovery appears ruled out because land prices have soared to a level far beyond the reach of average people." The report continued: "As for exports, their growth in recent months has been notably slowing down... Growth of exports is generally expected to continue flat for the time being as U.S. and European economies remain in a slump and Japan must take steps to resolve escalating trade frictions with them."
As regards the budget: "On the fiscal side, public works investment turned minus after September in comparison with the year ago level and there is considerable concern that they may turn out to be a drag on business in the second half of fiscal 1981. Accelerated disbursement of budgeted funds during the first half is the cause of slowdown in the second half." And further on: "The Government decided on the budget draft for fiscal 1982, up to 6.2% from the fiscal 1981 initial budget. Except for costs of bond issues and allocation for funds to local governments (and except the military budget's 7.75% increase), general expenses turned out almost flat from fiscal 198l, with the rate of increase being 1.8%. "
In 1977, the rate of increase of net public capital formation was 15.8%. In 1978, it was 14.5%. But in 1979, it was -1.5%, and in 1980, 0.7%.
THE STATE IS LESS AND LESS ABLE TO PROP UP THE ECONOMY
The recent stagnation/contraction of government spending is a response to the enormous public debt piled up in past years in order to sustain the economy. The budget deficits in fact remained high despite attempts to cut spending. In 1979, as mentioned, the deficit represented 39.6% of the total. In 1980, it was still 32.7% of the total, and in 1981, 26.2%.
Thus, since the end of the 1970s the government's room for maneuver in fiscal policy has narrowed extremely.
Despite the competitiveness of big Japanese manufacturing concerns in the world capitalist market, the basic contradictions afflicting the Japanese capitalist economy after the end of the boom have not been solved. This is true in the domestic context as well as the international one, both worldwide and regional.
In the present international and domestic context, it remains essential for the bourgeoisie and the LDP government to rationalize the whole system of government income and expenditures. This is necessary to avoid becoming trapped in the dilemma of stagflation in the immediate future. The government's lack of maneuvering room in the field of fiscal policy is a real problem for the bourgeoisie.
International pressure is increasing on the Japanese bourgeoisie and the LP government to carry out a "faster and larger" military buildup.
The Japanese bourgeoisie now finds itself in a position where it has to finance the East Asian neo-colonial regimes, and this is a major burden.
In 1980, the LDP government gave $250 million in foreign aid, including a $30 million "donation" to Thailand, which is the frontline of ASEAN facing the three Indochinese workers states. The South Korean regime has been demanding that the LDP government accord it $6 billion in government-to-government credits and $4 billion in commercial credits over the five years of 1981-85. In the 1970s, the Japanese bourgeoisie got their neoimperialist "East Asian Co-prosperity Zone" and in the coming period they are going to have to pay more and more for it.
### JAPANESE EXPORTERS CAUGHT
IN SHRINKING WORLD MARKET
The East Asian semi-industrialized export-oriented neocolonial economies A Battle over the Narita International Airport. (DR)
have their major market in the U.S. and West Europe, which are now economically stagnant. The frictions between these neocolonial exporters and those who command the American and West European capitalist economies will certainly increase.
It is also a big question how much more the Japanese bourgeoisie can expand its exports to the U.S. and Western Europe in the present state of the world capitalist economy, no matter how competitive Japanese industry is. In this respect, it is very interesting that this year the two biggest car manufacturers, Toyota and Nissan, are concentrating their sales campaigns on the domestic market.
Furthermore, the bourgeoisie and the LDP government are compelled to continue trying to sustain the economy by public spending. This is necessary to maintain the whole massive apparatus of the company unions.
JAPANESE CAPITALISM IN A DEAD END
It seems now, in fact, that the Japanese economy, like that of the other advanced capitalist economies, is drifting toward stagnation. Thus, in its February 13, 1982, issue the London Economist writes:
"The motor industry shipped $30 billion worth of goods abroad last year, accounting for 20% of Japan's exports, " and this industry expects to increase the exports by 1.1% and to produce 1I.3 million vehicles in 1982, while "capacity to make more than 13 million units has been laid down and capacity for a further 3 million units is on the way."
The signs are appearing of a crisis of overproduction, and in this respect the automotive industry is no exception. The same thing can be said for other manufacturing industries, such as electronics, steel, shipbuilding, and chemicals.
In such a context, industrialists are likely to look to a "faster and larger" military buildup as a way of expanding their market. But new arms spending would run up against the fiscal limitations in which the government finds itself.
The capitalist rationalization successfully carried out in the private manufacturing sector since the mid-1970s has now to be extended to the public sector and local government (the railways, postal system, telecommunications, and tobacco). In order to rationalize all social expenditures, the LDP government and the bourgeoisie will have to attack the farmers, who have traditionally been an electoral bulwark of the LDP.
THE CAPITALISTS MUST BREAK
THE INDEPENDENT UNIONS AND
WORKERS PARTIES
It is also the public-sector and local government workers who have been the traditional base of the left reformist trade-union confederation, Sohyo, as well as of the SP and the CP since the 1950s.
In their campaign to rationalize the budget structure, the bourgeoisie and the LDP government have made their main strategic objective to attack and try to break up the traditional mass bases of the Sohyo, the SP, and the CP.
Although the Sohyo leadership has taken a capitulationist course, the battle between the masses organized by this union confederation and by the SP and CP, on the one hand, and the LDP government and the bourgeoisie, on the other, has only begun.
The stakes in this struggle are very high both for the proletariat and for the bourgeoisie. by Paul Lawson
Unted Front Demonstraton Agains Nartlu Opening IR
In the big manufacturing concerns, the bourgeoisie smashed the reformist trade-union forces in the early 1960s. It achieved a situation where company unions predominate and where it enjoys total paternalistic control over workers who believe that they are established in their jobs for life.
However, throughout the 1960s and into the 1970s, Sohyo remained a militant force. And its leadership retained the initiative in the situation.
Now the bourgeoisie and the LDP government want to break Sohyo, the SP, and the CP, and establish its direct control over the masses that follow them. That is, it is seeking to fundamentally reinforce the Japanese bourgeois state vis-a-vis the working masses.
Since the 1950s, although it lost strength in the 1960s and 1970s, the bloc of the Sohyo, the SP and the CP have been the politically dominant force in the working class. The openly pro-imperialist rightwing Social Democratic Party, the DSP, and the right-wing union federation,
Domei, have remained politically in a minority in the working class.
THE REMILITARIZATION DRIVE
Moreover, the SP-CP bloc has continued to reject the U.S.-Japan Security Treaty and to oppose the Japanese Self-Defense Forces. Since the 1960s, new right-wing currents have developed inside the SP, but they have not yet achieved a dominant position.
Therefore, the bourgeoisie and the LDP government have to break the mass base of the Sohyo and the SP and CP in order to open up a full-scale remilitarization drive. They have to do this in order to be able to revise the Japanese constitution, which prohibits the government from building and using a war machine. This is the general economic, social, and political context in which the recomposition of the Japanese workers movement has been taking place for the last few years. I will take up this process in a subsequent article in International Viewpoint.