Japan's New Imperialism

Rob Steven

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315489278
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

A full scale examination of the 1979 Sino-Vietnamese War - the events that led to it, the Cold War aftermath, and the implications for the region and beyond.

1 Origins of the High Yen Crisis

The crisis of Japanese capitalism which sent the current wave of foreign investment into Asia was widely referred to as the endaka fukyō (the high yen recession). Although it began in the early 1980s, it manifested itself most dramatically in the yen’s 50 per cent appreciation (from ¥240 to the dollar to ¥160) from September 1985 to August 1986, its soaring to ¥120 in January 1988, and its subsequent fluctuation around the 130 mark. Although I examine the period 1980-87 in most detail, one cannot fully grasp the forces at work unless one sees this period in its historical context. I therefore briefly review the main features of the years leading up to this crisis, in particular the period after 1974.

My argument is that the course of the Japanese class struggle, notably the growing capacity of capital to break the power of organised labour, confirmed Japan as a low cost production site, particularly for the outputs of the machine industries. These were then increasingly sold in the high wage countries of Europe and North America, and Japanese capital got the best of both worlds. However, this invasion of the markets of its rivals caused strong reactions against Japanese capital, the most important of which were the pressures from the US resulting in the rise of the yen. The high yen has subsequently produced a unique situation: insofar as they represent costs, Japanese wages are now the highest in the world, certainly too high for Japan to remain an area of low-cost production. It is even cheaper to produce in the US than in Japan, not to mention Southeast Asia, and a tidal wave of DFI is sweeping across the world.

However, because of the astronomical costs of such things as housing, education and social security in Japan, the higher wages have not translated into either higher living standards or a buying power which could transform export-led accumulation into growth based on working-class demand. Japanese wages are both too high and too low: too high for capital to expand the numbers of jobs in Japan, but too low to serve as a market, the most important of which is still the US and to a lesser extent the EC. In this chapter I deal with the origins of this unique accumulation model, while in the next I discuss its adaptation during the endaka fukyō.

Restructuring to 1973

Postwar accumulation has been accompanied by a continuous process of industrial restructuring, or what has been called ‘scrap and build’ (Ninomiya, 1987). Right up to the first oil shock in October 1973 this took the form of running down the light industries which throughout the prewar period had generated the surplus for the stale to build infrastructure and subsidise heavy industry, and then building heavy industry into the dominant pillar of Japanese capitalism. Until 1973, the so-called ‘miracle’ was based on the heavy chemical and basic materials industries, processing imported raw materials and exporting iron and steel, ships, chemicals and petroleum products. Its counterpart was to scrap coal mining, agriculture (in spite of its subsidisation) and textiles, a strategy which meshed well with the political alliance with the US sealed in the Security Treaty of 1952. The latter would find a market for its agricultural surplus and other raw materials, as well as another lever with which to keep the Japanese in line with its military strategy in the Far East.

Scrap and build is a normal part of capital accumulation, but since this is a socio-political process it demands appropriate forms of political organisation by the ruling class to ensure working-class compliance. I have elsewhere tried at length to analyse this social structure (Steven, 1983) and only briefly outline here some of its main features. Scrap and build requires a social structure which can accommodate the main dislocations which this process normally brings. Up to 1974, Japanese social structure allowed for a relatively efficient industrial restructuring. The secret lay mainly in the way bourgeois and patriarchal social relations worked in parallel to divide and maintain tight control over the working class.

There are two axes where these relations have overlapped and reinforced social control in Japan. First, Japanese capital could get away with providing a sizeable proportion of the working class with wages and conditions which are comparable to those in Southeast Asia only because it provided excellent wages and conditions to the minority of workers who have been unionised and able to struggle effectively. This axis divides what are called regular workers, the bulk of whom even today receive from their employers lifelong (at least until about 55) job security, annual pay increments and fairly com prehensive social security, from the many categories of temporary and part-time workers, who receive none of these benefits and who are not generally granted union membership. Part-time workers are the worst off of this group, which also comprises day labourers, contract workers, retired workers on short-term hire and so on, and their wages are typically only a third of regular workers’ wages.

All large Japanese companies have kept substantial numbers of low-paid temporary workers, so that their unit wage costs have been extremely low even though their unionised, particularly their older male, workers could be very well paid. Whatever else may be said about rapid accumulation in the postwar period– for example, that it resulted from continual technical change through high levels of debt-financed investment in up-to-date equipment – it remains true that the miserable wages and conditions of the bulk of the working class allowed for the accumulation of the maximum amount of surplus from the rising labour productivity. These were the sorts of wages and conditions which could not be imposed on organised labourers, who had after half a century of struggle finally freed themselves of that burden

The division within the working class along the permanent-temporary axis has received an extra reinforcement because of the way it has coincided with patriarchal social relations. To an extent unknown outside Japan, regular workers have been male and irregular workers female. Even the overwhelming majority of formally regular women workers, many of whom are members of trade unions, are in reality also merely low-paid temporaries. This is because although both men and women are paid dismal starting wages in large as well as small firms, these wages, which are withheld from them when young, are returned to those who toil loyally in the same firms until retirement age. But since women are effectively retired at around 30 when they marry or have children, they never receive the wages which were withheld, and the patriarchal requirement on them to parent their children converts them from nominally regular into effectively temporary workers. It is certainly no exaggeration to say that low-paid female labour has been the Japanese bourgeoisie’s chief weapon in its struggle to build new internationally competitive industries after the Pacific War.

Of course not all temporary workers in Japan have been female. The million or so day labourers who congregate mainly in the slum districts of San’ya (in Tokyo) and Kamagasaki (in Osaka) are almost entirely male, and they are joined by many elderly men, who on retirement between 55–60, if they are lucky, are kept on in their previous jobs with heavily reduced pay and the insecure status of ‘temporary’. Still, of no other capitalist country could one claim that over two-thirds of the floating reserve army of labour (low-paid insecure workers who move from job to job), which itself comprises a full half of the active working class, has been female (Steven, 1983, p. 193).

The second axis which divides the Japanese working class and secures a high rate of exploitation covers the vast network of subcontracting relations that exist between large and small firms in Japan. Particularly in manufacturing, the technical division of labour in volved in the production process tends to coincide with an institutional division, so that different parts of a product are made by different firms, the largest of which assemble the components which are made by myriads of scattered subcontractors. The smallest of these undertake the most labour intensive tasks, sometimes receiving their orders from firms which are only marginally bigger than them selves and which are in turn working under contract from still larger firms. Often even the employers in the smaller ‘child’ companies are powerless in the face of the ‘parent’ companies’ capacity to dictate contract prices, quality standards and delivery dates. Wages and conditions deteriorate to the levels of temporary workers as one moves down the hierarchy of subcontracting and re-subcontracting. Moreover, the smaller the firms, the harder it has been for workers to organise, and very few even in medium-sized companies belong to unions.

The system of subcontracting has been of comparable importance to the temporary labour system in ensuring compliance with appalling conditions by the bulk of the Japanese working class. In fact only about one-quarter of this entire class has been well paid, had regular jobs and enjoyed comprehensive social security. If half the working class has been in the floating reserve army of labour, at least another quarter has been excluded from the well-paid labour aristocracy in large firms through having to work in smaller ones which are in varying degrees victims of the subcontracting system. However, this second axis which divides the working class has not overlapped as closely with patriarchal relations as has the first. While women are more concentrated in small firms than men, at least 20 per cent of economically active males have toiled away as employees in such establishments.

The Gathering Storm

The first oil shock in late 1973 triggered a crisis which marked a turning point in postwar accumulation and a qualitative strengthening of the structures of exploitation and social control which had created the ‘miracle’. Even though the liberalism which swept through all Japan’s authoritarian institutions (family, factory, school and state) directly after the war had never been entirely extinguished, the only trace remaining of it in the period after 1973 was an ageing and disillusioned generation who had been either educated or politically active during that interlude.

The overlapping networks of social relations which had ensured capital’s profitability before the oil crisis were no longer able to do so, and widespread bankruptcies, layoffs and losses of livelihood among the ordinary people occurred. But because in the preceding decades capital had concentrated on building up the heavy and raw material processing industries, whose social counterparts were the subcontracting and temporary labour systems, what was in reality a political problem presented itself as an ecological one: a constraint of nature. What was apparently a bottle-neck due to rising oil and raw material prices was essentially a breakdown of capital–labour relations.

It was to be expected that such a crisis would present itself as a conflict between Japan and the outside world. Ever since the Meiji Restoration, competition from foreign capital in one form or another, fro...