The general election is over. Whatever the outcome, there's no sign of any major changes to the country's future. Rather, the election campaign reflected a deep exhaustion and apathy in Japanese society. Issues at the core of daily life, such as wages, prices, finances, and the exchange rate (weak yen), were not explored in depth. There was no discussion of the looming 2040 crisis caused by a declining birthrate, or the image of Japanese society. The boom in Takaichi Sanae, Japan's Iron Lady and the first female prime minister, fueled the ongoing repetition of the "growth story" that has been around since the Meiji Restoration. Voices questioning the looming crisis were drowned out.
Takaichi's "active fiscal policy," which has divided the nation, is an extension of this. The state's role in determining the direction of growth and providing capital with funds to guide a shift in industrial structure has been repeated for 150 years, since the Meiji era. In all of these efforts—industry development, wartime control, high economic growth, and structural reform—the alliance between state and capital has played a central role, with workers always relegated to the background. The current administration's policies, which call for investment in cutting-edge technology and promote a "strong and prosperous Japan," are also an extension of this history. Yet workers are nowhere to be seen. The principle of fair distribution is not mentioned, nor is there any discussion of reforming the wage-determining system. While stories of growth are told, the fundamental question of who should reap the benefits is left unaddressed.
As a result, real wages have been falling for three consecutive years. This is not simply because companies are reluctant to raise wages. It is because the country lacks the systems and movements necessary to counter rising prices. Labor union membership is declining, the power of industry-wide bargaining is weakening, and organizing non-regular workers is stagnating. There is no mechanism for linking minimum wages to inflation, as in Europe, nor is there a system for making industry-wide agreements legally binding. Wages are left to the discretion of companies, leaving workers exposed to the waves of rising prices. While the liberalization of price pass-through is progressing, the price monitoring system is weak and the Fair Trade Commission's intervention is limited. There is no organized force anywhere in society to hold down prices, which are being driven up at this opportunistic rate.
If things continue as they are, the number of unmarried people and the declining birthrate will continue to increase at a landslide rate as we approach 2040. Unless real wages steadily rise under stable regular employment and people can sense an improvement in their lives, it will be difficult for the younger generation to start a family. There is no way the birth rate will recover in a society without prospects for the future. The 2040 problem is not simply a decline in population, but a crisis of social collapse in which the foundations of life crumble and reproduction becomes impossible.
Even more serious is the structure in which capital leans toward low-wage foreign labor. If the idea that it is easier to import cheap labor from overseas than to raise domestic wages becomes widespread, Japan's labor market will become dualized and social division will become definitive. If the treatment of foreign workers is kept low, the wages of domestic workers will not rise either. In this way, society as a whole will become fixed in a low-wage structure, and a "poor and exhausted Japan" will become a reality before 2040.
The situation in which an "active fiscal policy" has clashed with pressure from international financial markets, leading to a weaker yen and rising interest rates, is an extension of Japan's postwar dependence on the United States. The country's vulnerability, characterized by a lack of autonomy in fiscal and monetary policy and its susceptibility to the international environment, can no longer be hidden. While the state steers the economy, it lacks the strength to resist pressure from Washington and has failed to develop systems to protect the livelihoods of domestic workers. This dual vulnerability lies at the heart of the 2040 crisis.
The reason these issues are not becoming issues in general elections is not simply due to political negligence. This is because there are almost no channels in Japanese society for translating issues related to people's daily lives into political issues. Labor unions have weakened, the media has lost the ability to dig deep into structural problems, political parties have lost their ability to formulate policy, and civil society is disorganized. The reason issues directly related to people's daily lives, such as wages, prices, public finances, and the weak yen, are not at the forefront of politics is because society lacks the power to push for them.
In this light, Japan's current economic policies should be seen as a time when the structure of "150 years of Japan's decline" has been laid bare. Four weaknesses are now simultaneously exposed: the repeated alliance between state and capital, the lack of an institutional foundation for labor, dependence on the international financial environment, and the lack of a strong civil society. The 2040 crisis is a future in which all of these chronic problems will structurally erupt simultaneously.
Japan's decline is not simply a result of economic stagnation, but the result of modern Japan's failure to foster civil society. With 2040 fast approaching, what is needed is not a retelling of the story of growth, but rather a conception of a new social framework centered on distributional fairness and citizen autonomy. The time has come to start afresh, taking into account 150 years of history since the Meiji Restoration.
Where did the 150 years begin?
This is nothing other than the original sin of modern Japan, "opening the country to expel foreigners," hidden behind the glorious story of the Meiji Restoration.
The "150 Years of Japan's Decline" series is an attempt to trace back to the origins of the country's chronic illness.