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September 2002



Part 4. Japan, China and East Asia

145) Japan is the key country of Asia and the second most important industrialised nation in the world. Prior to the 1990s, it was pictured as the most successful capitalist country, a model for the rest of the world. It is deserving of a special document because perspectives, particularly for the economy, are a vital component of world perspectives.

146) For over a decade Japan has been trapped in a deflationary spiral. We have traced the causes of this, described the nature of the specific Japanese 'depression' - as an anticipation of the fate of the rest of the industrialised world - and this will be further examined in the document on economic perspectives. No policy, be it a further dose of deflation or of 'inflation', along the lines of the numerous quasi-Keynesian packages of economic measures introduced by the Japanese government, can fundamentally alter the situation facing Japan.

147) Its short-term prospects, despite the appearance of small growth at the beginning of 2002, is that Japan along with the rest of the world could fall off the cliff into an even worse economic situation than the parlous one it faces at the present time. The current joke in Japan is: "What is the difference between Japan and Argentina?" Answer: "Two years." Moreover, Japanese holders of dollars (accounting for 28 per cent of all dollars in circulation) could yet be the trigger for a precipitate fall in the dollar, which in turn could enormously aggravate the economic problems of world capitalism.

148) It is for this reason the key position of Japan as far as world economic processes are concerned, that the world bourgeois, let alone the Japanese capitalists themselves, looked so favourably on the coming to power of Koizumi in April 2001. He promised "a revolution from above", a "new broom", which would transform the economic position of the Japanese state and with it the lives of the beleaguered Japanese people. Although hailing from the main bourgeois party the Liberal Democratic Party, he presented himself as not beholden to the powerful faction bosses within that party. This was mere window dressing. He was elected with the support of the party factions. His election triggered a wave of grassroots fervour and he threatened to "smash his own party" if it blocked reforms. His 'reforms' were in reality 'counter-reforms', the main planks of which were to rid the banks and the government of the problem of 'bad loans'.

149) All his promises however, to take the surgeon's knife to the 'non-performing' sections of the economy have come to nothing. Faced with a serious crisis for over a decade the Japanese bourgeois have hesitated to go for a wholesale policy of bank and company closures which would have meant a huge increase in unemployment and a significant ratcheting up of mass discontent. Koizumi appeared to be prepared to grasp this 'poisoned chalice'. However, he, as with others, hesitated and adopted a Micawberish approach, "something will turn up". The result is that his popularity has slumped. His aging pop star hairstyle and his 'plain talking', as well as his alleged disdain for politics, has done nothing to arrest this.

150) His proposals to carry through "reform without sanctuaries" has run into the sand with half of Japanese polled who originally supported him now saying that he stands no chance of accomplishing his reform programme. There has been much talk, and feeble action, of sending in the 'regulators' to inspect banks in an effort to root out the bad loans "poisoning their balance sheets". He has fulminated against the 'zombie companies' behind them but promise of action has given way to paralysis as the size of the problem has become apparent. When faced with the case of Daiei, Japan's biggest supermarket chain, which had built up debts of ¥2,200 billion in the property buying binge of the 1980s, and no prospect of repaying these loans, the government encouraged a bank bail out.

151) The proposal to slash government expenditure is also largely symbolic, as the government itself has approved two supplementary budgets totalling ¥2,500 billion, to help prevent the economy sinking further into a deflationary spiral, and the Bank of Japan has accelerated the presses to print more government bonds. Attempts at a much vaunted deregulation programme, has come up against the vested interests of the LDP members. Even his attempt to privatise the post office was blocked in early 2002 by the cabinet. He had declared earlier: "This is a battle over whether the LDP cabinet will crush the Koizumi cabinet or the Koizumi cabinet will crush the LDP".

152) However, the Japanese people seem to be inured to such rhetoric, fearing that Japan's decade long economic blind alley will persist as before. Their growing disenchantment with Koizumi was shown in the crushing electoral defeats in by-elections in early 2002. An independent won from the LDP the mayorship of Yokohama, Japan's second largest city. This was followed soon after by a parliamentary by-election defeat in a former LDP stronghold of Niigata.

153) The increasing economic difficulties of Japan, which in turn has compounded growing social problems of rising unemployment, contracting wages and discontent despite the glitter that still remains in central Tokyo and other Japanese cities, means a new period is opening up for Japan. Hitherto the potentially powerful Japanese working class has not moved significantly. The causes of this can be found in the slow, almost incremental, worsening of the conditions of workers over a decade, the right-wing shift of the trade union leadership as in most of the industrialised capitalist countries and the betrayal of the traditional ex-workers' parties, which have moved into the orbit of the bourgeois and embraced the 'market'. But given the inevitable worsening of the situation of the Japanese workers and middle class a period of increased social tension is inevitable, out of which a new consciousness of the working class of its position in society, a renewal of the labour movement, a rebirth of the fighting traditions of the workers' movement, will take place. In Japan it is necessary above all to seek a road to the more thinking and audacious sections of young people and the working class generally.

Japan's relations with Asia

154) Not least of the factors which will shake up what has been a relatively inert society are the sharp turns in the international situation. Japan will be affected and, in turn, can have an effect on the international situation, particularly in its immediate backyard, Asia. Since the end of the Second World War US imperialism, with the stationing of 40,000 troops in Japan and a similar number in South Korea, has acted as the 'defensive shield' of Asia. It is an anomaly that, in the light of the colossal economic and industrial power of the Japanese bourgeoisie, it has been prepared for so long to accept this situation. The consciousness of the devastating price which was paid by the peoples of Asia and of Japan itself for the brutality of Japanese imperialism during the Second World War largely accounts for this.

155) The post-Cold War situation meant a greater assertiveness on the part of other regions of the world towards US imperialism. In the Philippines for instance, the US military was evicted but nothing like this happened in Japan, because of the dead weight of the past lying on the consciousness of the Japanese people. They feared the repercussions of a greater national and therefore military assertiveness on the part of the Japanese bourgeoisie. However, the aftermath of 11 September has begun to change the situation. This has been combined with a period of greater tension in the Asian theatre. A greater awareness by Japanese capitalism of the need to demonstrate its preparedness to defend itself, rather than rely on US imperialism, has begun to emerge. A growth of nationalism and calls for a greater re-arming of Japan can result from this. Japan has called for the return of the Kurile Islands, which were taken from it by Russia in 1945.

156) China and Japan, for instance, as the two major powers in Asia, rub up against one another like two mighty tectonic plates for influence and power in the region. China, as an emerging power in Asia and on the world stage, is not hesitant in making its presence felt when necessary. It supported US imperialism's actions against the Taliban and al-Qa'ida, largely for domestic reasons, the threat of an Islamic revolt and terrorism in Western China.

China and US policy in Asia

157) However, the Chinese elite cannot be at all happy that the US is using the war against terror to establish new military points of support in Asia, or sometimes re-establishing old bases. This looks very much to the Chinese as though there is a concerted effort to establish a military encirclement of China. In Central Asia Russian dominance is being replaced by the first stages of new US bases in Central Asia, which are referred to by US spokespersons as "semi-permanent". Also in the Philippines, the Moslem terrorist insurgents numbering no more than an estimated 500 fighters have little prospect of immediately overthrowing the Philippines government. Yet this has been used to re-establish a military presence which existed prior to the US's eviction a decade ago. One diplomat commented: "The Americans have been desperate to get back into the Philippines since their armed forces were kicked out of the Clark and Subic Bay bases in 1992."

158) Even before 11 September US strategists perceived Asia as a new centre of post-war competition, with China as the main potential rival for commercial and strategic influence over the continent and its emerging markets. Fortune magazine published for the first time a ranking of China's 100 biggest corporations and the Pentagon "highlighted the risks and rewards" of Asia, which in turn required, according to them, a bigger US military presence in the region. Soon after 11 September, in a little commented upon defence review by the Pentagon, the first under the Bush presidency, it identified the East and North-East Asian littoral as "critical areas" for US interests which must not be allowed to fall under "hostile domination". In code, a warning was given about the future threat posed to the US by an emerging China, the one country in the world with the most demonstrable capacity to act, even given its economic weaknesses at the present time. It states: "A military competitor with a formidable resource base will emerge in the region" and warns about lowering the "density" of a US military presence.

159) The demise of Russia following the collapse of Stalinism has opened up a vacuum - for instance, with the vacation by the Russians of the Cam Ranh Bay base in Vietnam - which the US is scrambling to fill. However, it comes up against China and possibly, a little later, Japan. Most of the Chinese companies on the Fortune list are in the energy and petrol-chemical sectors, which provide the base and drive for the Bush administration's international agenda, from Kyoto to Kazakhstan. As one commentator baldly stated: "Money and power are at stake."

North Korea

160) Flowing from this, however, are greater dangers of clashes, including serious clashes, between the competing powers in the region. The catalyst for this in the next period could be the 'rogue state' of North Korea. As a by-product of Bush's attack on North Korea as part of the "axis of evil", Japanese capitalism has also come into collision with Pyongyang, the capital of North Korea. North Korea has criticised Tokyo for passing a law enabling Japan's armed forces to give "logistical support" to the US-led campaign against the Taliban. Japan is perceived by North Korea as a growing military threat together with the US. At the same time Tokyo is suspicious of North Korea's weapons programme, particularly after it launched a missile over Japan in 1998. The Chinese pitched in after the exchange of fire with a North Korean spy ship, expressing its "concern towards Japan's use of military force in the East China Sea".

161) This heightened tension flows directly from the decision, which surprised and stunned the South Korean government, for instance, to include North Korea together with Iran and Iraq in the "axis of evil". One of the factors in Bush's decision to include Pyongyang was, it seems, in order to demonstrate that his stand was not anti-Islamic. It has, however, considerably ratcheted up the tension in the region, a constant feature of the situation on the Korean peninsula, since the Korean War itself. The government of President Kim Dae-jung had promised a brighter future for the peoples on both sides of the 38th parallel which has divided North and South Korea since the war. Its "sunshine policy" was aimed at "lessening the tension" between North and South - which in the past led to armed clashes and the fear of another war - the aim of which was to gradually wean away the North Korean enfeebled Stalinist regime towards the market and a closer relationship with the South.

162) The nightmare which has haunted the South Korean bourgeoisie and the more thinking sections of the US ruling class is a repetition of Germany in 1989, a sudden collapse in the North. The South Korean bourgeoisie is nowhere near as strong as its West German counterparts. Even the latter, however, have paid a high price economically - the complete melting away of its reserves - for the reunification of Germany. A similar scenario in the Korean peninsula would lead to the crippling of South Korea if it was to economically underwrite the North and particularly if it was faced with a massive flood of impoverished North Korean citizens, fleeing to the South to avail itself of the greater economic benefits there

163) Bush, with his eyes on the wider global conflict with 'terrorism', was impervious to this when he made his declaration. Bush and his entourage, in particular, hark back to the "glory days" of Reagan in the 1980s. The latter's policy of increased military expenditure in the US and the pressure on Russia to match this was allegedly the key factor which led to the downfall of the USSR. This is a gross oversimplification. It was a combination of factors which led to the collapse of the USSR as we have previously analysed. In summary these were:

i. The incapacity of society to further advance because of the form of political rule, a totalitarian Stalinist regime with control in the hands of a bureaucratic elite

ii. The world economic boom of the 1980s which contrasted with the slowing down of the economies of Eastern Europe and the Soviet Union, evident even in the 1970s.

A regime of workers' democracy would have revitalised the planned economy and allowed it to outstrip even the highest growth rates of the capitalist states of the West. To achieve this, the Stalinist regime would have needed to be overthrown - a political revolution - but the forces to lead and harness such a movement were not present in the period 1989-90.

164) It should be added however that the glittering prize of living standards similar to those in the US, Sweden or Germany on the basis of a restored capitalism remains a mirage to the peoples of the former Stalinist states. In answer to the prospects of 'American living standards' to the masses in these states at the beginning of the 1990s, our Czech comrades replied: "Yes, via Bangladesh." This is a more accurate reflection of what has transpired than the rose-tinted perspective mapped out by the spokespersons of capitalism at that time.

165) Bush's mini-attempt to emulate Reagan is a high-risk strategy, to say the least, when applied to North Korea. It seems that the White House believes that increased pressure would lead to a breakdown in the regime of Kim Jong-il which would trigger a coup by dissident army officers, followed by an anti-Ceausescu type movement which would deliver the North into the hands of US imperialism. Even if this scenario was to work out, as we have described above, this would create as many problems for the South and for US imperialism as the present unstable situation.

166) It was this which determined the so-called "sunshine policy" of South Korean president Kim Dae-jung. The position of North Korea is extremely precarious and the position of the enfeebled Stalinist elite, following the withdrawal of support from China and Russia, is desperate. No matter which way the regime turns it faces overthrow or removal. A decade-long recession has reduced the country's annual economic output from a paltry $23 billion in 1990 to $16 billion in 2000. North Koreans, it is estimated, are today dying at a rate of 40 per cent higher than in 1994. There is widespread famine and disease, according to the World Health Organisation (WHO). The paradox of the present situation is that the North Korean economy has virtually collapsed, but it is in the interests of the institutions of world capitalism that the regime is sustained through foreign aid, particularly through the supply of food. If WHO and other food agencies were to take the road of non-cooperation with North Korea the cornered Stalinist elite could even threaten military strikes if its survival was threatened by its own economic collapse.

167) The ravings in the Bush White House, which pass for serious political discussion, seem to take no account of this. North Korea has 1.1 million troops, a suspected 5,000 tonnes of biochemical weapons and enough estimated plutonium for one or two nuclear weapons. Commentators in the Financial Times have given the terrifying statistics of what a new war in Korea would mean: "One million would be killed on each side of the border".

168) This highly unpredictable and unstable situation determines the policy of South Korean capitalism, which was completely undermined by Bush's "axis of evil" speech. Prior to this, the Bush regime had attempted to repeat its Iraq stance, of forcing Pyongyang to accept arms inspectors. It had become more critical of Kim Dae-jung and his government for not adopting a tougher stance against the North, and had even informed the leader of the right-wing South Korean opposition Grand National Party (GNP) of the content of his "axis of evil" speech before informing the government. This indicates that US imperialism is hoping and expecting that a more pliant regime, led by Lee Hoi-chang, leader of the GNP, will replace Kim Dae-jung as president in this year's elections.

South Korea

169) And the government is certainly in trouble. The expected bonus from the "sunshine policy", with the reunification of families split since the Korean War over fifty years ago, has not materialised. This has combined with an even greater discontent with the stalling of the economy, growing scandals involving the government, including Kim's wife - who was alleged to have enlisted the help of South Korea's intelligence agency to search for hidden bounty buried by Japanese soldiers off the Korean coast during the Second World War - and a worsening of the conditions of the masses. Korea, it is claimed, is "likely to be one of the best performing economies in Asia" in the next year. However, compared to the spectacular growth in the past, a dismal 2.5 per cent is expected.

170) Seeking to deflect criticism from himself to others, Kim dismissed nine ministers and six presidential secretaries in January 2002. However, his image is tarnished, as the population of South Korea see him not as a principled opponent of dictatorship and a fighter for 'democracy' but as just another corrupt politician. Although a bourgeois - never radical, never mind socialist - Kim was cast in a heroic mould following the 30-year struggle for democracy in South Korea. During this time he was imprisoned, exiled and, on one occasion, nearly killed by the country's military rulers. The CIA is suspected of intervening to prevent him from being thrown overboard from a ship after his kidnapping from a Tokyo hotel in 1973. All that is in the past and as one biographer of Kim has stated: "People expected something different from Kim Dae-jung because he was the first opposition leader to become president. But he turned out to be just like the ones before him".

171) Following the overthrow of the dictatorship, we have attempted to intervene in South Korea, with material and visits, with the aim of trying to convince the more developed workers and youth to embrace a serious Marxist-Trotskyist policy. This would involve the building of a serious cadre organisation, with one of the central planks of such an organisation being the idea of a mass party of the working class on a socialist and revolutionary programme. The potentially powerful South Korean workers' trade union, the KCTU, could become the basis for such a party. However, the experience of the Korean workers of the dark night of dictatorship prior to 1997 has inevitably led to a certain caution, in relation to the post-1997 situation and particularly the leaders and parties which emerged after this.

172) Kim Dae-jung has compared pre-1997 and afterwards in terms of police repression against the masses. He pointed out that before he assumed office the police had used 133,400 tear gas canisters to suppress student and trade union demonstrations. Yet, he claimed, by 1998 this had fallen to 3,000 a year and since 1999 no more had been used. Triumphantly, he declared: "The tear-gas factories have all closed down". This is not quite true and the South Korean bourgeois will be compelled to reopen them as the South Korean masses once more move into action, inevitable given the perspective of a worsening of the economic and social situation of Korea.

173) Indeed, early 2002 saw the industrial ghosts of the past putting in an appearance. A huge collision took place between the government and workers, particularly in the public sector. In a further step towards the complete deregulation of the Korean economy the government has pushed ahead with the privatisation of gas, electricity and the railway network. This met with massive worker and union opposition in the industries affected but also led to workers in other industries, such as the powerful car workers, downing tools in sympathy with the electricity and railway workers.

174) At one stage the government weighed up "whether to break the strike". Prosecutors, who were seeking the arrest of 36 strike leaders, said police might be used to break picket lines and demonstrations because the industrial action was "illegal". Kim Dae-jung cautioned against the use of force and proposed that talks be resorted to before this was used. Significantly, one commentator pointed out: "Labour is still a force in Korean politics". Electricity workers remained out for weeks but the rail dispute was resolved following an agreement for improved working conditions and a government concession to "stop rushing" rail privatisation. However, even the moderate Federation of Korean Trade Unions (FKTU) has warned that if there is any going back on the agreements bigger protests will ensue.

175) The immediate post-1997 period saw the mass of the working class flood onto the political arena. Following the huge effort required by the struggle against dictatorship and then the need to use its power to affect change under the new regime pauses, periods when the masses digest their experience, are inevitable. In the absence of a clear, authoritative and mass workers' movement, not all the necessary conclusions are drawn. Illusions in bourgeois leaders such as Kim Dae-jung are inevitable in such a period. It takes experience, a period when the working class licks its wounds, and then prepares for the future, before new initiatives and a new consciousness begins to form.

176) The idea of a new mass workers' party has 'been in the air' so to speak, through our intervention and the general experiences of the working class in South Korea since 1997. However, until now it has not taken root for the reasons mentioned above but in the coming period it will be. The shine is already going off the bourgeois parties. In the ranks of the working class, particularly in the KCTU, the idea of independent political representation will develop in the next period.