SocialismToday           Socialist Party magazine

Socialism Today 95 - October 2005

Koizumi’s landslide

WORKING-CLASS voters had no real choice in Japan’s election on 11 September. The two main parties, Jiyu Minshuto (LDP – Liberal Democratic Party) and Minshuto (DPJ – Democratic Party of Japan) offered cuts or more cuts in public spending. There was, however, a big gulf in style. The victor, LDP leader and prime minister, Junichiro Koizumi, has carefully crafted his image as a political rebel ever since he took over in 2001. He revels in his nickname, the Lion King, always the centre of media attention, dashing around with dishevelled hair and open-necked shirt. Yet he is firmly rooted in the political establishment: both his grandfather and father were cabinet ministers in the past. The now-resigned leader of DPJ, Katsuya Okada, on the other hand, was dubbed ‘policy robot’ for his dour demeanour.

The snap election was called by Koizumi when he failed to get his plan to privatise Japan Post through the upper house of parliament. His political gamble paid off as Koizumi used the campaign to clampdown on powerful party factions and increase his control. Not only had Koizumi dissolved parliament, but he also expelled 37 LDP ‘rebel MPs’ who voted against the privatisation. Their opposition was from the position of fighting to hang on to vested interests, rather than any ideological defence of public ownership.

In fact, Japan Post is an essential part of the stagnant political system. Its huge funds, accumulated from mass household savings, are used in the elaborate system of kickbacks and political favours granted to the LDP’s traditional supporters in construction corporations, farming and a powerful doctors’ lobby. Over decades it has helped deliver the vote to the LDP, especially in rural areas.

Japan Post is the world’s biggest financial institution, controlling around £1,700 billion ($3,200bn, €2,416bn) of household financial assets – 85% of households have post office savings accounts and more than 60% hold one of its life assurance policies. It has 24,700 branches and employs 280,000 full-time staff, a third of all public servants. Koizumi wants to allow big business in the private financial sector to exploit this huge capital – although that is not how he presented it to the electorate.

Of the 480 seats in the Shugiin (the lower House of Representatives) fought over in this election, the LDP won 296 seats, up from 212 after the expulsions. The LDP’s coalition partner, the Buddhist-backed Komeito (New Clean Government Party), fell from 34 to 31 seats. That gives the coalition more than the two-thirds necessary to push through any legislation, apart from constitutional change, without the need for ratification in the Sangiin (the upper House of Councillors). The DPJ collapsed from 175 to 113 seats. Okada resigned. The turnout was 67.5%, the highest since 1990. Nihon Kyosan-to (Japan Communist Party) retained its nine seats, and Shakai Minshuto (Social Democratic Party) moved from six to seven.

Each voter has two votes. The lower house is made up of 300 single member districts (where a vote is cast for a particular candidate) and 180 proportional districts (where seats are allocated according to a party’s share of the vote). This favours the two main parties. Since the LDP was formed in 1955, it has ruled for all but one year – independently or in coalition. The DPJ was formed in 1998 from a disparate collection of politicians ranging from social democrats to right-wingers. Okada, who became its leader in 2001, was a member of the LDP until 1993.

The DPJ tried to campaign on a wide-ranging neo-liberal programme. It also called for the withdrawal of Japanese troops from Iraq, and improving relations with China and South Korea – in contrast to Koizumi’s nationalism, symbolised by annual visits to the Yasukuni shrine, where convicted war criminals are honoured and the militarism of the second world war is glorified.

Its message was drowned out by Koizumi’s star-studded election extravaganza, especially his ‘assassins’ – celebrity candidates from fashion, media, business and diplomacy, including telegenic women, who Koizumi called ‘Madonnas of reform’ – who stood against the expelled MPs. They dominated mass media coverage. The singular message was that postal privatisation represented dynamic social and political change. The powerful Keidanren business groups came out unequivocally for Koizumi, unlike in 2003 when they backed both the LDP and DPJ.

Koizumi’s previous ‘privatisation’ – of corrupt road-building corporations – is a warning of what to expect. Typically, he first organised a televised commission to ‘expose’ their mismanagement. But it was a complete sham. They are no more accountable than they were before. The Japan Post policy, due to start in 2007 and unfolding over ten years, is full of loopholes, written in to ensure that vested interests are safeguarded.

Koizumi is no friend of the workers. His government has slashed state spending on social services. To compensate for the rising numbers of older people, as the population starts to decrease, pension entitlements have been cut. The LDP is also planning to increase workers’ pension contributions. Over the past 15 years of recession, companies have undertaken severe downsizing, throwing tens of thousands of people out of work or replacing full-time employment with part-time and casual jobs. Small farms have gone under and suicide rates in rural areas have risen.

The OECD estimates that nearly a fifth of 66-75 year-olds live below its measure of the poverty line – households with an income half the national average. In Japan, a person who pays into the system for 40 years is eligible for a basic pension of £325 ($600, €480) a month. But at any given time, a third of Japanese people of working age are not paying into the fund, so many receive a lot less than this, while others get nothing at all. Social change has also resulted in fewer older people living with their children, so poverty is increasing.

Clearly, Koizumi has given the LDP, which was on the decline, a new lease of life. He has created the false impression that the kickback culture has been discredited in the party. The result is that the LDP scored big victories in the DPJ’s urban heartlands, such as Tokyo and Osaka. This could be short-lived as workers’ living standards continue to be undermined and opposition grows.

The victory has been greeted by rises on Japan’s Nikkei stock market, and generally welcomed in the international financial press. And it has coincided with signs of an improvement in the Japanese economy. Over the past years, however, there have been numerous occasions when such signals have been greeted with euphoria, only to see the economy slump again.

Unemployment fell to 4.2% in June, from 4.4% in April/May, and its peak of 5.5% in early 2003. It is at its lowest for seven years, though still well above Japan’s historical rate. In 2003-04, however, firms were still replacing permanent workers with part-timers and temporary staff.

There has been an increase in profits, mainly because of the expansion of the Chinese economy and US consumer spending. Japanese companies have increased investment in new plant and equipment in China and other overseas markets. In turn, those companies are buying more Japanese components and materials. As they had previously laid off tens of thousands of workers and cut costs, profit margins have risen and significant amounts of corporate debt have been paid off. The Economist estimates that bad loans to the banks fell from £162 billion ($255bn, €209bn – 8.7% of the total) in March 2002 to £38 billion ($68bn, €56bn – 2.9%) today.

Japan is burdened, however, with a huge public debt: 160% of GDP. Exports account for only 10-12% of the economy and, as yet, there has been no significant increase in retail sales: "While Toyota was taking over the world, car sales in Japan fell by 16% between 1990 and 2001". (The Economist, 17 September) Years of job losses and casualisation are resulting in a skills shortage, which will have adverse effects on productivity and long-term economic growth. Japan’s 100% reliance on imported oil makes it extremely vulnerable to oil price hikes. Therefore, it is a very precarious basis for a recovery. Any downturn in the global economy would completely undercut the gains currently showing through.

After his victory, Koizumi reiterated his pledge to stand down as party head and prime minister in September 2006. Whoever takes over, the future looks grim for Japan’s working class, unless it develops a socialist alternative. On top of attacks on pension provision and postal privatisation, further cuts in medical services, the civil service, government financial institutions and other public sectors are in the pipeline.

Manny Thain


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