Few people were prepared to see things in these terms at the time. The vast majority of those who had struggled for democratic reform in Russia believed that the turn to market capitalism would open up a glorious future. What they got instead was a devastating slump, the corruption of the Yeltsin years and the domination of the economy and society by former members of the ruling bureaucracy and mafiosi reborn as private capitalist oligarchs. Meanwhile, in the rest of the world the great majority of politicians and theorists in the social democratic and former Stalinist left drew the conclusion that it was socialism that had failed and that the future lay with Western style markets, failing to perceive the depths of the crises brewing there too.
Japan: the sun that stopped rising
The world's second economic power at the beginning of the 1980s was the USSR. Japan took its place as the Soviet crisis of the late 1980s turned into collapse.71 Japan's average growth rate throughout the 1980s was 4.2 percent as against 2.7 percent for the US and 1.9 percent for West Germany. Its annual investment in manufacturing equipment was more than twice that of the US.72 That the future lay with Japan was the near universal conclusion of media commentators. A committee of the US Congress warned in 1992 that Japan could overtake the US by the end of the decade. "After Japan" became the slogan of European and North American industrialists trying to motivate their workforces to greater feats of productivity. The "threat" from the "rising sun" became the excuse for the job losses experienced by American auto workers. Keynesian commentators like Will Hutton and William Keegan wrote books extolling the Japanese model of capitalism.
Then in 1992-3 a financial crisis pushed Japan into its own "period of stagnation", with a growth rate averaging just 0.9 percent a year between 1990 and 2001 .73 By 2007 its economy was only a third of the size of the US's (and the European Union's)74 as against estimates as high as 60 percent in 1992.75
The End of the Golden Age
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