The blame for what happened is usually ascribed to faults in the running of its financial system-either due to financial markets not being "free" enough in the 1980s, or to inappropriate action by the central banks once the crisis had started. The conclusion from such reasoning is that the Japan crisis was unique and has little to tell us about the direction in which the global system is going. The sudden inability of the world's second biggest economy to grow then becomes the result of accidents.
Yet all the elements of the Marxist account of the crisis of the inter-war years are to be found in the Japanese case. Japan had a rapidly rising ratio of capital to workers from the 1 950s to the late 1980s. This grew in the 1980s by 4.9 percent a year-more than four times as fast as in the US and 70 percent faster than in Germany.76 The result, as Marx would have predicted, was downward pressure on the rate of profit. It fell by about three quarters between the end of the 1960s and the end of the 1980s.
Japanese profit rate"
Return on gross non-residential stock"
The decline seemed manageable until the end of the 1980s. The state and the banks worked with private industry to sustain growth without much attention to profit rates. So long as there was a mass of profit available for further investment, the Japanese system ensured that it was used. Japan had been hit hard by the global recession of the mid-1970s, but was able not only to recover from it before most other countries but also to restructure industry in such a way as to keep expanding throughout the early 1980s when the US and Europe were in recession:
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Capitalism in the 20th Century