The crisis [of 1 973-5] indicated that future growth on the basis of heavy and chemical industrialisation was untenable. The role of the state in changing the strategic direction of Japanese capitalism was fundamental. Administrative guidance by MITI [Ministry of International Trade and Industry-CH] began to nudge Japanese capital in the direction of electronics, automobiles, capital equipment and semiconductors . . <sub>.</sub> 79
This required high levels of investment. The United States, for example, invested just 21 percent of its GDP during the 1980s compared with a Japanese figure of 31 percent. According to one estimate, the ratio of capital stock to GNP in Japan was nearly 50 percent higher than in the us.so The concentration of investment into certain industries in this way raised their productivity, even though it remained fairly low in the rest of the Japanese economy.st But such high investment could only be sustained by holding down the consumption of the mass of people. Partly this was done by keeping down real wages; partly it was done through providing minimal state provision for sickness and pensions, forcing people to save. As Rod Stevens pointed out when the boom was at its height:
Real wages in Japan are still at most only about 60 percent of real wages in the US, and Japanese workers have to save massively to cope with the huge proportion of their lifetime earnings which is absorbed by such things as housing, education, old age and health care. s<sup>z</sup>
But this level of real wages restricted the domestic market for the new goods Japanese industry was turning out at an ever increasing speed. The only way to sell them was to rely on exports. As Stevens also pointed out:
Because of capital's increasingly strict wage control and authority in the workplace, growing labour productivity in the consumer goods branches of the machinery industries (eg motor cars and audio-visual equipment) had to find outlets in export markets if the Japanese working class's limited buying power was not to interrupt accumulation.83
High productivity in the select range of prioritised industry made the required level of exports possible, with Japanese cars and electronics increasingly penetrating the US market. But it brought complications in its wake. Japanese economic success was very dependent on US good will. When the US demanded that Japan accept an upward revaluation of its currency to make its goods less competitive against American goods, Japanese capitalism had little choice but to comply and the volume of exports suffered (even though revaluation meant their value in dollar terms did not).
The End of the Golden Age
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