In the context of complete downfall of The Lehman Brothers, fourth biggest investment banking giant, September last year in US, the recent bankruptcy plea filled in by General Motors in the court has seen the end of an era of about 100 years of being a leading and most powerful auto-makers in the world. As everyone knows, it is not true that General Motors was going through a period of slow-down or global recession for the first time since its establishment. Its history is filled with such time interval from time to time, from the Great Depression to many big or small slow down in recent times. With such sort of historical achievement and survival for existence, what has happened this time? That certainly makes some serious topic to think about. Still, in the midst of that, two points are simple and distinct that these downfalls are not the end, and secondly; the in-built systematic structure of capitalism or any form of Neo-liberalism is not going to lead the circumstances to anywhere but to this.
With these consequences, it is quite natural that it will trigger some serious debate about the future of global economy, which is why I have decided to focus on these debates particularly in the second largest economy of the world through the headlines of the newspapers dailies.
If we talk about the headlines in newspapers, we can find some hope of recovery as the government of Japan has declared that Japanese economy is out of the so called "falling from cliff" and the tempo of deterioration has been slowed down.(1) Though, it has been about six months and more from the Lehman- Shock and few countries including China and India has been successful to be capable enough to bring some good results and giving some hope of a steady recovery, but the global economy as a whole, chiefly lead by US economy; is still in deep trouble and certainly required some time with the boost of certain fiscal and monetary regulation in order to return back on track. Yet, theoretically, it has left a remarkable influence on the lobby of big intellectual think tanks and the economists (particularly the hard core supporters of Adam Smith) of the world as well as Japan, to think about the objective and tools needed for the economy in order to surpass this global recession and also consider upon the regulations and corrections in the policy prospects.
Since the slow down hit the global economy, the trade business in Japan has been going through some serious trouble in the midst of increasingly falling foreign demands and remarkable reduction in exports. Moreover, the value of yen is still quite high at its highest level so far in economic history in the exchange market in compare with US dollar and all the tools and tasks for bringing down the value of this yen appreciation is still not productive enough. A number of companies dealing in the business of exports have filled in already their bankruptcy application as there is no more space of further interest rate cuts as it is already at the lowest level in Japan. In other words, if interest rate cuts are not a option to tackle the yen appreciation, what are the alternatives, Japanese economy have in order to go through this problem are the summation of the headlines in newspapers recently.
Japanese government, though, has proceeded with some plan of actions in order to boost the demand at both levels; domestic and overseas.
In case of increasing foreign demands, Japanese companies have opted for the option of cost-cutting which is one of the last options they can have beside technological advancement. The sole purpose was to provide cheap and good products to the international market as well as Asian market where China is striving hard to make his space and solid sustainable influence by providing cheaper products because of the cheap labor available in their home. This severe competition from China in trade business made Japan to pull itself to its limits which has its own pros and cons.
It is true that these cost cutting strategies adopted by Japanese management has lead Japanese trade business to a more widened market space in Asian countries as well as Latin American countries. However, this has also triggered some serious problems of unemployment as the expert says. The critiques of these cost cutting strategies blame the Japanese companies and its management for letting themselves go freely in the pursuit of excessive foreign demands and increasing the dependency on foreign markets rather to explore new possibility in the home country. The reason behind these overseas investments was solely directed to the cheaper labor and higher profitability which provoked severe cost cuts in Japan leading to the raising rates of unemployment. This is not the end, as in the process, Japanese companies have to switch its management system from its traditional trait of lifelong employment to contract-based labor which is put outside the framework of social insurance which is making the situation worse. Hence, there is a debate on the form of capitalism which has freed Japanese management system to pursue for higher profitability. “What will the responsibility of government and companies to provide those fundamental facilities, which have been taken back due to this recession and excessive exploration of money in foreign markets” is also a highlighted debate recently in Japanese newspapers.
Now, If we talk about policies to tackle the slump in domestic demands, Japanese government has already announced a stimulus package of about 15 trillion yen ($150 billion) to boost the domestic consumption. This has definitely shown some good consequences as the industrial output in Japan is increasing from last two months after announcement in April. However, the concerns regarding the sustainability of this stimulus are also quite high. The expert says that this stimulus will last for maximum one year; economy will get back to its previous position if more monetary actions will not be taken by the government. In other words, the debate over the possibility of measuring some new policies to boost the flow of money in economy at domestic level is also gaining momentum recently.
At last, the domain of the recent debates in Japan is majorly concentrated upon three points.
First, whether it is suitable and applicable enough for Japanese economy to carry on with the present form of capitalism or neo-liberalism and avoid any regulatory reforms in economy in order to survive in the export market which is the key factor in GDP growth.
Second, whether the system should be reformed from very basic level of policy framework more like a revolution. This also has serious concern about what will come as the result and what is the level of sustainability of new system. Whether a socialist approach will tackle the problem which is majorly directed to the citizens need and in the process it will halt the absolute freedom of Japanese companies to go for exploring their interests at their own choices.
Third, whether Japanese economy should undergo the process of purifications in the form of just few corrections and regulatory reforms at the policy level and increasing the government role in the economy which will shift the objective of the growth to the citizens and their welfare.
These are the few highlights of the debate which is being carried out by the newspapers dailies in Japan.
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