The Moral Economy and the Politics of Austerity in Japan

In keeping with the main theme of the upcoming annual SASE conference, this paper examines the moral economy and the politics of austerity in Japan. Although the concept of moral economy originally focused on how the introduction of market forces undermined the social fabric of peasant and early industrial communities (Thompson 1971, 1991; Scott 1976), subsequent scholarship has developed and extended the concept more broadly to explicate and examine the moral underpinnings of various economic forms. By doing so, this analytic move has opened up the space to examine more widely the relationship between the economy and morality even within the contemporary context, where neoliberal discourse in general, and austerity in particular, have figured prominently in framing the politics of advanced industrial democracies (Blyth 2013, Streek and Schafer 2013).

It is within this latter broader context that I seek to examine the moral economy and the politics of austerity in Japan.  At first glance, it would appear in the case of Japan that the need for austerity is seemingly straightforward and uncontroversial given the country’s extraordinarily high level of government debt and the looming welfare requirements of a rapidly aging society. Yet, I seek to argue in this paper that calls for austerity in the case of Japan have been misplaced.  In contrast to austerity advocates who argue that Japan’s high level of government spending and debt has caused its long period of stagnation and low growth, I seek to demonstrate that the level of government spending has been generally low over the last two decades, and that the growing public deficit is more an effect, rather than a cause, of stagflation and slow economic growth.   Moreover, just as austerity advocates blocked stronger fiscal policy action in the United States and Great Britain in the wake of the Great Recession, I show that there has been a wide discrepancy in Japan between the initial claims of Abenomics to utilize both fiscal and monetary policy to stimulate the economy, and the actual macroeconomic policies that have been adopted under the Abe administration. I further argue that this represents more generally a neoliberal trend over the last two decades that has eschewed fiscal policy stimulus in favor of both conventional and unconventional monetary policy measures, and that this trend has contributed significantly to the growing level of social stratification and risk in Japan. In the concluding section of this paper, I seek to draw out the broader comparative and implications of these findings.