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The Collapse of the Riskless, Middle-Class Economy

Published online by Cambridge University Press:  01 January 2023

Craig Freedman
Craig Freedman*
Affiliation:
Department of Economics, Macquarie University
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Abstract

The very basis of Japan’s post-war economic growth was time and place specific. A fundamental failure to recognise the temporary nature of Japan’s success led the Japanese to make ad hoc changes, which served largely to prop up the prevailing status quo. Inevitably, Japan’s ability to sustain the level of growth required to maintain its economic system periodically faltered, before collapsing in the nineties.

Since capitalist enterprise, by its very achievements, tends to automatize progress, we conclude that it tends to make itself superfluous — to break to pieces under the pressure of its own success. The perfectly bureaucratized giant industrial unit not only ousts the small or medium-sized firm and ‘expropriates’ its owners, but in the end it also ousts the entrepreneur and expropriates the bourgeoisie as a class which in the process stands to lose not only its income but also what is infinitely more important, its function (Schumpeter 1950: 134).

Type
Research Article
Information
The Economic and Labour Relations Review , Volume 13 , Issue 2 , December 2002 , pp. 288 - 325
Copyright
Copyright © The Author(s) 2002

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Footnotes

1

Collapse is of course a misnomer, though it does make for a more dramatic title. Since the end of its catch-up phase of post-war development, the Japanese economy has been undergoing a slow motion implosion. Starting with the early seventies, Japan has been wrestling with a chronic problem of insufficient domestic demand. The very institutions that aided its post-war development subsequently impeded further Japanese growth. A reluctance to sufficiently adapt to a changing economic environment eventually caused the Japanese economy to grind to a halt in the nineties.

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