Shifts in Japan’s Political Economy Regime

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Shifts in Japans Political Economy Regime

• Adjustments and changes

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Conservative dominance (60s)

• Power and influence of conservatives rose
• at the expense of the political left
• conservative supporters benefited
• prosperity and peace
• side payments
• successes in economy and in politics reinforced
  each other
• favorable international environment

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Challenges (1970s and 1980s)

• Socioeconomic bases of support
• new political parties, independent movements, and
  changes in voter patterns
• divisions within regime supporters superseded
  earlier left-right divisions
• central concern of regime continuity

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Socioeconomic challenges
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Socioeconomic challenges
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Socioeconomic challenges

• rise of large and technologically more
  sophisticated industries
• rise of the service sector firms
• relative decline of agriculture sector
• relative decline of small businesses
• shrinking bases of the conservative regimes
  electoral coalition

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Challenge 2 aging population
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Challenge 3 labor shortage

• Economic success
• rising demand for labor
• expanding influx of labor after WWII
• low-cost, young, highly-skilled
• changing age profile of the population
• bargaining power shift from management to labor

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Challenges to LDP

• Urbanization and rise of middle class
• Socioeconomic base of conservative support shrank
• Mobilization capabilities of LDP supporters
  declined
• People identified with party independents
  increased
• outnumbered LDP supporters in 1974

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Challenges to LDP

• Increased voter option in 1960s and 1970s
• formation of new parties
• transformation of existing parties
• in both conservative the political left
• threatened both LDP and JSP
• threatened conservative electoral and legislative
  hegemony

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LDP responses (1970s 80s)

• Attract new electoral support
• shore up conservative support
• draw away organized labor from DSP JSP
• attract the new middle class
• non-voters and non-partisan voters
• LDP dilemma between traditional supporters and
  new appeal

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LDP responses

• Adjustments in policy or institutions
• less tightly linked policy profile
• firm-level cooperation with labor
• substantial deficit finance for political target
• fiscal austerity and privatization
• manufacturing firms became multinational
• defense and security policies

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LDP electoral recovery
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Economic recovery (1980s)
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Bubble burst
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Stock market woes (2000s)
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International challenge

• External conditions
• challenged conservative policies
• threatened conservative socioeconomic support
• challenges to exchange rate policies
• Bretton Woods monetary system broke down

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International challenge

• international price of raw materials
• Japans dependency on imported oil (99)
• oil prices quadrupled in 1973
• oil prices rose by 2.8 times in 1979-80
• inflation
• balance of payments
• domestic productivity

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International challenge

• Increasing pressure from US and Europe
• reductions in Japanese tariffs, import quotas,
  and non-tariff barriers
• voluntary export restraints
• open Japanese market
• Japanese military spending
• challenges to vital aspects of Japans
  conservative economic policy profile