Covid-19 has shown us the limits of our current socio-economic structure and the neoclassical economics upon which it is based. We can no longer rely on centrist politics with a neoliberal bent, or on the fallacy of ‘balancing the budget’, to fully overcome this crisis. It is time for the progressive left to put forth a Green New Deal for economic recovery and take on the climate crisis, the economic crisis and the inequalities of our time.
Japan Downplays the Climate and Economic Crises
In July 2020, as the Covid-19 crisis ravaged through Japan, three symbolic events took place.
The first was the landslide victory and re-election of incumbent Governor Koike Yuriko in the Tokyo gubernatorial election on 5 July. Secondly, since 6 July, torrential rainfalls have caused many landslides and heavy floods in Kyushu. Thirdly, Osaka announced on 7 July that 168 businesses had declared bankruptcy in June, the highest figure in the country and around double the figure of June last year.
Governor Koike is a former Member of Parliament who served as Minister of Defence and Minister of the Environment. At the second ‘U20 Mayors Summit’ in Tokyo in 2019, an international convention of major metropolises, Koike stated that her goal was to ‘make Tokyo carbon neutral by 2050’. Yet the terms ‘global warming’ and ‘climate crisis’ were absent in her gubernatorial election manifesto. Of the four top-tier candidates including Koike, the progressive left was represented by Utsunomiya Kenji from the opposition coalition and Yamamoto Taro (twitter) from Reiwa Shinsengumi, a party newly formed in 2019 and headed by Yamamoto with the aim of making politics truly inclusive. Despite their support for climate action policies and their advocacy for robust benefits and compensations in response to Covid-19, the two candidates garnered far fewer votes than Koike. Since her re-election, the number of confirmed Covid-19 cases in Tokyo has continually reached record highs.
Osaka is known as the birthplace of the Japan Innovation Party (JIP). The JIP, founded ten years ago, enjoys strong popular support, holding 26 seats in Parliament. As their motto ‘No Reform Without Sacrifice’ (身を切る改革) suggests, the JIP is a typical neoliberal party that advocates governmental reforms based on cuts to public services. It therefore comes as no surprise that Osaka ranks lowest in terms of Covid-19 relief disbursement and had the highest number of business closures.
Climate Crisis and Rising Poverty and Inequality
These developments in Japan reflect broader global trends.
The climate and Covid-19 crises must be understood against the backdrop of public spending cuts, excessive competition, and austerity politics, which have all contributed to rising poverty and inequality and wreaked havoc on our environment. At the same time, natural disasters have become larger and more frequent, while military conflicts have spawned tides of refugees, exacerbating global tensions.
In response to Covid-19, countries traditionally in favour of balanced budgets have been forced to put deficit concerns aside and massively boost government spending. Japan, on the other hand, has maintained the consumption tax rate – which was raised last autumn – at 10% while maintaining low government expenditure. Due to temporary closure orders and the absence of adequate support, bankruptcies and unemployment are on the rise.
One might ask why right-wing political actors, who downplay the importance of climate, disaster and economic relief, remain in power in Japan. To answer this question, we need to cast our gaze back to 2009.
Austerity Politics and the Fall of the Progressive Left
Voters were full of hope as they cast their ballots in August 2009. The opposition Democratic Party of Japan (DPJ) won in a landslide, creating the first democratic regime change since the end of World War II.
"To respond to Covid-19, countries put deficit concerns aside and massively boost spending. But Japan maintains the high consumption tax rate with low government expenditure. Bankruptcies and unemployment are on the rise"
Unlike the Liberal Democratic Party (LDP), the DPJ was willing to promote gender equality and diversity, challenge vested interests, combat climate change and work in harmony with civil society. But the DPJ’s ascent was brief, for many reasons, including unreasonably high expectations following the de facto regime change and the harsh media scrutiny that ensued. However, in my view, the most damaging factor was the DPJ’s economic policies.
At the time, Japan was suffering from deflationary long-term stagnation, further exacerbated by the recent world economic crisis. Young college graduates, unable to find jobs, were pushed into temporary, gig and contract work, becoming what would later be known as the ‘lost generation’. Those lucky enough to find permanent employment were frequently forced to work long and intense hours, leading to famous cases of ‘suicide by overwork’ (過労自殺). I, too, belong to this lost generation, and I have seen how many of my friends struggled to get by. One of them worked for a toxic company and was subjected to power harassment. She could not speak out for fear of losing her job, and she ended up becoming physically and mentally ill.
Hope for the DPJ implied hope for a better economy. However, in the wake of the global financial crisis, the DPJ, motivated by fear, ended up emphasising a balanced budget and raising the consumption tax rate. To add insult to injury, the DPJ further joined the Trans-Pacific Partnership (TPP), a neoliberal trade agreement, and went on to promote the export of nuclear power. These moves defied the party’s principles and led the DPJ into a quagmire of contradictions. The Nuclear Meltdown on 11 March 2011 was the nail in the coffin.
High hopes turned into bitter disappointment and distrust in politics, especially against the progressive left. As independents became the new majority, the right-wing Abe administration (2013–present) gained relative popularity thanks to its clear fiscal and financial vision known as Abenomics. While the democratic anti-nuclear movement gathered momentum in the wake of the nuclear accident, the progressive left failed to capture their base and, election by election, their popularity plummeted.
Rising poverty and inequality, caused by prolonged economic stagnation, have discouraged people from taking an active interest in social issues.
What is needed now is an environmental policy that will give hope to those in dire economic straits – an anti-austerity Green New Deal (GND) for Japan.
Anti-Austerity Green New Deal: A Primer
GND proposals to date may be categorised into two ‘waves’. The first was between 2008 and 2009, with the New Economic Foundation taking the lead, followed by the United Nations, the European Union and South Korea among others, culminating perhaps most notably in US President Barack Obama’s proposal. The second wave came around 2018, with US Representative Alexandria Ocasio-Cortez’s proposal a prime example.
The second GND wave, unlike previous proposals, is based on anti-austerity economic theory. This is essentially a contemporary version of Keynesianism that opposes neoclassical macroeconomic theories (neoliberalism) at the heart of austerity and ‘balance the budget’ politics. Anti-austerity left Keynesianism, Modern Monetary Theory (MMT) and public money theory all share the following premises:
- Governments with the power to create money will not become insolvent (EU member states do not fall under this category).
- Taxation is merely a tool for controlling inflation by regulating purchasing power in the market; as such, there is no intrinsic need to balance the budget.
- Until full employment is reached, governments can create and spend money without causing inflation.
- Private sector savings and public sector debt go hand in hand.
- Central banks are de facto subsidiaries of their governments; as such, the two institutions ought to be treated as one unified governmental body.
An anti-austerity GND is a synthesis of many ‘novel’ environmental and economic policies, some previously considered taboo. By investing in green projects such as renewable energy development, the GND aims to create new jobs, reduce inequalities and stimulate the economy in the short term while also seeking to reduce our ecological footprint and achieve a just transition to a sustainable and climate-neutral economy in the long term. Moreover, the GND avoids relying on taxation as its main source of funding. Instead, it encourages unsustainable private sector investments to be shifted to green projects while also utilizing publicly created money (e.g. government bonds, Eurobonds in the case of the EU). It also advances progressive policies such as a universal basic income or a job guarantee programme.
Is a Post-Covid-19 Anti-Austerity Green New Deal Possible?
The unprecedented coronacrisis has highlighted the importance of care work (patient care, elderly care and childcare) as well as retail and hospitality work (in supermarkets and restaurants). These sectors are characterised by low greenhouse gas emissions and low wages, and the majority of their workers are women. Its power to create money gives the government the responsibility to tackle gender and labour issues through public sector employment and public spending.
"By investing in green projects, the Green New Deal aims to create new jobs while seeking to reduce ecological footprint and achieve a just transition to a sustainable, climate-neutral economy."
By changing the centralised, monopolistic top-down structure of our economy into a more locally driven, distributed network, and by supporting different corporate ownership structures – through nationalisation, public ownership, cooperatives, etc. – we may break the deadlock of corpocracy and empower citizen ownership. Progressive policies such as a universal basic income or a job guarantee programme, which are integral to our GND vision, may address the problem of ‘suicide by overwork’ so endemic to Japanese society while also removing the stigma associated with social welfare. These policies may also upgrade the status of work traditionally done by women – housework, childcare, elderly care, etc. – which are currently not valued on the market. In future, we may expect more pandemics as well as massive job losses and displacements due to AI and automation. In this context, it is paramount that we critically examine the way we think about work and money and transform our society and economy accordingly.
Moreover, improvements in energy efficiency could allow us to eventually generate all of our energy from renewable sources. Diversifying our energy sources will help alleviate the risk of natural disasters and pandemics. Electric vehicles will reduce emissions in the transportation sector. As fossil fuels become obsolete, we can also expect energy sector capital to shift to low-carbon alternatives around the world.
It is clear that our current socio-economic structure cannot withstand these crises. Its limits have been exposed. It is time for the progressive left to break free from centrist neoliberal positions and ‘balance the budget’ politics and rise to the challenge of our environmental and economic struggles by presenting a new way forward, an anti-austerity GND.
(The Japanese original version was published here.)