Japanese Economic Policy Research Articles

JAPAN'S REMARKABLE postwar history is coming to an end in a understated crisis that will probably last for the next several months and perhaps a year, probably determining the nation's course for another half century. A vastly complex situation can be narrowed down to three individual problems and their possible solutions. A rapacious inflation, part of the worldwide phenomenon but also very distinctive, has altered Japanese economic policy and sharpened issues that had been developing for some time. Second, the erosion of the Liberal Democratic Party as the holding company for Japanese conservatism has reached a stage where it probably cannot be halted. Japan is thus standing on the threshold of a new political era, probably to be characterized by more unstable government than in the past. Both of these factors-and linked to what appears to be America's weakened role in world affairs-are, ini turn, forcing at least a modulation of Japanese foreign policy and its world role, which for 25 years has been marked by almost total reliance on the United States. One caveat must be entered immediately into any discussion of Japan's future. More than the other industrial powers, because of its complete dependence on overseas sources of raw materials and disproportionately heavy reliance on foreign markets, Japan is the quintessential example of contemporary international interdependence. What happens to the economics and politics of Western Europe and the United States will dictate in no small measure the future of Japan. Yet it is also worth noting that Japan has retained-certainly far more than any of the other great industrial nations-a sense of selfdiscipline and restraint on the part of the masses. One should discount much of what is being said in the media about the basic changes al-

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