The Cost of Rapid Growth and Capitalist Democracy in Japan
From 1981 through 1983, Japan's price levels were largely stable. The wholesale price index remained virtually unchanged and the consumer price index rose only 10 points. The Japanese must continue, however, to be concerned, as they were in the 1970s, with persistent inflation or with the threat of rapid inflation in their economy.
In assessing the future risks of inflation what is crucial is not the short- term price stability resulting from the sluggishness of economic performance in the early 1980s and the net annual capital export of almost $20 billion, part of which was induced by high interest rates in the United States. Instead what is crucial is the politicoeconomic vulnerability of the Japanese capitalist democracy, which as this chapter seeks to demonstrate, continues to face serious long-term risks of rapid inflation that for political reasons will be extremely difficult to avoid. 1 These risks are not of recent origin but were inherent in the very process of rapid growth.____________________