Global Finance, Neoliberal Economic Reform, and the State: The Case of Japan

By:
Prof. Takaaki Suzuki
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Does the rise of global finance encourage neoliberal economic reform and erode state authority? Curiously, many observers draw similar conclusions about the effects of global capital despite occupying different ends of the political spectrum. Economic conservatives, who draw their inspiration from the anti-statist tenets of nineteenth century liberalism, celebrate the spread of global capital because it allegedly enhances economic freedom and disciplines the state to adopt market friendly measures. In contrast, many on the political left lament it precisely for these very reasons; greater economic freedom is seen to give large asset holders of mobile capital greater voice and power in the political arena that erode democratic practices and weaken the states ability to address the widening gap in democratic legitimation.

In this paper, I challenge this matter of fact portrayal of globalization on both empirical and theoretical grounds. In section 1, I demonstrate at the theoretical level how this portrayal offers at best an incomplete picture of the relationship between politics and markets that serves to occlude the states ongoing involvement in the economy despite its rhetorical commitment to laissez faire principles. In this section I also offer an empirically grounded support of my theoretical claims by examining the impact of global finance in the case of Japan. The two main issue-areas that I examine are the series of macroeconomic stimulus measures that were adopted throughout the 1990s, and the concurrent succession of government responses to the financial crises, in particular the strengthening role of the state, including the creation of new state-backed institutions that have been authorized with substantial financial resources and regulatory powers to recover bad loans and restore financial stability. These two issue-areas were selected because they represent two of the most important points of contention concerning the erosion of democratic choice and the role of the state in a post-Keynesian era marked by the globalization of the international capital market.


Keywords: Neoliberal State, Globalized Economics, Economics, Politics and Their Social Effects
Stream: Economics and Management, Politics, Public Policy and Law
Presentation Type: Paper Presentation in English
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Prof. Takaaki Suzuki

Associate Professor and Graduate Chair, Department of Political Science, Ohio University
USA

Takaaki Suzuki is Associate Professor of Political Science at Ohio University, and serves as the department's Graduate Director. He received his B.A. in Government and East Asian Studies from Oberlin College, his M.A. in International Affairs and Certificate in East Asian Studies from the School of International and Public Affairs at Columbia University, and his Ph.D. in Political Science from Columbia. His work is primarily in the field of international relations and comparative politics, with a regional focus on East Asia. Dr. Suzuki's book, Japan's Budget Politics: Balancing International and Domestic Interests, is published by Lynne Rienner Publishers as part of Columbia University's East Asian Institute Series. The book examines the interplay of the international and domestic forces that have shaped Japanese maocroeconomic policy. Some of his other publications include: "Global Finance, Democracy, and the State in Japan” (forthcoming, 2006); Modernity and the Transformation of the Japanese State" (2005); "Keyensianism, Monetarism, and the Contradiction of Japan's Modern Welfare State" (2003).

Ref: I06P0031