Dogs and Demons_ Tales From the Dark Side of Japan - Kerr [125]
The question of whether there really are «laws of money» is one of the most hotly debated topics among economists today. Karel van Wolferen warns against taking this view too far. He says:
That [there are laws of money] is what neoclassical economists, in other words, the vast majority of contemporary mainstream economists, are telling themselves and want everyone to believe. Keynes never thought so. And it fits in with American ideology, which is rarely recognized as an ideology. What Alan Blinder is referring to is perfectly accurate: Japan is definitely a challenge to received economic doctrine. Blinder once pointed out to me that the reason why this doctrine has become one, and why it is now rarely challenged, is because it had been made to fit the Anglo-American experience amazingly well. The reason why money does not have its own rules, like physics, is because there is an important political dimension to it. This notion is anathema to mainstream economists, which is why you get so much certainty where none is warranted.
There is no doubt that countries can structure the means of production and the use of capital in many different ways depending on their political structures, with «Russian communism,» «Japanese capitalism,» and «Anglo-American capitalism» being only three of numerous varieties. In that sense, van Wolferen is correct in reminding us that economics does not have ironclad laws of cause and effect, like physics. By Western standards, Japan's banks are almost all bankrupt-yet they continue to function. Many other aspects of Japan's unique form of credit-ordering also baffle outside economists-and, most remarkably, despite the Bubble and all the pain it has engendered, the whole system is basically still intact, ready for the next period of economic expansion.
However, the meltdown in Russia and a decade of doldrums in Japan suggest that while cultural factors can make some difference, certain underlying rules of money do exist and will in time assert themselves. The interesting lesson to be learned from Japan is that the effects of an economy's defying «laws of economics» will not necessarily show themselves as classical theorists would predict. Instead, they go underground, re-emerging in surprising forms elsewhere. At a bank in Tokyo, you can make 10 plus 10 equal 30 if you like – but somewhere far away, at a pension fund in Osaka, for example, it may be that 10 plus 10 will now equal only 15. Or even farther away, implications of this equation may require that a stretch of seashore in Hokkaido must be cemented over.
The Ministry of Finance did not get away with ignoring all the classical rules, for the bankruptcy of pension funds, insurance companies, and banks, the stagnant stock market, six years of zero-to-negative growth, and millions of people in debt to loan sharks are cold, hard facts that cannot be ignored. The argument over whether there are laws of money has to do partly with what sacrifices you are willing to take to maintain an «unscientific» system. Japan is willing to drive its national debt to stratospheric levels, flatten its mountains and rivers, and bleed its savers dry in order to support its system. So the system endures.
Back in the seventeenth century, when Saikaku penned his racy stories of townspeople in the cities of Osaka and Kyoto, shopkeepers knew differently. In Saikaku s world, people had to repay debts, money earned interest, quick-thinking businessmen prospered, while their competitors went bankrupt. Even staid Confucianists understood these things. In 1813, the Confucian scholar Kaiho Seiryo wrote: «Everything under heaven and earth