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Local Japanese Economy at Crossroads

Is 'Degrowth' the Way?


Is 'Degrowth' the Way?


Population decline is debilitating Japan’s local economies. But is economic growth the only way? Over the past decade an emphasis on interpersonal interaction, community development and happiness has gained rapid currency.



Is 'Degrowth' the Way?

By Sydney Peng
From CommonWealth Magazine (vol. 552 )

How can an outlying island under nine square kilometers, with only 800 residents, of whom 60 percent are over the age of 65, restore its energy and vitality?

Mihara Island, in Hiroshima Prefecture, is the focus of an experimental project known as "Hometown Front Lines," now in its sixth term.

Working in groups, 50 students publish newspapers, transform vacant buildings, and organize events, working out a prescription for revitalizing Mihara Island over a five-week period.

Standing on the front lines, they are up against the aging and dwindling of the population that is gradually overcoming their island.

Happiness Is Possible without Economic Growth

Ryo Yamazaki, a 41 year-old lecturer, has the telltale hearty laugh of an Osakan. An architect by trade, observing the shrinking of Japan's population he changed careers in 2005 to become a community designer, founding studio-L.

Having endured the suicide of his younger brother, Yamazaki believes that interpersonal connections are the essential foundation for community development.

From parks to department stores to moribund shopping districts, he makes reviving interaction among residents his top priority. Through clever use of his spatial design expertise he finds ways to put a smile back on places in decline.

Three years ago, observing the steady waning of communities outside of Japan's major cities, he resolved to start up the Hometown Front Lines lecture series as a means for reconsidering Japan's future.

With its current negative population growth, should Japan make economic growth its objective? Can only the pursuit of growth bring happy, fulfilling lives?

"It's possible to do things that make you happy without economic growth. If happiness is the ultimate goal, one need not take the long way around to get there," he says.

Over the past decade, the notion of "degrowth" that diverges from mainstream thinking on economic growth has rapidly spread. A growing number of young Japanese people no longer believe that economic growth makes life any richer.

Unlike the "growth is number one" mantra of Abenomics, in an era of shrinking population and low economic growth, they are more interested in interpersonal relations and community development – aspects not reflected by GDP.

Kosuke Motani, chief senior economist at the Japan Research Institute, Ltd., offers that although the Japanese economy has not experienced growth in two decades, deflation has kept prices steady, leaving living standards largely unchanged.

In addition, as Japanese government policy has been unable to effectively stimulate economic growth for years on end, passive degrowth thinking has become an option for some.

Given the stagnation of Japan's population since 2005, Professor Hiroi Yoshinori of the Chiba University Institute of Law and Economics says that the era where "anything produced could be sold" has now passed.

Japan can no longer make economic growth a singular objective; rather, it must revitalize regional economies, and "establish an economic order for the regional circulation of people, goods and money," he opines.

Facing a future of population decline, Japan sees conflicting approaches to economic development.

Mutual Aid Trumps Public Assistance

Former Minister of Internal Affairs and Communications and current Nomura Research Institute (NRI) consultant Hiroya Masuda believes that the time is right to update Japan's aging infrastructure, which dates largely from the 1970s. He says consideration should be given to whether this should be undertaken in areas with higher population density.

"The central government should provide extensive funding to lead local governments over towards 'compact city' thinking," he opines.

In last year's best-selling book Satoyama Capitalism, Kosuke Motani observed that in the era of high economic growth Japan invariably relied on highway and infrastructure development, industrial zones, and tourism stimulus to power local economic development. However, these three tools are no longer useful.

Ooizumi Tayuko, director of the Research Department at the Tohoku Regional Advancement Center, also holds that under financial pressures, authority over policy tends to migrate from the central government to local governments, while responsibility for regional development shifts from the government to the public.

"The center of gravity of local development has already shifted from public support with government backing towards self-help and mutual assistance among community citizens," she states frankly.

Hybrid Barter/Money Economy Is the Future

Whether through self-help or mutual assistance, can the lack of government resources and direction really lessen the impact of a shrinking population and help communities restore their vitality?

Kosuke Motani advocates that Japan should utilize the resources available in nature outside the capitalist system to establish a subsystem not reliant on money.

Tugging his white sleeves, and pointing to his shoes and bag, he proudly points out that these items were "payments" for lectures he has given – barter being one of the pillars of the "Satoyama Capitalism" he practices. (Satoyama is the Japanese term for rural areas bordering on mountains and forests.) These forms of production and trade that don't get counted in the GDP are important, Motani insists, because they make up for Japan's global trade losses.

Last year Japan spent 27 trillion yen (around NT$7.8 trillion) on petroleum purchases from abroad. The depreciating yen, plus the stoppage of the country's nuclear power plants, has resulted in year upon year of record trade deficits.

Not only have energy imports climbed, but the offshoring of Japanese enterprises has further taken jobs away, and local industrial zones have begun a notable decline.

Hiroya Masuda believes that conventional economic development and Satoyama Capitalism move in the same direction. Like major corporations and small- and medium-size enterprises, the two systems should co-exist, to the greater benefit of Japan's development.

"The country still needs some growth, or living standards will suffer," he stresses.

Nojima Tsuyoshi, a journalist for AERA, a weekly magazine under Asahi Shimbun, approaches the issue from the standpoint of generational differences. The rise and spread of the "degrowth" concept is possible because young people have never experienced life in an age of growth, but they still need hope and change. "That is the responsibility of all Japanese," he states.

Translated from the Chinese by David Toman