Now that Abe is gone, can we say, what I then called the Keynesian/neoliberal mix that was Abenomics, has worked to boost Japanese capitalism? It is an interesting question, because Abenomics combined all the policy proposals of mainstream economics into one and the three arrows were praised by neoclassical and Keynesian economists alike. So Japan has been the perfect laboratory model for the efficacy of mainstream economic policy to achieve sustained growth in output, incomes and jobs.
Over the weekend, Abe Shinzo announced that he was resigning as Japan’s prime minister. Last November, he became the country’s longest serving premier. He resigns amid the worst economic slump in Japan’s post-war history, caused by the coronavirus pandemic and the lockdowns. His popularity had plummeted due to a series of bribery and corruption scandals in his government and because of his handling of the pandemic.
In the second quarter of 2020, Japan’s national output fell 7.8% compared to the first quarter level, or an annualised drop of 27.8%, a quarterly drop more than 60% greater than in the depths of Great Recession of 2009.
But Japan was already in a classic economic recession before COVID-19 hit the world economy. Real GDP had already fallen in the last quarter of 2019.
Indeed, it is a sorry end to the great hopes expressed when Abe came into office in early 2013. …
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