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New Left Review 1, January-February 2000

The 20th century’s most dynamic economy has fallen into prolonged paralysis. What are the causes of Japanese stagnation, and why have the country’s rulers reacted so phlegmatically to it? Taggart Murphy highlights the potentially explosive interdependency between Japanese recession and the American bull market.



Japan’s troubles have persisted now for nearly a decade. That the world’s second largest economy and leading net creditor should remain mired in seemingly endless stagnation/recession confounds policy makers and observers around the globe. And their fears over the consequences have deepened since the onset of the developing world crisis in July 1997. It is evident that the United States alone cannot generate sufficient demand to pull the developing world out of the doldrums—that it requires the assistance of other leading economic powers. With a Europe preoccupied for the time being with its new currency, the only sizeable power left to help the United States propel the world forward is Japan. Yet far from being part of the solution, Japan appears to be a big part of the problem.

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R. Taggart Murphy, ‘Japan’s Economic Crisis’, NLR 1: £3

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