Constitutional analysis of present crises

November 24, 2008

Yasuo Sugihara (Emeritus Professor at Hitotsubashi University)

1. Global crisis of the economy and the finance after September 2008

The U.S. subprime mortgage crisis has triggered the economic and financial crisis which is swiftly gulping many nations. This global panic is causing bankruptcies of financing, manufacturing and distributing companies. Stocks and currencies are falling. Governments are funding financial businesses, and lowering official interest rates. Some governments are on the verge of becoming insolvent. Media call it "the worst crises since 1929" or "the worst possible in a hundred years." We are curious to know why it started in the USA, why other countries including Japan, EU and developing nations have been involved, and how we should cope with it.

2. Constitutional viewpoint necessary to analyze the crises

The core of this serious problem is economic and financial issues which can be analyzed in economic and financial ways. However, constitutional viewpoint is also indispensable to understand it.
Since the beginning of the modern period, most nations have provided basic rules in the constitution or the supreme law, on how the society and the politics should be. Details are usually written in other laws in line with the vision expressed in the constitution. That is what we call constitutional regime, which started in the U.S.A. and France in the 18th century, spread around the world and reached Japan in the Far East by the end of the 19th century. In the modern period, each time nations went through painful periods, they have moved forward into new eras by revising constitutions: obsolete principles about the society and the politics were replaced with new principles.

3. Modern civil constitutions, contemporary civil constitutions and present state of affairs

Civil revolutions gave birth to modern civil constitutions which were designed for annihilating status system and feudalism and for fully developing modern capitalism. They prescribed human rights and government system in conformity with these purposes. Freedom and equality were superficially granted, while property rights were regarded sacred and inviolable. Contracts were made freely without regulations. Representative system was not necessarily linked to free universal suffrage. And war was recognized as inevitable. Such ideas and rules opened the door to the modern period of human liberation. However, the modern period was tainted by capitalist system with evils such as: gender discrimination, uncontrolled long working hours at low wages and shorter life span. Therefore, fierce class struggles took place between the workers and their employers. Modern capitalist system remained instable, dotted with periodic depressions. It was a time of imperialistic invasions and wars, a new era of alienation of human beings.
After the World War I, contemporary civil constitutions came into existence. Their objectives were to overcome defects of modern constitutions and capitalist system. Constitutions in the USSR and other East-European socialist nations had the same goals. New constitutions in most of the developed capitalist nations articulate: (1)ban on gender discrimination, (2)idea of national welfare which aims to guarantee the right to maintain a human way of life, (3)disarmament and illegalization of war (peaceful settlement of international disputes and ban on war of aggression and invasion), and (4)further reinforcement of democracy. However, the present Constitution of the USA does not have the above (2) welfare and (3) ban on wars. Japanese Constitution is one of contemporary civil constitutions which clearly expresses all those 5 principles. Yet, Japanese government is not serious about carrying out any of those, because it always follows American policy.
Once the fundamental missions of contemporary rejimu are overthrown or neglected, the government system loses its reason for existence and becomes unsustainable. That is what we can learn from the history of the socialist governments of the USSR and eastern European nations which collapsed by the end of the 20th century, after the exhausting armament competition against the USA. Constitutional analysis is necessary to grasp and cope with the present crisis which is said to be the most serious one after the depression in 1929.

4. Why has the USA become the hypocenter?

The following points may help us to answer this question.

(1)The US constitution lacks the principle of national welfare, ban on wars and the pursuit of disarmament. Such a constitution allows the USA to devote itself to promoting the globalization of the market economy system, and to fighting the Cold War, hot wars and arms race.

(2)Soon after the World War II, as of 1948, the USA established the Pax Americana, and became the worldfs leader, in the economy as well, sharing 53.9% of the industrial output of the global capitalist economy and 53.7% of the total of gold and foreign exchange reserve of the world,

(3)The USA has been absorbed in building up its arsenal and fighting hot and cold wars since the World War II. The Cold War (1946-91) against the USSR was an all-out competition for its military hegemony and for the capitalist systemfs victory over the socialism. Hot wars include the Korean War (1950-53), Vietnamese War (1960-75) and the Iraqi War which continues from 2001. The increase of the military budget has been outstanding since Reagan administration. In 2008, under Bush Jr. Administration, the Defense Ministryfs budget reached 481.4 billion dollars excluding the expense for fighting wars in Iraq, Afghanistan and elsewhere. It is generally estimated that the US military expense actually exceeds 1.1 trillion dollars. Military expenses are basically non-reproductive waste. Military expenses are destined to damage the economy and the finance. The US current account deficit was 804.9 billion dollars and the federal budget deficit was 495.3 billion dollars in 2005. They are referred to as twin deficits.

(4) Along with its military expansion, the USA ardently propagated principles of market economy to the world, proclaiming "liberalization without exceptions." This campaign fueled speculative investment, which naturally damaged production, consumption and lives of most people. Thus, "laisser-faire" principle of modern capitalism thrived throughout the world, which is closely related to the environmental destruction of various forms in global scale.

(5) As a result, the USA became the hypocenter of the devastating crisis.

5. Why has Japan got involved? What should we do?

Japan, unlike the USA, has a constitution which states the principles of peaceful nation and of national welfare. Japan should never have been involved in this "most serious crisis after 1929" if it had faithfully carried out these principles. It is indeed regrettable that Japan neglected the contemporary significance of its constitution, followed the USA, and got involved in the trouble. We must cope with it in a right manner, by understanding its cause. The remedies should be based on principles stated in the articles 9 and 25 of the Constitution; peaceful nation and national welfare. The trouble drags on and more people suffer if we mismanage the problem by ignoring the factors and causes. We should learn a lesson from this crisis and realize the importance of the above principles in our constitution.
Only "the government by the people and for the people" can remove the pain of the majority of the people. We have learned through our experience that a person in power often forgets the reality of everyday life of the people. We desire a fair election system which allows us to convey our voices to the national and local assemblies, and local governments with broader authority.

6. Kempo to Shihonshugi, Constitution and Capitalism: the book I published (in Japanese) in August 2008

In this book I studied present constitutional situation in relation to the capitalist system, with reference to the history of modern and contemporary constitutions. In the light of various results in social scientific studies, I was able to analyze failures of the two superpowers in the 20th century from constitutional viewpoint. I was surprised that the global crisis broke out soon after the publication, in the next month. I strongly believe that we should try harder to see the real significance of the Constitution of Japan. I would appreciate your looking over the table of contents and preface of my book.