Audio version read by George Atherton – Right-click to download
Kazuo Mizuno, former chief economist for Mitsubishi Morgan Stanley Securities, has created a graph in which the vertical axis shows the world’s real GDP per capita and the horizontal axis shows the long history of humankind, illustrating – in one graph – the changes that have taken place in the past one million years. From this, Mizuno has managed to tease out a thrilling argument.
The modern period began in the 1600s, with the age of exploration in full swing. The principle on which society was based during this period was capitalism, a system in which a handful of people in the first world – less than 20 percent of the global population – bought cheap resources from the people in the third world constituting over 80 percent of the global population, in turn selling products at high prices.
The system worked well for 400 years, which was why developed countries flourished until the 1970s. However, Mizuno argues, with the emerging self-assertiveness of oil-rich countries and falling profit rates among major corporations, capitalism entered a stage of stagnation after peaking in 1974.
Leading the world in this new stage of capitalism were the US and Japan. When real investment hit a wall, they had nowhere to turn but bubbles. Japan dove straight into a real estate bubble in the 1980s, with the US following suit in the 1990s in the realm of finance. The bursting of both bubbles brings our economic history to the present day.
As a result of the globalization of the world economy, the system based on 20 percent of the world exploiting the remaining 80 percent is no longer viable. Mizuno says in his book, “Hitobito wa naze gurobaru keizai no honshitsu o miayamaru noka.” (Why do people misread the global economy?) It is obvious that Japan, which has heretofore been at the head of the global pack, should be the very nation to move on to the next stage first.
Over the next few years, Mizuno says, Japan will provide a “preview” of what is to come in the rest of the world, as we move into a new phase of capitalism.