Your Independent Journal from the Heartland
For more than three decades, structural reforms and neoliberal prescriptions—such as market deregulation, privatization, and reduced state intervention—were consistently advocated and imposed globally by the US and Bretton Woods institutions (the World Bank and IMF). Evidence now clearly suggests that neoliberalism disproportionately favored the wealthy elite while marginalizing the poor and working classes. This economic paradigm prioritized capital accumulation and corporate profits over social welfare, significantly widening the gap between the haves and have-nots.
Favorable tax policies, deregulated financial markets, and weakened labor protections led to wealth concentration at the top, resulting in stagnant wages, eroded social safety nets, and diminishing access to essential services like education and health. The inevitable consequence of these policies extends beyond mere economic disparity; it generates profound social discontent and political instability. This is happening in most of the countries in Asia. Even Japan, long considered a model of economic success and social stabilty, has become a typical example that neoliberal policies undermine the stability of even coherent societies, threatening the social and political order.
Japan’s first female Prime Minister, Sanae Takaichi, promised to create a strong economy and make “the entire nation rich and strong.” She did not explain whether there would be a reversal of neoliberal policies administered by successive governments led by Prime Ministers Yasuhiro Nakasone, Ryutaro Hashimoto, Junichiro Koizumi and Shinzo Abe.
Japan’s economy proved that neoliberalism had lost. Since the 1990s, the governments in Japan have implemented deregulation and market liberalization policies. They opted for market mechanisms, withdrawing state interventions. The financial markets were deregulated, and the old system of bank-centered financing became outdated in Japan.In the name of labor market flexibility, the system of permanent, secure lifelong jobs was done away with and moved towards insecure, non-regular work.
The IMF study on income equality in Japan showed that in spite of an increase in the employment of females and the elderly in the last decade,they were mostly employed in low-paid, part-time,temporary, contract, non-regular jobs. These non-regular employment offered lower wages, fewer benefits, and less job security, affecting younger workers and women.This had exacerbated income inequality over time.
As has often been the case, the neoliberal paradigm widened the wealth gap between rich and poor in Japan. Privatization of public services and deregulation of industries boosted corporate profits and investor returns. According to the Nomura Research Institute, between 2011 and 2023, assets of the “super rich” (those worth over $3.3 million) tripled, while the “rich” ($650,000-$3.3 million) saw their wealth double; their combined assets reached about $3.1 trillion by 2023. The 80% of the population experienced much slower asset growth.Real wage increases were minimal during these 13 years.
The significant gender gaps in earnings have created a social crisis in Japan; men earn about 80% more than women on average. Many dual-income households still report financial stress, mainly due to rising costs and social insurance.Neoliberal education policy with reduced public funding and increased reliance on private institutions made higher education less accessible to lower-income families. Poor families struggle without access to assets or educational opportunities. Even though it is an anathema to neoliberalism, the government expanded welfare provisions and social transfers due to the social crisis; but this did not mitigate the effects of growing inequality.
Such a serious crisis in the Japanese economy unavoidably impacts the political sphere of Japan. The Liberal Democratic Party (LDP), formed in 1955, has been in power almost continuously except from 1993 to 1996, and again from 2009 to 2012. It is one of the longest-ruling parties in the world. Its 70 years of dominance was disrupted in the 2024 Japanese general election. The LDP and its coalition partner lost their parliamentary majority in the lower house for the first time since 2009. The LDP secured only 191 seats, marking the first time in the LDP’s history that it did not control either house in the National Diet(both houses of Parliament). Despite these political setbacks, the LDP continues to govern.
Shigeru Ishiba served as Prime Minister from 2024 and resigned in 2025 after the ruling Liberal Democratic Party (LDP) suffered election losses. Sanae Takaichi won the LDP leadership election on Oct. 4, 2025, and assumed office as Prime Minister. Ironically, she asserted that she would take US-Japan relations to “new heights,” calling the alliance “the cornerstone of Japan’s foreign and security policy”.That means she would continue catastrophic neoliberal policies with the full blessing of the US,the architect of neoliberalism.
The neoliberalism in Japan is a cautionary tale for the global working people. Prioritizing market efficiency while abandoning social welfare would have serious consequences, including heavy human costs. People-oriented policies like developing employment-generating indigenous productive capacities and utmost concentration on human development through prioritizing health and education are necessary.
N. Gunasekaran is a political activist and writer based in Chennai, India.
Email gunatn@gmail.com
