Income doubling plan

The income doubling plan ( Japanese. 所得倍増計画 , shotoku baizō keikaku ) was passed in 1960 by the Japanese cabinet under Ikeda Hayato . It was the third Japanese Five-Year Plan adopted . It was to apply until 1969, but was replaced by the medium-term economic plan in 1965. The aim of the plan was to “double the national income”, with national income not referring to the salary of the individual worker, but to the gross domestic product .

The head behind the plan was Shimomura Osamu (1910–1989), a Japanese economist who, like many Japanese colleagues of his time, had a Marxist influence.

This should (and was) achieved through a procyclical policy: although the Japanese economy was already in a strong growth phase, the so-called Iwato boom. In 1958 and 59 economic growth was 10%. Nonetheless, the government took on further national debt to stimulate investment in the economy, particularly heavy industry, and to further expand Japanese infrastructure. It was possible to double key indicators such as steel production within a few years. A very large proportion of profits were directly reinvested by the industry in order to maintain high growth. Real economic growth averaged 10.9% during this period (the plan was 9%), so that the goal of doubling was achieved even faster.

The incomes of the Japanese remained at a low level, which was reflected in the slogan "rich Japan - poor Japanese". That was only to change in the 1970s, also because the Bretton Woods system was dissolved in 1971 and the yen then gradually began to rise from its fixed dollar rate of 1: 360.

In retrospect, the income- doubling plan has been heavily criticized by neo-Keynesian economists, precisely because of those pro-cyclical policies. In the 1970s, the central bank had to hike interest rates sharply to cool the overheated economy and make it easier for the Japanese government to repay loans. In connection with the 1973 oil crisis, this led to high inflation, which is why this phase was also known as the “crazy prices” phase.