In the 1980s, Japan was the dragon of the world. All cutting edge technology cars, gadgets, cameras, medical equipment and new management systems came from Japan.

Then the country started to slow down, and it basically went to sleep.

However, its levels of production and financial reserves were still sufficiently high that decline at the global level did not matter much for the average citizen.

Of course, Sony was substituted by Apple and now China has the image of the dragon, having surpassed Japan as the second largest economy, but the quality of life for the Japanese citizen is still better than in almost all other countries.

Now, they are awakening to the fact that social achievements cannot be taken for granted if the economy does not grow. The rate of unemployment in Japan stands at under five per cent, a risible figure by European standards, but unprecedented here.

The yen has soared and exporting has become increasingly difficult. Japan has no natural resources and must import all raw materials.

It did, however, manage to solve the lack of fossils, coal and oil by becoming the world’s largest producer of atomic energy. And its car industry is still the most likely successful survivor of the inevitable worldwide consolidation of the car industry.

Deep differences

It is beyond this short article to dwell on how history, under an uninterrupted line of emperors, can explain the deep differences with China, which has been for Japan what Greece was for Rome, but it is important to say that before the modernisation of Japan a reaction to the arrival of the US fleet led by Admiral Matthew Perry in 1853 the country’s political history is probably the most mediocre ever.

After the victorious war with Russia in 1904, which put the country on a par with the others, Japan’s military circles were able to take over and started a number of conflicts, which ended with the bombing of Hiroshima and Nagasaki.

Under the push of General Douglas MacArthur, commander of the occupation forces that ran Japan from 1945 to 1952, democracy was introduced, along with voting rights for woman, and since then a number of transparent elections have been held. But the Liberal Democratic Party (LDP), which has run the country practically without interruption since the Second World War, has become an increasingly self-referring political machine.

Now, what is new and disturbing is a wind of nationalism that has created totally unnecessary confrontation with China over a group of small islands, the Senkaku (or Diaoyu for China).

Three major towns - Tokyo, Nagoya and Osaka are run by nationalist leaders; the mayor of Osaka is setting up a new nationalist party; and the new leader of the LDP, Shinzo Abe, is a strong nationalist. But there is a clear and growing disconnect between politicians and the people. While this is a global trend, here it is particularly striking.

Japan is a country accustomed to living with earthquakes and tsunamis. The aftermath of the big earthquake that struck Kobe in 1995, causing 5,100 deaths, was recognised as an example of Japanese resilience and social solidarity.

But the most recent earthquake in March 2011 and its accompanying tsunami have created an unprecedented challenge. Over 650 kilometres of Japan’s northeastern coastline were devastated and some 20,000 people died. The estimated cost of the damage is 200 billion dollars, but the costs of reconstruction are still unclear.

Japan has slipped to 25th place in the most recent Global Innovation Index of the United Nations, falling out of the top 20 for the first time since the Index started in 2007. The Japanese electronic giants of the 1980s are no longer coming up with any significant innovation.

So, a sense of insecurity about the present, and a sense of doubt about the future, is descending on Japanese society.

More seriously, the number of recipients of government welfare aid topped 2.1 million in June this year, a record high for the population of 128 million. This has created a great shock, while it would be a dream elsewhere - the trend is ominous.

Perhaps the most notable reaction is among women, who are becoming independent, do not look at marriage as compulsory, and do not regard a man as their primary destiny.  It is difficult to say whether these new forces will be enough to balance the decline of political institutions and the ageing of the private sector but it is the best hope to which today’s Japanese can cling.