Japanese ruling party heads for a November showdown

The skirmishing has begun in Japan's own November presidential election. Prime Minister Yasuhiro Nakasone must lay his job on the line Nov. 20 in the biennial election for president of the ruling Liberal Democratic Party (LDP).

He is seeking to halt a trend in Japanese politics whereby each of the past five prime ministers has been forced to resign after about two years because of a chronic LDP factional power struggle. And at least two members of his Cabinet are determined to see he continues this tradition.

The chief battleground appears to be the economy.

What economic course should Japan chart from now on? Should taxes be raised? With Japan continuing to amass massive trade surpluses, why is the government so heavily in debt? And why hasn't some of this trade wealth filtered down to the general public, whose living standards have barely improved in the past decade?

These are some of the questions Nakasone's chief party rivals have hurled at him in recent days.

Kiichi Miyazawa - one of the LDP's outstanding intellectuals who has served as economics and foreign minister and chief Cabinet secretary - set the tone in revealing his plan to double the assets of every Japanese over the next decade.

This was seen as a direct attack on Nakasone, who, with the backing of financial authorities, is committed to an austerity budget policy in an effort to contain runaway national deficits. The accumulated deficit for fiscal year 1984, according to the government, has risen to more than $540 billion.

In the current fiscal year, defense and foreign aid were about the only areas allowed modest spending increases. The Finance Ministry fired the first salvo in the fiscal 1985 budget battle with a declaration last week that there will be no exemptions in the campaign to cut spending to the bone.

Rebel LDP elements contend there is something radically wrong when an economy that produces such spectacular trade surpluses - and which is on paper the second-richest country in the industrialized world - cannot make ends meet.

They gained valuable ammunition from a recent Construction Ministry annual report which showed public welfare has been continually sacrificed to industrial might. Among the statistics: At least 10 percent of the population (4 million families) live in jampacked ''substandard housing''; only 30 percent of Japanese homes are connected to a sewage system; and half of the nation's roads have no pavements (leading to a heavy toll in pedestrian deaths), while Tokyo has only 1 /20th of the park land available to residents of Washington, D.C.

In direct contrast to Nakasone austerity, Mr. Miyazawa wants the government to borrow even more to spend on stimulating the economy - and creating, he hopes , more tax revenue in the process. He wants the money spent on improved housing, sewage, and road systems, and the creation of more parkland.

Toshio Komoto, director general of the Economic Planning Agency, was defeated in the presidential race two years ago. But he has entered the race once again with a sharp attack on the government's fiscal policies.

In a recent LDP seminar, he dismissed Nakasone's repeated public pledges to balance the books without raising taxes, saying there was nothing to worry about if the tax increase benefited the national economy as a whole.

''Isn't it time we reviewed the simplistic view of holding steadfast to a 'no tax hike' policy?'' he asked, contending there was still room for the government to borrow more to cover public spending since deficit-financing bonds came from public savings.

Nakasone, addressing an LDP meeting last weekend, countered his rivals' calls for more public-works spending by saying current fiscal policy is no longer an effective tool to generate economic growth. Instead, he argued, Japan should put more stress on deregulation as a means of generating economic growth.

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