Japanese economic miracle
The American government reformed Japanese society during the occupation of Japan, making political, economic and civic changes.
[3] After World War II, the U.S. established a significant presence in Japan to slow the expansion of Soviet influence in the Pacific.
The U.S. was also concerned with the growth of the economy of Japan because there was a risk that an unhappy and poor Japanese population would turn to communism and by doing so, ensure Soviet control over the Pacific.
[1] The distinguishing characteristics of the Japanese economy during the "economic miracle" years included: the cooperation of manufacturers, suppliers, distributors, and banks in close-knit groups called keiretsu; the powerful enterprise unions and shuntō; good relations with government bureaucrats, and the guarantee of lifetime employment (shūshin koyō) in big corporations and highly unionized blue-collar factories.
[4] The Japanese financial recovery continued even after SCAP departed and the economic boom propelled by the Korean War abated.
The Japanese economy survived from the deep recession caused by a loss of the U.S. payments for military procurement and continued to make gains.
By the late 1960s, Japan had risen from the ashes of World War II to achieve an astoundingly rapid and complete economic recovery.
According to Knox College Professor Mikiso Hane, the period leading up to the late 1960s saw "the greatest years of prosperity Japan had seen since the Sun Goddess shut herself up behind a stone door to protest her brother Susano-o's misbehaviour."
To alleviate the influence of the recession, Japan imposed a series of economical and financial policies to stimulate domestic demand.
[10] The virtual destruction of the Japanese standard of living, combined with the military threat presented by the Soviet Union, compelled the United States to support a wide-reaching economic recovery.
The demand stimulated the Japanese economy enabling it to recover quickly from the destruction of the Pacific War and provide the basis for the rapid expansion that was to follow.
Prime Minister Hayato Ikeda, whom Chalmers Johnson calls "the single most important individual architect of the Japanese economic miracle," pursued a policy of heavy industrialization.
Led by the economic improvements of Sony businessmen Masaru Ibuka and Akio Morita, the keiretsu efficiently allocated resources and became competitive internationally.
[18] At the heart of the keiretsu conglomerates' success lay city banks, which lent generously, formalizing cross-share holdings in diverse industries.
MITI used the foreign exchange allocation to stimulate the economy by promoting exports, managing investment and monitoring production capacity.
The plan called for doubling the size of Japan's economy in ten years through a combination of tax breaks, targeted investment, an expanded social safety net, and incentives to increase exports and industrial development.
To achieve the goal of doubling of the economy in ten years, the plan called for an average annual economic growth rate of 7.2%.
[21] Ikeda introduced the Income Doubling Plan in response to the massive Anpo protests in 1960 against the US-Japan Security Treaty, as part of an effort to shift Japan's national dialogue away from contentious political struggles toward building a consensus around pursuit of rapid economic growth.
[23] Under the Income Doubling Plan, Ikeda lowered interest rates and rapidly expanded government investment in Japan's infrastructure, building highways, high-speed railways, subways, airports, port facilities, and dams.
However, his liberalization goals met with severe opposition from both industries who had thrived on over-loaning and the nationalist public who feared foreign enterprise takeovers.
[citation needed] Accordingly, Ikeda moved toward liberalization of trade only after securing a protected market through internal regulations that favored Japanese products and firms, and never achieved his ambitious 80 percent goal.
[citation needed] Ikeda also set up numerous allied foreign aid distribution agencies to demonstrate Japan's willingness to participate in the international order and to promote exports.
[citation needed] The creation of these agencies not only acted as a small concession to international organizations, but also dissipated some public fears about liberalization of trade.
[27] As a result, Japan converted to a technology-concentrating program, ensuring the steady increase of its economy, and standing out beyond other capitalist countries that had been significantly wounded during the oil crises.
The Ministry coordinated various industries, including the emerging keiretsu, toward a specific end, usually toward the intersection of national production goals and private economic interests.
The Japan Development Bank introduced access to the Fiscal Investment and Loan Plan, a massive pooling of individual and national savings.
[29] In 1982, Hitachi pleaded guilty in the United States District Court to charges that it conspired to steal trade secrets from IBM and transport those documents to Japan.
[36] At the conclusion of the Plaza Accord, former US President Ronald Reagan said, "When governments permit counterfeiting or copying of American products, it is stealing our future, and it is no longer free trade."
