Japan's Postwar Economic Miracle
Japan's economy grew at roughly ten per cent a year for nearly two decades and became the second largest in the world by 1968. The starting point was rubble. A quarter of the national wealth had been destroyed, the cities were burned, the empire that had supplied raw materials was gone, and millions were repatriated into a country that could not feed them. The American occupation then imposed reforms that Japanese governments had been unable to make: land redistribution that turned tenants into owners almost overnight, the legalisation of unions, the break-up of the zaibatsu conglomerates, and a constitution that renounced war — which capped defence spending at around one per cent of output for the whole period. The Korean War from 1950 brought American procurement orders that the prime minister called a gift of the gods. What followed was a distinctive arrangement rather than a free market. The Ministry of International Trade and Industry allocated foreign exchange and technology licences, the banks lent to industrial groups they belonged to, savings rates were extremely high, and large firms offered lifetime employment and seniority pay in exchange for enterprise unions. Quality control methods taught by an American statistician, W. Edwards Deming, were adopted more thoroughly in Japan than at home. Income doubling was announced as a target in 1960 and reached in seven years. The oil shock of 1973 ended the double-digit phase, and the asset bubble that burst in 1991 ended the rest. The social cost was carried in ways that were not counted at the time: mercury poisoning at Minamata, air that corroded buildings in Yokkaichi, commutes of two hours from apartments the size of a room, and a word coined in the 1970s for death by overwork.
- Year: 1955 CE
- Category: Economic
