The economic boom

The early postwar period witnessed incredible change in Japanese society, perhaps paralleled in scale only by the transformations of the early Meiji period. Indeed, the question of Japan’s identity in the new world order that was emerging from the wreckage of World War II was just as real and vital as the question had been when Japan had entered the modern world in the 19th century.

And a number of the issues were the same: Japan found itself impoverished and at the mercy of the Great Powers of the West, now the superpower of the USA; it found its traditions devastated and a new way of life being urged upon it, with the promise of great riches and power. The parallels were not lost on everyone. For some, the end of the wartime regime and the advent of a pacifistic and democratic constitution represented an opportunity to break with the past and to forge a new Japan.

For the majority, struggling to come to terms with what had happened, what had been lost, and what might be gained, there was a complex web of imperatives for continuity with the past and change in the present. For the first time in Japanese history, choices about the future seemed to lie in the hands of the masses themselves. The 1950s and 1960s were culturally and politically volatile decades, even as they were economically miraculous. In a characteristically pragmatic move, the majority of the people threw themselves into industry to rebuild their nation, whatever it would turn out to be. In the early 1950s, the

Japanese government sought to kick-start the process with its first ‘rationalization’ drive, targeted at the core industries of steel, iron, and coal mining. The metals industry, fed by nearly ¥750 billion, exploded. The amazing growth, which made the ruined postwar Japanese steel industry into the second most profitable in the world before 1959 (behind the USA), was fed not only by the tremendous demand from US forces in Korea but also by the steady influx of new technologies from Europe and the USA.

Because Japan did not have to invest in research and development (since ready-made technology could be bought in from outside), growth was rapid.

The growth in the metals industry had a knock-on effect in other industries, such as shipbuilding and (later) automobiles. In terms of shipping, Japan already had a tradition (it was the world’s third largest manufacturer in 1935) but its resources had been ruined by the war. Again, partly in response to the demand triggered by the Korean War and partly due to the influx of new technology, Japan was able to rapidly form a new shipbuilding capability. By 1960, Japan was the world’s largest shipbuilding

nation. By 1975, nearly 50% of the world’s new ships were made in Japan.

Many of the giant Japanese car manufacturers started life in this Korean War boom: Nissan, Toyota, and Isuzu all produced vehicles for the US forces, following US designs, but engineered in Japan. Not only did this lead to tremendous growth in the automobile industry, but it also provided Japanese manufacturers with free technology transfer – which would become crucial in the high-growth 1960s. Domestic demand for cars did not really take off until the early 1960s, since per capita income remained

low: in 1956, Japan produced only 100,000 vehicles for domestic consumption; by 1963, the figure was 1 million; and in the late 1960s, it was closer to 4 million. By 1967, Japan was the world’s

second largest car manufacturer.

It was not only the heavy industries that benefited from the economic boom – increasing national wealth had a knock-on effect in other sectors – this was the birth of consumer Japan. Companies like Hitachi and Matsushita Electric started manufacturing washing machines, televisions, and refrigerators – and production of each increased by at least eight times during the late 1950s. Whilst only 1% of homes had televisions in 1956, by 1960 the figure was more than 50%. If anything, growth in the 1960s was even greater. Prime Minister Ikeda’s famous ‘income-doubling plan’, which was set into motion in 1960, was designed to double Japan’s national wealth in 10 years. In fact, this unprecedentedly ambitious plan underestimated the expansion of the Japanese economy – the GNP tripled between 1960 and 1971, representing an average yearly growth rate of 12.1%. By the end

of the 1960s, Japan no longer had a balance of payments deficit, which had been acting as a periodic drag on growth up until that point.

However, those who like to talk about an ‘economic miracle’ should remember that all industrial economies experienced rapid growth during the period from 1950 to 1970. Growth in itself was not unique, although the speed (more than 10% per year) certainly was. Most commentators attribute this ‘miracle’ to a constellation of very mundane factors: the yen-dollar exchange rate was fixed at 360:1 by the Dodge Line, and it was held artificially at this level until 1971, hence the yen became increasing undervalued, thus stimulating exports; like the rest of the Western world, Japan benefited from a newly liberal trade regime under Bretton Woods and GATT; unlike the rest of the Western world, Japan did not have to spend much of its budget on its military, since it remained sheltered under the US–Japan Security Treaty; as a latecomer amongst the advanced economies, in a liberal trade regime, Japan could buy in new technologies rather than spend time and money on developing them; rapid population growth was accompanied by a tremendous expansion of the education system. Perhaps the most hotly debated ‘unique’ element in Japanese growth was the role of the bureaucracy and economic management. There is a strong case to be made that the Ministry of International Trade and Industry (MITI) and other ministries (especially the Ministry of Finance, MoF) played a leading role in Japan’s

rapid growth through a formal and informal gyosei shido (administrative guidance). However, a simple factor that should not be forgotten was the hard work, industry, and entrepreneurship of the Japanese people themselves. The quip that the ‘Japanese work too hard’ has a solid basis in reality: the average Japanese salaryman worked such long hours that they amounted to the equivalent of a full 12 weeks more per year than his European counterparts. In return for this dedication, the large companies offered their employees ‘lifetime employment’.

By the 1960s, access to the expanded education system was unprecedentedly meritocratic. Gone were the days when access to the elite public universities (the former ‘imperial’ universities) was determined by social class or financial means; for the first time in its history (and perhaps in the history of the world), the social distribution of entries into the best universities almost exactly matched the demographics of the country as a whole. This was a great testament to the uniform quality and wide

availability of primary and secondary schools around the nation. A side-effect of this success was that competition for places at the best universities, particularly Tokyo University itself, was (and remains) incredibly severe. Pre-university students would work even longer hours than their hard-working ‘sarariman’ fathers, and many (who could afford it) would attend special gijuku (cram schools) to maximize their chances of qualifying for their favoured school. Despite the meritocratic nature of admission to universities (or perhaps because of it), getting in to the right university is of immense importance for a student’s career prospects. A graduate of the law faculty at Tokyo University is

counted amongst the most elite fraction of her peers, and she has the choice of the top jobs in the government or big business. This ‘examination hell’ has made the suicide rate in Japanese schools amongst the highest in the world, and the expensive gijuku system has reinscribed the privilege of those with higher incomes.

Economic success also came at the expense of great environmental damage and pollution. The forests of Japan were pushed back into the mountains as the cities expanded to fill the scarce flat ground near the coasts (about 80% of Japan is too mountainous for development). The growth of heavy industry produced vast amounts of poorly regulated chemical waste that poisoned rivers and land. As early as the 1950s, people were complaining of mercury poisoning, which came to be known as Minamata

disease after the area effected, and cadmium poisoning, which came to be known as itai-itai-byo (literally, ‘it really hurts disease’) after the symptoms. But it was not until the early 1970s that

plaintiffs won any recognition or compensation for their suffering, or that proper environmental regulations were implemented. Thereafter, as its economy stabilized and rode out the oil shocks of the 1970s, Japan gradually became one of the world leaders in environmental protection.