Japan’s Economic Miracle

The defeat of the Japanese after World War II  allowed a reset for the Japanese economy. The American occupation helped put reform policies in place that allowed the Japanese economy to grow. (Takada, M., 1999) The reform policies included breaking up zaibatsu, or large Japanese business conglomerate, land reform, and labor democratization. Much went in to the Japanese war effort. Factories were transformed and cities were destroyed. (Takada, M., 1999) One fourth of the nations housing was destroyed. (Takada, M., 1999) Allied occupation forces worked to rebuild Japan. To get their economy back on track, Japan used what they were learning form the West mixed with prior experience. (Takada, M., 1999)

At the end of the war, Japanese unemployment reached 13.1 million. 7.6 million troops, 4 million in military production or military jobs, and 1.5 million Japanese from abroad needed to be absorbed into the workforce. (Takada, M., 1999) With a need for food, agriculture absorbed 18 million in 1947, which is 4 million more than before the war. (Takada, M., 1999) Under employment was a major problem. There were shortages on energy and food and problems with inflation. (Takada, M., 1999) Allied force, mostly America, helped to rebuild Japan. General Douglas MacArthur, Supreme Commander of the Allied Powers, along with his staff, created a new constitution for Japan.  In the new constitution, MacArthur demilitarized Japan, shut down all military production, and demilitarized the economy.

The breaking up of the military was both physical and institutional. (Takada, M., 1999) The breaking up of the zaibatsu was treated the same way. Before the zaibatsu was treated preferably by the Japanese government and were given lower taxes and funds to expand their business. (Takada, M., 1999) The zaibatsu had to sell stocks to the public in order to break up the monopoly. (Takada, M., 1999) MacArthur enacted anti-monopoly and decentralization laws. (Takada, M., 1999) Breaking up the monopolies helped smaller businesses by creating competition and helped spur economic growth. (Takada, M., 1999)

Land reforms were enacted. Landlords were forced to sell their land holdings. Land was bought up by the government and redistributed to tenant farmers. (Takada, M., 1999) Before World War II, Japan functioned a rather feudalistic society. Two-thirds of all farmers rented the land they farmed on. (Takada, M., 1999) Land reform inted to transfer land ownership to those actually doing the farming and improve tenancy practices. Land ownership went from 54% just after the war to 90% by 1950. (Takada, 1999) Land reform ended the feudal system in Japan and ended the social class structure. (Takada, M., 1999)

Labor democratization enabled Japanese to form labor unions. In 1945, there were no workers unions. By 1948, workers unions reached 60% in Japan, while the international average for worker’s unions was only at 30%. (Takada, 1999) Labor unions were a natural outcome of the breakup of the zaibatsu. Trade union laws in 1945 gave workers the right to organize in private industry, gave them the right to collective bargaining, gave them the right to strike, the right to democratic procedures in all union activities,  and prohibited unfair labor practices. (Takada, M., 1999) Under these new trade union laws, working conditions improved significantly. Unions forced management to accept the concept of lifetime employment and restrictions on dismissing employees. (Takada, M., 1999) In return, employers would receive loyalty from their workers. Improved working conditions and higher wages expanded and improved the economy. (Takada, M., 1999)

 

References

Japan: The Constitution. Retrieved on October 29, 2018 from https://www.loc.gov/law/help/japan-constitution/article9.php.

Takada, M., (1999) Japan’s Economic Miracle: Underlying Factors and Strategies for Growth. Retrieved on October 29, 2018 from www.lehigh.edu.