The rapid pace of economic development of Japan in the post-war period has always aroused increased interest in this country, raised a number of questions related to the reasons for such successful development.
Speaking about the reasons for the high rates of quantitative and qualitative growth of the post-war Japanese economy, it is necessary to take into account a number of factors: historical, social, political and international, which have a constant impact on this process.
First of all, the specifics of Japan’s historical and cultural development cannot be ignored: its dependence on the historical centers of Eastern and Western civilization led to the fact that the Japanese tried, and not without success, to borrow various aspects of foreign, more advanced cultures and then adapt them to their traditional values.
At the same time, in order to prevent the Japanese from dissolving into a more advanced civilization, the ruling circles of the country throughout its history have intensified nationalist concepts about the superiority of traditional Japanese culture, its special spirituality, and the messianic role of the Japanese nation.
In the second half of the nineteenth century, Japanese rulers and ideologists set the task of using the Western European model of development, primarily such aspects of it that would contribute to increasing japan’s economic and military power and would allow it to catch up with the Western powers in the shortest possible time.
Since the beginning of the twentieth century, copying the Western model has been reduced, first of all, to the creation of a strong army, colonial seizures and, finally, to the unleashing in 1941 of aggression in the Pacific Ocean, which led to the defeat of Japanese militarism. However, the very idea of following a more advanced model of economic and cultural development continued to be seen by Japanese political and business circles as the most effective way to revive Japan. After World War II, the American economic model of development was chosen. The United States decided to provide Japan, as its ally in the Far East, with the latest equipment and technology, not assuming that thereby contributing to the rapid revival and strengthening of the economic rival. U.S. aid has saved Japan enormous material and financial resources, and most importantly, the time needed to conduct scientific research and create new technology. In fact, Japanese reforms were developed by leading American economic professors, and practically on the spot they were carried out by the commander-in-chief of the American occupation forces, General Douglas MacArthur. American Magazine “Managemen Review” (Vol. 87, No. 10. November 1998) ranked MacArthur’s decision to rebuild the postwar Japanese economy 49th among the 75 best management decisions ever made in human history. At the same time, the United States set practical goals that meet the geopolitical interests of its own country. First of all, this is the destruction of the military potential of the aggressor in the Asia-Pacific region. At the same time, the reforms carried out were systematic, comprehensive and timely adjusted during implementation. Reforms were carried out in the following areas:
– monetary reform;
– demonopolization of the economy;
– conversion of military enterprises;
– budget reform;
– tax reform;
– reform of labor relations.
The occupation authorities ensured political stability in society, their functions included: police duties; health care; education; the judiciary; protection of competition. Thanks to the presence of the American army, the resistance of the old Japanese elite, who opposed the implementation of reforms, was broken. The executive role was given to the Japanese themselves. The Japanese government carried out budget planning, financial management, and the organization of money circulation. Thus, the Americans determined the direction in which the Japanese economy should move, gave the initial impetus and controlled the first stage of development, and then the Japanese themselves began to use a given algorithm.
The beginning of reforms is associated with financial stabilization. At this stage, American financial assistance was provided, food, fuel, and medicines were supplied. For all deliveries, Japan was able to pay after 10 years.
The occupation authorities carried out the conversion of the military industry. American military infantrymen were sent to every enterprise of the japanese military-industrial complex, under their control there was a dismantling and destruction of equipment intended for the production of weapons. The rejection of the militarization of the country’s economy was enshrined in the Constitution of Japan. In 1976, the Japanese parliament decided that no more than 1% of GDP would be allocated to the country’s defense. The decisions taken contributed in no small measure to Japan’s leadership in civilian technology, while the superpowers undermined their economic potential with an arms race, Japan step by step occupied a leading position in the world market for civilian products.
The next step in the Japanese economy was to overcome the economic crisis, which manifested itself in the closure of military enterprises, the reduction in the supply of raw materials and materials, the high level of inflation, the insolvency of enterprises, and the repatriation of foreign workers. American economic professors developed and then carried out the following measures to prevent the crisis: bankruptcy proceedings were introduced; prices and wages have been frozen; control over key sectors of the economy has been restored; a return to centralized supply of enterprises was carried out.
In the course of the reforms, the demonopolization of the economy was also carried out, during which a mass class of owners was created by selling shares of monopolistic enterprises to the population. More than 70% of the shares passed into the possession of Japanese citizens.
Land reform had also been carried out, during which 80 per cent of all land had been taken from former landlord owners who were not engaged in the productive use of their agricultural resources and sold to peasants at affordable prices. This measure helped to solve the problem of hunger in the country.
The reforms in Japan were completed by the “Dodge Shock Therapy”, named after the author – George Dodge, governor of the Detroit Bank. It included:
– budget reform;
– a new credit policy aimed at preventing
credit expansion, issuance of unsecured loans;
– price reform;
– currency reform, which established a fixed exchange rate for the Japanese
yen against the US dollar at 360 yen
per dollar.
The main result of the “shock therapy” was that Japan was able to avoid inflation after the abolition of fixed prices.
Tax reform was also carried out, the main directions of which were developed by Professor Shoup of Columbia University. In the country, the maximum level of the tax burden was reduced to 35%, the depreciation deductions of companies were streamlined, the book value of the property of enterprises was revalued, etc.
After the completion of the reforms, the occupation authorities fully transferred to the Japanese government the right to pursue economic policy. Post-war reforms in Japan became an example of some of the most successful reforms of the twentieth century. their main features were complexity and gradualness, and the most important feature was that they were carried out by force. And despite this, the reforms laid the foundation for modern prosperous Japan, allowing this country to turn from a backward, feudal one into a prosperous capitalist state.
Japan imported not only licenses and technology, but also American concepts of management, marketing, product quality control, and the theory of cooperation between labor and capital. Moreover, they did not just borrow, but adapted to the specifics of traditional Japanese culture, the nature of relationships in society and in production, the attitudes of the Japanese to work and the team.
An important aspect of traditional Japanese culture, which had a significant impact on the post-war development of the country, is the cultivation in the Japanese people of a specific attitude to work and knowledge. The huge social disparity between a narrow group of the ruling elite and the poor has led to the fact that for many centuries wealth has not become the main criterion of human dignity in Japanese society. To a large extent, it has been replaced by values such as conscientious work and knowledge. These important qualities were flexibly used by the government and Japanese entrepreneurs in the post-war period. At the same time, they adopted the traditional “group consciousness” of Japanese society. Specific moral norms that have been introduced in Japan for a long time suggest that the general tasks and actions of the group are always more important than the personal interests of each of its members. In the post-war period, the government and the business community of the country were faced with the task of sharply increasing national income on the basis of economic development and increasing the competitiveness of goods. A stable and skilled workforce was needed to expand production. And the bet was made on the diligence of the Japanese and the deep-rooted principles of collectivism. However, in order to make the most of these facts, it was necessary for the workers and employees to be confident that they would be guaranteed a stable place in the enterprise. It was on this basis that the principles of “lifetime employment” of skilled workers and “wage growth in accordance with the increase in work experience” were born, which became the social basis of the Japanese economic “miracle”.
The system of “lifetime employment”, tying the worker and employee to the company, encourages to give the work not only physical, but also moral strength, expecting that the prosperity of the company will contribute to the improvement of his personal well-being. This system contributed to the strengthening of the reformist spirit, which resulted in the weakening of the strike struggle. In Japan, it was possible to minimize the absence of workers for service.
The system of “lifetime employment” gave Japanese entrepreneurs the opportunity to achieve high productivity of workers with wages significantly inferior to its level not only in the United States, but also in western Europe. It was this factor that was one of the main reasons for the competitiveness of Japanese goods during the period of high rates of development of the Japanese economy. Japanese entrepreneurs were also able to spend significant funds on the constant training of technical specialists, without fear that, having received new knowledge, they will go to a competitor.
These factors and the specific conditions of the country led to the fact that the post-war reconstruction of Japan combined record and sustainable economic growth with considerable achievements in human development.
Between 1950 and 1970, the annual growth rate of real per capita GDP was about 10%. At the same time, poverty and income disparities have been significantly reduced. Between the early ’60s and mid-’80s, the share of national income earned by the richest 20% of households fell from 50% to about 45%, while the share of the poorest 20% rose from 5% to 10%. A commitment to equality of opportunity was critical to this dual success in human growth and development. Reforms carried out in the country included the abolition of the aristocracy; the adoption of a new constitution based on democratic rule; land reform; the introduction of a wealth tax and the granting of equal rights to women.
After world war II, the government continued to invest in the social sector by keeping defense spending at a minimum level (less than 1% of GDP). This has had a beneficial effect on education and health. Between 1960 and 1990, the proportion of the working-age population with secondary or higher education doubled.
It should be noted that this trend continued in the 1990s. In 1990, public spending on education and health in Japan was among the highest per capita (approximately $ 2208), while the world average as a whole was only $ 336. In Japan, special attention was paid to research and development and the training of workers in industry.
Japan was the first country to implement a balanced growth model from 1952 to 1972.
This model provided the Japanese economy with a rapid pace of development. In the early 70s, Japan began to smelt 120 million tons of steel (ranked first in the world) and also came out on top in the world in the field of shipbuilding.
The first “oil shock” of 1973 and the economic crisis of 1974-1975 revealed the weaknesses of the “high-growth model” of the Japanese economy – the extremely strong economic vulnerability of the country, which does not have its own raw materials, and demonstrated that the “high rates” were largely achieved due to unresolved environmental and other problems that became especially noticeable in the face of a sharp decline in production and inflation.
The second half of the 70s and the beginning of the 80s is a transition to a model of moderate rates of economic development, a focus on the export of manufactured products.
During the economic crisis of 1974-1975 and its overcoming, a new model of Japan’s economic development began to take shape, where the main attention was paid to the creation of anti-cost, energy-saving production. This model also provided for a significant reduction in the basic industries that require large amounts of energy and raw materials. Long-term programs were adopted aimed at saving energy resources and finding alternative sources of solar, geothermal and other types of energy. Thanks to all these measures, Japan managed to achieve the most significant reduction in the energy intensity of production among the world’s leading countries. This led to the fact that the next sharp increase in oil prices in the late 70s did not have a significant impact on the Japanese economy.
The main attention began to be paid to industries working for export – the automotive industry, the machine tool industry, the production of consumer electronics (tape recorders, televisions, video recorders). On the production of consumer electronics Japan at the end
The 70s overtook Western Europe and the United States.
One of the most important reasons for the competitiveness of Japanese goods in Western markets was the creation of mass production. Many Japanese companies began to specialize in the production of individual goods, created capacities of maximum productivity. So, in the 80s. the company “Toyota” at three plants produced 3 million cars a year. The American company “Ford” produced the same number of cars in 20 factories. In the second half of the 80s, Japan annually produced more than 11 million cars, more than 15 million televisions, 30 million video recorders. It was the mass production and conquest of the markets of Western Europe and the United States that made it possible for Japanese entrepreneurs to use part of the profits to improve the quality of products.
The problem of quality in Japan, as already noted, has become an important element of the long-term concept of strengthening the country’s economic power.
In the mid-80s, the efficiency of Japan’s export model of development significantly decreased. In the United States and Western Europe, protectionist sentiments have intensified. In 1986, President Ronald Reagan imposed a 100 percent duty on imports of Japanese integrated circuits. As American newspapers wrote, this was the most sensitive blow to Japan after the Second World War. The U.S. and the European Union have demanded cuts in Japanese imports.
Complicating the situation of the Japanese economy was increased competition from the so-called newly industrialized countries and, above all, South Korea and Taiwan. However, at the end of the twentieth century, the first place in relations between Japan and NIS was not competition, but a “horizontal division of labor” based on the production of high-tech products. For example, the largest automobile companies, such as Nissan, Honda, moved part of the assembly of their cars to South Korea. This step turned out to be beneficial for the two countries. Japanese companies were able to reduce production costs due to the low wages of South Korean workers and employees employed in Japanese enterprises. At the same time, a powerful impetus to the development of the South Korean economy was given by the influx of Japanese capital, which largely ensured the formation and dynamic development of local industry. In general, it should be noted that from 1973 to 1990, Japan was characterized by a gradual attenuation of ultra-fast GDP growth (up to 5%). In the nineties, the Japanese economy was characterized by low growth rates. This stage of Japan’s economic development coincided with a four-year depression of the world economy, which after seven years of prosperity entered
1990 in a serious economic crisis. In 1992 alone, industrial production in Japan fell by more than 8%. In 1993, the country’s economy experienced zero growth, and in 1994 it was 0.6%. In 1996 alone, economic growth in Japan exceeded 3.5%.
It should be noted that while in the past the economic downturn was almost invisible due to relatively conservative macroeconomic policies and unsurpassed microeconomic flexibility, over the past two decades most japanese industries have had to face serious problems. The crisis of the 90s was caused not only by circumstances common to all developed countries, but also by difficulties associated with the structural restructuring of the economy.
In the early 90s, serious adjustments were made to the Japanese economic model. The stake was placed on the full use of the results of the new technological revolution and, above all, the introduction of automation and information in all sectors of production and services, the transition to the advanced development of domestic demand. This, however, did not reduce Japan’s interest in exports. Its structure has changed. An increasing place in exports began to be occupied by high-tech products, services, information, knowledge. But it was the domestic demand for knowledge-intensive goods and services that became the main engine of the country’s economic development in the late twentieth and early twenty-first centuries. In this regard, significant investments in infrastructure have been envisaged.
It is worth noting some new aspects of Japan’s business structure that demonstrate its flexibility and ability to adapt quickly to scientific and technological progress and market demands. So, unlike the previous model of production and industry specialization, almost all large companies have moved to diversify their activities, create a variety of products, primarily in the field of high-tech and technological production.
Recently, from the Japanese academic community, there have been many pessimistic forecasts and statements that in the
In the twenty-first century , Japan will face a number of intractable problems. First of all, they express serious concerns that Japan’s significant lag behind the United States and Western Europe in fundamental research will weaken Japan’s chances in the competition for leadership in the new technological revolution. Japan is second in the development of new products and technologies based on fundamental research, which are currently catalysts for the technological process. This applies to the space, aviation industries, the development of large computers, software tools.