A History of Japan: From Stone Age to Superpower (72 page)

In terms of employment of the labour force, secondary industries – mostly manufacturing but also including construction – rose from 22 per cent in 1950 to 35 per cent in 1970.
⁸³
By contrast, primary industries – notably agriculture – fell from 48 per cent in 1950 to around 18 per cent in 1970. Clearly, there was a focus on increased manufacturing, but the rise of tertiary (service) industries should not be overlooked. These have always been important in Japan’s economy, and in fact during this period they occupied more of the labour force than secondary industries, rising from 30 per cent in 1950 to 48 per cent in 1970.

Consumer patterns too had their catchphrases. There were the ‘Three Treasures’ of the 1950s – radio, motorbike, and sewing machine. The treasures were updated and redefined in the early 1960s to mean refrigerator, TV, and washing machine. The late 1960s was the age of the ‘Three Cs’ – car, colour TV, and cooler (air-conditioner). The Japanese consumer was able to acquire more and more goods because real wages tripled between the mid-1950s and 1973.

The economy, as measured by GNP, grew fairly evenly at around 9 per cent per annum during the 1950s. This rose slightly to around 10 per cent in the early 1960s, and then to more than 13 per cent in the late 1960s and early 1970s. That is, between the end of the Occupation and the worldwide Oil Shock of 1973, Japan’s economy grew at an annual average rate of more than 10 per cent. By the time of the Oil Shock it was to be an economic superpower. It was the third-largest economy in the world (after the United States and the Soviet Union), the largest producer of ships, third-largest producer of steel, second-largest producer of cars (the largest by the end of the 70s), largest producer of radios and televisions, and so on.

Japan’s remarkable postwar economic growth is often referred to as an ‘economic miracle’.
⁸⁴
It does, however, have identifiable causes – several dozen in fact, though it may well be a ‘miracle’ that they all came together. Some of these have already been discussed, some merit further discussion, and some are a little technical to be discussed in detail here. The United States also features in not a few of them. In general, the main causes include (not in any order of priority):

•
constructive American/Occupation policies, such as reviving the
zai-batsu
, and abandoning reparation payments (as well as giving seized plant to smaller companies);

•
American/Occupation financial advice, as from Joseph Dodge;

•
American/Occupation financial aid (in the order of two billion dollars during the Occupation);

•
American procurements during the Korean War;

•
American security provisions for Japan enabling military expenditure to be kept to a fraction of that of most nations;

•
American goodwill (at least until the 1970s);

•
support and guidance for business from the government and bureaucracy;

•
widespread agreement as to the importance of planning rather than relying purely on market forces, and of considering national interests rather than merely company interests;

•
frequent use of non-tariff barriers to protect domestic industries from foreign competition;

•
the opportunity for major companies to adopt state-of-the-art technology on a large scale due to the wartime destruction of existing
equipment and facilities (and in some cases due to the seizure of plant for intended reparation);

•
relative stability in the government and bureaucracy;

•
a long-term orientation with a focus on survival and market share rather than a profit-centred short-term orientation (aided by the low demands of Japanese shareholders);

•
within that broad long-term framework, a pragmatic ability to switch focus and diversify in the short-term where necessary;

•
low government expenditure on relatively unproductive ‘social overheads’ such as housing and welfare;

•
a high personal savings rate and hence large capital accumulation, arising from a need to compensate for inadequate government welfare provisions combined with personal tax concessions and similar incentives by the government;

•
a high debt-equity ratio, supported by Bank of Japan policy (meaning large loans able to be secured for little collateral);

•
corporate tax concessions and incentives;

•
a policy of purchasing patents rather than acquiring them under licence;

•
the tailoring of research and development to practical commercial considerations by entrusting most of it to corporations rather than to neutral academic research institutions or similar;

•
a favourable world trade situation that permitted the importing of cheap raw materials and the exporting of manufactured goods to eager markets;

•
the shift of considerable labour from the relatively unproductive primary sector (particularly agriculture) into the more productive secondary (manufacturing) and tertiary (service) sectors;

•
the promotion of consumerism;

•
the diligence of the Japanese worker (somewhat open to question as a permanent national characteristic, but certainly a feature of the postwar period);

•
the widespread commitment among Japanese as a whole to rebuilding Japan and regaining a place among the world powers;

•
the relatively high retention rate of experienced and generally loyal workers through the so-called ‘lifetime employment system’ adopted in major corporations (though this has been exaggerated);

•
the relative lack of disruption to production through industrial action by workers (though this too has been exaggerated, especially for the years prior to 1960).

Many, including some Japanese themselves, would add to the list an emphasis on exports. In fact, the ratio of Japan’s exports to GNP has typically been below that of most nations. It is simply that its GNP grew so very big that in absolute terms its exports seemed to dominate the world. A tendency to compare Japan only with the United States, which has typically had a very low export-to-GNP ratio and a large trade imbalance with Japan, adds to misperceptions.

Stability in government provided a helpful setting to economic growth. After 1948, despite frequent shuffling and jockeying behind the scenes, Japan was to be governed by conservatives of essentially the same philosophy right through till the mid-1990s. In particular, it was to be governed from 1955 till 1993 by the Liberal Democratic Party (
Jiy
Minshut
). The formation of the LDP in 1955 was basically a realignment of existing parties, and effectively continued the merging of the prewar
Seiy
kai
and
Minseit
lineages. There was thus an element of conservative continuity between the postwar and prewar eras.

This continuity was also seen in the triad of government-bureaucracy-business. After the purges were stopped many powerful prewar individuals – even some imprisoned for their role in the war – resumed positions of power. Probably the best known of these was Kishi Nobusuke. He had been the official responsible for the 1936 legislation that drove Ford out of Japan, and later became a member of T
j
’s wartime cabinet. Imprisoned for his wartime activities, he was released in 1948. He was elected to the House of Representatives as a Liberal Party member in 1953, was a major architect of the realignment that led to the formation of the LDP in 1955, and became prime minister in 1957 (till 1960).