THE JAPANESE ECONOMIC MIRACLE IN THE 1950s term paper

In 1945 Japan was a defeated country with its economy in shambles. Yet, in less than four decades it emerged as the second most powerful economy in the world. This Japanese economic miracle is due in part to the deeply rooted symbiotic relationship between government and business, which the Meiji Reforms (Meiji means period of “Enlightened Rule”) of the 1870s had accelerated. The Meiji committed Japan to become “a rich but strong state.” Democratic Japanese governments in the 1950s continued this tradition by relying upon the Ministry of International Trade and Industry (MITI), a small but powerful group of government bureaucrats, to plan the Japanese economy. MITI encouraged an export-driven economy, one that would be built on an entirely new industrial base and would be committed to exporting high quality automobiles, electronics, and manufactured goods to world markets. Japanese businessmen proved to be particularly skilled in combing Western manufacturing and managerial techniques with the Japanese work ethic. W. E. Deming’s ideas on “quality circles,” discussion groups of management and workers, focused on improving productivity and quality first tried in America in the 1930s, were brought to Japan in the 1960s with stunning success. Japanese governments encouraged the growth of large conglomerates or keiretsu. The huge Mitsuikeiretsu is a conglomerate of more than a dozen companies including Toshiba Electric, Toyota automobiles, and the Mitsui Bank. To protect Japanese industry from foreign competition, the government developed elaborate import licensing procedures for foreign products. These procedures, along with a system of tariffs, guaranteed that there would be little foreign competition in Japanese markets. Japanese workers, renowned for their tenacious work ethic and frugal lifestyle, contributed to this economic miracle with double-digit rates of personal saving and willingness to accept modest wages and long hours. As a result of these policies Japan was able to accrue huge yearly trade surpluses with its trading partners. By 1986 Japan’s per capita gross national product was $17,000, thereby surpassing the United States, which averaged $16,000 per capita. By 1992 the United States had become the world’s largest debtor nation, while Japan had become the world’s largest creditor. By 1997, however, the Japanese economic miracle had paled considerably. Japanese banks had over-extended themselves underwriting a number of questionable loans, and in 1998 several Japanese banks and investment firms collapsed. An economic recession in South Korea, China, Russia, Thailand, and Latin America severely affected Japan’s exports. In 1999, for the first time since World War II, large numbers of Japanese workers were unemployed.
Suggestions for Term Papers
1. Write a paper examining what Japanese students study in their secondary schools (see Suggested Sources), how they are admitted to college, and how Japanese education helped Japan to become an economic power.
2. Gather information on a keiretsu and write a paper assessing its strengths and weaknesses. 3. John Dower (see Suggested Sources) writes that American occupation policies in Japan after World War II were an undervalued part of Japan’s economic miracle. Agree or disagree, stating your reasons for your position on this issue.
4. Investigate W. Edward Deming’s ideas on management (see Suggested Sources) and write a paper on how his ideas influenced the growth of Japan’s economy.
5. The Ministry of International Trade and Industry (MITI) has been called the “brain trust” of Japan. Write a paper on MITI’s role in the Japanese economic miracle and decide whether its reputation is justified.
6. Large industrial trade unions have not had much influence in Japan. In a paper on industrial relations between management and workers in Japan since the war, comment on the factors that might explain the lack of influence that trade unions have had.

Research Suggestions

In addition to the boldfaced items, look under the entries for “The Asian Economic Meltdown at the End of the 1990s” (#97) and “The Chinese Economy at the End of the Twentieth Century” (#100).

SUGGESTED SOURCES

Primary Sources

“The Second Maekawa Report.” In Japan, Exploring New Paths, edited by Jon K.T. Choy, 14–18. Washington, D.C.: Japan Institute, 1988. These were sweeping recommendations made to bring Japan’s economy into harmony with the world’s economy. It provides a good insight into Japanese economic thinking in the 1980s.

Secondary Sources

Aguayo, Rafael. Dr. Deming: The American Who Taught the Japanese about Quality. New York: Simon and Schuster, 1991. A good summary of W. Edward Deming’s influence on Japan.

Cutts, Robert L. An Empire of Schools: Japan’s Universities and the Molding of a National Power. Armonk, N.Y.: M. E. Sharpe, 1997. A solid explanation of how Japanese universities shape economic and public policy.

Dower, John W. Embracing Defeat: Japan in the Wake of World War II. New York: W. W. Norton, 1999. A very useful discussion of American occupation policies and the response of Japanese to them.

Johnson, Chalmers A. Japan: Who Governs? The Rise of the Developmental State. New York: W. W. Norton, 1995. One of the best explanations of how Japanese bureaucrats have combined developmental economics with free market capitalism.

———. MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975. Stanford: Stanford University Press, 1983. The classic examination of how the Ministry of International Trade and Industry planned Japan’s economic miracle.

Katz, Joshua D., and Tilly C. Friedman-Lichtschein, eds. Japan’s New World Role. Boulder: Westview Press, 1985. A concise exposition of the connections between Japan’s economic power and its international responsibilities.

Katz, Richard. Japan, the System that Soured: The Rise and Fall of the Japanese Economic Miracle. Armonk, N.Y.: M. E. Sharpe, 1998. A journalist’s careful account of when and how the Japanese miracle faded.

Vogel, Ezra F. Japan as Number One: Lessons for America. Cambridge, Mass.: Harvard University Press, 1979. A succinct analysis of what Americans can learn from Japan.

Wolferen, Karel Van. The Enigma of Japanese Power: People and Politics in a Stateless Nation. New York: Knopf, 1989. A Dutch journalist’s insightful explanation why Japanese bureaucrats, not the politicians, plan and run Japan’s economy.

World Wide Web

“The CIA Factbook, 1999.” http://www.odci.gov./cia/publications/factbook/index.html. This Central Intelligence Agency site is updated yearly.