They left Japan in shambles. By the time they surrendered in 1945, Japan’s military leaders had slashed industrial production to 1930 levels. Not so with the American occupiers. By the time they left in 1952, they had rebuilt the economy and grown it by fifty percent. By 1960 the economy had tripled, and by 1970 tripled once more.
For Japan’s spectacular economic recovery, the American-run Allied Occupation had apparently set the stage. The Americans had occupied, and the economy had boomed. The Americans had ruled, and Japan had thrived. At least during the Occupation’s early years, the Americans had apparently planned and run a “Good Occupation.”
Or so it is often said. In fact, the Americans did nothing of the sort. When they arrived in 1945, they brought few economic plans. Rather than invent a new plan, they simply helped incumbent bureaucrats keep the legal controls they had manipulated—disastrously—throughout the War. Coming from the New Deal, many Americans brought an instinctive aversion to competitive market policies. After rehabilitating the Marxist leaders and intellectuals, the Americans let them use the legal apparatus to ideological ends. With a Socialist Premier, Japanese voters let them try.
By 1948, the voters had had enough. Under the legal controls, miners did not mine. Firms did not produce. Farmers sold, if they sold at all, only on the black market. With inflation out of control and production stuck at desultory levels, conservatives struck back. They installed the quintessentially capitalist Shigeru Yoshida as Prime Minister; Yoshida promptly shut down the planning apparatus, and Japanese voters ratified the change. Inflation stopped, the economy rebounded, and Washington politicians forced their control-inclined agents in Tokyo to acquiesce. After June 1950 (after it had already started to recover), the economy enjoyed a procurement bonus from the Korean War.
Japan -- History -- Allied occupation, 1945-1952, Economic development -- Japan, Capitalism -- Japan, Allied occupation (World War II), Japanese occupation, Japan, United States