America and the Japanese Miracle

The Cold War Context of Japan's Postwar Economic Revival, 1950-1960

Aaron Forsberg

• Publisher: The University of North Carolina Press
• Year: 2003
• Print ISBN: 9781469613758, 9780807825280
• eBook ISBN: 9780807860663
• Topic: Politics & International Relations
• Subtopic: Japanese History
• Index: Politics & International Relations

In this book, Aaron Forsberg presents an arresting account of Japan’s postwar economic resurgence in a world polarized by the Cold War. His fresh interpretation highlights the many connections between Japan’s economic revival and changes that occurred in the wider world during the 1950s.

Drawing on a wealth of recently released American, British, and Japanese archival records, Forsberg demonstrates that American Cold War strategy and the U.S. commitment to liberal trade played a central role in promoting Japanese economic welfare and in forging the economic relationship between Japan and the United States. The price of economic opportunity and interdependence, however, was a strong undercurrent of mutual frustration, as patterns of conflict and compromise over trade, investment, and relations with China continued to characterize the postwar U.S.-Japanese relationship.

Forsberg’s emphasis on the dynamic interaction of Cold War strategy, the business environment, and Japanese development challenges “revisionist” interpretations of Japan’s success. In exploring the complex origins of the U.S.-led international economy that has outlasted the Cold War, Forsberg refutes the claim that the U.S. government sacrificed American commercial interests in favor of its military partnership with Japan.

Chapter One
Introduction

The American-Soviet rivalry and Japan’s rise from surrender to economic superpower reshaped international relations during the decades after the Second World War. During the 1950s the relationship between Japan and the United States became the arena where these two great forces intertwined most completely. That crucial decade saw the United States win Japan’s alliance in the Cold War while the Japanese economy made the transition from postwar reconstruction to high-speed growth.

The Thesis and Themes of This Book

Studying the diplomacy of the fifties from the inside reveals the many connections between the Cold War and Japan’s postwar economic revival. It suggests that the Cold War environment abroad, particularly U.S. diplomacy, facilitated the so-called Japanese miracle during the period. Still, the primary credit for Japan’s high-speed economic growth is not due to the United States; clearly, both the commitment to growth and the discipline necessary to achieve it originated in Japan. The American contribution was to foster an international environment in which Japanese effort produced meaningful results. Yet precisely because the relationship between the United States and Japan was so close, postwar relations were replete with friction.

American interest in Japanese revival flowed from origins far removed from any concern for Japan. As the end of the Second World War neared, American planners in the executive branch prepared to restore international order and build the institutions of the postwar era. For those “present at the creation,” as Secretary of State Dean Acheson later described their vantage point, the United States had an obligation to take the lead. Fundamental to the internationalism of these officials (most of whom were conservative Democrats and liberal Republicans) was the establishment of a system of multilateral trade and payments. Beyond the obvious commercial opportunity for the United States, the object of such an order was to break the vicious cycle of protectionism, depression, and war, which they held responsible for causing the collapse of peace during the 1930s.¹

In theory and in practice, the American foreign policy establishment’s thinking was predicated upon the integration of Germany into the Western European economy and Japanese economic revival. In 1945, however, most Americans were unprepared to think about rebuilding either power. After postponing many difficult decisions about the terms of a postwar settlement, U.S. president Franklin Roosevelt died suddenly in April, leaving the problems of peace to Harry S Truman. The two imposing military commanders administering the occupied territories after the war’s end—General Douglas MacArthur in Japan and General Lucius D. Clay in Germany—faced daunting challenges simply maintaining adequate food supplies, public health, and civil order. Official postsurrender policies reflected rather than reconciled the conflicting strains in American thinking. They were not as punitive as popular American sentiment, but civilian and military officials on the ground concentrated on demilitarizing the former enemies and reforming public life. Beginning in 1947, economic desperation in the occupied areas and the growing American-Soviet rivalry afforded executive officials in Washington the chance to seize the initiative and reorient U.S. foreign policy.

Even more than Germany, Japan represented the supreme test of the establishment’s vision. During the Occupation, Japan’s conservative leaders expressed their eagerness to join the institutions of the emerging order and to trade with the Western powers. But domestic U.S. support for liberal economic principles was thin, and hostility toward Japanese trade ran deep. The same sentiment defined the policies of America’s principal allies and trading partners. Whereas postwar European leaders were able to build on long-standing ties linking West Germany and its non-Communist neighbors in Western Europe, postwar East Asia was not an organic economic unit. Only in the context of the escalating Cold War were American leaders able to overcome opposition to Japanese integration into the global economy.

In this story three themes stand out. The first is the prominence of Japanese economic recovery as an objective of American security policy. The second is the many ways that U.S. policy and other external variables worked to Japanese advantage, often in ways not fully evident at the time. Paradoxically, friction was the inevitable consequence of strategic and economic cooperation. Thus, the final theme is the profound undercurrent of friction in the U.S.-Japanese relationship. If Americans saw the benefits accruing to Japan from the Cold War partnership, the Japanese noticed its demands upon them. Deeply rooted protective tendencies on both sides insured that a proliferation of disputes over trade and investment was the natural corollary to economic integration

The prominence of Japanese recovery as an American policy objective reflects how U.S. foreign economic policy toward Japan was inseparable from the broader Cold War strategy of the Truman and Eisenhower administrations. Japan was one of the great stakes in the struggle between the “free world” and the Communist bloc. Just as Germany was the pivotal nation in the European balance of power, Japan was the “ultimate domino” in postwar Asia.² Besides denying Japan’s industrial base to the Soviet bloc, from 1948 forward Washington planners called for building Japan into a powerful anti-Communist ally. They correctly identified in economic policy a promising means of consolidating the U.S.-Japanese alliance against Communist power. The outbreak of war in Korea in 1950 reinforced their sense of urgency. During the Japanese peace treaty negotiations, the overriding U.S. aim was to maintain the close bilateral association begun during the Occupation. Toward this end, U.S. officials sought to promote Japan’s reintegration into the international economy so that the Japanese could make a living by trade.

The contours of Japan’s foreign trade were established during the first half of the decade. Virtually cut off from the world, economic conditions in Japan in 1950 were desperate. Although the Korean War boom provided a powerful boost at a crucial time, it was also a highly disruptive force. By alienating the United States and the newly established People’s Republic of China (PRC), the Korean War paved the way for the imposition of severe controls on trade that severed Japan’s economy from the Asian mainland. Because Japan was on the U.S. side in the Cold War, Sino-American political antagonism could and did interfere with Japanese efforts to expand commercial ties with the PRC. In compensation, however, U.S. president Dwight Eisenhower pressed for increased Japanese access to the American market and membership in the General Agreement on Tariffs and Trade (GATT). The effect was to reorient Japan’s foreign trade westward and to tie Japan to the U.S. economy. In contrast with the prewar period, Japan’s postwar economy developed largely apart from that of the Chinese mainland.

The fragility of the U.S.-Japanese alliance throughout the fifties also had important economic consequences. American officials often worried that Japan might try to pursue an independent course in the Cold War much like India. They looked to economic ties to bind the United States and Japan together more tightly in mutual interest. American policy was a political success. The test came when opposition to the conservative government of Kishi Nobusuke, the revised security treaty, and the Cold War alliance boiled over in 1960. The security treaty crisis was a bruising affair for everyone, but the alliance held. To the extent that Japan’s close economic ties with the United States persuaded the Japanese of the value of continued partnership, American policy had precisely the effect that U.S. strategists intended.

The second theme, regarding the commercial advantages that Japan reaped from the American alliance, is reflected in both obvious and less apparent ways. During the first half of the fifties the U.S. goal of building a liberal economic order abroad and the Japanese government’s desire to expand the nation’s economic opportunity largely overlapped. Both governments focused on remedying Japan’s ever expanding trade deficit and integrating Japan into the Western trading bloc. They made visible progress toward accomplishing both goals, but American support for trade liberalization was less solid than...

Table of contents

• Cover Page
• America and the Japanese Miracle
• Copyright Page
• Dedication
• Contents
• Tables
• Preface
• Abbreviations and Acronyms
• Chapter One Introduction
• Chapter Two to Keep the Japanese on our Side
• Chapter Three The Economics of Peace
• Chapter Four War in Korea and the China Trade Embargo
• Chapter Five The Fight over Trade Policy, 1953
• Chapter Six Japanese Integration with the Western Trading Bloc, 1954-1956
• Chapter Seven The Limits of Integration: Foreign Direct Investment in Japan
• Chapter Eight High-Speed Growth and Trade Friction, 1955–1960
• Epilogue
• Appendix Treaty of Friendship, Commerce, and Navigation between the United States and Japan, 1953 (Excerpts)
• Notes
• Bibliography
• Index