Military spending in Japan and Finland: from warfare to welfare state

Abstract

Japan is a substantially larger polity and economy than Finland, and Japan’s development towards modernity, by and large, began with the earlier Western colonial incursions and the Meiji Revolution (or Restoration) in the late 1860s. This series of political, economic, and social transformations changed Japan profoundly and created the basis for its industrial and military expansion prior to the First World War. Japan was not yet quite the superpower during this conflict or immediately after; however, with the rise of the military elite in the 1930s, it began to militarize and expand extensively. A defeat in the Second World War forced Japan to reorient completely once again, following an occupation by the Allies, towards low military spending and civilian economic expansion. Despite the fact that Japan lost the war, it seemed to ‘win’ the peace, namely by having extremely fast economic growth until the 1980s. The economic performance during the Golden Age of economic growth from the late 1940s to the 1980s was spectacular, making Japan the second-largest economy in the world. How much of this was due to the West imposing limitations on Japan’s military capacity, beyond some small provisions, essentially forcing them to free ride on the United States? The answer is not entirely clear at this point. For example, the collapse of the bubble economy in the late 1980s eventually turned into a depression that still, up to a degree, hinders the Japanese economy, and the recent problems created by the Great East Japan Earthquake and the Fukushima disaster in 2011 are creating a lot of uncertainties. It seems that the economic performance, whether fast or slow, was driven by factors other than the absence of military spending, which is often called the peace dividend. However, there were some budgetary tradeoffs between social and military spending.