Rebuilding from the Ruins: Miracle of Postwar Japan’s Economy

Abstract

This article studies the economic success of Japan in the postwar period and explores it from the perspective of political economy. The economic success of Japan in the second half of the 20th century is visible. After World War II's end, Japan's economy was destroyed entirely, and the industrial system also collapsed. Tokyo was burned to the ground during the air attack, and Mount Fuji could be seen from anywhere in Tokyo. Still, as a defeated country, it chased after western developed nations with an astonishing speed and had remarkable success, making scholars wonder about why Japan's high-speed development. Since the idea that the economy is the foundation of national development has become common sense, scholars continually argue about the best method to develop the economy. In the second half of the 20th century, Neoliberalism flourished gradually and dominated the mainstream in the west. However, the "Miracle of Japan's economy" proved to the world that statism and the political economy also could bring remarkable success to socioeconomic development with great competitiveness. Therefore, studying the "Miracle of Postwar Japan's Economy" is vital because it provides a more comprehensive view for scholars and reveals the truth that the economy's success is multipath. In the article, the author focuses on two Japanese policies on the economy to explore their influence and result. The first policy is "Foreign Exchange and Foreign Trade Act", and the other is the "Inclined Production Mode". This article believes Japan's success in the postwar period resulted from political economy.