Global Capitalism by Jeffry A. Frieden

Author:Jeffry A. Frieden
Language: eng
Format: epub
Publisher: W. W. Norton & Company
Published: 2017-11-18T05:00:00+00:00

Postwar growth accelerates

The postwar compromises grew out of the agreements signed at Bretton Woods in 1944. The Bretton Woods system maintained the spirit, if not always the letter, of the Bretton Woods Agreements: international integration tempered by government concern for national constituencies; markets tempered by social reforms; American leadership tempered by Western cooperation.

The Bretton Woods system delivered the goods: economic growth, low unemployment, and stable prices. Japan was the most dramatic success story: Its output grew eightfold in just twenty-five years. The Asian nation’s postwar miracle began with a quick recovery during the American occupation and accelerated after 1950 as orders poured in to supply American troops during the Korean War. The Japanese learned new methods, created new industries, searched out markets abroad, and quickly became a major force in international trade.

Japanese industrialists moved quickly to adopt technologies developed in the previous thirty years. They drew on a backlog of new products as well as a highly trained and very cheap labor force. Japanese companies in the 1950s and 1960s spent one-quarter to one-half of all their research and development budgets to buy foreign technology. Sony, for example, started life in 1946 as a repair shop and first made an electric rice cooker that did not work. Over the next few years it made cheap copies of the tape recorders American occupiers had brought to Japan. In 1953 it licensed from Western Electric the right to produce the new transistors that Bell Labs had recently invented. Sony turned out its first transistor radio—the world’s second—in 1955 and brought a miniaturized “pocket radio” to market two years later. Meanwhile companies like Honda in motorcycles and Toyota in automobiles were carefully imitating American production techniques to supply the Japanese market.

The Japanese government supported manufacturers with tax breaks, subsidies, cheap loans, and other assistance. The domestic market grew spectacularly after decades of crisis and war. In the early 1950s virtually no Japanese households owned televisions, washing machines, or refrigerators; ten years later half of them owned all three, and by 1970, 90 percent of the country’s families had the three appliances. This helped fuel a revolution in basic industry: Steel production went from less than ten million tons in the early 1950s to almost a hundred million tons fifteen years later.

The government also encouraged firms to produce for export, especially with a very weak yen that made the country’s goods highly competitive and that made it extremely profitable for Japanese companies to sell overseas. By the late 1950s Sony was marketing its radios in the U.S. market, Toyota its cars, and Honda its motorcycles. Honda set up a factory in Los Angeles in 1959 and one in Europe in 1962. Japanese companies had become well known to Western consumers, and in 1961 Sony became the first Japanese company to sell stock in the United States. By the 1960s Japan’s manufacturers were a major force in world trade.

Japan achieved remarkable economic success in the first twenty-five postwar years. In 1950 Japan was roughly as developed as the United States had been in 1850, measured by GDP per person.

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