ABSTRACT
Chapter 1 explored the economic, demographic, and political dimensions of the ‘economic miracle’ that transformed Japan from a country devastated by war into the world’s second largest economy. We traced a history whose basic steps are familiar to all Japanese who think about Japan’s postwar development. It begins with the struggles of the first decade, when Japan was just beginning to recover. Next came the period of rapid growth that stretched from the mid-fifties until the first oil shock in 1973, when double-digit growth was the norm. Following the first oil shock, the pace of economic growth retreated to single digits. It remained, however, twice that of Japan’s OECD rivals. The second oil shock, in 1979, was another brief setback, but Japan’s recovery in the 1980s was nothing short of spectacular. During the economic Bubble of the late eighties, Japan Incorporated seemed invincible. The land in central Tokyo on which the Imperial Palace sits was, it was said, equal in value to the whole of California (a mild exaggeration perhaps, but it captures the mood of the period). The collapse of the bubble and the onset of near- or sub-zero growth brings us up to the present day.
