The Influence of Economic Thought on the Political Economy of Modern Japan

In the immediate postwar era, economic issues were at the forefront of Japanese politics [Lanciaux 1995]. As the Japanese debated what kind of economic system they would have and what would be the relative strength of labor, business, and government within that system, the left was initially dominant. Business was disempowered by occupation policy while labor was strengthened. Labor, aligned with Marxists, was quite radical and boisterously exercised its new right to strike. Labor's power was limited with the so-called "reverse course," when MacArthur ordered the canceling of a general strike planned for February 1, 1947, and the subsequent two years of trimming of union power. This reverse course culminated in 1950 with the "red purge" or expulsion of Communist's from positions of influence as the occupation forces made Japan safe for capitalism [Chapman 1991, 1112]. The United States supported, in more than rhetorical terms, the uniting of the conservative parties that became the Liberal Democratic Party (LDP) in 1955. The LDP ascended to power and has been the dominant political party in Japan for most of the postwar era, with the leftist parties in perpetual opposition and unable to have any real impact on the political decision-making process.

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