Nevertheless, the war was to prove the prelude to the most spectacular period of economic growth in Japan ’s history. In 1952, Japan ’s GDP was smaller than colonial Malaya ’s. Within a generation the country had moved from a primarily agrarian to a fully-fledged industrial nation, achieving an annual per capita growth rate of 8.4 per cent between 1950 and 1970, far greater than achieved elsewhere and historically unprecedented up to that time. By the 1980s, Japan had overtaken both the United States and Europe in terms of GDP per head and emerged as an industrial and financial powerhouse. [168] It was an extraordinary transformation, but it was not to be sustained. At the end of the 1980s, Japan ’s bubble economy burst and for the following fifteen years it barely grew at all. Meanwhile, the United States found a new lease of economic life, displaying considerable dynamism across a range of new industries and technologies, most notably in computing and the internet. Japan ’s response to this sharp downturn in its fortunes was highly instructive – both in terms of what it said about Japan and about the inherent difficulties entailed in the process of catch-up for all non-Western societies.
The apogee of Japan ’s post-1868 achievement – the moment that it finally drew level with and overtook the West during the 1980s [169] – carried within it the seeds of crisis. Ever since 1868, Japan ’s priority had been to catch up with the West: after 1945 this ambition had become overwhelmingly and narrowly economic. But what would happen when that aim had finally been achieved, when the benchmarking was more or less complete, when Japan had matched the most advanced countries of the West in most respects, and in others even opened up a considerable lead? When the Meiji purpose had been accomplished, what was next? Japan had no answer: the country was plunged into an existential crisis. It has been customary to explain Japan ’s post-bubble crisis in purely economic terms, but there is also a deeper cultural and psychological explanation: the country and its institutions, including its companies, quite simply lost their sense of direction. [170]
Nor was the country endowed by its history with the ability or facility to change direction. Ever since 1868, through every historical twist and turn, it had displayed an extraordinary ability to retain its focus and maintain a tenacious commitment to its long-term objective. Japan might be described as single-path dependent, its institutions able to display a remarkable capacity to keep to their self-assigned path. This has generated a powerful degree of internal cohesion and enabled the country to be very effective at achieving long-term goals. By the same token, however, it also made changing paths, of which Japan has little experience, very difficult. The only major example was 1868 itself and that was in response to a huge external threat. [171]
Figure 7. Japanese pessimism about their international role and influence.
The post-bubble crisis, which was followed by a long period of stagnation, led to much heart-searching and a deep sense of gloom. Some even went so far as to suggest that Japan had suffered two defeats: one in 1945 and another in the 1990s. [172] The pessimism that engulfed the country revealed the underlying fragility of the contemporary Japanese psyche. Having finally achieved their goal, they were filled with doubt as to what to do next. As the United States regained its dynamism and Japan was becalmed, there was a widespread sense that its achievement was little more than a chimera, that it was always destined to live in the shadow of the West. [173] Japan’s psychological fragility in the face of the post-bubble crisis is a stark reminder of how difficult the process of catch-up – in all its many aspects – is for non-Western countries. Here was a country whose historical achievement was remarkable by any standards; which had equalled or pulled ahead of the West by most measures and comfortably outstripped the great majority of European countries that it had originally sought to emulate; which had built world-class institutions, most obviously its major corporations, and become the second wealthiest country in the world – and yet, in its moment of glory, was consumed by self-doubt.
