Introduction

The George W. Bush administration, it is said, had imagined the occupation of Japan as a model for nation-building after prosecuting the war in Iraq. For the United States, the US occupation of Japan is a grand success story, transforming the erstwhile enemy, militaristic Japan, into a democratic, peaceful nation, as John Dower depicts in Embracing Defeat (Dower 1999). In contrast, whenever someone brings up the idea of “escaping from the postwar regime”Footnote 1 it is accompanied by an air of criticism, founded on the premise that the occupation distorted Japan’s unique culture and tradition, as well as the shape the country would have had naturally. It appears that these two grand stories have constructed mutually exclusive, self-contained worlds.

On the other hand, underlying both narratives is the understanding that the Allied occupation lasting 6 years and 8 months, from the time of Japan’s defeat to the moment the Treaty of Peace with Japan came into effect, brought about dramatic changes in the political, economic, and social systems that had made up the architecture of modern Japan. They merely differ in the perspective from which to consider those “changes” or how to place those changes within the discourse of Japan’s modern period. Before we return to the grand story of these “changes,” let us retrace the picture of the occupation of Japan by focusing on the true nature and structural causes of these changes. I would like to offer three viewpoints in this chapter.

“American” Occupation

The start of the post-World War II international order brought with it the occupation of the Axis countries, Japan and Germany, as well as those countries and lands liberated from the Axis powers. The occupations of Japan and Germany, above all, were designated as the foundation for lasting peace and stability in the Allies’ conception of the postwar world. Yet the methods used to implement occupation in the two countries greatly differed in two aspects.

First, whereas Germany was divided into four zones, placed under military governments, and administered by the United States, Britain, France, and the Soviet Union, respectively, Japan (except for Okinawa, the Ogasawara Islands, and the areas taken by the Soviet military) was placed under the authority of the General Headquarters of the Supreme Commander for the Allied Powers (GHQ/SCAP). US forces made up the majority of Allied troops deployed on the main islands. While the management of the occupation of Japan was under the multilateral framework, the US government retained the lead on occupation policy. The Far Eastern Commission (FEC), the highest decision-making body for the occupation of Japan, was established by the United States, Britain, the Soviet Union, the Republic of China, and a total of 11 major belligerents (increased to 13 in the autumn of 1949). The Allied Council for Japan (ACJ), made up of the United States, the British Commonwealth countries, the Soviet Union, and the Republic of China, was set up as SCAP’s advisory body in Tokyo. Despite the constraints of these multilateral frameworks, the US government was able to achieve its policy aims by and large through exercising its veto power in the FEC or issuing directives (Interim Directive Authority) in emergency situations without waiting for the decision of the FEC.

In addition to the contrast between the European and Asia-Pacific fronts during World War II, the ground warfare waged with Allied forces resulted in Germany’s collapse whereas in Japan’s case, it surrendered by accepting the Potsdam Declaration before the US forces launched amphibious operations on the main islands, giving rise to the difference in form of each occupation. If Japan’s acceptance of the terms of surrender had been delayed slightly, the Soviet army would have invaded the northern part of Japanese islands and Japan likely could not have avoided being physically divided during its occupation.

Germany became a nation divided, as the border between the occupation zones of the Soviet Union and other three countries solidified along with the eventual intensification of the Cold War. Moreover, despite the official agreement that the four occupying nations coordinated their policies in Germany, it was quite difficult in reality; from time to time, they each pursued separate occupation policies for their zone that reflected their own national interests. In Japan’s case, in part because SCAP basically preserved Japanese administrative organs, it was possible for the United States to implement occupation policies uniformly through the Japanese government. Under the sole control of the United States virtually, Japan generally was able to maintain its integrity as a nation.

Second, all authority was concentrated in a single individual, General Douglas MacArthur, who by wearing the hats for SCAP and the Commander in Chief, US Army Forces in Pacific (CINCAFPAC) simultaneously, stood at the apex of both the administrative body for the occupation as well as the legal and military force supporting it. This is in stark contrast to the US occupation of Germany, which went without a clear division of roles between the military government overseeing administration of the occupation and US armed forces stationed in Germany, and the administration lacked a center for over 6 months.Footnote 2 Moreover, MacArthur had a strong sense of mission, as though appointed by God to remake militarist Japan into a democratic, peaceful country. He was also an exceedingly political soldier. The fact that he made the Japanese people understand, at an early stage, that he was the only power and authority standing atop the institutions ruling Japan, including the emperor, while he did treat Emperor Shōwa with respect, thoroughly attests to his keen political sensibilities. Though a man with many detractors, it is largely owing to MacArthur that the occupation of Japan was implemented without major turmoil.

Process of Occupation Reforms

In interstate warfare until World War II, the victors would often occupy part of the loser’s territory to exact reparations or supervise its disarmament and demilitarization, but hardly ever did the thought occur to reorganize and reconstruct the defeated nation. The Hague Convention on Land Warfare (which entered into force in 1900 and was amended in 1907) stipulated the duty of the “occupant” to respect, unless absolutely necessary, the laws in force in the occupied country. That the occupying country would reorganize the body politic of an occupied country or force its transformation was a new phenomenon of the World War II era.

It is one of the inevitable outcomes of the Allied policy demanding the unconditional surrender of the Axis Powers. The Potsdam Declaration could be understood as the terms of surrender that the Allied Powers offered to Japan, which the Empire of Japan accepted without condition. Paragraph 7 of the Potsdam Declaration clearly states that “[u]ntil such a new order is established and until there is convincing proof that Japan’s war-making power is destroyed, points in Japanese territory to be designated by the Allies shall be occupied to secure the achievement of the basic objectives we are here setting forth,” and lays out the fundamental direction for reforms starting in paragraph 8 (Potsdam Declaration 1945). The Potsdam Declaration can be seen as providing the legal grounds for occupation reforms.

One more thing we need to consider is the growing importance of ideology as a factor driving international politics. The Soviet Union established Communist regimes in all of the eastern European countries it liberated from Nazi Germany and in its occupation zone in Germany, as a result of deep-rooted anxiety and fear kindled by the experience of having European powers invade deeply within its own borders twice since the nineteenth century. US policy toward occupied Japan, beginning about halfway through, also prioritized rebuilding the country for fear that weakness made it vulnerable to Communism. The Allied occupation comprised one part of the Cold War struggle over the choice of political-economic national systems.

The Potsdam Declaration enumerated a menu of reforms: disarming Japanese military forces (paragraph 9), meting out stern justice to war criminals and establishing freedom of speech, of religion, and of thought, as well as respect for fundamental human rights (paragraph 10), abolishing industries enabling Japan to re-arm for war while permitting eventual Japanese participation in world trade relations (paragraph 11). Through such reforms to demilitarize and democratize the country, the US government intended to remake Japan’s political, economic, and social systems that were premodern or even feudal from the US perspective as a liberal, democratic system while at the same time destroying Japan’s ability to prosecute war so that it would never again challenge the international order. The Occupation started with the elimination of military elements—the disarmament and demobilization of Imperial Japanese forces which ended with the abolition of the Army and the Navy ministries in December 1945, the arrest of war criminals (starting in September 1945), and the purge of undesirables from public office (SCAP directive in January 1946)—with reforms focusing more on democratization following sometime thereafter.

It is possible to categorize the various occupation reforms to democratize Japan into three broad types according to the process in which they came about. The first type of reform is what the Japanese government achieved voluntarily, perhaps exemplified by revision of the Election Law (December 1945) that granted women’s suffrage and the enactment of a Labor Union Law (December 1945) that was comparable to international standards.

The second type, in contrast, are the reforms GHQ compelled the Japanese government to make, for instance, dissolution of the zaibatsu (1945–1947), the Anti-Monopoly Law (April 1947), or the Law for the Elimination of Excessive Concentration of Economic Power (Deconcentration Law, December 1947). From the US perspective, the zaibatsu, business conglomerates centered around a family or a shareholding company, were the equivalent of absentee landowners in farming villages, symbols of Japan’s feudalistic society. There was hardly anyone within the Japanese government who regarded the zaibatsu as an economic and societal problem, unlike the landlord-tenant system, the structural cause of the poverty of farming villages creating a bottleneck to economic growth in Japan overall, which at least some enlightened bureaucrats acknowledged as issues to resolve by curbing the power of landowners and improving the status of tenant farmers. It might also be possible to include among this second type the guarantee of religious freedom and abolition of State Shintō, as well as the reorganization of Shrine Shintō that ensued (Shintō directive, December 1945).

The third type falls between the other two: reforms the Japanese government started, either voluntarily or in response to the GHQ’s wishes, that became more radical after the GHQ intervened mid-way through the process. Emblematic of this type is constitutional revision (the new constitution was promulgated in November 1946). Many reforms belong in the category of this third type: the Diet Law (promulgated in April 1947) that stipulated the primacy of the National Diet over administrative organs; agricultural land reforms (the law amending the Agricultural Land Adjustment Law and the Owner-Farmer Establishment and Special Measures Law promulgated in October 1946); local autonomy (Local Autonomy Law promulgated in April 1947) and decentralizing policing authority (Police Law, December 1947) that led to the ultimate breakup of the Ministry of Home Affairs; and educational reform (Law for Fundamental Education and School Education Law promulgated and implemented in March 1947).

Continuity/discontinuity of modern Japanese history has been always an issue on the occupation studies. When thinking about Japan’s modernity, occupation reforms perhaps take on a sense of completion by redressing distortions in that modernity. Focusing on the fact that changes in the economic and social systems had proceeded apace under Japan’s total war system shows that there are arguments to be made that Japan did not change all that much under the US occupation’s democratizing reforms, or that these sorts of reforms would have happened even without the US occupation of Japan. These arguments, constructed on the research achievements of Japanese modern history, are very suggestive, for they consider the significance of occupation reforms from a longer-term perspective. On the other hand, reforms to demilitarize and democratize Japan made unsteady progress, and their power to disrupt varied from area to area. Even if you grant that the orientation for systemic reform was inherent in Japanese society, we must not disregard the hard truth: the fact that reforms were accomplished in that period and in that way is what made postwar Japan’s political, social, and economic reality, a reality made possible by the Allied occupation of Japan.

“Reverse Course”?

The occupation period for 6-year and 8-months can be devided in two, with 1947–1948 as the turning point. The first half is the period when the pursuit of demilitarization and democratization reforms was heavily emphasized; major reforms were intensively implemented in roughly these 2 years. The second half, in contrast, was a period when priority was placed on stabilizing and reconstructing the Japanese economy, which eventually led to making peace and recovering independence.

The occupation policy’s evolution away from the direction of demilitarization and democratization has frequently been called the “reverse course.” The expression connotes a criticism, that the program for rebuilding the Japanese economy accompanied the strengthening of the state’s power, which ended up making the democratization reforms unfinished. The change in occupation policy is generally understood as being a process that was integrated with the process for incorporating Japan into the Western bloc, because it coincided with the deepening of the tension between East and West. The “reverse course” theory inevitably gives rise to the view that Japan’s subordinate relationship to the United States was firmly established, and that Japan became the junior partner strategically in the Cold War, through the Peace Treaty with Japan and the U.S.-Japan Security Treaty.

An examination of the late occupation period from the context of US policy toward Japan suggests that the characterization of the “reverse course” is not entirely appropriate. First, the US government had conceived the shift from demilitarization and democratization toward economic reconstruction during the war, at the stage it began drawing up plans for the occupation of Japan. I would also remind the reader that paragraph 11 of the Potsdam Declaration clearly states that “[e]ventual Japanese participation in world trade relations shall be permitted.” Because the key reforms to demilitarize and democratize Japan had completed by the end of 1947, the United States would have changed course to stabilize and revive the country’s economy, even if the Cold War had never happened.

Also at work were demands to reduce the burden on the US taxpayer. Even though US ground forces deployed in Japan stood at 100,000 men in 1948—a reduction to about one-quarter of the initial figure—outlays on the occupation were not an insignificant burden to the US government. It is only natural that policy moved in a direction to promote Japan’s economic independence. There is practically no ideological meaning to be found here.

Still, it is a fact that the change in occupation policy coincided with the period that the Cold War intensified in Europe and in Asia. And the US government’s policy for Japan underlying the change (National Security Council (NSC) Report 13/2, approved October 1948) is, beyond a doubt, the very product of the US Cold War strategy of containment. For that reason, the shift in occupation policy is colored by an ideological significance and thus is understood as part of the Cold War in Asia.

The policy of containment promoted by George F. Kennan, the US State Department’s Soviet expert, was predicated on the idea that conciliation with Communist powers was not possible. Even as it argued the need to oppose the Communist military threat with force, the policy held as its core concept the goal of driving the Soviet Union into dialogue with the West and the collapse from within over the long term, by means of maintaining healthy societies based on liberal and democratic values among the Western countries. In that conception, Japan was designated together with Western Europe as regions where the spread of Communism must be prevented. In addition to its strategic location in the Asia Pacific region, forming a part of the island chains from the Aleutian Islands to the Philippines, Japan’s potential industrial power was believed to pose a grave threat to the United States if it might fall into Soviet Communist hands. Accordingly, the creation of a politically, socially, and economically stable Japan that was not vulnerable to Communism was emphasized as the policy that the United States should pursue in the Cold War. Starting in the summer of 1947 and throughout the following year, the State Department reexamined the existing policies toward Japan focused on demilitarization and democratization from such a perspective.

In keeping with the resultant NSC 13/2, the US government issued a nine-point economic stabilization plan in December 1948 that featured a balanced budget, price controls, and wage stability. In February 1949, it dispatched a chairman of the Detroit Bank, Joseph M. Dodge, who instructed the Yoshida Shigeru cabinet to implement policy measures to stabilize the economy. The budget for fiscal year 1949 was planned to balance the overall budget, starting with the general accounts, the special accounts, and government-related institutions, by abolishing and reducing subsidies and price supports, and minimizing expenditures for public works or unemployment compensation. Following these inflation-fighting measures, a single exchange rate at 360 Japanese yen to one US dollar was introduced. Inflation, which had plagued Japan since the defeat of the war, rapidly returned to normal through this series of policies that were called the Dodge Line. Taking a scalpel to the economic system which had been comfortably protected by various forms of subsidies, public lending through government financial institutions, and a doubling and tripling of the exchange rate, facilitated restoration of fiscal health, the elimination of inflationary factors, and the rationalization of industry to achieve international competitiveness.

Measures to promote the reconstruction of the Japanese economy and foster an environment for the country’s independent economic management were also put into effect over the course of 1947–1949. The US government had relented on reparation policies that had aimed at minimizing Japan’s productive capabilities, with the final declaration on the termination of the raparation program in May 1949. It started the flow of GARIOA (Government Aid and Relief in Occupied Areas) and EROA (Economic Rehabilitation in Occupied Areas) assistance that focused on heavy industrial materials and machinery, in addition to relief products such as foodstuffs and medicines. Finally, it permitted a limited restart of private trade, as well as amended the anti-monopoly law and relaxed policies aimed at deconcentrating businesses that had been the core of economic democratization policies. The basic policy on easing reparations was ultimately reflected in the Peace Treaty which did not obligate Japan to make reparations, except for Allied powers so desiring, whose present territories had been occupied by Japanese forces and damaged by Japan, by making available the services of the Japanese people in production, salvaging, and other work for those countries. Various US assistance measures, beginning with GARIOA and EROA, were indispensable elements that supported the Japanese economy throughout the 1950s.

It is widely known that the Dodge Line immediately contained inflation and even gave rise to a stabilization crisis. Social instability grew in the summer and autumn of 1949, with mysteries such as the Shimoyama incidentFootnote 3 coupled with the large-scale typhoons hitting the mainland. For the Japanese economy to escape from deflation and enjoy a temporary recovery, it would have to wait for a special procurement boom brought by the Korean War (Chosen tokujū). The problem of a weak Japanese economy would continue to constrain US policy toward Japan even after the occupation was concluded, for it was in the latter part of the 1950s when the economy finally embarked on a stable growth path. The shift of US occupation policy would require time until the objective of Japanese economic stability was achieved.

The fact that the Yoshida Shigeru cabinet braved the Dodge Line’s surgical treatment is thought to have held important significance for US policies toward Japan. Economic stabilization policies, while necessary for Japan’s economy in the long term, were to nobody’s advantage in the short term; in fact, these measures brought disadvantages to a large number of people. The unwavering will and ability of the Yoshida cabinet to carry out such unpopular policies that could precipitate political instability, even if it was able to count on the absolute power of the GHQ/SCAP if necessary, was certain proof from the US standpoint that Japan had the potential to resist Communism. It was in the latter half of the occupation period that it became clear: Japanese political powers brought up under a democratic political system were capable of sustaining the US long-term objective to foster Japan as a member of the Western bloc.

Assessing the Occupation of Japan

During the peace negotiations in 1951, Yoshida and his staff occasionally expressed their aversion to laws and institutions established under the Occupation, in particular internal security, economic, and labor fields, being made permanent by the peace treaty. The Yoshida cabinet also seemed eager to amend policies that were not suited to Japan’s customs and mores based on the work of the cabinet ordinance consultative committee to reexamine every law and ordinance stemming from the occupation. The Reform Party (founded in February 1952), Hatoyama Ichirō’s faction, and other conservative anti-Yoshida forces advocated a policy to comprehensively reexamine institutions forced by the Allied powers, which they generally considered to be incompatible with Japanese tradition and culture, after the Peace Treaty was signed in September 1951.

As restoration of sovereignty meant that Japan could no longer depend on the absolute power of GHQ/SCAP, the Japanese government recognized an importance to strengthen its authority necessary for economic reconstruction or maintaining public order. In addition, for conservative forces, notably those designated as war criminals or purged from public office as undesirables, it was unbearable to accept the various institutions introduced during the occupation period as a new reality, and they believed that inappropriate or excessive reforms were supposed to be corrected as soon as possible so that Japan could restore its true independence. The most important political issue for them was revising the constitution. The fact that Japan was able to survive only under the aegis of the United States in terms of the economy and national security even after peace was established gave further impetus to seek for breaking the fetters of occupation reforms. That is why the expressions “genuine independence” and “autonomous independence” had so much allure in the political space in the 1950s.

Yet no fundamental changes were made to the overall direction set by the reforms that democratized and demilitarized Japan. Occupation reforms, together with the Treaty of Peace with Japan and the Treaty of Mutual Cooperation and Security between Japan and the United States of America (Japan-US Security Treaty), constituted the basic framework for Japan’s domestic and foreign policies from the 1950s onward. Why had they become institutionalized?

First and foremost, many people benefitted from these liberal and democratic reforms. Occupation reforms, on the whole, had the effect of advancing equality by compelling a redress of wealth disparities while they also raised the degree of freedom in politics, society, and the economy. The achievement of freedom and equality unmistakably boosted the legitimacy for governance and the resilience of the society in the long term. Moreover, demilitarization and democratization reforms changed the rule of political games. Not only those who supported the vast array of the GHQ’s occupation policies, but also those who were at the mercy of and opposed to them, had, in the course of the daily struggle for their own and for Japan’s survival, turned into a new class with vested interests, which internalized the norms and rules that occupation reforms had created. As for the people who had not been permitted to enter the political arena during the Occupation and held no loyalty to the product of those reforms, they, too, had to adapt to the new rules in order to participate in the game, the struggle for power.

Bibliography: For Further Reading

Dower, John W. 1999. Embracing Defeat: Japan in the Wake of World War II. New York: W.W. Norton & Co. (Iwanami Shoten published the first edition translated into Japanese in 2001).

National Security Council. 1948. Report by the National Security Council on Recommendations With Respect to United States Policy Toward Japan (NSC 13/2). Referenced at https://history.state.gov/historicaldocuments/frus1948v06/d588.

Potsdam Declaration. 1945. Referenced at https://www.ndl.go.jp/constitution/e/etc/c06.html.

Additional Bibliography

Amamiya, Shōichi. 2008. Shirīzu nihon kingendaishi, 7 Senryō to kaikaku (Japan’s Modern History Series, Vol. 7: Occupation and Reforms). Tokyo: Iwanami Shinsho.

The author’s treatise on occupation reform based on his research of the “system” throughout the wartime to postwar periods. It emphasizes the seeds of reform found within the total-war system.

Fukunaga, Fumio. 2014. Nihon senryōshi 1945–1952: tōkyō, washington, okinawa (The Occupation of Japan, 1945–1952: Tokyo, Washington, and Okinawa). Tokyo: Chūkō Shinsho. [Published in English as: Fukunaga, Fumio. The Japan Institute of International Affairs (trans). 2021. The Occupation of Japan, 1945–1952: Tokyo, Washington, and Okinawa. Tokyo: Japan Publishing Industry Foundation for Culture.]

This book lays out the process resulting in peace, as demilitarization and democratization reforms were eventually altered under the “reverse course,” replaced with policies to foster Japan as an anti-Communist, pro-American state amid the Cold War. It features new points from Okinawa’s perspective.

Iokibe, Makoto. 1997. Senryōki: shushōtachi no shin Nihon (Occupation Period: The Prime Ministers and their New Japan). Tokyo: Yomiuri Shinbunsha, 1997.

Defeat, occupation, making peace—how did the Japanese government respond when presented with these critical scenarios? An examination, centering on the five Japanese prime ministers of the occupation period.

Itabashi, Takumi. 2014. Adenauā: gendai doitsu o tsukutta seijika (Adenauer: the Politician who Made Modern Germany). Tokyo: Chūkō Shinsho.

This book sheds light on the domestic and foreign policies of Konrad Adenauer, “the man seeming responsible for all of the roles played in Japan by Yoshida Shigeru, Hatoyama Ichirō, Kishi Nobusuke, and Ikeda Hayato.” The author offers a perspective for considering an international comparison to Japan’s occupation and postwar eras.

Kusunoki, Ayako. 2013. Gendai nihon seijishi. 1, Senryō kara dokuritsu e, 1945–1952 (History of Modern Japanese Politics, Vol. 1: From Occupation to Independence, 1945–1952). Tokyo: Yoshikawa Kōbunkan.

This book depicts how Japan’s political powers-that-be responded to US-led occupation reforms, economic crisis, the Cold War, and making peace, and how that shaped Japan’s postwar political system.