Throughout the postwar period, Japan's economy continued to boom, with results far outstripping expectations. Japan rapidly caught up with the West in foreign trade, gross national product (GNP), and general quality of life. These achievements were underscored by the 1964 Tokyo Olympic Games and the Osaka International Exposition (Expo '70) world's fair in 1970.

The high economic growth and political tranquillity of the midto late 1960s were tempered by the quadrupling of oil prices by the Organization of the Petroleum Exporting Countries (OPEC) in 1973. Almost completely dependent on imports for petroleum, Japan experienced its first recession since World War II.

Despite its wealth and central position in the world economy, Japan has had little or no influence in global politics for much of the postwar period. Under the prime ministership of Tanaka Kakuei (1972-74), Japan took a stronger but still low-key stance by steadily increasing its defense spending and easing trade frictions with the United States. Tanaka's administration was also characterized by high-level talks with United States, Soviet, and Chinese leaders, if with mixed results. His visits to Indonesia and Thailand prompted riots, a manifestation of long-standing antiJapanese sentiments. Tanaka was forced to resign in 1974 because of his alleged connection to financial scandals and, in the face of charges of involvement in the Lockheed bribery scandal, he was arrested and jailed briefly in 1976.

By the late 1970s, the Komeito and the Democratic Socialist Party had come to accept the Treaty of Mutual Cooperation and Security, and the Democratic Socialist Party even came to support a small defense buildup. The Japan Socialist Party, too, was forced to abandon its once strict antimilitary stance. The United States kept up pressure on Japan to increase its defense spending above 1 percent of its GNP, engendering much debate in the Diet, with most opposition coming not from minority parties or public opinion but from budget-conscious officials in the Ministry of Finance.

The fractious politics of the LDP hindered consensus in the Diet in the late 1970s. The sudden death of Prime Minister Ohira Masayoshi just before the June 1980 elections, however, brought out a sympathy vote for the party and gave the new prime minister, Suzuki Zenko, a working majority. Suzuki was soon swept up in a controversy over the publication of a textbook that appeared to many of Japan's former enemies as a whitewash of Japanese aggression in World War II. This incident, and serious fiscal problems, caused the Suzuki cabinet, composed of numerous LDP factions, to fall.

Nakasone Yasuhiro, a conservative backed by the still-powerful Tanaka and Suzuki factions who once served as director general of the Defense Agency, became prime minister in November 1982. Several cordial visits between Nakasone and United States president Ronald Reagan were aimed at improving relations between their countries. Nakasone's more strident position on Japanese defense issues made him popular with some United States officials but not, generally, in Japan or among Asian neighbors. Although his characterization of Japan as an "unsinkable aircraft carrier," his noting the "common destiny" of Japan and the United States, and his calling for revisions to Article 9 of the Constitution (which renounced war as the sovereign right of the nation), among other prorearmament statements, produced negative reactions at home and abroad, a gradual acceptance emerged of the Self-Defense Forces and the mutual security treaty with the United States in the mid-1980s.

Another serious problem was Japan's growing trade surplus, which reached record heights during Nakasone's first term. The United States pressured Japan to remedy the imbalance, demanding that Tokyo raise the value of the yen and open its markets further to facilitate more imports from the United States. Because the Japanese government aids and protects its key industries, it was accused of creating an unfair competitive advantage. Tokyo agreed to try to resolve these problems but generally defended its industrial policies and made concessions on its trade restrictions very reluctantly.

In November 1984, Nakasone was chosen for a second term as LDP president. His cabinet received an unusually high rating, a 50 percent favorable response in polling during his first term, while opposition parties reached a new low in popular support. As he moved into his second term, Nakasone thus held a strong position in the Diet and the nation. Despite being found guilty of bribery in 1983, Tanaka in the early to mid-1980s remained a power behind the scenes through his control of the party's informal apparatus, and he continued as an influential adviser to the more internationally minded Nakasone. The end of Nakasone's tenure as prime minister in October 1987 (his second two-year term had been extended for one year) was a momentous point in modern Japanese history. Just fifteen months before Nakasone's retirement, the LDP unexpectedly had won its largest majority ever in the House of Representatives by securing 304 out of the 512 seats. Despite the solid conservative majority, the government was faced with growing crises. Land prices were rapidly increasing, inflation increased at the highest rate since 1975, unemployment reached a record high at 3.2 percent, bankruptcies were rife, and there was political rancor over LDP-proposed tax reform. In the summer of 1987, economic indicators showed signs of recovery, but on October 20, 1987, the same day Nakasone officially named his successor, Takeshita Noboru, the Tokyo Stock Market crashed. Japan's economy and its political system had reached a watershed in their postwar development that would continue to play out into the 1990s.

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Source: U.S. Library of Congress