Abstract
The Supreme Command for the Allied Powers (SCAP) claimed credit for bringing democracy to Japan during the Occupation. With some exceptions, the predominant result of SCAP's activities in economic (as distinguished from political) affairs, was just the opposite. SCAP imposed comprehensive economic controls on Japan and suppressed the free market system. Its intervention was especially repressive on the international plane.
Prior to mobilization for the Pacific War, Japan had never had a planned or controlled economy. As the occupation drew to a close, SCAP authorized the Diet to pass legislation for international economic controls to be employed by successor peacetime governments. An extensive Japanese government bureaucracy with a vested interest in the perpetuation of economic controls took charge of their implementation. The economic control laws, and the bureaucracy to which they gave rise, constituted an important part of SCAP's legacy to postwar Japan. This legacy became a primary conditioning factor in Japan's subsequent resistance to economic liberalization—a source of continuing friction in relations between the United States and Japan.
