Mancur Olson’s 1998 obituary from The Economist sums up his beliefs as to why Germany and Japan made such startling recoveries after WWII while Britain, one of the victors, floundered.
The conclusion was striking. Narrow, self-serving groups had an inherent, though not insuperable, advantage over broad ones that worry about the well-being of society as a whole. How might that insight explain the fate of nations? In 1982, in “The Rise and Decline of Nations”, [Mancur Olson] offered an answer.
In any human society, he said, parochial cartels and lobbies tend to accumulate over time, until they begin to sap a country’s economic vitality. A war or some other catastrophe sweeps away the choking undergrowth of pressure groups. This had happened in Germany and Japan, but not in Britain, which, although physically damaged in the war, had retained many of its old institutions. Surely there was some less cataclysmic route to renewal? Yes, said Mr Olson, a nation’s people could beat back the armies of parochialism, but only if the danger were recognised and reforms embraced.
Read more at Mancur Olson | The Economist.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
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I don’t know if Mr Olson’s argument is true or not but I don’t see it has much bearing on the post-war success of either country.
From what I know of the period there are four factors that drove Japan’s and similarly Germany’s post-war growth.
1. Industries in both countries were rebuilt from scratch with the latest and best technologies.
2. Japan’s currency was grossly undervalued as China’s is today.
3. Disarmament meant huge savings available to fund real economic growth.
4. They are historically strong nations whose peoples are industrious.
Peter
If we compare to Britain, it is also a historically strong, industrious nation. Disarmament would also have yielded savings. There was also opportunity to re-build damaged industries, but this was not done. Perhaps the telling factor was an over-valued currency. But a level playing field in Japan and Germany no doubt played a part. The difference may also have been in attitude: the victors squabble over the spoils while the vanquished bond together to re-build their nation.