The dissolution of the zaibatsu after World War II had a profound impact on Japan's economy, promoting competition and economic growth. The breakups also helped to democratize and demilitarize the economy.
How the zaibatsu were broken up
- The Allied occupiers broke up the zaibatsu, which were family-owned conglomerates that had fueled Japan's war effort
- Holding companies were outlawed in 1947
- The practice of tying family assets to business groups was ended
- The maximum inheritance tax rate increased
The economic impact
- The breakups led to the formation of keiretsu, which were corporate groups that maintained relationships between companies but with less centralized control than the zaibatsu
- This shift allowed smaller companies to thrive
- The breakups contributed to Japan's rapid economic growth after World War II
- The breakups also led to a more equal distribution of income and wealth
The legacy
The breakups helped Japan become a member of OECD in 1964 and remain a country with a relatively equal income distribution.