Akihiko Tanaka

The 1980s: The Decade of Neoliberalism

From the Soviet Union’s invasion of Afghanistan to the collapse of the Berlin Wall in 1989, the events of the 1980s saw the end of the Cold War. While the new Cold War saw ongoing friction and tension between the US and the nations of Europe over their treatment of the Soviet Union, Japan continued to establish its stance as an ally of the US. The close relationship between President Reagan and Prime Minister Nakasone Yasuhiro set the tone for political relations between Japan and the US at the time. The economic relationship between the two nations in the 1980s saw the US become the world’s greatest debtor, while Japan became the world’s greatest creditor. The US under President Reagan sought to restore a “strong America,” but struggled to retrieve its international competitiveness, and was burdened by huge twin deficits. On the other hand, 1980s Japan achieved unprecedented economic strength, culminating in the overconfidence and arrogance of the so-called “bubble economy” in the late 1980s. In the context of growing economic friction in the late 1980s, backlash labelling Japan “abnormal” and calling for its “containment” led to one of the tensest periods for Japan-US relations.