Also in 1935 he began to build the military, making military service required and increasing Germany’s military
spending much faster than any other country because the German economy needed more resources to fuel itself
and needed to get these from other countries so it built and used its military power to help get them. One
could argue that getting them militarily was more cost-effective than trying to produce goods to trade with
others to earn income to buy what was needed.
Like Germany, Japan was also hit exceptionally hard by the depression and became more autocratic in
response to it. Japan was especially vulnerable to the depression because, as an island nation without adequate
natural resources, it relied on exports for income to import necessities. When its exports fell by around 50%
between 1929 and 1931, it was economically devastated. In 1931, the depression in Japan was so severe that
the country went broke—i.e., it was forced to draw down its gold reserves, abandon the gold standard, and float
its currency, which depreciated it so greatly that Japan ran out of buying power. These terrible conditions and
large wealth gaps led to fighting between the left and the right. In 1932 that led to a massive upsurge in
right-wing nationalism and militarism to forcefully restore order and bring back economic stability. To that
end, Japan’s military took control and pursued military options to get Japan the resources it needed by
taking them away from other countries. Japan invaded Manchuria in 1931 and later expanded through
China and Asia to obtain natural resources (e.g., oil, iron, coal, and rubber) and human resources (i.e., slave
labor). As in the German case, it could be argued that this path of military aggression to get needed
resources was the best path for the Japanese because relying on classic trading and economic practices
wouldn’t have gotten them what they needed.
Shifting to more autocratic, populist, and nationalist leaders and policies during times of extreme economic
stress is typical, as people want strong leadership to bring order to the chaos and to deal strongly with the
outside enemy. In 1934, there was severe famine in parts of Japan, causing even more political turbulence and
reinforcing the right-wing, militaristic, nationalistic, and expansionistic movement.
In the years that followed, this movement in Japan, like that in Germany, became increasingly strong with its top-
down fascist command economy, building a military-industrial complex with the military mobilized to protect its
existing bases in East Asia and northern China and its expansion into other territories. As was also the case in
Germany, during this time, while most Japanese companies remained outside government ownership, their
production was controlled by the government.
What is fascism, and why was it adopted in countries like Germany and Japan? Consider the following three big
choices that one has to make in order choose a country’s approach to governance: a) bottom-up (democratic) or
top-down (autocratic) decision-making, b) capitalist or communist (with socialist in the middle) ownership of
production, and c) individualistic (which treats the well-being of the individual with paramount importance) or
collectivist (which treats the well-being of the whole with paramount importance). Pick the one from each category
that you believe works best for your nation’s values and ambitions and you have your preferred approach. Fascism
is autocratic, capitalist, and collectivist. Fascists believed that top-down autocratic leadership, in which the
government directs the production of privately held companies in a way that individual gratification is
subordinated to national success, is the best way to make the country and its people wealthier and more powerful.
The United States and Great Britain believed that the democratic, capitalist, and individualistic mix was better,
while the Soviet Union believed that the autocratic, communist, and collectivist mix was best.