The Cold War constituted one of the most significant factors in the meteoric rise of the German and Japanese economies after 1945. It was a primary motivation for the US redefinition of both countries as partners rather than pariahs, and both could then leverage the institutions and structures of the US-led capitalist world to maximum advantage. The United States also provided military protection for the two countries, enabling them to recalibrate their political–economic systems decisively away from their pre-war national security orientation to a commercial one. However, the end of the Cold War changed everything rapidly and fundamentally. The opening of the old Soviet bloc along with the rise of China presented extensive market opportunities, but simultaneously produced potential new competitors, while Anglo-Saxon neoliberalism has challenged German and Japanese cooperative capitalisms. For Germany in particular, the post-Cold War landscape has involved expensive reunification along with growing numbers of refugees. Globalisation has thus been a double-edged sword, undercutting the high-wage societies of Deutschland AG and Japan, Inc. Scaling back of US military commitments, moreover, have also led to Germany and Japan spending more money defending themselves, as well as to deployment of troops for the first time since 1945.

This chapter describes the end of the cold war, the Washington Consensus that drove efforts to reform the institutions and economies of the states that previously had pursued autarkic economic policies, and the counternarratives that pushed back against the Washington Consensus