One of the reasons is because the reforms carried out by the occupying authorities were cut short because of the Cold War. In the aftermath of the war the allied occupational government carried out radical reforms, much of it modeled the New Deal in the United States. Monopolistic conglomerates called the Zaibatsu were broken up, land reform was passed distributing land previously owned by wealthy landowners to farmers who worked those fields, the rights of organized labor was guaranteed. All of those were liberal/left-leaning reforms which were ironically enough supported by MacArthur: a conservative Republican.

However, with the start of the cold war fear arose about Communist influence in Japan. The liberalization of politics resulted in an upsurge of leftist politics, with the Japanese Social Democratic Party becoming the largest in the legislature. There was a the fear that reforms have gone too far and that it was leading to Communist influences in Japan. Therefore in the later years of the occupation reforms were reversed, labor organizations lost many of their rights, a military was re-established, and the allies allowed conservative pre-war politicians back into power . The conservative, right-wing Liberal Democrat party soon became dominant in post-war Japanese politics. Between the 1950s and 1990s Japan was a de facto one party state under the Liberal Democrats.

The post-war reforms were therefore, incomplete in transforming Japan into a liberal state because of the demands of the cold war. The controversy would be to what degree SCAP should have continued to implement new dealesque policy in Japan after 1947-48.