Philip K. Dick's The Man in the High Castle

The Man in the High Castle is Philip K. Dick's examination of a alternative history world where the Japanese and Germans have emerged victorious in World War II and the United States has been carved up between the two. The story's setting is the American West, run by Japan, which turns out to be a more more benevolent occupier than the Germans in the American East (there is also a relatively autonomous region in the Rockies). The protagonists (there is no one "standout" character), Japanese and American alike, all consult with the ancient Chinese book I Ching to discern their futures and best strategies for living.

I think that Dick showed how the losing side of a war can adapt to occupation by adopting much of the culture of the victors. That is, to some extent, how the Japanese were able to adjust following their "real" loss in World War II and their relatively benevolent occupation by the Americans and the reconstruction of their political system to conform with Western culture.

In the story is a book, written by a man living in Wyoming (in that aforementioned autonomous region), that espouses an alternative history in which the Allies instead won the war and occupied Japan and Germany. This book, naturally frowned upon by the authorities, becomes an enormous underground hit and, along with the I Ching, is in the possession of the protagonists as well. Eventually, one of them decides to visit the author and discover how he was able to write his "history" in such vivid detail, as if he had actually experienced it himself. And this is revealed at the end, an explanation that is disturbing to no end!

The Man in the High Castle won the esteemed Hugo award in 1963 for best science fiction novel. It impressed me as well, although it is not my favorite alternative history story. That personal honor goes to Stephen Baxter's incredible 2006 novella The Pacific Mystery, which also sets up a world in which the "bad guys" won World War II. I recommend both Baxter's and Dick's very different versions of a world where Nazis run rampant and the protagonists begin to sense that something is not quite right with reality.