The Japanese Industrial Economy: Late Development and Cultural Causation (Routledge Studies in the Growth Economies of Asia)

The Japanese Industrial Economy • • • What was the role of ‘culture’ in the Japanese economic success? Why did Japan ...

Author: Ian Inkster

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The Japanese Industrial Economy

• • •

What was the role of ‘culture’ in the Japanese economic success? Why did Japan industrialise when China did not? Of all possible nations, why was it Japan that most spectacularly utilised the technologies of the West to rise to economic superpower status?

This ground-breaking book reveals that the way to understand the Japanese industrial experience is to focus on the resources that the nation brought to bear on the task of responding positively – and in a sustained manner – to the superior technologies and institutions of the industrialised world, from the late nineteenth century. Japan’s economic history is one of technology transfer and industrial transformation under conditions of relative industrial backwardness. Ian Inkster argues that the history of the Japanese economy cannot be understood without a theory of cultural engineering – a process whereby the industrialising elite managed cultural attributes speciﬁc to Japan in order to modernise the economy. This book reveals that the manipulation of culture was of more importance than the character of the original cultural stock in explaining Japan’s modern industrialisation. Thus the features of private enterprise culture that are so often isolated as keys to the nation’s historical competitiveness may have been only temporary reﬂections of this wider process of cultural engineering: a necessary input into the programme of technology transfer and late development. Unlike many books on the Japanese economy which are either research-based monographs for the student or specialist, or directed at businesses and the media, this book provides a highly reliable guide to the industrial economy and history which is accessible, and covers a wide area; it will be of great interest to those involved in Asian studies, Japan studies, economists and professionals in business and enterprise culture. Ian Inkster is Research Professor of International History at Nottingham Trent University, Fellow of the Royal Historical Society, and editor of the journal History of Technology. His books include Clever City (1991), Science and Technology in History (1991), and Technology and Industrialisation (1998). This book is the sister volume to Japanese Industrialisation: Historical and Cultural Perspectives, also published by Routledge in 2001.

Routledge Studies in the Growth Economies of Asia 1 The Changing Capital Markets of East Asia Edited by Ky Cao 2 Financial Reform in China Edited by On Kit Tam 3 Women and Industrialization in Asia Edited by Susan Horton 4 Japan’s Trade Policy Action or Reaction? Yumiko Mikanagi 5 The Japanese Election System Three Analytical Perspectives Junichiro Wada 6 The Economics of the Latecomers Catching-up, Technology Transfer and Institutions in Germany, Japan and South Korea Jang-Sup Shin 7 Industrialization in Malaysia Import Substitution and Infant Industry Performance Rokiah Alavi 8 Economic Development in Twentieth Century East Asia The International Context Edited by Aiko Ikeo 9 The Politics of Economic Development in Indonesia Contending Perspectives Edited by Ian Chalmers and Vedi Hadiz 10 Studies in the Economic History of the Paciﬁc Rim Edited by Sally M. Miller, A. J. H. Latham and Dennis O. Flynn 11 Workers and the State in New Order Indonesia Vedi R. Hadiz 12 The Japanese Foreign Exchange Market Beate Reszat 13 Exchange Rate Policies in Emerging Asian Countries Edited by Stefan Collignon, Jean Pisani-Ferry and Yung Chul Park 14 Chinese Firms and Technology in the Reform Era Yizheng Shi 15 Japanese Views on Economic Development Diverse Paths to the Market Kenichi Ohno and Izumi Ohno 16 Technological Capabilities and Export Success in Asia Edited by Dieter Ernst, Tom Ganiatsos and Lynn Mytelka

17 Trade and Investment in China The European Experience Edited by Roger Strange, Jim Slater and Limin Wang 18 Technology and Innovation in Japan Policy and Management for the 21st Century Edited by Martin Hemmert and Christian Oberländer 19 Trade Policy Issues in Asian Development Prema-chandra Athukorala 20 Economic Integration in the Asia Paciﬁc Region Ippei Yamazawa 21 Japan’s War Economy Edited by Erich Pauer 22 Industrial Technology Development in Malaysia Industry and Firm Studies Edited by K. S. Jomo, Greg Felker and Rajah Rasiah 23 Technology, Competitiveness and the State Malaysia’s Industrial Technology Policies Edited by K. S. Jomo and Greg Felker 24 Corporatism and Korean Capitalism Edited by Dennis L. McNamara 25 Japanese Science Samuel Coleman 26 Capital and Labour in Japan The Functions of Two Factor Markets Toshiaki Tachibanaki and Atsuhiro Taki 27 Asia Paciﬁc Dynamism 1550–2000 Edited by A. J. H. Latham and Heita Kawakatsu 28 The Political Economy of Development and Environment in Korea Jae-Yong Chung and Richard J. Kirkby 29 Japanese Economics and Economists since 1945 Edited by Aiko Ikeo 30 China’s Entry into the World Trade Organisation Edited by Peter Drysdale and Ligang Song 31 Hong Kong as an International Financial Centre Emergence and Development 1945–1965 Catherine R. Schenk 32 Impediments to Trade in Services: Measurement and Policy Implication Edited by Christopher Findlay and Tony Warren 33 The Japanese Industrial Economy Late Development and Cultural Causation Ian Inkster

The Japanese Industrial Economy Late development and cultural causation Ian Inkster

London and New York

First published 2001 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group

This edition published in the Taylor & Francis e-Library, 2002. © 2001 Ian Inkster All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Inkster, Ian The Japanese industrial economy: a technological and institutional analysis / Ian Inkster. p. cm. – (Routledge studies in the growth economies of Asia) Includes bibliographical references and index. 1. Industrialization–Japan. 2. Japan–Economic conditions. 3. Japan–Social conditions–1868– I. Title. II. Series. HC462 .I574 2001 330.952–dc21 ISBN 0–415–25001–3 (Print Edition) ISBN 0-203-47204-7 Master e-book ISBN

ISBN 0-203-78028-0 (Adobe eReader Format)

2001019970

Contents

Illustrations Preface and acknowledgements 1

Introduction: achievements and outcomes

vii ix 1

Modelling Japan? 1 Preludes to the twentieth century 2 The short twentieth century 1912–71 10 Japan in the modern climacteric 1971–2001 14 Honing an argument 20 Analysing the industrial economy 21 2

Interpretations of Japan

23

Late development 23 Technology transfer 24 The social and the economic 25 Features of Japanese industrial history 26 Interpretations and perspectives 30 Wider contexts 32 The cake of custom and cultural engineering 32 3

Maturity: social problems of Japanese capitalism Introduction 35 Measures of Japanese society 35 The social underpinnings of fast growth 41 Underbelly or endaka society? 46 Traditions and modernities: the limits to convergence theory 49 Limits to Japanese growth 52

35

vi Contents 4

Forging explanations: technology

56

On modes of explanation 56 The conditions of technology transfer 58 Japanese exceptionalism: the primacy of technology transfer 63 Catch-up, culture and the creativity debate 75 Summary and conclusions 79 5

Cultural engineering

82

Problems of the cultural stock argument 82 Tokugawa and beyond: aspects of Japanese history 86 Fundamentals: the Meiji case 89 The avoidance system: on minimising cultural resistance 95 Summary and conclusions 101 6

The institutions of late development: private enterprise

105

Enterprise culture again 105 Culture and enterprise 106 Culture, ideology and institutions: the Masuda model 107 Late development: increasing agency 112 Late development in the endaka laboratory 113 Cultural studies: tacit knowledge and obligational drag 114 Summary and conclusions 117 7

Nationalism and globalism: Japan in world context

120

On being exceptional: global history 120 The Asian context: China, Korea and Japan 123 Exceptionalism as accumulative causation 126 History continuing 128 Notes Bibliography Index

131 139 154

Illustrations

Map Japan in East Asia

xii

Table Table 1 Public sector human capital formation 1868–1912

93

Figures Figure 1 Figure 2 Figure 3 Figure 4

Technology transfer, adaptation and indigenous capacity The cultural resources of bushido Cultural resources and Japanese industrialisation Technological change: types and resources of resistance

62 89 94 96

Preface and acknowledgements

‘There come no other foreigners here. All the men here are mine.’ So declaimed the Emperor of Japan to Will Adams of Gillingham, Kent, in the opening years of the seventeenth century. To an extent the point was well made. Prior to the nineteenth century, Japan was an isolated, primarily agrarian nation about which very little was known. If to Western observers Korea appeared as a hermit nation, then Japan was a sort of seminary, from which inmates were periodically exuded and towards which emissaries at times journeyed. Both movements of men caused more confusion than enlightenment. Even the forced intrusion of the American Commodore Matthew Perry in 1853 with his ﬂeet of ‘black ships’ was not in itself sufﬁcient to open up understanding or fruitful commercial relations. However, in contrast to the relative sluggishness of economic change in the long Tokugawa years, during the late nineteenth century Japan did emerge as an industrial nation. What was it that made Japan the Asian industrial success at a time when China was in the process of being carved up by the Western powers, when progressive opinion in Russia was yet struggling under the weight of Tsardom and when India was suffering the continued iniquities of British rule? Some historians have answered such a question by pointing to the role of economic change in the Tokugawa era (1603–1868) as a necessary prerequisite to industrialisation in the Meiji years (1868–1912). A large revisionist literature has in the last thirty years or so focused on the demographic, social and economic dynamics of the years prior to the 1868 Meiji Restoration as the essential key to any interpretation of Japan’s industrial success. This approach confronts an older and often Marxist tradition which stressed the backwardness, legalism and exploitative character of the Tokugawa regime, with frequent use of the term ‘feudal’ for general descriptions of its structures, attitudes and institutions. In his earlier work Kazushi Ohkawa, the most famous of Japanese economic historians, stressed such economic backwardness and the relative suddeness of late development. Because the progressive changes in the Tokugawa years were merely ‘limited regional phenomena’ (Ohkawa 1964: 166), modern economic growth began in the Meiji years. In the present book we illustrate major dynamics and discontinuities in Japan’s industrial development, which at key points were associated with the changing character of the nation’s interactions with the West. Furthermore, we identify several

x Preface and acknowledgements short periods in which the exploitation of technological and other opportunities inhering in such interactions depended upon political rather than commercial responses, upon expensive and imaginative investments in institutions and in human capital rather than large physical investments, and upon a deliberate process of cultural engineering as against a progressive momentum generated unproblematically from an identiﬁable set of unique cultural attributes. So this book does not fall easily into either the economist or the culturalist camp. In global terms, interactions between Western modernity and more isolated traditions normally failed. Cases such as those of Egypt or India or Turkey, held up by Western interests in early Meiji Japan as great exemplars of progress through new commercial, political, cognitive or technological interactions, had by the end of the Meiji era generated expensive failures and social traumas, rather than sustained industrialisations. In most cases the economic costs of technological modernisation created social costs that broke the reigns of progressive or modernising elites. In most cases technological interactions were merely a part of a wider process of Western imperial expansion, the agencies and institutions of which ultimately swamped indigenous authority and reduced or removed the economic sovereignty of existing regimes or power structures. In most cases political breakdown in late industrialising regions put an end to the very complex processes of sustained industrial modernisation based on imported Western ideas, technologies and institutions. Japan survived late industrialisation. Our argument is that Japan did so by sustaining industrial momentum through crisis periods such as the 1870s and 1880s, or the 1930s and 1950s, which involved adjustments and expensive institutional innovations that certainly impacted on the subsequent longer periods of sustained industrialisation, but in the main did so without causing halts or reversals of fortune. Cumulatively, this succession of critical and organic ages generated a long-term process of industrialisation, the major characteristics of which were a peculiar mixture of endogenous assets, political agency and institutional innovations and borrowings. In Japanese industrial history reactions to new conditions, and particularly creative responses to changed international circumstances and interactions, seem to explain as much about the ultimate long term as do such factors as geographical location, the possession of cheap and malleable labour or the achievement of high levels of physical capital investment. Of course, such response drew upon existing assets of all sorts, but the existence of those assets is never a sufﬁcient explanation of the success or character of such response. The agencies, institutions and technologies of the critical ages of Japanese industrialisation are perhaps better examined in terms of the exact character of interactions between Japan and the West and the ability of the industrialising elite to promote and sustain industrialisation at relatively low political cost in the short term. Despite the exigencies of very late development, the traumas of the 1870s (opening up to the West) or of 1930 (economic depression brought about by failures of ﬁnance and production in the West) or 1945 (defeat in warfare at the hands of the two major capitalist nations of the West) did not actually lead to wholesale revolution or irretrievable industrial breakdown.

Preface and acknowledgements xi Some common illusions ought to be dispelled at the outset. Japan is not small but very large, with a present population of around 125 million: only China, India, the United States, Russia, Indonesia and Brazil are bigger. In area Japan is not as small as is often imagined, its area of 378,000 sq km is greater than that of the other recent ‘miracle’ economy of West Germany or of Poland, Malaysia or the Philippines. The climate is not relentlessly monsoonal – the temperate climate is mostly similar to that of the east coast of the United States. Nor is the nation isolated somewhere in the middle of the Paciﬁc or an appendage of China. As our map indicates, the Japanese archipelago of four main islands – Hokkaido, Honshu, Shikoku and Kyushu – is strung out alongside and in very close proximity to China, Russia, the Korean peninsula and Taiwan. Difﬁcult terrain does cause a singular density of population, greater than that of major industrial competitors such as Germany or the UK, but less than that of such newly emergent economies as Taiwan or the Republic of Korea. The savings rate remains high, but this does not mean that Japanese households fail to purchase the goods of global capitalism: over 98 per cent of households own a washing machine, a colour television set, a vacuum cleaner and a refrigerator, and over 75 per cent own cameras, microwave ovens, cars and videocassette recorders. Again, the historical focus on economic growth has led to a lack of public amenities, but the Japanese have been prepared to make up for this when possible by private insurance initiatives: the number of physicians and hospital beds per head compares favourably with the ﬁgures for European nations, and only Sweden outcompetes Japan in the latter regard. Despite much periodic antiJapanese clamour in the Western press, there is little good evidence that the export of Japanese manufactures has caused Japanese industrial success at the expense of others. Economic growth has not come about through the massive expansion of the economy overseas – indeed most of the outward investments of the economy have occurred since 1985 when internal growth has slowed. Nor any longer is Japan a hermit nation: by the early 1990s some twelve million Japanese were travelling overseas annually, with North America, Europe and Oceania outcompeting Asia as destinations. Nor are the Japanese in any way religious fanatics, wedded to a singular cosmic ethos, for by the last decade of the old millennium the major religions boasted a total followership of around 214 million, far greater than the total population. This, together with the recent popularity of a great host of new religions, suggests that the Japanese continue to show variable allegiance to a variety of doctrines in the hope that some combination might satisfy their individual moral dilemmas. In this they are surely not unlike many Europeans or Americans. In short it is difﬁcult to point to any overriding characteristic of Japan that either ‘explains’ its tremendous economic history or deﬁnes it as any more a singular nation than the United States or France or Indonesia. I have tried to make this text accessible and as unambiguous as an academic approach may allow. Notes and references have been kept to a minimum although the bibliography should be complete enough for most purposes. To help with the alphabetical listing and with the index, Japanese names in the text are rendered in Western fashion, with the family name coming second. With some exceptions the

xii Preface and acknowledgements

Japan in East Asia

sources are English, but I would once more like to thank Jerry Liu for assistance with Chinese materials. As with my other recent book for Routledge, Japanese Industrialisation 1603–2000, I have beneﬁted from the critical awareness and general scepticism of my students in Australia, Taiwan and Britain from 1973. I would also like to thank my various editors at Routledge who, amongst other astute decisions, recognised the possibility of creating two workable texts out of one unmanageable manuscript. Finally, I would for the ﬁrst time like to thank properly that great Japan scholar, Sidney Crawcour of the ANU, Canberra, for so strongly encouraging my research interests in Meiji Japan during 1976, when I delivered my first interpretative paper on Japanese industrialisation.

1

Introduction Achievements and outcomes

Modelling Japan? Prior to those quite recent social, commercial and industrial changes in Japan which have seemed to detract from its historical trajectory of ultra-fast growth, the nation was lauded as the best case of capitalist achievement. During the 1970s and 1980s a heady economic performance in the face of global recessions ensured that Japan became a focus of non-Marxist commentary, well-expressed in the writings of Ezra Vogel and Herman Kahn (Vogel 1979, Kahn 1973). Academic experts were at all times strongly involved in informing this general enthusiasm. At one point Ichiro Nakayama claimed that, in considering the potential development of poor twentieth-century nations, ‘Japan’s case is to be regarded as a model. She was able to transform herself almost overnight from her previous condition of retarded agrarian capitalism to a modern industrial country’ (Nakayama 1967: 171). Similarly adamant was the claim of Sumihito Hirai when he generalised that ‘there are universal conditions which must be satisﬁed in order for there to be development. Japan’s situation in the early Meiji era and also the gradual process of its development may serve as one formula for getting this important task underway’ (Hirai 1978: 16). For K. M. Panikkar the acquisition by Japan of Western science and technology at an early stage provided a model for the analysis of the later economic weaknesses of India, China and South-East Asia (Panikkar 1953). But the notion of Japan as exemplary is far from new. By the 1890s Japan had completed a ﬁrst period of modern industrialisation based on textiles and was about to enter a second season of change centred on the heavier, military industries. The nation had established a somewhat more rational fiscal system, was gaining economic autonomy and, indeed, the beginnings of an empire in Asia. At just this time, previously sporadic Western accounts of Japan made way for a sharper focus on economic achievement, especially as centred on new industries, novel institutions and the use of introduced Western technologies. By this time the oyatoi, the Western experts employed in Japan to install machinery and modernise education, were returning, and added their own more certain opinions to those of writers and intellectuals whose views were often less personal but less informed. In particular, the scientiﬁc and technical journals of the West, whose editors and contributors were for ever debating the causes of supposed industrial stagnation or decline in the older industrialisers, applauded the unexpected vitality of Japan. Following the

1 2 3 4 5 6 7 8 9 0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

2 The Japanese industrial economy Board of Trade Journal, the Bulletin of the Department of Labour and the distinguished Consular Reports of both Britain and the USA, such eminent periodicals as The Engineer, Engineering, Chemical News and Nature were crammed with more or less informed accounts of Japanese society, culture and economic structure, including explanations as to why Japan ‘left China behind’, why the government was successful in its mining and manufacturing ventures, and why education and the institutions of scientiﬁc and technical training and diffusion were at the heart of the matter. Japan was being ‘modelled’, and from Harper’s Weekly to the London Times the non-technical ‘serious’ press was informedly clamorous. For every ‘special correspondent’ who appeared in Tokyo or Yokohama there were more than two explanations of the industrial rise of Japan. A particular feature of this early modelling of Japan was the attention given to the roles of the state and the array of associated new institutions in Meiji Japan. By 1903, with a successful war against China behind it, Japan became a model for emulation. In a highly publicised speech of September of that year, entitled ‘The Inﬂuence of Brain Power in History’, the President of the British Association for the Advancement of Science, Sir Norman Lockyer, taunted his fellow experts with the query: ‘shall we follow Japan and thoroughly prepare by “intellectual” effort for the industrial struggle that lies before us?’ (Simmons 1904: 168). By June 1905, with a Japanese war against a European nation (Tsarist Russia) fully waged and won, Nature more soberly proclaimed that the ‘lesson which our educationalists and statesmen have to learn from Japan is that the life of a modern nation requires to be organised on scientiﬁc lines in all its departments . . . it must be consciously used for the promotion of national welfare’ (Nature, 8 June 1905: 872). In this the Western scientific and intellectual journals were following the many messages of such travelling Japanese as Baron Kikuchi Dairoku, sometime Japanese Minister of Education, who in 1907 was lecturing to the Edinburgh Royal Society on the educational system as the backbone of Japan’s recent economic and military successes.1 In the later twentieth century the modelling of Japan tended to move from tales of unusual agency and institutions and towards analyses of human and physical resources, labour surplus (Fei and Ranis 1964), structural explanations of motivation and behaviour (Hagen 1964, McClelland 1969), or generalised models of escape from low-level economic and demographic traps (Nelson 1956). Although ingenious enough, the analytical precision of such reﬁned explanations did tend to undervalue the forces of late development as stressed here, that is the peculiarity of Japan’s circumstances, and the energy, creativity and costs invoked by Japan’s ‘response’ to the Western powers.

Preludes to the twentieth century The old idea of Tokugawa Japan (1603–1868) as a ‘purely feudal organisation of landed property’ (Marx 1867: 795) has given way in recent years to notions of ‘a merchant contingent’ demanding regime change, who had at hand a ‘labor force inured to long hours of disciplined work’ as well as institutions appropriate to the

Introduction 3 increase of capital formation beyond that characteristic of a stagnant ancien régime. The industrialisation of the Meiji years (1868–1912) did not result from either a spontaneous or a Western-induced generation of new forces inscribed on a tabula rasa, for ‘modern persons’ had long achieved positions of power and occupied sites of potential economic revolution (Nakamura 1981: 270, 281). Even in the sixteenth century Japan had not fulﬁlled all the requirements expected of a feudal system of closed social classes and immobility, rank-based distribution of goods and services, and a multiplicity of authorities with power in the hands of great lords based on their own possession of distinct landed regions and military bastions. The existence of concepts of an Emperor and of the ‘family nation’, the sometimes outstanding, centralised power of lay shogunates, and traditional ideas of the ie, or household – with its strong homage relations that might at times relegate obligations between lord and vassal to a comparatively lowly status – were all features even then that stood outside any straightforward system of feudalism. Modern views emphasise the pervasive changes occurring throughout Japan between the sixteenth and the nineteenth centuries. For this period it is best to remain sceptical concerning exact socioeconomic quantities. Nevertheless it now appears that a population of some thirty million people were becoming increasingly urbanised and that even the most rural locations harboured an enormous variety and extent of non-agricultural by-employments, ranging from cotton dealing and retailing, dyeing and indigo trading, and silk rearing and reeling, to rice, tea and sardine dealing (the latter being important as nutrition and as fertiliser in the relative absence of livestock), cracker-making and oil-pressing, milling and shopkeeping. By the late Tokugawa era some 80 per cent or more of the population generated some 60 per cent of the nation’s income in agricultural activities. This suggests that higher productivity lay with the 4 per cent or more engaged in secondary manufactures and the 10 per cent or so engaged in trade, carriage, urban infrastructures and ﬁnancing. (Up to 7 per cent of the population were of samurai or aristocratic ranking, most of whom did not contribute to national output.) Despite only a very mild population growth, most of which was probably occurring prior to 1720 or 1750, demand seems to have grown sufﬁciently to induce a doubling of the cultivated acreage, from around 5 million acres in 1600 to 11.5 million by 1868. As was often the case for Japan, the reaction to external forces set the scene for commercial and economic change. Prior to the seventeenth century Japanese economic history was a fraction of a regional, Asian tribute system centred on China and its ﬂuctuating, complex satellite interrelations. From the later ﬁfteenth century the growing turn towards silver as a means of taxation, military ﬁnancing and private transaction within China led to the development of a large tribute silver trade, mostly in the hands of Asian and European intermediaries (Steensgaard 1990: 18–19). The Manchu conquest of China shifted a traditional conception of East Asian centrality, and permitted Tokugawa Japan to assume the mantle of a greater independence. Japan withdrew from China’s tributary system from the 1630s, and Chinese silver was increasingly supplied by Peru and Mexico through both Atlantic and Paciﬁc routes, just as silver assets allowed Japan to ﬁnance improved home production of a range of rural products (O’Flynn 1991, 1986, Goldstone 1991). An

4 The Japanese industrial economy earlier vital relationship with China was based on exports of Japanese gold, silver and cotton in exchange for Chinese cotton goods, silk, porcelain, saltpetre, dyestuffs and sugar, and a prime motive of Tokugawa shoguns was to secure a greater isolation and independence from China through stimulation of a wider range of Japanese exports and to improve the use of labour and land in agricultural production as a substitute for imports (Latham and Kawakatsu 1994, Toby 1984). There is a real sense in which such rudimentary economic policy was merely one aspect of the overriding state project of increased internal control (Umesao and Matsubara 1989). The search for the internal dynamic should begin with urbanism and that peculiar institution of sociopolitical control, sankin kotai (alternate residence). This was the law enacted in 1634 by the Tokugawa Shogun that obliged all the daimyo (feudal lords, of whom there were around three hundred) or their close family members to reside alternately in their domains and in the government capital Edo (Tokyo), and to leave their wives and children as hostages in that city. This system, which was replicated throughout Japan by the daimyo themselves in an effort to control their own domain retainers, not only led to a vast improvement in transport and communications but also encouraged one of the great building booms in premodern history (Hall 1955–6, Smith 1960, Nakamura 1981). The redivision of lands consequent upon Tokugawa victory after the long civil-war period had meant that older military or commercial centres had become badly placed, and the years from 1580 to 1610 had seen the massive growth of Osaka, Kochi, Hiroshima, Edo, Kofu, Sendai, Hikone and Nagoya. An edict of 1615 abolished the right to have more than one castle town in each province, and sankin kotai merely hastened and concentrated a move towards the construction of large castle towns in the middle of the new territorial divisions. Competition amongst the lords ensured that cities, residences (including those of the hostages in Edo), hostelries and travelling courts would be superbly ostentatious, this dragging many lords into debt with the larger merchant groupings. The level of urbanisation was extraordinary. During the Tokugawa years, Edo (Tokyo) was one of the largest cities in world history, with a population at times of well over one million, mostly composed of administrative and aristocratic consumers of goods. Nor was Edo’s relationship to Japan like that of London’s to England. The new Japanese capital was surrounded by a network of other large (over sixty thousand) administrative, commercial and cultural centres, such as Kobe, Osaka, Kyoto, Nagasaki and Nagoya, and was endowed with a serviceable port in the expanding city of Yokohama. In Britain, the level of urbanisation (using a benchmark of those living in concentrations of ﬁve thousand or more) was no more than 13 per cent in the early eighteenth century, perhaps 15 per cent by mid-century and 25 per cent by 1801, by which time the ﬁrst industrial revolution was well under way. In the later eighteenth century London was the home of perhaps three-quarters of the residents of large towns in Britain. By comparison, the urban population of Japan by the mid-eighteenth century was possibly 22 per cent or more, including thirty or forty castle towns with populations of over ten thousand each. The contrast in urbanism is no measure of degrees of industrialisation. This is not the point of

Introduction 5 the comparison. Rather, we would emphasise that in Japan such huge urban centres generated a consumer demand of increasing volume and sophistication, ensuring that modern manufacturing technique from the West could potentially exploit large new markets. Urbanism of this sort meant that Japan beneﬁted from yet another distinct spatial force, the so-called ‘neighbourhood effect’. Within a neighbourhood of productive enterprise, pressure on laggards builds up as the number of innovative adopters grows. Such neighbourhood effects eased the passage of information, new cultural forms and novel techniques. More problematically, the city may well have generated some homogeneity of culture and institutions, some innovative social milling, side-effects which might well have eventually assisted the Meiji authorities in their efforts towards industrial modernisation. Such new cities were often dominated by samurai populations, newly divorced from the land and with little military function during the long years of internal peace and external isolation. Within such places literacy and talent might now be rewarded, and many middling and upper samurai solved the problems of service and income by adopting administrative and logistic functions. But centres of conspicuous consumption must be satisﬁed, and around the cities soon radiated a great system of supply. Merchant groups became the bridges that allowed arms and foodstuffs to pass into urbanism from ruralism. Merchants and artisans moved from older centres into the castle towns, and merchants often stood in close alliance with lords and retainers, for within the town they were protected and patronised, and from this base they became the moneylenders, the bankers and the adopted sons of their betters. Just as the upper classes of Tokugawa society became somewhat more divorced from the land, so too did transport improve, cities unify an emergent middle-class culture, and agriculture and artisanry respond to greater opportunities. Since the reforms of Toyotomi Hideyoshi (1536–98) during 1583–98, rice was the currency of extraction, the means whereby daimyo and retainers gleaned from agricultural producers up to 50 or 60 per cent of their rice output by the mideighteenth century. One hope for the peasant farmer was to diversify away from traditional crops in order to escape feudal taxation partially, and this was rendered more likely in regions proximate to the large urban centres or with good transport facilities. Perhaps this great move to by-employments permitted increased output in the absence of fast population growth, as an identifiable industrial base could be constructed by redeploying throughout the year an existing rural labour force. So there was less need than in Europe for any full-time movement of labour from agriculture to industry whether by attraction or by oppression. More certainly perhaps, in more prosperous by-employment areas many peasants were no longer under conditions of personal bondage but in effect became taxpaying tenants of the daimyo, a position more likely to generate ambition and mobility when the opportunity arose. At the same time tenancy and local markets together measured the spread of a money economy, opportunities for proﬁt and savings in many niches of the nation, and rising frustrations amongst those who partook of improvement but were impatient of the political centralisation that at least nominally constrained their actions.

6 The Japanese industrial economy In particular, long-time residence in the castle towns combined with internal peace to divorce many retainers from the land at the same time as their stipends were minimised by lords facing the pressures of forced conspicuous consumption. The decline of personal ties of loyalty was surely hastened amongst that minority exposed to rangaku or Dutch learning, which in embellished forms filtered through the communication systems of and between major centres. Such samurai groups provided social fodder for the late-Tokugawa dissidents, just as they were amongst those who would take industrial advantage of the commutation of stipends into lump sums after the Restoration of 1868. From all this we may paint a fairly colourful picture of change. By the end of the era, there was an escalation of political rebellion against the central regime, and this has been seen as evidence of a trapped modernity. Certainly Chosu and Satsuma were both leading areas of disaffection as well as foremost regions of commercial progress, the lord of Satsuma himself being a leading entrepreneur in pottery, in cannons and in the cotton spinning mill established in 1861 at Kagoshima on the basis of imported Lancashire machinery.2 With all this sketched out, we would not go on to argue that such changes in themselves were sufﬁcient to generate the industrial revolution of the Meiji era. Certainly the Meiji modernisers inherited from Tokugawa a high level of literacy, a sturdy revenue base of around 25 per cent of national income, a balanced external trade (with annual exports of silk and silkworm eggs, tea, cotton and seafoods amounting to some $10 million), an agricultural population increasingly converted to tenancy (to perhaps 30 per cent of the total) in a sector that now marketed up to 50 per cent of the total product. But for every ‘modern’ merchant in late Tokugawa Japan there were several others who happily depended on usury, patronage and adoption into the upper classes and who were thus hardly apposite agents of either political or industrial revolution. The most intelligent of the commoners were usually immersed in the traditional land-based commerce of rice sales and guild organisation, as treasurers of domains and in the extension of credit to the shogunate and daimyo, rather than engaged in new industries. Amongst such groups had arisen a strong ideology that justiﬁed commercial proﬁt in terms of service to the whole nation – this reﬂecting a samurai mode of legitimation – and had little to say about proﬁts from industry. Again, for every region beneﬁting from proximity to new forms of demand, there were regions whose modes of supply had not altered in generations and whose inhabitants spoke a language and saw a world map entirely other than that of their urban compatriots. Nor was the search for new avenues of wealth and expression as great as the fear of China, Russia and Western Europe, particularly after the British wars against great China in the early nineteenth century. In all, we must beware confusing some seemingly necessary inputs into industrial modernisation with an argument about sufficient causation. The timing and character of the Meiji Restoration of 1868 and the subsequent industrialisation process was some complex compound of long-term internal changes and relatively short-term factors stemming from an enormous escalation in the interaction with other nations and their products, technologies, institutions and ideologies. It is in this conjunction of forces that we might discover some explanation of early Japanese industrialisation.

Introduction 7 Our major clue into the workings of this conjuncture lies in the scale of things. In 1868 Japan was exceedingly large by world standards; compared to its thirty-odd millions of people, the population of Britain stood at around twenty-four million.3 It is highly unlikely that the system was effectively mobilised in its entirety as a prerequisite of interaction with the Western world. The story of industrialisation is more likely to lie with particular sites and agencies, the effective compulsions of those modernisers in government, bureaucracy, industry and commerce who together saw the need to meet the coming Western impact fully, rather than to allow an insidious, powerful foreign influence to end in system corruption, perhaps colonialism and subjugation. Those historians who might see such an imperative as merely the delaying of the logic of interaction to the awfulness of 1937–45 should not forget that in the interim years Japan joined the ranks of the industrialised nations of the earth. It was the only large independent nation to do so. Spatial factors may well have partially determined Japan’s political position within the economy of nations. Late Tokugawa, Meiji and early twentieth-century industrialisation was to be forged within a world of aggressive competition, vicious commercial cycles, imperialism and war. But Japan was tucked in nicely behind China. By the time that the early Western religious, military and commercial agents arrived there they had lost something of their former vigour, having spent themselves on the unfortunate mammoth of the global foreground. Through Meiji and later years many inﬂuential Westerners saw a distant and seemingly commercially benign Japan as a bulwark against Russian imperialism and then communism, a view extended in modified form in the early years of the Cold War, when the more positive implementations of the Western occupying forces in defeated Japan after 1948 were surely conditioned by expansions of Asian and global communism and centralised planning regimes. Japan was at least capitalist, if strangely so. The limited revolution that brought in the Restoration of the Emperor during 1868 has been seen as the watershed of political and economic history, not so much because it demarcated deﬁnite periods of economic growth overall4 but because it saw the working through of forces of courtly decay at the centre, rising ambitions with economic change in the provinces, and fears generated by the growing interactions with industrial Western powers from the 1850s onwards. The western and southern clans used the ready symbolism of the Emperor against a shogunate that was seen as capitulating to alien powers, and they developed the popular formula sonno-joi, to venerate the Emperor and expel the foreigners. A mass of reforms were crowded into a decade: administrative departments replaced the ﬁefs of the daimyo (lords) and the whole class of lords were amalgamated into the kazoku (the noble class as a whole) and removed of privileges, just as conscription abolished any special status of the samurai (armed retainers). After the defeat of the more populist counter-resistance of the Satsuma rebellion in 1877, reforms escalated in national education, industrial projects, taxation and moves towards at least regional democracy. The immediate effect of reform and Western interaction was a move of the foreign trade balance from a healthy surplus to a trade deﬁcit and an outﬂow of specie. The lack of protection from Western imports and the enormous demand for

8 The Japanese industrial economy Western products, raw materials, machinery and expertise meant that industrial modernisation was being led by imports paid for by Tokugawa accumulations of specie and traditional exports – tea and raw silk. The notion that trade stimulated industrialisation through increased demand has little to recommend it. Trade broadened horizons and provided the foreign inputs to later industrial production, and the deﬁcit years from 1868 to 1881 were probably the most important ones in Japan’s entire history. Failure of the regime, collapse of traditional product lines, devaluation of specie, any or all might have rendered the aims of modernisers merely pipe-dreams and the probability of loss of sovereignty at the hands of Western colonisers that much more likely. The rise of the Japanese cotton industry and import substitution policies after 1881 meant that Japan escaped the initial development trap, and during the years 1890–1913 the average annual rate of volume growth of Japanese exports stood at 8.6 per cent in comparison to a second highest rate of 5.1 per cent for Germany and 3.5 per cent as the world average. By the end of the Meiji era Japan had reversed the original trading pattern: 50 per cent of exports were of manufactured textiles and one-third of imports were of raw cotton, soon to be increasingly supplied by US producers. Behind this performance lay a concentrated utilisation of foreign raw materials, machinery and skills in the production of textiles and, then, of iron and steel, shipbuilding and general engineering industries. The large internal market for textiles represented an original dynamic, later replaced by foreign sales: by 1909 over 50 per cent of manufacturing industry in Japan was textiles, and of this some 65 per cent of total raw silk and 30 per cent of all cotton yarn was exported. G. C. Allen was always of the opinion that the merchants and business class of late Tokugawa were not deviant and energetic agents of change, but rather consisted ‘for the most part of mere ﬁnancial agents of the old regime, and few of its members were ﬁtted to act as entrepreneurs in the new era’ (Allen 1968: 31–2). The alternative agency was government itself. Recent scholarship has tended to downplay the statist features of Japanese industrialisation, but in doing so has often missed the point. Naturally, much of government direct investment and experimentation in modern industry was costly and mediocre in quality and effect. But the strong argument concerning the role of government was never centred on its direct industrial activities, but rather on its ability to hold the system together, gather the threads of Tokugawa assets, build infrastructure (something no one else would or could do) and spread information and incentives. This essence of government has rarely been challenged by those historians who seek out dynamic market forces prior to 1912. It was government that established the early railways (1872–87), the telegraphic and postal services (1869), port facilities and new road building. However much Mitsubishi railed against the government at that time, it was ofﬁcialdom stimulated by the British and American shipping monopolies that entrusted that old business group with the transportation of troops to Kyushu and Taiwan in 1874 and awarded grants of government ships free of charge, subsidised annually Mitsubishi’s operations, including special grants to maintenance of a naval college, and provided loans to the company for port equipment. Whilst government factories to an extent were designed to provide state needs for plate glass, bricks, cotton spinning, cloth

Introduction 9 weaving and so on, even more were such projects intended as models to be emulated and eventually transferred to the private sector. The famous Matsukata deﬂation of the early 1880s, which saw the selling-up of government factories to private interests at low cost, cannot be deﬁned as a moment of failure. No historian has shown successfully that the state had intended to retain control indeﬁnitely, indeed all statist declarations were of the opposite character, and the fact that government hung on to ownership or influence in military industries and in the case of the Hokkaido development project, founded by the authorities some ten years earlier, surely indicates that government saw its role as that of direction and persuasion.5 Those who would dismiss such points tend to consider Japanese markets (from consumer goods through to information) as they emerged from Tokugawa and the turmoils of the 1870s as somehow potentially optimal to industrialisation. Of this there is little convincing evidence. Perhaps the most important role played by the Meiji government lay in its successful resistance to foreign capital into the 1890s and its consequent adoption of a policy of information dispersal and rudimentary industrial planning. The industrial programme and the capitalisation of the previous annual expenditure on samurai stipends caused an increase in government debt by the late 1870s together with pressure internally to borrow from overseas (Inkster 2001). In fact moneyprinting and bond issues, land tax revenue (80 per cent of the total around 1880) and the subsequent deﬂation allowed the industrialisation of Japan to be essentially independent of foreign capital until well into the 1890s. The expenses of the SinoJapanese war of 1894–5 of ¥200 million were met with domestic bond issues, revenues from the occupied territories and indemnity. Subsequent expenditure on annexation of Formosa (Taiwan) and armament in the face of Russia was met mostly by indemnity, increases of sake, land and income taxation, and the beginning of foreign loans. The Russian war of 1904–5 cost ¥1,500 million and this led to a resort to great foreign borrowing, so that in 1907 50 per cent of the national debt was owed to foreigners, this falling to around 15 per cent by 1914. During the years 1896–1913 perhaps $800 million was borrowed from overseas, amounting to some 3 per cent of national income or one-third of capital formation (Emi 1963). What is most noteworthy is that such borrowings were late rather than early, were in the form of bond issues rather than direct foreign investment and represented a declining proportion of the total national debt of government at the end of the period. The indication is that government was inexpensive, that industrialisation was not based initially on large inputs of capital but rather of labour (Fei and Ranis 1964, Blumenthal 1980a) and that foreign borrowing when it did occur was absorbed in the growth rate and larger size of the total economy. The exclusion by law of foreign capital (and particularly of direct investment by foreign companies entering Japan) meant that a prime role of government was to substitute for the key functions played by these advanced external sources in other cases of late development, such as Germany or Tsarist Russia. Exclusion of direct investment entailed exclusion of foreign skills, organisational know-how and trading contacts and standards, all of which had to be provided by ofﬁcialdom. This does much to explain the industrial projects, large investments in education and industrial

10 The Japanese industrial economy training and hiring of paid foreign employees in mines, industry and the bureaucracy. The Ministry of Education, founded in 1871, enrolled 28 per cent of children in elementary schools by 1873, a ﬁgure that had risen to 46 per cent by 1886. Against a background of new university and technical institutes, large numbers of foreign technicians and educators were employed from 1872 at an average salary ten times that of the bureaucratic Japanese and costing up to 50 per cent of the budget of the Ministry of Industry in the years 1870–90, this excluding the large number of students and officials sent to study abroad. Agricultural improvement through the use of veterans and school graduates was joined by government employment of German chemists and Dutch agricultural engineers.

The short twentieth century 1912–71 Growth accelerated in the interwar years, averaging around 4 per cent overall, 7 per cent for manufacturing. These rates were the fastest in the world. In income per head terms, a better measure of efﬁcient performance, Japan grew at around 2.6 per cent in comparison to 1 per cent for Germany and about 0.8 per cent for the USA and the UK. Japan was now a net lender of capital to Manchuria, Formosa, Korea and China, and achieved a rate of gross investment as a percentage of national income of over 15 per cent, amongst the highest in the industrialised world. The supply of labour remained elastic, with the proportion of the labour force engaged in agriculture falling from 61 per cent in 1913 to 46 per cent in 1938. In terms of gold, export prices fell by 70 per cent during 1929–38, suggesting continuous low-cost production and an undervalued yen. Overall, government did not withdraw from the economy: government expenditure provided 40 per cent of net investment and many ofﬁcial loans went through the Industrial Bank of Japan to colonial enterprises, particularly the South Manchuria Railway Company. In these years subsidies went commonly to strategic production – sugar production in Formosa, chemicals and petroleum exploitation. Often these took the form of tax exemptions, but for the failing agricultural sector the support structure broadened to include price maintenance for rice and silk, relief measures in depression and grants for the formation of co-operatives. Tariff policy included high duties on chemicals and metals and in 1926 was extended to protect woollen spinning and weaving and rayon manufacture. More common and representative of the emerging Japan model were the controlling organisations such as the ﬁshery guilds, export inspections and quality controls, and the link between political parties and the great zaibatsu companies (ﬁnancial cliques) of Mitsui, Mitsubishi, Sumitomo and Yasuda. In return for government contracts and licences the companies provided normal ﬁnancing and special assistance to imperial expansion and development. During these years Japan became a colonial power. The 1905 Treaty of Portsmouth after the war with Russia eventually led to the securing of Korea, which became the colony of Chosen in 1910. In its colonies Japan pursued a very purposeful policy of exploitation through food pricing and forced exports, conﬁscations of public lands and food catches, forced migration of skilled craftsmen to Japan, the formation of an alienated elite who increasingly managed the colonial

Introduction 11 system at key sites, and land alienation and the creation of a new tenancy exposed to increasing rents. By 1936 trade with colonial North-Eastern Asia represented 40 per cent of Japan’s total, in comparison to only 8 per cent with non-colonised SouthEast Asia. The period began with only the beneﬁts of war. European conﬂict (1914–18) stimulated Japanese industries into the need to substitute for imports. Asian colonies of Europe were no longer being fully supplied from the West, and Japanese textiles ﬂowed into China and India, and indeed Europe itself, just as Japanese shippers and insurance companies reaped the beneﬁts of a new independence from the great foreign mercantile monopolies: income from freight carriage increased tenfold during 1914–18. Japan emerged from war as an ally of the capitalist West, and the blind eye turned by the West towards the aggression of the Siberian Expedition in 1918 (when Japanese troops penetrated Russian-controlled Siberia) together with the conclusions of the 1919 Versailles Peace Conference, which gave Japan a seat amongst the Big Five of the League of Nations, and the further Washington Conference of 1921, which awarded the right to war shipping in the ratio of three Japanese ships to every ﬁve British or American, were altogether eloquent testimony to the unfolding of a new Japan. But the answer to Japan’s longer-term performance lies in the combination of high levels of investment and technological borrowing with relatively speedy recovery from those commercial horrors that more or less afﬂicted all advanced systems in these years – the world recessions of 1920–1, 1927 and 1929–31 – as well as that which belonged to Japan alone: the Tokyo earthquake of 1923, in which half of the buildings of that great city were destroyed. Speedy recoveries were some function of low-cost inputs to manufacturing within a context of technological borrowing (Inkster 2001). This was associated with a shift from growth in consumer industries during the 1920s to very rapid growth in heavy industries after 1931 and with the stronger emergence of a dual industrial structure. Modernism was concentrated in key areas in receipt of large investments and skilled labour at high wages, traditional supply and demand continued to be satisﬁed by a much modified by-employment sector and a strongly growing system of subcontracting, which utilised an unskilled casual labour market at extremely low wage levels. Whatever the negative welfare outcome of these relations, they permitted fast industrial and economic growth, particularly through speedy recovery from adverse external impacts. The character of the Japanese system is best illustrated by the depression of 1927–31. The postwar speculative boom collapsed in 1927 with the failure of thirtyseven main banks, and the zaibatsu bought up bankrupt ﬁrms. As the Diet’s two major parties were allied to Mitsui and Mitsubishi, the anti-zaibatsu feelings of small business were already translated into anti-Diet politics prior to the onset of the heavy depression of 1929. The collapse in industrial production was triggered by the fall in demand for Japanese silk products in crisis-ridden America. The fall in exports led to deflationary policies that aggravated market conditions and encouraged a movement of industrial labour back to the land, adding to the negative effects of already sinking agricultural prices. As at this time some 40 per cent of the value of the produce of the tenant farmer went to the landlord as rent, the price fall hit a wide

12 The Japanese industrial economy range of rural people. Rural discontent was worsened and politicised by colonial agrarian imports, and a period of riots, strikes and lockouts was compounded by bad harvests in 1931 and 1932. A rise of extreme nationalism was generated principally outside of Diet politics because the politicians were seen as linked to those zaibatsu who had gained from the depression and as promoters of an inefﬁcient economic policy (for instance the return to the gold standard in 1930 at supposedly too high a parity, or the cutting of civil service salaries). Earlier notions of a liberal reconstruction of Japan along more Westernised lines were stillborn in the rise of an anti-capitalism that preached national socialism at home and imperialism overseas. Peasants and farmers hit by depression were the family members of soldiers and ofﬁcers of the Japanese army. The period from late 1930 onwards saw an inexorable collapse of Diet politics, a ﬂurry of assassinations and coups, a rise of Shintoism associated with extreme nationalism in school and college texts and curricula and the rise of military expenditure in the budget towards the 50 per cent mark. Yet Japan recovered from depression very quickly, and subsequent economic growth was at a higher rate than that of the 1920s or of other nations (Blumenthal 1980b: 10–25, Nakamura 1971). From December 1931 the government turned from conventional deﬂationary policies towards more expansionary instruments, using deficit budgeting, armaments expenditure and relief operations, and an effectively lower exchange rate. But this is an unlikely contender as the chief explanation of Japanese ﬂexibility in comparison to other industrial nations at that time. The base of 1930s growth was a dual industrial structure whereby small-scale producers and casual workers took the brunt of the down-turn, continuing to work under appalling conditions and on short-time or poor contracts, while the large ﬁrms reduced output but did not move to full unemployment of their skilled workers. This system was maintained by the toiya merchants, those who contracted with a variety of small manufacturers to produce a general portfolio of goods for systematic sale when needed. Although seen as relics of Tokugawa production, such merchants allowed ﬂexibility and quick recovery from depressions at the cost of the unskilled, and at the same time were at the forefront in the internal diffusion of new technologies, especially those associated with the electrical industry. Improvements in power within industry, extensions of efficient railway transport and the introduction of machine tools increased the quality of output of the skilled labour force. In the years 1929–33 annual imports of machinery and equipment averaged at around ¥120 million and fed the growth of Mitubishi Heavy Industries (shipbuilding, steel works, power stations, locomotives), Hidachi Engineering (locomotives, steam turbines, motor cars, electrical equipment), Shibaura (Mitsui) Engineering Works (electrical machinery), Kawasaki (shipbuilding) and Miike Machinery Works (mining machinery and electric motors) amongst several others, most manufacturing under licence from American or European ﬁrms throughout the 1930s. This combination of transfers of technique, low labour costs and infrequent shut-down of modern plant allowed a ready recovery from depression under the auspices of the post-1930 military-industrial programme. Japan lost one quarter of national income as a result of the Second World War and the longer aggression against China (1931–45) (Minami 1986: 181). The

Introduction 13 impacts continued after 1945 under the government of the Western allies, the Supreme Command Allied Powers or SCAP (1945–52), which rapidly introduced reforms in labour law, land tenure and industrial structure (with the dissolution of the zaibatsu) that were designed to introduce democracy rather than increase economic growth. The establishment of the Diet as the core of the democratic process at least formally moved the basis of sovereignty from the imperial system and towards popular accountability. During 1945–8 the healthy foreign trade balance of the 1930s had been converted to one in which exports as a percentage of imports averaged at around 35 per cent, and at this time income per head was around 60 per cent of that of the mid-1930s. Yet in the period 1955–70 Japan’s real national income grew at the staggering rate of 11 per cent per annum. Given a relatively slight population increase, this measured a rapid rise in the wealth of the nation. Although this growth was aided by fortuity – an undervalued yen, the Korean war from 1950 which sucked in military supplies from Japan, the long-term growth impacts of some SCAP institutional reforms, general expansion in the world economy – the underlying factors still surrounded technology transfers from the US and Europe, which induced very high rates of internal investment: gross investment as a percentage of national income rose from a high 25 per cent in 1955 to a phenomenal 40 per cent in 1969 (GATT 1971: 3–5).6 Manufacturing led this period quite markedly, the sector expanding from 22 per cent of output in 1955 to 40 per cent in 1969. Payments for technology imports rose in the same period from $20 million annually to $120 million by 1961 to $350 million in 1969. Blumenthal and others have argued that technology importing was complementary to increased domestic research and development throughout the high growth period – expenditure on R&D rose from $475 million in 1960 to $1,950 million in 1968, and more than half of this was carried out by private enterprise, a much higher figure than in other nations (Blumenthal 1976, 1979, Inkster 1993, 2001). Chemicals, machinery and transport equipment, the fastest-growing industries, absorbed most technology transfers and most R&D expenditures. Together with a surplus supply of labour that was disciplined and ready to move between sectors (for example, employment in services grew from 13.6 million in 1955 to 22 million in 1969), technology transfer dictated the overall trajectory of Japanese industrial and economic growth in these years. In particular, export growth might be seen as a reﬂection of such factors rather than as the cause of fast growth – new technology and organisation (much of the latter initiated by the SCAP occupation forces) in manufacturing led to a growth of labour productivity at an average annual rate of around 10 per cent (15 per cent between 1965 and 1969) and it was this that dictated the competitiveness of Japanese goods in foreign places. Imported techniques and a high investment rate created a new-vintage system in novel sites designed in terms of appropriate scale and organisational criteria. Other industrial nations did not gain the advantages of this productive combination to anything like the same extent. This was a golden age in which Japan reaped the benefits of a renewed relative backwardness in that inputs of capital and labour could yield bigger outputs than in other nations.

14 The Japanese industrial economy It follows from our argument that the most important aspects of public policy were not those relating to foreign trade – however marked they seemed at the time – but rather those that aided technology transfer, encouraged a high rate of savings and investment and increased R&D in manufacturing towards levels higher than would have been reached under normal market forces. Indeed, the most profound of policy instruments relating to trade at that time was the undervalued yen combined with the high elasticity of yen-priced goods; that is, a small fall in Japanese export prices at this time led to large increases in the volume of exports (Shinohara 1962: 33, 68–75, 110–205, Kojima 1977: 9–17). Yet this was the period of the International Monetary Fund and an international fixed exchange-rate system, so that the exchange rate was not that dictated by speciﬁcally Japanese policy-makers. Indeed, US policy at Bretton Woods, which established the international exchange system from 1944 to 1971–3, and activities during SCAP, together with the huge traded supplies of high technologies, provided just the necessary inputs to the Japanese trajectory. We might conclude that US global policy was of more importance than any Japanese trade policy in creating a high-growth, commercially competitive Japan. Although debate continues on this theme, there is a case to be made that an imperial-based bureaucracy remained at the real heart of the political system, and that this provided a continuity of policy regime, of networks and mutual understandings, that together may not have yielded a great democracy but did beget growth and ‘growthmanship’, a consensus on economic growth as an ‘ideologically neutral focus for the whole society’ (Edwards 1997: 7, Stockwin 1982, Johnson 1982, 1984). Within this environment developed indicative planning, including the famous Income Doubling Plan of 1961–70, and the crucial networking and suasion role of the Ministry of International Trade and Industry, which by the 1960s was in a unique position from which to guide (but not ﬁnance) micro-industrial policies in growing industries. Low government spending on social services and the military reduced current expenditure below that of most other nations at that time. Birth control policy and encouragement of labour movement from agriculture together increased the population of working age in manufacturing.7 Investment in public utilities (transport, power, water) created positive external economies in manufacturing and required sophisticated imported technique. Household savings were channelled into productive investment through banks and post ofﬁces and encouraged by a policy framework that neglected expenditure on social services, particularly unemployment and health insurance and old-age pensions – it is difﬁcult to separate such ‘forced’ saving from that due to natural consumption propensities derived from ‘traditional cultural practices’. By the later 1960s personal savings were twice those found in the USA despite the latter’s higher personal income levels.

Japan in the modern climacteric 1971–2001 At the beginning of the 1970s several forces combined to move the economy on to a more genuinely expansive trajectory. Although core technology continued to be imported into key new industries, particularly microelectronics in all its many forms,

Introduction 15 automatic systems, biotechnologies and marine technology, there is a real sense in which the years since 1971–3 have represented a catching-up from previous relative backwardness and have acted as a watershed equivalent to that of 1868–81. The global abandonment of fixed exchange rates – initiated when the gold convertibility of the US dollar was terminated in August 1971, ushering in a period of floating currencies in an effort to effectively devalue the dollar – coincided approximately with the OPEC crises which hoisted the price of one of Japan’s principal productive imports, crude oil. General commercial crisis together with an emerging Japanese trade surplus prompted pressures (mainly from the USA) on Japan to increase the value of the yen and liberalise its trading regime in order to allow greater imports of products and of foreign capital and enterprise, just that element so avoided in the crisis of the Meiji era. Internally, a growing labour shortage in manufacturing began to exert some pressure on wages and a need to seek new sources of productivity in order to retain export competitiveness. By the mid-1980s the rising yen had not dampened Japanese exports but had encouraged a massive boom in the export of capital from Japan: foreign assets seemed cheaper in Japanese yen terms just as Japanese enterprise began to produce abroad in order to escape the higher costs of production at home. A newly voiced middle class wielding very significant consumer power began to demand changes in welfare policy and in policies to reduce environmental hazards relating to space, high rents and pollution, and the character of cityscapes. An outcome of this was a new pressure on the monopolistic Liberal Democratic Party to operate a more open politics with less cronyism, corruption and cultural conservatism. It is hardly surprising that such a combination of circumstances should have given rise to predictions of slower growth from around 1970. In fact, the expansion of the economy outwards, associated with large investments in labour-intensive manufacturing in Asia and increased productivity from technological innovation within Japan itself, and a continued high investment rate, caused the rising yen to keep pace with a growing national income into the beginning of the 1990s. The impacts of the structural features of the 1970s, which we might summarise as a move towards a complex maturity, were waylaid until the last decade of the millennium. Most significantly, the interim years of c. 1970–90 saw the most expansive economic growth in Japanese history. If there was a phase of Japanese capitalist expansion in the modern era, then this was it. Japan’s current account balance moved from a surplus of $20,799 million in 1983 to one of $57,157 million in 1989, to one of $117,640 million in 1992 (Japan 1991: 47, Japan 1994: 46). As the yen rose in value from its 360 to the US dollar in 1970, through the speedy rise of 1985–6 to a rate of 168, to the high of 110 in 1993, so too capital poured out of Japan as low labour costs were sought in Asia and global assets were purchased by Japanese yen-holders. Whilst from the Japanese end this appeared as an incremental shift, in smaller receivers of Japanese capital it acted as a marked new element: thus from 1970 to 1971 direct Japanese investment into Australia tripled and went mostly into resource projects such as iron ore, coal, alumina and woodchips in the form of joint ventures with substantial local equity participation (Senate Standing Committee 1973: 63–6). This change in one comparatively micro-bilateral relationship

16 The Japanese industrial economy represented very well the general shift of the Japanese growth trajectory. Japan’s direct overseas investment moved from a total of some $12,000 million during 1985 to $22,300 for 1986, and to a high of $67,540 during 1989 (Japan 1991: 56, Japan 1994: 54). Yen revaluation had failed to curb Japanese exports but had created a massive export of capital from Japan, one that entailed the purchase of real estate, ﬁlm companies, automobile plants and oil reﬁneries from the USA to Indonesia (Komiya and Wakasugi 1990). Although foreign direct investment (FDI) inﬂows into Japan were less than 1 per cent of world FDI inﬂows by 1997, Japan’s FDI outflows constituted around 6 per cent of total world FDI outflows. Given that Japanese national income represented around 7.5 per cent of world income, it follows that Japanese expansionism still showed its very late characteristics. That is, the Japanese totals remained small in proportion to world levels, especially the levels of older investors such as the UK or the USA: they tended strongly to a balance in favour of Japan, and tended equally to be concentrated in non-manufacturing areas and in newly industrialised Asian nations (Drysdale et al. 1999: 2–9). Such characteristics combined to make this expansionist phase extremely visible and subject to a great deal of world criticism, especially from American commentators, who saw Japan’s commercial expansion both as a threat to the American economic system and as a measure of the failure of US policy-makers to curb Japanese trade through revaluation of the yen upwards. Into the mid-1990s the global pundits were still referring to the coming new century as ‘the Asian Century’, a time of a new, perhaps more humane, capitalism located in new places and new industries. The industrial and economic growth experience of Japan in the rest of the 1990s was such that the ‘Japan model’ at last fell from grace – an annual average rate of growth of over 4 per cent during the troubled 1980s fell to around 1.5 per cent during the terrible 1990s. Indeed, in ofﬁcial quarters in the USA and in some European nations, Japanese industrial performance, foreign trade and government economic policy were all seen as contributory to global malaise, increased uncertainties about defence policy in the Paciﬁc arena and exacerbations of the ﬁnancial disasters in East Asia more generally. The seeming contemporaneous ‘recovery’ of the US economic system, which attained a 3 per cent average annual rate of national economic growth for the decade, conﬁrmed a feeling that the global talk of a Paciﬁc or Confucian industrial ‘renaissance’ had been voluble rather than lucid, and that the Western sceptics who had criticised the ‘Asian model’ for inattention to conventional public policy, peculiar institutional linkages between public and private sectors, and immature market development, had shown better historical judgment (World Bank 1996, Economic Commission for Europe 1997, Hamlin 2000).8 Seen as caused by avoidable human error, and involving a great deal of injury and fear, the nuclear accident at the fuel-processing plant in Tokaimura, Ibaraki Prefecture, on 30 September 1999 appeared to demonstrate the rise of a new, vulnerable and misguided Japan. In fact, for industrial Japan itself most problems follow from difficulties of international relations, the slow-down effects of a greater industrial maturity, increased costs related to environmental limitations (especially on space),

Introduction 17 demographic down-turn, and the failure of the political system to provide the growth focus of earlier years. Although this certainly represents a considerable list of constraints on growth, several points might be made. First, even in combination, these constraints do not equal a collapse of the Japanese industrial system, which still beneﬁts from the earlier advantages of a skilled labour force, good industrial equipment and infrastructures,9 and a relative quickness of technological and institutional adaptation and innovation, at least within industry. Second, the signiﬁcant shift to services, real-estate and external commercial transactions relating to trade, capital, insurance and ﬁnancial services more generally, whilst perhaps dramatic in a comparative historical context, is part of a general process of catchup and maturity that can be identiﬁed as occurring from around the early 1970s. Third, physical environmental constraints are perhaps more severe for Japan than for many industrial systems in Asia or elsewhere – densities and congeries which were advantageous to earlier industrial development have become cost-inducing limitations. Fourth, changing external geopolitical and economic circumstances have been beyond the control of Japan entirely. Particularly this is true of the industrial and commercial development of China. Demographic transition, which has added to the social costs and responsibilities of central and local governments, is hardly the outcome of faulty government policy or of the waning of entrepreneurial zeal. Yet it is of great import: the population of 126 million in 2000 is projected to drop to 101 million by 2050, one third of whom would be older than 65. This alone would create sustained negative industrial and economic growth. Finally, although shaky in operation, under different leaderships and philosophies, central government has, in fact, attempted more of a neo-Keynesian growth-inducement and employment policy than would have been acceptable in other, industrial mixed economies. Indeed, it is the budgetary and commercial implications of such official policy that has brought so much criticism from Japan’s industrial competitors. But it is also precisely in this decade that the Japanese system has shown a greater tendency towards ﬂexible entrepreneurship, the development of an independent venture-capital market, especially associated with new Internet and related technologies, admittance of foreign companies and investors involving a variety of joint agreements,10 and something of a breakdown in old political monopolies and corruptions. In addition, during this decade the external economy continued to expand; in October 1998 the Obuchi government pledged over $30 billion in loans to the hardest-hit of the Asian crisis economies, and Japan remains the largest foreign aid donor in the world. If the Japanese bubble economy collapsed in 1990, there was no identifiable turning-point towards fast growth up to the year 2000. With an average annual growth of around 1.5 per cent for the decade, and deﬁnite negative growth in 1997 and 1998, the Japanese economy has suffered its worst long-term growth performance since 1868 (Economist, 27 November 1999: 156–7, Samuelson 2000). The collapse of the real-estate and stock markets has continued into the new century. In industry proﬁts have been falling and unemployment rising and wages declining. The resultant fall in domestic consumer demand has tended to encourage an

18 The Japanese industrial economy increase in exports, a further point of contention with the USA and Europe, but also increasingly with industrialising East Asia. A major criticism of public policy centres on the failure of government to turn the trade surpluses and yen appreciations of the 1980s into increased domestic demand (Okita et al. 1987). It is commonly argued that this failure results from the intransigence of protective legislation across farming, banking and retailing as well as manufacturing, which has been designed to extend employment and investment security. Such protectionism, it is claimed, has promoted excess capacity in manufacturing and forced budget-deﬁcit spending as the only feasible public policy strategy. Only belatedly are major production companies reducing capacity: at the opening of the year 2000, fifteen chemical plants were reported as cutting capacity, and Nippon Telephone and Telegraph planned to eliminate some 21,000 jobs by 2003. The G-7 Tokyo meetings in January 2000 were used by Europe and the United States to advise Japanese policy-makers further on the need for greater deregulation and ﬁnancial planning. At around 105 yen against the US dollar, both Japanese and international commentators have speculated on the negative impacts on the world economy of further yen appreciations, a position reversing that of the 1970s when American policy was wholly geared to raising the value of the yen from the very low level of the golden age. In opposition, the Asian industrialisers are equally wary of any fall in the value of the yen towards the 150 to the dollar mark, for this might quickly reduce Asian sales to Japan and shrink Japanese investment in Asia, worsening the region’s debt problems.11 The value of the yen in 2000 epitomised the position of Japan in the world. The 1990s witnessed a furthering of a ‘new dualism’, with highly regulated older industrial areas such as steel and shipbuilding falling into shrinking markets,12 followed by automobiles and consumer electronics, but increasingly offset by the fast emergence of smaller, flexible high-tech and services companies led by entrepreneurs who have escaped the regulations of the larger enterprises. Although major ﬁrms such as Sony, NTT, Shin-Etsu Chemicals and Fujitsu have successfully moved over to restructuring into new high-tech enterprises and subsidiaries , the socalled ‘new economy’ is better encapsulated in the brashness and zeal of Softbank and its founder president, Son Masayoshi, aged 40. Compared to the earlier modern enterprises, both services and electronics firms of the new economy tend to be smaller in size and stimulated by a wave of foreign money and Internet brokerage. Official figures have recently shown that firms with fewer than ten employees account for over 60 per cent of retail sales on the Web. The failure of the bubble has meant that the major Japanese banks have accrued a huge amount of bad debts, most of which originated in the earlier, basically nonindustrial, investment booms of the 1980s but have been continued under the protection of old regulations which have curtailed market competition in the financial sector. This situation was worsened in 1997–8 with the impacts of the ﬁnancial crisis in Asia and the continued fall in residential and commercial land values.13 Much investment expansion had been into industrialising nations in the region, and this continued through the period 1992–7. By 1998 some $125 billion had been placed at risk in Asia. This combination of circumstances meant that by

Introduction 19 late 1997 the large banks of Japan faced approximately $658 billion of nonperforming loans, around 16.3 per cent of GDP, this representing a huge wasting asset trapped outside the operations of the traditional industrial sectors (Fukui and Fukai 1998: 24–33, Lincoln 1998: 57–62, Krugman 1998, Iwata 1999: 55–73). This series of relationships led to large bankruptcies in the ﬁnancial sector, failures and bail-outs involving prestigious banks or ﬁnance houses such as Takushoku Bank (1997),Yamaichi Securities, Sanyo Securities and the Long-Term Credit Bank (late 1997 onwards). In addition, this same grouping of large ﬁnancial enterprises was further damaged by an outburst of corruption and racketeering charges and scandals embracing also Mitsubishi, Hitachi, Toshiba and Nomura, and involving the Ministry of Finance. Many of these related to blackmailing and stockholder payoffs of the sort described in Chapter 3 (pp. 47–9).14 Towards the end of 1999 banking chose to lever itself out of such a quagmire through mega-merger. The Industrial Bank of Japan, Dai-Ichi Bank and Fuji Bank planned to create the largest bank in the world by forming a joint holding company, one which would eliminate redundant investment, close branches, phase out jobs, and write-off problem loans. Against this background, the public sector has attempted several methods of demand stimulation. During the decade the government has pumped approximately ¥82 trillion or $683 billion into the economy, mainly by public works projects. By early 1997 the accumulated state debt had reached ¥416 trillion, or about 90 per cent of Japan’s GDP in that year. In the later years the monetary authorities maintained very low interest rates in order to stimulate investment activity: by September 1998 the Bank of Japan discount rate fell to its lowest level ever at 0.25 per cent. At the same time taxes have been kept relatively low. This combination of instruments yielded an annual budget deﬁcit of 3.4 per cent of GDP in 1997. The major criticisms of government economic policy in 2000 advocated drastic moves away from the expensive bolstering of inefﬁciency, and towards ﬁscal reform and an industrial policy that would assist the restructuring of large enterprises15 by revising outmoded labour laws, and a movement of government spending from construction to manufacturing. Interestingly, in an article published in The New York Times in April 1999, Prime Minister Keizo Obuchi agreed that ‘Japanese companies can no longer afford to make social stability a priority and keep workers on the payroll regardless of earnings’. But electoral politics alters moods. In December of the same year, Obuchi was reported by the Far Eastern Economic Review as restating the more conventional view that the ‘strengths of Japanese-style management should be retained’ and applauding the tradition whereby ‘Japanese companies have a strong sense of responsibility to society’ (Dawson and Chanda 1999: 17). A popular explanation of industrial slow-down lies in the failures of the political system to maintain its traditional ‘growthmanship’ orientation. Thus in 1998, Prime Minister Ryutaro Hashimoto was blamed for failing to come to grips with the banking troubles, and much of this uncertainty could be ascribed to the weakening of the power of the Liberal Democratic Party,16 especially as evidenced in the upperhouse legislative elections of July that year, when the LDP was left short of a majority, resulting particularly from the loss of support in the great industrial centres

20 The Japanese industrial economy of Tokyo, Osaka and Nagoya. The consequent rise of Keizo Obuchi to the LDP presidency and hence as Prime Minister involved the formation of an ‘economic reconstruction cabinet’ which set out to resolve the banking crisis by purchasing the stock of weak banks in order to recapitalise into productive concerns. Later in the same year the government increased the spending programme and reintroduced a limited tax rebate (Bristow 1998, Sender 2000). One perspective, then, on Japan in the 1990s would be to lay at the door of politics the faults of the economic system. In turn this might be seen as an inevitable function of time passing, which has resulted in a complete removal of the late-development imperatives and tactics of ‘growthmanship’, a recently risen and powerful middleclass voice, and an erosion of the twin mechanisms of technological lag and institutional innovation. These three processes together represent the underlying internal constraints for the Japanese industrial economy into the new century. In time, the system has transcended its own ‘developmentalism’. At the same time, more than for any other large industrialised nation, growth in Japan is severely constrained by its environmental costs and the geopolitical location of the nation in developing East Asia. Together these two factors might be visualised as corresponding exogenous constraints. Whether these five important underlying constraints can be converted into working conditions for future economic success has yet to be established.

Honing an argument From the rather rolling terrain that we have already surveyed, it should be clear that the present text is wary of all simplifying models of Japanese industrialisation, whether these be economistic or culturalist. Similarly, the text departs from the only position on which Jacobs and Braudel seemingly agree (Jacobs 1958, Braudel 1985).17 That is, it is not necessary to argue that those features which separate Japan from Asia also somehow bring Japan closer to the European experience. To argue with either Jacobs or Braudel that bureaucracy in China contrasted with pluralism in Japan and held back industrial and social development does not, even if correct, in itself permit a slide towards an identification of Japan with Europe. Such an identity must be independently established, and we would suggest that Japan in fact sits neither immediately to the left of Asia nor immediately to the right of Europe or the West, a position to which we return later. The natural scientist T. H. Huxley once gibed that the social scientist Herbert Spencer’s idea of a tragedy was a deduction killed by a fact. Somewhat more recently, Robert Solow has argued powerfully that, although economic activity itself is always ‘embedded in a web of social institutions, customs, beliefs and attitudes’, much formal analysis proceeds in implicit denial of this, ‘as if economics is the physics of society’ (Solow 1985: 328). Something equal to this may be said of those cultural or social historians who find in one feature or model the deciding demarcation, the ﬁnal explanation of Japan’s industrial success. This does not mean that anything goes. The intention of the present text is to point to the importance of the relationships between what might be thought of as

Introduction 21 physical factors or assets on one hand, and the institutions within which – and agencies through which – such assets are estimated, gathered, protected, valued and dispersed. Sometimes such institutions are markets. Sometimes they are not. Historians are periodically faced with a barrage of institutional arrangements which decisively impinge upon the activities of economic agents but which exist only in terms of law, power and the nation state. On two very large canvases David Landes has pointed to a number of non-market institutional factors which induced the innovative activities of the European bourgeoisie. Here the arbitrary actions of the state were minimised, protection of property was optimised and individual contracting between ‘free’ economic agents thereby replaced force and obligation (Landes 1969, 1998). In contrast, with equally massive scope, Joseph Needham might have argued that China in many ways represented a more viable alternative setting for industrial development, witness its high levels of literacy, classical educational system and meritocracy (Needham 1986). We suggest here that, in cases of late development and technology transfer, the relations between market and non-market forces are systematically different from those found in either the earlier, Western industrialisers or in those nations which do not pass through a speciﬁc phase of industrial transition at a later date, whether this be the result of missing assets or colonisation. In this we develop, although we do not directly follow, several of the ideas of Alexander Gerschenkron (1966). Of necessity the nation state is our unit of analysis, and national development is a term which encompasses social and political development as well as industrialisation.

Analysing the industrial economy Throughout this volume we will rehearse an approach to the dynamics of Japanese industrialisation which revolves around the importance of technology, institutions and the historical interventions of the state, particularly in so far as the latter helped determine the character of the relations between Japan and other, more advanced industrial systems. Chapter 2 surveys major aspects of Japanese industrialisation and illustrates the unhelpful character of many existing general approaches, particularly those which conﬁne explanations solely to economic factors. Chapter 3 treats broadly of Japanese society. Some years ago the then British Prime Minister, Margaret Thatcher, told her public that there is no such thing as society. There are only individuals. A majority of Japanese believe the exact opposite about themselves. There are no such things as individuals. There is only society. Many analysts have concluded that this stark difference of image reﬂects a real difference in the manner in which Japan operates in comparison to Western nations more generally, that in the way in which identity is constructed lies the secret of Japanese industrial efﬁciency, if not economic growth. The treatment of the social underpinnings of Japanese industry takes up this issue and argues for the importance in Japan of key institutions. Centring on theories and processes of technology transfer, Chapter 4 argues that such a theme best explains Japanese success but is understandable only in terms of contemporaneous processes of institutional innovation. Furthermore, such

22 The Japanese industrial economy institutional change was itself at least partially dependent upon the use of foreign models of enterprise structure and behaviour. Thereby, ‘late development’ conditioned both technological progress and institutional development. It is this which serves to render problematic the historical relations between Japanese culture and Japanese industrialisation, the subject of the following chapters. Chapter 5 evolves an approach to cultural engineering, visualised as an historical process wherein the state initiated a manipulation of traditions and values in order to reduce the ﬁnancial and political costs of late industrialisation. Japanese success followed not merely from the possession of certain cultural assets but from their deliberate mobilisation, especially across periods of particular technological and institutional transformation. But industrial modernisation was sustained in Japan because this process did not remain locked into the fortunes of the state as such, but was passed on into the culture of private enterprise itself. Chapter 6 takes up the theme of Japanese enterprise culture in more detail, and agrees with other commentators that much of Japan’s modern advantage may well have rested on key features of Japanese enterprise organisation and behaviour. However, for reasons that may now be obvious, our argument departs greatly from any approaches which begin with such features as explanations of Japanese economic performance. Chapter 7 reverts to a more explicitly comparative perspective. Clearly, Japan is an exception, but it is not necessarily one which proves any golden historical rules. Indeed, whether juxtaposed with the West or with China, Japanese historical experience tends to strip most grand theories of their power as tools of historical explanation. Comparison, or setting Japan in global historical context, seems to force out a mixture of the mundane with the profound. Japan’s industrialisation may well have depended on its escape from colonialism, but if so this was itself an outcome of the conjunction of mundane factors of timing, location, topography, climate, density of settlement and efﬁciency of transport and communications, as much as it had anything to do with social structure, political regime or even human resources. Furthermore, such relatively basic features of historical Japan may have been of very great importance in conditioning Japan’s subsequent industrial success, particularly perhaps in providing a good environment for the speedy mobilisation of scarce resources.

2

Interpretations of Japan

Late development During most of the nineteenth and twentieth centuries the industrialisation of late starters under conditions of relative economic backwardness was replete with tensions and traumas, often disabling internal political conﬂicts, and the tortuous decisions and interventions of the modernising state itself. Across an array of cases, international commodity and investment ﬂows and the constant threats of political encroachment posed massive problems for late developers and for the social elites and interest groups within them. This latter distinction is of real importance. It was surely rare indeed that a large ‘nation’ somehow ‘responded’ to the West. In nations or empires such as Russia and Japan, with their many millions of peoples living in relative isolation, industrial modernisation resulted from the activities of a relatively small elite whose own motives were prompted and directed within the very process of international interaction itself.1 From the middle of the nineteenth century, the growth in power and inﬂuence of such early industrialisers as Britain, the USA, Belgium or France, together with the increased availability of investment funds and advanced technologies in the growing international economy, sparked political reactions and commercial responses amidst a group of European late developers. Even amongst nations with already established commercial or cultural links to the industrialising core, late development was hardly a matter of smooth, organic transition. Huge injections of foreign capital, the organisation of joint ventures and of migrant labour, and the large importations of advanced industrial and transport equipment were closely associated with the new initiating and controlling roles of the nationalist state at all levels of intervention, from tariffs and direct investment in model installations, through technology search and application, to labour regulations and training institutions. Modernising technological projects in the metallurgical districts of south Hungary might involve a great range of advanced machinery from several nations, in combination with a labour force of thousands of workers and skilled technicians drawn from Britain, Germany, Italy and France as well as from Hungary, Romania and Bulgaria. From Bismarck onwards, most leaders of late-developing nations visualised their task as the harnessing of scarce resources and their concentration within new projects and institutions as a requisite of military industrialisation programmes.

1 2 3 4 5 6 7 8 9 0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

24 The Japanese industrial economy During the attempted industrial drives of relatively backward nations there was thus a higher likelihood of income distribution shifting quite speedily towards capital and away from consumption to a greater degree than had occurred in early-start nations at the time of their own industrialisations (Gerschenkron 1966). Within many parts of Europe, Russia and elsewhere the need for a concentration of resources in order to effect technology transfers into heavy transport and military industries caused the strategic role of government to embrace both industrial enterprise and political control in a much more intensive manner than ever witnessed before in world history. But the transfer of technique is not readily divorced from the transfer of ideologies and ambitions. The social displacement and the devaluation of existing assets of entire social groups and classes, which necessarily occurred within late developers as they sought industrial transformation, together with the general fear of the unknown amongst even wider social and religious groupings, created environments within which grew new ideologies, interests and political alternatives. We argue here that it is precisely in this context of industrialisation under conditions of relative economic backwardness that the Japanese industrial experience belongs. A principal trigger was the expansion of the leading early starter, Britain, into China during the British industrial revolution. The British seizing of Singapore in 1819 and the growing tensions in the opium trade with China signiﬁed to many, including Japanese observers, that the next focus of British commercial interests would be in the Far East. The British fought and defeated the Manchu dynasty in the Opium Wars of the 1830s, and by the Treaty of Nanking (1842) forced upon China the ﬁrst of a great succession of unequal treaties between the industrial and commercial West and the agrarian and commercial East. In Japan the movement towards political reform and military-based industrial change was undoubtedly hastened by the expansion of British interests and the collapse of the traditional authority of the Chinese empire. The recurring worries over Russia remained evident in the writings of Hakumin Aizawa , but Shinen Sato in his Kondo Hisaku emphasised that a China weakened by the West exposed Japan to a new challenge. Shozan Sakuma gave early warnings of the danger of Britain, whilst others, such as Genzui Kusaka, made wary study of the British techniques of warfare in China.

Technology transfer As we have already suggested, technology transfer across nations does not normally lead to sustained industrialisation. The history of even eighteenth-century Europe is a history of failed technology transfers to France and to Britain, as well as in Spain or Russia. Very few nations have managed to repeat the performance of the clutch of a dozen nations that succeeded in industrialisation on the basis of such transfers prior to 1914. For reasons outlined, relative backwardness is by definition a disadvantage. In terms of its speciﬁc transfer components, apart from the obvious problems of capital cost and lack of precise information, the phenomenon of technological interrelatedness means that single components of a production process can seldom be simply replaced or ‘borrowed’ in a piecemeal fashion. The higher

Interpretations of Japan 25 the level of sophistication of the technologies, the greater the difﬁculty of transfer. Technology transfer requires organisation and involves some calculation of risks. As we have suggested, for a host of reasons forward planning is seldom found in relatively backward nations undergoing industrial modernisation and open to foreign ideologies and political inﬂuences. Yet Japanese industrial success was based on just such technology transfer. For Edwin Reischauer, ‘Western science and cheap oriental labour made an excellent combination for low-priced production’ (Reischauer 1964: 92). For Sumihito Hirai ‘the first step to economic development was to learn and imitate Western technology’ (Hirai 1978: 16). In an extremely inﬂuential account, two of the most distinguished economic historians of Japan find a positive feedback mechanism between technology transfers and institutional innovations across the period from the nineteenth to the later twentieth century. Ohkawa and Rosovsky note that only a well functioning ‘socio-political infrastructure’ can close the gap between advanced imported technologies and their efﬁcient absorption, and that ‘Japanese economic history shows both the signiﬁcance of a rapid absorption of imported technology and also the development of specific institutions that facilitated the entire process’ (Ohkawa and Rosovsky 1973: 219). The econometric historian Ryoshin Minami has similarly suggested that ‘the rapid growth of Japanese manufacturing, compared to that of other countries, was largely dependent on rapid technological progress, as a latecomer Japan had the advantage of exploiting modern technologies developed in advanced countries’. Minami acknowledges that ‘simply having a backlog of technology available is not a sufﬁcient basis for the successful emergence of a modern economy’, and singles out labour bias, government initiation and utilisation of existing social overhead capital as the reasons for Japanese accomplishment. Of especial importance, Minami concludes that ‘according to the Japanese experience, policies to develop the social capacity to absorb modern technologies are of great signiﬁcance’ (Minami 1979: 308, 314).

The social and the economic A purpose of the present text is to develop an interpretation of the Japanese industrial economy from the points at which a more conventional approach might conclude. Every one of the causal or conditioning features isolated by the above analysts demands serious consideration of the dynamic and unforeseen relations between social and economic forces. Thus, ‘institutions’ were neither automatic nor fortuitous facilitators of Westernised technological transformation. New institutions depended on search and selection processes and, at times, required very costly investments, which had to be chosen in the face of viable industrial alternatives in a situation of resource scarcity. Chapter 5 highlights the huge expenditures on education and training required for successful industrial transition at times of great social upheaval. Again, policies which effected an increase in ‘social capacity’ of the sort meant by Minami were not simple outcomes of either inherited national resources or perfect information, but were arrived at in situations of imperfect information and internal social and ideological conﬂict.

26 The Japanese industrial economy So, this volume takes up the challenge of Japan’s unique industrial experience. The transfer of the layers of Western influence to Japan was initially the concern of intellectuals, bureaucrats and han (clan) authorities and government, but through time passed into the hands of the entrepreneur. An important period of transition was that of the industrial drive, c. 1868–81, when a host of new institutions and formulae were adopted in order to reduce yet satisfy the traditional privileges of newly displaced elites. Land tax reforms during the years 1872–3 established some basis for government revenue, and the state forged new systems of education, property rights and commercial security. During these years there was a speedy introduction of a range of infrastructural, military and manufacturing technologies from Europe and America, and without doubt this soon began to yield an increase in the growth of industrial production. The continuing industrialisation was dominated by the state, which retained its political control in the face of cultural and political conﬂicts. The later Meiji years witnessed a greater spread of industrialisation, and the continuing prominence of government during the build-up of a militaryindustrial complex and the successful waging of major wars against China (1895) and Russia (1904–5). For both nations engaged in the second of these conﬂicts, war had profound outcomes in the longer term. In Russia defeat was an element in the civil breakdown of 1905, the prolongation of recession and the ideological turmoil that was to lead to the Revolution of 1917. In contrast, Japan’s victory led to a surge of foreign investment into the nation, an increase in the pace of technology transfer and a confirmation of the statist industrialisation programme. Yet it might be reasonably claimed that the military result had been founded in the immediately prior processes of late development. The low standard of the Russian railway, especially during the winter at Lake Baikal, drastically reduced the ability to mobilise and concentrate resources: 80,000 troops were ﬁelded against the 180,000-strong army of Japan. The debate over whether Russia could hold Port Arthur, the nation’s only ice-free port on the Paciﬁc rim, on the basis of a naval engagement, centred on technological capabilities. When the Russian Baltic ﬂeet eventually arrived in May 1905, it compared badly with Togo’s modernized navy, this resulting in Japan’s naval victory at Tsushima on 28 May 1905.2 The estimated cost of the war to Japan was around £100 million, to Russia only somewhat less. From around this point, in Japan the decisions of many private businesses replaced the earlier direct activities of the state. In Russia the movement towards private enterprise in these years was more uncertain and far less fruitful. In Japan, from the end of the Meiji era, shocks of depression (1930–2) and war (1937–45) were followed by renewed phases of catchup based on more advanced imported technologies. It was in this period of industrial modernism that there emerged most strongly in Japan the seemingly unique relationships between technological progress and institutional change which became so characteristic of the economy during its golden age of the 1960s and 1970s.

Features of Japanese industrial history No approach to Japan has won the day, and interpretations of the nation’s industrialisation vary between those strictly economistic and those which are just

Interpretations of Japan 27 as assuredly cultural. The ﬁrst of these groupings of interpretation sees Japan as a valuable case study in economic development and is based on theories of surplus labour absorption, or of high levels of investment or of skill transmission across the Meiji Restoration divide of 1868. Very often, such interpretations derive from even more general perspectives gained from the history of other, especially Western, nations or regions. This is particularly so of what we might label the ‘Rostovian’ approach to Japan, that which greatly emphasises a long build-up of internal ‘prerequisites’ to industrialisation throughout the Tokugawa years.3 Those historians who stress the long-term role of indigenous Japanese culture fall into two major camps, amongst and between which there are several distinctions and overlaps. One major tradition postulates that it is possible to isolate speciﬁc Japanese traits which were and are either similar to or functional equivalents of cultural traits found in Western history. So social mobility and an ethos of individualism and commercialism may have been ingrained in Japan at an early date, there may have been competing points of authority rather than the extreme centralism of the Chinese or other social systems, traits in neo-Confucianism may have acted on commercial behaviour in a way analogous to the ‘Protestant ethic’ in the West, and so on. Other writers stress the unique character of ‘Japanese culture’, but then argue that this gave rise to a unique and non-replicable case of ‘Japanese industrialisation’. The ﬁrst culturalist approach allows great generalisation to and from the Japanese case, the second approach forbids all generalisation. We argue here that amidst this eclecticism of interpretation lies the wonderful complexity and breadth of change of Japanese industrialisation, much of which is impossible to express or explain in ﬁrm economistic or adamant culturalist terms. Our general position is that Japan succeeded as a late developer because Japan reallocated energies and a motley collection of resources towards a process of industrialisation based on creative searching, learning and adaptation. Modelling of the historical experience is difficult once we acknowledge some of those very unusual features of the Japanese case which go back into the early part of a long industrial prelude and which were noted brieﬂy in Chapter 1. The extremely large population of around thirty million for most of the Tokugawa era contained by the end of that time a labour force of approximately twenty-four million, some 70 per cent or more of whom were employed in agriculture. Figures for England and Wales show a population of around six million in 1701, some growth by mid-century and over nine million by 1801 (Deane and Cole 1969). Whatever the ﬁnal outcome of the dispute about population growth in England in the earlier as against the later eighteenth century, the overall comparative picture is of the gentle increase of a small population associated with the early development of the ﬁrst industrial nation. In Japan by contrast, the pre-industrial population growth was negligible, remained gentle during Meiji industrialisation, and was at all times generated by a very large population base. Again in comparison, late twentieth-century underdeveloped nations were small: of eighty-ﬁve nations classiﬁed as undeveloped by the United Nations in 1965, forty-ﬁve had populations of up to ﬁve million and ﬁfteen of ﬁve to ten million, the median size being ﬁve million, the arithmetic mean seventeen mllion. In summary, the large and relatively stable population of Japan represented

28 The Japanese industrial economy enormous production potential and a very large market for the consumermanufactured products of the West. In a much smaller global economy than today, with a much smaller and less sophisticated technological system, the thirty to forty millions of Meiji Japan offered a far greater base for technological transfer, usage and diffusion than can be hazarded for either early starters or present-day poor nations. As we have noted, most of the Japanese rural workers were engaged also in some form of commercial or industrial by-employment, especially in the traditional pursuits of silk and textiles, sugar, glass, pottery, paper and fertiliser production. At ﬁrst this may not seem to be a feature much removing Japan from early modern European experience. After all, European historians now commonly describe seventeenth- and eighteenth-century Europe as ‘a differentiated patchwork of interdependent regions, specialising in a wide array of agricultural and industrial activities, and trading in mass commodities through a network of towns and cities’ (Ogilvie 1995: 221). This ‘proto-industrial’ model of European industrialisation depicts a continuing progressive relationship between such proto-industries and population growth, labour surpluses and mobility, commercialisation of agriculture (the movement to commercial crops for non-farm markets, contract labour, money rents and so on), technological innovations stemming from rising demands (through higher incomes, greater numbers and the equipment needs of agriculture) and the fading away of traditional restrictive institutions and statist instruments as they made way for more strident, vigorous market forces and nascent entrepreneurship.4 However, several of the components of this particular ‘European model’ are in fact missing from Tokugawa Japan, particularly those relating to demography, technology and entrepreneurship (Mendels 1972). For although Japan was most certainly awash with rural industries, in contrast with the more advanced regions of Europe these were not servicing export markets, were not metallurgically based or situated in or around production-oriented towns and cities. As described in Chapter 1 and Chapter 5, institutional factors stemming from internal political imperatives determined that Japan was commercially isolated compared to nations of equivalent development, and that the large cities were, with some exceptions (outstandingly Osaka), principally centres of conspicuous consumption. Perhaps of equal importance, Japan differed from Europe in the location and character of its productive innovations. In the Tokugawa years the principal technical improvements were found in the villages, in the increased use of commercial fertilisers, irrigation, new threshing machinery, multiple cropping and crop diversiﬁcation. The wooden-framed thresher first appeared around Osaka prior to 1700 and replaced the koki-hashi in drawing of rice stalks. Saved labour at harvest times did not result in labour movements but appears to have been used in other farm pursuits, including the planting of winter crops immediately after the late harvest. Innovation was land-saving rather than labour-saving. Only in the later decades of the eighteenth century did iron technology begin to make inroads on production levels, and in several han the leading industry changed from rice culture or gold mining to iron mining and working. Different techniques were used to produce cast iron, pig iron and steel, and there is evidence of a merging of traditional methods with Iberian metallurgical techniques. It is possible that the increased production of threshing

Interpretations of Japan 29 forks, scissors and carpenters’ tools might have been of importance to the incorporation of European methods of iron-smelting during the Meiji years. But none of this was sufﬁcient to establish an industrial trajectory of the West European sort. Such rural industrial employments were by no means to fade away during the acceleration of modernised industrialisation in the later nineteenth century. Indeed the rural industries of the Meiji period thrived in both the domestic and the foreign markets, and acted as a site for labour absorption into higher productivity work as well as for the reception of Western technologies in transport and power supply. A very high population density of around a hundred persons per square kilometre in early Meiji Japan, greater than that found in any other industrialising system at that time, and dense settlement on major alluvial plains, meant that an efﬁcient transport system became quite speedily converted into an efficient information system, especially when the techniques of the telegraph and printed media were introduced during the 1870s. It might be concluded that Japanese topography in itself created a density of settlement which encouraged a movement of people and ideas at a speed and efficiency not attainable in China or India even a century later. As Hagerstrand has been at pains to point out, such characteristics have profound impacts on transmission and diffusion processes, whether of ideas or of artefacts (Hagerstrand 1968). Once opened to foreign threat and competition, Japan’s spatial characteristics allowed an efﬁcient diffusion of Western technologies or of Japanese best practice techniques and organisations through geographically proximate and therefore competing enterprises, a process which worked well in the context of the relatively simple metal technologies of the later nineteenth century and earlier twentieth century. Aided by new public sector institutions for education, training and information collection, testing and diffusion, the positive effects of such mundane, given features must not be neglected. Japan was also very lucky. Despite disasters of diplomacy and formal commercial arrangements, Japan was fortunate in its foreign commercial dealings and with the timing and global impacts of the opening in 1869 of the Suez Canal, which markedly reduced transport costs between Europe and Asia generally. Indeed, Japan’s eventual trading competitiveness in a world of increasing tariffs and colonial trades was such as to neutralise the stiﬂing effects of the unequal commercial treaties which Japan was forced to sign with the Western powers, and these latter were revoked during the 1890s. There was one instance of extreme good fortune. It was precisely during the late 1860s and early 1870s that a dramatic infection destroyed the silkworm eggs of Italy, southern France and elsewhere. As raw silk was one of the principal staples of the period, Western commercial interests soon searched out alternative sources, and the Japanese began to supply the world with a simple basic product. But silk was not such a staple as coffee or copper, for it was more readily manufactured using cheap labour and improved machinery. By the 1890s, the business acumen, labour organisation and export revenues of the Japanese silk industry were providing the immediate context for the development of the Japanese cotton textile industry, the second core industry of the Japanese industrial revolution.

30 The Japanese industrial economy

Interpretations and perspectives A major feature of the present study is to question the meaning and use of such terms as ‘began to supply’, or ‘using’, or ‘providing the immediate context’ in this sort of narrative of Japanese success. Such notions become intrinsically problematic when we recognise that ﬂukes must be converted. Response was not automatic, nor success assured. The major active agents of change did not in fact ‘know’ what was going to happen next. In the case above of the silk industry, Western investigations in Japan uncovered imminent dangers to the Japanese cocoons, and a meeting of foreign merchants in May of 1871 advocated quality control, especially in the reeling process, through the better instruction of both dealers and growers (Adams 1874, Japan Weekly Mail 1871: 188–9). Western recommendations included the limiting of further production to the most suitable provinces, conﬁning production to only full-sized silk, the use of improved reeling and twisting machinery and a stoppage of the export of silkworm eggs. Western advice was based on considerable treks into otherwise forbidden corners of Japan, at one point involving detailed reportage of a marketing association of sixteen villages, the Matsukawa-gumi, members of which were all engaged in the cultivation of the oak silkworm in the province of Shinshiu near Matsumoto. At this time such associations might market up to twenty million cocoons annually. As early as the late months of 1870, F. O. Adams of the Londonbased Silk Supply Association was advising commercial and ofﬁcial agents that the decline in quality was due to the disease pebrime, a contagious blight that had destroyed the Italian silk industry. Adams advocated the testing of Japanese worms using the recent techniques of Pasteur, Tyndall and others, and denounced the introduction of foreign eggs into the breeding process. The work of the British was bolstered by the researches of Gravier and Brunet, who recommended and gained the support of provincial governments for the establishment of silk-reeling establishments (ﬁlatures) of two to three thousand basins. Brunet returned to Europe in order to procure the necessary machinery, and news of such activity was readily spread in such specially created ofﬁcial organs as the Shimbun Zasshi, which were ﬁlled with reports of European methods of silk-egg rearing and even animal husbandry. By August 1871 the International Bacological Congress met in Austria and announced Japanese progress, and during the following months it became clear that Japanese silk merchants and growers were adhering to European advice. On one trip into the countryside, the British expert Russell Robertson distributed within a week over two thousand pamphlets warning against inferior birriti seed, not only in towns and villages but ‘at every roadside cottage’ (Japan Weekly Mail 1870: 479, 498–9). Most of the above paragraph describes an information system only, and such description can not predict the character of the Japanese response, which patently involved a great number of agents and institutions, from village associations to newspapers, to ofﬁcial interventions. Clearly, the advice of foreign experts to limit some outputs or invest in new machines threatened many existing interests and involved immediate costs, with no assurance of success other than the dubious ‘science’ of strangers. Yet the early response ensured Japan an industrial leading

Interpretations of Japan 31 sector based on exports to the West. By the end of the decade twenty-seven different prefectures boasted over seven hundred modernised silk ﬁlatures based on a mixed water (over 80 per cent), steam and hand-power technology. This became the ﬁrst major industrial object lesson for the Japanese: ‘Silk affords the best example of what may be done in other branches of business and who, in the face of the examples we have quoted, can assert that industrial undertakings will not ﬂourish in Japan?’ (Mainichi Shimbun, 13 November 1879: 5). Our summary position at this stage is simple enough. This combination of features in itself distinguished Japan from other late developers in Meiji and later years, and provided good conditions for the absorption of Western technology across a range of employments and for the manipulations and persuasions of government agencies. Such features also go some way in elucidating the sprightly performance of agriculture proper throughout the transition towards the more mature industrial economy. Even if we accept that the earlier tax return data tended to inﬂate the seeming growth rate of Meiji agriculture, a present estimate of around 1.5 per cent per annum growth is not unreasonable, and lies above a population growth of less than 1 per cent. Even the food importing of the early twentieth century was as much a reflection of the policy imperatives of a new empire as it was evidence of any failure on the part of agriculture to satisfy food requirements, just as the rural producers moved more towards industrial crops such as silk and indigo. Efﬁciency increases arose not from large inputs of machinery or capital but from dissemination of existing best practice, biological innovations led by Western techniques or inputs (for example, novel rice varieties), double cropping and improved irrigation. Much of this was motivated by a key institutional change, the introduction of a land tax which demanded money payments but did not allow sufﬁciently for the effects of inﬂation in the early Meiji period. Less than income-maximising to the state, the land tax from the early 1870s may well have been motive-optimising to the producer or landholder. It provided the great bulk of government revenue for ordinary expenditure until the 1890s. Innovation in Japanese agriculture was, thus, labourusing, and the failure of wages to be a principal cause of inﬂation for most of the years prior to 1937 testiﬁes to a considerable amount of underemployment prior to 1868, despite the much-vaunted improvements of the Tokugawa years. A ﬁnal outstanding feature of the Japanese case, which furthers the difﬁculties in the way of constructing adequately smart explanatory models, is the peculiarity of government intervention. For example, during the highly signiﬁcant transformations of the Meiji years, government taxation averaged well below 10 per cent of national income. In international terms this represented a very modest level of revenue and expenditure. Yet without doubt government was the principal agent of technique and knowledge transfer and usage, social and cultural control and melioration, institutional transformation and international transactions. At the same time, the decidedly unequal treaties signed with the Western powers, and the consequent absence of control over tariffs, reduced a potential source of revenue and removed the possibility of pursuing any direct policy of export promotion under protection. The only focus left for the industrialising state was cost reduction and quality control

32 The Japanese industrial economy over a wide front. In this book we argue that it was this context, together with the Meiji internal policy decision not to import foreign capital (see Chapter 1), which forced upon the entire industrialising system a concentration upon cultural engineering, technology transfer and human capital formation. Such building blocks of industrial transformation were created relatively quickly by the state, but exploited more or less effectively by the private sector during the 1890s and onwards.

Wider contexts To emphasise for very good reasons those historical features of Japan which combine to preclude the simple application of Western-based models is not in any way to equate Japanese experience with that of Asia more generally. As we have tried to show, many of the characteristics of industrialising Japan are those of late development. They are not necessarily those of an Asiatic mode of production, or clearly representative of a wider Confucian culture. So if we juxtapose Japan with the great civilisations of India or China we ﬁnd very obvious points of contrast, all of which impinged upon patterns of industrialisation. Compared to these two giants, Japan was isolated and beyond the ambitions of the great Western powers. Japan was densely settled and obviously maritime. For Japan communications were easier and taxes more collectable: even the monsoon was far kinder. In Japan the multiple authorities of emperor, shogun and han emerged historically rather than through the application of a coherent and unchanging ideology, and this allowed greater diversity and deviance. Whereas in China classical learning not only dictated status but also represented belief, in Japan the educational system was deliberately managed to reduce or ameliorate the contradictions between traditional ideals and Tokugawa or Meiji realities. Brushing even more broadly, we might hazard that, in both Japan and the more advanced parts of Europe, population was densely settled, iron techniques allowed increasingly efﬁcient power transmission, and distances between regional markets and more advanced production sites were relatively small compared to India or China. Perhaps primarily because of this, in both Japan and Europe there is evidence of multiple tensions between traditional values and new commercial practices. It is true that the expenses of the individual han, both in satisfying the control needs of the state and in establishing its own internal controls, could be very high indeed, even in comparison with China: the outlays on sankin kotai, (or forced alternate residence for the nobility) in Tokugawa Japan could at times come to 70 per cent of annual han revenue. But the expenses of the central state in maintaining sovereignty were surely less in Japan and advanced Europe than in China and India, and the methods less draconian. In turn, this permitted more secure market transactions in Japan than could be found elsewhere in Asia.

The cake of custom and cultural engineering For the constitutional theorist and historian Walter Bagehot, in his Physics and Politics of 1873, the modern and enlightened Age of Discussion awaited the dissolution of

Interpretations of Japan 33 the ‘cake of custom’. By deﬁnition, perhaps, cultural traditions held back progressive change, but for Bagehot the urge to conformity or stasis was not inherent in or natural to cultures per se. It was an outcome of particular beliefs stemming from religious or moral ideas which were themselves historical and intrusive cultural artefacts. Culture could shift. For Bagehot, change towards modern democracy depended on the improved education of the masses within a social system of continued hierarchies, whereby the political and moral choices of the newly enfranchised would be guided by the enlightened intentions of sovereign cultural elites. In contrast, the nation of late industrialisation was faced with immediate choices forced by rapidly changing international circumstances, where the principal goal of elites and interest groups was to maintain control while instigating industrial revolution in order to survive pressures stemming from both within and without. A crumbling of the ‘cake of custom’ would mean disaster. Retirement into cultural conservatism might mean worse. Most commonly commentators on Japan’s industrial history eschew the sociocultural and ideological contexts. Yet industrial revolutions cannot occur in emotional vacuums, for in such an artiﬁcial space there could be no entrepreneurs, no agents motivated through their own private concerns, no decisions informed by the instructions of others. For instance, the performance of the Meiji government could be measured fairly narrowly (though with difﬁculty) in terms of the costs of its interventions, the effects of crowding-out and so on, as if the absence of government would have been ﬁlled by optimising economic agents operating fairly in a system of recognised and stable property rights. This would be no reasonable description of early Meiji Japan, a place where merchants gulled producers, employees absconded at will, where ex-samurai armed themselves against the regime, where Westerners of every complexion hid deep within the protection of extraterritoriality, and where compradore agencies extracted incomes from any producing pocket that they could uncover. Any interpretation of Japanese industrialisation must surely incorporate a story of regime survival at low cost. If effective resource utilisation had depended wholly upon public-sector investments in human capital formation, technology transfer and Western ideas, then the system would have collapsed entirely some time well prior to the outbreak of hostilities with China in the 1890s. The subsequent history of Japan would then belong to the realm of imaginative counterfactuals. It is postulated frequently enough that Japan’s industrial transition occurred at low cost because modernised industry was gently but ﬁrmly grafted on to a culture either acquiescent or ﬂexible. Thus Inazo Nitobe uncovered bushido (the samurai code of loyalty and honour) as the cultural or behavioural mainstay of Japanese modernity, a view followed by modern analysts such as Everett Hagen, who depend very much upon the notion of the nation ‘following’ the samurai (Nitobe 1907, Hagen 1964). No doubt this sort of approach does echo the judgments of influential contemporaries. Thus the great Meiji minister and political thinker Shigenobu Okuma (1838–1922) believed that ‘Bushido had the power to change feudalism into constitutionalism’ – itself a distorted echo of Bagehot? Other writers have even more explicitly linked speciﬁc cultural traits to modernising behaviour patterns.

34 The Japanese industrial economy However, too much is assumed about the social mechanisms whereby the ethics of an elite became the values of a nation. More realistically, subsequent chapters of this book argue that the cost of transition into and sustenance of industrialisation in Japan was relatively low, not simply because of the intrinsic character of cultural traits but because such traits were selected and harnessed to the process of change by a determined industrialising elite acting under the tough conditions of relative economic backwardness. Late development demanded cultural engineering, a theme to which we return in Chapter 5.

3

Maturity Social problems of Japanese capitalism

Introduction Until recently the Japanese economy has been lauded as the most ﬂexible, aggressive and successful of the large capitalist nations in coping with the slower growth and greater complexity of the global economy. The failures of the 1990s changed all of this. Both foreign and Japanese commentators have begun to doubt the quality of the nation’s social and political institutions. On the one hand it has been suggested that the social characteristics of industrialising Japan are not those that will sustain further expansions in the economy and in social welfare into the new century. On the other hand, in a somewhat different vein, it has been suggested that economic growth in Japan has occurred at the cost of retardation in social and psychic welfare, that capitalist success has kept democracy at bay and that Japan is a powerful example of aggressive capitalism – unencumbered by distributive policies, socially divisive and environmentally disastrous. In an effort to throw some light on an at times heated but obscure debate, this chapter considers some key aspects of Japanese society and institutions.

Measures of Japanese society In many ways Japan represents a typical, mature capitalist society. Japanese households spend just less than 20 per cent of their disposable income on food, about equivalent to Germany and the UK, somewhat more than the USA. Expenditure on clothing and housing takes up almost the same proportion of household income in all four of these nations, but the Japanese spend more on medical care and education than do the Europeans, less than do the Americans. The Japanese are normal capitalists. Almost all Japanese households have a colour television set, refrigerators with freezers, washing machines, vacuum cleaners and microwave ovens, whilst over three-quarters of households possess cars, video decks, and air-conditioning. Pianos have long been popular, with nearly a quarter of households boasting one. Satellite receivers are owned by a third of the population, word processors, stereos and compact disc players by around a half. Japanese people consume much like Americans or Europeans. Despite very different cuisines, the Japanese eat much the same amount of protein as the British or the Germans, of which animal protein constitutes about the same proportion (around 55 per cent).

1 2 3 4 5 6 7 8 9 0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

36 The Japanese industrial economy Fewer people die of cancer or heart disease than in comparable industrial nations, but many more die of pneumonia. Japan may be ‘greying’, but this is in line with demographic transitions in all other industrialised nations, where universally the proportion of the population of those aged 65 and over lies in the range 13–17 per cent (Japan: 14 per cent in 1994). Japan’s suicide rate is now much higher than that of the UK or the USA, but lower than that of France. Per capita expenditure on health is well below that of the USA, but comparable with expenditures in the UK, Sweden, France or Belgium. Where the number of trained doctors in Japan is proportional to the numbers in the UK, the number of hospital beds per capita is far greater in Japan than in the UK, the USA or any major industral nation other than Sweden. Similarly, Japan can boast an equivalence with Britain, the USA or Germany in the supply of trained teachers. Japan produces as many different book titles per annum as does the UK, and with ease exceeds all other nations in the circulation per capita of daily newspapers and the production of new movies. By 1992 record, cassette and compact disc sales in Japan totalled $3.4 billion, and the Japanese music industry became the second largest in the world. By about the same time, cocaine seizures by the Japanese police had reached approximately the same level as US seizures in the 1970s, and there was growing evidence of a similar Colombian connection. The Japanese pornography industry was by then generating perhaps $10 billion a year, dominated by the sale of some fourteen thousand new home video releases annually (Japan 1994, 1998). Despite all the rhetoric to the contrary, Japanese society is not homogeneous but capitalist, this involving much of the competition and many of the status differentials between groups and individuals that might be found in Europe and the USA, if manifested within and between contrasting institutional complexes. More carefully, Waswo makes the point that, on any sure measures, Japan is probably no more ‘middle-class’ than Western industrial societies and that, if anything, the gap between rich and poor, the advantaged and disadvantaged, within Japan may well be widening, as the children of parents with the highest incomes continue to do proportionately better than others in securing the educational credentials that provide access to high-income futures and as property ownership becomes increasingly skewed. (Waswo 1996: 129) Furthermore, Japan too has an underclass, composed mostly of resident Koreans, recent Asian immigrants (see below), labouring in small companies, the burakumin (a segregated social group), the Ainu (the Hokkaido minority population who have historically faced discriminatory treatment amounting to social exclusion),1 and a mass of the casually employed. In important respects Japan is unlike everywhere else. But in many such instances the difference may be explained in simple geographical and historical terms. Housing prices and ofﬁce rentals in Japan are far above those of Europe or the USA, although this has not prohibited a rise in the amount of home ownership, still below that of the USA or UK, but above that for France (that is, around 60 per cent).

Maturity 37 Urban squalor is a general feature of late development, in Japan exacerbated by industrial dualism and extreme spatial restrictions: in 1950 the majority of Japanese still lived in towns and villages, but by 1990 77 per cent of a much larger population were city dwellers, this directly reflecting the shift in resources towards manufacturing outlined in Chapter 1. Public utilities are measurably expensive or undeveloped, space always at a premium. In Japan the cost of mail, electricity, gas and public transport is much higher than in other nations, although the telephone system is efﬁcient and cheap. The proportion of the Japanese population linked directly to an underground sewerage system is considerably less than in other, comparable nations, this reﬂecting the physical realities of industrial dualism and the preponderance of small businesses, the self-employed and run-down dormitory towns, illustrated in the extreme by the frequent public squalor of the one hundred or so ‘bedroom communities’ that encircle Tokyo and contain some twenty million souls. In like fashion, Japan as ‘welfare laggard’ may be explainable in terms of late development. State welfare expenditure in Japan lies far below that of most industrial nations, although such public expenditure has been rising, from 5 per cent of GDP in 1970 to over 10 per cent by the late 1980s. On the other hand, late development yielded in Japan a younger population (requiring less welfare expenditure), closer communities (providing voluntary welfare in lineal families) and a corporate welfarism, especially amongst larger ﬁrms, which yielded health and pension schemes analogous to public expenditures elsewhere; these together allowed lower official expenditures. As the economy matured, so too did communities weaken and workers age – the ratio of elderly folk living with their married children fell from 87 per cent in 1960 to 65 per cent in 1985 – and so too did government expenditure begin to rise. By the mid-1990s, for instance, public health expenditure was equivalent in GDP terms to nations as variable as Australia, Italy, Sweden and the UK. Unemployment, in total and amongst youth and women, remained well below that of other nations. Again, the precise institutional formulations of government and enterprise in this ﬁeld may also be considered as at least fragmentary features of late development. The Meiji poor law of 1874 and the Civil Code of 1896 together formalised the household system as a welfare institution for the aged, infirm or unemployed. What had long been a moral duty became a legal requirement. Late development of the sort analysed in Chapters 4–5 demanded a statist focus on technology, physical infrastructures and training programmes, and a minimisation of expenditure on any form of public assistance.2 Even the Occupation reforms under the Revised National Assistance Act of 1950 deﬁned public expenditures as supplementary to familial welfare. Again, much of the character of corporate welfarism may be explicable in terms of the late-development struggle to retain the loyalty of scarce skilled workers, an attempt renewed by private enterprise in the 1950s and 1960s in the face of government welfarism. The loyalty of scarce skills could be secured by lifetime commitment on one hand, health care and pensions on the other, especially where welfare entitlements accumulated greatly but were instantly lost through disruption or departure.

38 The Japanese industrial economy Late development may explain features of Japanese life that are too readily visualised as both traditional and immutable, such as the interventionist industrial activities of the state, the character of education and training or the ability to absorb foreign artefacts and ideologies within relatively unchanged frames of reference. In the early stages of industrialisation in Europe the mercantilist state intermittently attempted interventions under the banner of national competition. The European state sui generis did little for formal education prior to the First World War, and apprenticeship loomed very large, a form of industrial skilling at least analogous to Japanese in-house training. Eighteenth-century Europe was replete with technology transfers from areas of comparative advantage to regions of relative backwardness, transfers which often failed. In viewing Japan as a late developer we might choose a perspective which admits to the existence of analogous features between modernising Europe in the eighteenth and nineteenth centuries and modernising Japan in the twentieth century.This perspective may even be extended to the ﬁeld of gender relations. The notion in Tokugawa Japan that women should be ‘good wives and wise mothers’ is identical to the gender assumptions of Enlightenment Europe and wonderfully captured in Rousseau’s conviction that women were intended by very nature ‘to make us love and esteem them, to educate us while young, and take care of us when grown up, to advise, to console us, to render our lives easy and agreeable – these are the duties of women at all times, and what they should be taught in their youth’.3 In most nations of nineteenth-century Europe women could not hold or inherit property, earned dowries and wasted their talents in precisely the manner of Tokugawa and Meiji Japan. Early but informal versions of the Japanese Civil Code of 1898, which formally iterated the subjugation of women, could be found in most nations of the West. Women in the West even yet receive lower wages for equal work in otherwise ultra-modern industries, and by such comparison we get very much closer to Japan today. Again, when through war or demographics the work of women became vital, so too in both the West (after 1918) and Japan (after 1950) the avenues of opportunity (if not of equality) slowly opened. Although the culture of the ‘salaryman’ continues to resist career women in private enterprise, an Equal Employment Opportunity Law was passed in 1985, and second incomes became of especial importance with the inﬂation of the following years. A 1987 survey of leading Japanese corporations found that in 72 per cent of cases it was at least claimed that no preference was shown for men over women in recruiting amongst new college graduates. Against such precise statistics we might note the failure of most female graduate employees to rise above the ranks of lower management and the common phenomenon of the overqualiﬁed ‘ofﬁce lady’. During the Recruit scandals of 1988 it was the female vote which was most volatile and threatening to the then ruling LDP cronies, causing major setbacks in the House of Councillors election in 1989.4 When we witness Japan we see the partiality and time-lags of accelerated change in the late-development mode. Even the exaggerated character of elite networks may be explicable in terms of late development. Thus, the University of Tokyo is indisputably ichiban, or number one. Entrance examinations are approached only after months of expensive cramming; exam failures at times result in suicide. Entry to the Todai (Tokyo

Maturity 39 University) club brings tangible rewards, arrogance and conﬁdence: nearly all of Japan’s prime ministers have been graduates, 25 per cent of all Diet members are graduates, over 90 per cent of Ministry of Finance senior bureaucrats are graduates, perhaps a third of the presidents of Japan’s top thousand firms are graduates. Something like this has been the case since the Meiji foundation year of 1877 and today represents the complex aftermaths of a deliberate move towards the creation of an industrialising meritocracy at a time of severe relative backwardness and foreign intellectual and technological supremacy. As Waswo has summarised, it was to secure to the new industrialism ‘well-qualiﬁed ofﬁcials and technicians for the state that the university, ﬁrst created in 1877, was expanded in the late 1880s and early 1890s, and for the entire period until 1945 most bureaucrats in the service of the central government were graduates of its faculty of law’ (Waswo 1996: 162). A more unusual category of socio-institutional differences comprises those which may be attributed to the reforms of the Occupation forces after the Second World War, and as outlined in Chapter 1. Many seeming oddities of the ‘Japanese’ social system may have originated in the educational, enterprise, labour, legal, agricultural and financial administrative changes which resulted from that most peculiar juxtaposition of defeated Imperial Japan and the victorious West, basking as indeed the latter was in the idea of the supremacy at war of the institutions of constitutional democracy over those of the authoritarian personality. Fifty years later, the new instrumentalism of those years has left its mark on many aspects of Japanese life. Several of these have been touched on elsewhere in this text, but we might add here some comments on the place of agriculture in Japanese social life and public policy. By the mid-1990s only 14 per cent of land in Japan was devoted to agricultural purposes, as compared to 31 per cent in Germany, 47 per cent in the USA and 71 per cent in the UK.5 At the same time, the proportion of workers employed in agriculture in Japan was around 6 per cent, compared to 3 per cent in the USA or slightly more in Germany, but even more on a par with European nations. Yet the social position of the agricultural sector, the cultural status of the rice economy and the power of the agricultural lobby were higher in comparison to most industrial nations than might be expected from such objective measures. This anomaly is at least partially explicable in terms of the land reforms of 1947–50, which effectively removed tenancy and absentee landlordism, transferred 6 million cho of land to 6 million small-owner households (one cho is about one hectare), and thereby strongly encouraged the trend towards part-time farming and dual occupations. Even in the late 1980s some 4.5 million farm households remained, many of whom provided the continued allegiance to the policies of the Liberal Democratic Party which at once secured its repeated victories and ensured an equally continuing commercial protection of the Japanese agricultural sector and official price-maintenance schemes. Other differences are not so readily dismissed as late-development effects. Despite high incomes, close proximities and a great chaos of consumer durables, Japanese criminality per capita remains far below that of the major industrial nations. Not only are crimes at a level of around one-third to one-quarter of the levels elsewhere, in Japan since 1970 there has been no signiﬁcant increase in the rate of reported

40 The Japanese industrial economy crime in total. Even at the end of the 1990s Japan had around one lawyer for every 6,600 people, compared to one for every 300 in the more criminal and litigious USA and one for every 650 in even milder-mannered Britain. Indeed, with the rise of corporate and personal bankruptcies at the turn of the century, Japan was increasingly seen as in great need of improved and less elitist law training. In the early 1990s juvenile crime in Japan had reached perhaps one-tenth the level of the USA and was composed far more of neighbourhood larceny and involved far less violence. In Japan juvenile delinquents continue to attend school. Yet such crime was and still is seen in Japan as one of the biggest of all the social problems that beset the endaka society. Again, Japanese households continue to save far more of their disposable incomes than anybody else other than the Germans and the Italians. In the recent past such high personal savings were explicable in the need for household coverage of intermittent shocks – from earthquakes to the expenses of female marriage, to unemployment or illness. Such urban white-collar savings were most commonly held in the form of small blocks of shares and originated in periodic bonuses as well as less formal goodwill money gifts within neighbourhoods, between business dealings and from clients to a wide array of public servants, teachers and local bureaucrats. As with other supposedly extreme social differences, such as the extension of systems of familial obligations into business and labour organizations, or the strength of the work ethic, the high-savings propensity has been explained in broadly cultural terms on both supply and demand arguments. In this sort of approach, the supply of savings has traditionally come from frugality, gift-giving (of which bonuses are a special effect) and hard work, all of which may carry the cultural assumption. The demand for savings may be attributed to the traditions of selfhelp, obligation and gift-giving, and status expenditures (as in marriage expenses and dowries), all of which may carry the equal cultural assumption. We might summarise that many measures of comparison suggest that the institutions of Japanese society are those of late industrial capitalism, and are unique in the same sense that the social institutions of Germany, Britain or the USA are peculiar to their national settings. General late-development effects have been and are yet complicated by the instrumentalist interventions of the postwar years of Occupation, when the Western nations led by the USA construed Japan as a complex experiment in Eastern democracy as a bulwark against Western-inspired communism. Several aspects of modern Japanese society – including low crime rates and high savings rates – may not be so readily explained in terms of a simple late-development model, although even in such cases we have suggested that late development may have exerted indirect effects which encouraged such social features. The next section extends such notions of social difference (at times viewed as cogent measures of cultural particularity) into the theme of the social underpinnings of Japanese industrialisation. Here we might note that, in the particular case of savings, the phenomenon itself is unusual rather than unique (some European nations surpass the Japanese in personal savings levels at lower levels of disposable income), on the decline rather than the increase (as with working hours and other

Maturity 41 ‘work ethic’ indicators) and possibly explicable entirely in non-culturalist terms. In this case, we might, other things being equal, expect high personal savings in a society where public welfare has been set at a low level, where urban facilities lag behind the growth of private incomes, where there has been a high degree of sectoral occupational movement and where there is a disproportionate amount of risky small-business and self-employed activity as well as a general tendency towards sporadic non-monthly receipts of income. Each of these elements has been met with already in the present text, and none demands an explanation based on unique cultural processes. But it is indeed such identifiable socio-institutional (if not strictly cultural) differences between Japan and other industrialised nations that are often seen as the ﬁnal cause of the nation’s good industrial performance. Consistently enough, the more recent problems of the economy are then explained in terms of changing social processes and institutions, particularly centred on family, neighbourhood, private enterprise and the ethos and functions of the public sector

The social underpinnings of fast growth The most powerful single approach that directly links social and cultural processes to a history of industrial success is that which centres on a world of loyalties and duties, of individual obligations and group identities. Quite commonly it is argued that the seemingly radical adjustments of modernity have not in fact removed the secular importance of group orientation over individualism, that there profoundly continues and ever has been ‘a stress on duty and loyalty rather than on rights and a right to change, a preference for consensual rather than majoritarian decisionmaking, and respect for hierarchy, seniority, and family. Stirred in with all these patterns has been a sensitivity to those lower on the social scale in the common pursuit of group harmony.’ Henderson points to the Confucian basis of the ‘ﬁve relationships’ of Tokugawa Japan (lord–man, father–son, husband–wife, older–younger brother, friend–friend) as being at the core of modern groupism and loyalty codes (Henderson 1977). Aptly we might refer to Yamamoto’s Way of the Samurai: ‘Being a retainer is nothing other than being a supporter of one’s lord, entrusting matters of good and evil to him, and renouncing self-interest. If there are but two or three men of this type, the ﬁef will be secure.’ Major interpretations of Japanese industrialisation have, indeed, been predicated on a distinction between Japanese neo-Confucianism, with its early stress on hierarchical relations and obligations, and the Confucianism of China, with its traditional focus on relations between equals. So, the essential claim of Michio Morishima is that Japanese Confucianism was fundamentally different from that of China and elsewhere. Where many anthropologists and sociologists of the 1960s and 1970s emphasised the dampening impacts of ‘traditional’ cultural formations on industrial modernism, Morishima isolated Confucianism as a cultural machina of Japanese industrialisation (Morishima 1982). Other writers have stressed Shintoist elements as the key to the virtue of loyalty which, in opposition to individualism, unlocked a door of modernity by securing the legitimacy of those modernisers amongst the Japanese elite who

42 The Japanese industrial economy wished to appropriate Western technologies and industrial ideologies without wholesale cultural revolution. We might generalise that this mode of argument poses a dualistic distinction between the social underpinnings of early Western industrialisation, which is composed of the rise of individualism as the carrier of creativity, competition and innovation, and the cultural underpinnings of late development, composed of all those elements which served to harness the innovations of the West to the attributes of the East without undue or costly social disturbance. In particular, this culturalist approach serves to explain late industrialisation as a process forced into the cultural system by an industrialising elite utilising the technologies of the individualistic West. Where late-development programmes elsewhere have almost invariably broken down under internal political pressures, the complex Confucian nexus in Japan has served to dampen all forms of public expression of disquiet. Koschmann has summarised that overt rebellion or dissent ‘breeds isolation from the social and political hierarchy, which remains the primary source of wisdom and paternal care. Therefore, inherent in the system are the preservation of harmony through repression of conﬂict and the failure of a universal concept of individual rights to fully replace power as the central principle of hierarchical relationships’ (Koschmann 1972: 14). Japanese industrialisation becomes a story of cultural hegemony, almost regardless of the exact character or form of particular, prevailing cultural artefacts or traits. It is possible to take the argument some steps beyond consensus as merely a permissive element of industrial and technological followership. Thus Yasuzo Horie has argued for a direct link between Confucianism and Meiji entrepreneurship. Horie suggests that Japanese Confucianism was essential in that its very accessibility and simplicity meant that it acted as a medium of cultural translation, blending Confucianism and Shintoism into an emphasis on loyalty and ﬁlial piety associated with the further spread of a bushido ethos during the Meiji period. In turn, Horie argues that the essential rationalism of this admixture ‘bred habits of mind that facilitated the introduction of Western technology. Intellectual discipline coupled with a ﬂexible pragmatism made the Japanese quick to take up Western learning when its practical utility for national defence and other purposes became clear’ (Horie 1965: 196). A more extreme version of this social-underpinnings approach was brieﬂy noted in Chapter 2 (pp. 32–4). Expressed most popularly and stridently by Inazo Nitobe during the Meiji years, it was argued that the bushido ethic (bu-shi-do: military-knightly ways), originally a subculture of the samurai, survived the Restoration of 1868 after having already ‘ﬁltered through the social class for which and by which they were developed and leavened the whole nation’ (Nitobe 1936: 124–41). Thus Meiji industrial leaders, shown by Silberman and other modern writers to have been composed mainly of ex-nobility, were naturally enough ‘followed’ by the multitudes of lay folk, just as the practice of honour forged Japanese society into an encampment, highly prepared, readily mobilised, cemented in service (Silberman 1964). With its strong Confucian infusions brought to the contemplative methods of Buddhism, the cultural ‘elements’ of bushido were not exclusively in the patrimony of Japan. Rather, in Nitobe’s own view, it was in the historical ‘aggregation of moral

Maturity 43 qualities’ that bushido took on its uniquely Japanese character (Nitobe 1907: 169). It may, then, be possible to visualise bushido both as a motor force of change and as a unique conﬁguration evolving from cultural undergirdings derived from China, Korea and elsewhere. What were the social conditions in Japan which produced this sort of outcome and its associated modern characteristics of groupism and consensus? Why did a mixture of cultural attributes and borrowings coalesce in a particular functional pattern? Ruth Benedict identiﬁed giri as the fundamental underpinning of such cultural traits.6 From a sophisticated anthropological perspective and taxonomy, Benedict brilliantly isolated giri as a form of relational cement, a type of obligation, found in Japan but nowhere else. Where systems of reciprocal obligations between individuals and the Emperor, parents, ancestors, teachers and lords existed in China and elsewhere, only Japan placed giri debts within the central core of a complex system of relational obligations. Giri are those debts which must be actively repaid ‘with mathematical equivalence to the favor received’ and upon which there are time limits. Giri may be paid not only to lords and family but to non-related non-superiors as the reciprocal of any previous obligations incurred, which may have been as money, gifts or work contributions. Non-translatable, giri is much better explained by Benedict herself: It is speciﬁcally Japanese . . . giri she owes to no Chinese Confucianism and to no Oriental Buddhism. It is a Japanese category and it is not possible to understand their courses of action without taking it into account. No Japanese can talk about motivations or good repute . . . without constantly speaking of giri . . . But ‘repaying giri’ is full of malaise. The difﬁculties of being a debtor are at their maximum in ‘the circle of giri’ . . . Giri to the world can roughly be described as the fulﬁllment of contractual relations . . . The great traditional giri relationship which most Japanese think of . . . is that of a retainer to his liege lord and to his comrades at arms. It is the loyalty a man of honour owes to his superior and to his fellows of his own class . . . now ‘repaying giri’ is no longer loyalty to one’s legitimate chieftain but is fulﬁlling all sorts of obligations to all sorts of people . . . In peasant villages, in transactions in small shops, in high circles of the Zaibatsu and in the cabinet of Japan, people are ‘forced with giri’ and ‘cornered with giri’. (Benedict 1946: 133–40) Although critical of too generalist an approach, R. P. Dore has extended this perspective very usefully. Dore suggests that Tokugawa and earlier traditions did not merely stress Japanese Confucian-like hierarchical relationships, but rather imposed an ethic which by no means neglected horizontal relationships, and which in its texts, schools and acts taught the duty of maintaining harmonious relations of mutual support, that is, giri relations – see for instance the example of this in Chapter 2 concerning the Matsukawa-gumi. It is this which is at the core of the ‘dependent society’, that which induces ‘in the individual a humble respect for the established institutions of his society’. Japanese industrial modernisation is a tale of

44 The Japanese industrial economy reapplications of this ethic to new circumstances and institutions, ﬁrst demonstrated in the switch of loyalties from community to nation: ‘The modern city Japanese was thus, provided with standards of behaviour which were more generalized than those of the Tokugawa villager and hence more useful to him in the more varied circumstances and problems of his everyday life’ (Dore 1958: 378–80). A recent and well-known extension of this approach to the social underpinnings of Japanese industrialisation is that of the social anthropologist Chie Nakane. A key element in Nakane’s approach to Japanese society involves the translation of the general notion of groupism and relational identities into the character and structure of particular institutions. Thus the notion of kaisha, often rendered simply as ‘enterprise’ or ‘company’ in the West, in fact ‘symbolizes the expression of group consciousness’. Kaisha does not mean that individuals are bound by contractual rerlationships into a corporate enterprise, while still thinking of themselves as separate entities; rather, ‘kaisha is “my” or “our” company, the community to which one belongs primarily, and which is all-important in one’s life’ (Nakane 1974: 3). This analytical translation of an anthropology into an institutional format seems very close to the judgments made by Ruth Benedict about giri relations, and thereby serves to identify Japan as institutionally distinct from other East Asian societies. Although the cultural causation may thus be unique and highly qualitative, in institutional result the difference is one of degree, and in the example of the kaisha ‘what distinguishes this relation in Japan is the exceedingly high degree of this emotional involvement’, evidences of which ‘always receive social and moral appreciation and approbation’. Although Nakane sees the immediate institutional backdrop of such enterprise culture as the ie family system, this is not primarily the traditional household, but rather ‘the ie is a corporate residential group, and, in the case of agriculture or other similar enterprises, ie is a managing body’, a deﬁnition which does seem to incorporate fully the giri relations of Benedict in a fairly central position in the interpretative scheme. Thus the lifetime-employment system, commonly visualised as a key element in the corporate culture of Japan, is not explainable in any formal contractual terms, but is an extension of the ‘belief that employer and employee are bound as one by fate in conditions which produce a tie’, where the enterprise really employs ‘the total man, as is shown in the expression marugakae (completely enveloped)’. Nakane concludes from such examples that Japan is a society held together not so much by neo-Confucian virtues of respect within a hierarchical frame as by ‘vertical stratiﬁcation by institution or group of institutions’. That is, groups attach themselves not through horizontal bonds but through vertical allegiances to higher status groups, generating an institutional complexity deriving fairly equally from the deeper undercurrents of both groupism (à la Benedict) and hierarchy (à la Morishima).Thus in Japan workers do not face capitalists, but the members of one family or ﬁrm do face those of another and, potentially, all others. Conflicts between management and labour within the firm are quarrels of a household, expressible in company unionism, not industrial unionism. As Hess has summarised, ‘it is relatively difﬁcult to establish horizontal bonds such as a national trade union movement that would cut across company unions’ (Hess 1995: 146). Competition takes place between parallel groups, and these may be villages,

Maturity 45 companies or schools, or between groups within a religious sect. Most importantly in terms of any historical approach to Japan’s industrial modernity, it is this conﬁguration of institutions which has lent itself so broadly but consistently to statism and followership. Nakane’s position is best rendered by Nakane: These characteristics of Japanese society assist the development of the state political organization. Competing clusters, in view of the difﬁculty of reaching agreement or concensus between clusters, have a diminished authority in dealings with the state administration. Competition and hostile relations between the civil powers facilitate the acceptance of state power and, in that a group is organized vertically, once the state’s administrative authority is accepted, it can be transmitted without obstruction down the vertical line of a group’s internal organization. In this way the administrative web is woven more thoroughly into Japanese society than perhaps any other in the world. (Nakane 1974: 3, 15, 90) In contrast, the central administrative systems of such great civilizations as China and India could never inﬂuence much more than the ‘upper strata of society’, except perhaps by due force. The diffuse power of central administration was well established during the Tokugawa years and became ‘an essential basis for the rapid modernization which has taken place since the Meiji period . . . there was already an effective root in the Japanese soil long before the advent of western inﬂuence, and it was by grafting to this living, native root that modern bureaucracy grew’ (Nakane 1974: 106). The ‘social-underpinnings’ approach in total appears to borrow from a social or cultural anthropology which stresses hierarchy as in Morishima, and groupism as in Benedict and the giri theory, these elements together yielding the phenomenon of social ‘followership’, and the approach of Nikane which links such traits to particular institutional characteristics, including those of private enterprise. A ﬁrst class of possible problems relates to assumptions about homogeneity and the neglect of historical resistance to modernisation.7 That is, there are important problems arising from the veracity of the cultural anthropology and what have been considered its problematic psychological assumptions (Bennett and Nagai 1953, Glazier 1974). Thus Mead felt it proper to highlight the end-passages of Benedict’s seminal book: ‘Japan’s motivations are situational. She will seek her place within a world at peace if circumstances permit. If not, within a world organized as an armed camp’ (Mead 1959). However sophisticated the analysis of giri obligations, the tone is psychological and insinuates a national homogeneity of motive and response. The second category of problem relates to the institutional manifestation of this anthropology in private enterprise, propensities to save or peculiarities in state intervention in the economy as designated by Nakane and others. Many such institutional features may be explicable in quite other terms. As we have stressed throughout, late development may manifest itself in various institutional forms, especially under the pressures to reform and innovate which build up during the technology transfer process. The speciﬁc presumptions of SCAP after 1945 further

46 The Japanese industrial economy removed the institutional basis of Japanese society away from any longer-term ‘anthropological’ determinants, and served to muddy the analytical waters in the modern period. As we will further argue, deliberate processes of cultural engineering instigated by the modernising elite within a sovereign Japan further created an institutional complexity difﬁcult to align with any model of traditional Japanese society and its purported value systems. Finally, as suggested in Chapter 6, alternative theories of culture or society might yield equivalent institutional results to those of Benedict or Nakane. Whilst this latter point is by no means sufﬁcient to act as a sturdy critique of the conventional liberal anthropology, together with the other considerations it suggests a certain looseness of ﬁt between existing theoretical approaches to Japanese society and the actual performance of the industrial economy. If essential features of the institutional life of Japan are only problematically linked with an anthropology of groupism, then change in such institutions and the outward behaviour patterns associated with them may or may not reﬂect any fundamental changes in Japanese society and its so-called ‘traditional’ values. A fall in household savings, an abandonment of lifetime employment, a rise of neighbourhood crimes may reflect those economic and demographic changes or alterations in Japan’s global commercial and strategic position that are more certainly associated with endaka Japan.

Underbelly or endaka society? Without much doubt, the bubble economy inﬂated prices, expectations and the value of assets held by relatively new social groups. The real-estate inﬂation of the mid-1980s and onwards engendered a host of endaka phenomena, from designer boutiques, nouvelle cuisine and Bentleys and BMWs to bar hostesses, live sex shows, bosozoku motorcycle speed tribes and the young girls of the ari-burei zoku, the earlybreakfast clubs of those nightlifers who just made it back to the suburbs in time for the pretences of a more traditional respectability. The strident youth of Roppongi or Shinjuku in their neoprene bodi-con styles, kept their ghetto-blasters ﬁrmly tuned to techno or disco as the Emperor lay slowly dying. Karl Taro Greenfeld summarised well a notion of a real turning-point, perhaps based on a demographic force of numbers as much as on new wealth and mobilities: The twenty-ﬁve million Japanese between the ages of ﬁfteen and thirty bear little resemblance to the twelve-hour-day salarymen or kimono-clad geisha familiar to westerners; they are a far cry from their generational predecessors, the shinjinrui, the Japanese baby-boomers. The speed tribes, the children of the industrialists, executives, and laborers who built Japan, Inc., are as accustomed to hamburgers as onigiri (rice balls), to Guns N’Roses as ikebana (flower arranging), and are often more adept at folding a bindle of cocaine or heroin than creasing an origami crane. (Greenfeld 1994: xiv)

Maturity 47 Such vivid reportage emphasises social change, and convincingly so.8 To the new youth, the commanding pre-endaka corporate ethic of ‘burying your bones with the company’ seemed somewhat less attractive to say the least. Many such youngsters gave up the old ambitions of saving for house-owning, and substituted spending on luxury goods and services and travels overseas, which in turn further shifted consumer demands. Both youth generally and women in particular lead the popular move away from the Liberal Democratic Party. The acceleration in geographical mobility forced by the heightened demands of the inﬂating economy was bound to loosen old neighbourhood loyalties and sanctions: as a Japanese adage has it, ‘the traveller leaves his shame behind him’. And deeper than this, the bubble economy was associated with far closer and more powerful network alliances between established yakuza9 syndicates, real estate and ﬁnance, right-wing political parties, local bureaucracies and the black marketeers of the youth culture. One official survey based on two thousand companies reported that one-third admitted paying the crime syndicates regular annual amounts based on fear of commercial ruin or embarrassment. More importantly, the bubble economy saw yakuza elevated to the managing boards of major companies, and more commonly appearing as principal shareholders of companies such as Nippon Steel or Nomura Securities. From the ultra-right-wing uyoku political parties – who openly espoused racism, eugenics, Shintoism, a second restoration of the Emperor, the return to Japan of the Kurile Islands, abolition of Article 9 (that which in the constitution limits the military to self-defence), and the rewriting of schoolbooks to minimise or omit the atrocities committed by Japanese forces after 1936 – to the Liberal Democratic Party itself, the years of endaka witnessed a noxious growth in the entwinement of crime and politics. Ominous and still remembered was the 1989 shooting of the Mayor of Nagasaki, Hitoshi Motoshima, by a member of a right-wing organisation with strong yakuza ties, the members of whom reacted to the mere criticism of the Japanese Emperor. A question hangs over our judgment of the degree and timing of change. The multitude of right-wing dissidents who wish to change Japanese society by force draw upon such traditional legitimations as The Way of the Samurai, a tract of the seventeenth century written by Tsunetomo Yamamoto. The yakuza were always if intermittently inﬂuential in politics – witness the resurrection of Nobusuke Kishi as Prime Minister in 1957 nine years after he was imprisoned for war crimes. Many crooked syndicates and corrupt networks are now run by Japanese who broke the backs of communists or labour leaders during the 1950s and 1960s. The bosozoku descend from the Tokyo motorcycle gangs of the same era. Amphetamines were a common resort of Japanese soldiers before 1945. The shunga woodblock prints had been the pornography of much earlier eras. Today’s hostesses were the jokyu (‘cafe girls’) of the 1920s, who were the geisha of tradition. As much as anything, the shift is in sensibilities, not in structures. Such features of Japan were secular and endemic because the fast and latedeveloping style of Japanese industrialisation always involved much more than Todai salarymen. As we have emphasised, modern manufacturing epitomises but does not represent the entire industrial economy. For every salaryman who managed to

48 The Japanese industrial economy secure a metropolitan home during the real estate inﬂation, there were many less fortunate who were forced further out into depleted suburbs two hours’ commuting time or more from their workplaces. Services employ more people than does manufacturing; 40 per cent of workers are women; over 90 per cent of all businesses (including services and agriculture) employ fewer than ten workers. The modern sector of Japanese industry rested on a mass of blue-collar and service-sector employees, small ﬁrms and the self-employed, contract and casual workers, and an enormous employment of dormitory-housed cheap female labour, most of whom in their many millions became residents of suburban wasteland communities. Justly enough, such suburbs have been described as the vassals of the economic miracle. Here are located many of the subcontactors or further offshoots of that large enterprise system described in more comfortably abstract terms in Chapter 6, as well as the bulk of the many casual workers employed in large modern enterprises. Kanban and ‘just-in-time’ production systems (see Chapter 6, note 1) have for many years been reliant upon the existence and dependencies of many multitudes of suburban suppliers of parts and materials. It is in such districts that the unskilled casual worker is found, and amongst such small firms that the weight of unemployment is periodically felt. A reason why ofﬁcial unemployment remained so low in Japan during the 1990s in comparison to the industrialised nations was that the burden of industrial down-turns or market failures was mostly borne by the casual workers, small subcontractors and women of the suburbs, rather than the full-time employees of the cities. As late as the mid-1980s, workers in firms of less than a hundred employees earned incomes barely more than half those of the large enterprises, a scale-based wage differential signiﬁcantly greater than in other industrial systems. Again, such a socio-geographical mechanism has tended to reduce the power of unionisation or alternative labour movements across industries, to reinforce familystyle identities within the enterprises of the modern sector and to minimise the days lost by annual labour disputes.10 That is, in a secular or longer-term sense the distasteful underbelly of Japan supplied the institutional requirements of fast, latedevelopment industrialisation. Recent cyclical effects have merely helped to identify the key relationships. In times of boom such suburbs were generally socially viable but very hard-working and undersupplied with all forms of public utility. When bubbles burst, much of the hard work stopped and neighbourhoods changed in character, became locations for the furosha (street tramps), youth gangs and drug peddlers. We may push this argument a little further. Much has been written about the ‘ﬂexibility’ of Japan’s manufacturing system, particularly during the years of inﬂation, rising labour costs and changing global markets (Dore 1986). Although the weight of the argument has been to identify the large enterprises as carrying such ﬂexibility (see Chapter 6), we have argued here that small enterprises have been foremost in the ﬂexibility stakes. It is they that have not only suffered from labour shortages and cyclical down-turns but also been leaders in the application of micro-electronic technologies and the introduction of new production equipment (such as automated soldering or winding machinery) to components manufacture and services provision. It was the very market uncertainties of the 1980s and 1990s that caused large

Maturity 49 manufacturers to hesitate to enter unknown territory, and induced growth and innovation amongst the smaller independent ﬁrms, who entered even such advanced ﬁeld as robotics. More than half of the small and medium enterprises of Japan in the early 1990s were subcontractors to larger enterprises. These ﬁrms were forced to adopt new techniques in order to produce components for increasingly demanding and cost-conscious large enterprises serving more precise, niche markets. Thus, in automobiles, subcontractors responded to ‘just-in-time’ stock management systems of large parent enterprises through focusing on increased precision or on reducing defect ratios to near inﬁnity, or on shortening the time between order and delivery. The endaka economy acted as a pressure-cooker on a great multitude of such small ﬁrms, upon their workers and their communities. The endaka years have been strongly associated with the tendency on the part of large manufacturers to reduce the number of their subcontractors while extending their production responsibilities.11 Amongst survivor contractors these years have been associated with a relative fall in the number of total employees in production departments but a rise in the proportion of female production workers, especially in quality control.12 Flexibility in Tokyo required a Darwinian struggle in the suburbs.

Traditions and modernities: the limits to covergence theory Late-development theory does not necessitate any resort to so-called convergence theory, in that features of late development which may alter or weaken with further capitalist development tend to be limited to such instruments as banking or technology. Industrial investment by the state or central bank in conditions of relative backwardness might well be replaced over time by more ‘normal’ instruments of private enterprise investment. Over time the state might thereby relinquish controls over trade and production; this in turn yields more power to individuals and markets (Inkster 2001). The mechanisms of industrial capitalism in late developers will, over time, begin to appear increasingly like those of the early starters. In contrast to such instrumentalism, most theories of an ultimate convergence of systems attempt to say something about the ﬁnal conﬂuence of the fundamental social and cultural conﬁgurations of advanced societies, and to this extent are more akin to recent theories about the ‘end of history’, the approach of an era wherein the historical demise of all alternatives leaves only a hegemonic liberal capitalism within which change is merely evolutionary and from which more paradigm-disturbing ideological and other conflicts have been removed. This perspective will be returned to as our exit from Chapter 7. Unfortunately, it is relatively easy to slip inadvertently from one identity to the other, to claim that the removal of relative backwardness over time is equivalent to a more fundamental convergence of systems. This book has argued that much of Japanese economic history might be explained in terms of an historical departure from an initial Meiji position of relative economic backwardness and catch-up. Here we adopt a sceptical attitude to claims that the changes of the endaka or earlier years amount to convergence with a mythical Western or capitalist norm. The convergence theories

50 The Japanese industrial economy associated with the classsical studies of ‘modernisation’ were only ever convincing in so far as they concentrated solely on the relatively early stages of industrialisation, wherein one might expect a certain co-variance of rates of change in various institutions. As Eisenstadt summarised, at a time when convergence perspectives were still popular, the assumptions of such approaches ‘predicated that the processs of modernization of the different economic and political institutional spheres tended to coalesce in relatively similar patterns’ (Eisenstadt 1978: 169). Whether it was ever really legitimate to move on from such early imperatives of industrial revolution to the claim that continuing national successes would depend on further ‘moves in a general commmon evolutionary direction’ was always problematic. In 1996 Toyota’s co-op union began to offer its 205,000 members a new service: the visiting and cleaning of family grave sites. At a cost of ¥5,000 (around $50), the union would send out someone to tidy up around the grave, leave flowers and incense, pour water, pray and then snap a picture. Both Western and Japanese commentators have made a great deal indeed of this sort of cultural and instrumental admixture. Greenfeld writes well of those Japanese grandmothers in kimonos who ‘bow in gratitude to their automated banking machines’ (Greenfeld 1994: 271) Another side of a similar coin is seen in the ancient Chinese characters inscribed on the uniforms of the Tokyo bosozoku gangs. Or in the pinstriped salarymen as they lie satiated in sake on the early-morning platforms of high-tech commuter stations. But in this Japanese suspension between traditional mores and modern artefacts there is little that is really new or unique. In 1953 when Japanese were asked to choose between the comparative weights of ‘tradition’ and ‘individual evaluation’ in deciding on matters of social morality, 35 per cent chose tradition. In 1978 this had mildly risen to 42 per cent, the opposite of what we might ﬁnd for the UK or USA. But from just this sort of evidence such Western analysts as Peter Berger have identiﬁed a real movement, ‘that Japanese culture is indeed changing toward more individuated patterns’. Following a conventional sociological line, one of Berger’s cardinal premises is that ‘all over the world, at least in nonsocialist societies, modernization has an individuating effect’ (Berger 1986: 167–70). For Berger convergence spells a general weakening of social subordination as a characteristic feature of Japan, a change which could well reduce the capacity of the social system ‘to continue integrating individuals into groups with a strong sense of identity and common destiny’. His tentative pre-endaka (1986) judgment on East Asian societies more generally was that the cross-national evidence on individuating modernity is strong enough to make one very skeptical about the ability of these societies to continue on their merry course of happy ‘groupism’ . . . it is likely that these societies will sooner or later face some of the current problems of western society, both in areas of economic productivity and of political governability. (Berger 1986: 170) The salience of the immediate prediction should not overcome the weaknesses inherent in this approach. What are our proper measures to be? The modern ‘ofﬁce

Maturity 51 lady’, out every night in city clubs, will still utilise or fall social victim to the omiai, the meeting designed to arrange an appropriate marriage. How then to measure ﬁlial authority and familial respect in a world where youth moves freely and without much friction into and out of the sphere of the salaryman? What is it that is supposed to be changing in the social life of Japan, the public character of individuals (tatemae) or their true character (honne), and how may surveys in 1953, 1978 or 2000 successfully and consistently separate the one from the other? A major question relates to the sources of seeming convergence or, more generally, Westernisation, as well as to its measurement. Are such recent social changes generated by cultural diffusion or emulatory convergence on one hand, or by historical or evolutionary convergence on the other, or by some mixture of the two? Emulation is bound to occur given the capacity of international media and technologies both to contain and to transform social practices. When technology transfer occurred over time as a major feature of dynamic development, so too did sociocultural diffusion occur, especially in the consumption of the products of such foreign technologies, from media products themselves to household goods to contraceptives or new dietary standards. Historically, and conditioned by war, they also contained an implicit cultural message concerning the instrumental superiority of the democratic, liberal, individualistic cultures from which they came. So we might well expect this level of ‘convergence’ through the interactions and emulations of catch-up. Thus, the then shocking but since symbolic riots at the University of Tokyo, led by the Non-Sect Radical Movement in 1968, may easily be seen as an epiphenomenon of the global student and radical unrest of that year, and directly attributable to international media radiating inﬂuences from core areas of advanced social change and experiment. Similarly, the increased availability of cocaine, Ecstasy and marijuana may be explained with reference to the travels overseas during the 1980s of thousands of children of the bubble executives of Japan Inc. Again, the life of the clubs and their hostesses may be put down to the increased presence of large numbers of illegal foreign workers and migrants. Evolutionary convergence, the postulate of most real convergence theories, acts only as systems converge because of the natural imperatives of capitalist development through time. Japan has clearly been subjected to the emulatory form of instrumental convergence for a considerable time. But the difﬁculty of isolating measurements makes it risky to claim a significant process of evolutionary convergence, although it is plausible that this process in now at its initial stages. It is certainly feasible that the later developers of East Asia are now strongly subjected to the forces of emulatory convergence. The weakness of convergence theory is that it trivialises real cultural, social and institutional distinctions. By the 1990s Japanese authorities tended to translate social change as those transformations in institutions which have long been seen as central to fast economic growth. Thus in its White Paper on the Life of the Nation in 1994 the Economic Planning Agency itemised such factors as the ageing of society, growing international awareness and the increase in two-income families as influential in altering individual perceptions of the company.

52 The Japanese industrial economy Resistance to changing jobs in mid-career has lessened and the system of seniority-based pay raises and promotions has come under review. With these trends, the feeling of unity and strong sense of belonging that employees used to feel towards the company have weakened, as have the degree of restraint the company exercises over employees and the employees’ dependence on the company. The idea that personal development can be realized through duties and personal communication in the workplace is expected to gain ground. In the future, it is predicted that people will live full lives on many levels, and personal contact will not simply be work-related but will take place everywhere, especially within the family and in the community. (Economic Planning Agency 1994: 3) The implicit model here seems to be that demographic or economic factors have forced a real change in institutions but not in basic cultural traits. That is, the theme is not a loss of duties and relationships but a switch in their institutional operation, away from the postwar company and back towards more traditional sites of family and community. Such an approach serves to insert further dynamic elements into the Nakane model (above) of Japanese society. We shall return to aspects of this theme in Chapter 6.

Limits to Japanese growth From a mess of possibilities we might here suggest that there are three major perspectives concerning the present and future social underpinnings and social problems of the Japanese economic system. Each of these more or less draws on recent analyses of Japanese social history. The ﬁrst perspective argues that for various reasons it is at least premature to claim that social changes in Japan are undermining the trajectory of economic growth. It is quite feasible that the fundamental loyalties and obligations of ‘historical’ Japan have not altered and continue to underpin economic change. Furthermore, Japan shares many of such key cultural assets with parts of East Asia that in very recent years have also achieved spectacular economic growth. It is reasonable to argue that recent economic, demographic and other changes have altered key institutions in a manner which hardly touches underlying social mores. It is also reasonable to posit that many of the reigning institutions of Japan, especially those in the public and commercial spheres, are not particularly reﬂective of underlying social mores, have indeed arisen through the conjunctures of late development, of Occupation and through global media inﬂuences. They were temporary phenomena of late development, just as emerging new institutions in both private and public spheres may be temporary features of a capitalist, but increasingly post-industrial, maturity. In contradiction, a second perspective suggests the likelihood that a lack of institutional social change will act as a barrier to continued growth and prosperity. That is, the institutions of late development are not appropriate to a mature commercial, technological and political incorporation into the increasingly complex global system. In this perspective the real problem for Japan is caused by the cost and

Maturity 53 slowness of social response to the social and institutional imperatives of modern capitalism, the technologies and sites of which have increasingly moved from manufacturing industries to services and the ever-shifting worlds of non-work: tourism, leisure, sport, entertainment and the life-needs of the increasingly large numbers of older, retired peoples of the prosperous nations of our globe. In this second perspective, then, the endaka elements of social change must, in the main, be encouraged as ingredients of a further ﬂexibility, where the sources of commercial dynamism pass from private enterprise or government agencies to individual interests and groups. Thus, fast growth has been often associated with such social features as cultural homogeneity, a standardised education system, group co-operation at work, a high savings propensity etc. However, such attributes now stiﬂe the exploitation of those imminent opportunities that are associated with changing global circumstances. As Mitsuko Shimomura, the editor of the Asahi Journal, summarised in a luncheon lecture in Tokyo in April 1990, such institutional attributes ‘resulted in the establishment of a climate that hinders individuality, creativity, responsibility, spirituality, ethics and value standards and broader well-balanced visions of the world; qualities that are increasingly needed as Japanese society struggles to effect positive change’ (Shimomura 1990: 11–15). Shimomura went on to warn of the essential ‘poverty of diversity’ which is symptomatic of the Japanese social system and fostered by an ingrained educational system which is ‘generally more adept at implanting technical expertise and knowledge than nurturing creativity and an individual’s own thought and values’. Analogously, within private enterprise the relatively recent traditions of lifetime employment and seniority structures ‘do not provide for ﬂexibility and dynamism in dealing with an outside world with different values’. The old Todai-based elite networks may have served the functions of concentration and conservation of talents and energies during the struggling phases of catch-up from relative economic backwardness, but within the mature economy they induce an ‘incessant protectionism’, which may only be altered by the intrusion of new social elements – women, the young and the foreign. In this chapter we have already suggested that the ﬁrst two of these elements might be expected to emerge as powerful vehicles of social change as relative backwardness disappears in almost any system: scarcity of labour and higher wages make a pragmatic difference. Here we might now suggest that the newer foreign elements have hitherto served more to measure the degree of ‘incessant protectionism’ in Japanese society than to effect much in the way of social re-evaluation. By 1990 the number of illegal foreign workers in Japan had exceeded 100,000, rising rapidly to an estimated 290,000 by November 1992, still a much smaller proportion of the workforce than could be found in Europe or the USA or, indeed, in most other nations of the world. Yet in Japan, the general social and ofﬁcial reactions to the new inﬂux were pervasive and often very vocal. Some of this could be explained by the nature of the illegal foreign employment: almost 90 per cent of women apprehended as illegal immigrants were working as bar hostesses, strippers and prostitutes. However, the actual number of such female workers seems to have been far below that of male factory and construction

54 The Japanese industrial economy labourers from the Philippines, Korea, Thailand, Malaysia and elsewhere. Most of such workers have entered medium and small enterprises faced with rising labour costs, and have thus permeated into the underbelly of the economy (pp. 46–9). Thus the endaka economic changes have forced a type of solution which has in turn created social friction as reality rubbed against notions of homogeneity, particularity and purity. Amongst Japanese liberals the short-term solution was seen as improved training of foreign workers, but the permanent policy solution was seen as closure of the influx alongside better training of the domestic workforce and improved technology to allow Japan once more to become reliant on only its own labour force. In recent years, the Japanese educational system has become a particular focus of this second perspective. Western commentators have quite commonly attributed Japanese economic success to the efﬁciency of its education. Authors such as Rohlen, Duke and White have in different ways seen education as behind the creation of key human resources: the inculcation of loyalty, training in speciﬁc skills, superior work practices, late selection and late reward of abilities, diligence and positive attitudes and so on, all of which have been seen as outcomes of a superior system (Rohlen 1987: 42–9, Duke 1986, White 1987). Believing with White that Japan ‘is homogeneous and middle class in character’ (White 1987: 46), such approaches underplay the social costs and exclusions involved in selection processes and discipline building. In a catch-up context requiring fast basic training, memory, discipline and emulation, such a system was appropriate but elitist. In the modern economy it is no longer appropriate but remains elitist. James and Benjamin, and Horiuchi, have shown that during the 1970s the higher educational system became if anything more selective and that students from poor backgrounds received poor education. Horiuchi went on to argue that, given that the Japanese educational system was probably less responsive than other subsystems to changes in the economy, then its continued growth might involve a serious misallocation of resources (Horiuchi 1980). Of equal importance is the known lack of facilities for vocational, part-time and evening education for those engaged in the smaller enterprises. Because truly vocational education is attached to the large private enterprises, a good deal of human capital is locked into small and medium-sized firms and continually wasted on a large scale. Whilst this exclusion mechanism has been a feature of Japan for some years, the opportunity cost of the educational neglect of workers in small ﬁrms and part-time employment in generally undernourished city suburbs is now much greater. The third perspective would identify Japan’s major problems as arising once more from developments in the outside world as these coincide with recent internal economic factors of maturity and natural limits imposed by size, location, demography, climate and so on. However, the obvious prospects of further but unidentiﬁable advanced technological changes render even such physical, objective constraints problematic, and by elimination increase the importance of the external factors revolving around altering global institutions and diplomatic relations. In this perspective internal social constraints or resistances may cause problems of adjustment and control, but rarely a halt to all those agencies and sites of economic

Maturity 55 progress and expansion that Japan has accumulated over the last hundred years and more. Future gowth is therefore more likely to be limited by an unfortunate combination of internal physical environmental forces and externally generated global frictions and disturbances. The physical and the social have come together in recent years in the initiatives of the women’s environmental movement, perhaps best personiﬁed in Michiko Ishimura (born 1927), who in a series of non-ﬁction novels exposed the horrors of ‘Minamata disease’, the mercury poisoning caused by industrial pollution, and created a collective bible for Japan’s environmental movement from the 1970s.13 Interestingly, in her major work Ishimura argues both that such a case condemns the whole trajectory of industrial modernism and that only women may with any veracity address and solve the environmental problem. This dual claim sketches a remarkable parallel with radical feminist conservationism in the West.

4

Forging explanations Technology

A historical perspective suggests that the central questions are not whether industrial technologies will be transferred, but rather when it will happen, where it will happen, which technologies will be transferred, how they will be modiﬁed in the process, and how rapidly this process will occur. (Nathan Rosenberg, 1982) No Man can set Bounds to Improvements even in Imagination; and therefore, we may still assert, that the richer manufacturing Nation will maintain its Superiority over the poorer one, notwithstanding this latter maybe likewise advancing towards Perfection. (Reverend Josiah Tucker, 1758)

On modes of explanation In Chapter 2 we suggested that economistic arguments may at times be insufﬁcient as sturdy explanations of economic effects. In our example the early Meiji silk industry and its thriving exports did not emerge as an automatic outcome of some naturally existent comparative advantage. Such advantages had to be converted into the reality of commercial operations, this involving key Japanese agents in the recognition of both the threat and the opportunities afforded by the European silkworm disease, in selection of Western advice on scientific matters, in technological investigation and applications, and in production and marketing cooperation and co-ordination at new levels of organisation involving sophisticated interactions with Western agency. None of the items on this list was somehow ‘natural’ to the purely economic context of the time, none was automatically ‘calledup’ by new commercial circumstance and all posed institutional demands. We might specify this point further by a brief consideration of the well-known Caves test relating to the role of foreign trade in overall growth. A classic economistic view would run as follows. If the common export-led growth model for Japanese industrial success is to be upheld, then it must pass the test formulated by R. E. Caves in 1971. If the true motor of growth in the later Meiji years or of the so-called ‘miracle’ years of the 1960s was a sustained increased

Forging explanations 57 demand for Japanese goods in foreign markets, then there should be strong evidence of a significant volume increase of Japanese exports together with an equally signiﬁcant increase in the foreign prices of such exports (Caves 1971). Similarly, K. Akamatsu derived his gankokeitai or ‘ﬂying geese pattern’ to describe changes in the composition of trade. In this model, an initially high level of importation of capital equipment and technology is paid for by a signiﬁcant volume increase in exports of manufactures and this gradually gives way to a rise in the production of such goods internally (Akamatsu 1962). In history the Caves test is seldom passed, and Shinohara posited a famous thesis that, in the post-1945 years and probably before, the strong export performance of the Japanese economy was a direct function of an undervalued yen, that is Japanese exports were artiﬁcially cheap in foreign places (Shinohara 1962, 1970). We agree that Japan usually fails the Caves test and that fast export growth was some reﬂection of the comparatively low price levels of Japanese goods in foreign markets. But our position arises from a form of social economics eschewed by the more formal approach of the economists. Using the same sort of trading data we may depart from the economistic style of argument on at least two pathways. First, we have stressed the vital role of imported technologies, materials and ideas in reducing the internal production costs of export products. Export prices were not a mere function of low labour costs and a declining terms of trade, and the major function of trade in Japanese industrialisation was on the import side. But more extensively, we also claim that such productive relationships were the outcome of broadly ‘social’ forces, particularly those which induced the efﬁcient workings of institutions that harboured transferred technologies and ideas and those that allowed the modernising elite to pursue policies of industrial and commercial reform, as in our silk example above. An economistic version of Japanese trade would not work because it would not explore why technology transfer worked in Meiji Japan, or which institutions outside of those of very rudimentary markets really determined the character of commercial relations, and so on. Again, the actual workings of the Akamatsu model depended on the retention of economic sovereignty, particularly the move from government instigation of import substitution activity (1881–1996) towards protection of infant industries (1896–1914), an impossible shift in the absence of the gaining of tariff autonomy during 1897–9, a result of ofﬁcial political, commercial and diplomatic activity whose character and effectiveness lies beyond the reach of formal economics. Martin Fransman notes something similar in his astute summary of the modes of presentation resorted to in ‘explanations’ of Japan’s successful transfer, assimilation and improvement of advanced technologies in the twentieth century. Noting that major economistic accounts acknowledge the development of technology as a key element in Japan’s economic growth and then commonly resort to a closing formula of the sort which raises the image of the ‘social capacity’ to import and receive and adapt, Fransman judges that such a tactic ‘does not take us very far down the road towards an understanding of Japanese eonomic success . . . it is clearly necessary that we develop a more penetrating analysis of the process whereby technological knowledge is acquired, assimilated and improved’ (Fransman 1988: 87).

58 The Japanese industrial economy We have noted the insufficiency of the economistic explanatory mode, particularly with reference to the character and mechanisms of inward technology transfer in Japanese industrial history. In this chapter we forge an explanation of Japanese industrialisation which centres on the processes and mechanisms of technology transfer, assimilation and adaptation, but depends on neither a technological nor an economic determination of the causal regress. This is not to say that there are no valid sufficient arguments derived from purely economic considerations. Thus in an industry very dependent on producer demand, such as the early Japanese chemical industry, it is obvious that technology transfers might be either curtailed or directed by the small size of the market. This might help explain the Japanese transfer and use of the lead-chamber process over the contact process (in sulphuric acid manufacture), or the Leblanc process over that of Solvay (in soda production). Yet such choices might be equally well explained in terms of the close commercial relations at that time with Britain, where both processes were retained, or by insufﬁcient search operations, or in terms of licensing problems (as with Solvay) and so on. But more importantly, even if scale determined original choices or limitations, this argument does not in itself lead to the conclusion that subsquent increases in scale of operation will automatically induce the transfer and diffusion of what are considered best-practice technologies elsewhere. Apart from different mixtures of factor endowments or raw material qualities, and varying commitments to complementary technologies in related industries, choices will be constrained by institutions and by visions of what is possible amongst key agents of change.

The conditions of technology transfer Technology transfer, especially from rich to poor, nearly always fails at high cost. As Edwin Mansﬁeld emphasised so long ago, this is principally because it is a complicated and extended process requiring systematic linkages, reasonable calculations and thus a constancy of regime. Mansfield distinquished between vertical technology transfer (when information transfers from basic research to applications, to design, to commercialisation in a linear-type model) and horizontal technology transfer, (where technology of one system is transferred to another). In the case of signiﬁcant transfers into Japan, both levels were in operation in the process whereby complex artefacts were diffused into more common usage. As Mansﬁeld noted, ‘the difﬁculties and costs are much greater under these circumstances than if only a horizontal transfer is involved’ (Mansﬁeld 1975: 374). In other words, transfers between systems of like capacity are difﬁcult, transfers involving a complex learning process through new institutions may be impossible. An interesting variation on this theme occurred during the Crimean War when British policy-makers attempted to overhaul their military production by adopting the central features of the ‘American system’ of manufacturing, the system based on interchangeability and mass production. During the years 1853–4 British private interests and a Parliamentary Committee combined to ‘search’ the American system for those of its components susceptible to emulation. At the time it was frankly

Forging explanations 59 accepted that for the most part the Americans possessed little advantage over the British in terms of technique (actual machine design, construction and performance), that in Mansﬁeld’s sense there seemed little vertical diffusion involved. But what the USA had captured to its great advantage was the organisational innovation of interchangeability, which over the next half century was to be a fundamental mode of operation in the industrial economy. The ‘technology’ to be transferred across the Atlantic was far more than the speciﬁc tools and machines, many of which had been previously transferred from Britain, for, as Rosenberg has stressed, it involved the use of tools in a different workshop space, a systematic arrangement of machines through the ‘progress of material through the manufactury’ and the ‘discipline and sobriety of the employed’, or what we might label a contrasting context of cognition and action (Rosenberg 1969: 193). Technology transfer of this sort included intrinsically the immediate organised environment of the artefacts themselves, a perspective which accords with the systems approaches of such modern analysts as Shrum or Hughes (Bijker et al. 1987, Shrum 1985). In the end the ‘American system’ did not diffuse throughout Birmingham or London as a result of such searches, and this was almost certainly because of its highly institutionalised features. Machine arrangements and related work processes were embedded in a distinctive technological system, itself evolved within a non-British enterprise, factor, market and skills environment. Vertical institutional transfer may be of greater salience than even Mansﬁeld’s vertical technological transfer. Yet Britain and the USA spoke the same language, shared the same core technologies and understood the same basic scientiﬁc or logistical principles. Tokyo Electronics snatched America’s electronics lead by purchasing the transistor in the mid-1950s. The transistor had been invented in the USA in 1947, but apparently stood beyond the pale of the main market inducements created within that nation’s technological system. Just as the British had searched America for the elusive X-factor which when transferred would revitalise their own system, so the Japanese one hundered years later ventured abroad in an effort to increase the array of marketable electronic appliances. The difference between the two cases might be clear enough. The British failed in their quest because they were aiming to transfer the closely nested central elements of a distinct technological system, where the artefacts concerned were of small relevance – indeed, the US artefacts could be created in Britain. The Japanese succeeded because they purchased a discrete artefact that was demonstrably superior to anything produced within their system but was amenable to all but instant diffusion within that system. The lesson is that techniques and institutions are closely associated, transfer of the one will involve innovation in the other, and this may be costly, time-consuming and conﬂict-generating. The more contrasting the techniques, the more difﬁcult their transfer, as caught in Mansﬁeld’s approach. But in addition, even technique transfers between similar systems might fail if seemingly detachable physical artefacts are socially embedded. Finally, the success of the Japanese might be explained as a contrast. An inferiority of technological know-how was compensated for by a speedy search operation, institutional adaptation and an ability to recognise the new product possiblities inherent in a new process technology.

60 The Japanese industrial economy The sociology of this theme has been extended by writers such as Randall Collins, who depart with the assumption of the ‘embeddedness of technology in a social context’ and move on to the conditions of technological advancement. Collins argues that, in terms of adoption of technique from an advanced core, success is much more likely in cases of planned geopolitical development, precisely of the sort associated with Meiji strategies for the escape from imperialism or dependency by utilising the production techniques of the advanced aggressors. From a very general global perspective, Collins concludes that technological innovation in new sites may not result from market forces at all, but from ‘something analogous to the market in the military sphere . . . This allows the time period for the successive technological improvements of an arms race’ (Collins 1986: 84, 94, Schroeder 1995). We have noted the function of arsenals and military demands in the technology transfers of the Meiji years (Inkster 2001, Yamamura 1977). Appraising Henry Rosovsky’s summary of Japanese experience, that ‘Western technology need not be treated as a given; simple and small improvements suited to local conditions are frequently possible’, Nathan Rosenberg highlighted the necessary conditions for successful technology transfer, all of which centred on indigenous technological capacity (Rosenberg 1982: 270–5, Rosovsky 1972: 248–9). Original transfer requires search, selection and modiﬁcation, processes described for Meiji and interwar Japan in Chapter 1. Subsequent adaptation processes may be through the use of second-hand machinery and other less-than-best techniques, through the use of cheap labour in longer shifts and for repairs, or through the use of domestic materials in construction and maintenance, all of which may be found in the Meiji years. This formula is identical to the position of Abramovitz, who at one point concludes that ‘tenacious societal characteristics normally account for a portion, perhaps a substantial portion, of a country’s past failure to achieve as high a level of productivity as economically more advanced countries’ (Abramovitz 1986: 387). This touches upon methods of resistance reduction or removal, a theme of Chapter 5. But for Abramovitz social capacity is technical competence, measured by an ability to ‘adapt to the requirements of change’. If a nation exposed to technology transfers transcends its own dependency, then the gradual closing of the technology gap does not inevitably mean a fall in productivity, a point made evident in the postwar ‘golden age’ of catch-up, when Japan and some European nations transcended their relative backwardness to the USA through transfers aided by the Marshall Plan and transnational corporations, but then went on to further increased productivities in the 1970s and 1980s. The erstwhile receiver of technique can become a creator of technique and ‘the evolution of social capability connected with catching up itself raises the possibility that followers may forge ahead of even progressive leaders’ (Abramovitz 1986: 389), as evidenced in the more general East Asia Edge of the 1980s and 1990s. The exploitation of advanced technology requires the diffusion of information within a responsive technological system, the movement of resources from one area to another, and a high level of investment. Although Japan has historically evidenced a high rate of savings and investment, we have argued that investment has itself been induced by the historical process of technology transfer, and that in the period

Forging explanations 61 of initial transfers to around 1890, much was accomplished in face of a scarcity of investment funds, yet without resort to signiﬁcant foreign capital prior to 1895. Our argument has been that Japanese history illustrates the value of explicit institutions of information dispersal and inducements to resource-shifting which have been initiated in various ways by the public sector. Such an argument does not in itself explain the responsiveness of the private sector to new information or other inducements, although this subject is broached in Chapters 1 and 6. In the period when a great technological lag is evident, as for Japan to the 1950s, the creation of an internal sequence of technological progress does not have to entail breakthrough innovation. Findlay has argued that progress in a technological system does not require the ability to innovate beyond the level of the existing imported best technique (Findlay 1978). Solo’s notion of ‘social competence’ entails the ability to recognise what can be transferred and adopted, adaptation facilities (for example arsenals and dockyards in Meiji Japan) and institutional responsiveness to ‘provide a more hospitable environment for the advanced technology’. Because core knowledge is ever-advancing, Solo judges that it is ‘the problem-solving, information-producing apparati that must be mastered, adopted and applied’ if technology transfer is to be successfully sustained at reasonable cost to the existing system, and we have argued that the satisfaction of such desiderata is institutionbound (Solo 1966: 93–5). Solo goes on elsewhere to suggest the need for an exhaustive capacity, one that can ‘contain the generation, recapitulation, dissemination of information, the determinants of creativity, the process of learning by individuals and groups, the disintegration and re-creation of ideology and values, the receptivity or resistance to novelty, and the scope of the power and the nature of opportunity and the motivation to transform technology’ (Solo 1969: 863). Whilst this is an admirable description of absorption capacity within a mature system, development under conditions of relative backwardness by deﬁnition meant a lack of most of these functions or capabilities and the need to create them with reasonable felicity from the nation’s existing cultural, political and informational resources. This is a subject of the analysis throughout our text. We might usefully begin our elaboration by suggesting that much of Solo’s framework may be constructed within the process of industrial transformation (that is as co-requisites) rather than as necessary prerequisites to such change. Figure 1 posits an institutional feedback system which may serve to reduce the level of initial requirements and which appears to ﬁt attributes of Japan after c. 1868. Allowing that in the years of initial industrial transformation there is little direct interaction between blocks A and B, over time a process of adaptation and incremental technical and institutional innovation may ultimately lead to ﬂow X4 (Japan in the 1960s). The Meiji need to adapt transferred technology created some limited, specific capacity in textiles and military-related metallurgy and engineering in block C (ﬂow X1), which in turn impacted back on various areas of Japanese industry (ﬂow X3). During the twentieth century the indigenous technological capacity developed sufficiently to create inputs for further adaptive-developmental work, perhaps especially evident in the transfers of the 1930s. Flow X2, composed of such elements as informed choice (bounded rationality), screening and the assessment of foreign

62 The Japanese industrial economy technology strengthened throughout the years of Meiji. In this model of Japanese industrialisation much of the new capability is directed at the adaptation of technique in block C, possibly predominant until the 1970s or even later. We argue that Japan ﬁts well the dictum of Harry Johnson that through time a nation ‘could achieve leadership in applications by drawing on knowledge provided by the basic research conducted by the scientists of other countries, conﬁning its participation in basic science to the minimum required to keep in touch with developments elsewhere and “ﬁll in the holes” where necesssary’ (Johnson 1975: 14). Blumenthal tested the more common, reverse thesis of an inverse correlation (or substitution effect) between levels of imported technology and domestic R&D for six nations, and found that Japan and two others exhibited a positive correlation between the two variables (Blumenthal 1979: 304). In other words, historically, technology transfer into Japan has been complementary to domestic technological development, an econometric ﬁnding very compatible with the analysis of this book and this chapter, which incorporate more speciﬁc institutional elements.

Indigenous technology system

Technology transfer A X1

Scientific research (R&D)

X2

B X3

X4

Technology adaptation and development C

Industrial production

Figure 1 Technology transfer, adaptation and indigenous capacity

Design and engineering

Forging explanations 63 The following sections examine some features of Japanese technology transfer in the light of the above discussion, suggest the key role of institutions in capturing the potential advantages of relative backwardness, and attempt to place the recent and still current debate on Japanese technological ‘creativity’ in the context of its history.

Japanese exceptionalism: the primacy of technology transfer All major economic historians of Japan acknowledge the primacy of technology transfer since the Meiji Restoration.1 Here we wish to isolate some important features of that historical process in order to suggest a social economics of Japanese development, and in particular to show the importance of institutional innovation and adaptation over time. By the interwar years the major institutional vehicle for the transfer of technology was the foreign ﬁrm, operating in Japan through branch plants or through acquiring a minority interest in Japanese ﬁrms in exchange for patent rights, equipment or engineering skills. Through such arrangements, Siemens, General Electric and Westinghouse introduced a number of electrical goods and processes, Ford and General Motors the automobile. The Mazda lamp was developed in Japan as a result of the afﬁliation of the Tokyo Electric Light Company with General Electric, which began in 1905. Because the patent rights on the GE tungsten ﬁlament expired only in 1927, the ﬁrm secured monopoly over the new technologies. This was a case of tied licensing, with TELC not being permitted by GE to export except to the Japanese colonies. The large and expanding home market meant that the cost of technology importing could be easily borne by innovating private enterprise. New firms such as Nitchitsu or Nissan Chemicals emerged on the basis of exploitation of the Haber-Bosch and related technologies, utilising hydroelectricity and an existing capacity to produce chemical fertilisers prior to the introduction of synthetic ammonia. This seems to have been an example of Findlay’s dictum (p. 61) concerning the minimal requirements for technology transfer, and perhaps of Collins’s theories concerning the geopolitical imperative: during the 1914–18 war the supply of Chilean sodium nitrate was clearly put at risk, a problem removed by the commercial efﬁcacy of the Haber-Bosch process. Rather than improve on the core techniques, Japanese transfer ﬁrms tended to license down to users, and any early attempts at Japanese improvements in electrochemicals were left to the Special Nitrogen Research Laboratory founded by the government in 1918, which subsequently concentrated on cost-reducing investigations into the use of different catalysts. Such enterprise strategy replaced the earlier transfer mechanisms of the foreign trading companies and merchants (Inkster 2001). These had included such firms as the American Frazer and Co., agents for Baldwin locomotives, who operated in Japan into the late 1930s. By that decade the phenomenal growth of the Japanese chemical industry was entirely dependent upon co-opted Western technology at a time when competition amongst Western suppliers permitted choice at relatively low cost, and where many basic processes were quite free of property rights constraints: that is they no longer

64 The Japanese industrial economy had patent protection. In chemicals, initial large transfers were soon followed by improvement and adaptive innovation. The Japanese synthetic fuel industry owed much to a group of foreign core processes, including the Fischer-Tropsch method which synthesised gases with the aid of a catalyst and was purchased outright by Mitsui Mining. In the meantime Mitsui Bussan Kaisha sent out its experts to Germany and purchased the machinery of the Fischer method for its 30,000-ton plant on the Miike coalfield in Kyushu. The signing of the 1936 German– Manchukuo Trade Treaty regulated a triangular trade, with Japan importing machinery and chemicals from Germany and exporting materials, machinery and textiles to Manchukuo. In return, Manchukuo exported staples to and imported machinery from Germany. From late 1937 the German ﬁrm of Otto Wolff extended credit to Manchukuo for their purchase of machinery for heavy industry. Under a separate treaty with Italy, Manchukuo supplied staples to Italy and in return received machinery and manufactures, much of which was re-exported to Japan. It seems clear that during the 1930s the national programme of military or strategic technology transfers was delivering a new institutional complex which served to bind the energies of both the public and private sectors. Again, this is suggested in developments in the chemical industry, particularly those centred on the naval demand for oil. Whilst the imported Fischer-Tropsch process allowed a synthesis of oil from coal, the more advanced method of coal hydrogenation of the Bergius technology produced a range of products including acids and construction materials. A range of Japanese institutions focused on this aspect of fuel chemistry, including the Japan Steel Laboratory and Mitsubishi Mining, but the Naval Fuel Depot at Tokuyama was the core site for the study of improvements in fuel technology as well as for attempts at commercialisation within the colonies through the ofﬁces of the South Manchurian Railway Company and the Korean Synthetic Oil Company. Most of the engineering and shipping ﬁrms operating in Japan in the 1930s were linked to foreign technology by licensing. Mitsubishi produced turbines under licence from Escher Wyss and Ljungston, Hidachi manufactured boilers under licence from several Yarrow-based enterprises. In addition, joint agreements were common in engineering. Thus Toyo and Babcock was a joint concern of Mitsui and Babcock and Wilcox; Shibaura Engineering Works was a joint concern of GE and Mitsui; the Japan Steel Works resulted from a joint agreement between ArmstrongVickers and Mitsui. So, in key areas technology transfer was dominated by large zaibatsu concerns in some form of partnership with leading Western enterprises. As G. C. Allen pointed out in 1940, one reason for this was that ‘the necessity of acquiring foreign patent rights precluded concerns without great capital resources from embarking on certain lines of manufacture’ (Allen in Schumpeter 1940: 345). Thus in Japan the drawn-out processes of technology transfer could impinge on market structure. There certainly appears to have been an identity between the phase of fast technology transfer and the growth spurt of all industry, but particularly the heavy industries. Catch-up here crowded into the years 1927–31 and ‘although technique and organisation had improved in other countries, the gap between Japan and the leading Western countries in industrial efficiency had appreciably

Forging explanations 65 narrowed’. American ﬁghter pilots eventually fought against Japanese aircraft whose origins could be traced back to US draughting boards, whose design was improved by the skills of Japanese trained at MIT, Stanford and Cal Tech, and whose production was dependent on Japanese who had been apprenticed to Curtis, Douglas, Boeing and Lockheed. There can be little doubt that the interwar period saw a strengthening of technological sovereignty at certain institutional levels. Despite the move to militarisation and the very fast growth of the heavy industries in the 1930s, Japan yet remained an insigniﬁcant net importer of foreign capital, which meant that the mechanisms of tehnology transfer remained with trade, licensing and government inducements. Industrialisation was now strongly associated with mechanisation, electriﬁcation and machine tools; by 1930 the engineering industries employed a hundred thousand workers mostly within zaibatsu ﬁrms linked by licence with GE and other leading Western ﬁrms and with vast imports of machinery and equipment: between 1929 and 1933 imports of the latter totalled some ¥120 million and came overwhelmingly from the USA. Advanced technical areas witnessed a high degree of foreign ownership: GM and Ford owned some 80 per cent of the Japanese automobile industry, and thereby were diffused into Japan key Western technologies, such as electric smelting, the contact process for sulphuric acid manufacture and the new-style open-hearth furnaces. Much private-sector activity was aided by a government intent on high levels of heavy industry growth: the machine tool industry as represented by Mitsui, Mitsubishi and Nissan was heavily subsidised by government and responsive to military contracting. Around that time Elizabeth Boody Schumpeter argued that the principal function of government was in regulating the institutional structure for technology transfers. A process of cultural persuasion, coercion and militarism was used to secure cheap labour in the small supplier ﬁrms, just as a ‘ﬁrst class labour market’ was created for metals and chemicals based on graduates and a complex of loyalty institutions embracing the notions of family nation and the institutional realities of group incentives, in-house training and the famous ‘Three Treasures’ of lifetime employment, seniority wage systems and enterprise unions (Schumpeter 1940: 613, 678). Government was also important to the emergence of a research and knowledge diffusion structure not unrelated to technical advance. Although it is true that chemical and engineering industries generally suffered from a lack of applied scientific knowledge and of practical experience, the absence of a well-defined researcher role in such a late developer had the advantage of ensuring that most Japanese scientists were at least involved in a range of consultancies, public services and commissions. Several scientists became important go-betweens, translating elements of Western scientiﬁc and technical knowledge to Japanese ofﬁcialdom and students, and this tendency was only hastened in the war of 1914–18. The blockade of Germany caused the isolation of Japan from its major scientiﬁc and industrial partner, and the imperatives of war saw the foundation of ten new university chairs in technical fields despite financial stringency elsewhere. Private enterprise expanded into the research ﬁeld. In 1915 a research division was founded at Takeda Pharmaceuticals, and Marumiya built its first research laboratory, this being

66 The Japanese industrial economy followed by research facilities in such other chemical ﬁrms as Mitsubishi, Sumitomo and Mitsui. In 1918 Asahi Glass began its applied chemical laboratory, and Tokyo Electric Company its research laboratories. In 1917 private enterprise and government combined to ﬁnance the Research Institute for Physics and Chemistry, and in the subsequent postwar years scientiﬁc missions directed at the silk industry, fuel, metallurgy, nutrition or nitrogen ﬁxation were now far less inﬂuenced by the Ministry of Education and received greater support from private enterprise. Japanese recovery from around 1950 was associated with US aid and procurements expenditures, a large amount of technology importing through licensing, a surge in Japanese investment in science and technology, and an increase in Japanese patenting. Between 1956 and 1972 some 176,000 foreign licence agreements were signed, mostly with the USA in such ﬁelds as electrical machinery, chemicals, pharmaceuticals and synthetic fibres. Clearly, during the 1950s and 1960s technology importing was particularly complementary to the building of an internal technological capability, and was a ﬁrm component of a related commodity trade: 60 per cent of all commodity imports were raw materials and fuels, 20 per cent machinery and equipment. The efficiency of the economy from that time was illustrated in the Japanese response to the 1973 oil crisis (Inkster 2001). Despite a very high dependence on oil and oil-related inputs, continued increases in productivity led to a higher industrial growth rate than in any other capitalist economy and the continuation of a buoyant export sector in the face of a general depression in world trade. The institutional backdrop to this technology transfer and industrial performance was very much that of government, ﬁrst through the Japan Development Bank’s subsidies and cheap loans to innovating ﬁrms, then through MITI’s ikusei policy of monitoring new industries through strategic policy phases. Technological and commercial information-gathering and goal-setting was followed by the growth of exchange facilities and loans, the issuing of licences for foreign technology importing, tax incentives and cartelisation. Micro-economic policy involving repeated interventions in the area of R&D and technology transfer were deemed necessary in order to push resources into areas where the potential for fast growth was high but where the unaided operation of market forces would be unlikely to sustain the necessary levels of investment and infrastucture. It has been frequently argued that it was the emerging synergy between government and enterprise which permitted the speedy moves fom technology transfer to import substitution to export promotion. By the 1980s a similar procedure was followed for declining staple industries, such as iron and steel, pharmaceuticals and textiles, all high-technology recipients of foreign transfers during the 1950s and 1960s. Policies which quickened the relocation of resources from such industries, such as retraining schemes, job search, allowances for scrapping and rebuilding or converting of equipment, could be used also to direct the geographical location of enterprises or aim assistance at particular groups of small ﬁrms. Certain features of the modern technology transfer process do stand out. Technologies were transferred partially and selectively after a great deal of screening

Forging explanations 67 based on local R&D capability. Foreign technology in non-strategic industries was particularly discouraged by highly bureaucratic selection processes and standards speciﬁcations. The existing large industrial base and the collective bidding of business and government raised bargaining power against foreign ﬁrms and agencies. Foreign ﬁrms were generally in a minority position in joint ventures and their activities were often tied in to strategic production areas. So, although the Japanese paid out a great deal in royalties, there was a low level of direct investment income remittance compared to such nations as Britain or Germany.2 Yet the domestic and foreign sales induced by technology transfer were very high indeed, particularly in electrical machinery and chemical products, with weaker impacts in the older industries. On the whole, exchange earnings from ﬁnal product exports far exceeded original royalty payments, and at any rate most foreign technology entered very large Japanese ﬁrms whose general strategies included adaptive innovation and plant layout novelties. During the 1960s some 30 per cent of total R&D expenditure in the private sector was allocated to adaptation and improvement of imported technologies. There can be little doubt that the success of transfers in modern times arose from institutional innovations, mostly in the private sector. The reformulation of zaibatsu entities such as Sumitomo or Mitsui in the guise of co-ordinated enterprises with a shared banking facility – the keiretsu structure – dominated the high-growth phase. Such institutional structures permitted co-operation in decision-making, the pooling of information and research facilities and the sharing of risks, especially in areas of high technology associated with transfers. Scale plus multifunctional linkages gave rise to the ‘ﬂexible rigidities’ nominated by Dore as a key to Japan’s success in those years. Dore stressed that the obligational net within the units of the keiretsu group (including bank and trading company) meant that changes in market forces might not immediately disturb agreed arrangements (Dore 1986). Fransman rightly emphasises that what we might here label ‘obligational drag’ (for which see further in Chapter 6) is conducive to technological change in so far as greater certainty induces greater investment in skills and machines and inter-firm co-operation becomes institutionalised and familiar (Fransman 1990). Of equal signiﬁcance are the more general claims of Mansﬁeld and others that very large ﬁrms are the most likely to institute chains of incremental innovation, which may be centred on diffusion of existing and newly transferred technique but are not necessarily technology leaders in core innovation. Azumi has carried this further by suggesting that the lower bureaucratisation allowed for in the keiretsu structure allows a capture of the advantages of scale with the ﬂexibilities required for greater innovative moves. In summary, during the high-growth phase the keiretsu format assisted technology transfer because its total size boosted the bargaining power required for contracts with foreign agencies or firms and created a wide circle of certainties and cooperations in the development of technical systems shared between different producing units, eliminating many contracting costs (Azumi 1985, 1987: 15). Linked banks were more likely to ﬁnance technological projects, and the role of shareholders as a check on innovative activity was strictly limited. We have elsewhere questioned the thesis that Japan ‘caught up’ with best technique generally during the 1970s (Inkster 2001) Although there was certainly

68 The Japanese industrial economy a decline in the demand for foreign technology in the machine sector, there was if anything an increase in demand for overseas technologies in the high-growth areas, especially in electronics and chemicals. But in a world situation where major trading partners, particularly the USA, were sceptical of Japan’s trade liberalisation, it was less permissible to wield the traditional Ministry of International Trade and Industry (MITI) weapons of infant-industry protectionism or other restrictive practices in an effort either to stimulate the new or to control the old. Higher incomes combined with newly expressed social and environmental problems (Chapter 3) to force wider policy goals, from the provision of social infrastructure in the cities to incometransfer policies for agriculture and small businesses. To an extent policy did turn from growth to the monitoring of declining industries, to energy and resource conservation, and to the ‘administrative reform’ of the bureaucracy in an attempt to cut the budget deficit. In total, the new environment prompted new policy measures designed to increase the capacity of the Japanese technological system to evolve a new generation of processses and products away from the old machinofacture trajectories of the golden age of catch-up.3 The promotion of ‘high tech’ in microelectronics or biotechnology has been seen as the hallmark of the new technology policies of the 1980s and 1990s. By direct activity and by incentives to enterprise, the government intention was the generation of industrially speciﬁc R&D for the high-tech sectors at a level beyond that of best technique elsewhere. In fact, increases in basic research were mostly generated within the enterprise sector itself, with government activity concentrated in taskoriented research involving novel institutional combinations. Thus the Technopolis strategy, designed sensibly enough to create sites of new industry and renovation for old industries, has since become buried in rhetoric, yet might be seen as an institutional response to new conditions of technology transfer and new demands for the diffusion of ‘core’ technologies between sectors rather than as fundamental to the creation of new high-technology processes. Government R&D expenditure is in fact relatively low, and funds to MITI have always been small (Inkster 2001). In such areas as telecommunications the direction of technical change has been affected much more by the patterns and levels of government orders and procurements, tax write-offs, loans and subsidies: most of this does not come under the accountancy of ofﬁcial R&D. To this should be added the operations of MITIsupported research links and co-operative R&D projects which were not necessarily ﬁnanced by government at all. During the 1980s there was a movement towards private-sector funding of the applied life sciences, which by 1985 provided twice as much funding in this area as government. In the specific area of ‘application of living bodies’ 82 per cent of expenditure was by enterprise. In the same year gene recombination received ¥36.2 billion, of which companies spent ¥19.3 billion. In contrast, any planned run-down of older so-called ‘saturated’ industries did not then involve any drastically reduced R&D expenditure. Indeed, in such industries there was something of a shift towards basic research in an effort to ‘find new frontiers’, and the 1980s saw increased expenditure on steel, non-ferrrous metals and ceramics R&D. Most of the increased R&D expenditures of the 1980s remained outside the universities. By the mid-1980s

Forging explanations 69 companies expended three times the combined expenditures of universities and research institutes on R&D, over two-thirds of which went into ‘developmental’ work, the largest commitments being in electrical machinery, communications, chemicals and transport. Between 1975 and 1985 Japan increased its share of US patents from 8.8 per cent to 19.3 per cent, more than the total granted to British, French and West German applicants combined. This directly reflected the increased emphasis of private enterprise on research-intensive activities, although it also accorded well with cries from the public sector concerned with the needs of restructuring. When Michiyuki Uenohara, an executive vice-president of the leading electronics company NEC, summarised that it ‘is a question of feeding back new technologies into existing mature products’ (Bell et al. 1985) he succinctly stated the essence of a strategy closely linking the public and private sectors, one which was to become a basis for such later institutional experiments as the Multifunctional Polis, the plan by MITI to establish a high-tech city in Australia (Inkster 1991b). Thus high-tech additions such as four-wheel steering and electronic controls were sought in order to rejuvenate and differentiate the market in the automobile industry, a strategy which appeared to beneﬁt such companies as Nissan. A fall away in consumer electronics in the late 1980s, and a shift to the offshore manufacture of mass-produced products such as audio equipment, spelled not an entire abandonment of that sector to lower-cost competition but a shift to such product innovations as high-deﬁnition television systems, miniature camcorders and Super-VHS format video recorders. At the same time major enterprises increasingly focused on non-consumer products such as microchips, ofﬁce machines and telecommunications, and began to command global heights in such high technology areas as high-density random access memories (D-RAMS), the most highly used category of chips for office equipment. In older industries the early switch was to process innovation, heralded by the massive investments in semiconductors between 1975 and 1985 in such areas as pulp and paper manufacture, chemicals, iron and steel and non-electrical machinery. This was joined by a deﬁnite strategy of diversiﬁcation based on product technologies. Among steelmakers, Kobe Steel moved into biotechnology, Nippon Steel into information systems, NKK into electronics. Many textile makers shifted into plastics, foodstuffs and even medical products. Furthermore, new technologies were a basis for the switch from manufacturing into service investments associated with the endaka years. As the value of knowledge-intensive software and systems increasingly outstripped that of basic hardware, electronics ﬁrms moved from manufacturing to services as a logistic switch as much as in conformity to domestic demand for banking, transport and general business services. Spanning various of these strategies, by the late 1980s ﬁrms such as NEC or Fujitsu had R&D budgets which exceeded 10 per cent of their annual turnover. If there was a catch-up switch in technology policy, its results in terms of industrial and technological growth have not been clear. The new policies necessitated proper recognition of a lucrative technology at the early stage of the product cycle, the regulation of competition – as in MITI’s control over the introduction of the Basic

70 The Japanese industrial economy Oxygen Furnace Process by arranging for equal access – and organised co-operative R&D, as in the computer industry and the infamous Very Large Scale Integration technology project of 1979–85, the Supercomputer project of 1981–9 and the Fifth Generation Computer project of 1982–91. Enterprise participation in such projects required some diffused ‘average’ techniques to exist already; otherwise leading ﬁrms would be unlikely, whatever the inducements, to ‘share’ knowledge and techniques or personnel. Thus the VLSI circuit memory chips research programme was designed as exemplary for the catch-up phase of institutional and technological growth. Yet, according to its contemporary analysts, the project developed little in the way of breakthrough technique, and a great deal of administrative effort was required in order to co-ordinate the co-operative activity of ﬁve major enterprises, four co-operative labs and MITI specialists. Many commentators rightly centre on the novelty of the institutional context when attempting to capture the essence of the modern technological system. Thus for Fransman the ‘Japanese technology-creating system’ refers particularly to the manner in which the institutional complex allows for research co-operation between commercially competing ﬁrms, usually by devolving to the lower-range task of coordinating the separate in-house research of individual companies in a group rather than truly joint research effort. As we might expect in a competitive market environment wherein government inducements and assurances cannot be everything, co-operation tends to operate at the node of co-ordination rather than that of creative advancement. Importantly, this sort of analysis focuses not on the creation of information but on its studied relocation to sites where the pressure to innovate might be greatest, as at the group level on the shop floor of a kanban production system (Fransman 1990, Inkster 2001). The evidence is that, through information strategies of this sort, technology and information transfer agreements, as between Hitachi and RCA, NEC and Honeywell, and Toshiba and GE, have historically provided a useful learning base for the growth of indigenous capabilities. Fransman argues that the pre-commercial, co-operative research agreements advocated by MITI encouraged the development of ‘oriented basic research’ within private enterprise. During the 1970s when a combination of the Nixon Shock (the decoupling of the US dollar and the gold standard in August 1971, as noted in Chapter 1) and IBM’s System 370 forced Japanese computer businesses out of the market, the three survivors, Hitachi, Fujitsu and NEC, were all members of NTT’s group of supplying ﬁrms, and to that extent inﬂuenced by government activity. For many years NTT and government were together fundamental to the establishment of co-operative research, as with the mainframe computer project of 1972–6 which was designed to address the competitive advantage of System 370. Clearly the institutional frame within which Japanese industrial technologies have operated since the 1970s is not that of Europe or the USA, where there was a tendency towards financial weakness, short-term strategies and inadequate institutional linkages between production, quality control and marketing, together with a fragmentation of brand names. Progressive ﬁrms attempting to escape such historical constraints did not possess the advantages of Japanese enterprises, where a growing gijutsu-rikkoku ideology of technocratic nationalism was encouraged by

Forging explanations 71 government agencies responding to the commercial aggression of the USA, and where a tradition of long-term technological ﬁnancing and planning was fostered by a complexity of government agencies, large ﬁrms and prefecturally based advice and guidance, the latter often intended to assist the technological improvement of small and medium-sized businesses. In some areas of very advanced technique the Japanese case suggests that it is at least possible for ofﬁcial activity to initiate a trajectory of response to rapid advances in other systems. Thus although in Japan there had been pressure from the Keidanren (Federation of Economic Organisations) to explore the commercial possibilities inherent in the life sciences from the 1970s, MITI took up biotechnologies as part of its wider restructuring strategy (see above) only from around 1980 as a response to Genentech and the Cohen-Boyer patent for rDNA technology. MITI’s interest in the chemical industry and the need to reduce oil imports led directly to the establishment of the Bioindustry Ofﬁce, a main function of which was to plan aspects of the long-term development of the new ﬁeld, to search out areas of international co-operation and to establish the new legislation required for intellectual property rights in this area. Official support for the industry in the form of protection, subsidies and incentives was not so important as might be predicted by the simple ‘Japan Inc.’ perspective. As we might now expect, it was the institutional context of policy and the response of the private sector, especially Mitsubishi Chemicals and Kyowa Hakko, which dominated events. It appears that MITI’s involvement strengthened its self-image as the new hataburiyaku, or standard-bearer, of Japanese high technology policy. We would argue on the available evidence that the strategy of technology transfer is still available to and operated by the Japanese industrial system, and that several recent institutional strategies, from techno-cities to co-operative research, are designed to situate the Japanese system as an optimal user of global core techniques, from wherever these may arise. A strategy of ‘waiting and transferring and adapting’ may operate for some time into the future. The existence of an efﬁcient technologyproduction organisation, including remarkably quick ‘down-times’ between shifts in factories (see further Chapter 6), means that Japanese enterprise may continue to produce ﬁnal products cheaply, variously, quickly and reliably. If product life cycles are shortening, this still remains a possible strategy. As one Japanese chemical ﬁrm is reported to have declared, even if ‘the Americans try to stop us by slapping patents on the results of their genetic engineering research, university research and the contents of patents eventually become public’ (Moritani 1986: 13). Japanese trading companies remain closely tied to production processes and have secured tremendous intelligence systems, despite the frights and disturbances of the endaka years. Japanese firms continue to buy into university research in other nations and frequently gain control over intellectual property. Others will continue to establish their own research facilities in advanced industrial systems, where they can employ sophisticated skills and techniques generated originally in the technological systems of the host nations. The restrictions on electronics trade of the European Union may have acted as the principal inducement to the growth of Japanese electronics investments within Europe, additionally attracted by the

72 The Japanese industrial economy possibilities of capturing local strengths in telecommunications and defence electronics. Similar moves may be expected repeatedly in the near future. Again, whatever the restrictive policies of the US government might be concerning technology leakage to Japan, individual ﬁrms will still beneﬁt by licensing (or making equivalent arrangements) to Japanese enterprise in exchange for access to Japanese ﬁnance or marketing expertise. Private enterprise will indubitably strive to beneﬁt from continued co-operative schemes aimed at fusing private and government R&D activity, as was evidenced to a degree in the Next Generation Base Technologies Development Programme, which combined initially the facilities of twenty-eight government labs, eighty-six private enterprises and thirteen universities. Although the ‘creativity’ strategy has often been envisaged as replacing that of technology transfer (see pp. 75–8), even now a lack of clear trends in technology policy or development suggests a continuation of Japanese eclectic pragmatism. This may be composed of the traditional transfer strategy, but with more attention given to feedback arrangements, as indicated ﬁrst as long ago as 1982 with the offer to foreign companies of participation in MITI’s Fifth Generation project, and more recently in the attempt at joint research arrangements between NTT and several US firms and international participation in the Human Frontiers Project. Such a reciprocal strategy may be expected to surge with the observed increased attempts in Europe to mount large co-operative programmes and to encourage pre-commercial collaborative research across nations embracing partnerships between public and private. At the same time individual European ﬁrms have been pursuing technological innovation through joint ventures with Japanese companies, such as the Fujitsu-ICC partnership. Europe may increasingly see the solution to some of its own technological problems in a growing technological dialogue with Japan. This would be quite complementary to the observed shift of Japanese private enterprise into basic or generic research – as early as the mid-1980s, NTT spent twice as much as MITI on R&D. It would also fit comfortably with the continuation of policies designed to redeﬁne and rejuvenate declining or ‘saturated’ industries before they become a social and budgetary drag on the entire national system: this may be what will keep Japanese social and economic efﬁciency above that of Western competitors in the years to come. Finally, we might also expect the Japanese government to make very serious attempts to continue in its long historical role as governor of conﬂict, especially that which might stem from technological discontentment. Whereas in Europe and the USA from the 1970s, dissatisfaction over the environmental wastage of many techniques was added to by the new hazards of high-technology research, including the threats to health that might arise from experimental manipulation of the genetic materials of living organisms, little discussion of such matters appeared in Japan. When this movement became increasingly politicised in the West, as it was shown how biotechnology in Western universities had become privatised and syphoned off into the private sector, again there was little debate in Japan, and the move towards techno-scepticism is only now developing real political strength. In her study of Japanese micro-electronics and the computer society, Morris-Suzuki makes it clear

Forging explanations 73 that a central feature of Japan’s ‘information capitalism’ is the co-opting of public knowledge through the complexities of the institutional structures presented here (Morris-Suzuki 1988). Important questions remain relating to the source of the institutional innovations associated with technology transfer and Japanese industrial modernisation. There is a strong claim that many key institutional components were themselves transferred into Japan from advanced systems, particularly those of (in approximate order) the Chinese and Koreans, Dutch, British, Germans and Americans. We might note that there appears to have been some positive relationship between the character of foreign institutional inﬂuence and the contemporaneous trend in scientiﬁc and technical transfer. Thus a long rangaku (Dutch-learning) history of Dutch–Japanese influence, including establishment of schools based on Dutch models from the eighteenth century, led to a speeding up of technology transfer under military imperatives during the crisis years of Tempo-Bakumatsu (from the 1830s to 1868). This focused almost entirely on Dutch science and technology, from the translation of P. van der Burg’s treatise on industrial technology in 1854 through the application of Dutch iron metallurgy in the han furnaces of Hakodate, Kamaishi and Kagoshima to the Dutch inﬂuence over the naval training school at Nagasaki from the 1850s. Similarly, the increased institutional inﬂuence of the British during the early Meiji years redirected the trajectory of technology transfers. It was Englishmen from Platt Bros machine manufactory in Oldham who in 1867 constructed the ﬁrst steampowered spinning plant at Kagoshima, the English engineer Edmund Morell constructed major railway lines between Tokyo and Yokahama and Osaka and Kobe, Dutch and English civil engineers in combination planned the bulk of Japanese canals, river embankments, harbours (for example Osaka), lighthouses and irrigation systems, and, with the exception of a single professor of industrial art, the ﬁrst cohort of thirty-two professors to the new Tokyo School of Engineering in 1871 were all British. Industrialising Germany seems to have replaced other foreign inﬂuences as a source of institutions, ideas and technologies around the 1890s, during a phase when Japan was investing increasingly in heavy and military industries. Germany, led by Prussia, was also a late developer, whose industrialisation was associated with a very strong state presence, heavy industries and military goals and ambitions. It was, too, a nation foremost in the invention or adoption of new institutions for technological advancement, from the appllcation of the polytechnic principle to the development of the research-teaching laboratory and the formation of laboratories in private enterprise. The combination of a statist political economy with a technocratic emphasis within institutions was of special appeal to the bureaucrats of mid-Meiji Japan. Thus in experimental science Japanese students were entering the German programmes in bacteriology, stereochemistry and metallurgy, training which led to Japanese research programmes in theoretical physics, geophysics and magnetism by the early twentieth cetury. Bartholomew in particular has argued that such German laboratory experience was a fundamental institutional inﬂuence in the creation of a modern Japanese scientiﬁc ethos and the implantation within Japanese research and development of the German values of

74 The Japanese industrial economy completeness, thoroughness, community and co-operation, values which at a wider level are often interpreted as integral to the traditions of Japanese culture (Bartholomew 1989, Inkster 1990c). It might be possible to conclude that until relatively modern times, and prior to the huge growth of the large private sector ﬁrms across a wider range of industries, Japanese technology transfer was conditioned by a ‘ﬁrst choice’ which followed from ofﬁcial searches of what then seemed to be the most appropriate foreign sites of general modernity and power. This then created something of a bilateral relationship in which the transferral of institutions, ideas and technologies fused as one complex of ‘Western’ inﬂuence, often strongly bolstered by the employment or consultancy of key personnel from that nation. It is commonly considered that the inﬂuence of the US statistician W. Edwards Deming was of essential importance for the establishment of such institutions as quality control circles at the hub of progressive Japanese business culture. Certainly, from 1950 much publicity was given to Deming’s lectures and writings on quality measurement in Japan, but there is strong evidence that he was preaching to the converted. Indeed, William Tsutsui offers an alternative and earlier American influence through the better-known scientific management movement of F. W. Taylor, which was introduced into Japan in the early years of the twentieth century. Tsutsui claims that it was neither indigenous corporate familialism nor Deming’s quality system but rather Taylorite approaches that ‘provided the fundamental structure for contemporary management thought and practice’. Scientific management practices from the West were quite compatible with Tokugawa notions of efﬁciency and resource-saving, and thus could be readily championed by businessmen and bureaucrats during the immediate post-Meiji years. Amongst several factors at work, many Japanese workers felt themselves socially promoted by any system which paid such attention and due regard to their every movement. During the Second World War an attempt was made to resolve the irony of using American methods as a weapon by calling for an Imperial Way of Efﬁciency, which portrayed scientiﬁc management as indigenous and drew upon pseudo-academic materials generated by such organisations as the Japan Society for the Promotion of Science (Tsutsui 1998). An alternative argument to all this is that institutional innovations have indeed been endogenously resourced. Within this position is much room for debate, particularly as to whether Japanese industrial and commercial institutions arose naturally from the cultural resources built by the nation over many years, a claim relating to such underlying characteristics as groupism or communalism, or whether they were deliberately and pragmatically constructed by the modernising elite as part and parcel of a wider industrial process, one which utilised whatever resources were at hand, including cultural resources, under the clear imperatives of late development. A large part of what we might term the ‘anthropological’ claim has been presented in Chapter 3. Our position here serves to combine the idea of institutional transfer with that of late development. Technology transfer was internalised within the institutions created under the imperatives of backwardness. This required a process of cultural

Forging explanations 75 engineering which drew on an eclectic mix of cultural patterns, images and artefacts. The character or trajectory of the resulting institutions was strongly inﬂuenced by foreign ideologies and models of modern organisations and enterprise culture. To this extent, Japanese institutional development may be explicable in terms of the exigencies of relative backwardness. Chapter 5 considers aspects of cultural engineering, its history, resources and costs. Chapter 6 examines the character and role of the institutions of private enterprise.

Catch-up, culture and the creativity debate In themselves, theories of technological dependency and institutional borrowing can have little to say about creativity or the conditions under which it occurs. Few nations have demonstated historically significant phases of either industrial or intellectual creativity in the absence of potent prior or contemporaneous external inﬂuences, a generalisation which does not exclude the industrial, technological and ideological transformations which occurred in eighteenth-century Britain (Inkster 1991a). In spite of this, the greater maturity of the Japanese industrial system and the growing competition of other East Asian nations have spawned a public and academic debate concerning the ability of the Japanese system to create core changes in areas of scientiﬁc or technological signiﬁcance (Anderson 1984, Moritani 1985, Bell et al. 1985). Thus in its very inﬂuential Vision of Industrial Policy in the 1980s of 1980, MITI emphasised the past role of technology transfers and went on to advocate ‘individual, creative technological development. There is some concern about this capability’. Similarly, the Director of Research at NEC Corporation was reported as saying that no one could ‘wait for solutions to come from outside of Japan. We have to create an adequate environment to promote creativity by ourselves’ (Bell et al. 1985). At Matsushita executives wore CREATE badges, and NEC have experimented with the introduction of ‘innovation’ groups as an equivalent to quality circles. It is not surprising that this period of doubt, contemporary with the general national policy towards industrial restructuring, coincided with a running critique of those Japanese institutions that were identiﬁed as dampening the nation’s creative potentials (see pp. 52–5). Nakasone’s Adhoc Commission on Educational Reform judged that the state of the educational system was one of ‘desolation’ and in need of root and branch reform. The criticism was of a school life which emphasises cramming and rote learning in batteries of multiple-choice tests, an ofﬁcial system aided and abetted by a great industry of private cram-schools. Furthermore, the emphasis in schools (as in other East Asian nations such as Taiwan, it should be noted) on group work and assignments has led to a regression towards the norm or average in approval or assessment procedures. Thus official reports have written of the uniformity of tests and achievements, the existence of ‘excessive controls’, the inability of students to ‘ground themselves’ and so on. Those students who excel in this process are precisely those who enter the elite universities with promise if not certainty of good employment in leading firms or ministries. In many cases the universities act more as a selection mechanism than a training ground: this goes

76 The Japanese industrial economy somewhere towards explaining the dislocation between university research, research in private enterprise and the character of the national R&D budgets and expenditures (Inkster 1991b, 2001). However, the same point does suggest that problems in the educational system do not necessarily bear a close relationship to research and innovation processes and potentials within the bounds of private enterprise itself. At present there is little in the global cultural system which prohibits the employment of a foreign-trained Japanese doctoral student within a hightechnology Japanese ﬁrm. The reform recommendations of the new institutional critique have included a more flexible school curriculum and greater respect for individuality as a social mode, more joint university–enterprise research projects, an expansion of post-doctoral programmes, increased transfers of faculty between universities, government and industry without damage to careers, and the introduction of evaluation systems which offer better rewards to young researchers and encourage interdisciplinary projects. From the latter has developed the notion of bounding disciplines or ‘fusion’, as in mechatronics or bioelectronics. Again, the advance of electronic communications and publishing has encouraged the idea that the Japanese research community might beneﬁt from greater global exposure and competition through such new media. Following from this have been recommendations of increased international research collaborations. In mid-January 2000 the Prime Minister’s Commission on Japan’s Goals in the 21st Century reported under the title of The Frontier Within: Individual Empowerment and Better Governance in the New Millennium. Amongst novel suggestions to reduce the school week to three days in order to focus on creativity, to improve knowledge of Japanese and East Asian historical relations, to ease the passage of skilled immigrants and permanent residents, and to instate English as an ofﬁcial second language based on a ﬂuency for all citizens, the Report demonstrated an accelerated move towards the values of individualism in public-sector planning. The belief of the Commission was that late industrialisation during and since the Meiji years, the stress on catchingup, had ‘ossiﬁed society and the economy and leached Japan’s vitality’. No longer does the world offer ‘ready-made models’, and now ‘Japan’s own latent strengths, talent, and potential are the key to Japan’s future’, the public discourse being identical to that used during the Multifunctional Polis project but now extending the venue of reform to Japanese institutions themselves rather than merely their foreign outposts. The overall strategy of the public sector should now be to alter radically ‘the methods and systems whereby citizens interact with the state’ through ‘redeﬁning and rebuilding the relationship between the individual and the public domain’ and by transferring responsibilities and guidance to the private sector generally as a requisite of a new system of governance (National Science Foundation 2000: 2–8). There is some limited evidence that the institutional critique has passed through as organisational change in some of the larger high-technology companies, particularly those associated with such technology cities as Tsukuba, where experiments have been made in the formation of multidisciplinary groups assigned to specific production and design tasks. Other companies such as NGK have

Forging explanations 77 attempted to reduce dependency on seniority by selecting out promising researchers as of special status, whilst NEC has called for more openness in information production and more co-operation with academic research. Bell has reported that companies such as Vaculac Corporation, Japan’s largest manufacturer of vacuum equipment, have encouraged a more liberal spending policy in R&D and encouraged foreign research and search trips (Bell et al. 1985, Science and Technology Agency 1985). The creativity urge has also led to major and costly experiments in new lifestyles, science cities, multifunction polises and so on, in an effort to transcend the prohibitions on creativity reputedly engendered at the very heart of Japanese research, in the social and psychic life of the laboratory itself. Much here depends on the accuracy with which such laboratories are observed. A seemingly rigid hierarchy may disguise the reality of an underlying and traditional nemawashi type of process at work, within which consensus in fact results from a multilayered debate and feedback system which does allow the voice of youthful creativity to be heard, if not instantly or overtly rewarded. As Muller reported in 1985, although on the surface of the Japanese laboratory organisation things may often appear peaceful, orderly and conventional, underneath there is frequently a greater turmoil (Satofuka 2000). We might also note that a succession of modern studies of Western laboratory practice have concluded that hierarchy, career interests, power struggles, methods of enforcement and urges towards consensus may be found at the core of many sustained and nominally highly successful research programmes in both pure and applied science (Latour and Woolgar 1979, Knorr-Cetina and Mulkay 1983). Yet the Japanese have been doing creative things for many years. Outstanding examples of scientiﬁc creativity include ephedrine, the culture of the tetanus bacillus, Taka-Diastase (named after Takamine Jokichi), adrenalin, atomic modelling, rational imaginery numbers, tetrodotoxin and spirochete culture, and their important applications in the form of such patents as that for diastase manufacturing, all of this accomplished during the Meiji years of transition. Japanese nationals have received the Nobel Prize in the natural sciences in 1949, 1965, 1973, 1981 and 1987, and for years Japan has ranked at the highest levels in fundamental mathematics, in magnetics and in such applied industrial areas as new materials and microelectronics. Early twentieth-century scientiﬁc creativity was demonstated in advances in work on human chromosomes (1922), the Law of Compton scattering (1928), magnetic ﬁeld cooling (1930), the meson theory (1935) and the ferroelectric phenomenon. It might be noted that Hideki Yukawa (1907–81) won his Nobel Prize for the meson theory prior to any experimental work in the West. In the area of fundamental technical improvements of global commercial signiﬁcance, Japanese developments include acid ﬂavourings (1908), the telephotograph (1928), the Zero fighter (1939), liquefied coal (1943), the electron microscope (1942), the Fujie vacuum tube electronic calculator (1956), the electronic desk top calculator (1964) and the liquid crystal display (1980s). Amongst more independent novel innovations were KS steel (1917), Duplex telephony (1917), magnetic recording (1950), the pin diode (1958), transistorised television (1960s), the Shinkansen, synthetic leather, trinitron (1968), the quartz wristwatch (1969), saticon, and the card type of electronic

78 The Japanese industrial economy calculator (1983). As we have suggested above, and as Nakayama has generally emphasised, by the 1980s Japanese enterprises were spending more of their R&D budgets on basic research than the private sector in comparable industrial nations, and the relatively low overall figure for basic research in Japan is an historical reﬂection of the low overall R&D investement by government (Nakayama 1985). That is, we might judge that basic research in Japan is more likely than in other nations to be located in or emerge from private enterprise itself, a result which must question the view that catch-up inevitably poses problems for the future advancement of the industrial system. And, of course, we might severely question the simplistic distinction between creative breakthroughs and follower applications, as many of the above instances serve to do. It is true that the newer core breakthroughs of the new industries have emerged from companies such as Xerox (Ethernel), IBM (laser technology applications, DOS in 1981), Bell Labs (alloptical processors in 1990), Intel (the Pentium chip in 1993), Microsoft and Texas Instruments, and that institutions such as the US National Academy of Science command the headlines. Western research teams remain the sources of important technological breakthroughs, such as the monoclonal antibodies of the British team (1975), the large US programme on ﬁbre optic cables (1977), the French construction of fast breeder reactors and the joint European–US team applications of DNA sequencing to markers for genetic diseases (1978). In terms of some general idea of ‘creativity’, how does such a list compare with Casio’s electronic typewriter with memory, NEC’s voice data input terminals, the Japanese 64-kilobyte computer chip and the further improvements of Hitachi and Fujitsu (1990–3), or with the at least creatively organised government–enterprise projects on artiﬁcial intelligence (using Prolog from 1982), MITI’s Sixth Generation programme using neural networks or the establishment of the MITI laboratory for Fuzzy Engineering research in 1989? We remain very sceptical about the saliency of ‘creativity’ as a factor in the debate concerning the performance of the Japanese economy for two simple reasons. First, any ‘absence of creativity’ has not been proved, although it may be true that Japanese institutions are more geared to a world of catch-up through transfers than to one of industrial maturity. But, as we have seen (pp. 63–75), Japanese institutions change, and the institutes of late development may not be those of the future society. Second, we have also argued (pp. 71–3) that Japan may yet adopt an eclectic mix of technological and related strategies in order to stay ahead of competitors. Furthermore, increases in productivity in the Japanese system will most probably stem from an adept programme of reinventing declining industries, and from a combination of institutional reforms and resource switches and savings which will move the economy increasingly away from traditional manufacturing industry at improving levels of productivity even in the absence of core technological advance. The resources constraint together with difﬁculties over global commercial and political relations (especially with China and the USA) will almost certainly be of much more future importance than any limitations imposed by a supposed absence of genius or an inability to take intellectual risks within the ambit of entrenched institutions. Institutions are not necessarily entrenched.

Forging explanations 79

Summary and conclusions At this stage we might summarise our reflections on the historical dynamics of Japanese industrialisation as follows. First, technology transfer was at the heart of industrial modernisation in key periods, but perhaps especially during the late Tokugawa period, the Meiji years, the 1930s and the years of high growth in the 1960s to 1980s. Second, sustained progress through technology transfer is a rare phenomenon in modern global history. This suggests that mere intention, capital availability, factor bias, existing work skills and technological search are not enough to explain the importance of technology transfer in Japanese industrialisation. Third, a variety of ﬁndings from social economics suggests certain fundamental conditions for sustained success in technology transfer, amongst which appropriate non-market institutions loom large. Japanese history indicates the importance, in particular, of institutions, but also suggests the signiﬁcance of the multiple transfer of technologies and institutions, and the wider process of social change which this requires. Indigenous institutions may be adapted to new circumstance using foreign resources of ideology and institutional practice.This may occur most successfully during phases when the source of transferred technology is also a source of new institutional innovations in the receiver. Generally, this point highlights the importance of the USA to the industrial modernisation of Japan. Fourth, both economistic and institutional approaches ignore the geography of change and development at their peril. Every social economics is spatially situated, and physical distance can be measured in terms of the cost, time (opportunity cost) and effort (risk level) involved in order to transcend it, especially in the modern period of machinofacture (from Meiji to the 1960s miracle) when so much industrial production was dominated by the heavy and cumbersome equipment and structures of metallurgy, chemicals and engineering. The movement of information and artefacts, even in a case of coherent market forces, will always face the friction of distance, which may only be reduced by transport and communications infrastructures. This highlights the importance of Japan’s relatively dense settlement on navigable rivers and coastlines as well as the fundamental relevance to technological change of early urban and road developments, emphasised especially in Chapter 1. The notion of social-spatial fields, in turn, emphasises the salience of social structure. Hierarchical systems will result in relatively speedy diffusion of new ideas amongst the population of a given strata but will erect barriers to diffusion across such groups, as perhaps epitomised by the pattern of information spread of rangaku in the mid-Tokugawa years. Whatever the institutional complexities involved in transfers into Japan, spatial diffusion was aided by the density of settlement and thus readier emergence of market forces when compared to Asian or non-European systems of otherwise similar industrial potential. Market transactions require some degree of trust and understanding, and new, difﬁcult frontiers in fractious terrains inhibit (or increase the cost of) transactions between relative strangers. Solving for such natural frictions will require the interventions of powerful authorities, the multiple presence of which might serve to halt freely competitive development in

80 The Japanese industrial economy the longer run. Japan’s dense settlement on alluvial plains was always far more conducive to the diffusion of information and artefacts through elementary market forces. Economic competition between regions and nations does not take place on a level trading ﬁeld. Fifth, Japanese success rested at least partially on the prevailing character of international transfer mechanisms, particularly prior to the 1980s, a dynamic element quite outside the control of Japanese bureaucrats and businessmen. This may remind us that Japan presents no proper model for emulation, as the mechanisms of transfer have changed. In particular, as we have seen, the technological rise and openness of the USA had a specific positive impact on industrialising Japan, an effect hastened by the Marshall Plan during the 1940s and 1950s. The total flow of private and official capital – much of which embodied advanced US technology – reached a peak at the end of the 1950s. As Hood and Young summarised, the US corporations were aided in their access to foreign countries by the Marshall Plan operations and subsequently by the gradual liberalisation of trade and payments, and they were in the unique position of having the capacity to export, and resources to expand, abroad. The convertibility of the dollar, the IMF, the formation of the GATT, and so on were all parts of a new situation. (Hood and Young 1979: 18) By 1967 US and UK corporations controlled over 70 per cent of all overseas investment, and, for quite deliberate political reasons associated with the Cold War, US dollars and US technology ﬂowed into Europe, Japan and elsewhere. But it was industrial nations such as Japan and Germany which optimised their opportunities. In such nations severe technological lag resulting from war, high rates of investment, ready supplies of semi-skilled labour and a relatively free flow of technologies combined to yield fast growth rates overall. Such a conjunction of circumstances is rare in world history. Abramovitz has argued that there was a deﬁnite ‘waning of the opportunity for catching-up’ around 1970, and although he suggests that ‘social conditions’ amongst his sample of fifteen nations determined catch-up, in fact success seems to have been most closely linked to his more immediate variables of ‘degree of lag’ and ‘rate of investment’ (Abramovitz 1986: 387, 389), We have previously noted the range of US contributions to modern Japanese economic growth. The provision of relevant transfer mechanisms should be added to such a list. Sixth, something of a window of opportunity was opened from the combination of a plethora of transfer mechanisms, the type of technology prevalent at the time, the state of the Japanese economy, the alliances of the Cold War, which together add to our notions about the unusual circumstances of Japanese growth generally since 1868. In particular, it may have been of special signiﬁcance that the USA, the economy of greatest size and advancement and possessed of the most sophisticated mechanisms of transfer (from the Marshall Plan to the transnational corporation), was also overwhelmingly the centre of creative technique advancement: between

Forging explanations 81 1953 and 1973, the golden age of catch-up through licensing for Japan and other nations, 50 per cent of global technological breakthroughs were American. Seventh, there seems to be little reason to believe that industrialisation through technological catch-up precludes a subsequent and profound technological creativity. Blumenthal and others have found a signiﬁcant historical correlation between imports of technology and improvements in indigenous technological capabilities, particularly so for Japan, France and Australia. The present but perhaps rather passé debate on ‘creativity’ surely reflects a transitional period between followership and parity in technological capacity, and there is at present no convincing argument proving an inability in Japan (or indeed, in East Asia more generally) to move into some type of sustained technological leadership. Finally we return to the institutional argument (pp. 59–60) but extend it by positing that either a ‘late-development effect’ or a process of ‘cultural engineering’ or a combination of both were vital to the historical dynamics of Japanese industrialisation. At critical points or junctures we might identify the mobilisation of key cultural assets in a process of cultural engineering instigated in the public sector in order to stimulate or guide or direct the impact of late-development effects in the private-enterprise sector. In this sense, at least, we present an argument from cultural power and engineering rather than from cultural resources as such. In turn the origins of the cultural power and ability of the industrial elite to engineer institutional and attitudinal change in this way may have arisen within the essentially mundane factors of space, location, terrain, urbanism and communications, so that any approach through a social economics must fully acknowledge physical and temporal circumstance.

5 Cultural engineering

novelty is no less novel for being able to dress up easily as antiquity. (Eric Hobsbawm, 1983)

Problems of the cultural stock argument We have already noted in Chapters 2 and 3 the frequency of claims concerning Japanese culture as a determinant of Japanese industrial success, whether in the early years of Tokugawa or during the ‘miracle’ years of the twentieth century. Thus for generalists such as Jacobs or Braudel, Japanese culture served as a backdrop for the emergence of a bureaucracy in Japan that worked in contrast to that of the Chinese and served as a vehicle of transformation based on particular cultural traits (Jacobs 1958, Braudel 1985). For others social mobility and a spirit of individualism were ingrained within early modern Japan, whilst traits in Japanese neo-Confucianism may have acted on commercial behaviour in a way at least analogous to the ‘Protestant ethic’ in the West (Morishima 1982). Somewhat unfortunately, the argument from culture has become entangled with the theses of the nihonjinron school which seeks to isolate as a principal if not sole causal variable a uniqueness of Japanese culture, society and national character well beyond the common sense in which all cultures may be discovered to be unique (Mouer and Sugimoto,1980, Smith 1983, Yoshino 1992). The thought of this school may most properly be called culturalist or cultural reductionist, in that a highly abstracted cultural ethos becomes the ﬁnal arbiter of behaviour and performance. An important component of this approach is that Japanese communicative interactions are empathetic and non-verbal, this perforce leading to group orientation and consensus decision-making. Often utilised in the 1960s and beyond to describe the advantages of Japanese business enterprise, the concept of shindanshugi, or group orientation leading to loyalty and selﬂessness within formal organisations, is very close to the more recent Masuda formulations described in Chapter 6. We do not accept here that the ‘argument from culture’ as such is necessarily linked to the nihonjinron approach. We now suggest that to ‘argue from culture’ requires some sort of rider about the growth of cultural facilitators. Any other approach seems to construct an artiﬁcial

Cultural engineering 83 and untenable frontier between the ‘cultural’ and the ‘material’, one which fails to recognise the frequency with which historical elites or interests have everywhere attempted to use cultural forms in order to ‘reconstruct or reinforce material and institutional structures’ (Goldstone 1991: 457, Giddens 1982, Bourdieu 1984). Here we deﬁne culture in a broadly Weberian way, principally as a social category which embraces the way of life of a people and is not described merely in terms of learned or elite knowledge. In such a conception culture may be transmitted across generations and social divisions, is learned within the normal operations of society and is, thereby, shared. As with the growth of the capital stock or labour supply in a formal economic model, so in a sociocultural model we might seek to establish some timely growth of the ‘cultural stock’, or perhaps a change in its ‘quality’ if it is to serve as a truly salient and proximate ‘cause’ or important determinant of economic growth. We should ask of the cultural historian that which economic historians demand of themselves.1 Any growth model of the eighteenth-century British economy or of the nineteenth-century US economy could not rest, for example, on the evidence that surplus capital existed and was drawn upon by industrialists. Why should such a ‘pool’ of investment capital not have been utilised for industry many years before? Again, to show that such capital embodies a superior form of technology would yet be insufﬁcient as causal proof. What was the historical relation between capital and technique; where did the latter come from; if it existed over many years why did industrialisation not occur earlier? Most economic historians would attempt to answer such challenges by showing at least, first, a growth of capital or technique prior to or contemporary with a growth of industry, second, a change in the quality of such capital or technique which made it appropriate to new industrial growth and, third, some mechanisms whereby such increased and qualitatively changed assets were harnessed to the process of industrialisation – that is, a theory of entrepreneurial agency or a theory of increased demand for new products and so on. The doctrine of proximate causation is surely relevant here. A causal statement should say something as to the timing and exact character of the ‘explicandum’, and this will not be convincing if the supposed explanatory element was one existing in its essentials long prior to the event. Causal lags which extend over many generations of experience and motive seem unconvincing. Otherwise, and at best, culture becomes a facilitating factor in the economic change we attempt to elucidate – a dormant resource which may be called into effect when other dynamic elements ‘require’ it, as in the crucial case of those exogenous forces of foreign techniques and ideas and agents which disturbed the Japanese social and economic system after the 1850s. In this case the dynamism belongs to other factors which are measurably changing in quantity or quality. Explanations or interpretations of signiﬁcant, dynamic change then lie with skills, or with capital, or with political mechanisms of response, or, indeed, with the cognitive impacts of foreign machines, institutions and ideas. We may rescue something of a cultural argument as at least partially but coherently explanatory if we more formally insinuate the idea of purposive ‘cultural engineering’. Our thesis is that such a notion does embrace the elements of the ﬁrst to third desiderata above, and that the process of cultural engineering may be clearly

84 The Japanese industrial economy discerned at important points of Japanese industrial modernisation since 1603. So, in his discussion of private enterprise culture in recent years, Takafusa Nakamura has emphasised that such institutionalised assets as subcontracting, lifetime employment, seniority wage systems, company unions and so on arose out of the particular exigencies of postwar development rather than as natural formations of historical cultural traits (Nakamura 1981). The case of Japan, then, suggests that, when a cultural stock meets a foreign system, the subsequent phase of cultural engineering becomes a vital input-factor of response, survival and growth. The resultant processes of cultural stock growth, application and qualitative change may be of more importance than the exact character of the initial traits or elements which made up that ‘stock’. Such an approach may not only explain something of key Japanese transitions, but might also help further those distinctions between Japan on one hand and China and other areas of East Asia on the other, which we note elsewhere. For instance, over a very long period from the 1500s to the 1700s, neighbouring Korea evidenced a move to primogeniture, an institutionalisation of the practice of agnatic adoption (after an earlier history of adoption of daughters and daughter’s sons), and the emergence of neo-Confucianism, all of which elements have been identiﬁed by other writers as cultural essentials to the modernisation of Japan (Peterson 1996). The divergence in actual experience may lie somewhere in the contrasting strength of inducements to mount meaningful programmes of cultural engineering. In order to uncover cultural engineering we may begin with the notion that, in Gellner’s felicitous judgment, cultural traits, ‘though often experienced as given, can be under deliberate control’ (Gellner 1997: 9). This may occur through what Bhabha has termed ‘ideological framing’, the elite provision of a sense of purpose, of identity and of continuity through the deployment and reinvention of selected cultural fragments as the essential ‘traditional culture’ of a people or nation (Bhabha 1990: 291–322). Whatever the exact resources to hand, the goal may be isolated as Ulrich Beck’s ‘constructed certitude’ (Beck 1997). Within a very broad comparative format I. Robert Sinai outlined the components of such a deliberate framing process in Japan as lying well beyond the twin elements of internal reform and foreign importation: The distinctive quality of this whole movement lay precisely in the unusual degree to which the past was utilised for the needs and purposes of the present . . . the Japanese now made a determined effort to preserve the essential ‘Japaneseness’ of Japan and to exalt its unique spiritual qualities. In the course of this reaction, Shintoism was revamped as the authentic ancestral religion of Japan and as the embodiment of national distinctiveness, the emperor system was re-sanctiﬁed, and the emperor came to be venerated as the ‘ruler from ages eternal’, and a doctrine of racial superiority helped to combat the inferiority complex that had always been very close to the surface of Japanese life and to fortify the people for the enormous changes through which they would have to pass. (Sinai 1967: 92–3)

Cultural engineering 85 Such elements were reinforced by the Rescript of 1890, which emphasised a return to native traditions, ancestor worship, ﬁlial piety, loyalty to superiors and duty to the state in a very deliberate statist exercise aimed at inscribing the essence of nationhood and citizenship. Through such instruments and institutions, Japan’s social values, with their ‘emphasis on hierarchy, proper place and unquestioning obedience, were thickened with broader brush strokes’. Such an invention of tradition involves a particular fabrication directed at a deep legitimation of the modernising or transforming elite itself. Thus for Eric Hobsbawm, invented tradition is ‘a set of practices, normally governed by overtly or tacitly accepted rules and of a ritual or symbolic nature, which seek to inculcate certain values and norms of behaviour by repetition, which automatically implies continuity with the past’ (Hobsbawm and Ranger 1983: 1). Perhaps cultural engineering in particular is some subset of this wider process, more of a cultural selection procedure (the search for appropriate fragments) directed firmly and narrowly at the actions, policies and agenda statements of the elite, at legitimising everyday behaviour rather than the underlying attributes of the elite itself? From the beginning, such cultural engineering focused on the selection, speciﬁcation and publication of appropriate ideology, and in the words of Carol Gluck ideological formation became a ‘conscious enterprise, a perpetual civic concern, an affair, indeed, of state’, which involved the casting of ancient elements in moulds ‘newly formed in the Meiji years to suit the needs of the time’ (Gluck 1985: 3, 39). So the dispatch of Shinto missionaries into the countryside during the 1870s, the fusing of Chinese and Western prescriptions, emphases on ﬁlial piety and the aesthetic tradition, the designs for a civic education of the 1880s. In all of this the emphasis on the correct design of institutions was paramount – from the debates on the education code of the early 1870s to the moves in the civil code from an original Anglo-French model to a German one in the 1890s. For Frank Upham, Japanese political elites have repeatedly and across a wide range developed particular institutional forms which ‘have reified one among many historical processes as “tradition” while denying equally valid ones’ (Upham in Vlastos 1998: 58). This deliberate but narrow process of cultural engineering is more likely to occur at times of emergency and intrusion, when the authority of existing powers is disturbed by the heady presence of foreign ideological and technological systems, where much is new in the way of observable physical artefacts juxtaposed with very different ideologies. Thus, Lone argues in his treatment of the Japanese war with China in the 1890s that these years witnessed a tremendous increase in the pressures to invent traditions, and especially to establish more ﬁrmly the idea of imperial rule by divine right, as Shintoism converted from the religion of an agrarian society to one of nationalism and militarism (Lone 1994). Such critical conjunctions require the more imminent, ad hoc and expensive processes of cultural engineering in order to explain, simplify and justify policies, artefacts and institutions that are not only new but distinctly foreign. If the Charter Oath issued by the Emperor Meiji 1868 was to be actually instrumental in ‘abandoning the absurd customs of former times’, and if knowledge and inspiration really were to be ‘sought throughout the world in order to strengthen the foundations of the Imperial throne’, then more than a casual

86 The Japanese industrial economy reliance on the existing cultural stock was called for. Here we argue that cultural engineering is more likely to succeed (it has been attempted often enough in modern history) in cases where there is contemporaneously taking place a wider process of ‘invention of tradition’ alongside expensive, strategic elite investments in the instruments of human capital formation. Thereby we may invest our explanations of Japanese industrial success with coherent elements of both the economic and the cultural.

Tokugawa and beyond: aspects of Japanese history Japan’s long history is dotted with seemingly vital episodes of cultural transfer, accumulation and manipulation. Early Buddhism was primarily a religion of the refugees, of immigrants, diplomats and commercial agents, and acted as a political tool of the ruling family. Japanese Buddhism provides ancient examples of deliberate cultural manipulation, most commonly identified in the figure of Prince Taishi Shotoku (574–622), who, in the words of Masahura Anesaki, ‘found in Buddhism a universal basis for the relationship of the ruler to the ruled. His inspiration helped in advancing national unity and in subduing the clannish spirit under it’ (Anesaki 1948: 17). Shotoku was as prepared as any Meiji bureaucrat to utilise Confucianism to the same general social end and to popularise such notions through Chinese arts, from architecture to flower arrangement. Japanese scholars have commonly emphasised worldly gains and a lack of ‘real faith’ in the early history of Japanese belief systems. Similarly, the epiphenomenality of many cultural borrowings may be explained within the thesis that such inputs to the cultural stock were manipulated by the political elite. In general reference to the cultural activities of the pre-1868 Japanese elite Robert J. Smith has written that there was ‘a marked tendency to receive ideas and concepts from diverse sources, and to incorporate them into the existing system without much concern for their compatibility’ (Smith 1983: 14, and see also pp. 32–4). This could not inhibit the importance in Japan of the artefacts of such belief or cultural systems – Chinese conceptions of empire and centralised administration, writing systems, literary forms, music and dress, arts and crafts, gardens and architecture. As Sinai has summarised, ‘Japan never really soaked up the Chinese spirit but only put it on like a garment’ (Sinai 1967: 93). But the beneﬁt could be considerable. Thus the two great classics of Tokugawa agriculture, the Records of the Peasants of 1682 and the Anthology of Agriculture of 1697, were based entirely upon the Chinese theories derived from yin–yang, used Confucian moral precepts to illustrate the geographical superiority of Japan and were influential as praxis into the Meiji years. Through such texts late Tokugawa retainers, regional ofﬁcials, peasants and kokugaku (national learning) scholars, and even masterless samurai, became more or less imbued with selective Chinese cultural traits.2 With its T’ang centralism and bureaucratic feudalism, the long Tokugawa shogunate may certainly be viewed in terms of cultural admixtures and disjunctions. In the early days of the Pax Tokugawa, the authorities institutionalised Confucianism itself as the dominant lay philosophy of the seventeenth century.

Cultural engineering 87 Here we might point to Ieyasu’s support of shushi (the religious sects), the foundation of the official Tokugawa college and the employment of Confucian advisers by individual daimyo, as well as the establishment of private centres of learning and dissemination in the major urban centres of Kyoto, Osaka and Edo.3 It is not so difficult to suggest that the ‘cultural’ assets of Tokugawa were quite specific constructs of a controlling elite. The work of Masao Maruyama has illustrated how far the early rulers of the new dynasty manipulated culture as an input to social control and legitimisation. The neo-Confucianism of shushi-gaku was established by the new regime as an ‘orthodoxy’ demanding ‘universal acceptance’ (Maruyama 1974: 186). Although the Bakufu, or shogunal government, could surely not fully ingrain an ideology of control, and although it too drew upon an earlier tradition, it seems certain that the formulations of such important thinkers as Razan Hayashi and Seika Fujiwara were deliberately translated and utilised in the process of social and political reconstruction. Most importantly, the first great leader, Ieyasu Tokugawa (1542–1616), provided some direct commentary on the regime’s institutional arrangements: If the Way of human morality is not understood, society will be chaotic, the nation will not be at peace, and disorders will never cease. To bring forth an understanding of the principles of the Way, there is no better means than books. The printing and diffusion of books is the most important task of a benevolent government. (Smith 1973: 10) The alternative rational heterodoxies of scholars such as Sorai Ogyu (1666–1728), who rejected much of neo-Confucianism, were met with the vehement reassertion of the statist doctrines of bushido. When the political controls of isolation, expulsion and sankin kotai (alternate residence) had been established, such cultural engineering was sufficiently effective until the disruptive impacts of the riots and reforms of the 1830s and 1840s. Characterised by endemic regional distress, the period of the Tempo reforms (1830–43) combined provincial efforts at self-strengthening with the conservative responses of central government. Regional famines and risings became more common, symbolised most clearly in the Oshio riots in Osaka. It was at just this point that the late-Tokugawa regime particularly sponsored the new Confucianism, bushido and so on as means of control and integration, this aiding the long-term process whereby samurai values became Japanese values. As the samurai groups became the backbone of the industrialising system after 1868, it followed that the articulation of their goals and policies was increasingly seen or felt as an expression of national values. But this transposition was by no means smooth, and we have indicated how maintenance of good order in the years before c. 1885 was a prime concern of the authorities and a requisite of industrialisation. Dampening of civil unrest took the form mainly of soft rule: media laws, confinement of assemblies, arrests of key ﬁgures only, and the buying out, often through ofﬁcial appointments, of radical activists. Some attention to local democracy, together with a promise of an eventual

88 The Japanese industrial economy Western-style constitution, further weakened the tactical positions of the regime’s antagonists. To all this was added a less easily measured process of manipulation of traditions and values closely associated with very high educational expenditures. R. E. Cole once argued that there was a ‘conscious manipulation of the past to devise new solutions to emerging problems’, just as Sidney Crawcour has emphasised that ‘concepts invoked by social engineering either existed in premodern Japan or were represented as sanctioned by tradition’ (Cole 1973: 60, Crawcour 1978: 240). An example of this was the public disputes over the identiﬁcation of the rights of the people with the Imperial authority, which occurred throughout the pages of such popular newspapers as the Nichi Nichi, Hochi, Akebono and Komon Shimbun during 1880. By reference to ancient Chinese meanings of the characters representing Imperial authority, ofﬁcial opinion and its media deliberately created the idea that Japanese culture naturally led to an identity between the two. Messages of this sort were continually repeated in the huge number of government notiﬁcations of the 1870s and 1880s. Clearly, the effectiveness of such controls did depend on the level of literacy. The historical relations of cultural engineering and human capital formation were close. Education was always a major battleground of Confucian, nationalist and civil rights advocates, as well as a focus for the clarification of government intentions and policies. An important analyst, Tesshi Furukawa, has argued that the representative twin traits of industrialising Japan may be labelled ‘spirit of the governed’ and ‘spirit of the taught’, and that these derive largely from the character and authority of the 1890 Imperial Edict on National Education for the moral training of the people, a law readily derivable from the bushido textbooks of the early eighteenth century (Furukawa 1967: 239). Education became one most important vehicle of the transmission of the values of the elite to the populace at large, one which was invested in and institutionalised to an extent not witnessed elsewhere. The relations between cultural engineering, human capital formation and technology transfer remained strong throughout the years of industrialisation. They were by no means conﬁned to the Meiji years. Thus, in the interwar years of 1918 to 1937 Japan exhibited a tremendous growth performance, based on relatively fast recovery from the depression of 1927–31, large investments and a move to heavy industry. Overall manufacturing growth was at around 6.5 per cent, but metals and metalworking grew at over 10 per cent, and the heavy sector employed around 50 per cent of all manufacturing workers by the late 1930s. We have argued in Chapter 1 that the increases in output per worker arose from mechanisation, electriﬁcation and improved machine tools, and that these features were in turn created by high rates of investment, human capital formation and accelerated technology transfers. Perhaps 50 per cent of manufacturing depended directly on foreign capital and machine importing, which was especially centred in the large zaibatsu enterprises manufacturing under licence or as joint-stock enterprises. This was one aspect of the industrial dualism of the nation at this time, which permitted a concentration of high skills, Swedish, German and Swiss machine tools, and the deployment of foreign engineers at key installations. Perhaps it is not surprising that during the period 1935–40, geared to war, the fast advancement of the Japanese tool industry

Cultural engineering 89 was located in Mitsui, Mitsubishi and Nissan, all greatly supported by government agencies. In Chapter 6 we suggest that this period saw the process of cultural engineering travel from sites in government, schools and universities into the sites of private enterprise itself.

Fundamentals: the Meiji case The movement from general ‘inventions of tradition’ towards more speciﬁc cultural engineering may be displayed through some further consideration of bushido, dealt with only brieﬂy above. This samurai-centred code of the warrior was seen by Nitobe in 1899 as providing the motivating ‘sense of honour’ which powered the early Meiji industrialisation process in place of Western ‘pecuniary or industrial considerations’ (Nitobe 1907: 168–9, 1936: 124–41). Figure 2 suggests that bushido drew upon several of the cultural elements already met, each of which was an eclectic, loose bundle of borrowed strands. We may think of each of such strands as resources or ingredients of the cultural stock, and of Meiji-style bushido as a culturally engineered product of that stock. Two historical features deserve explicit notice. Bushido served as a creed of the samurai, promoting aspirations and an ‘animating spirit’. In this sense ‘what Japan

Method, doctrine

Bu-shi-do: Militaryknightly-ways Meng-Tsu/Mencius (370–289 BC?) Natural benevolence

(Zen) Buddhism fatalist stoicism, meditation, Absolute

Moral knowledge and impulses

SHINTOISM Loyalty: ancestral reverence, passivity, innate goodness, emperor-worship: know-thyself

Figure 2 The cultural resources of bushido

Authoritative knowledge

CONFUCIUS Five Moral Relations, confirming Buddhism and Shintoism. Benign precepts

90 The Japanese industrial economy was she owed to the samurai’. But bushido emerged as a ‘moral standard for the whole people’, a sanctified code which spread outwards in modified forms to commoners in general, its spirit producing even such aberrant consequences as the otakodate, those who championed lost causes and at times headed movements for popular rights. To writers in the cultural tradition of Nitobe, it was precisely this downward filtration of ‘tradition’ that marked bushido as a crucial ingredient of transition. In addition, with its strong Confucian characteristics melded with the contemplative methods of Zen Buddhism, the ‘elements’ of bushido were not exclusively endogenous to ‘Japanese culture’. Japanese Buddhism even in more popular versions, differed greatly from the systems of India, Sri Lanka or Burma, with a definite downplaying of notions of extinction and an equally observable upgrading of ritual and salvation. It was in the historical ‘aggregations of moral qualities’ as described by Nitobe that bushido took on its uniquely Japanese character. Bushido thereby becomes at once both our engineered motor force of change and a unique conﬁguration evolving from cultural underpinnings derived from China, Korea and elsewhere. The conditions of the Nitobe cultural engineering model were clear enough, and as follows. The bushido ethos survived the Restoration conﬂicts of 1867–8, as did many other cultural traits. Prior to this the bushido idea had ‘ﬁltered through the social class for which and by which they were developed and leavened the whole nation’. The knightly class were automatically ‘followed’ by the multitudes of ‘tradesmen and peasants’. Honour as an ethic and honour as a practice were indivisible, ultimately forging Japanese society as an ‘encampment’, highly prepared, easily mobilised, cemented in service (Nitobe 1936: 124–41). Finally, bushido provided both agency and energy, a conclusion which accords strongly with the frequently quoted motivational statements of Meiji system-builders. In particular, the Oyomei school, which centred in Satsuma and Chosu, the clans which supplied the political and administrative leadership of Meiji industrialisation, followed bushido very closely in its avocations that action is the highest form of expression and that life is a constant effort to defeat the resistance of inert matter. What this account omits is the enormous expenses and complications of cultural engineering. Filtration, selection and popularisation of bushido and its associated traits and behaviour patterns all took place alongside an overt process of human capital formation. Although many accounts stress the role of Meiji educational investment as principally that of introducing foreign languages, concepts and techniques into Meiji industrial culture, a far greater amount was spent by the state on basic literacy and value-indoctrination than on the much-lauded modernisation of higher technical, scientiﬁc, commercial and legal education. The total cost to government of mass education during the Meiji era accumulated to around ¥1,000 million, about one third of all local government expenditure and equivalent to about twenty-five times the annual land tax of the late 1870s. The modern Japanese estimate of the manner in which this Meiji system simultaneously beneﬁted cultural and commercial efﬁciencies is best represented by a Ministry of Foreign Affairs summary of 1972 that

Cultural engineering 91 all people were ﬁrst educated in ‘becoming loyal subjects’ at primary schools, followed by absorption into higher schools, depending on the degree of ‘ability’. This made it possible to take into government service out of a vast pool of talent those people who were considered appropriate for the state and to bring the society classiﬁed into strata according to the degree of schooling closer to a society based upon ability. (Ministry of Foreign Affairs 1972: 22) Writers such as Tesshi Furukawa or Josiah Royce have in different manners seen such a formal institutionalisation of cultural engineering as an essential carrier of the most extreme of the loyalty doctrines (Royce 1930). Meiji education became one large vehicle of the transmission of the values of the elite to the populace at large, one which was invested in and institutionalised to an extent not witnessed elsewhere in the nineteenth century. Mita has judged that reformulated school texts were quite simply ‘the most important means of instilling values among the people’, serving to replace family by state control in a period of fast generational change (Mita 1992: 225, 229). The years 1872–9 focused on translation of Western texts, the years 1880–5 on a revival of Confucian texts, the years from 1886 on the development of state-approved amalgams. It seems certain that the main determinant of the shift around 1879 was the Satsuma Rebellion of 1877, as indicated by Motoda Eifu’s Kyogaku taishi (Main Routes of Education), which argued that ‘searching the world’ had gone too far. The 1879 policy statement Key Concepts of Education referred explicitly to ‘drawing into the brain before all else a sense of the moral obligation of ﬁlial piety’. The Education Decree of 1880–1 elevated moral training to the top priority and the textbooks of subsequent years were increasingly dominated by notions of the family-state. Despite incorporating such terms as ‘human capital’, or ‘social capacity’ or ‘human resources’ into interpretative models, most economists treat human capital fairly narrowly as formal education. Our approach requires a more liberal treatment, and follows the advice given by the development economist W. Arthur Lewis to a UNESCO conference in 1961, that when considering general economic development ‘investment in humans is not to be equated with education, as normally conceived in institutional terms’, because human capabilities are ‘improved by education, public health, research, invention, institutional change, and better organisation of human affairs, whether in business or in private or public life’ (Lewis 1961: 125). The movement to sustained industrialisation might, then, arise from human capital formation (HCF) activities over a wide range. Similarly, Bowman and Anderson fully recognised that industrial transformation ‘entails conflict and requires major adaptations and adjustments by the individuals and groups who make up a society. It both contributes to and depends upon human resource development of many kinds, including “education” outside schools’ (Bowman and Anderson 1968: 121). Thus there seems to be no analytical reasons why HCF should not embrace investments in sanitation, disease prevention, nutrition and general health, or any investments which might increase or redirect learning potentials, information dispersals, expectations and motivations, entrepreneurship, or broaden the channels of meritocratic mobility.

92 The Japanese industrial economy Table 1 more formally measures our usage of the term human capital formation (calculated from Emi 1963: 73, 157–62, 168–70, 175–77, Meiji-Taisho Shoran). It might be argued that our measures of HCF must capture expenditure which induces factor mobility, information dispersal and acceptance of new industrial technologies. In such a view, the economic impacts of educational investments may be taken as including inculcation of attitudes, obedience and submission to hierarchies and to sustained income inequalities, all of which might be also seen as prime outcomes of the process of cultural engineering. Such investment is relatively cost-effective when compared to increased policing, riot control or militaristic subjugation of the labour force or the population at large. This is indeed a message of the ‘social reproduction’ school of analysts, those who today consider that the psychological and institutional preservation of capitalism and its power structures must be the focus of economic explanation. Table 1 attempts a rough approximation of Meiji public sector HCF with all of this in mind. The Hitotsubashi economist Koichi Emi has argued that early transfer payments were essential to the setting up of a modern economy, as they took the form primarily of compensation for losses of feudal incomes, dampened dissent and were fundamental in ‘constructing the new and coming capitalist society to support the initial political revolution’ (Emi 1963: 109). It seems, therefore, reasonable to calculate HCF as approximately equivalent to the totals of expenditure on education, transfers, employment of foreigners, and social and sanitation developments not coming under the heading of capital expenditures proper (columns B, C, E, F, G). Infrastructure has been taken separately as capturing the essence of public social overhead capital, not defined here in HCF, despite the judgment of another Hitotsubashi economist that ‘traditional and modern social overhead capital both developed rapidly in the early Meiji period, and formed the foundations for the economic growth which followed’ (Minami 1986: 24). From this it will be seen that public-sector HCF alone represented some 20 per cent of all public expenditure, considerably higher than either capital expenditure (12.6 per cent) or infrastructure (5.2 per cent). More important in our present argument, in the period 1873–7, the years of the heightened drive towards industrialisation, HCF peaked at 43.4 per cent of total government expenditure. Without the cultural engineering process, not represented in government expenditure ﬁgures, there can be little doubt that the HCF ﬁgures would have been far higher if such investment was to fulﬁl the equivalent industrial or economic roles. This would have placed enormous further strains upon the regime, possibly to a level sufﬁcient to halt the early industrial drive entirely. In Figure 3 we attempt some further analysis of the role of cultural engineering in industrialisation. Here we are suggesting that the historian might explain Japanese industrial success to block D through recourse to conventional cultural and technological arguments, but that to move interpretation beyond this point requires more explicit acknowledgments of cultural engineering. Block A–B contains a cultural stock that is altered in character (‘the invention of tradition’) and deliberately mobilised (by cultural engineering) in order to reduce the costs of late industrialisation. The character of such cultural manipulation was at least partially

149

321

445

545

582

1169

2309

4733

6078

16331

1873–77

1878–82

1883–87

1888–92

1893–97

1898–02

1903–07

1908–12

Totals

Total government expenditure (A)

1868–72

Year

788

387

216

168

66

38

38

25

Education (B)

172

67

37

39

12

5

7

5

853

304

176

154

90

57

39

33

Social/ Infrastructure Sanitation (C) (D)

Local government expenditure

2064

749

671

151

117

77

65

76

122

36

Transfers (E)

Table 1 Public sector human capital formation 1868–1912 (million yen)

170

57

39

30

10

8

6

7

10

3

Education (F)

18

2

2

4

7

3

Foreign employees (G)

2062

841

415

356

178

97

64

52

41

18

Capital (H)

Central government expenditure

1.6

1.5

2.3

1.1

1.2

1.8

1.7

3.4

2.3

H

19.7

20.7

20.3

16.8

17.5

22.3

21.7

26.3

43.4

28.2

A

B+C+E+F+G B+C+E+F+G

(%)

94 The Japanese industrial economy determined by the imperatives introduced through the importation of Western techniques and ideologies, as represented in ﬂows (c) and (ci) and as described in Chapter 4. That is, successful industrial transition (block E) relied on a process of cultural engineering in association with continuing and accumulating technology transfers. The success of such flows also further legitimised the policies of the industrialising elite (ei). In this wholly schematic and heuristic approach, the failure

Social structure

Cultural resources

A

B

Exogenous (Western) forces

C

b – energy a – direction

c – direction and energy

1868 The empowered industrialising elite

D

ei – legitimising processes

cultural

d

engineering

Meiji industrialisation

E

cultural

e

production

The twentieth century

F Figure 3 Cultural resources and Japanese industrialisation

ci – technology transfer

Cultural engineering 95 of other nations similarly situated arose either because the forces for change from the outside (both block C and ﬂow c) were simply not strong enough or because such forces directed the decision-making system – via colonialism or the formation of compradore groups and separated elites – into a trajectory which did not coincide with the demands being set by internal social and cultural forces – the collapse of block A–B and the loss of effective economic sovereignty held by any erstwhile modernising elite. Vital to the ﬁnal success of the empowered elite in Japan was a process of cultural engineering backed by investments in human capital formation to levels far beyond the investments in industry itself. The actual direction of such cultural engineering and institutional innovation was possibly charted through the imperatives associated with continuing technology transfers (ci). Figure 3 does serve to illustrate the great difﬁculties faced by any of the outstanding cultural approaches, but points out the equal difﬁculty of properly distinguishing (or negotiating) between so-called cultural and so-called structural or economic interpretations of Japan’s industrial transitions. For instance, it is difﬁcult to imagine what the evidence would look like which would enable historians to run exclusively down block B to ﬂow (b) at block D, without recourse to the other feasible explanatory elements. There probably exist no quantifications nor any theories which would yield unambiguous empirical operations for the relevant blocks and ﬂows. In the end this might mean that Parsons’s gambit, the move from a multicausality to a sufﬁciently ‘cultural’ determinism, will be found wanting amongst historians of Japanese industrialisation (Parsons 1966: 113).

The avoidance system: on minimising cultural resistance It would be reasonable to presume that a principal cultural function of the Japanese state in the process of industrialisation was to reduce resistance to technological and institutional change, as much as to advertise such change overtly. Often enough resistance to modern industrialisation is dealt with by analysts as nihilistic or ‘luddist’, as if it was solely the business of the unlettered outsiders or of interest groups directly affected by technological change. Even in quite sophisticated approaches which incorporate the complexity or nuances of acceptance or rejection of new artefacts and institutions – such as that of Anthony Wallace – there is rarely much analysis of the role of overt cultural engineering (Wallace 1995). We may complicate such dismissive perspectives with reference to Figure 4. There can be little doubt that the political and budgetary activities of the Meiji state and of later governments were often directed at reducing resistance of vested interests, as in the buying and selling-back of private enterprises, which protected the value of private assets and at times increased the incomes of particular groups. We have seen that the Meiji government devoted enormous funds to income transfers, designed to satisfy the aspirations of the old aristocracy at a time of great change. However, it may be argued that the resistance of most vested interests was dampened by the very pattern of industrial and technological transformation after 1868 and did not depend especially upon a process of income transfer or cultural engineering. Many indigenous industries, such as sake and soya processing

96 The Japanese industrial economy Level

Type of resistance1

Source of resistance

1

VESTED INTERESTS (a) Capital (b) Labour

Assets (physical) Organisations Incomes

2

INTELLECTUALS2

Principles Organisations

Interests Careers

CULTURAL

Institutions Bureaucracies

Ideologies Norms

3

Figure 4 Technological change: types and resources of resistance Notes 1 Primarily in this analysis referring to ‘adoption-diffusion’ processes, but might extend to conditions and character of original innovative processes. 2 Here we are thinking of intellectual resistance to signiﬁcant technological discontinuities.

or paper-making, were large employers, but not greatly or rapidly affected by foreign technology or new organisations. Where there is evidence of foreign techniques in such industries, as in wood-cutting and lumbering, there seems to have been no substantial impact on work and labour organisations. Most of the new industries using modern technique, such as beer-making, railroads, equipment manufacture, electrical appliances or motors, had no real entrenched work processes or skills or ﬁxed assets to contend with. The real centre of contention was more likely to have been in textiles, particularly cotton-spinning. But there is little evidence of ludditestyle resistance in cotton, and during the depressions in the weaving districts during the 1880s small producer associations tended to form, aimed if anything at a further, more efﬁcient diffusion of information and foreign techniques. At the spinning end of the industry, Saxonhouse has summarised how the several dozen modestly sized mills ‘relied almost entirely on a labour force of women whose average entrant lived in a company dormitory and stayed no more than two years’ (Saxonhouse 1976: 98). Such a context offered little in the way of a proletarian revolt. We might generalise that the dualistic industrial pattern of Meiji development tended to protect small-enterprise workers and capitalists and minimise either the negative impacts upon them or the power of those who were deleteriously effected to actually express themselves in cultural or political terms. This latter case was surely that of the thousands of young transient country girls who were crowded together yet socially isolated in the great dormitory-mills of Osaka and Tokyo. In such circumstances it is difﬁcult to directly assign to culture any absence of resistance to technological and other changes stemming from vested interests of labour or capital. In Figure 4 we have identiﬁed a second potential level of resistance, that of the intellectuals. It is clear that the disruptive activity of the dissenting Meiji intellectuals was severely curtailed through the direct measures of the state and by what we have termed ‘soft rule’ (Inkster 1998a). We might now extend this position by adding the inﬂuence of the cultural engineering process, which convinced many of the worth of the modernising process while offering positions of security, status and high incomes to all those enlisted as educators, administrators and ideologues. In terms

Cultural engineering 97 of our chart, such actions by government reduced the potency of the resources of the intellectuals – principles, organisations, interests and careers – as sources of resistance. This position requires a little elaboration. Harootunian and other political scientists are almost certainly correct in their overall judgment, from Meiji evidence, that ‘the existence of a strong strategic elite in the initial stages of modernisation is more important than a comprehensive design for change of a variety of politically articulate groups competing with each other’ (Harootunian 1966: 19–20). In this sort of interpretation the intellectual resistance to industrial and technological reformation of Figure 4 was converted in Japan into some fraction of an ‘adaptive elite’, whose internal debates and recourse to popular opinion and support served functionally in the further sifting of information, gauging of support and articulation of goals. In our own analysis we wish to present such a transition not as part of an unproblematic evolutionary social outcome but as deliberately forged in the processes of selective recruitment into the new meritocratic elite, social engineering and human capital formation. Thus we must at once admit to the importance of structural factors. The intellectual opposition during the Meiji period was predominantly drawn from backgrounds that were identical to those of the industrial modernisers in power. The lower samurai class provided the background for many post-1868 intellectuals, bureaucrats and senior government ofﬁcials and ministers alike. For truly disruptive conﬂict to have been sustained, the intellectuals would have to have had much less in common with the bureaucratic elite. Tokyo University or other institutions, and the constant networking of relationships which emanated from them, helped convert the antagonism of the 1870s into the consensus of the late 1880s. Again, the industrial successes of the latter decade cut the ground from under critiques which focused on alternative modes of development, just as full employment of the intellectuals, in education, government, trade and local administration, dampened feelings of alienation and made insiders of erstwhile marginal groups. This was an institutional version of the selling-up process as applied to business groupings, or of the commutation of stipends and other income transfers (quantiﬁed in column E of Table 1, p. 93) as applied to many of the ex-noble class. The inﬂuence of the foreign communities in Tokyo, Yokohama and elsewhere, with whom leading political intellectuals interacted quite frequently, served further to pull dissenters towards a commitment to foreign knowledge, science and technique, a commitment identical to that of the bureaucratic strategic elite. In addition, a political radicalism that stemmed increasingly from the thought of such Western liberals as Herbert Spencer and Charles Darwin could, through notions of societal evolution and a belief in the moral functions of science, be found highly computable with technocracy, industrialism, cultural engineering and bureaucracy. A combination of such changing structural factors and cultural engineering effects might be seen in the short history of such dissenting groups as the Meirokusha (Inkster 1988: 116–23, Braisted 1976). Although a leading intellectual such as Yukichi Fukuzawa might rely upon reputation as a basis for income and inﬂuence, other members such as Hiroyuki Kato were seldom outside of an ofﬁcial position, a severe limitation on the degree of their dissent. Kato’s early democratic radicalism

98 The Japanese industrial economy of 1868–70 was soon diluted in an intellectual formula which served to separate kokutai (the national polity) from seitai (the politico-administrative system) in the solution that Japan’s backwardness prevented democracy and freedom of choice at the seitai level even though the kokutai might increasingly include such elements as political goals. Education was needed in order to spur the efﬁciency of the seitai, a position similar to that of Fukuzawa, for whom kokutai became in essence the fact and spirit of national independence, a prize lost if a prematurely democratic state had to withstand the multiple cognitive and artefactual onslaughts of the West. It would be difﬁcult to ﬁnd a tidier apology for a programme of cultural engineering. The very success of early industrial and technological programmes might have been a sufﬁcient element in the undermining of the more extreme and physical resistance of the Joi intellectuals. Although there was a deﬁnite revival of a Joi ‘expel the barbarians’ mentality around 1878, this did not develop a sound thesis about the inevitability or otherwise of Western-style industrialisation. Indeed, the ultimate cry of joi was a reﬂection of a strategy which followed their underlying belief that the Japanese state was in process of dissolution, and that such aspects of industrialisation as the proﬁt motive or the applications of Western scientiﬁc thinking were simply no substitutes for, and were incompatible with, Japanese values and Confucian ethics, a rider addressing incompatibility but not the feasibility of a successful rejection. So, when it became clear that the industrial process was fairly entrenched, joi was reformulated to embrace limited Westernisation. Similarly, kaikoku (the concept of ultimately expelling the West through the immediate use of its techniques) had at its base a notion of incompatibility and the possibility of protecting traditional modes and limiting industrial modes by excluding the pervasive inﬂuence of Western morals and concepts of virtue. Western inﬂuence could be visualised as dualistic, and Western technique could be used to cope with the external threat as Eastern ethics were incorporated to address internal dissolution. It seems clear that both joi and kaikoku represented tactical systems that might be found inappropriate when social or industrial conditions changed. By the later 1880s industrial success was such that the ‘reject the West’ arguments of such groups as the Joi writers were becoming patently anachronistic – too much was already in place. It was at just this point that Fukuzawa evolved a series of cultural and political propositions which fell somewhere between those who adopted all things Western and those who judged Westernism as still detachable from a broader cultural base. Other intellectual strategies were forged such as those of Tokutomi Soho and his followers who began the rejection of fundamental Japanese cultural traits, arts and institutions, or those associated with a renewed search for a ‘usable past’ as formulated by the Seikyosha group of political intellectuals after 1888, perhaps caught at ﬂow (e) in Figure 3. Ultimately, at block F of that schematic chart, as Kenneth Pyle summarised, the notion of sekai no bunmei (world civilisation) obliged many of the intellectuals and administrators of the new Japan to ‘preserve and develop their distinctive talents and values in order to supplement the contribution of Western culture’ to world civilisation. Finally, intellectual opposition wilted rapidly during the period that Kenneth Pyle has discerned as a turning point, 1889–90, when a sense of ‘national mission’

Cultural engineering 99 enfolded the new constitution from February of 1889 and the meeting of the ﬁrst Diet in November 1890 (Pyle 1969: 151). At this point a far greater convergence of the intellectuals was forged under the exigencies of external issues: the unequal treaties, extraterritoriality and its legal framework, international diplomatic relations and so on. As the intellectuals entered the milieu of the Japanese war against Russia, cultural nationalism had become not only natural and national, but also honourable and international. The third level of resistance depicted on Figure 4 is that of culture itself, seen as a complexity of institutions, ideologies and norms. Our argument has been that this was minimised by the successful programme of industrialisation and cultural engineering. We might pursue the theme further by introducing the additional notion of Japan as an avoidance system. That is, it might be reasonable to tell the story of Tokugawa (for example the narrow channels of Rangaku), Meiji, and later industrialisation as one of avoidance. There is a very acute sense in which Japan as a cultural system never did confront the West, its ambitions, traditions and ideologies, until at least the years after defeat in the war of 1937–45. The Toynbeean vision of a confrontation of cultural systems, of subsequent reaction and response, mimesis and adaptations, might not be a particularly clarifying one. We have seen that from the early modern period the Japanese system could choose artefacts from other lands precisely as it isolated itself from their peoples and their politics, and this was true in the cases of both the Chinese and the Europeans throughout the long Tokugawa years. One writer, perhaps somewhat fancifully, has concluded that Japan thereby ‘secluded herself as in a convent, abstained from internal dissensions, and went as it were to school’ (Scherer 1927: 185). It might be noted that the Rangaku trickle of Western learning was centred on the small, fan-shaped artiﬁcial island of Deshima, situated in Nagasaki bay, a mere 200 yards by 80 yards in extent, and that the ten ships per year that visited from 1641 actually dropped in numbers as time went by.4 Most trades did not involve much in the way of cultural exchange: a Japanese bullion drain of perhaps £40 million in gold, silver and copper between 1609 and 1858 ﬁnanced an import of Spanish wines and English cheeses, toys and pet animals. Although this small site has been seen commonly enough as a conduit for the ‘civilisation of the West’, for Dutch translations and the learned use of Western instruments, for the Japanese study of Lalande and the construction of telescopes, barometers and thermometers, such effects should not be overstated. This was a site also of periodic rejection,5 but, more importantly, it was one which embodied the essential attributes of the slight and calculated relations between Japan and other places both then and for many years to come (Busk 1841). Thus, the island was connected to the town of Nagasaki by a stone bridge with a guarded stockade that isolated some dozen or so European residents whose only evening visitors were prostitutes or progeny. Japanese compradore go-betweens fixed prices and curtailed commercial relations between buyers and sellers (Busk 1841: 28–31). Japanese in communication with foreigners were forbidden to pass on knowledge, and sixty to seventy interpreters, who served both Deshima and the nearby Chinese factory, acted as a further barrier between cultures. This was furthered by the niceties of convention: Japanese of any rank did

100 The Japanese industrial economy not speak directly to Dutchmen but always through an interpreter, even though either might know the other language. Visits to Nagasaki by foreigners required individual petitions to the governor in advance, and as all such visits called for interpreters and ofﬁcials they were generally tiresome and expensive. Clearly, the period of Rangaku was not one of total isolation but neither should we exaggerate the extent to which Japanese intellectuals, technicians or commercial agents were exposed in a meaningful manner to direct dealings with the rest of the world. We have emphasised that Japanese ‘culture’ was not a stable medium through which Western (or, earlier, Chinese or Korean) ideas and artefacts were screened, selected and efficiently utilised. In addition to a very dynamic and specific programme of cultural engineering, there was also constructed a clutch of essentially artificial sites of endeavour in arsenals, armament centres, model factories, dormitory complexes, religious houses, schools and universities, docks, stations and lighthouses. Far more ingenuity and money was spent on the construction of such special sites, and thus on the avoidance of much direct cultural or social confrontation between Japan and the West, than was ever directed towards high technologies and new industries as such. Later, the dualistic industrial economy which nurtured the thriving smaller-enterprise industries and workshops well into the twentieth century caused the resulting sites of modernity to be not so much enclaves as harbours of conﬂict, change and transformation. There was no interface, merely a number of nodes of modernism which grew and spread through time. At times, of course, conflict and doubt moved out of such sites and the crises of modernisation were diffused and publicised more widely. More commonly, confrontation was contained nicely within these places. Within such harbours were contained, studied and modified the elements of a specifically negotiated ‘foreignness’ or ‘otherness’. Through the exclusions on foreign capital and the conﬁnement of the bulk of modern and foreign activity to particular ports and urban areas, the Japanese ‘interior’ of millions was deliberately isolated, rather than wasted by the inevitably embedded features of industrial modernism, a common enough characteristic of regime crisis in poor nations of the twentieth century. It is most certainly the case that in other places it was precisely violent debate concerning the extent to which foreign inﬂuence should penetrate national systems that generated destabilising and disabling ‘internal dissensions’, just the sort of fractures that eventually led to colonial conquests. From all of this we might judge that cultural engineering was fundamental to the harnessing of the existing Japanese cultural stock to a modernist programme of industrialisation. This was aided by the costly investments in human capital formation. How far such a complex was essential to the reduction of actual opposition to industrialisation – to the containment of the total regime costs of late development – is much more difﬁcult to judge. In the case of vested interests and the intellectuals (Figure 4) other important factors seem to have been at work. In the case of ‘cultural’ opposition, in so far as this can ever be properly isolated from the insidious working of vested interests, its apparent easy curtailment was almost certainly a function of the combined control impacts of cultural engineering, human capital formation and avoidance measures.

Cultural engineering 101

Summary and conclusions Karl Polanyi once famously argued that in the British case – often enough considered archetypical – the prevailing ideas of individualism and liberalism, both strongly associated with innovation and risk-taking, were in fact a manufactured ideology, rather than any organic or ‘natural’ cultural requisite of industrialisation. In this view the British state and elite fabricated ideology in order to foster a particular enterprise culture, identiﬁed in the features of individual ambition and identity through struggle, the concentration on output and proﬁt, the belief in the system logic of individual desires, actions and pursuits, as in Adam Smith’s ‘invisible hand’ (Polanyi 1944). For such an argument to hold, subsidiary arguments about motivation and power were required, and these have been fashioned in the host of social histories of industrialising Britain which have been published since Polanyi’s book of 1944. This may suggest that arguments seeking to relate culture to industrialisation always do demand some account of the ‘invention of traditions’ or of cultural engineering. We would suggest that cultural engineering is much more likely to be intensely adopted in the hands of an industrialising elite in cases of relative economic backwardness and late development. Eight speciﬁc points are worth noting in detail. First, if we deﬁne culture as the values and norms of a coherent system, together with the material products of that system, then the historical intrusion of foreign material and cultural goods, and the means to fabricate them, are necessarily stimulants of cultural crisis. Culture becomes a limiting factor – and thus a possible explicans of dynamic change – in the same sense that the rate of physical investment may be taken as a determinant of economic growth only if it is relatively scarce and in demand and growing. If there is somehow an over-abundance of such capital, its growth rate or exact quality is unlikely to be a ‘cause’ of the economic growth rate. Similarly, the cultural argument requires us to move beyond a characterisation of the ideal and replete character of the stock of culture and into some account of cultural change or even cultural investment. Second, features of cultural engineering include borrowing, eclecticism and ﬂexibility, all accepted as descriptive elements of Japanese culture over a very long historical period. Cultural engineering may be regarded as an important component of a more general ‘invention of the past’ programme which may be mounted by a strategic, modernising elite. In periods of crisis, culture may not act merely as a latent resource. Cultural engineering is likely to be inefﬁcient in the absence of a sustained programme of human capital formation and associated investments in social overhead capital and physical infrastructures. The unpacking of this complexity may be difﬁcult, but one dynamic and perhaps leading element was provided by technology transfer, as schematised in Figure 3 above. The expense of social investment in Meiji Japan lay far above the direct public costs of industrial and technological development per se. Third, this view entails an explicit acknowledgement of the power of the elite and the precise character of the mechanisms crafted by that elite to ensure sustained interactions between the Japanese and Westerners across crucial junctures. Thus,

102 The Japanese industrial economy well into the twentieth century, territories in and around Tokyo, Kyoto, Osaka and Nagasaki became the principal sites of transformation, not Japanese ‘culture’ or Japanese ‘society’. Within such sites the highest status of cultural agencies, including the Emperor himself, his court and retinue, most government ministers, ex-princes of the Empire and ex-nobles at large, all combined to fashion the transformation of a nation. In this process they drew upon cultural resources lying beyond the bounds of such sites in a manner suggested in this chapter. Japanese agents of modernity may thereby have drawn upon a great array of cultural resources in both internalising and legitimising their potentially very disruptive activities. This valid explanatory position does not in itself establish a strong ‘cultural’ argument. Fourth, dissent from the industrial programme certainly occurred on several fronts (see Figure 4) but was curtailed by structural as much as cultural forces, and was further subdued by overt cultural engineering and employment of intellectuals within the new facilities for human capital formation. In Gramscian terms, cultural engineering might be seen as one factor amongst others (including human capital formation and the avenues of the avoidance system) that served to shorten and ease the transition between the fall of ‘traditional intellectuals’, and their old allegiances and claims to independence, and the rise of a new group of ‘organic intellectuals’, those embedded in the requirements and micro-culture of the modernising elite, who identiﬁed fully with the new value system and power structure (Simon 1982, Hoare and Nowell-Smith 1971). This seems to have occurred particularly in the 1880s, and the career of Fukuzawa might be seen in this light. Fifth, in the case of pre-1868 protests it is particularly difficult to isolate the cultural and political causal elements. Because late Tokugawa villages were the effective unit of taxation, protest tended to occur as a village collective activity, and tended to be aimed at rich peasants (the honbyakusho or small landholders) or against village sinecures, and most petitioning seemed to be instigated as a response to local and immediate crises or injustices. Thus, although Anne Walthall has recently judged that by the last few years of Tokugawa ‘it was becoming increasingly apparent that the verities of the past would no longer hold’, it is not clear that the escalation of protest was also more political or ideological (Walthall 1991: 15). Similarly, there is much evidence, from 1871 particularly, of sporadic outbursts of reaction against new Meiji technologies, ranging from vaccination to telegraphs and railways. But here the main method of control appears to have been ofﬁcial diffusion of information and an alliance between Western expertise and existing Japanese skills. Thus original adverse reactions to vaccination during the smallpox epidemic of late 1870 were countered when Western medical men in government hospitals in Yokohama placed vaccination ﬁrmly in the hands of Japanese doctors: in the first week of 1871 alone Japanese doctors visited over fourteen thousand houses and forty-seven thousand people (Inkster 1980: 56–8). Sixth, the process of cultural engineering clearly depended on that ‘escape from colonialism’ which we have touched upon in Chapters 1 and 2. The subsequent internal ability to manipulate was surely the factor which distinguished Japan from the other non-Western areas of the globe, and commands far more explanatory power than problematic demarcations of contrasting cultural traits. If we are also

Cultural engineering 103 prepared to maintain that this escape owed more to the relatively mundane features of location, demography, terrain and timing in combination with the long-term impacts of the social control regime of Tokugawa than it did to more sophisticated cultural or economic factors, then the ‘argument from culture’ becomes highly modiﬁed and conditioned. Seventh, successful cultural engineering by the modernising regimes of Japan depended upon a broader process of the ‘invention of the past’ as well as on expensive policies of human capital formation centred on schooling and cultural training. Large contemporary systems such as China or India could not maintain such expenditures across phases of sustained industrial modernisation, nor was the ‘invention of the past’ by an internal elite possible during colonialism or in the immediate aftermaths of colonial rule. It is true, of course, that there were other differences stemming from different historical circumstances. To use the famous distinctions of Edward Shils, China and perhaps India were more traditionalistic than merely traditional. Following a Weberian approach to culture, Shils deﬁned action as being essentially ‘traditionalistic’ where there is ‘self-conscious deliberate afﬁrmation of traditional norms, in full awareness of their traditional nature and alleging that their merit derives from that traditional transmission from a sacred orientation’ (Shils 1958: 160–1). In such highly encoded systems with a sacred past we might expect the process of cultural engineering to be far more problematic than in a system which has over many hundreds of years periodically ingested admixtures of new traits and belief systems from elsewhere. Bert Hoselitz extended this approach by suggesting that in cases where traditional norms are held just as self-consciously, but ‘without necessarily being attached to sacred origins’, then ‘they will be more easily subject to alteration and even rejection’ (Hoselitz 1961: 86). This last category may seem to ﬁt reasonably the Japanese case as we have presented it here and in earlier chapters. Yet to disengage such distinctions as explanations of contrasting histories of industrial modernity is quite another matter, especially when more immediate explanations lie to hand. But the Shils formulation at least has the merit of emphasising the possible importance of the manner in which cultures are historically configured, rather than following the more simplistic culturalist approach, with its frequent emphasis on the contrasting of particular cultural traits. Eighth, the cultural engineering process took some time to move beyond the conﬁnes of the public sphere and popularised culture into private enterprise itself. It follows from the story so far that any historical approach to Japanese industrialisation is obliged to consider the relations between Japanese enterprise and its cultural context, and the extent to which specific elements of Japanese business organisation and behaviour may be explicable in cultural or cultural engineering terms. Our suggestion is that private enterprise became the principal site of cultural engineering, particularly after 1918, a suggestion which continues the argument of Chapter 4 and heralds some of the arguments of Chapter 6. This does not mean that enterprise became the only or even the principal agency of such a process. In this manner Japanese industrialisation remained based upon a system which in most part avoided any wholesale cultural confrontation with other nations. This may well have lent great strength to the ability of Japan to respond positively

104 The Japanese industrial economy to crisis and foreign intrusions, and it may very well be crucial in the ability of contemporary Japan to find globally useful accommodations with the growing economy of mainland China. It must throughout be remembered, as shown in Chapter 3, that modern large-scale Japanese industry does not adequately represent Japanese society nor does it directly reﬂect Japanese culture.

6

The institutions of late development Private enterprise

Enterprise culture again A company will get nowhere if all the thinking is left to management. (Akio Morita, 1987) There is a regular hierarchy of masters over him; foremen, manager, clerk, and capitalist, every one of whom is more important than he who does the work. (William Morris, 1883) What is often thought of as private-enterprise ‘culture’ is in fact an historical conjunction of internal and external processes. For instance, a late-developing industrial system might exhibit less public welfare, fewer mature banking systems, fewer democratic government instruments, less rigidity with respect to home-grown, well entrenched technologies and institutional forms, and more ambition, than a mature industrial system. Thereby the ‘enterprise cultures’ of the two systems will be expected to contrast, but such contrast may be only most loosely related to any original or decisive ‘cultural’ contrasts between the two social systems at large. If we then admit that no social system is homogeneous, then it is clear that the character and role of private enterprise culture becomes highly problematic. In particular, for historians or other analysts it becomes most difﬁcult to move from depiction of ‘cultural features’ towards theories about enterprise performance and the competitiveness of nations. Furthermore, we have argued strongly throughout this volume that, historically, Japanese culture never acted as a mere ‘asset’ but was at times deliberately mobilised in order to confront the many problems faced by a late-industrialising political economy. Does the culture of private enterprise and its speciﬁc institutional manifestations in the ‘Three Treasures’ (lifetime employment, wage seniority, enterprise unions), or kanban, or ‘just-in-time’ and so on, follow from its entrenchment within a wider, earlier process of cultural engineering? Are there cultural processes in private enterprise that might be analysed as lying beyond the ambits of such cultural manipulation? If Japanese private enterprise culture is an epiphenomenon of an engineered culture, is it endlessly ﬂexible, or are there real limits to such ﬂexibility formed out of underlying ‘cultural’ attributes?

1 2 3 4 5 6 7 8 9 0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

106 The Japanese industrial economy

Culture and enterprise Representing the complexities of the Japanese management system in terms of ‘justin-time’, Hopp and Spearman summarise very well a standard management-culture view: The roots of JIT [just-in-time] undoubtedly extend deep into Japanese cultural, geographic, and economic history. Because of their history of living with space and resource limitations, the Japanese are inclined towards conservation. This has made tight material control policies easier to accept in Japan than in the ‘throw-away’ society of America. Eastern culture is also more systems-oriented than is Western culture with its reductionist scientiﬁc roots. Policies that cut across individual work-stations, such as cross-trained ﬂoating workers and total quality management, are more natural in this environment. Geography has also certainly inﬂuenced Japanese practices. Policies involving delivery of materials from suppliers several times per day are simply easier in Japan, where industry is spatially concentrated, than in America with its wide open spaces. (Hopp and Spearman 1996: 149–50) Here certain key geographical elements (space and resources) condition a behavioural pattern (conservation) which in turn stimulates acceptance of control and system, features which are again made more industrially effective because of geographic factors (concentration). This is an interesting feedback system and cultural interpolation, but does depend on an unquestioning isolation of particular traits, a rather myopic comparison with the USA rather than with alternative, smaller nations and a neglect of the question of the origins of institutional forms in favour of an argument concerning the general acceptance of such forms. Similarly, Steven Nahmias, after dismissing the saliency of structural or even workermotivation factors in explaining the Japanese success in comparison to American industry, argues that the key lies with Japanese management philosophy nested within institutions of the kanban type, where technology as such is not as important as ‘lean production coupled with providing job security and proper incentives for workers’ (Nahmias 1993: 730). It might be remembered from Chapter 4 that this sort of judgment is uncannily identical to that of those historians who have analysed the inability of the British to adopt the ‘American system of manufactures’ during the 1850s: the story is one of institutions as much as of the technologies harboured within such institutions. Similarly, the difﬁculties often faced with transferring ‘justin-time’ and related systems out from Japan into America, Europe or Australia in recent years have tended to centre on the problems of adopting institutional structures which are dependent upon speciﬁc behavioural patterns and incentive schemes, a point to which we shall return at the end of this chapter. Ironically, in the case of ‘just-in-time’, the original institutional model may have been that of the stock-replacement systems of the American supermarket of the 1950s, observed by Taiichi Ohno as working effectively within Japan and as transferable to the workstations of Toyota’s assembly processes.1 It should be strongly emphasised that

The institutions of late development 107 the resulting institutional imperatives then forced further chains of incremental technological change. Thus the improvement of start-up times instigated by Shigeo Shingo as integral to the ‘just-in-time’ system (and labelled ‘single minute exchange of die’ or SMED) required a novel use of jigs, ﬁxtures, pre-use preparations and so on, which in combination did seem to increase ﬂexibility even in the absence of any greater ﬂexibility of management decision-making as such. There is, it must be noted, a great number of interpretations of the Japanese ﬁrm that make claims regarding a cultural determination of the structure and behaviour of the Japanese ﬁrm. Thus Pascale and Athos add to the above features those aspects of the culture of the Japanese ﬁrm which inculcate ‘ambiguity, uncertainty, and imperfection’ as well as ‘interdependence as the most approved mode of relationship’, and claim of the Japanese that ‘their development of language and forms of discourse, especially their indirection, permit high development of skills we seldom achieve or honour’ (Pascale and Athos 1983: 204). But it can be seen that the move from general cultural attributes to speciﬁc enterprise features is both vague and very varied indeed: for every analysis there are seemingly several possible cultural traits to choose from. The next section isolates a Japanese viewpoint that appears to offer a more complete approach to enterprise performance centring on speciﬁc characteristics and an unusual argument concerning the very essence of Japanese individualism.

Culture, ideology and institutions: the Masuda model We have described several approaches to Japan’s cultural distinctiveness, but perhaps none quite as vivid or adamant as that recently outlined by the Masuda Foundation (Masuda 1992, Hamaguchi 1985).2 This encapsulates a strong line of Japanese thinking in its principal claim that Japanese culture deﬁnes the individual entirely in terms of others (Bellah 1972: 47–68).3 According to this perspective, in Japan human interactions are ‘considered to have intrinsic value and are not maintained or abandoned according to an individual judgment as to whether they represent a functional plus or minus’. This contrast with other societies arises because the basic unit of the Japanese social system is not indeed the individual at all but the contextual or the relatum, a ‘unit’ or social element which inhabits the space between what in Western terms might be deﬁned as the individual and her network relations. The contextual is a ‘social molecule’ which ﬁnds the basis of ‘its’ identity in relations between ‘ego’ and others, and ‘interactions between ego and others are developed within the life space to which they both belong’. For the Masuda Foundation this formulation is in distinct contrast to Western individualism where ‘interactions between ego and others take place outside the individual life spaces which they each possess’ in a means–ends environment ‘which may be used for strategic manoeuvring’. It follows that major organisational features of Japanese private enterprise, such as ‘just-in-time’, quality control circles, kanban and the ringi system, ‘come from the circumstance that contextuals such as these support organisations’. In opposition to those outsiders who see Japan’s organisations as coercive, as demanding sacriﬁces of the individual, in fact Japanese ‘corporativism’

108 The Japanese industrial economy induces all those who work together to go ‘beyond their own duties and cooperate so as to secure appropriate beneﬁts for themselves through the efﬁcient achievement of the goals of the organisation’. Group participation and identity leads to the faithful furtherance of the goals of the organisation principally because the ‘members of an organisation in this case exist not as an individuum, i.e. as individuals, but as a relatum, i.e. contextuals’. That is, at work it is because the Japanese in fact ‘put themselves ﬁrst that they are so ready to cooperate with others’. The Masuda position does not privilege ‘culture’ as a starting point of causal analysis, but seems rather to rest on an analogue with certain natural systems whose components are equivalents to those found in Japanese society. In particular the Masuda Foundation ultimately sees the relatum as some historical product of responses to outside pressures of the sort that we have emphasised in our approach to technology and institutions (Chapter 4) and the requisite process of cultural engineering (Chapter 5). Thus, in response to changes in outside environmental conditions there has been the introduction of ‘what was needed as civilisation, creating overlapping, multi-layered cultural and social structures in the same way that we put on layers of clothing according to the weather and our physical condition’. If somewhat more adamantly claimed, this seems equivalent to the idea of cultural epiphenomenality as introduced in Chapter 5. Masuda also emphasises elite agency, for in historical ‘cases, “invented tradition” is the device used to synchronise the “endogenous evolution” of ordinary people and the “exogenous revolution” carried out by key persons’. The task of the elites faced with external challenge has been to operate a mechanism of selection (of foreign traits or artefacts or skills), followed by one of integration, and in these situations ‘tradition is not simply the repetition of ancestral patterns, but is created as necessary’. Cultural engineering involves persuasion, and invented tradition is ‘negotiated tradition’. The conclusion of this approach is that ‘invented tradition is a social device for the simultaneous accomplishment of the demands of maintaining consistency within the social system and adapting to the environment’. In summary, it is the fundamental natural system of relatum/contextual in Japan which has historically evolved the characteristic building blocks of Japanese culture, the household or ie, village or mura, the party or to, and the ‘band in revolt’ or ikki, organisations designated as ‘network-type social systems’ in the Masuda model. In turn these have spawned industry associations, prefectural organisations, private enterprise cultures and all those Japanese institutions that have ‘individual contextuals as their constituent members’. The principal characteristics of such network systems are their high degree of ‘respondency’ or speed of change in response to changed external environments, combined with their relative stability. Hence the long periods of stability of the Kamakura (1185–1333), or Muromachi (1392–1467) or Tokugawa eras. Hence also the relative ease of dynastic or system transformation, as in the relinquishing of effective power in the Meiji Restoration or the move from defeat and depression to high growth in the postwar years of the 1950s and 1960s. A principal intention of the Masuda approach is to throw some light upon the nature of Japanese business enterprise. The argument is that, in contrast to the West or to China, the Japanese enterprise is based on the contextualist group of employees

The institutions of late development 109 mediated by shaen (societal ties), and this is the focus of all subsequent networking. Within this nexus, kinship and class are of little importance compared to relations of najimi (familiarity) and a subsequently powerful ‘we-consciousness’. Japan is unique. From this has developed ‘long-term stable employment or organisation of jobs around the workplace group’. It is this stability of employment which has given rise to such elements as annual mass-hiring, changing assignments, job rotation and age seniority. The frequently cited ‘Three Treasures’ of lifetime employment, seniority promotion and company unions are not sufﬁcient explanations of Japanese enterprise vitality, but only select fragments of a deeper group or social-ties structuration. Finally, from this level of institutionalisation have developed speciﬁc managerial methods characteristic of the modern ‘Japanese system’: quality control circles, on-the-job-training, post transfers, entertainment rewards and so on. Against the background of a profound commonality, these higher management practices may vary greatly across different industries and enterprise types, ‘and they change rapidly as environmental changes call for new methods’. The Masuda model permits many permutations amongst these practices and for a multitude of relations between them and traditional ties of kinship and locality. Thus ringi (group consensus) and nemawashi (informal sounding out of employees’ ideas concerning a proposed action) (see Chapter 3) may both be visualised as amongst those ‘devices by which the traditional communal group order based on kinship ties and community ties has been skilfully mobilised and rationally organised’. From such an analysis – combining the individual as contextual, with the dominance of social ties in private enterprise – emerges the claim that Japanese business behaviour is systematically different from that of all others, and that this is to Japan’s economic advantage. If one’s ‘own’ perspective intrinsically embraces that of others, then business or legal communication ‘does not necessarily require any clear verbal expression, and in many cases non-verbal forms of communication play a more important role’. So, within Japanese enterprise, tacit understandings amount to information itself, and represent a formal component of the well-being of the ‘relatum as an actor subject’. In the depths of the enterprise, beyond the surface ramifications of lifetime employment or seniority systems, there lies ‘a metainformation which is mutually understood between people in silence, and frequently it is this meta-information that basically regulates people’s actual speech and conduct’. By such means the approach seeks both to explain Japanese industrial success and to deﬁne the borders of understanding between Japanese people and others. Finally, Masuda highlights the seeming problems associated often enough with contemporary Japanese social or institutional homogeneity, and as outlined critically above in Chapters 3 and 4. Thus, tacit understandings subsumed in uniform cultural practices have ‘the demerits of not allowing people to engage in creative activity by themselves or not tolerating people who are outstandingly great’. Hence the Japanese debate on creativity as considered above, pp. 75–9. In perhaps exaggerated form, the Masuda model delineates several of the features emphasised by modern analysts of Japanese management culture and organisation, and represents something of a postmodern nihonjinron. Leading industrialists have repeatedly emphasised the advantages and deliberate exploitation of groupism and

110 The Japanese industrial economy traditional ties, as in Morita’s advice that ‘we think it is unwise and unnecessary to deﬁne individual responsibility too clearly, because everyone is taught to act as a family member ready to do what is necessary’. Importantly, the engineer-chairman of Sony went on to make it quite clear that such socialisation within the ﬁrm was a mere – if opportunistic – extension of general social norms, the familial attitude arising because ‘Japanese tend to feel that way almost instinctively’ (Morita et al. 1987: 149, 181). Masuda might just omit the term ‘almost’. The work of Masahiko Aoki stresses the structural logic of such practices as kanban and the functional rewards gained from an ambiguity of job demarcation or reduction of unit-speciﬁc interests in production systems (Aoki 1990). A number of analysts have identified a cultural-institutional contrast between American and Japanese systems as at the heart of differences in overall economic performance (Dertouzos et al. 1989, Derian 1990, Inkster 1991c: 558–63). For over twenty years Michael Porter has paid close attention to the institutional origins of competitive advantage, with the signal premise that ‘since ﬁrms play a central role in the process of creating competitive advantage, the behaviour of ﬁrms must become integral to a theory of national advantage’ (Porter 1990: 21). The particular, or proximate, sites of the individual ﬁrm are what determines its environmental advantage, and this is not equivalent to the market environs of the industry at large. Importantly, for Porter success emerges from enterprises which for some reason are unencumbered by conventional wisdom, and these exhibit some weakening in the importance of hierarchy, formal knowledge and close linkages, but some unusual strengthening of diffused freedom of action and looser but more manifold linkages with others within the ﬁrm. This seems very similar to some of the Masuda and Aoki formulations for Japanese enterprise. Michael Crozier and others have stressed that the potential for reform in enterprise structures depends on the character of the underlying ‘human relations system’, a phrase more immediately reminiscent of Masuda (Child et al. 1993). In a world of increased complexity, where simple motivational tools will not effect great institutional change, success may arise only from ‘strong culture ﬁrms’, those with the capability for establishing ‘conditions for human groups to give the best of their resources to cooperate efﬁciently and to learn to innovate while taking upon themselves a greater share of the mastering of complexity’. Modern technical innovation research projects such as Project SAPPHO have also concluded that successful innovation is associated with good horizontal information ﬂows across a mix of levels, just as failure is characterised by rigidity and hierarchy (Rothwell et al. 1984: 258–91). The difference between these approaches and that of Masuda is that the latter posits that for Japan the ‘human groups’ within the enterprise are essentially of a different character from their equivalents in the West because of contrasts in the fundamental environmental and historical conditions under which vital cultural inputs – endogenous to the social system but exogenous to the enterprise – were formed. It should also be emphasised that the Masuda approach is not merely a restatement of conventional notions of ‘groupism’ as such. The latter tend to see the group as composed of separate individuals, the individualism of each of whom is more or less ‘deliberately’ subsumed within the group as it plays its part as an agent

The institutions of late development 111 of organisational activities. The group is a way of organising and directing individuals. But in the Masuda type of perspective this is a refracted, sympathetic but essentially Westernised view of the Japanese system. As a leading member of the Masuda project, Esyun Hamaguchi, put it some years ago, ‘the group is not a super system for the purpose of keeping individuals in line; it represents nothing more than a deﬁned area in which relationships between members are interwoven. The group and its members can also be regarded as identical and inseparable’ (Hamaguchi 1981: 49–50). From the perspective of a comparative analysis of groups and organisations, the sociologist Anthony Giddens has also identiﬁed the attributes and the advantages of Japanese enterprise culture. Drawing on the work of William Ouchi, Giddens contrasts the Japanese enterprise organisation with the stylised Weberian model. In contrast to the prescriptions of Weber, Japanese corporations are not pyrimidical in authority or decision structure, involve far less employee specialisation, exhibit the group rather than the individual as the basic node of organisation, offer lifetime employment and encourage very fuzzy distinctions between the inside world of the corporation and the outside world. These are all features highlighted by the Masuda model, although Giddens follows Ouchi directly in identifying such elements of enterprise as outcomes of ‘clan forms’ of authority (Giddens 1989: 282–6, Ouchi 1981). Such clan forms seem to lie somewhere between Masuda’s social-tie groups – basic to the well-being of all relatums – and traditional clans. Although the Masuda model may represent the most uncompromising of the approaches which seek a ‘causal accounting’, moving from some level of ‘culture’ to some explanation of industrial performance, many of its features and some of its assumptions are shared by a variety of other analysts. The difference is that in the Masuda model the features of Japan as a natural system begin with the relatum as unit, this determining the character of complex networks and institutional forms, this forging particular behaviour patterns, these permitting the emergence of particular institutional elements which have been conducive to industrial growth (for example the ‘Three Treasures’), these becoming the central attributes causing Japan’s industrial success. The Masuda approach would also claim to answer the sceptics who consider that ‘cultural models’ are either empirically dubious or mere attempts to disguise the present problems associated with maturity and slow-down (Chapter 3). Those who point to the recent erosion of the ‘Three Treasures’ and to layoffs and moves offshore may be answered by the Masuda model’s premise that such surface features are – and have always been – readily alterable epiphenomena of the underlying natural and cultural systems of Japan. The thesis of the present text would reduce the status of the Masuda cultural features from causal to permissive. Whilst it is perfectly possible to identify such key features of private enterprise, it is clear that they have not merely distilled out of a homogeneous ‘Japanese society’ into enterprise and such highly speciﬁc institutional forms as ringi or kanban. As described in Chapter 5 and elsewhere, a state-led process of cultural engineering has served to legitimise such institutions in cultural terms, to select appropriate forms and to sustain the experimental transfer of foreign ideologies into the process of private-enterprise modernisation.

112 The Japanese industrial economy

Late development: increasing agency We might very well accept that modern Japanese enterprise shows both organisational and behavioural characteristics different from those of the West and feasibly at the heart of modern industrial performance. To this we might add that it is possible to identify speciﬁc institutional features which either induce or permit key behavioural characteristics, as depicted in Chapter 4. What remains problematic is the causal location of such features. There seem to be three large possibilities. One argument is that the reason for Japanese enterprise performance lies in the speciﬁc forms themselves, and that the right mix can generate certain behaviour. This is the direct argument from enterprise culture. The second possibility is that enterprise structures and attributes arise from cultural formations which have been generated over a considerable time and well outside the enterprise. The enterprise has been a beneﬁciary of such cultural traits, and opportunistically so. That is, the intelligent enterprise has optimised the environment. The third view follows as a special combination of the ﬁrst two and seems the strongest possibility of all – that late development has forced an historical process of institutional innovation that involved periodic cultural manipulation within institutions but depended also on the establishment of earlier mechanisms of cultural engineering. In turn these served to support and ensure the success of such institutional innovations. In a quite complex way Japanese enterprise reﬂects its immediate origins in relative backwardness more than its distant origins in earlier cultural formations. An important feature of Japan’s twentieth-century success was the transfer of the site of such cultural manipulation from the public sector into the private sector. A major aspect of Japanese enterprise history in the twentieth century involved the introduction, diffusion and adaptation of Western management ideologies in the years following the Meiji era. Recent work has stressed the importance of both private-sector and public-sector inﬂuences in transferring scientiﬁc management notions prior to 1937, but it seems certain that the more potent transfers of the European and American productivity movements occurred during the Occupation as a result of the mixed activities of American publicists, the Japanese Labour Ministry and the Ministry of International Trade and Industry, the latter of which proposed the formation of a Japan Productivity Centre in 1951. As with technology, this institutional modelling involved frequent trials and errors, with failed experiments in German-style management techniques replaced by Americaninspired mixtures of Taylorism or scientific management alongside the qualitycontrol emphases associated with the inﬂuence of Edward Deming (Tsutsui 1998: 152–200). This confusion of incremental, ad hoc experimentation may be seen as a component of the broader process whereby cultural engineering moved well beyond the agents and institutions of the state and into the private sector, as well as a complicating factor for any thesis linking Japanese culture with Japanese industrial success during the twentieth century. As we have seen (pp. 58–75), the transfer of foreign management and organisational models may be considered an essential

The institutions of late development 113 component of the contemporaneous transfer of foreign techniques of production. In essence, then, the location of Japanese industrialisation within a global context of relative backwardness resulted in the technological and institutional characteristics of its twentieth-century industrialisation being somewhat removed from traditional cultural traits and values per se. Even this quite sophisticated formulation is further complicated when we accept that, just as this borrowing of foreign institutional forms and ideologies was occurring, so too was Japanese enterprise itself most deliberately fostering notions of corporate familism based on ‘imitation of the family’ formulations. Such overt mimesis, where familism is quite deliberately spread into other forms, was well established by the modern period, and from the Meiji period onwards was quite overtly fostered by company owners and managers. Traditionally, young men or their advisers had commonly selected inﬂuential individuals in local communities as ‘father ﬁgures’, a version of oyakata-kokata (ﬁctitious parent-child), the simplest form of extended familism. Tenant farmers and merchants did much the same with local landlords and in many cases this led to branch-family recognition as a reward to loyal service. Thus, both statist cultural engineering and private enterprise manouvrings might be quite usefully seen as resting to an extent upon traditional patterns of imitative familism, and such a complexity might well have been an efficient cultural nexus for the introduction of foreign enterprise ideologies and behavioural formulae or maxims. At one point Keiichi Sakuta summarised that ‘what enabled corporations to capitalise on this pattern in the ﬁrst place was that it had already thoroughly permeated non-blood relations throughout Japanese society’. Furthermore, the same writer estimates that if such patterns had not become established over time, then ‘corporations would probably not even have conjured up such an idea’ (Sakuta 1979: 5).

Late development in the endaka laboratory If our intrusion of a late-development thesis into the cultural argument is valid, then we might expect that the destabilising forces of the inﬂating endaka economy, as described in greater detail in Chapters 1 and 3, and the so-called ‘Asian crisis’ of the late 1990s would serve seriously to erode speciﬁc institutional forms. Aspects of social and institutional change during the endaka years have been identiﬁed in more detail above (pp. 46–52). If not deeply embedded in the cultural identity of the nation at large, the institutions of late development may be rendered dysfunctional quite quickly. In the midst of a crisis of a more ‘mature’ capitalism, specific formulations would be jettisoned by competitive, ﬂexible private enterprises. This is precisely what occurred during the 1990s. The ‘Three Treasures’ enterprise labour system in particular – lifetime employment, enterprise unions, seniority wages – was put under threat as soon as industry was hit by lower real growth. Highschool drop-outs have increased in number, graduate unemployment has risen and by the turn of the century unemployment amongst men aged 15 to 24 was approaching 10 per cent, twice the national average. This movement away from characteristic forms should not be exaggerated: as late as early 2000, estimates were

114 The Japanese industrial economy made that some four million ‘surplus’ lifetime salary workers were still maintained in large Japanese companies. But this may represent stasis arising from size as much as anything else. Mitsubishi and other corporations are reducing graduate entry, and bright young Japanese are turning from secure salaries towards self-employment or small businesses just as large insurance companies, stockbrokers and manufacturers face a drain of experienced experts into a variety of high-technology start-up companies.

Cultural studies: tacit knowledge and obligational drag Clearly enough, it is too early to recognise those elements of enterprise culture that will survive the social and commercial pressures of maturation and globalisation, two sets of forces that are (uniquely) hitting Japan at about the same time. However, we might surmise that, amidst many institutional changes, two underlying characteristics of Japanese enterprise may persist and support something of a rejuvenation of the mature economy. In so far as this is the case, such characteristics may be isolated as amongst the real ‘cultural’ elements of modern Japanese enterprise, whatever their precise origin in more ancient traditions of familialism or groupism. In this chapter and in Chapter 3 we have presented several perspectives which associate an extended familialism with an overwhelming reliance upon tacit knowledge and informal understandings as the principal modes of communication within and between Japanese institutional settings. As Satinder Gill has most recently expressed it, in contrast to the West ‘the use of explicit forms of communication is a problem for traditional Japanese cultural practices, where silence is heavily imbued with meaning’ (Gill 2000: 82). Whilst this may, ironically, culturally delimit the final domestic uses of those electronic communications technologies that Japanese enterprise has so successfully dominated in global markets in recent years, it means that within the corners and conﬁnes of Japanese enterprise ‘the point of reaching a consensus is understood instinctively’. The present evidence is that, even in an environment in which many institutionalised forms are undergoing signiﬁcant variation, tacit communication systems are not subject to erosion, as the core of such systems lies far closer to the heart of the social self. That is, such elusive forms of communication may well follow directly from the traditions of intuitive interactions between immediately located individuals which stem from groupism or the character of the Japanese social self, as maintained in the Masuda and similar models. The point is that such communication modes are not only characteristic of Japan but have acted to its competitive advantage as a modern industrial nation. Thus there is a clear value to high levels of tacit communication in ﬂexible manufacturing systems. Leadership in small production ‘cells’ allows command by, as well as sharing of, experience-based knowledge by informal increments. It remains highly likely that formal methods, such as statistical process control, which seek to reduce uncertainties by continuous small corrections of manufacturing process, work better in a system of tacit understandings and are more ﬂexible than formal measures of

The institutions of late development 115 coping with production breakdowns after they have occurred. Again, how do Japanese ‘performance displays’ actually work? They take several forms, but tend to announce and celebrate production targets, the acquirement of new skill levels, photographed achievements, graphic displays and so on. In terms of formal, read communications, the performance displays may well seem to represent a ‘control system’. But in a frame of tacit understandings they serve to boost conﬁdence, assure individual workers of their place in the scheme of things and bolster continuous communications in physical environments of noise, stress and movement, all with the aid of a glance rather than a direct order.4 It is noteworthy that even in the 1990s, in many large Japanese production firms, there was little conversation between workers on most of the lines, although plenty during breaks. The importance of tacit knowledge to the efﬁciency of the subcontractor system (see Chapters 1 and 3), and to technological learning between contractors and ﬁrms, is fairly obvious, and may serve to explain why these partnerships are frequently spatially very concentrated: their efﬁcient maintenance depends on constant faceto-face nurturing, rather than upon formal, heavily institutionalised hierarchies and decision-making systems based on explicit codes and procedures. Job-rotation and group clustering depend on tacit understandings and the ability to communicate them.5 We might even suggest that this embeddedness in tacit communication systems may be the major factor which has limited the real application of Japanese institutional formulations to Western production systems outside of Japan in recent years, rather than any lack of a ‘work ethos’ or other supposed limitations as such. If we remember that the Japanese enterprise has always instituted a multiplereward-system for efficient outputs emanating from small groups, then it seems likely that these two factors together do describe the limitations to the application of the Japanese enterprise mode elsewhere. Even if the multiple-reward system, involving less tangible rewards to workers than merely their wages and bonuses, is further eroded under post-endaka conditions, it may still be that tacit communications will remain to mark ‘the Japanese system’ as non-mimetic.6 More contentiously we might suggest that the private and public sectors in Japan are also characterised by ‘obligational drag’. The analogy here is with physical rather than cultural engineering. A machine has friction, which conditions its general efﬁciency and its responsiveness to a change in external conditions, such as temperature or fuel quality. Obligational drag might be seen as ‘friction’ operating within institutions. In Japan the high level of obligational drag may be interpreted as arising directly out of the system of hierarchical and reciprocal social obligations, which we ﬁrst described on pp. 41–6. Our hypothesis is that the greater the level of such obligations, the greater the likelihood that decisions that are forced upon an executive by changed external circumstances, and which are detrimental to the immediate fortunes of individuals within the enterprise, will be either diluted (perhaps via tacit understandings) or delayed to a greater degree than could ever be explained by ‘normal’ bureaucratic stasis or risk-avoidance. This may not optimise the use of resources in the short run, but over a longer term it may serve to induce a greater investment in technologies and institutional forms or organisations. This is because the internal history of the enterprise is thereby to an extent insulated

116 The Japanese industrial economy from the more violent ﬂuctuations of the economy or particular industries. Together with better information diffusion and more complex reward systems, this may explain Japanese survival and ﬂexibility in very institutional terms. Historically, institutions outside the ﬁrm itself have tended to work in the same direction – thus government forecasting and indicative planning, or the long-term lending of afﬁliated banks. In the postwar period perhaps all of such institutional factors have combined to dampen short-term responsiveness in adverse conditions, in a manner analogous to the sluggishness of a machine suffering friction.7 The Japanese system operates sluggishly but in a secure, progressive direction, in contrast to systems of greater responsivity or volatility whose very quickness dampens their ability to plan in the longer term. This is not quite so contradictory as it may appear, for it still yields overall efﬁciencies and ﬂexibilities, especially if seen in the context of arguments about the social underbelly (pp. 46–9) or kanban-style production systems (above). We may even suggest that by the 1980s a key dualism was characteristic of Japanese private enterprise. At the level of production and design, a series of technological and institutional improvements led to time-saving and cost-reducing effects, which in effect were a reduction of ‘friction’ in the production ﬂow process, as idealised in the kanban or ‘just-in-time’ systems described here (see also note 1, p. 136). Alongside this, a management system persisted which was characterised by networks of ‘obligational drag’, which increased friction in decision-making at the centres of executive and administrative systems within private enterprise. In turn, this softened the dislocative impacts on the individual enterprise of changes in the commercial environment, promoting greater securities and long-termism. It might be that, in many instances, that which is commonly termed daikigyobyo or ‘big-company disease’ is really obligational drag at work, providing a protective sluggishness in the strategic decisions of the small number of executives who must bear the brunt of generating security in rapidly changing circumstances. Remembering the ambiguous character of tacit understandings, large boards of up to ﬁfty executives may stiﬂe disturbances even more effectively!8 These two features of Japanese enterprise – high levels of tacit communication and obligational drag – might work together within executive decision-making systems or networks. For instance, tacit knowledge may itself act as a buffer to change: the formal communication of external changes and the subsequent need to adjust may come up against deliberately slowing aspects of tacit understanding and informal communication, thus aiding drag effects. Electronic communication can be made to undermine the speed of actual decision-making in a system dominated by complex cells of tacit understanding. Tacit communication thereby may act as a double-edged weapon in enterprise culture. At the level of actual production, as described above, it reduces friction and increases flexibility and speeds up the production process. At the level of executive decisions and company relations with external environments, it may aid obligational drag in reducing the salience of formal, contracted agreements and providing room for hesitancy, reﬂection and risk-reduction.

The institutions of late development 117

Summary and conclusions In Chapter 5 we tried to minimise any stark differences between the ‘economy’ or material techniques on one hand and Japanese ‘culture’ on the other by showing that at key points of transition a series of institutional innovations in the sociopolitical system of the nation served to engineer a working relationship between existent cultural traits and intrusive Western technologies as a necessary condition of successful industrial modernisation. In this the local and central state was of tremendous importance, not only in recognising, organising and gathering cultural resources but also in financing very major expenditures for human capital formation. State cohesion and institutional innovation were vital inputs to the process of technology transfer (Chapters 4 and 5). Thus, much of Japan’s industrial success may indeed be sensibly explored in terms of fundamental ‘cultural traits’ but only in the sense that culture was a resource drawn upon by key agents and sites of material change. Japanese culture was accommodating rather than causal. Furthermore, in a more comparative stance we might posit that other nations have ‘failed’ to transfer modernising techniques not because of their ‘cultural traits’ as such but because of the cultural confusion and disarray associated with social change under conditions of relative economic backwardness. Throughout much of the globe, political revolution has destroyed industrial revolution. In the present chapter we have considered the possibility that Japan’s twentiethcentury advantages originated in the passage of such cultural engineering processes from the sites of the state, from the institutions of education or political orthodoxy to the private enterprises of the industrial sector. It may now be possible to gather together some conclusions from the accumulative persuasions of Chapters 4–6. First, many global cultural arguments have focused on comparisons between Japan and the West to the neglect of comparisons between Japan and China, and this has not served our greater understanding of very complicated historical relationships. Given that Japan shares much of the cultural history of China and East Asia more generally, any cultural argument for Japan’s success must be prepared to come up against the barrier of China’s supposed ‘failure ‘ to industrialise until very modern times. On the other hand, an approach which emphasises cultural engineering and its resources, and the manner in which such a process transmogriﬁed the institutions of private enterprise, does serve to allow interpretations of Japanese success which escape the Chinese paradox. China could not ﬁnance and maintain an equivalent process of cultural mobilisation, whatever its given cultural attributes. Such wider comparative points are extended in Chapter 7. Second, cultural arguments of various sorts may address the theme of the character and role of Japanese private enterprise, and may act in opposition to theories that are designed to explain the special organisational attributes of Japan in terms of market forces, government policies, the institutional reforms of the Occupation during the years 1945–52 and so on. Furthermore, this sort of explanation for Japan does seem to complement several of the recent interpretations of enterprise performance which have been developed by writers such as Porter and Crozier, whose prime concerns have not necessarily related to Japan or East

118 The Japanese industrial economy Asia. This makes this style of argument more attractive. On the other hand, such approaches have not resolved the problem of the real historical relations between enterprise cultures and the wider culture within which they operate, and many are predicated on the idea that enterprises may reform themselves without much recourse to the niceties of the external culture. Nor have they, with the exception of the Masuda and allied models, considered the possibility that such a wider culture is not a resource to be selected from by private enterprise, but is rather a living and mutable product of a deliberate process of cultural engineering. Chapter 5 showed that cultural engineering has been an identifiable phenomenon of industrial modernisation and has worked alongside more expensive processes of state-ﬁnanced human capital formation. Third, despite the assumptions of much of the earlier literature on Japanese ‘modernisation’, the national culture is not homogeneous, and Japanese society shows many of the social class differences, regional and educational inequalities and alienations of capitalism more generally. For every salaryman there are numerous shop girls and casual day-labourers, and for every high-technology subcontractor there is a small family ﬁrm working under unsafe, insecure and sweated conditions, for ever on the point of failure. Even in the modern sector kanban is a minority institution, and enterprise benevolence falls upon only a minority of workers. Again, the points of success have quite actively created the sites of failure: dormitory towns evolve from business district achievements, they are not merely an untouched, leftover component of Japanese industrial society but a vital dynamic of that society (Chapter 3). Nevertheless, our purpose has not been to uncover all corners of Japanese history, but to derive an argument for Japan’s fast, sustained industrial success and its relative competitiveness. If we wish to explain why Japan grew at 8 per cent rather than say 3 per cent, then such technological and institutional factors, however partial and at times socially harmful, may serve far better as explanations than do more conventional arguments relating to the rate of investment (as causal) or, even, to the high rate of savings or sturdy work ethos. This is because such alternatives at different, key periods of Japanese history appear to be either indeterminate in the causal chain (investment and savings may reﬂect features of demand that may be coloured by tastes or complex social proclivities) or directly attributable to other factors (thus high domestic savings might arise from social insecurities and a relative backwardness of public welfare or insurance provisions, the work ethos from a high level of non-monetary rewards to hard effort within modern enterprises). Such institutional features, in the context of the imperatives of relative industrial backwardness and technology transfer, may well be sufﬁcient to explain the ability of Japan to sustain its escape into modernity. Fourth, it may be possible to identify certain features of the culture of enterprise that do seem to stem from the wider ‘culture’ fairly naturally and deeply. These may not be eroded in the ‘endaka laboratory’ and may have served and continue to serve high rates of economic growth. We have suggested that an unusual mixture of tacit communications with ‘obligational drag’ serves such a purpose, although there is no reason to believe that even this mixture of traits might not be found elsewhere in East Asian private enterprise.

The institutions of late development 119 Fifth, admitting to the erosion of many institutional forms in both private and public sectors during the endaka years, might we yet envision a restarting of the cycle of cultural engineering, then institutional innovation, then technological change, yielding new forms of industrial production in new industries and utilising new institutional forms in a world of radically changed commercial relations? I have suggested that the major limitations on continued Japanese industrial and economic development are most likely to come from outside the nation, in the relations between Japanese economic needs and global industrial and commercial developments (see also Inkster 2001). Sixth, the major limiting factor for Japan is not social or cultural as such, but rather the manner of its adjustment to the realities of a rapidly changing global political economy. If there are commanding cultural elements of the ‘Japanese model’, and if many of these are shared in a wider Buddhist–Confucian view of the world, cultural elements may well serve to ameliorate some of Japan’s coming global problems, and in this sense Japanese culture may serve future Japanese economic growth very well indeed. But, when facing the United States and perhaps the West more generally, this may not be the case at all. Indeed, as suggested above, the reliance on tacit knowledge delimits the value of the micro-electronics revolution to many Japanese users and renders more difﬁcult the communications, contracting and arbitrage required of its relationships with the West generally and the United States in particular.

7

Nationalism and globalism Japan in world context

The methodical babble of the universities is often no more than an agreement to avoid, by means of a shifting semantics, an issue that is hard to resolve. (Immanuel Kant, 1766) The greatest living contrast is between the old Eastern customary civilisations and the new Western and changeable civilisations. (Walter Bagehot, 1872)

On being exceptional: global history In 1885, at the end of Japan’s ﬁrst industrial drive, Yukichi Fukuzawa (1835–1901) promoted the notion of datsua nyuo – ‘extraction from Asia and assimilation into Europe’ – to summarise his estimation that Japan’s international status would henceforth depend upon the degree of Westernisation attainable by extricating the country from Asia, by imitating the West, by sacriﬁcing the interests of Asian neighbours to those of Japan (Fukuzawa 1885). In this he was ﬁghting in those battles waged amongst the bureaucrats and intellectuals that so dominated early industrialisation in the Meiji years. In an article on ‘The Fate of the Orient’ in the previous year, an inﬂuential Japanese newspaper had argued that it ‘is out of the question for Japan to desert the fellowship of Eastern nations in order to enter the coteries of European powers’ (Choya Shimbun, 1 May 1884). In retrospect the debate did not so much revolve around such stark duality: it centred on the precise manner in which Japan was to pursue a controlled, limited industrial modernisation through alliance with Western interests. The battle was won by those who settled for a distant interconnection involving diplomacy, technologies and institutions rather than an intimacy resting on cultural conversions. Japan became the only large nation of the late nineteenth century to transcend the industrial hegemony of the extended Atlantic system. As we have seen, the exceptional character of Japanese industrialisation has claimed much analytical attention. More importantly, Japanese history has served to condition severely many of the attempts at general, historical theorising. In describing the Japanese industrial trajectory in this book we have firmly eschewed the dominant Western views concerning culture, industry and

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Nationalism and globalism 121 modernity. In the 1920s Oswald Spengler had used the term ‘pseudomorphs’ to depict the deceptive cultural formations that are created when an existing complex civilisation is drawn into the orbit of an intruding, expansive and powerful system. Thus, for Spengler, the Hellenic civilisation imported into Egypt and South-West Asia at the time of Alexander the Great was and remained only a deceptive veneer. Not only did existing values and attributes remain, they reacted against new forces to create the true development of culture and civilisation in such regions (Spengler 1922–3). The questions that arise for us concern a case where the principal form of interaction was, broadly, technological and material. In such a case, must the affected culture be transformed either as a prerequisite or as a corequisite of an advantageous, subsequent process of ‘borrowing’ and catch-up? Within the Western tradition, Arnold Toynbee appeared to provide something of an answer. In Toynbee’s big picture, ‘a culture is carried by a society’ and ‘a society is the common ground between the individual field of action of a number of human beings’. Toynbee’s judgment on our problem of technological interaction would revolve around his belief that technology ‘seems to be difﬁcult to invent but relatively easy to acquire from its inventors by mimesis. An ascendancy based on superiority in technology is therefore a wasting asset’ (Toynbee 1961: 439, 528). From this arises a possible Toynbeean answer to Spengler: technologies may be successfully transplanted into a new frame, such as that of nineteenth-century Japan, as a process of pseudomorphosis. That is, imitation and replication does not necessarily require cultural transformation. This interpretation becomes more worthy when we note that, for Toynbee, mimesis or imitation is directed towards certain personalities who ‘command a following because they are pioneers’. Change through technological mimesis may succeed on the basis of elite or bureaucratic actions, and these may or may not arise from the underlying values of the given ‘society’ or ‘culture’ as a whole. Again, Japan springs to mind. With Joseph Needham we complete a triumvirate Western perspective, for he has most forcefully considered the inability of China to benefit from technological interactions even after a very long period of superiority, strength and conﬁdence. We may provisionally accept the two major Needhamite propositions concerning the initial environment for Spenglerian pseudomorphosis or Toynbeean mimesis. Until the scientiﬁc revolution of the sixteenth and seventeenth centuries ‘East Asian culture was much more efficient than the European West in applying human knowledge of Nature to useful purposes’. Furthermore, ‘the centralised feudalbureaucratic style of social order was in the earlier stages favourable to the growth of applied science’. From that time, however, such institutions inhibited further progress as well as any ‘positive’ response to Western technological interactions. What was it in the culture of China which forbade ‘progressive’ emulation and followership and was not to be found in the nations of Central and Eastern Europe, Scandinavia, Russia and Japan? According to Needham and others, the Confucian veneration of the sages and Taoist lamentations for the lost age of primitive community may in the Chinese case be offset against a pre-Rennaissance belief in the progress of scientific and other knowledge, a tradition of co-operative

122 The Japanese industrial economy investigation (for example the astronomers and naturalists of the pharmacopoeias), of openness and of empiricism. Attempts to excel the achievement of the sages can be found throughout Chinese history. Such features of Chinese culture were heightened precisely during the time of the European scientiﬁc revolution, that is, in the Ming period. In China greater emphasis was placed on freedom of information, scepticism and experimentation, all characteristics of the new philosophy in Europe during the seventeenth and eighteenth centuries. Needham stated that ‘although Chinese society was so self-regulating and stable, the idea of scientiﬁc and social progress and real change in time was there . . . however great the forces of conservatism there was no ideological barrier . . . to the development of modern natural science and technology when the time was ripe’ (Needham 1986: 5, 7, 14). So, may culture have been of little direct relevance compared to the impact of hierarchy and bureaucratic institutions per se in dampening or prohibiting the ability of Chinese science or technique to follow the European lead after 1650 or 1700? In this perspective a different polity, an attitude amongst Chinese leaders that at least permitted Western technologies an entrance, might well have changed the economic face of China even though that Western intrusion remained but a pseudomorphosis in Spengler’s sense. Together, these three commanding views of the West and of China seem to combine to show that the necessary ingredients of technological response centred throughout history on the ability of an elite to gather the energies for a systematic response, one which would allow industrial modernisation in the absence of wholesale cultural challenge and change. Recent modifications of the classic viewpoint include that of Eric Jones, who, in his search for an explanatory form which moves ‘away from the natural environment as well as away from culture’ in exploring different patterns between Europe and Asia, settles upon the differential weakening of the major premodern constraint on economic growth, ‘the nearly universal rent-seeking propensity of the state’. Thus in Europe and Japan the premodern weakening of the state reduced historical levels of high risk, conﬁscations and extortionate taxes, and permitted the emergence of entrepreneurial investments in environments of increased security and broadened consumption (Jones 1988). Our present text on Japan has brought in numerous qualifications and severe modiﬁcations to such a story of historical and cultural dynamics, many of which are found in the concluding sections of the above chapters. It may be well to gather some of these historical fractiles together. First, we have argued that mimesis through followership required more systematic effort and knowledge than Toynbee or Spengler ever allowed. On one hand, an expensive process of human capital formation backed an overt phase of cultural engineering. In addition, technological interaction and transfer required both institutional innovation and much in the way of technological search, selection, diffusion, repair and adaptation. Most importantly, quite mundane non-cultural features of Japan, related to location, climate, topography and population settlement patterns, might be enough to explain both the relative ease of technological diffusion and learning processes as well as those political or regime characteristics of Japan which may be so readily contrasted with corresponding features of the Chinese case.

Nationalism and globalism 123 Thus, drawing from Chapters 1 and 2, the readiness of Japan to transfer technology during the Meiji era might be almost entirely explicable in terms of the impacts of the new urbanism and sankin kotai – a regime formulation directly linked to continued rent-seeking behaviour on the part of the state – on information dispersal over relatively small areas, dense settlement in cities and towns, and the material demands of local daimyo and other interests in a relatively polycentric political system. In turn such features quickened and cheapened the Meiji processes of cultural engineering as described in Chapter 5. Growth in Tokugawa Japan might have beneﬁted not so much from a weakening of the rent-seeking regime as from a change in methods of control, a change permitted by environmental and other factors that worked in a contrasting manner in systems such as those of India or China (Umesao and Matsubara 1989). To contrast China and Japan principally in terms of regime differences would also be too simplistic. Traditionally both systems relied on large water-control technologies, and this may have demanded the development of centralised regimes (Chi 1936: 46–74, Wittfogel 1957). Irrigation systems required frequent inter-village co-operation and the decisions of extensive bureaucracies on a level beyond that normally met in early or premodern Europe. Again, rice cultivation tended to be associated with a less healthy working environment, constantly threatened by waterborne pestilence and debilities, and a very intensive but intermittent use of labour (Bray 1986: 62–139). The need for frequent crisis management, corvée labour and other organised responses to environmental threats may well have encouraged centralised regimes in both China and Japan. But the reasons why the two systems in fact differed to the point of contrast surely follow from decisive if mundane differences of geography and location. Where distance and topography demanded massive structures in China,1 the scale of operations were much modiﬁed in Japan. Where absence of animals for consumption, limited geographical mobility over short periods and climatic vagaries combined in China to produce frequent famines and emergencies,2 in Japan such impacts were mitigated by urbanism, short distance and good transport. Where attempts at industrial modernisation in China foundered as a result of the enormous expenses involved in maintaining political control across vast expanses and along complex borders, in Japan modernisation could be initiated and evolved under conditions of relative isolation, selective interaction and progressive learning and diffusion. By different routes, arguments which postulate cultural or political differences as sufﬁcient explanations seem to disintegrate into relatively mundane geographical determinism.

The Asian context: China, Korea and Japan The big global perspectives do not always help. We might here focus a little more closely on a triangle of seeming contenders – the mammoth China and two of its historical tributaries, Japan and Korea. Each might be seen as at some time a system that was capable of economic progress in the face of European material ascendancy.3 In addition the greater similarity of size and situation in the latter two permits some ﬁne-tuning of comparative arguments.

124 The Japanese industrial economy As with Japan, Korea might have beneﬁted from the chaos of the early 1600s that was associated with the end of the Ming and the beginning of the Ching regimes in China, although the recovery of the older tribute system as a silver zone linking trade and tribute was more centred on Korea. By this time a move both to agnatic adoption within kinship groups and to primogeniture had taken place as an institutional response to population pressure and land shortage (Peterson 1996). By this time also, Korea had shown much evidence of technological ingenuity and borrowing. The 1440s had seen the rise of a Korean alphabet independently of the Chinese that was upheld in elite society. The next decades saw the use of the gunpowdered hand-grenade, and transfers of hand guns from Japan and cannon from China, with the Koreans manufacturing heavy cast-iron cannons for export to Japan from the 1520s. The matchlock hand guns introduced into Japan by the Portuguese in the 1360s had not been developed there, and it was only with the Japanese invasion of Korea in the 1590s that Koreans began to copy Japanese guns for their own use and utilising their own metallurgical techniques (Perrin 1979). By the 1590s Korea too had developed the castle-town type of defence (Underwood 1931, Boots 1934). Again, the greater freedoms under the Manchus after the civil strife of 1619 led in Korea, as in Japan, to a great transfusion of techniques and instruments, with Peking acting as a centre of transmission for clocks and barometers from Europe. This sort of evidence points to great similarities, rather than profound differences, between Korea and Japan. Signiﬁcantly the 1400s had also seen the development of Korean printing by casting of characters in copper as a response to a decree of 1403 that ordained that in order ‘to govern it is necessary to spread the knowledge of laws and books in such a way as to ﬁll the minds and render upright the hearts of men. Thus only can order and peace be achieved’ (Courant 1936: 15). Such a decree surely sounds like a portent of the Tokugawa regime of control. Some hundred thousand types were cast in copper in a programme that continued into the 1500s, and ‘when copper failed they put into the melting-pot bells of ruined monasteries, vases, and instruments belonging to the government and to private individuals’ (Courant 1935: 67). The movable-type programme slowed or halted between 1544 and 1570 and seems to have been revived around the 1770s as a result of a huge surge of cast copper production (Trollope 1936: 103–7, Hulbert 1905: I, 163). The contrasts between the two systems in the early modern period surround precisely the conditions of Japan’s advancement, particularly those relating to population, isolation and regime authority. Korean census surveys suggest a population of around 4.7 million in 1677, rising to 7 million in 1767. So Korea was smaller in demographic terms than Japan, more comparable to the many poor nations of the world in the early twentieth century. Also in great contrast with Japan, from the 1580s (around the time of the Japanese invasion) Korea had peaceful and closer relations with China under the Ming, no standing army and limited ﬁrearm development, and an internal political debate that inhibited united opposition against external threats, particularly those stemming from Japan. These were the conditions for Hideyoshi’s invasion of Korea in 1592 in his attempt to make the kingdom a ‘stepping stone to the conquest of the Ming empire’ (Hulbert 1905: I,

Nationalism and globalism 125 344). Direct aid from China repulsed Japan, but the second attempt from 1597 led to the aggressive congeries of Japanese troops (105,000 in number), Chinese troops (210,000) and European Roman Catholics, the latter bent on religious conversion. China poured silver into Korea – some 8 million ounces required to pay the Chinese forces, another 3 million ounces to relieve Korean famine conditions. When compared to the size of the total European forces in the Indian ocean in the early modern period, the impacts of the vast Japanese numbers in Korea might be imagined (Braddell 1865: 114–56, Marshall 1980: 16–22, Parker 1976 and 1988). Nor were the Japanese merely warriors. The death of Hideyoshi allowed a fuller intermixing of Japan and Korea through marriage and through commerce, and these were years of a more insidious exploitation – war booty was now followed by the transportation of Korean artisans to Japan; Satsuma-ware pottery was really taught to the Japanese by forced Korean settlers. The long years of the Yi dynasty (1392–1905) were doubtless dominated by the needs of the yangban administrative class, many of which were met by commercial and cultural imports from China, most of them arranged by a mercantile class whose rewards took the form of monopoly rights, an arrangement ended only with the collapse of 1895 (Keun 1970: 200–12, Vinacke 1941: 123–54, Juhn 1973: 115–18). By Confucian values, the status of scholar-ofﬁcial was sought above all others, this sustaining the system of official exactions, precisely the aggressive rent-seeking identiﬁed more generally by Eric Jones. Confucian familialism together with only narrow avenues of social mobility similarly prevented the emergence of any legal system of individual property rights, and thus set a high-risk premium on all innovative activity. The authorities controlled internal movement, trade and taxation. As one writer has concluded, the ‘existence of strong traditionalism precluded the possibility of a revolution or major reform from above or below’ (Kim 1977: 13). As we have seen, a comparable picture, one which delineates the configurations of a socioeconomy in opposition to those of Western industrial modernisation, might be drawn for Tokugawa Japan. The differences might lie in the degree of centralised power exercised through the nobility and yangban in Korea and the importance of the examination system (Kim 1977: 25–36), the more familial and less hierarchical character of Korean Confucianism (Kang 1977: 23–7), the smaller population and much lesser degree of urbanisation, the far closer relations with China, and the nature of the foreign interaction in the late nineteenth century, led as it was by Japanese military imperialism. If there is some doubt as to the balance of the long-term contrasts, then any critical comparison must surely focus on the nature of foreign interaction in Meiji Japan and Yi Korea in the years before c. 1910, the year of outright annexation.5 As with Japan, threats from the West led to movements for reform and rejuvenation in Korea, as in the Taewongun Reform of 1864, and there is much evidence of self-strenghtening ideology amongst both the Western-oriented intellectuals and the bureaucrats. However the period from 1876 to 1895 was one of Japanese commercial and political intervention, the years 1896 to 1905 ones of generalised loss of commercial sovereignty to foreign powers, and from 1905 ones of more direct Japanese colonialism (Lee 1968, Reeve 1963).4 From the 1880s

126 The Japanese industrial economy Japanese immigrants ﬂooded into Korea to reach 72,500 in number by 1905, most of whom resided in the treaty settlements of Seoul, Fusan and Ninsen (Henderson 1973: 264, Japan Year Book 1916: 536). Such immigrants established a strong network of shops, communications and enterprises that antedated formal annexation and has been seen as representing a milieu for real emulation and transfer of technique: the Japanese from Kyushu were not so far in advance of Koreans to inhibit competitive emulation in methods of rice planting, the use of new seed varieties, fertilisers and so on (Henderson 1973: 265). In summary, the longer-term contrasts between Japan and Korea almost certainly centred on differences in population size and urbanism; between Japan and China, in greater centralisation and a resulting lesser ability to withstand invasion from outside. The different conﬁguration of precisely these elements is centred on in this volume as the explanation of Japan’s industrial success. Here the resulting inability of Korea to take advantage of relative backwardness through institutional change, technological transfer and cultural engineering in the years after c. 1876 contrasts strongly with the Meiji programme of industrialisation after 1868. We may further question a global view which emanates from an unstated Eurocentrism if we bring into account the recent reformulations of Chinese history, especially as led by Frank, Pomeranz and Wong. Here the stress has been on a possible equality of position and potential between China and Europe as late as the nineteenth century, pushing the divergence between the two great systems away from Needham’s scientiﬁc revolution but towards the Northern European industrial revolution (Frank 1998, Wong 1997, Pomeranz 2000). The new approach brings to the fore several of the features of Chinese performance which are noted above. A great contribution is to encourage more of a comparison between the advanced regions of China and the whole of Japan, and to discourage the continued pursuit – to diminishing returns – of the older comparison of the total Chinese and Japanese cultural and economic systems as found in conventional Western views, in Michio Morishima and elsewhere (Morishima 1982). The analytical position is undoubtedly an interim one, but the new revisionism does point to a ‘failure’ of China which is unexpectedly late and partial, derived from the more mundane workings of global trade, technology and capital, rather than the long-term determinants of culture or, even, institutions. It is thus in accord with our critical position throughout this volume.

Exceptionalism as accumulative causation In the present text, any lurking geographical determinism has been modiﬁed by a thesis concerning technological transfer, institutional innovation and late development. Here we have argued for the importance of short periods of institutional and technological change, conjunctions that determine the longer trajectories, which in turn explain, for instance, the contrasting histories of Japan and China since the earlier nineteenth century. We have tried to show how Kaldor’s ‘cumulative causation’, whereby development begets development, or, in Myrdal’s twist, failure begets failure (‘a country is poor because it is poor’), is a product of

Nationalism and globalism 127 industrial revolution itself (Kaldor 1981, 1985, Myrdal 1957). Once an industrial breakthrough has occurred, as in Japan during the 1880s, then Kaldor’s cumulations set in, with sustained growth in the efﬁciency of any one industry being increasingly determined by the growth of the total industrial economy. Specialisation, learningby-doing and the generation of positive external economies become endemic to the system as a whole. In Japan the ﬁrst two of these processes passed over to the private sector quite speedily, and the last of the three depended on infrastructural improvements emerging from a sustained military programme in the public sector. For a long time manufacture remains the key to cumulation, for it continuously provides and defines the major inputs to, or employs the services of, all other progressive sectors. Success in new technologies arises from past success, and the accretion of experience, knowledge and technological mastery that results from a built-in learning process as time passes. In this vision capital accumulation is only a result of true progress in the system, the growth of which once established is conditioned by the growth of effective demand. Until this Kaldorian threshold is passed, the industrialising system remains untried and unsound, and reversion is as likely as cumulation. We have argued that, in Japan, it is precisely at such points that cultural engineering, human capital formation, technological transfers and institutional innovations were at their maximum importance. Here we agree with Gerschenkron that there do exist such crucial junctures ‘at which the advantages of backwardness reach optimal levels and beyond which lies at least a limited period of declining promise and growing disability’ (Gerschenkron 1966: 364). Divergence between China, Korea and Japan occurred when Japan reaped advantages of late development just as China and then Korea suffered a growing disability. Third-world ‘failure’ dominated the short twentieth century (c. 1914–71) as a broader version of such divergences, for, once cumulative causation was established within an array of economic systems across the globe, then underdevelopment became equally endemic. Catch-up growth became more difﬁcult as technological artefacts and the institutions within which they were increasingly embedded emerged as the principal products of a dynamic, complex and interactive process. This is the historical context of Japanese exceptionalism. In the 1960s the eminent Dutch historian Jan Romein hazarded that if the nineteenth century was European, then the twentieth would be Asian, and claimed that European dominance and its association with competitive nationalism, political pluralism and individualism was merely a great deviance from normality (Romein 1962). This formulation was very similar to that of Toynbee, who recognised a ‘return to normality’ in such events as the Turkish Revolution of 1908, the Chinese Revolution of 1911 and the revolutionary changes in the global status of Indonesia, India, Pakistan, Ceylon and Burma during the years 1947–9. Such massive events were for the history of the globe what the French Revolution had been in the history of Europe. In this shift of perception Japan was the earliest exemplar. Pursuing the theory that the so-called defeat of Asia was ‘instead a provisional withdrawal allowing those countries to adapt in their own way to the new conditions of the world economy’, Fontana most explicitly explains how the sustained Japanese exception in those earlier years ‘gave

128 The Japanese industrial economy the lie to the belief that primitive peoples could embark upon progress only under the tutelage of colonisers’. Furthermore, the post-1945 resurgence of Japan broke previous patterns and ‘encouraged all manner of speculation about the Japanese spirit, but as was to be expected nobody said anything sensible about it’ (Fontana 1995: 136, 139). Indeed, in this text we have suggested that essentially mundane factors certainly assisted and might have determined the initial Japanese escape from colonialism, and that the subsequent sustaining of industrialisation depended on a complex of state-led technological and institutional innovations, within which the much-vaunted ‘cultural factors’ were vital, not in any initiating or ‘causal’ sense but in reducing the cost of late industrialisation.

History continuing It is clear that we would challenge mightily the claims of Francis Fukuyama concerning The End of History. Within a ﬁrmly Western vision, the evidence might seem convincing enough: between 1983 and 1993, twenty new countries were added to the list of Freedom House democracies. In the 1980s perhaps 75 per cent of the world lived in repressive regimes. By the mid-1990s this figure had dropped to around 30 per cent. Furthermore, moves towards liberal democracy seem to pay off, appear to be associated with entry into the winners’ club of world economies as well as into the more gentlemanly, elite club of international associations and cultural networks. If national cultures still exhibit their stubborn peculiarities, the elites of most nations opening up to the new global ‘liberalism’ do seem to ﬂaunt their ability to disassociate themselves from their original cultural sites as they enter a world of global cultural signiﬁers, ‘McDonaldised’ or not. The question remains of how far such seemingly liberal victories do represent, as Fukuyama claimed, the ultimate triumph ‘of the Western idea . . . the total exhaustion of viable systematic alternatives to Western liberalism’ (Fukuyama 1989: 3, 1992). But the rise of Islam confounds Fukuyama, as does the emergence of local anarchies in the new hotspots within Europe itself, several of these being associated with new, indeterminate interfaces between the Muslim and the Christian worlds, interfaces with a long history, but of recent historical suppression and release. It is especially difﬁcult as yet to visualise that great northern slab of ancient Islamic civilisations – ranging across central and western Asia, Turkey, Iran and the Islamic states of the former Soviet Union, especially Azerbaijan, Kazakhstan and Uzbekistan – as falling neatly into any era of Western liberal dominance. Hopeful aspiration still gets reversed – witness the turn of Solidarity in Poland from its plans for a new democratic order in the 1980s towards a dangerous, nationalist extremism. The historian Arthur Schlesinger has recently worried that new technologies and globalisation might, in combination, pose a threat to democracy, and thus stir the beginnings of another wave of unpredictable, historical change (Schlesinger 1997). Just as likely is the Toynbee vision, in which ‘history’ takes on a new beginning following the accidental supremacy of Europe or the West over the last ﬁve hundred years. Both the rise of East Asia and its very recent crisis pose a challenge to any ‘end of history’ saga, and we must approve of David Williams’s position that the

Nationalism and globalism 129 exceptional character of East Asian industrial modernisation means that for some considerable time ‘the world will stand beyond the end of history regardless of what has happened in Eastern Europe’ (Williams 1994: xiv). There are those who have suggested that recent East Asian development is not really ‘genuine’ but still occurring within a wholly dependent framework of intellectual, technological and institutional borrowing, a notion persisting in 1984 as ‘the capitalist havens’ idea of Blomstrom and Hettne (Blomstrom and Hettne 1984: 132–7). But Japan cannot be so easily dismissed. It is true that Japan is often deﬁned sui generis, mostly because it escaped colonialism where other nations did not. But of more importance in the world story is the fact that Japan, long after such a nineteenth-century ‘escape’, continued to sustain industrial and economic growth to levels beyond that of all other nations on earth except the United States. This sustained progress, despite imperialisms, wars and maturities, and in the face of the scepticism and condescension of the Western powers, has been the story of this present volume. Fukuyama’s claim does seem to approach conventional convergence theory and may be seen as a historian’s version of Krugman’s ‘mutually beneﬁcial exchange’ in a world of trading and investing national economies where everyone behaves in self-maximising ways. Clearly, East Asian conceptions of ‘self ’ might modify this tremendously even under otherwise capitalist auspices. Is Asian capitalism simply an extension of the life of the global system through the positing of a stimulative ‘challenge’ to the centre, analogous to that posed earlier by Japan alone? Or are we witnessing the early years of diverse modes of development, or even of convergence away from the existing core rather than towards it? We have suggested elsewhere that such movements might be towards quite new, regional sites of endeavour (Inkster 2001). Such novel places might not work by the rules of the Western capitalist regime of the post-Enlightenment period: they might emerge as ‘viable systematic alternatives to Western liberalism’ in a way precluded by Fukuyama. Would this be because of the ultimate impacts of differing national cultures, or would it arise from the fall in saliency, importance or relevance of all ‘national’ cultures? The Western view has always tended to underestimate the difﬁculties and random processes inherent in the shift to Asia, new sites and agencies. The fall of the Berlin Wall was an important event which occurred in Europe. But, as it occurred, much else was happening in other places. Yet to abandon Hegel is not to opt for the more cyclical accounts of the ancients, nor for the notion that alternatives to Western liberalism must of necessity be anarchic, destructive, incompatible or unreasoning. Of course, this was something of what the Chinese thought of the Europeans in the late eighteenth century, and something of what the Japanese thought of the Europeans and the Americans in the late nineteenth century. But in the longish run they have coped very well. Mahbubani sees the reaction to Fukuyama as a further recent ‘clear signal of the foolishness that has engulfed many in the West’, a myopic vision in contradistinction to that which might instead recognise a ‘retreat of the Western idea as old and rich civilisations regain their self-conﬁdence to discover their own roots’, what he terms the ‘return of history’ (Mahbubani 1998: 90). To see Japan in historical context is

130 The Japanese industrial economy to consult an alternative mental map of world history. And of the present. Asians now represent some 70 per cent of the population of this planet, a proportion seemingly destined to expand rather than to shrink over the next few decades. This change of site and agency is not mere mimicry as in Toynbee, but full of untoward surprises, possibilities, real-life adventures and, we dare say, an abundance of analytical riches. The new global modus operandi may be neither a liberal Western consensus and convergence nor a Japanese–Chinese Confucian Renaissance. The recent history of Japan and East Asia suggests that we cannot know. The long Japanese industrialisation process and the recent ‘Asian turn’ both indicate that history continues. There is yet to come, in some distant future, any resting synthesis.

Notes

1

Achievements and outcomes

1 Born in 1855, the Baron Kikuchi had been ennobled in 1902. See also Nature, 12 May 1904, p. 36, and 1907, p. 311. For Western views of Japan’s institutional and other advantages, see E. von Hesse Wartegg, Cina e Giappone, translated into Italian by M. Camperio, Milan, Ulrico Hoepli, 1900. 2 Kagoshima, an ancient town of Satsuma province, was an interesting example of a site of repeated Western inﬂuence. It was there that Francis Xavier landed in August 1549, in 1863 the city was bombed by the English admiral Kuper as reprisal for the murder of Richardson by samurai the previous year, and in 1877 the town was the centre of the Satsuma Rebellion, sometimes viewed as a populist reaction to Westernising inﬂuences. 3 The real difference, of course, is that Japan’s population had stood at such a ﬁgure from around 1720–50, when Britain’s had perhaps reached seven million. Those historians who believe in demographic growth (rather than sheer size) as a vital input into industrial revolution must, when faced with this contrast, either create a pristine and unique ‘Japanese model’ or must attempt to ﬁnd more demographic growth in Tokugawa Japan. Both tactics have been attempted, but see Hanley and Yamamura 1977. See also our analysis of Korea in Chapter 7. 4 Gross national economic growth is merely an accounting result of a mass of interconnected decisions and activities. Actual changes in such growth may lag behind changes in the causes of growth by considerable periods. A change in the trajectory of growth, say towards consumer industries or towards capital goods, may be caused by factors operating somewhat earlier and may result only in a change of overall growth patterns and rates at an even later time. Such lags are longer the bigger the system, and Japan was very big. If we consider the relative small scale of the English population in the late eighteenth century and the difﬁculty of deﬁning an industrial revolution there despite the success of textiles, coal and metals, then the signiﬁcance of the measured rate of growth in Meiji Japan becomes clear. If Meiji agriculture grew at a lesser pace than had previously been thought, then the overall Meiji growth of around 3 per cent was generated primarily by growth in infrastructure (the fastest growth sector), textiles, and later metals and engineering, with a perhaps 1.2 per cent growth in agriculture excluding rural industries. From such reasoning we may write of an industrial revolution in Japan and of the importance of the 1868 restoration as an explanatory event or, even, process. 5 The northern island, Hokkaido (literally ‘region of the northern sea’), had been more or less colonised during the sixteenth century. During the Restoration, the Tokugawa attempted to make the island a source of resistance, and a shogunal ﬂeet continued to ﬁght from there into 1869. This was a major reason for the establishment of the Kaitakushi development project, designed to settle ex-samurai and others on new

1 2 3 4 5 6 7 8 9 0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45

132 Notes

6

7 8

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commercial agricultural and industrial schemes, initially under the auspices of American personnel, planning and technique. Although that administration was reformed in 1881 and again in 1886, central government continued spending on the regional plan. The other side was a low rate of private consumption in Japan, which actually decreased as a proportion of national income to around 50 per cent in 1969 compared to over 60 per cent in all other major industrial systems except the German Federal Republic (55 per cent). This generates the notion that Japanese cultural forces dampened consumption and thus aided recovery and long-term growth. The fact that consumption in Japan had reached around 62 per cent in 1955 and then fallen does shake this belief and points rather to opportunities for consumption, relative prices, import policy and so on as possible factors. We argue that the dynamic lies with catchup through technology transfer, which induced high investment and high imports of equipment etc. Around 1970 the investment rates in the USA and the UK were 18 per cent, in Germany 27 per cent. This strongly suggests that Japan had long been a high saver and investor in comparison with major competitors. In turn, this fully accords with our technology transfer-imports model, which explains also the huge export booms at low prices: exports were required in order to balance imports and were comparatively cheap and of good quality because of the technologies utilised in their production, which were of new vintage and well arranged because newly imported. None of this denies the importance of the low exchange rate, but puts it in context. See further throughout Inkster 2001. Between 1950 and 1967 the rate of non-agricultural employment in Japan increased at six times the rate of the UK, twice the rate of Germany. No one in the early 1990s predicted that in 1999 the growth rate of the US economy would be seven times that of Japan (4.2 per cent to 0.7 per cent of GDP), with all major economies outperforming Japan, but Germany at only 1.0 per cent. At the same time Japanese unemployment equalled that of the USA at over 4 per cent, with both lying well below Germany, Britain, France, Italy and the general European level. This is, however, a wasting asset. Recent ﬁndings concerning such symbolically modernist infrastructure as the Shinkansen or bullet trains (a sign of industrial success since the maiden journey from Tokyo to Osaka in 1964 which had initially promoted Herman Kahn’s vision of the twenty-ﬁrst century as the ‘Japanese century’) have established that since 1945 infrastructural maintenance has been historically undervalued. This might well be related to the political clout of the large construction companies, who concentrate on securing contracts for new roads, dams and transport systems, not on maintaining the old. In 1998 Japan spent 15 per cent of GDP on new constructions, compared with 8 per cent for the United States. This is clearly encouraged by the pump-priming of government policy as described in this section: in the eighteen months of Keizo Obuchi’s government to January 2000 some $142 billion was spent on supplementary budgets to pay for public-works projects. Particularly, from the revised Foreign Exchange and Foreign Trade Law of April 1998, more deregulated Japanese enterprises are able to forge ﬁnancial and institutional links with foreign enterprises in the absence of large-bank intermediaries. New alliances include Bankers Trust and Nippon Credit Bank, Merrill Lynch and Yamaichi Securities, and Westdeutsche Landesbank with Daihyaku Life. South Korea and Taiwan would be the most immediately hit by such a fall, followed by the larger China, whose steel, petrochemical and home appliance industries compete with Japan. In the longer run of the historian, a fall in the yen could be in Asia’s interest if it serves to stimulate general growth in the Japanese trading economy, particularly imports of labour-intensive goods, energy and raw materials, this minimising or reversing any negative domino effect on South-East Asia. As we move away from basic production relations, all things become speculative, but the Bank of

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Japan has not been known for bold printing policies and a graduated fall to a rate of 130 to the dollar seems more likely. At the opening of 2000 Mitsubishi Heavy Industries, one of the core companies of the Mitsubishi Group, was valued at about one-tenth of the 1990 valuation. Even ﬁrms such as Nippon Steel, which has a successful computer software component, appear to be in trouble. Generally the economy has become far more sensitised to ﬂuctuations in ﬁnancial or commercial variables, suggesting a reduction of the industrial and technological robustness of the 1970s or even 1980s and some erosion of institutional attributes referred to in earlier chapters of this book. Thus a tentative recovery of industrial growth of 1996–7 was quickly shut off by the Asian ﬁnancial crisis and the ﬁscal changes which raised consumption taxes and terminated an income-tax rebate programme. A Commercial Code of 1982 had forbidden payoffs to sokaiya racketeers who specialised in applying pressure through chaos at stockholder meetings. The new element in the 1997 and later cases was that the largest and most reputable companies were involved in making payments. From early in 1998 senior administrators in the MOF were being arrested and charged with giving the banks advanced warning of ofﬁcial inspections in return for gifts and lavish entertainment. Most manufacturing unemployment is in small ﬁrms of fewer than thirty employees. Only 14 per cent of manufacturing and service unemployment is from ﬁrms of over ﬁve hundred employees. At present large ﬁrms reduce employment indirectly by shifting permanent employees to subsidiaries which are then liquidated (in 1999 there was a 120 per cent increase in such liquidations) or by humiliating employees into leaving or retirement. By late 1999 there seems to have been some trend towards restructuring amongst the prestige manufacturing ﬁrms – Nissan Motors removed 21,000 jobs, NTT and Mitsubishi followed. In 1999 total unemployment hit a high of around 5 per cent or three million persons. The LDP had lost its power in the lower house in the 1993 election, and regained it only by 1997 through defections and alliances of a dubious sort. The minority position in the upper house led to alliances with the Social Democratic Party and the New Party, Sakagake, which served to cloud its position on industrial and economic issues. This was all worsened by the prevalence of ‘tribal’ politics at the interstices of decisionmaking systems – the bands of politicians tied to and serving special interest groups or bureaucratic cliques, usually in return for ﬁnancial rewards or electoral assistance. This combination of polico-institutional factors explains the failures of Hashimoto to reduce the number of central government ministries and agencies as advised in the report of the Administrative Reform Conference in September 1997. Seemingly because Braudel does leave this theme somewhat open, especially in Wheels of Commerce (1985: 585–99). Interpretations of Japan

1 The late development perspective has been elaborated in various ways. Most approaches follow from the initial essays of Alexander Gerschenkron (1966), which posited a systematic difference in economic and institutional changes between early and late developers. For an analytical application to Meiji Japan, see Inkster 1980. 2 Heihachiro Togo was a highly representative Meiji leader: born in 1847 of a Satsuma samurai family, he was sent abroad to study in England 1871–8, and later commanded the Naniwa-kan during the 1894 Chinese war, and as Admiral was commander of the ﬂeet in the Russo-Japanese war. 3 This with reference to W. W. Rostow’s original Stages of Economic Growth and its many elaborations and applications. For the Rostovian perspective applied to Japanese

134 Notes industrialisation see S. B. Hanley and K. Yamamura, ‘A Quiet Transformation in Tokugawa Economic History’, Journal of Asian Studies, 30 (1971). 4 For the work on proto-industrialisation drawn on herein see F. F. Mendels, ‘Protoindustrialisation: The First Phase of the Industrialization Process’, Journal of Economic History, 32 (1972): 241–61; J. Mokyr, ‘Growing Up and the Industrial Revolution in Europe’, Explorations in Economic History, 31 (1976): 371–96; J. de Vries, The Economy of Europe in an Age of Crisis, 1600–1750 (Cambridge, 1976). 3

Maturity: social problems of Japanese capitalism

1 The ﬁght against the Hokkaido Aborigine Protection Act of 1899 – which was used primarily to press the Ainu people into modernised farming by curbing their rights to hunt and ﬁsh – became effective only in 1994 when the Ainu writer Shigeru Kayano and six other Ainu politicians became members of the Upper House. 2 The 1930s had seen a brief move towards public legislation in the form of the Military Service Assistance Law of 1937, the Mother–Child Protection Law of 1938, and the War Victim Relief Law of 1942. But these were clearly short-term emergency formulations for warfare: military interests were behind the establishment of the Ministry of Welfare in 1938. 3 It must be admitted that neo-Confucianism was decisively and systematically misogynist. But during the early twentieth century the notion of women as fully ﬂedged ‘people’, as in the phrase Onna mo hito nari, ‘Women are people too’, altered the tradition, and the conception of good wife and wise mother (ryosai kenbo) appears very similar to Western formulations at that time. 4 In the House of Counsellors elections more electors voted for the Japan Socialist Party than for the LDP. From September 1986 the JSP was chaired by the ﬁrst woman to head any modern party in Japan, Takako Doi, who astutely used the issues of indirect taxation, agricultural protection and the Recruit scandal to increase the popularity of the social democratic left, especially amongst women. 5 It should, however, be noted that 66 per cent of Japanese land use is in forests, compared to 10 per cent for the UK or 32 per cent for the USA. 6 Benedict’s The Chrysanthemum and the Sword was a cultural anthropology published in 1946 under the exigencies of war conﬂicts and investigations. Such work, which abounded in those years, has since been criticised as imposing confoundedly bland psychological conceptions on national characteristics of nations, applied to systems from the USA itself to Soviet Russia. Through her comparative research on contemporary cultures at Columbia University, Ruth Benedict was a central inﬂuence in this movement, as was Margaret Mead. 7 The modernisation literature did generally emphasise homogeneity of Japanese culture and society, especially as exhibited in the very well-known series of books that came from Princeton University Press which together composed the so-called Conference on Modern Japan: for the ﬁrst and last of these see M. B. Jansen, ed., Changing Japanese Attitudes towards Modernization (Princeton, Princeton University Press, 1965) and J. W. Morley, ed. Dilemmas of Growth in Prewar Japan (Princeton, Princeton University Press, 1971). 8 This is most certainly not to argue that the social changes of the 1960s and 1970s, very much transferring-in from American and European experiences as well as from new prosperities as such, did not give an earlier indication that the seeming patchwork quilt of Japanese society had already been rent. There had been student demonstrations, the emergence of the popular citizens’ movements shimin undo and jumin undo, and increased labour militancy as exhibited in the spring wage movements. 9 Yakuza is literally 8–9–3, a losing hand of cards in a traditional Japanese game. There is no intention here of suggesting a new social element, for organised syndicates were

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13

4

long involved in extortion, drugs, prostitution and protection, kidnapping and blackmail rackets. But the ‘bubble economy’ did offer greater markets and more opportunities through property deals based on corrupt ofﬁcialdom both to strengthen links with politics at all levels and to create a camouﬂage of highly nominal respectability. An insidious element became more circumventive, treacherous and covinous. Unemployment in Japan in the mid-1990s was at a rate of around half that of the USA or UK, and yet further below that of Europe; this was true also of full-time unemployment of youth and females. Days lost by labour disputes, which in Japan embrace protest actions and factory closure, were falling and much below those of any nation. As rough proxies of the slight power of modern sector labour as a result of such regionalised labour dualism, the rates of wage increase, both through spring wage increases and as measured in total wages in the business sector, were falling and well below those of comparable industrial systems. Parent companies increasingly demanded composite rather than single parts from subcontractors as a direct result of ‘just-in-time’ systems. Without the delivery of highquality parts in a given quantity on time, ‘just-in-time’ could not be implemented. Having fewer contractors allows greater ﬂexibility for the parent ﬁrm. The rise of female production workers in smaller ﬁrms has occurred alongside a fall of female production workers in establishments of more than ﬁve hundred workers. From the 1980s the fall of female workers in depressed old industries such as wood products, pulp and paper, chemicals, ceramics and textiles has been countered by the switch to small micro-electric-technology ﬁrms in a great variety of industries, but especially amongst subcontractors. Chisso was the chemical company identiﬁed as responsible for the disease, which was transmitted through the consumption of polluted shellﬁsh, a major site being the efﬂuent of the Shiranui Sea. Forging explanations: technology

1 In order to make it clear that we are prepared to acknowledge some of the major generalisations of the more conventional economic histories which ﬁnd technological change as the central element, whilst withholding agreement with their causal style, we might list the following early outstanding studies: J. C. H. Fei and G. Ranis, Development of the Labor Surplus Economy (Homewood, Richard D. Irwin, 1964); L. Klein and K. Ohkawa, Economic Growth: The Japanese Experience (Homewood, Richard D. Irwin, 1968); K. Ohkawa and H. Rosovsky, Japanese Economic Growth (Stanford, Stanford University Press, 1973), and several of the papers to be found in W. J. Macpherson, ed., The Industrialisation of Japan (Blackwell, Oxford, 1994). 2 Even as late as the early 1990s Japan was paying some $3,000 million annually in royalties etc. to foreign companies, but this compares to $8,000 million payments by Germany. At the same time Japan was in receipt of substantial technological payments (around $2,750 million), was devoting twice as much to internal R&D ($94,000 million or 3.54 per cent of national income) than Germany or the UK, and a smaller proportion of such investment (16.8 per cent) came from public funds (compare Germany 34 per cent, UK 39 per cent). These ﬁgures suggest a strong complementary relationship between technology transfers-in and internal R&D in the case of Japan, even well into the ‘bubble economy’ period. See Japan 1994: 25 and Inkster 2001 more generally. 3 For much-publicised cases of the creativity debate see Scientiﬁc American (October 1980), New Scientist (20 October 1981 and 21 March 1986), Nature (29 September 1983), Science (December 1986 and August 1987 and Fortune (30 March 1987), as well as R. P. Dore, ‘Where Will the Japanese Nobel Prizes Come from?’, Science and Public Policy (December 1986).

136 Notes 5

Cultural engineering

1 For the simplest and most authoritative statement of this sort of position see R. M. Solow and P. Temin, ‘Introduction: The Inputs for Growth’, in P. Mathias and M. M. Postan, The Cambridge Economic History of Europe volume VII part 1, The Industrial Economies, Britain, France, Germany and Scandinavia (Cambridge University Press, Cambridge, 1978): 1–27. At one point the authors tackle the notion of explanation by summarising that they ‘want to account for changes in output by changes in input much as one would account for changes in the area of a rectangle by the historical changes in the lengths of its sides’. Here we argue that cultural engineering represents a dynamic change in the amount and character of the cultural inputs to growth. 2 Wu-hsing depicted the ﬁve elements as earth, metal, ﬁre, water and wood, encoding a system for soil analysis. The basic Ching distinctions between yin (rice) and yang (wheat) were adhered to into the late-Tokugawa reform movement to guide harvesting, timing of plantings and so on. 3 Ieyasu Tokugawa (1542–1616), the ﬁrst Tokugawa shogun, was engaged in brilliant military campaigning through to 1615, and then rapidly brought in new legislation regulating the samurai, established the kuge code regulating the court nobility, and initiated a system of pacifying legislation that lasted with only slight modiﬁcation to 1868. 4 It might be noted that Deshima had been built originally to house the Portuguese. Direct communication was not really with Holland but with the colonial administration of Batavia (Java). The island was maintained by the Nagasaki police and civil ofﬁcers. 5 Thus an oil-mill model presented to the Nagasaki governor from Deshima was very much admired but returned because its adoption would throw Japanese workers out of employment. This is a sensible attitude normally identiﬁed with Chinese rather than Japanese responses – see Busk (1841): 317–18. 6

The institutions of late development: private enterprise

1 Thus the work-station obtaining materials from an upstream work-station is analogous to the customer getting goods on to the shelves upon demand from a supermarket storage area. Characteristics of a model just-in-time system are, thus, smooth operations, timely information and response, clarity, foolproof automation (Ohno’s notion of autonomation). The subsequent and associated institutional innovations at Toyota (1950s–70s) included the kanban system (which involves incremental or adjustment decision-making by work-stations on an assembly line through the passage to and fro of kanban notes or instructions), reduction of start-up times, worker training, changes in vendor relations, and quality control circles etc. In the idealised system such a chain of improvement will lead to no friction in the ﬂow process, i.e. no or very little start-up time, breakdown, handling, lead-time, surges in quantity or product mix. As an example, Toyota shortened die changes for their large presses from two or three hours to less than three minutes. Leading Japanese manufactures by the 1980s were achieving total start-up times of less than six minutes. 2 Research Project Team for Japanese Systems, Japanese Systems: An Alternative Civilization? (Yokohama, Sekotac, 1992). Published in both Japanese and English, this book is the ﬁrst major publication of the Masuda Foundation for International Communication and Education, a private foundation established in Yokohama in 1988 and named after its President, Seiji Masuda. Unless indicated otherwise, this section is based on this publication and on Hamaguchi (1985). 3 Thus Watsuji Tetsuro (1889–1960) denied the notion of an abstract individual, for in Japan all individuals take on meaning only when in groups, and the ideal system fuses culture, group and person organically into one, the kyodotai (approximately, a

Notes 137

4 5

6

7

8

7

Gemeinschaft). In this thinking, then, there is strong resistance to separations either of individual and society on one hand, or the social and the cultural on the other. See Bellah, pp. 52–67 in particular. A good example of the meeting of formal and tacit is in the photograph displays which are placed in the precise spot where an improvement has taken place, and thus serve as informal visual feedback systems. It may be a little fanciful, but surely tacit knowledge systems reduce the likelihood of accident. Thus many Japanese production systems use very fast-moving carts which rove constantly in conﬁned, indeed crowded, workspaces, working under great pressure amidst numerous runners moving from place to place. Although accidents are certainly reported, what would the rate of accident be for such a system applied in France or the USA? Just as Americans of the nineteenth century could adapt a borrowed technology to such an extent that it could not be reverse-transferred to its original source at a later date (for example British manufacturers in Birmingham), so Western machinery and management techniques as transmogriﬁed in Japan become non-reversible to the West. Our explanation would focus on a speciﬁc ‘cultural’ element, in this case the propensity of the Japanese to rely upon tacit communication systems. Even in combination, then, ‘obligational drag’ and tacit communications are not a sufﬁcient argument for sluggishness or long-termism, for they have been backed by the character of banking, kerietsu networks, indicative planning and so on, for which see also Inkster 2001. Also we are suggesting an asymmetry – that these features allow ﬂexibility and speedy response in times of opening opportunities and expanding markets, but allow for slowness of internal response when external conditions become threatening. Recent evidence from Sony, Kayo, Hoya, Mitsubishi and Matsushita is that boards are now being sharpened and reduced in size, or in some cases key decisions have shifted to more informal subgroups. Whether this means a reduction of obligational drag is not yet clear. Nationalism and globalism: Japan in world context

1 Stonehenge is insigniﬁcant when compared to the Great Wall, which required a conscription in the seventh century of perhaps a million souls, half of whom died. From AD 600 the Grand Canal involved the employment of some 5.5 million persons guarded by a police force of ﬁfty thousand. A million people may have died in its construction and early maintenance. 2 Western writers too frequently note that the Chinese character for ‘crisis’ contains that for ‘opportunity’. Perhaps natural and water control crises led to an opportunity for the total system to prove itself by limited adaptation and through the gathering and harnessing of human resources. 3 Thus the great medieval south-western province of Korea, Silla, a state from ‘whence Buddhist missionary civilisers crossed to Japan, and to which Chinese ﬂeets were guided by the mariner’s compass, before Europe ever heard of such a thing’ (Grifﬁs 1912: 24), providing a conventional view of Korea as a mediator between China and Japan. 4 The ﬁrst foreign treaty of 1876 was signed with the Japanese, and was really addressed to the Chinese in Korea, and from then most internal Korean struggle addressed the issue of China and Japan. China’s interest now was to open Korea to all interests in order to dilute those of Japan – in 1882 the Treaty of Tientsin with the United States, and from then to 1886 treaties with Britain, Italy, Russia, France and Germany. The period 1896 onwards appears as distinct in relation to foreign merchandise: foreign tonnage surged during 1897 and again during 1906–7 (Vogtherr 1979: 19).

138 Notes 5 It might be noted (in light of our general position) that the greater tendency to emphasise familial and horizontal relations in Korea goes back to the Mongol neoConfucianism of 1286 onwards. Together with the examination system and the deliberate use of Confucianism as a political tool, this suggests that the difference with Japan was generated mostly through the contrast in relations with China rather than through fundamental cultural attributes. The exact character of the colonial development of Korea after 1910 remains a subject of debate (Inkster 2001, Kim 1977) but there is little doubt that, ﬁrst, it was dominated by Japan’s military, industrial and commercial needs entirely, and that, second it cannot be compared with the great phase of Japanese industrialisation in the years 1910–42. Our purpose here is only to show how the Korean comparison highlights the importance of key factors (urbanism, sovereignty, technology transfer, cultural engineering) in the success of Japanese industrialisation.

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Index

Abramovitz, M. 60, 80 absorption capacity 61 (see social capacity) Adams, F.O. 30 Adams, Will ix adaptive elite 97 Adhoc Commission on Educational Reform 75 Administrative Reform Conference (1997) 133 adoption 124 agency 112–4 agriculture 31, 39, 131 Ainu people 36, 134 Akamatsu trade model 57 Allen, G.C. 8, 64 America 11 (see USA) American system of manufacturing 58, 106 Anderson, C.A. 91 Anesaki, M. 86 Anthology of Agriculture (1997) 86 Aoki, M. 110 artiﬁcial intelligence 78 Asahi Glass 66 Asian crisis 17–18, 113, 132–3 Asian tribute system 3, 124 (see silver) Athos, A.G. 107 Australia 15 automobile industry 65, 69 autonomation 136 avoidance system 95–101 Azumi, K. 67 Bagehot, W. 32–3, 120 banks, banking and bankruptcies 18–19, 40, 132 Bartholomew, J.R. 73–4 Basic Oxygen process 69–70 Batavia (Java) 136 Beck, U. 84

bedroom communities 37 Bell, J. 77 Benedict, R. 43–6, 134 Berger, P. 50–1 Bergius hydrogenation (Germany 1913–24) 64 Berlin Wall 129 Bhabha, H.K. 84 Bioindustry Ofﬁce and biotechnology 71–2 Bismarck, Prince Otto von (1815–98) 23 Blomstrom, M. 129 Blumenthal, T. 13, 62, 81 bonus system 40 books and statism 87–8, 91 bosozoku speed tribes 46–7, 50 Bowman, M.J. 91 Braudel, F. 20, 82, 133 Bretton Woods 14 Britain and British inﬂuence 4, 27, 30, 73, 75, 83 Brunet, P. 30 bubble economy 17–18, 46–7, 135 Buddhism 42–3, 86, 119, 137 burakumin 36 bureaucracy and decision-making 14, 20, 67–8, 82, 121 Burg, P. van der 73 bushido 33, 42–3, 87–91 by-employments 3, 5, 11, 28–9 capital exports and imports 15–16, 18, 65 capitalist havens 129 Caves, R.E. 56–7 chemical industry 58, 63–4 China 3–4, 6–7, 12, 17, 20, 24, 26–7, 32–3, 41–3, 84–6, 88, 103–4, 117, 121–7, 129, 137–8 Chisso (chemical company) 135 Chosen 10 (see Korea)

Index 155 Chosu 6, 90 Civil Code (1896) 37 clans, 111 Cohen-Boyer patent 71 Cold War 7, 80 Cole, R.E. 88 Collins, R. 60, 63 colonialism 10, 102, 129 Commercial Code (1982) 133 commercial ﬂuctuations 116 communication modes 114 (see information) comparative measures, approaches and perspectives 22, 35–41, 120–30, 137–8 competitive advantage 110 compradores 33, 99 compton scattering, law of (1928) 77 Confucianism 27, 32, 41–3, 86–91, 98, 119, 125, 138 conjunctures 6, 126–7 consensus decision-making 42, 82 (see also groupism, loyalty and obligations, relatum and contextual) conspicuous consumption 5–6, 28 constructed certitude 84 consumption habits 132 contextual 107 (see Masuda Model, groups, individualism) convergence theory 49–52, 129 corporate welfarism 37 corruption and cronyism 15, 19, 38, 47, 135 (see also politics, Diet) cotton industry 96 (see textiles) Crawcour, S. Xii, 88 creativity and creativity debate 42, 75–8, 81, 109 crime and criminality 39–40, 47 Crimean War 58 Crozier, M. 110, 117 cultural anthropology 44–5, 134 cultural causation 27, 34, 41–4, 82–6, 107–11, 117; and cultural stock argument 83–4, 92, 101 cultural engineering 22, 32–4, 81–104, 108, 113, 118–19, 123, 136 cultural resistance and conﬂict 95–101 culture (deﬁned) 83, 99, 101 (see epiphenomenality) cumulative causation x, 126–8 daimyo 4–5 Darwin, C. 97 Deming, W.E. 74, 112 dependent society 43–4

depressions and cycles in the economy 11 Deshima, 99–100, 136 Diet elections and parties 11, 13, 38, 99, 133 (see politics) direct overseas investment 16 (see also capital exports) Doi, T. 134 Dore, R.P. 43–4, 67 dormitories 48, 96, 118 down-times 71 D-RAMS 69 drugs and drug culture 51 dual industrial structure 11–12, 37, 88, 96 Duke, B. 54 Dutch inﬂuence 73, 99–100 (see also rangaku) early breakfast clubs 46 East Asia (general) 18, 50, 52, 60, 75–6, 81, 117, 123–6, 129–30, 132 economic growth 10, 13, 15, 17, 83, 88, 118, 131–2 (see underlying constraints) Economic Planning Agency 51–2 Edinburgh Royal Society 2 Edo 4 (see Tokyo) education and training 9–10, 25, 32, 53–4, 75, 86–8 Eifu, M. 91 Eisenstadt, S.N. 50 electronics and electrical industry 59, 69, 72–5 Emi, K. 92 Emperor and Emperor Movement 7, 47, 84–5, 88, 102 emulatory convergence 51 encoded systems 103 endaka society 40, 46–53, 113–14, 119 end of history 49, 128–30 engineering industries 65 enterprise culture 22, 103–19 environmental constraints and policies 17, 20, 37 epiphenomenality 86, 108, 111 (see also mimesis, Spengler, cultural causation) Equal Employment Opportunity Law (1985) 38 European and Western comparisons 20–1, 23–4, 28–9, 32, 38, 120–3; Eurocentrism 126 European Union 71–2 evolutionary convergence 51 export-led growth 8, 13, 56–7 (see trade) familism 48, 113–14 (see ie)

156 Index feudalism 3 Fifth Generation Computer project 1982–91 70, 72 Findlay, R. 61, 63 Fischer-Tropsch process 64 ﬁve relationships 41 ﬂexible manufacturing 48–9, 67 Fontana, J. 127 foreign employees 10, 93 (see Western experts) foreign enterprise 63–5 Foreign Exchange Law (1998) 132 foreign investment into Japan 9 Formosa 9 (see Taiwan) Frank, A.G. 126 Fransman, M. 57, 67, 70 Freedom House 128 French Revolution 127 Frontier Within (2000) 76 Fujitsu 78; -ICC partnership 72 Fujiwara, S. 87 Fukuyama, F. 128–30 Fukuzawa, Y. 97–8, 102, 120 Furukawa, T. 88 fusion (technological) 76 fuzzy engineering research 78 G-7 meetings (2000) 18 Gellner, E. 84 gender and gender relations 38, 48, 96, 134–5 Genentech 71 General Electric Co. 63–5 geopolitical factors and trends 17, 78 German-Manchukuo Trade Treaty (1936) 64 Germany 9, 64–5, 73, 135 Gerschenkron, P.A. 21, 127, 133 Giddens, A. 111 Gill, S. 114 giri 43, 45 global contexts 55, 78–81, 119–30 Gluck, C. 85 gold standard 12 government intervention and investment 8–10, 12, 19, 31–2, 36, 93 grave sites 50 Great Wall and Grand Canal of China 137 Greenﬁeld, K.T. 46, 50 group harmony and groupism 41, 44, 46, 82, 108–11 growthmanship 14, 19–20 Haber-Bosch process 63

Hagen, E. 33 Hagerstrand, T. 29 Hamaguchi, E. 111 han furnaces 73 Harootunian, H.D. 97 Hashimoto, R. 19, 133 Hayashi, R. 87 Hegel, G. W. F. 129 Hellenic civilization 121 Henderson, D.F. 41 Hess, D. J. 44 Hettne, B. 129 Hidachi Engineering 12 Hideyoshi, T. (1536–98) 5, 124 high-tech and R&D policies 68–73 Hirai, S. 1, 25 Hobsbawm, E. 85 Hokkaido Aborigine Protection Act (1899) 134 Hokkaido development project 9, 131 Hood, N. 80 Hopp, W.J. 106 Horie. Y. 42 Horiuchi, A. 54 Hoselitz, B. 103 human capital formation 88–95, 117 (see also education) Human Frontiers Project 72 Hungary 23 Huxley, T.H. 20 IBM’s System 370 70 ideological framing 84 ie family system 44 (see also familism) illegal foreign workers 53–4 IMF (International Monetary Fund) 14 immigrants 53–4, 76, 126 Imperial Edict on National Education (1890) 88 Imperial Way of Efﬁciency 74 import-led growth 8 (see trade) imports of machinery and equipment 12, 65, 88 (see technology transfer) Income Doubling Plan (1961–70) 14 income transfer payments 93–5 India 32, 103 indicative planning 14 individual and individualism 42, 50, 75–6, 82, 107–11, 136–7 Industrial Bank of Japan 10, 19 industrial restructuring 75 industrial revolution 131 information systems and processes 30–1, 61, 79, 123; and meta-information 109;

Index 157 tacit knowledge 109; transfer agreements 70 institutional critique 76 institutions and institutionalism 21–2, 25, 28, 31, 40–1, 45, 52, 59, 70, 73–5, 81, 85, 106, 112–16, 117 instrumentalism 49 intellectuals 96–8, 102 (see also organic intellectuals, Joi ) interest rates 19 International Bacological Congress (Austria 1871) 30 Internet 17 interpreters 99–100 invention of tradition 85, 92, 101, 103, 108 (see cultural engineering ) investment 13, 132 Ishimure, M. 55 Islamic civilizations 128 Jacobs, N. 20, 82 Japan (general) xi, 35–55 Japan Development Bank 66 Japan Productivity Centre 112 Japan Society for the Promotion of Science 74 Japanese doctors 102 Johnson, H. 62 Joi intellectuals 98 Jones, E. 122, 125 just-in-time 48–9, 106–7, 116, 135–6 Kagoshima 6, 73, 131 Kahn, H. 132 kaisha 44 Kaitakushi development project 131–2 Kaldor, N. 126–7 kanban 106–7, 110, 116, 136 Kant, I. 120 Kato, H. 97 Key Concepts of Education (1879) 91 Kikuchi, Baron D. 2, 131 Kishi, N. 47 Korea and Korean War ix, 10, 13, 43, 84, 123–6, 132, 137–8 Korean Synthetic Oil Company 64 Koschmann, J. V. 42 Krugman, P. 129 laboratories 77 (see also research labs) labour supply, market and employment 10, 13, 15, 27–8, 109; productivity 13, 112 Lake Baikal 26 land reforms (1947–50) 39

land tax 9, 26, 31 Landes, D. 21 language and discourse 107, 114–15 late development approach and industrialisation x, 9, 21–24, 27, 32–4, 36–41, 45–6, 48–52, 74–6, 81, 101–5, 112–19, 133 LDP (Liberal Democratic Party) 15, 19–20, 39, 47, 133 (see also politics, Diet, corruption) lead-chamber process 58 Leblanc process 58 Lewis, W.A. 91 liberal democracies 128 lifestyle reform 77 lifetime employment/commitment 37, 44, 53, 84 (see also Three Treasures) Lockyer, N. 2 Lone, S. 85 loyalties and obligations 41–6, 52–3, 65, 107–111, 115–16 (see also giri, Masuda, groupism) Mahbubani, K. 129 management systems 106, 109 (see enterprise culture) Manchuria and Manchukuo 10, 64 Mansﬁeld, E. 58–9, 67 markets and market structures 48–9, 79 Marshall Plan 60, 66, 80 Maruyama, M. 87 Masayoshi, S. 18 Masuda, S. 136; Model and Foundation 107–12, 114, 118 matchlock guns 124 Matsukata deﬂation 9 Matsukawa-gumi 30, 43 Matsushita Corporation 75 Mazda lamp 63 Mead, M. 45, 134 Meiji Charter Oath (1868) 85 Meiji period (1868–1912) 3, 6–10, 89–95 Meirokusha 97 Mencius (370–289 BC ?) 89 merchants 5–6, 8, 12, 30 meson theory 77 metallurgical techniques 28–9 military expenditure and industry 12, 60, 127 Military Service Assistance Law (1937) 134 mimesis and imitation 120–3, 130 Minamata disease 55 Minami, R. 25, 92 Ministry of Foreign Affairs 90–1

158 Index Mita, M. 91 MITI (Ministry of International Trade and Investment) 14, 75; and technology policy 66, 71 Mitsubishi and subsidiaries 8, 10, 12, 19, 64, 71, 133 Mitsui and subsidiaries 10, 12, 64 modern climacteric 14–20 modernisation theory 45, 49–52, 134 Morishima, M. 41, 126 Morita, A. 105, 110 Morrell, E. 73 Morris, W. 105 Morris-Suzuki, T. 72–3 Mother–Child Protection Law (1938) 134 Motoshima, H. 47 Multifunctional Polis 69, 76 Myrdal, G. 126 Nahmias, S. 106 Nakamura, T. 84 Nakane, C. 44–6, 52 Nakasone, Y. 75 Nakayama, I. 1 Nakayama, S. 78 Nature 2 Naval Fuel Depot (Tokuyama) 64 NEC Corporation 75, 77–8 Needham, J. 21, 121–3, 126 negotiated tradition 108 (see tradition and traditionalism, invention of the past) neighbourhood effects 5 network systems 108 New Party 133 Next Generation Base Technologies 72 nihonjinron school 82, 109 Nippon Steel 47, 69, 133 Nissan Motors 133 Nitobe, I. 33, 42–3, 90 Nixon Shock 70 Nobel Prize 77 Nomura Securities 47 Non Sect Radical Movement (1968) 51 NTT (Nippon Telephone and Telegraph) 18, 70, 72, 133 nuclear accident (1999)16 obligational drag 67, 114–16, 118, 137 Obuchi, K. 19–20, 132 Ohkawa, K. ix, 25 Ohno, T. 106 Oil crises 66 (see OPEC) Okuma, S. 33

OPEC (Organization of Petroleum Exporting Countries) 15, 66 Opium Wars 24 organic intellectuals, 102 oriented basic research 70 Oshio riots 87 Ouchi, W. 111 Oyomei school 90 Panikkar, K.M. 1 Parsons, T. 95 Pascale, R.T. 107 patents and licensing 63–5, 69, 77, 81, 88 (see royalties) peasant farmers 5, 12, 102 pebrime 30 performance displays 15 Perry, M. ix Platt Bros. machinery 73 Polanyi, K. 101 politics and political parties 11–12, 19–20 Pomeranz, K. 126 poor law (1874) 37 population, settlement and demography xi, 7, 17, 27–9, 36–7, 124, 131 pornography 36 Port Arthur 26 Porter, M. 110, 117 primogeniture 84, 124 printing 124 private enterprise R&D 71 (see R&D) protectionism and tariffs 10, 18, 57 (see trade) Protestant Ethic 27 proto-industrialism 28 proximate causation, doctrine of 83 pseudomorphs 121 Pyle, K. 98 quality control circles 74, 136 rangaku 73, 79, 99–100 rDNA technology 71 Records of the Peasants (1682) 86 Recruit scandals (1988) 38, 134 Reischauer, E. 25 relative economic backwardness (see late development) 24, 49, 113 relatum 107–9 (see contextual) rent-seeking 122, 125 Rescript of 1890 85 Research and Development 13–14, 65–72, 76–8, 135; and private sector 68–73, 78

Index 159 Research Institute for Physics and Chemistry (1917) 66 research laboratories 65–6, 73 restructuring and new economy 18 Revised National Assistance Act (1950) 37 reward systems 115 rights of the people 88 ringi 107, 109 (see groups, enterprise culture, concensus) Robertson, R. 30 Rohlen, T.P. 54 Roman Catholics 125 Romein, J. 127 Rosenberg, N. 56, 60 Rosovsky, H. 25, 60 Rostow, W.W. and Rostovian approach 27, 133–4 Rousseau, J.J. 38 royalties 135 (see patents) Royce, J. 91 rural industries 29 (see by-employments) Russia and USSR 9, 23–4, 26 Russo–Japanese War (1904–5) 9, 26 Sakuta, K. 113 salaryman culture 38–9, 47, 50 samurai 3, 5–7, 9, 33, 41–3, 87, 89–90, 97, 131,133, 136 sankin kotai 4, 32, 87, 123 Sato, S. 24 Satsuma and Satsuma Rebellion (1877) 6, 90–1, 131; Satsuma-ware 125 savings 14, 41, 60 ; and households 40–1 (see investment) Saxonhouse, G. 96 SCAP (Supreme Command Allied Powers 1945–52) 13–14, 39, 45, 46, 117 Schlesinger, A. 128 Schumpeter, E.B. 65 scientiﬁc management 74 (see also management, enterprise culture, Deming) scientiﬁc revolution 122, 126 scientists 65 seclusion 99 selection and integration 108 (see technology transfer) selling-up policy 97 shaen (societal ties) 109 (see also giri, Benedict) Shibaura Engineering Works 64 Shils, E. 103 Shimbun Zasshi 30 Shimomura, M. 53

shindanshugi (group orientation) 82 (see also groups) Shingo, S. 107 Shinohara, M. 57 Shintoism 12, 41–2, 84–5, 89 Shotoku, Prince T. (574–622) 86 Siberian Expedition (1918) 11 Silberman, B.S. 42 silk and silk industry 6, 11, 29–31, 56 Silk Supply Association 30 Silla (Korea) 137 silver 3, 125 Sinai, R. 84, 86 Sino–Japanese War (1894–5) 9, 85, 133 sites of endeavour 100, 102, 129 small and medium sized businesses 48–9, 54, 100, 118, 133 smallpox epidemic (1870) 102 Smith, A. 101 Smith, R.J. 86–7 social capacity 25, 57, 60–1, 91 (see also human capital formation) social change 46–55 Social Democrat Party 133 social economics 79 social institutions and structures 35–55 social overhead capital 92 social-spatial ﬁelds 79 social underpinnings approaches 40–6 sokaiya racketeers 133 Softbank 18 Solidarity 128 Solo, R. 61 Solow, R. M. 20 Solvay process 58 South Manchuria Railway Company 10, 64 spatial factors 7 Spearman, M.L. 106 Special Nitrogen Research Laboratory 63 Spencer, H. 20, 97 Spengler, O. 121–3 stability 108 states and statism 23, 45, 91, 122–3 (see rent-seeking) statistical process control 114 (see Deming) strong culture ﬁrms 110 subcontractors 48, 115 (see small and medium sized businesses) suburbs 48 Suez Canal 29 Sumitomo and subsidiaries 10 Supercomputer project 1981–9 70

160 Index tacit knowledge and understandings 109, 114–16, 119, 137 Taewongun Reform (1864) 125 Taiwan (and Formosa) 8–10, 75, 132 Taka-Diastase 77 Takeda Pharmaceuticals 65–6 Taoism, 121 taxation 31 (see land tax) Taylor, F.W. and taylorism 74 technical training 25 technocratic nationalism 70–1 technological innovation and progress 25, 28, 30–2, 56–81, 121; and diversiﬁcation 69 (see Research and Development, creativity); and resistance 95–101 technology transfer 11–13, 21–2, 24–5, 30–1, 51, 58–75, 112–13, 132, 137; and foreign trade 67–8; and government strategies 72–3; and institutions 67, 70–5, 117–19; and mimesis 120–3 (see also import-led model) Technopolis strategy 68 Tempo reforms (1830–43) 87 Tetsuro, W. (1889–1960) 136 textiles 8, 73 (see also cotton and silk) Thatcher, M. 21 Three Treasures 65, 105, 109, 111, 113 Togo, H. 26, 133 Tokaimura, 16 Tokugawa era (1603–1868) 2–6, 27–8, 41, 44–5, 86–9, 124–5 Tokugawa, I. (1542–1616) 87, 136 Tokyo Electronics 59, 63 Tokyo School of Engineering 73 tools and workshops 59 Toynbee, A. and Toynbeean interpretation 99, 120–3, 127–8, 130 Toyota 50, 136 trade and balance of trade 7–8, 11, 13, 57 (see Yen) traditional and traditionalistic 103 traditional intellectuals 102 transnational corporations 80 Treaty of Nanking (1842) 24 Treaty of Portsmouth (1905) 10 Treaty of Tientsin (1882) 137 tribal politics 133 Tsukuba, 76 Tsushima 26 Tsutsui, W. 74 Tucker, Revd J. 56 Turkish Revolution (1908) 127

Uenohara, M. 69 underclass 48–9, 53–4, 116 underdeveloped nations 27 underlying constraints on economic growth 20 unemployment 37, 48, 113–14, 132–3, 135 unequal treaties 29, 31 (see trade and protectionism) University of Tokyo 38–9, 51, 97 Upham, F. 85 urbanism 4–5, 79 USA 11–12, 14, 16, 60, 66, 74, 79–81, 119, 132; companies 63–6, 110 Vaculac Corporation 77 Versailles Peace Conference 11 Very Large Scale Integration technology project 70 vested interests 96, 100 Vision of Industrial Policy in the 1980s (1980) 75 wages 38 Wallace, A. 95 Walthall, A. 102 war 11–12, 26, 60, 65, 74, 85, 88, 125 War Victim Relief Law (1942) 134 Washington Conference (1921) 11 Waswo, A. 36, 39 water-control technologies 123 Way of the Samurai 41, 47 Weberian analysis 83, 103, 111 We-consciousness 109 (see groupism) welfare provision and expenditure 37 Western employees and experts 1–2, 30 Western inﬂuence (general) 26, 30–1, 56, 63–66, 73–4, 78, 98–100, 112, 120–3 Westinghouse 63 White, M. 54 White Paper on the Life of the Nation (1994) 51–2 Williams, D. 128–9 women 38, 135 (see gender) Wong, R. Bin 126 Wu-hsing 136 Xavier, F. 131 yakuza syndicates 47–8, 134–5 Yamamoto, T. 41, 47 yangban 125

Index 161 Yasuda and subsidiaries 10 Yen value and revaluations 14–16, 18, 132 Yi dynasty (1392–1905) 125 Young, S. 80

youth culture 46 Yukawa, H. 77 zaibatsu 10–13, 88 Zen Buddhism 90 (see Buddhism)

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