The Political Economy of Japanese Society: Volume 1: The State or the Market?

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THE POLITICAL ECONOMY OF JAPANESE SOCIETY VOLUME 1

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The Political Economy of Japanese Society Volume 1 The State or the Market?

Edited by

BANNO JUNJI

OXFORD UNIVERSITY PRESS 1997

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Oxford University Press, Great Clarendon Street, Oxford   Oxford New York Athens Auckland Bangkok Bogota Bombay Buenos Aires Calcutta Cape Town Dar es Salaam Delhi Florence Hong Kong Istanbul Karachi Kuala Lumpur Madras Madrid Melbourne Mexico City Nairobi Paris Singapore Taipei Tokyo Toronto Warsaw and associated companies in Berlin Ibadan Oxford is a trade mark of Oxford University Press Published in the United States by Oxford University Press Inc., New York © the various contributors 1997 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press. Within the UK, exceptions are allowed in respect of any fair dealing for the purpose of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act, 1988, or in the case of reprographic reproduction in accordance with the terms of the licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside these terms and in other countries should be sent to the Rights Department, Oxford University Press, at the address above British Library Cataloguing in Publication Data Data available Library of Congress Cataloging in Publication Data The political economy of Japanese society / edited by Junji Banno. A revision and translation of the 7 vol. ed. published 1990–1992 by the University of Tokyo Press. Includes bibliographical references and index. Contents: v. 1. The state of the market? 1. Japan—Economic conditions—1945– 2. Japan—Politics and government—1945– I. Banno, Junji, 1937– . HC462.9.P5719 1997 330.952′04 — dc21 97–23116 ISBN 0–19–828033–5 (v. 1) 1 3 5 7 9 10 8 6 4 2 Typeset by Graphicraft Typesetters Ltd, Hong Kong Printed in Great Britain on acid-free paper by Bookcraft (Bath) Ltd Midsomer Norton, Somerset

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Acknowledgements For five years, beginning in 1986, the Institute of Social Science of the University of Tokyo carried out an institute-wide co-operative research project aimed at delineating the characteristics of contemporary Japanese society. On one hand, as a late-developing country, Japan had become an economic giant. On the other, the socialist block, with its claims to represent the postcapitalist regime, had begun to wither away. We attempted to deliberate on these global changes from the perspective of Japan. The result was the sevenvolume series, Gendai Nihon Shakai (Contemporary Japanese Society), published by the University of Tokyo Press in 1991 and 1992. The Institute of Social Science is composed of scholars specializing in economics, political science, and law, and a few others specializing in history and sociology. Among some thirty-eight permanent faculty members, approximately half concentrate their research on foreign countries, while the rest study Japan. The mission of the Institute is to engage in collaborative academic research among these differing fields of specialization, including both studies on contemporary Japan, and comparative studies of Japan and other foreign countries. The seven volumes of Contemporary Japanese Society reflect the character of the Institute. Volumes two and three concern the analysis of the current state of foreign nations, with Japan as a basis of comparison; volume seven considers the political and economic relationships of Japan with foreign countries; and volumes four, five, and six deal with Japan’s social structure, its pathologies, and its historical determinants. This two-volume work is composed of selections from those seven volumes that clarify mostly the political, economic, and legal characteristics of contemporary Japan and their historical foundations, edited with the foreign reader in mind. Furthermore, the pieces that analyse Japan’s contemporary situation have been updated to reflect the changes that have taken place since publication of the first edition over six years ago. The original work contains many other fine studies which deal with foreign nations. However, because the English edition is our first systematic effort to introduce our collaborative research to a foreign audience, we decided to emphasize research on our own country, where our ‘comparative advantage’ lies. The original Japanese series was edited by a committee of eight from the Institute, with Professors Aruga Hiroshi as Editor, and Baba Hiroji as Associate Editor. For the English edition, I was the sole editor because I was the director of the Institute at the time it was launched. The work of selecting and rearranging seventeen essays from the sevenvolume set fell to an ad-hoc Institute committee chaired by Professor Mori Kenzo, with Professor Nitta Michio and Associate Professor Hiwatari Nobuhiro

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as the other committee members. Later they were joined by Associate Professor Ishida Hiroshi and Associate Coordinator Tomoko Tsuchida, who were in charge of the numerous negotiations and manuscript revisions which were necessary from the signing of the contract with Oxford University Press, all the way to the final publication. In addition to the translators listed in this two-volume work, there were other people who kindly supported the translating. In particular, I would like to thank Professors Glenda Roberts and Mark Tilton, both at our Institute at the time of the preparation of the manuscript, for their invaluable assistance. On behalf of Oxford University Press, Professor Ronald Dore provided us with detailed advice on the content and selection of the seventeen essays from the viewpoint of a foreign scholar of Japan. In general we agreed with his suggestions, and made the appropriate changes where possible. Our deepest thanks go to Professor Dore for all the time and effort he spent on this task. Needless to say, however, the final responsibility for the content rests with myself, as editor. The original Japanese series, as mentioned above, was published by the University of Tokyo Press, and I would like to express my heartfelt thanks to the Press for their willingness in bringing this English version to publication. We received financial assistance for the English translation work in this volume from The Daido Life Foundation. I herewith offer my sincere thanks for their generosity. Permissions to reproduce the following copyright materials are also gratefully acknowledged: Shinchosha, for Plate 6.3, ‘Pesuto kanja no chiryo, Osaka shiritu Momoyama Byoin no zu’ (A patient of the plague under treatment at Osaka Municipal Hospital of Momoyama in 1900), by Tatsukawa Shoji, Meiji Iji Orai Tokyo Metropolitan Government Archives, for Plate 6.1, ‘Tokyo Sakurada-gai rikugun choren no zu’ (‘The Army’s Drill Ground at Sakurada-gai, Tokyo), by Torashige Asai Collection, for Plate 6.2, ‘Nishikie “Etyujima daichoren no zu” ’ (The Grand Drill at Etyujima) by Kunisada Tokyo Metropolitan Government Archives, for Plate 6.4, ‘Shinchiku Azumabashi shin zu’ (The newly-built Azumabashi) by Kunimasa. National Diet Library, for Figure 6.1, ‘A prototype of school design,’ by J. P. Wickersham (translated by Mitsukuri Rinsho), Gakko Tsuron (261–1) Iwasaki Bijutsusha, for Figure 6.2, ‘Shomin kyoiku no kukan “Terakoya” no zu’ (A space for people’s education, ‘Terakoya’) by Watanabe Kazan, Isso-hyakutai-zu

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ACKNOWLEDGEMENTS

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National Diet Library, for Figure 6.3, ‘Equipment in Barracks’ (Rules for Barracks Administration), Rikugun Seiki Ruiju (31–283) Iwanami Shoten, for Figure 6.4, ‘Shintai kensa no jogensha no zu’ (An advisor to physical examinations) Shimizu Isao (ed.), Bigo Nihon Sobyo shu B. J. Institute of Social Science University of Tokyo January 1997

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Contents List of Plates List of Figures List of Tables List of Contributors INTRODUCTION The Historical Origins of Companyism: From Westernization to Indigenization

x xi xii xv 1

Banno Junji

PART I. STRUCTURE 1. CORPORATE STRUCTURE AND THE JAPANESE ECONOMY

13 15

Hashimoto Juro

2. AN INTRODUCTION TO JAPANESE COMPANY HISTORY: STABILITY AND CHANGE IN THE RANKING OF LARGE MANUFACTURING ENTERPRISES

55

Yamazaki Hiroaki

3. INDUSTRIAL RELATIONS AND THE UNION MOVEMENT

85

Tabata Hirokuni

4. THE WEAKNESS OF THE CONTEMPORARY JAPANESE STATE

109

Watanabe Osamu

5. JAPANESE COMPANYISM AND THE END OF THE COLD WAR

162

Baba Hiroji

PART II. HISTORICAL ORIGINS 6. THE SOCIAL ORDER OF MODERN JAPAN

191 193

Narusawa Akira

7. LABOUR AND FARMERS’ MOVEMENTS IN PREWAR JAPAN

237

Nishida Yoshiaki

8. THE WARTIME INSTITUTIONAL REFORMS AND TRANSFORMATION OF THE ECONOMIC SYSTEM

277

Okazaki Tetsuji

Notes Index

303 347

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List of Plates 6.1 The Army’s drill ground at Sakurada-gai, Tokyo 6.2 The Grand Drill at Etyujima, 1871 6.3 A patient of the plague under treatment at Osaka Municipal Hospital of Momoyama, in 1900 6.4 The newly built Azumabashi

194 195 218 222

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List of Figures 1.1 Rates at which manufacturing business entities of different sizes open and close per year 6.1 6.2 6.3 6.4

A prototype of school design A space for people’s education Equipment in barracks An adviser to physical examinations

8.1 International comparison of price levels 8.2 Organization for drawing up economic plans in the planning board 8.3 System for implementing the materials mobilization plan 8.4 Marine transport capacity

18 198 200 208 225 278 282 286 300

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List of Tables 1.1 Distribution of family concerns and non-family concerns by size, 1989 1.2 Estimated operating incomes and net incomes of family and non-family concerns, 1989 1.3 Concentration of assets held by the top 100 corporations in the non-financial sector and their subsidiaries, 1981 and 1986 1.4 Percentage distribution of corporate shares held by different investors, 1984 and 1989 1.5 Listed firms and individual shareholders, 1991 1.6 The twenty largest financial institutions in terms of corporate shareholdings, and the number of firms in which they rank as the 1st–3rd largest shareholders, FY1989 1.7 Values of corporate shares held by corporations, classified by investment motives 1.8 The twenty largest non-financial corporations in terms of corporate shareholdings, and the number of firms in which they rank as the 1st–3rd largest shareholders, FY1989 1.9 Three largest industrial firms’ shareholdings in firms, broken down by percentages of shares held, FY1989 1.10 Total debts of Osawa Shokai, year end, 1979–1983 1.11 Osawa Shokai’s outstanding debts broken down by creditor, as of the end of each account settlement term 1.12 Ataka Sangyo’s outstanding debts broken down by creditors 1.13 Sankyo Seiki’s debts broken down by creditors 1.14 The dispatch of executives by major firms to other firms 1.15 Distribution of company presidents by the number of years served as department head and board member before promotion, respectively, to board, and company presidency 1.16 Salaries of corporate executives 1.17 Distribution of retirement ages of full-time corporate executives 1.18 Procurement and uses of investment funds by corporations of different sizes 1.19 Fractionalization of the personnel management system 1.20 Recruitment policies 1.21 Distribution of employees of different age groups promoted to supervisory/managerial posts 2.1 The change in the ranking of the top fifty companies in terms of net profits, 1929–1987

17 20 21 24 25 26 28 29 30 33 34 35 37 39 40 42 45 46 48 50 52 58–9

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LIST OF TABLES

2.2 Distribution of the top fifty companies by industry 2.3 Changes in the profit ranking of American commercial, mining, and manufacturing industries 2.4 The scale of wage differentials in the prewar cotton industry: a comparison between Japan and the United States 2.5 Reasons for orders to subcontractors 3.1 Number of labour disputes, workers involved, and working days lost 7.1 Election results for the proletarian parties, 1927 prefectural assembly elections 7.2 Election results for the proletarian parties, 1928 national Diet elections 7.3 Changes in labour union membership by ideological tendency 7.4 Changes in farmers’ union membership by ideological tendency 7.5 Labour disputes and participants, by major demand 7.6 Tenancy disputes 7.7 Labour and tenancy disputes, by duration 7.8 Mediators of tenancy disputes under the Conciliation Law 7.9 Mediators of labour disputes, and initiators of mediation 7.10 Mediated tenancy disputes, initiators of mediation, and outcomes 7.11 Worker’s household income 7.12 Factory and mine dismissals 7.13 Status of dismissed workers 7.14 Farm household income 8.1 Outline of the 1939 economic plans 8.2 The process of formulating the steel production plan for the fourth quarter of 1941 8.3 Formation of monitoring organizations of major city banks

xiii

60 62 78 80 90 238 240 242–3 244–5 252–3 254 256–7 262–3 264 266–7 269 270 271 273 279 291 295

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List of Contributors B H Professor of Political Economy, Faculty of Economics, Daito Bunka University B J Professor of Japanese Political History, Institute of Social Science, University of Tokyo H J Professor of Japanese Economy, Institute of Social Science, University of Tokyo N A Professor of Japanese Political History, Faculty of Law and Political Sciences, Hosei University N Y Professor of Economic History, Institute of Social Science, University of Tokyo O T Associate Professor of Economic History, Faculty of Economics, University of Tokyo T H Professor of Labour Law, Institute of Social Science, Univer-sity of Tokyo W O Professor of Japanese Politics, Faculty of Social Sciences, Hitotsubashi University Y H Professor of Business History, Faculty of Economics, Saitama University

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Introduction The Historical Origins of Companyism: From Westernization to Indigenization* BANNO JUNJI

During the 1980s bubble economy, social scientists in Japan and elsewhere showed great interest in ‘Japanese-style management’ and ‘Japanese-style administration’. Although the bubble has burst, this interest persists. Now, however, instead of praise, the formerly admired patterns are subject to criticism. An important theme in investigations into Japanese-style management has been the effort to uncover the historical origins of the system. Given the severe economic problems of the first postwar decade, it is not surprising that scholars initially tended to look back to the prewar Showa period. The following statement made in 1952 by the well-known economist Takahashi Kamekichi explains this tendency: Japan’s capital accumulation decreased greatly as a result of wartime waste. At present it has sunk to levels as low as the Meiji period. . . . Unfortunately, many of the country’s present financial, administrative, and political leaders are people who established their careers during the prewar period when Japan’s economy peaked. They have no experience with poverty and, therefore, do not know how to cope with it. This is one of the most serious problems in present Japan.1

Takahashi’s assessment of the prewar economy may be difficult to accept for Japanese who grew up being taught that prewar capitalism was very undeveloped. It also flies in the face of the frequently expressed notion that Japan’s aggressive actions in Asia were a result of domestic poverty. Nevertheless, according to Takahashi, the Sino-Japanese War broke out in 1937 when the Japanese economy was at its highest point. This view was endorsed by the famous ‘White Paper on the Economy’ published in 1956, in which the following assessment appeared: In fiscal year 1955 the Japanese economy exceeded prewar standards in all areas except trade. Real national income was 113 per cent of the average of the three years from 1934 to 1936. Coincidently, the figure was identical to that of 1939, the highpoint of prewar Japan. Also, in fiscal 1955 the output of mining and manufacturing industries exceeded that of 1944, the highest previous total. In fiscal year 1955, therefore, the Japanese economy exceeded not only the prewar average but also its peaks.2 * I am grateful to Mr Michael Cuttler, Dr Dean Kinzley, and Professor Albert Craig for their help in completing my English text. All the quotations from Rodo were translated by Mr Cuttler, Dr Kinzley and Professor Craig corrected and revised my English draft.

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The well-known and often repeated assessment of this White Paper that ‘the postwar economy is over’ meant, in fact, that the postwar economy had finally reached and exceeded the prewar standard. Shortly after the publication of the White Paper, James G. Abegglen went a step further and suggested that elements in Japan’s postwar employment and management systems displayed a direct continuity from the premodern period. He also argued that the existing system of factory organization constituted an important model for underdeveloped countries, and one that differed substantially from both the Anglo-American and Soviet patterns of developments.3 Abegglen’s ground-breaking work influenced all subsequent analyses of Japan’s employment and management systems. But if, in fact, those systems were direct continuations from the premodern period, an observer of Japanese industries in the 1930s or 1940s ought to have been able to identify the same systems that Abegglen saw in the 1950s. In the years that followed, the preponderance of scholarship on the origins of systems of labour–management relations focused on the prewar period. The important works by Hyodo Tsutomu (1971) and R. P. Dore (1973) are representative of this trend.4 Moreover, many have identified the prewar era as the seedbed of contemporary big business: that is, the organizational contours of big business began to be formed, according to this line of argument, in the prewar period. Yamazaki’s essay in this volume takes this approach. Other social scientists interested in the role of bureaucratic or state initiatives began, during the 1980s, to give greater emphasis to the wartime system than to that of the 1920s or 1930s.5 Yet in every case it was the period prior to the conclusion of the war that was seen as crucial in shaping postwar organizational structures. For the most part, neither those studying the employment system nor those focusing on the role of the state bureaucracy view the contemporary economy as a genuinely market-oriented capitalism. Instead, one group emphasizes the central role of the state or bureaucracy while the other highlights the role of private firms within a corporatist system. As illustrated by Baba’s concluding chapter to Part I, this book gives centrality to the private rather than the public sector: ‘Companyism’ will be used here both to mean a high degree of employee loyalty, as expressed by the term ‘company-man’, and more broadly to describe the overall Japanese system. The goals of postwar Japan were to become a modern democracy and a nation of culture and peace. Though these ideals were not completely illusory, in actuality Japan became a country centred on economic growth. Growth was achieved through private enterprise, and was not the result of state planning or even state guidance. . . . ‘Companyism’ does not mean the same thing as ‘Japan, Inc.’, which has to do with the role of the government in economic growth and the relationships between the government and big business. This approach emphasizes the close ties

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3

between government, bureaucracy, and business, but pays little attention to business organization. The Japan, Inc. approach has been associated with the view of Japan as exceptional which has been adopted by some US scholars in recent years. In contrast, the companyism approach looks at firm organization and behaviour, and allies itself with broader Japanese-style management approaches.6

In this interpretation then, the wartime economy and the postwar reform periods were distinctive, substantially disconnected moments in the history of Japanese ‘companyism’. In the wartime period, the state restricted private firms’ profit-making capacity and prohibited the activities of labour unions. During the period of postwar reform, conflict between firms and unions became endemic. Both periods, therefore, differ from the later notion of ‘companyism’, but in different ways. In this regard, Baba’s concept of ‘companyism’ diverges from recent views about ‘the 1940s system’.7 The essays in Part I make it clear that it is possible to analyse contemporary firms, labour unions, and politics without reference to prewar traditions. Hashimoto’s essay shows that some important elements of ‘companyism’ are still not present in many small and medium firms. He also points out that the independence of managers from large shareholders does not mean that top managers are the representatives of the employees. Once they are promoted to the top management, they take on a completely different character from other employees. If it is true that important elements of ‘companyism’ remain ambiguous in the 1990s, then the search for the historical roots of the system in the prewar period is not an easy task. Tabata’s essay argues, indeed, that the labour–management relationship peculiar to ‘companyism’ only emerged in the wake of the oil shocks of the 1970s. Since the labour– management relationship has gone through several recognizable stages in the postwar period, he says, it is unnecessary to go back to prewar experiences to understand it. It would appear to be even less meaningful to return to the prewar period if the emotional and psychological dimensions of ‘companyism’ were being considered. Most scholars hold that it was only in the 1980s that workers and managers (and scholars) became convinced that a company-centred economy could enhance both productivity and workers’ welfare. They avoid attempting to locate such a conviction in any quarter during the prewar period. These gaps between the various aspects of recent ‘companyism’ and prewar economic organization and ideas suggest a basic discontinuity between the contemporary and prewar systems. Is it still necessary, then, to study the historical origins of the system in order to understand its operation? The essays in Part I make clear that postwar Japanese society has gone through several distinct and separate stages of development. On this basis, it is possible to suggest that the individual stages themselves may have had different historical antecedents. One approach to this matter is through the

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categories that Albert Craig used to analyse Japan’s modernization: preconditions, Westernization, and indigenization respectively, in relation to the late Tokugawa, Meiji, and post-Meiji eras;8 but by taking the postwar economy as our focus, it is also possible to see the prewar and wartime systems as the baseline preconditions, the first and second decades of the postwar as a time of Westernization or even Americanization, and the decades after 1960 as the period when the borrowed American patterns were ‘indigenized’, integrated seamlessly into the fabric of Japanese society. Then, after the bubble burst, the early and mid-1990s saw a growing debate as to whether the system produced by the assimilation was still adequate for Japan’s needs. We may note in passing that these three stages, as analytical categories, are politically neutral. In treating the earlier modernization of the Meiji period, Narusawa describes the conscription that exposed a large number of young men to the discipline of army life as one aspect of westernization. Some historians, thinking of Westernization as something uniformly democratic and desirable, have seen this discipline as the continuation of earlier feudal values. This is misleading. Similarly, Nishida’s essay points to the seriousness of the conflicts between capitalist landlords and their labouring tenants before the 1930s, a conflict that prefigured the class struggles of the first postwar decade.9 Koza faction Marxists mistakenly interpreted these early conflicts as disruptions within a local society that was still feudal in character. True class conflict in an industrializing society, they felt, ought to have begun as a proletarian movement by factory labour. Avoiding such historical prescriptions, we would maintain that German authoritarianism is just as ‘Western’ as British liberalism, and wartime militarism as much a form of indigenization as the social democrats’ movement for industrial cooperation in the 1930s. Many of the essays in this volume stress the differences between the prewar or wartime and postwar systems. Okazaki’s description of the wartime system suggests how the transition from a market-oriented to a planned economy resulted in a special form of ‘companyism’ operating under bureaucratic controls. This was a kind of indigenization. But Okazaki’s companyism lacked many of the essential features used by Baba to define the companyism of the 1980s—the most obvious difference being the lack of private sector leadership. Narusawa and Nishida also seem to be describing a prewar society with conditions very different from those after the war. Certainly these differences existed and were important. Yet we may ask whether there were not also some similarities between the prewar indigenization of the 1930s and the postwar period of indigenization after 1960. Specifically, did the companyism of the 1930s not strongly resemble the companyism of the 1970s and 1980s when Toyotaism replaced Fordism? And were not the responses of Japanese and foreigners to Japan’s prewar industrial successes similar to those described in Ezra Vogel’s Japan As Number One? The remainder of this introduction will address these questions.

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5

COMPANYISM’S PREWAR PROTOTYPE

Western countries emerged from the wake of world depression much more slowly than did Japan. Indeed, by 1932 Japan was the only industrialized country to begin to recover economically. There were widespread doubts about the superiority of Western social and economic models as a result of this disparity. Indeed, it is after 1932, with the emerging signs of Japanese recovery, that pride in the Japanese system became increasingly evident. Management and labour leaders alike demonstrated new confidence in the existing structures. The moderate Nihon Rodo Sodomei ( Japan Federation of Labour, hereafter Sodomei), in particular, benefiting from the union’s ties to light industry which led the recovery, articulated a policy of ‘industrial cooperation’ to replace the old goal of ‘industrial democracy’. The rejection of Westernization and the move to indigenization had begun. The dramatic growth of light industry in this period brought about a trade war with Western trading partners, and most particularly with Great Britain, long Japan’s model for westernization. Thus, while the commitment to industrial cooperation prevailed, Japan began to overtake its economic and cultural mentors. This period, then, from 1932 to 1937 might be seen as the moment when Japan entered the ranks of developed nations. It is this period which was the prototype of postwar ‘companyism’. With the outbreak of the Sino-Japanese War in 1937, economic development shifted to an emphasis on heavy industry. In this latter stage of indigenization there was little of the earlier confidence in the superiority of Japanese economic systems and organization: no one believed that the Japanese economy was ‘Number One’. Moreover, despite growing state efforts to organize workers, there is relatively little evidence of continued labour commitment to their firms and genuine ‘industrial cooperation’.10 In November 1935, just three months before the well-known incident of 26 February 1936, the following observation appeared in the official Sodomei journal, Rodo: Since 1932 Japanese industry has been growing rapidly and trade is expanding. Conditions in mid-October point to the emergence of an imminent trade surplus. In terms of industrial output, our output in cotton spinning places us number one in the world, surpassing Britain. In rayon production, we have moved ahead of France and Italy to become the second leading producer and we are closing in on the world leading United States. Moreover, dry goods too have made remarkable gains and Japanese goods are now flooding every corner of the world.11

This observation appeared not in an official ministerial White Paper nor in an economic journal. Instead, the leadership of the largest labour union was recognizing Japan’s new important world trade status.

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INTRODUCTION

While moderate, the Sodomei sought to build on this new trade stature to win wage increases for its membership. The union argued that workers’ wages as well as their productivity should be brought up to western standards. In making this case Rodo asked, What are the causes of the inroads made by Japanese trade goods? The main reason is workers’ low wages. [ Japanese companies] have competitive advantages because of low wages that allow low production costs. . . . Having workers suffering domestically because of low wages while extending tariff breaks to the great powers is not something of which we should be proud. . . . We will be able to take real pride in our victory in the global trade war only when we enter foreign markets paying our workers wages high enough to allow them to enjoy a living that compares favourably with Western workers.12

While the national union leadership was dissatisfied with wages and work conditions, the attitudes of workers at the factory level were quite different. At that level there is considerable evidence of worker satisfaction with management and the firm. In March 1935, for example, the head of the Kawasaki branch of the Tokyo Seiko labour union expressed his satisfaction with the state of labour–management relations in his plant: Union members are gradually coming to feel responsible for their lives as well as that of the group. In particular, a spirit of collaboration in production is manifested in a variety of ways. Along with the movement to eliminate wasteful talk we have created a committee to study further improvements in efficiency. In thinking about past improvement in the use of machinery, we have made fundamental gains as a result of whole-hearted efforts to cooperate with the company. We have solicited slogans from our regular members and many of these slogans have been used in [accident prevention] posters as part of our safety programme.13

The Tokyo Seiko union was the largest Sodomei branch, with approximately 1000 members. It had been party to a labour agreement since 1926, and in 1933 its members were proud to study ‘efficiency improvements’ in cooperation with management. The same union commitment to company production was in evidence in the Pilot Fountain Pen factory. The union had about 200 members and had been a party to a collective bargaining agreement with the company since 1931. A factory council with seven members from both the union and management operated in the firm. The council sought to turn a defective-product prevention initiative into a regular programme. The head of the union branch commented on this activity: When employees are not familiar with the more than 200 work processes and give insufficient care to even one of them, defective goods are produced. Therefore, the months from last November to January of this year was declared a defect prevention

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period: the factory council took the initiative to conduct courses on the entire fountain pen manufacturing process, and undertook a campaign to promote the prevention of defective products and a general improvement of quality. This programme has been extremely successful and as a result the number of defective products has declined markedly and tens of thousands of yen that might have been wasted have been saved. With these achievements in mind, the current factory council has resolved to continue promoting the prevention of defective products in the future and will make every effort to achieve this goal.14

It is important to recognize that the factory councils in both the Tokyo Seiko and Pilot plants operated within the framework of a collective bargaining agreement. As a result, a kind of partnership between the unions and the companies existed one purpose of which was to increase productivity. Thus, the union leaders expressed pride in the efficiency of their own factories in comparison to other firms lacking such cooperation. The head of the union at the Tokyo Galvanization company, an organization about the same size as that at Pilot, told a Sodomei leader: ‘I am not boasting when I say that of eight Tokyo area galvanization plants, the efficiency of ours is number one.’15 The trend of union–management cooperation in enhancing productivity was especially conspicuous between 1933 and 1935, the period when Japanese light industry began to grow significantly. More than 60 per cent of the collective bargaining agreements that existed with unions in 1935 had been negotiated during those years, and of those more than 50 per cent were with Sodomei-affiliated unions.16 The contract with Matsumoto Electric Meter contained a formal article specifiying that ‘the labour union will make every effort to increase both productivity and quality’. In addition, in the Committee for Industrial Cooperation of this company, union members agreed to respect the spirit of the labour agreement and make every effort to improve working conditions and the quality of our products. Our purpose is to contribute to the prosperity of Matsumoto Electronic Meter Inc. as well as to the welfare of its workers.17

In May 1934 Dr Okochi Masatoshi, a well-known student of industrial efficiency, spoke at the inauguration ceremony of the Matsumoto Electronic Meter agreement. He explained the superiority of the Japanese style of management over the British system: The reason British companies, especially in the textile industry, have fallen behind those in Japan is that they have lost the passion for innovation and improvement in production methods. They pride themselves on reaching compromises between labour and management, but by itself compromise is not sufficient to produce inexpensive, high-quality goods. Only when management and labour truly cooperate in achieving innovations and improvements will industries be capable of contributing to the welfare of the whole society. I refer to this system as ‘intellectually oriented industry’,

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INTRODUCTION

and it will be such industries that will lead a second industrial revolution. . . . The aim of the cooperation committee is to use the council system to develop improved machines and to reduce production costs.18

To Okochi, therefore, it was the cooperation between management and labour in the areas of efficiency and productivity that led to the new leading position of Japanese industry. Similar conclusions were being reached by others. E. H. Pickering, an Oxford graduate and a member of the British National Liberal Party, visited Japan for six months from September 1934 to March 1935. It was his second visit. Between 1927 and 1931 he taught English in Yamagata High School. Friends at the Japanese Embassy and in the Minseito party arranged his second trip, during which he visited numerous factories.19 The hope was that he would then refute western criticisms of Japanese social dumping. Pickering was, in short, a pro-Japanese member of the British élite whose 1934 trip was arranged for very political ends. Even taking these conditions into account, Pickering’s Japan’s Place in the Modern World, published in 1936, is a rare and important comparative study of Japanese and British factory systems in the 1930s. Concerning the sources of Japanese industrial efficiency, Pickering argued that a relatively small salary gap between management and workers helped to create a sense of common interest: There is not so great a gulf fixed between the operatives and managerial staff as in other countries. The standard of living is much the same for all. As has been pungently expressed, ‘There is no kipper-and-tea and oyster-and-champagne contrast’ in Japan as we know it here. . . . Our English working man would feel utterly lost in his manager’s house, and both the kind of food eaten and the method of eating would lead us to feel here that there is one world for the rich and another for the poor. . . . For the most part the salaries are modest enough to keep the staff and the operatives in a sympathetic understanding of each other’s needs. Thus two very desirable objects are attained. First, there is a fairly general feeling throughout the mill that all are linked together in a common interest, and secondly, the overhead charges are considerably reduced and this is conducive to more economic production.20

In this observation we see conditions comparable to those ascribed to 1980s Japanese firms by Baba in the essay that concludes this volume: ‘A second way in which companyist capitalism is moderated is that there are few status distinctions and cleavages between employees. A company is by its nature an authoritarian, hierarchical organization, but under companyism these features are not made conspicuous. There are no sharp distinctions between job classifications either in wage structures or decision-making power. The high chance of promotion from lower-ranked jobs also has the effect of blurring the boundaries between different grades.’ What this suggests is that in the

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INTRODUCTION

9

eyes of at least one 1930s British observer Japanese firms were already ‘companyist capitalist’ organizations. With regard to contemporary Japanese factories, many have pointed out the remarkable commitment of workers to their job and their willingness to work long hours. Pickering had a similar impression in 1934. Following his tour of the Toyo cotton mill he wrote: The Japanese seem to approach work in a very different way. We tend to regard it as a job that has to be done, and fix our eyes on the end. The Japanese appear to revel in the process itself, in the means. Indeed, in some extreme cases, they love work so much that they are prepared to live with it, even to sleep with it. That is why the movement for shorter hours has made comparatively little headway in Japan. The fact that he is able to get moral, spiritual, and often aesthetic pleasure out of his task makes the Japanese more ready to go on with it hour after hour without much feeling of boredom or weariness.21

In many respects Pickering’s understanding of the Japanese relationship of management and labour was broadly similar to the views expressed by labour leaders considered earlier. There was a very significant difference, however: in the light of his experience with British labour unions, Pickering did not regard the ‘industrial cooperation’ discussed by Sodomei leaders as part of labour union activity. Instead, he said: Organized labour movements have had little success in Japan, and there is practically no trade unionism as we know it. There was, however, a period when, under the sway of western ideas, heroic efforts were made to unite the workers, but the fact that the paternalism of the family system had found its way into modern industry doomed these efforts to failure. Although there are today some 1000 unions of one sort or another, with a membership approximating to 400,000, there are few if any which are capable of enforcing the will of the members in the same way and with the same effectiveness as ours would be. . . . But although trade unionism is not able to do much to enforce the rights of the workers in the worst type of factory, the more enlightened employers, influenced by a combination of the traditional spirit of paternalism and a desire to be efficient on approved lines, actually do far more than the law [the Factory Law] requires of them, and the factories and methods they have established have served as pioneering examples to the law itself.22

Pickering also noted the importance of the Japanese educational system. Like many contemporary observers who have linked Japan’s educational system with the nation’s high levels of productivity, Pickering emphasized the egalitarian nature of education in Japan and its contribution to efficiency: The thing that struck me most about Japanese education is that it has probably a more democratic basis than that of any other country in the world. The state furnishes the best education in Japan, and furnishes it without distinction of class, and

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INTRODUCTION

freely to all, in the elementary stage, and in the higher stages at a fee that, by comparison with other countries, is little more than nominal. In Japan all classes go to the same elementary school, the same secondary school, the same high school, the same university. There is not one education for the rich and another for the poor.23

Also, he said, It is education, not cheap wages, which makes the Japanese so formidable in the sphere of industrial competition. The Japanese people were able to start on their industrial system with a freer, more enterprising, and more cheerful spirit than that which characterized the ignorant, poverty-driven wretches who laid the dubious foundation of our own.24

Pickering did not just consider productivity expansion in terms of labour– management relations. He also placed importance on the growing size of factories and the Japanese willingness to pursue innovative production processes. Of the former he wrote: It is indeed remarkable how rapidly this nation of small industrial units has been able to organize a great part of its industry in large and admirably controlled undertakings. It is not as if a group of powerful industrialists had, so to speak, arrived from another sphere, put their heads together, and decided that the best way to set industry going was by means of large, well-organized units. What has happened is that, almost in a twinkling of an eye, the small industrial units have swelled out, amalgamated, and formed themselves into an entirely different kind of organization. . . . Not only in textiles, but also in the heavy industries, the transformation has rapidly taken place from small to large units, although in textiles it is more widespread and complete.25

It is important to note that the expansion of which Pickering wrote took place rather suddenly in the 1930s without bureaucratic initiative. While the growth of larger factories integrated large numbers of workers and work processes in a single space, the processes themselves were operating with increasing efficiency, raising per-worker productivity. Based on his observations of the Tokyo Cotton Mill, Pickering described this transformation as follows: When we look into the methods by which this considerable economy has been attained, we are astonished at their comparative simplicity. The greater part of the machinery is still the same. . . . The changes have been mainly in the preliminary processes. For these, almost all the machinery is now of Japanese make, and the very simplicity of the methods by which the coarse raw cotton is led from machine to machine is most impressive. In the mixing section, for example, one worker can easily tend a machine which formerly required three or four. The processes in the blowing section have been reduced from three to two, and there has been the same economy in the roving section.26

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11

Moreover, technological innovations made on the Toyota automatic looms themselves had a significant impact on productivity growth. In the case of the Toyo Cotton Mills: In the year 1921, 39,000 workers (male and female) were required to produce a little over 700,000,000 yards of cotton piece-goods, whereas in 1933, 34,000 sufficed for the production of almost 1,674,000,000 yards, the per-head production thus rising by over 250 per cent. On the weaving side, it is the Toyota automatic loom which is mainly responsible for this remarkable increase. Whereas in Lancashire it is rare for a girl to work more than six ordinary looms, in Japan, it possible for one girl to control between thirty and forty automatics.27

It is important to note that these innovations were taking place in light industry during the late 1920s and 1930s and not in the 1940s. As numerous studies, both in Japan and elsewhere, have suggested, various elements of ‘companyist’ capitalism came into being during the wartime period. An economic structure tied to broad bureaucratic guidance, companybased unions, and the independence of management from large shareholders was substantially shaped in the years after 1937. But there was little confidence within the Japanese economic system in these years. To develop the heavy industry needed to prosecute the war in China it quickly became essential to import machinery and iron ore, even while light industry exports were declining as a result of the tariff barriers erected by, and economic depressions in, the Western powers. Supplies of natural resources and the balance of trade were both threatened after the outbreak of the Sino-Japanese War. As Matsuura Masataka recently suggested, Japan’s wartime economy was weak and the Japanese people recognized this.28 Moreover, labour union leaders were extremely dissatisfied with the Sanpo Associations which their unions were forced to join. In economic terms, then, conditions between the first and second halves of the 1930s differed greatly. The confidence of the early 1930s resembles the views of most Japanese during the 1980s, while the concerns about weakness during the wartime period remind us of the recent worries about Japanese system. None of this is intended to suggest that the foundation of ‘companyism’ in the 1980s was established during the early 1930s. Instead, the argument is merely that important similarities existed between these two periods. There is no doubt that many developments in the fifty-year period between the early 1930s and the 1980s affected the structure and character of 1980s ‘companyism’. As a result, searching for precise, delimited historical origins would almost certainly be a futile exercise. Nevertheless, it is worth noting the similarities between the 1930s, when the Japanese economy was believed to be overtaking that of the world leader, Great Britain, and the 1980s, when it seemed to many that Japan’s economy was on the verge of overtaking the new world leader, the United States.

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INTRODUCTION

Detailed summaries of the essays in Volume II are unnecessary here. Despite the obvious differences in method and conclusion between these essays and previous studies, the topics with which they deal will be familiar to those interested in contemporary Japan. When the essays in Volume II appeared in the original Japanese version they came under two broad groupings: the impact of the Japanese economy on foreign countries and the problematic effects of companyism on domestic society. Since the essays were originally written in the final years of the bubble economy, the authors have made substantial revisions for the present English version. In addition to those revisions, two new essays have been written on themes that have emerged during the 1990s. Nitta’s discussion of the changes in the Japanese employment system and Hiwatari’s evaluation of the end of one party dominance both address such themes. Yet, despite the extraordinary changes that seem to have taken place, both Nitta and Hiwatari raise doubts about whether these changes reflect fundamental, structural changes in either the economic or political system. Indeed, it may be that changes in Japanese society have not been as profound as either political leaders or the various news media excitedly suggest. And this may also be the reason for the notable similarities between Japanese firms and economic attitudes in the early 1930s and in the 1980s.

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PART I Structure

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1 Corporate Structure and the Japanese Economy* HASHIMOTO JURO

I. Introduction In an attempt to grasp the main features of the corporate-centred structure of the Japanese economy, this chapter adopts the term ‘companyism’, or ‘company-first-ism’,1 which I believe is a key to capturing certain important aspects of present Japanese society. The corporate behaviour, managerial organization, and industrial relations associated with companyism seem to apply only to larger corporations in Japan, which constitute a small minority of companies. It is thus important to keep in mind that the phenomena captured by the term ‘companyism’ are limited, albeit important, features of the economic culture of Japan. This is the topic dealt with in Section II. Section III examines and redefines the term companyism, which has been defined rather vaguely. I shall elaborate on my two earlier studies of the topic2 by adding new evidence, and shall also refer, as much as possible, to relevant arguments recently propounded by scholars of the Neoclassical and Institutional schools.3 But the more finely the term ‘companyism’ is refined, the greater become the difficulties involved in explaining actual corporate behaviour by this term. Inspired by the dramatic appreciation in value of the yen that began in 1985, Japanese corporations stepped up their efforts at globalizing and restructuring their operations. These efforts have brought about some important changes in corporate behaviour, one being a shift from emphasis on continuous technological improvement to discontinuous technological innovations and breakthroughs, and another being the accelerated standardization of those jobs which can be standardized. As a result of these changes, which have taken place concurrently with the ageing of the workforce, companyism has begun to undergo certain modifications. In Section IV I present a rough sketch of such ongoing modifications of companyism—rough because many apparent modifications * Translated by Moriya Fumiaki.

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are still embryonic, and there is no knowing which are going to be short-lived and which are going to have lasting effects, of what extent. II. Two Worlds of Firms It is often pointed out that small and medium-sized firms are a dominantly large segment of all the firms in Japan,4 and their vitality is an important source of the vitality of the Japanese economy as a whole. For instance, in support of their thesis on the ‘second divide’ for industrial development, Piore and Sabel cite the large number of small and medium firms in Japan as an explanation for the better performance of the Japanese economy in contrast with the British economy, with its much heavier concentration of larger firms.5 It is difficult to ascertain exactly how many firms there are in Japan, especially individually owned firms as opposed to larger corporations. Government statistics show that there were 4.11 million individually owned business units in 1988, but since some individually owned firms operate several business units each, the number of such firms is some fraction of 4.11 million. The Basic Survey on the Employment Structure for 1987 shows that of a total of 6.07 million self-employed persons working most of the time, 1.78 million were using employees on a constant basis. The 1.78 million can be regarded as equivalent to the number of firms owned and run by individual entrepreneurs. A sampling survey on these individually owned firms found that one firm was employing between two and three employees on average, and was earning a minuscule running profit of ¥4.70 m. in the manufacturing sector, ¥3.60 m. in commerce, and ¥2.82 m. in service—amounts far smaller than the average annual household budget. In terms of their share in the national income on a distributive basis, the total income earned by individually owned firms6 in 1988, as distinct from private and public corporations, added up to ¥33,000 bn., which was 92 per cent of the total corporate income of ¥36,000 bn. earned by private corporations. Not only is the former amount smaller than the latter, but the relative weight had been reversed from one decade earlier in 1978, when the total income of individually owned firms amounted to ¥26,000 bn., or 1.61 times the ¥16,000 bn. total income of private corporations.7 Thus, even though individually owned firms remain significant in terms of their total earnings, we can say that private corporations are growing far more rapidly, or that a phenomenon of rapid incorporation is taking place. As for the composition of corporations, the National Tax Administration Agency’s statistics reveals that the number of corporations in 1989 was 1.96 m., an increase of 40 per cent over one decade earlier, and that 97.5 per cent of these were either joint-stock companies (kabushikigaisha) or limited responsibility companies (yugengaisha), with nearly all the entities with ¥20 m. or more in paid-up capital incorporated as joint-stock companies.

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17

T ABLE 1.1. Distribution of family concerns and non-family concerns by size, 1989 Paid-up capital

< < < < < < < >

¥5 m. ¥50 m. ¥100 m. ¥500 m. ¥1 bn. ¥5 bn. ¥10 bn. ¥10 bn.

TOTAL

Family concerns

Family concerns managed by nonfamily members

Non-family concerns

No.

%

No.

%

No.

%

1,075,844 761,742 22,386 8,756 456 331 33 26

98.3 94.2 68.1 43.1 24.1 13.3 5.9 3.8

7,744 29,877 7,416 8,477 902 1,146 176 122

0.7 3.7 22.6 41.7 47.6 45.9 31.3 17.7

10,576 17,390 3,079 3,100 535 1,018 353 540

1.0 2.1 9.4 15.2 28.3 40.8 62.8 78.5

1,869,574

95.3

55,860

2.8

36,591

1.9

Source: Kokuzeicho Kikakuka (Planning Section, National Tax Administration Agency), Zeimu Tokei kara Mita Hojin Kigyo no Jittai (The Actual Situation of Corporations Looked at from Statistics on Taxes) (Dec. 1990).

Table 1.1 shows the distribution of these corporations on the basis of whether or not they are defined by the Corporate Tax Law as family concerns. Family concerns account for more than 95 per cent of all the corporations, and those with paid-up capital of less than ¥50 m. number as many as 1.84 m., accounting for 93.7 per cent of the corporations.8 A family concern is defined as ‘a corporation in which the combined number of shares, or the combined value of shares, held by three shareholders or less, as well as by their family members, is in excess of 50 per cent of the total number of shares or 50 per cent of the total value of shares, issued by that corporation’. As such, a family concern can be regarded as one in which ownership and management are not separated from each other. As with individually owned firms, ‘natural persons’ (i.e. specific individuals) having stakes in these corporations seem also to be at the helm as their managers. In other words, if we add up the individually owned firms and the family-run corporations, we can say that a dominant majority of firms in Japan are owned and managed by individuals in their capacity as capitalists. In this regard, the Japanese economic system is clearly a capitalist one in the most fundamental sense of the word. Since the corporations owned and run by natural persons or individual capitalists can be assumed to be small in the size of their operations and capital funds, many of what are called small and medium firms belong to this category. Based on Fig. 1.1, which shows the rates of birth and closure of business units of these firms (not the rates of start-up and closure for these firms themselves, which are not available), it is clear that small business units in manufacturing have high birth and death rates. Conditions in the manufacturing

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(%) 9

8.6

8

7.6

7.6 7.2

7

6.9 6.3

6.8 6.6

A

6 4.8

5

Keys: 4

3.5 3.4

3.2

3

3.3

3.9 B 3.2

A: Business entities with 1–19 employees

3.1

2 1.3

1.4

0.8

1.0

1976–79

80–83

1.7 0.9

1 0

Rate of opening Rate of closure

1.3 1.3

C

B: Business entities with 20–299 employees C: Business entities with 300 or more employees

83–85

85–88

F IG. 1.1. Rates at which manufacturing business entities of different sizes open and close per year. Source: Chusho Kigyocho (Small and Medium Enterprise Agency), Chusho Kigyo Hakusho (White Paper on Small and Medium Enterprises) (1990 edn.), p. 199.

sector are hostile to the survival of small and medium firms, which face bankruptcy at a far higher rate than do larger corporations. It is true, on the other hand, that small and medium firms are full of entrepreneurship, with many of them developing innovative new products, devising technologies for processing new materials, developing software technologies for plant management, and shortening the delivery time and adding information services.9 Capitalists as ‘natural’ persons are actively engaged in entrepreneurial activities. It was estimated at the beginning of the 1970s that two thirds of the owneroperators of small and medium firms were former employees of these firms. The proportion of workers who become owner-operators of their firms was estimated to be as high as 50 per cent for smaller firms, declining with firm size to around 20 per cent for firms in manufacturing with work forces of 100–299.10 More recently, 53 per cent of the new small and medium firms established in 1986 or after were independent entities, and 41 per cent were ‘firms affiliated with existing firms’; these the proportions in 1966–75 were 65 per cent and 25 per cent respectively. The increase in the share of the latter category runs parallel to changes in the founders’ earlier job histories. Of the founders

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19

of the new small and medium firms established in 1986 or after, 32 per cent were former employees of such firms, 26 per cent were owner-operators of small firms, and 17 per cent were former engineers or supervisors at larger corporations. Compared with the percentages for the firms established in 1965–77, which were 51 per cent, 19 per cent, and 5 per cent respectively, the share of former employees of small and medium firms in the new founders of these firms had decreased by nearly 20 percentage points.11 This drop, however, merely represents recent developments; approximately one half of small and medium firms were founded by former employees of these firms, and one seventh by owner-operators of these firms. This means that small and medium firms themselves give birth to new generations of similar firms, with the owner-operators of firms that go bankrupt often becoming employees of similar firms.12 The world of small and medium firms is governed by a mechanism distinct from that governing large corporations: we can characterize it as a capitalism of individual capitalists, as distinct from the system of large corporations with its characteristics of companyism.13 This is by no means to deny any interactions between the two worlds. Viewed over a long time-span, there are a number of firms which have grown from small or medium firms into large corporations. More pertinent to an analysis of the present-day Japanese economy will be the trading relationships between the two worlds, such as the subcontracting system and the dealership linkage for distribution. Both of these relationships have often been interpreted as manifesting the domination of small and medium firms by larger corporations; but this is not necessarily accurate.14 The dealership linkage has proved economically rational in facilitating mass distribution, and if this rationality is lost, as is presently occurring with the dealership linkage for home electric appliances and electronics equipment for personal and commercial use, the distribution system for a certain product area can crumble to a certain extent.15 The subcontracting system, too, can be understood as an efficient setup for inter-process division of labour based on long-term direct-transaction relationships. This is evident from the fact that, as areas advantageous for mass production have grown narrower, an increasing number of small and medium firms have shown a tendency to withdraw from subcontracting relationships; the ratio of small and medium firms in the manufacturing sector having subcontracting relationships with larger corporations fell from 65.5 per cent in 1981 to 55.9 per cent at the end of 1987, a drop of nearly 10 percentage points. At the same time, the average number of firms with which a small and medium firm has subcontracting relationships is on the increase.16 It is, therefore, far more important to look into larger corporations themselves, with their sharply different orientation from that of small and medium firms run by entrepreneurial capitalists, and to look first of all into those grouped under non-family concerns in Table 1.1.17 The larger the paidup capital of a firm, the greater the chance of its being a non-family concern.

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T ABLE 1.2. Estimated operating incomes and net incomes of family and non-family concerns, 1989

Operating income (¥ bn.) Share (%) Income (¥ bn.) Share (%)

Family concerns

Non-family concerns

614,070 50.1 14,747 34.6

611,330 49.9 27,888 65.4

Note: The underlying assumption is that firms of the same size range are earning the same operating incomes and net incomes (i.e. revenues minus deficits), regardless of whether they are family-controlled or not. The figures shown in the table are the cumulative sums of the figures estimated for firms of different size ranges. Source: As for Table 1.1.

Virtually all the corporations with paid-up capital of ¥1 bn. or more are nonfamily concerns. Table 1.2 compares the operating incomes and net incomes earned by firms controlled by families with those not. Compared in terms of operating income, which reflects the size of operations, the amount earned by familyrun firms, which constitute a dominant majority of all firms, and that earned by the very small number of firms not under the control of families, which constitute a small minority, seem to be more or less on a par. Compared in terms of income, the amount earned by a small number of non-family concerns accounts for nearly two-thirds of the total. Moreover, there are only 3355 non-family concerns with paid-up capital of ¥1 bn. or more (Table 1.1), but together they account for three-quarters of the operating income and fourfifths of the income earned by all the non-family concerns. Table 1.3 compares the changes between 1981 and 1986 in the indices of overall concentration of corporations in the top 100 firms in sectors other than financing. The relative share of the top 100 firms in total corporate assets decreased over the period. A comparison between the relative share of the top 100 firms in total corporate assets in 1981 and that of the same percentage of the largest firms in 1986 (i.e. 109 firms) does not change this conclusion. At the same time, the number of subsidiaries owned by the top 100 firms increased by as many as nine on average, with the share of these subsidiaries in total corporate assets increasing slightly. The share of the top 100 firms and their subsidiaries in total corporate assets decreased by 1.2 percentage points. The share of the top 100 firms and their subsidiaries in total corporate assets in 1981 and that of the top 109 firms and their subsidiaries in 1986 recorded a slight decrease, of between 0.2 and 0.4 percentage points. Thus, even though the degree of their overall concentration decreased slightly, the top 100 firms in the non-financing sectors and their subsidiaries account for nearly one quarter of all corporate assets.

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T ABLE 1.3. Concentration of assets held by the top 100 corporations in the non-financial sector and their subsidiaries, 1981 and 1986 No. of firms

All corporations (A) Top 100 corporations in non-financial sector (B) Subsidiaries of the top 100 corporations (C) B + C = D B/A (%) C/A (%) D/A (%)

Total assets (¥ bn.)

1981

1986

1981

1986

1,714,885 100

1,874,121 100

546,401.8 112,188.7

747,675.0 143,713.6

2,995

3,899

20,865.7

29,841.6

3,095 0.006 0.17 0.18

3,999 0.005 0.21 0.21

133,054.4 20.5 3.8 24.4

173,555.2 19.2 4.0 23.2

Source: Kosei Torihiki Iinkai (Fair Trade Commission), Shuyo Daikityo no Kabushikishoyu no Jokyo ni tsuite (On the Situation of Shareholdings by Major Corporations) (Aug. 1988).

III. The Structure of Companyism

1. Problems with the thesis of companyism Keeping in mind the features of larger corporations sketched above, I would like to characterize their corporate activities, managerial organizations, and industrial relations summarily as ‘companyism’. Baba Hiroji defines companyism as ‘an exquisite combination of capitalist competition and communal or socialistic relationships’.18 While the definition captures some of the features of larger corporations in Japan, it also suffers from logical incoherence and cannot readily explain why and how competition can be combined with ‘communal or socialistic relationships’. Communities that actually existed through history, whether based on blood relations or on territorial relations, had no room for competition. On the other hand, ‘socialistic’ means an equality in results, and equality is not compatible with competition, unless we make the unrealistic assumption that every person is equal in ability and effort, and also in performance, which is affected by a number of other conditions. Thus Baba’s definition is beset with a logically very perplexing problem. In contrast, there are some who assert that larger corporations in Japan are very similar to, or reminiscent of, worker-controlled firms. Proponents of this view point out that ‘the management of a large Japanese corporation is a representative of the employees as a whole’, which behaves in such a way as to maximize the income of each ‘member of the company’, and thus keeps the company’s workforce as small as possible and the company’s ‘main body’ as slim as possible.19 Some observers also emphasize that Japanese firms, with their small wage differentials within the same firm, the tendency for an employee

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to be employed over an extended period of time, and the extensive practice of internal promotion, have much in common with worker-controlled firms in the West, in particular ESOP (Employee Stock Ownership Plan) firms.20 The view of Japanese firms as reminiscent of employee-controlled firms has in common with the companyism thesis that both assert (as will be discussed at greater length later) that the primary objective of Japanese firms is to maximize the interests of their employees. As a matter of fact, Japanese firms seem poised to attach even greater importance to their employees, and to become ever more reminiscent of employee-controlled firms. For instance, a recent questionnaire survey of company presidents has found that, in response to the question ‘To what have you given priority thus far, and to what do you intend to give priority from now on, in the distribution of profits?’, 19 per cent of the respondents answer that they have been giving priority to their employees, but 30 per cent say they plan to do so from now on.21 Nonetheless, if Japanese firms were employee-controlled they would not pursue the course of corporate expansion through employment expansion.22 Indeed, as already suggested, Japanese firms have been eager to expand their corporate groups by hiving off and nurturing affiliated firms, even if they try to keep their ‘main bodies’ as slim as possible. Even at present, a majority of managers of larger corporations are determined to allocate profits preferentially to investments in facilities. With their obvious eagerness to outperform their competitors and expand their operations, including those of their affiliated firms, they are radically different from worker-controlled firms. These observations suggest that the definitions of the terms ‘communal’ and ‘socialistic’ can be misleading if these are understood as implying equality in income distribution on a post hoc basis. None the less, these definitions seem to connote ‘the absence of rigidly defined hierarchical statuses’ and ‘classlessness’. A distinction among various hierarchical statuses, despite being denied by the ideology of liberalism (at least in theory), is still being drawn in a corporate structure, differentiating workers, middle managers, engineers, and top managers from each other in various ways. That the status hierarchy has been broken up in Japan far more conspicuously than in Britain is pointed out by Ronald Dore, who contends fairly convincingly that Japanese industry, unlike its British counterpart, experienced social and democratic revolutions, in particular through the postwar labour reforms that ‘had achieved equality in almost everything except wages for workers of all grades’ (emphasis added).23 What about the ‘classlessness’ implied by the terms ‘communal’ and ‘socialistic’? Baba notes: The control by owners is weak. There is no need to dwell upon the well-known features of Japanese corporations, such as the absence of large capitalists, the general annual shareholders’ meeting having become a ceremonial affair, and the minimal

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23

authority given to auditors. These phenomena, usually summed up as the separation of ownership from managerial control of a firm, are prevalent, with the result that a firm is commonly construed to be not a group of shareholders, but rather a group of regular employees, or ‘members’ of the firm. The shareholders are not regarded as members of the firm. The chief executive officer is the most successful of the members of the firm.24

Baba’s characterization of a Japanese firm, reminiscent of Komiya’s thesis, attaches importance to two factors: the absence of capitalists; and the position of the chief executive officer as the ‘most successful of the members of the firm’. I would like to comment briefly on these points.

2. Shareholders The thesis that capitalists are absent in a Japanese corporation implies two points. On the one hand it refers to the absence of natural persons as large shareholders. On the other, it implies that large shareholders, whether natural persons or juridical persons (corporations), almost never impose their own decisions on the executive managers who act as their agents, or appoint and discharge them on their own initiative. The second point is another way of expressing the second factor stated above: that the chief executive officer is the most successful of the members of the firm. It is widely accepted that Japanese corporations have very few, if any, natural persons as large shareholders. Nishiyama Tadanori paid attention to this fact when he propounded his thesis that Japanese capitalism is an ultra-capitalism where ‘workers called managers are in control of large corporations’ replacing the capitalists who had gone under. Similarly, Okumura Hiroshi made much of this fact when he characterized Japanese capitalism as ‘corporate capitalism’. A number of pieces of evidence show that this still holds true today. To begin with, Table 1.4 shows that corporate shares held by individual investors and foreigners add up to some 26 per cent of all the shares held by various investors, and that this percentage decreased by 6 percentage points over the five-year period from 1984 to 1989. In contrast, the percentage of corporate shares held by financial institutions increased by 6.4 percentage points in the same period, with the result that the percentage of corporate shares held by corporations, including both financial and industrial corporations, increased. The declining position of individual shareholders suggests that the number of individual shareholders having the capability to control and influence the operations of corporations is falling. What sorts of position do individual shareholders occupy in the entire picture of corporate shareholding? Table 1.5 classifies a total of 2038 companies listed on the stock exchange according to whether they have large individual

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T ABLE 1.4. Percentage distribution of corporate shares held by different investors, 1984 and 1989 Investor

1984 A

National and local governments Total for financial institutions Banks and trust and banking companies Life insurance companies Non-life insurance companies Industrial corporations Securities companies Individuals Foreigners TOTAL

1989 B

A

B

0.2 39.6 18.3 12.7 4.8 25.9 1.9 26.3 6.1

0.4 38.0 17.4 12.1 4.1 29.5 1.8 23.0 7.4

0.7 46.0 22.1 13.1 4.1 24.8 2.0 22.6 3.9

0.3 43.5 21.3 11.8 3.9 29.5 2.0 20.5 4.2

100.0

100.0

100.0

100.0

Note: A: based on the numbers of shares held; B: based on the current market prices of shares held. Source: Zenkoku Shoken Torihikisho Kyogikai (National Council of Security Traders), Kabushiki Bumpu Jokyo Chosa (A Survey on the Distribution of Corporate Stocks), 1989 edn.

shareholders, with a 3 per cent share used as the criterion for defining a large shareholder. (The 3 per cent ratio represents the minimum necessary for an individual shareholder to exercise some influence over the management of the firm concerned.25) A total of 535 firms, or 26.3 per cent of all the firms listed on the stock exchange, have large individual shareholders defined in the sense above.26 Thus, approximately three-quarters of the listed companies have no large individual shareholders. Among the top 100 corporations in terms of total assets, large individual shareholders are virtually non-existent.27 The incidence of corporations with large individual shareholders is considerably uneven from one industry to the next. The highest concentrations of such corporations are in the miscellaneous manufacturing (57.8 per cent), commerce (43.0 per cent), metal products (37.9 per cent), services (32.8 per cent), and machinery (32.0 per cent). One feature common to these industries is that, having been boosted by two processes that began to unfold in the mid-1970s—i.e. the structural change in the Japanese economy toward a more service-oriented one, and the surge of microelectronics-based technological innovations—these industries have either expanded into new business areas or experienced the emergence of innovative forms of business operations. Seen from the standpoint of the ‘two worlds of firms’ mentioned above, these industries contain many firms that rose quickly from the rank of small and medium-sized firms run by capitalists/entrepreneurs to the rank of large corporations. Two points can be made here. One is that the world of entrepreneurship, which constantly gives rise to new generations of large corporations, serves as an important source

0 43 29 12 6 36 5 13 8 7 22 58 55 13 12 37 117 4 4 3 24 6 21 535

2,038

Total of such firms

243

0 18 18 3 3 12 2 5 7 1 11 27 29 3 1 13 60 2 1 0 12 4 11 122

0 9 5 2 1 8 2 2 1 3 1 10 17 5 4 11 27 0 1 2 4 1 6 123

0 7 3 6 1 10 0 5 0 2 7 17 9 3 4 10 25 1 2 1 6 1 3 47

0 9 3 1 1 6 1 1 0 1 3 4 0 2 3 3 5 1 0 0 2 0 1

6th–9th largest

39

0 2 3 1 0 1 1 0 1 0 0 4 2 0 1 2 13 1 0 0 2 2 3 113

0 6 6 2 1 6 1 3 2 1 3 9 11 2 0 11 33 0 0 0 5 2 9

10–20

211

0 17 8 3 3 13 2 3 5 4 12 26 33 7 5 12 38 1 2 2 9 1 5

5–10

172

0 18 12 6 2 16 1 7 0 2 7 19 9 4 6 12 33 2 2 1 8 1 4

3–5

20 or more

3rd–5th largest

Largest

2nd largest

% shares of ind. shareholders

Shareholder ranking

Firms with influential individual shareholders

18 145 101 79 31 182 32 62 58 39 58 181 188 87 35 64 272 47 129 27 108 31 64

Grand total of listed firms

0 26 17 2 4 15 3 6 4 2 10 25 34 4 3 20 82 2 0 0 3 3 10 275

A

64

0 8 5 0 3 5 0 2 0 0 4 7 5 0 0 3 17 0 2 1 1 0 1

B

339

0 34 22 2 7 20 3 8 4 2 14 32 39 4 3 23 99 2 2 1 4 3 11

Total

Firms controlled by individual shareholders

Note: Counted under Column A are two types of firm, one consisting of firms whose largest shareholders hold 3% or more of the outstanding shares of the firms concerned (and are deemed to have influence on or a say in the running of the firms to such an extent that the firms are characterized as being family concerns, influenced by the owner family, or managed by the owner family), and the other being those in which the largest individual shareholders are estimated to own at least twice as much shares as the second largest individual shareholders. Counted under Column B are those firms which are deemed to be managed or strongly influenced by the owner family, even if their largest individual shareholders own less than 3% of the outstanding shares.

TOTAL

Fishery, agriculture, forestry, mining Construction Food products Textile Paper and pulp Chemical Coal, oil, rubber Glass, clay, stone Steel Non-ferrous metals Metal products Machinery Electric machinery Transportation equipment Precision machinery Other manufacturing industries Commerce Securities trading and other financing Banking and insurance Electricity, gas, communications Transportation, warehousing Real estate Services

Industry

T ABLE 1.5. Listed firms and individual shareholders, 1991

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2.93 1.86 1.85 1.62 1.37 1.28 1.21 1.20 1.18 1.03 0.90 0.88 0.86 0.85 0.83 0.79 0.78 0.64 0.59 0.56 23.21

11,585 7,345 7,308 6,403 5,426 5,045 4,795 4,760 4,662 4,061 3,538 3,491 3,407 3,362 3,291 3,129 3,089 2,519 2,338 2,207 91,761

Nippon Life Insurance Mitsubishi Trust & Banking Daiichi Life Insurance Sumitomo Trust & Banking Industrial Bank of Japan Sumitomo Life Insurance Mitsui Trust & Banking Meiji Mutual Life Insurance Toyo Trust & Banking Daiichi-Kangyo Bank Yasuda Trust & Banking Fuji Bank Asahi Mutual Life Insurance Long-Term Credit Bank of Japan Mitsubishi Bank Sanwa Bank Sumitomo Bank Mitsui Bank Tokyo Marine & Fire Insurance Daiwa Bank

TOTAL

% of the outstanding shares

No. of shares held (m. shares)

Financial institution

477

77 47 40 28 16 20 19 32 13 21 15 33 15 9 23 27 8 13 5 16

Largest shareholder

798

109 64 47 59 50 31 27 25 25 57 27 52 17 16 42 51 39 24 15 21

2nd largest shareholder

No. of firms in which they rank as

1,006

74 65 51 79 63 18 47 26 38 89 35 88 23 32 69 66 69 31 16 27

3rd largest shareholder

T ABLE 1.6. The twenty largest financial institutions in terms of corporate shareholdings, and the number of firms in which they rank as the 1st–3rd largest shareholders, FY1989

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27

of vitality for the Japanese economy. This fact seems to refute the view that characterizes the Japanese economic system as having transcended capitalism. Second, these newly emerging large corporations eventually become corporate ongoing concerns with the passage of time. Obviously, the latter point calls for a more detailed analysis. I will, however, limit myself here to looking at the place individual shareholders occupy in these firms. Firms with large individual shareholders holding 10 per cent or more of the shares—i.e. those endowed with strong supervisory rights, including the right to peruse the company books—number 150, or 7.5 per cent of the total, and many of them are in the miscellaneous manufacturing, services, and commerce industries. These firms constitute a group of their own because they are characterized by the strong presence of entrepreneurs-cumcapitalists, as typified by Secom (a security firm) and Mos Food Service (the operator of a hamburger chain). However, aside from the limited number of firms of this nature, there are firms in which individual shareholders, their founders, and their families are deemed to have some say. As shown in Table 1.5, the firms under the influence of individual shareholders defined in the latter sense add up to 275 when counted in accordance with criterion A, or 339 when counted in accordance with both criteria A and B.28 The latter number accounts for one-sixth of all the listed corporations. There is, however, almost no knowing the extent of the influence the individual shareholders actually have in the running of these firms. What is important to keep in mind here is that the firms which are deemed to be influenced by large individual shareholders (defined in the broadest sense possible) add up to only about one sixth of all the corporations listed on the stock exchange. To put it another way, the shares of larger Japanese corporations are held primarily by corporate shareholders. By far the most prominent among the corporate shareholders are, as already noted, financial institutions. The list of the twenty largest financial institutions in terms of shareholding (Table 1.6) includes major life insurance companies and trust banks. The 20 financial houses together account for 23.2 per cent of the shares of the listed corporations; corporations having one of these financial institutions as the largest shareholder add up to 477, or 23.4 per cent of all the listed corporations, and those having members of this category either as the largest, second largest, or third largest shareholder add up to a cumulative total of 2281, which surpasses the total number of listed firms. Let us look at the percentages of the shares held by Nippon Life Insurance Co. and Mitsubishi Trust and Banking Corporation—which respectively occupy first and second places in the list leading the insurance companies and trust banks named there—in a total of 124 corporations that have either of the two as the largest shareholder. In approximately 80 per cent of the cases, the ratio of the two institutions’ holdings as the top shareholder is 5 per cent

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T ABLE 1.7. Values of corporate shares held by corporations, classified by investment motives (¥10 bn. and % of values at current price) End of Mar. 1988 End of Mar. 1989 Short-term investments 2,139 (4.9) by specified money trusts 547 (1.3) by fund trusts 483 (1.1) by stock investment trusts 1,109 (2.6) Medium- to long-term investments 7,546 (17.5) by life insurance companies 5,366 (12.4) by non-life insurance companies 1,723 (4.0) by pension trust funds 457 (1.1) Cross-shareholdings and other strategic investments 21,736 (50.3) by financial institutions 8,664 (20.0) by industrial corporations 13,072 (30.2)

2,956 (5.7) 449 (0.9) 905 (1.8) 1,602 (3.1) 9,140 (17.7) 6,501 (12.6) 2,107 (4.1) 532 (1.0) 25,638 (49.7) 10,662 (20.7) 14,976 (29.0)

Source: Nihon Keizai Shimbun (19 July 1989).

or more but below 10 per cent, with their holdings slightly exceeding 10 per cent in one corporation each.29 It is safe to conclude that financial institutions rank as the top shareholders in corporations whose shareholdings are fairly dispersed. And none of such corporations is ever reported to have been subjected to interference by the investing institutions as big shareholders. It may be possible to reason, as do the proponents of the theory of corporate capitalism referred to earlier, that Mitsubishi Trust and Banking, for instance, belongs to the Mitsubishi corporate group, and that the corporate group as a whole can wield influence as a shareholder in the decisionmaking by its members. A corporate group cannot be regarded as an independent economic actor in its own right, and thus should more usefully be regarded as a collection of stable shareholders.30 Table 1.7 suggests that corporate firms holding shares in other firms are seldom motivated by the intent of exercising influence as shareholders. In fact, approximately 50 per cent of corporate investments in the shares of other corporations are motivated by the ‘investment policy of mutual shareholding’. And corporate shares held by life and non-life insurance companies as a means of ‘medium- to long-term investment’, too, can be considered as holdings by stable shareholders. Among corporate shareholders, however, special attention must be paid to corporations in non-financial sectors. According to Table 1.8, which lists the top twenty business enterprises in terms of holdings of corporate shares in FY1989, the cumulative total of shares owned by these firms slightly exceeded the shares owned by Nippon Life Insurance alone. All twenty firms, other than GM, are among the 100 largest non-financial firms in terms of total assets owned. Their holdings of corporate shares are concentrated conspicuously in specific corporations. To take, for instance, the top three corporations in this

TOTAL

Toyota Motor Hitachi Ltd. Nippon Steel Corporation Matsushita Electric Industrial Co. Nissan Motor Mitsubishi Corporation Mitsubishi Heavy Industries Toshiba Mitsui & Co. Nippon Electric Co. Sumitomo Shoji Kaisha Sumitomo Metal Industries General Motors Marubeni Corporation Mitsubishi Chemical Industries Fujitsu Ltd. Asahi Chemical Industry Tokyu Corporation Fuji Electric Co. Asahi Glass Co.

Company

0.38 0.34 0.28 0.27 0.23 0.23 0.20 0.17 0.14 0.12 0.12 0.10 0.10 0.09 0.08 0.08 0.08 0.08 0.08 0.08 3.25

12,827

% of the outstanding shares

1,508 1,344 1,090 1,057 920 900 772 663 570 490 465 407 384 343 335 326 325 318 306 304

No. of shares held (m. shares)

251

26 25 22 12 27 21 3 14 16 15 4 9 1 9 10 13 6 11 2 5

Largest shareholder

105

11 1 11 2 4 11 7 0 18 3 7 3 0 9 2 3 6 2 4 1

2nd largest shareholder

No. of firms in which they rank as

60

6 2 5 1 5 7 4 0 5 2 7 3 1 5 0 0 5 0 0 2

3rd largest shareholder

TABLE 1.8. The twenty largest non-financial corporations in terms of corporate shareholdings, and the number of firms in which they rank as the 1st–3rd largest shareholders, FY1989

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T ABLE 1.9. Three largest industrial firms’ shareholdings in firms, broken down by percentages of shares held, FY1989 Firms grouped by percentage of shares held

Shareholding companies Toyota Motor

Hitachi Ltd.

Nippon Steel

3–5 5–10 10–25 25–40 40–50 50% or more

1 3 11 7 3 1

– – 9 2 – 14

– 6 10 1 4 1

TOTAL

26

25

22

Source: Kigyo Keiretsu Soran.

list, their percentage shares in the firms where they are the largest shareholders are distributed as shown in Table 1.9. While it is noteworthy that Hitachi Ltd. holds 50 per cent or more of the shares in many of the firms for which it is the largest shareholder, the top three firms in the list, inclusive of Toyota Motor Co. Ltd. and Nippon Steel Corporation, have 10 per cent or more of the shares in more than 80 per cent of the 71 firms under investigation. Many of these firms, in which the large corporate shareholders have dominant shares, are either subsidiary to or under strong influence of the latter, and important decisions on managerial matters are subject to prior consultation with their parent companies. Moreover, the nomination of executive officers of these subsidiaries or affiliated companies is often made concurrently with the nomination of those of the parent companies as part and parcel of the personnel management of the latter. This arrangement can be regarded as an institutional manifestation of the great extent of controlling influence the large corporate shareholders have over these firms. A conflict that erupted in March–May 1991 between Toshiba and its 48.1 per cent-owned subsidiary Toshiba Machinery over the choice of the new president of Toshiba Machinery is a case in point.31 The conflict developed as follows. (1) The incumbent president of Toshiba Machinery informed Toshiba, in advance of its shareholders’ meeting scheduled for June of the same year, of his intention to serve in his present post for another term. (His behaviour was premissed on the widely accepted practice of larger firms in Japan, to be explained later, that the power to appoint the successor to the company president should reside with the incumbent president.) (2) However, Toshiba considered the matter as constituting part of the reshuffling of its executive officers, informally decided to replace the incumbent president with one of its executive directors, and informed Toshiba Machinery of this informal decision.

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31

(In other words, Toshiba acted on the premiss that as the largest shareholder it would naturally have the power to appoint the subsidiary’s chief officer.) (3) In protest against this decision by the parent company, the president of Toshiba Machinery submitted his resignation to his board of directors in advance of the shareholders’ meeting; but he was eventually persuaded by his directors to abide by Toshiba’s decision and remain in his post until the shareholders’ meeting was over. (Toshiba had its own way, in appointing the new president of Toshiba Machinery to head the subsidiary.) If a parent company can exert this kind of influence in the appointment of chief officials of a subsidiary, it is worthwhile determining how many corporations are potentially subject to this sort of influence. Assuming that a corporation owned 25 per cent or more by a corporate shareholder has a good chance of being influenced by the latter, there are a total of 460 such corporations, or 22.6 per cent of all the listed firms. The corporations potentially under the control of corporate shareholders thus outnumber those 339 corporations in which individual shareholders are deemed to have much say. The remaining approximately 1200 big corporate firms of Japan which do not belong to either category are deemed to be free from shareholder influence. It is to these corporate firms that what is believed to be an attribute of Japanese corporate firms—‘weak control by owners’—actually applies.

3. The influence of creditors Another important factor is the role played by creditors—mainly banks and, to a lesser extent, general trading firms (sohgo shosha). Some scholars, including Miyazaki Yoshikazu, make no distinction between loans and shareholding, while others regard corporate groupings as essentially the same as corporate links dictated by financing arrangements. It should, however, be more appropriate to view transactions between banks and business companies as long-term face-to-face transactions in funds between the two parties. One thing that distinguishes a transaction in funds from a long-term face-to-face transaction in an ordinary commodity is that a transaction in funds involves the selling and purchase of the right to use the funds over a certain period (that is, the term of lease), and, as such, it is completed only with the full payment of the principal and the interest. In other words, the transaction in funds entails as one of its important elements a certain duration of time extending into the future, and thus entails management of the risks posed by the uncertainties involved. This means that the lending banks find it necessary to keep watch on the borrowing firms’ performance when the transactions take effect, performing a role similar to that of a ‘family doctor’ vis-à-vis the borrowers. The responsibility for performing this role is concentrated in the ‘main bank’, or the bank lending the largest sum of money to a specific borrower. By concentrating in the main bank the responsibility for monitoring a certain borrower’s performance and

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reviewing its creditworthiness, all the other banks involved can save the costs of their lending operations; on the other hand, the status of main bank visà-vis a certain borrower company offers the bank a chance to improve its monitoring and reviewing expertise, and to gain a competitive advantage in absorbing deposits from the firm concerned and its affiliates. Under the constraints of limited amounts of operational funds, banks compete against each other for greater transactions in funds, for new clients, and for the status of main bank. In this respect, long-term face-to-face transactions in funds are subject to much the same mechanism of long-term competition as are longterm face-to-face transactions in ordinary commodities.32 This explains why larger firms with stable performance and very little possibility of defaulting on their borrowings—such as Toyota Motor Corporation, Matsushita Electric Industrial Co. Ltd., Nippon Steel Corporation, and Tokyo Electric Power Co. Inc.—have no main banks, even though each has its largest financier. Also important to note is that the role of a main bank for a given firm is not fixed, but is subject to competition from rival banks. Miwa Yoshiro points out that in the period from 1973 to 1983 the main banks in the sense of largest lenders remained unchanged in 66.7 per cent of the firms he investigated.33 Another of his findings, which shows that changes in the main banks took place in as many as two-thirds of the firms with most rapidly expanding sales, seems to conform well with the foregoing description of the way inter-bank competition is waged. Changes in main banks do continue to take place even today. During FY1989 alone, the top lending banks for a total of 170 firms—representing as many as 8.3 per cent of all the listed firms—were replaced by their competitors. The percentage is significantly large, as it translates into a ten-year change rate of nearly 120 per cent.34 These main banks do not sound the alert or say anything about the operations of their borrowers so long as the latter perform well. They just receive from the borrowing firms their settlements of accounts, in much the same way as the ‘family doctor’ is kept posted about data on a patient who is doing well, such as the patient’s temperature, electrocardiograms, and blood sugar levels. In the cases of well-performing firms which are totally free of longterm loans, even the submission of their settlements of accounts to their main banks is very ritualized. These ‘loan-free’ firms—the most typical being Toyota Motor, Matsushita Electric Industry, and their affiliates—numbered 236, or 12.7 per cent, of the 1862 non-financial listed firms. It is safe to assume that these firms do not have main banks, and are little subjected to banks’ influence. Does this mean that banks do not intervene in the operations of their borrower firms? Assuming that the main banks are the ‘final resort’ for the borrowing firms, it may be only when these firms are faced with crises35—when they are threatened by hostile merger and absorption or by possible bankruptcy due to mismanagement—that the banks intervene. Let us examine the behaviour of the main banks in three recent crisis situations.

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T ABLE 1.10. Total debts of Osawa Shokai, year end, 1979–1983 (¥ m.) 1979

1980

1981

1982

1983

Total debts of Osawa Shokai Debts of overseas subsidiariesa Debts of Osawa Camera Salesb

37,141 8,618

41,467 16,741

54,314 20,983

57,748 23,426 500

58,586 15,938 7,074

TOTAL

45,753c

58,208

75,297

81,674

81,598

Notes: Both a and b represent the debts underwritten by Osawa Shokai. The figure marked c is as presented in the following source, although it is inconsistent with the 2 figures given in the same column. Source: Osawa Shokai, Sogyo Hyakunen-shi (A Century-Long History Since the Establishment) (1990), p. 150.

Osawa & Co.: a case with no main bank 36

Osawa & Co. was a family-run trading firm, and its main shareholders, other than members of the founder’s family, were insurance companies. The company’s performance suffered a serious setback due to overseas subsidiaries’ business failures and the failure of its export of cameras. In the process, the debts of its head office and those of its overseas subsidiaries snowballed, and at especially fast rates in 1979–81, as shown in Table 1.10. However, the report on the company’s bankruptcy points out that the ‘non-presence of a main bank for the company was one of the factors underlying its bankruptcy’. In order to examine the implication of this assertion, Table 1.11 describes the changes in the company’s outstanding long-term and short-term debts as broken down by the lending institutions.37 At least two conclusions may be drawn. First, as of the end of 1979, Nippon Life Insurance Co., the largest supplier of long-term funds to the company, and Saitama Bank, the largest supplier of short-term funds, were more or less on a par in terms of the total amount of funds each was supplying, and were thus serving as two ‘parallel main banks’.38 As of the end of 1981, Chiba Bank, Nippon Life Insurance, and Saitama Bank, with much the same balance of combined long-term and short-term loans advanced to the company, were serving as three parallel main banks. The existence of the parallel main banks may have stemmed from the borrower’s desire to avoid having a main bank, or from the lenders’ desire to hedge risks. Second, and on a closer look at Table 1.11, it seems plausible to conclude that both Nippon Life Insurance and Saitama Bank, the two parallel main banks at the end of 1979, intended to reduce their transactions with Osawa & Co. and withdraw their loans rapidly. Their loans outstanding with the firm were reduced by as much as 60 per cent over the four-year period under study. Taiyo Kobe Bank and Tokai Bank followed suit. When the two parallel main banks began to withdraw their loans rapidly, the company had to procure

2,826 384 608 339 0 186 4,343 50 739 0 0 266 8 1,063 610 0 0 0 0 0 0 0 238 100 46 0 0 693 0 17 1,704 7,109

0 0 0 0 0 0 0 100 246 0 100 100 50 597 2,238 300 538 502 300 0 400 160 1,457 925 0 679 220 0 0 0 7,719 19,127

2,436 400 1,022 594 0 342 4,794 44 638 0 150 192 0 1,024 506 0 0 0 0 0 0 0 182 184 28 0 0 510 125 0 1,535 7,352

0 0 0 0 0 0 0 100 303 0 100 100 0 603 1,870 791 706 686 350 0 470 160 1,281 1,080 517 833 370 0 100 0 9,214 21,346

SD

LD

LD

SD

Dec. 1980

Dec. 1979

Note: LD: long-term debts; SD: short-term debts.

GRAND TOTAL

Nippon Life Insurance Sumitomo Mutual Life Insurance Daiichi Mutual Life Insurance Chiyoda Mutual Life Insurance Asahi Mutual Life Insurance Meiji Mutual Life Insurance Subtotal Nippon Trust & Banking Mitsui Trust & Banking Chuo Trust & Banking Mitsubishi Trust & Banking Sumitomo Trust & Banking Toyo Trust & Banking Subtotal Saitama Bank Ashikaga Bank Chiba Bank Sanwa Bank Joyo Bank Hokkaido Takushoku Bank Osaka Bank Mitsubishi Bank Taiyo-Kobe Bank Tokai Bank Yokohama Bank Hyogo Mutual Loans & Savings Bank Kinki Mutual Loans & Savings Bank N’l Ass’n of Mutual Insurance Coops. Seattle First National Bank Orient Lease Subtotal

Creditor

2,322 336 1,018 510 500 290 4,976 232 662 100 244 270 0 1,508 402 0 0 0 0 0 0 0 122 120 10 437 0 590 125 0 1,806 8,289

LD 0 0 0 0 0 0 0 360 273 320 320 100 0 1,373 1,905 1,599 2,380 594 939 100 799 160 430 949 478 1,780 809 0 0 0 12,922 32,925

SD

Dec. 1981

2,310 352 974 460 488 306 4,890 302 582 48 196 180 0 1,308 358 260 100 0 0 100 82 0 62 56 0 412 100 553 87 0 2,170 8,368

LD 0 0 0 0 0 0 0 393 214 100 373 100 0 1,180 1,394 1,157 1,392 654 1,144 0 639 135 333 370 0 2,037 988 0 0 0 10,243 36,364

SD

Dec. 1982

1,219 1,091 568 491 368 82 3,819 798 523 309 236 80 0 1,946 324 260 100 100 100 88 46 30 8 4 0 311 60 506 0 0 1,937 8,699

LD

0 0 0 0 0 0 0 762 646 153 335 100 0 1,996 810 2,332 931 490 881 330 0 135 330 370 0 2,221 720 0 0 0 9,550 38,648

SD

Dec. 1983

T ABLE 1.11. Osawa Shokai’s outstanding debts broken down by creditor, as of the end of each account settlement term (¥ m.)

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funds from other financial institutions, including Hyogo Mutual Loans and Savings Bank, Chiba Bank, Ashikaga Bank, and Nippon Trust and Banking. This may be the implication of the assertion of the ‘non-existence of a main bank for the company’. Having no strong ties with its main bank(s), the company simply failed to honour its bills when these other banks withdrew their loans all at once.

Ataka & Co. Ltd.: a case where the main bank intervened to avoid a bankruptcy and arrange a merger 39 Before it was absorbed by C. Itoh & Co. Ltd. in January 1976, Ataka & Co. Ltd., was the ninth largest general trading firm in Japan. In 1975, shortly after the first oil crisis, its performance went downhill following the failure of an oil development project undertaken by Ataka USA, the company’s American subsidiary. At that juncture Sumitomo Bank, its main bank, intervened, liquidating the company’s poorly performing operations and arranging its absorption by C. Itoh & Co. The composition of Ataka & Co.’s borrowings from various banks, including its main bank, Sumitomo Bank, and its quasi-main bank, Kyowa Bank, stood as shown in Table 1.12. The actions taken by the main bank to prevent the company’s bankruptcy and to work out its absorption by C. Itoh can be summarized as follows. (1) As is evident from Table 1.12, Sumitomo Bank continued to provide funds to Ataka & Co. as its ‘last resort’. The bank headed a six-bank consortium for joint financing (consisting of the six banks listed in the table), which jointly took over the burden of providing the loans of ¥57 bn. withdrawn by other banks in the period from September 1975 to September 1976.40 In addition to these loans, Sumitomo and Kyowa Banks made emergency loans to help tide the company over fund shortages. T ABLE 1.12. Ataka Sangyo’s outstanding debts broken down by creditors Financial institution

Sept. 1975

Mar. 1976

¥ bn.

¥ bn.

%

Sept. 1976 %

¥ bn.

%

Sumitomo Bank Kyowa Bank Sumitomo Trust & Banking Bank of Tokyo Mitsubishi Bank Mitsui Bank Subtotal

67.9 47.3 41.5 25.9 15.6 – 198.2

12.8 8.9 7.9 4.9 3.0 – 37.5

83.3 57.5 45.7 25.5 15.4 8.4 235.8

16.0 11.0 8.8 4.9 3.0 1.6 45.2

93.1 65.9 53.2 27.4 16.1 8.7 264.4

17.3 12.2 9.9 5.1 3.0 1.6 49.1

TOTAL

528.5

100.0

521.4

100.0

538.0

100.0

Source: Nihon Keizai Shimbunsha, Hokai (The Collapse) (1977), p. 145.

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(2) In response to a request from the chief executive officer of Ataka for their help in rehabilitating the company, Sumitomo and Kyowa Banks supplied their executives and employees on loan, with the new chief executive officer chosen from among them to execute the rehabilitation plan. The officers dispatched from the two banks took charge of the liquidation of the unprofitable operations and personnel downsizing by soliciting volunteers for early retirement. (3) The costs of amortizing Ataka’s bad debts, totalling ¥230 bn., were borne by the six member banks of the consortium, with Sumitomo and Kyowa Banks jointly accepting 80 per cent of the burden, and the remaining four banks 17 per cent. (4) The deciding factor in Ataka’s reorganization was its merger with C. Itoh & Co., and Sumitomo Bank talked C. Itoh & Co. into accepting the merger deal. This may be likened to a family doctor who enlists help from a medical specialist. It is reported that C. Itoh owed a debt of gratitude to Sumitomo Bank, whose loans had helped tide it over a financial crisis in 1964,41 and the firm must have collaborated with Sumitomo in the expectation that maintaining amicable ties with the bank would prove to its own advantage in some ways some time in the future. At the same time, however, C. Itoh & Co. resisted the idea of accepting Sumitomo Bank as its own main bank, and managed to win the bank’s approval for retaining Daiichi Kangyo Bank as its main bank.

Sankyo Precision Machinery: a case where a firm escaped an attempted merger and absorption deal 42 Having started originally as a musical-box manufacturer, Sankyo Seiki (Sankyo Precision Machinery) had by 1985 grown into an electronics manufacturer of micromotors and other electronic parts as well as control devices such as time-switches. Beginning around May 1984, Minebear, a ball-bearing manufacturer, started accumulating Sankyo’s stock with the intent of buying it out; in June 1985, when it had managed to acquire 14 m. shares (or 20 per cent), it offered Sankyo a merger and absorption deal, which Sankyo rejected. Thereafter, a group of banks financing Sankyo began to intervene with the purpose of safeguarding Sankyo, whose poor performance at the time was due to the strong-yen recession, from Minebear’s buy-out offensive. Table 1.13 shows Sankyo’s outstanding borrowings in 1985, broken down by the financial institutions from which it was borrowing. Hachijuni Bank is apparently the largest lender to Sankyo, but the table ought to be interpreted with some care. It is important to keep in mind that Hachijuni is considered an affiliate of Mitsubishi Bank, its largest shareholder, and also that Yamanashi Chuo Bank and Meiji Life Insurance, other prominent lenders, also have Mitsubishi Bank as their largest and second largest shareholder respectively.43 Let us see how Sankyo’s financiers acted in response to the proposed merger and absorption.

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T ABLE 1.13. Sankyo Seiki’s debts broken down by creditors (¥ m.) Financial institution

Debts Long-term

Short-term

1,233 390 375 442 120 75 65 45 55 42

2,491 800 500 300 380 340 160 180 160 130

3,724 1,190 875 742 500 415 225 225 215 172

242 229 220 141

– – – –

242 229 220 141

Industrial Bank of Japan Long-Term Credit Bank of Japan

1,369 1,369

– –

1,369 1,369

GRAND TOTAL

7,500

7,743

15,243

Hachijuni Bank Taiyo-Kobe Bank Mitsubishi Bank Mitsubishi Trust & Banking Daiwa Bank Yamanashi Chuo Bank Fuji Bank Bank of Tokyo Daiichi-Kangyo Bank Tokai Bank Meiji Mutual Life Insurance Nippon Group Life Insurance Taisho Life Insurance Sumitomo Marine & Fire Insurance

Total

Source: Yukashoken Hokokusho Soran: Kabushikigaisha Sankyo Seiki Sisakusho (Financial Statement of Sankyo Precision Machinery Co.), 1985.

(1) Faced with Minebear’s offensive, top managers of Sankyo asked Mitsubishi Bank for support, and the bank, for its part, ‘quickly decided to comply with Sankyo’s request, and began to lead all the financiers in offering support to Sankyo’.44 In this way, Mitsubishi Bank at first tried to play the role of a lawyer vis-à-vis to Sankyo. (2) Mitsubishi Bank moved to implement a programme to secure a stable majority of Sankyo shareholders behind the company’s effort to take the offensive, and Sankyo’s other major financiers agreed to go along with the programme. Among them, the financiers purchased 12 million more shares in the firm, increasing the ratio of stable shares beyond 60 per cent. Mitsubishi Bank was able to implement the defence programme, thanks mostly to the multiple main bank–cooperating bank linkages it had developed with the other financiers.45 Moreover, Mitsubishi Bank warned Minebear that it would sever business ties with it should the latter escalate its offensive and proceed with its takeover bid. It is safe to say that with the sounding of this warning Minebear’s attempt to absorb Sankyo was crushed. (3) Mitsubishi Bank advised Sankyo to reorganize to lift itself out of the state of poor performance that had made it vulnerable to the merger and

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absorption bid. In particular, the bank talked Sankyo’s management into consulting with Hachijuni Bank, receiving an executive director of Hachijuni Bank as its vice-president, and discharging redundant employees. In carrying out the firm’s reorganization, Mitsubishi Bank acted as proxy for the latter’s ‘family doctor’. We might even say that the bank was in charge of the reorganization process. Not only did the bank have a say in the reshuffling of the top executive posts and in an important matter of decisionmaking, but also it had its advice accepted. (4) When the failure of Minebear’s attempt became decisive and it began to withdraw in 1988, it became necessary to find buyers for the shares to be sold off by Minebear. Mitsubishi Bank sounded out several steel manufacturers as potential shareholders ‘compatible’ with Sankyo, and secured Nippon Steel Corporation’s commitment to buy up Minebear’s holdings. Nippon Steel was viewed as compatible with Sankyo in the sense that it would abstain from the kind of ‘abnormal’ behaviour shown by Minebear and would think highly of Sankyo’s expertise in electronics. In making this arrangement, Mitsubishi Bank expected Nippon Steel to play the role of a specialized doctor as well. The foregoing examples seem to suggest that when a firm for which a bank serves as the main bank faces a crisis situation, the main bank intervenes and takes charge of crisis management. The commonly used term in Japan, a ‘firm under a bank’s control’, points to this particular role of crisis management played by the main bank. Once the crisis is over, the bank goes back to its ordinary role of a ‘family doctor’, having gained esteem for its superb crisis management capability. Thus, banks compete avidly for the position of main bank.

4. Are top executives representatives of the workforce? Only in a limited type of firm do large shareholders have a strong say in management. To what extent does Baba’s second characterization of a Japanese firm referred to above hold true: that the ‘chief executive officer is the most successful of the members of the firm’, and that he/she is the representative of the entire workforce? At the outset, it seems worth remembering that a big Japanese firm does not have an ESOP (Employee Stock Ownership Plan). Employee shareholding schemes and employee shareholding associations are found in many big firms, but the percentages of the shares held by their employees are so small that it seems safe to say that the employees seldom have a say in the running of their firms as shareholders. It is easy to ascertain whether the chief executive officer of a firm is the most successful employee of the firm or not. Of a total of 37,899 board members of the listed firms in FY1989, as many as 28,652, or 75.6 per cent, were

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T ABLE 1.14. The dispatch of executives by major firms to other firms Firms dispatching executives

No. of firms receiving executives

No. of executives received

No. of executives with representation right

Daiichi-Kangyo Bank Sumitomo Bank Mitsubishi Bank Fuji Bank Sanwa Bank Taiyo-Kobe Mitsui Bank Industrial Bank of Japan Tokai Bank

139 85 126 132 108 133 100 78

229 188 181 173 168 165 138 137

40 52 31 43 34 24 51 31

NTT Nippon Steel Corporation Hitachi Ltd. Toyota Motor Nissan Motor Mitsui & Co. Mitsubishi Corporation Nippon Electric Co.

74 59 48 32 30 50 61 24

207 185 185 127 114 108 101 101

29 27 20 38 14 22 14 18

1,279

2,507

488

TOTAL

Source: Kigyo Keiretsu Soran.

promoted from among the ranks of these firms’ ordinary employees; and of a total of 5508 executive officers of these firms, 3850, or 70.0 per cent, were promoted up the corporate ladder.46 A majority of the 9247 board members appointed from outside the firms were dispatched from affiliated firms, banks, or some of the nine largest sogo shoshas. Major banks and firms having 100 or more of their own employees on the boards of other firms are listed in Table 1.14. Of all the board members and executive officers appointed from outside these firms, as many as 27.1 per cent and 29.4 per cent respectively were dispatched from the eight major banks and eight firms listed in Table 1.14. These banks and firms placing their own men on the boards of other firms often have a say in the running of those firms, but the individuals appointed as board members of the receiving firms can be regarded as having much the same career background as those promoted from within the ranks of the host firms. At any rate, top executives can be regarded as the most successful of ordinary employees. But does the fact that the chief executive officer of a firm is the most successful of the firm’s body of employees also mean that he is the ‘representative’ of his fellow employees? It is well known that the president of a big Japanese firm often retires only after appointing one of the board members— usually his senior vice-president or executive director—as his successor. In

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T ABLE 1.15. Distribution of company presidents by the numbers of years served as department head and board member before promotion, respectively, to board and company presidency (persons) Years spent as board member before promotion to company presidency b

No. of years spent as department head before promotion to boarda 1

5 6 7 8 9 10 11 12 13 14 15 16 17 18 TOTAL

2

2 2 1 1 2 2 2 1

4 1 3 1 2

3

4

5

1

1 1 2 1 2 3

1

2 2 1 5

1 2

3

7

2 1 1 2 1 1

1 1

2 2

1 2 1

1 12

1 1 2 2 2

6

13

11

17

Total 3 4 10 7 14 13 9 5 10 6 1 3 2

12

13

2

88

Notes: a Department heads include plant superintendents and branch general managers. The 2 presidents under survey, who were promoted to department head and board member at the same time, are treated here as having served as department head for 1 year. b One president spent less than 5 years in the post of board member before promotion. Source: Shukan Asahi (ed.), Shacho e no Kaidan (The Corporate Ladder to President) (Asahi Simbunsha, 1989).

some cases the board chairman with a real say similarly appoints the successor president. From the standpoint of the appointee, the appointment comes as a bolt from the blue.47 Thus, the chief executive officer exercises his personnel management right in a very centralized manner. Moreover, he sometimes appoints a younger and lower-ranked member of the board as his successor, in disregard of the seniority hierarchy among the board members. Since the choice is based on the performance, competence, and personality of the would-be appointee, all the board members with a chance of being appointed as the successor to the incumbent president compete harshly against each other. What is more, the competition is waged for an extended period, because, as is evident from Table 1.15, of a total of 88 company presidents surveyed, as many as 74, or 84 per cent, had to serve as board members for seven to fourteen years before being promoted to the presidency.48 A prospective department manager, as shown in Table 1.15, must wait for one to six years before he is selected for promotion to a board member.49 An

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employee selected as a board member by the shareholders’ meeting retires from his status as an employee. The hard-won post of board member, however, has a specific term of office, and thus the newly elected member must work hard in order to be re-elected for another term. Different firms adopt one of four different arrangements for their top executive posts, which occur at almost the same rate: board chairman–president–vice-president–executive director; president–executive director; board chairman–president–executive director; and president–vice-president–executive director.50 The average numbers of persons holding various top managerial posts in larger firms are: 1 president; 0.7 person in the vice president’s post; 1.9 persons in the executive general manager’s post; and 4.3 persons in the general manager’s post. As one is promoted along this ladder, the number of posts available one step above is reduced by half, which implies that the selection process grows more severe along the way. A higher managerial post carries with it a greater say in the appointment of personnel, with the chief executive officer’s post carrying the largest prerogative. Thus, a board meeting is held in a very solemn atmosphere, reminiscent of the Shogunate court, where all the high-ranking retainers must be seated properly and wait in obedient silence until the president, a latterday corporate Shogun, makes his majestic entry into the board room.51 As such, the chief executive officer, who has the despotic right of personnel management within the company, is by no means the representative of all the employees. And the very process by which a corporation selects its top manager seems to be vital in ensuring that it is free of managerial ‘slack’. This process is also a stark contrast to the ‘inefficient management’ characteristic of the three former public corporations before their privatization in the late 1980s—the Japan National Railways, Nippon Telegraph & Telephone Public Corporation, and Japan Tobacco & Salt Public Corporation—which, despite having much the same employment practices and labour relations as large private firms, had their top executive officers imposed from outside.52 There is, however, another aspect to the status of top corporate executives —relatively small differentials in annual salaries between them and their subordinates, as shown in Table 1.16. A Japanese corporate president receives, on average, an annual salary that is only twice as large as the amount received by a managing director, or 1.5 times that received by an executive director. These differentials are much narrower than in the United States, where a CEO earns an extremely large income. A rank-and-file board member who concurrently holds a staff post receives as much as 78 per cent of his total salary as an employee and the balance as a board member, which means that the change in his status from an employee to an employer is unaccompanied by a dramatic change in his salary. Moreover, the portion of his salary received as an employee is lower than that of an auditor, and an ordinary board member not holding a staff job receives only 9.6 per cent and 14.8 per cent, respectively.

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T ABLE 1.16. Salaries of corporate executives (¥ 10,000 and %) Executive post

Monthly salary

Annual bonus

Annual remuneration

Differential (%)

Board chairman President Vice-president Senior managing director Managing director Director without a staff post Auditor

252 (76.4) 243 (80.3) 191 (80.9) 155 (78.3) 122 (79.5) 89 (82.1) 88 (85.0)

935 716 541 514 378 233 186

(23.6) (19.7) (19.1) (21.7) (20.5) (17.9) (15.0)

3,959 (100.0) 3,632 (100.0) 2,833 (100.0) 2,374 (100.0) 1,842 (100.0) 1,301 (100.0) 1,242 (100.0)

100.0 91.7 71.6 60.0 46.5 32.9 31.3

53 365 418 (28.8)

317 1,133 1,450 (100.0)

36.6

Ordinary director with a staff post Remuneration as a board member Remuneration as an employee Total

22 64 86 (71.2)

Source: Rosei Jiho 2999 (1990), p. 19.

It is worthy of mention in this connection that large firms often have intermediary posts between the level of board member and that of ordinary employees. Variously called komon (advisor), riji (trustee), or san’yo (councillor), these posts are at the top of the promotion ladder for the ordinary employees, and the holders of these posts are treated almost as ordinary board members. Approximately 70 per cent of the large listed companies have these posts, and the number of persons holding them is on the increase.53 The practice of treating these highest-ranked employees on an equal footing vis-à-vis rank-and-file board members has the effect of blurring the line between employees and employer, and making executive jobs an extension of the corporate promotion ladder for employees. It is not only board members who must compete for an extended period before being selected for further promotions: middle managers, too, are subjected to a similar competitive and selective process.54 Decisions on promotions in a Japanese firm are made on the basis of an individual employee’s current post in the job hierarchy (e.g. ordinary employee, subsection chief or deputy section manager, section manager, department chief ) and of his/her qualifications; as one climbs higher on the corporate ladder, the number of posts available diminishes and the competition grows keener. At a large electronics firm, for instance, the number of posts for department chief is onetenth of that for section manager. Moreover, it is important to note that promotions to section manager positions take place slowly, along what Koike Kazuo calls a ‘slow-track promotion’ system, which seems to have much to do with the practice of treating new employees ‘equally’ for an extended period. It is usually fifteen to twenty years after joining a firm that employees with college diplomas are screened and classified into three career courses: candidates for core management posts, those for sectional management posts, and

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those to be managed. Only those selected as candidates for core management posts are promoted to section managers and participate in the competitive race for higher posts. Under this slow-track promotion system, white-collar workers are assured of equality in opportunity, as they are given wider opportunities for promotions and are treated more equally than they would be under a fast-track system. Keeping the opportunities for promotion wide open to new employees during the first fifteen to twenty years of their employment produces a strong incentive for hard work. Moreover, they are treated equally until they reach the time for classification into the three career routes. The period over which equality in result is ensured is also long. Employees who joined the firm in the same year regard each other as competitors, but also as ‘buddies’. The slowtrack system may have a role in narrowing wage differentials, even after employees of the same age group are filtered out into different career courses.55 A number of research findings reveal that a section manager earns 75–80 per cent of a department chief ’s salary, and a subsection chief makes 75–85 per cent of a section manager’s salary.56 The slow-track system also has the effect of giving the filtering-out process a certain degree of fairness, because a group of employees of the same age in their competitive phase are aware that their performances are continuously being monitored and assessed. A performance evaluation system is in place in many large corporations, for use in determining each employee’s bonuses, pay raises, and promotions.57 Similar systems are used by foreign firms, but one thing characteristic of the Japanese system is that the performance of an employee is assessed by several supervisors of higher rank, who are frequently rotated from one position to another, with the result that the employee faces the decisive moment only after having been subjected to twenty to thirty performance assessments, conducted by a total of twenty to thirty different supervisors. This minimizes the possibility of an employee’s performance being evaluated unfairly or arbitrarily. Moreover, a performance evaluation considers not only individuals’ accomplishments but also the behaviour patterns they exhibit in the process—their morale, sense of responsibility, positive attitude, and cooperativeness.58 The performance evaluation system has built into the competition the principle that one who makes efforts over an extended period can be duly rewarded. This system is compatible with the way in which jobs are arranged in Japanese workplaces. The job arrangement in large firms is typically characterized as one of ‘division of labour based on cooperation among workers’, ‘flexible job demarcation’, or ‘flexible execution of job assignments’.59 Such an arrangement can play a role in smoothing out the process of employment readjustment, and in spotting potential trouble effectively, but it can also make it difficult to distinguish one employee’s accomplishments from another’s. Given this fact, assessments of employees’ performance based solely on their

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accomplishments tend to be biased; but placing importance on the process which led to such accomplishments will produce less biased—and thus fairer —assessments. This practice of performance evaluation, too, supports the view that large Japanese firms treat their employees fairly equally. I may sum up as follows. While the workplace within a large firm is characterized by harsh competition for an extended period, the competition is dictated by the principle of ‘treating employees of equal competence equally’. The competition, which is for positions of higher rank or qualifications, is juxtaposed with, or buttressed by, the principle of treating employees equally, as pointed out by Dore. The organizational principle here is characterized as one of inducing individual employees to compete with each other while providing them with an extensive safety net of equal treatment. As such, the organizational principle of a large Japanese firm is radically different from that of a community which makes much of territorial affinity and/or blood relationships, and also from the socialist ideal: ‘From each according to his ability, and to each according to his need.’ There is no denying, however, that the presence of the safety net of equality is readily associated with the image of a community, and gives the workplace in a large Japanese firm a definitely more ‘communitarian’ appearance than those in which shareholders as capitalists have strong prerogatives, or those equipped with a fast-track promotion system. This is because employees of a Japanese firm are, for an extended period, treated not as a factor of production but as members of an organization who deserve equal treatment. Perhaps we may have to conceptualize Japanese firms as constituting communities of a new variety. In order to place the foregoing observations in perspective, it is necessary to point out, as a reminder, what may already be common-sense knowledge. Given the system of in-house competition governed by the principle of ‘treating employees of equal competence equally’, the participants in the competition have a common interest in seeing their company continue growing, expanding into new business areas, creating new jobs, and offering greater chances for promotion. They also find it in their shared interest to restrain the shareholders and creditors from having a say in personnel affairs, and to keep in place an extensive career ladder (which allows successful competitors with long service to climb to top executive posts). Responsible for pursuing these shared interests of employees, CEOs represent these interests vis-à-vis outside groups, while internally they have the despotic right of personnel management. The CEO of a firm, with his dual role as the despot internally and the representative of the employees externally, is sometimes held in check by the firm’s by-laws specifying a retirement age for directors. It should be noted, however, that only approximately one-third of larger corporations have such by-laws specifying the retirement ages for their directors. The distribution of

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T ABLE 1.17. Distribution of retirement ages of full-time corporate executives (%) Age

50~59 60~61 62~63 64~65 66~67 68~69 70~ TOTAL

Director

Managing director

Senior managing director

Vice-president

13.0 50.0 31.5 3.8 1.9

10.0 20.0 52.0 10.0 6.0 2.0

6.5 9.7 45.1 16.1 19.3 3.2

24.2 12.1 27.3 27.3

100.0

100.0

100.0

100.0

6.9 53.4 27.6 12.0

100.0

President

9.1

Source: Rosei Jiho 2999 (1990).

retirement ages for various posts in these firms, presented in Table 1.17, shows that higher posts carry higher retirement ages. As such, the figure gives an idea of the distribution of ages at which holders of various directorship posts are subject to selection for further promotions. Approximately 40 per cent of the firms have no rules on retirement ages for their directors. The CEOs of these firms might appear to be unbridled by any constraints, including those of the shareholders and creditors. None the less, even in these cases the CEOs are forced into retirement by internal pressures if they or their firms arouse social criticism because of some misdeeds, or if their firms show poor business performance. In this way, in-house competition is linked with inter-firm competition. This mechanism of competition with its built-in principle of equality—the one by which employees compete with each other for an extended period for promotion to supervisory or middle managerial posts, to directorships, and finally to the CEO position—forms the very basis of companyism. IV. Conclusions: Modifications of Companyism We have begun to perceive some conditions which apply to the modification of the structure of companyism. With regard to corporations’ relations with their shareholders, it was anticipated that these might be affected by the massive flotation of new stock at current prices, convertible bonds, and warrants that took place in 1986–9 as stock prices soared. However, the equity financing activities seem to have been carried out in combination with efforts at further stabilizing inter-corporate shareholding relations, as can be inferred from Tables 1.4 and 1.7. If a group of corporations issue securities on condition that a little over 50 per cent of the new issues of one firm are purchased by its affiliates, in exactly the same amounts as its purchases of the new issues floated by them, then the member

A B

109,445 (16.9) 91,917 (22.2)

12,501 (12.1) 6,677 (19.1)

59,889 (58.0) 11,691 (33.4) 30,826 (29.9) 16,631 (47.5) – – 27,401 (26.5) 16,731 (47.8)

64,140 (62.1) 17,369 (49.6) 19,350 (18.7) 6,122 (17.5) 810 (0.8) 1,275 (3.6) 38,886 (37.7) 17,462 (49.9) 9,009 (8.7) 6,183 (17.7) 864 (0.8) 1,393 (4.0)

< ¥10 m.

25,893 (14.4) 17,270 (12.0)

106,603 (59.3) 70,581 (49.3) 47,358 (26.3) 55,302 (38.6) 25 148 (0.1) 37,043 (20.6) 50,819 (35.5)

115,357 (64.1) 80,591 (56.3) 31,654 (17.6) 22,915 (16.0) 2,381 (1.3) 3,182 (2.2) 63,333 (35.2) 62,627 (43.7) 17,618 (9.8) 26,019 (18.2) 3,324 (1.8) 5,812 (4.1)

¥10–¥100 m.

12,954 (13.8) 6,783 (13.4)

59,228 (62.9) 26,116 (51.4) 21,995 (23.4) 17,880 (35.2) 121 (0.1) 400 (0.8) 16,302 (17.3) 14,543 (28.6)

62,087 (65.9) 30,269 (59.6) 14,585 (15.5) 4,147 (8.1) 2,240 (2.4) 2,200 (4.3) 31,954 (33.9) 20,412 (40.2) 7,165 (7.6) 6,052 (11.9) 3,049 (3.2) 2,289 (4.5)

¥100–¥1 bn.

(52.4) (32.9) (26.1) (33.8) (6.0) (16.4) (15.6) (11.5)

(57.9) (54.1) (10.1) (19.9) (4.2) (4.6) (42.0) (45.7) (4.3) (6.7) (6.0) (9.4)

58,097 (21.4) 61,188 (33.2)

141,989 60,667 70,831 62,293 16,289 30,297 42,137 21,230

156,899 99,679 27,355 36,724 11,460 8,529 113,802 84,128 11,713 12,416 16,268 17,301

> ¥1 bn.

Source: Ministry of Finance, Zaisei Kin’yu Tokei Geppo, Oct. 1985 and Oct. 1990.

Note: The % figures in lines A represent the ratio of the outstanding amount of each item to the assets (deferred assets), while those in lines B represent the ratio of the net increase in each item to the net increase in total assets.

Capital

Corporate debentures Borrowed money

Fixed liabilities

367,708 (56.7) 169,056 (40.9) 171,010 (26.4) 152,106 (36.8) 16,453 (2.5) 30,804 (7.5) 122,883 (19.0) 103,313 (25.0)

Liquid liabilities

A B A B A B A B

398,484 (61.5) 227,907 (55.2) 92,943 (14.3) 70,839 (17.1) 16,891 (2.6) 17,336 (4.2) 247,975 (38.3) 184,629 (44.7) 45,504 (7.0) 50,670 (12.3) 23,505 (3.6) 26,795 (6.5)

Grand total

Size of company in terms of paid-up capital

A B Cash and deposit A B Negotiable A securities B Fixed assets A B Land A B Investment in A securities B

Liquid assets

Assets and liabilities

T ABLE 1.18. Procurement and uses of investment funds by corporations of different sizes (¥ bn. and %)

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firms as a whole remain ‘safe’ or ‘stable’ shareholders to each, and procure new funds worth a little less than 50 per cent of the new issues. For instance, Toyota Motor procured ¥300 bn. in 1988 by issuing convertible bonds, and used ¥85 bn. of this sum to purchase convertible bonds floated by Nippon Denso and other affiliates, which together purchased ¥40 bn. worth of Toyota’s convertible bonds, using a portion of the proceeds from the sale of their own convertible bonds. A factor of greater importance that can potentially exert modifying effects on companyism is the likelihood that life and non-life insurance companies might change their investing behaviour. Life and non-life insurance companies account together for more than 17 per cent of all the shares of the listed corporations, and they invest in stocks 22.1 per cent and 17.6 per cent respectively of their total investment funds.60 The latter two figures are still considerably lower than the official 30 per cent ceiling imposed on their investment in stocks, but they may have to be increasingly conscious about the rates of return on their investments as the marketing of insurance plans is liberalized further, and as the buyers of insurance plans with savings deposits features are growing sensitive to the difference in the rates of dividends offered by different plans. If this becomes the reality, insurance companies may start having a voice as shareholders in corporate policies on dividend payments, and may even reconsider the merit of remaining safe shareholders. If they sell their shares, in the increasingly internationalized securities markets, these may be acquired by shareholders who would demand a strong say in corporate management. Turning next to corporations’ relations with their creditors, Table 1.18 compares the various items of corporate assets and debits outstanding as of FY1984 (lines identified as A), and net increases in these amounts from FY1984 to FY1989 (lines identified as B). A comparison of the percentage figures in lines A and B shows that corporations let their fixed debts and capital increase in order to finance their investments in land and negotiable securities. Larger corporations with paid-up capital of ¥1 bn. or more procured funds mainly by increasing capital and bonds, which were invested in speculative buying of negotiable securities and land.61 The table also makes it clear that large corporations, in procuring the investment funds, reduced their dependence on long-term borrowing, and thus their dependence on banks, by large margins. This is in stark contrast to smaller corporations, especially those with paid-up capital of ¥10–100 m., which financed their investments in negotiable securities and land by significantly expanding long-term borrowings from banks.62 Corporations’ drift away from banks is likely to have the effect of reducing creditors’ influence on corporate managers, or of decreasing the number of firms in which creditors can have a say. This will mean increased autonomy of corporate management, but it will also mean that banks will find it increasingly difficult to perform their ‘family doctor’ role in keeping a close

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Total for all the firms surveyed Firms employing > 5,000 Firms employing 1,000–4,999 Firms employing 300–999 Firms employing 100–299 Firms employing 30–99

Mining Construction Manufacturing Utilities Transportation and communications Wholesale, retail, restaurants Financing and insurance Real estate Services

5.5 3.8 5.5 3.6 5.6 8.0 24.0 12.5 7.6

6.3 39.8 21.8 14.0 9.3 4.1 3.7 2.3 5.1 3.6 3.5 7.3 14.0 6.3 4.8

5.1 13.3 16.7 11.5 7.5 3.4

Introduction planned in 3 years

75.7 84.6 78.8 85.7 76.4 74.8 60.5 71.9 76.7

78.0 44.2 57.5 69.5 76.8 79.8

No plan for introduction

15.1 9.3 10.6 7.1 14.5 10.0 1.6 9.3 10.9

10.7 2.7 3.9 5.0 6.4 12.7 5.5 3.7 4.8 3.6 8.9 7.5 12.7 7.3 6.4

5.9 18.9 10.9 8.3 8.1 4.8

2.8 0.8 1.9 0.9 1.6 4.4 7.9 3.6 2.3

2.4 13.3 14.3 7.3 3.1 1.3

Introduction planned in 3 years

80.3 85.9 83.2 91.1 74.7 77.1 75.0 79.4 79.5

80.8 65.5 72.1 79.9 83.1 80.5

No plan for introduction

Not yet introduced

11.5 9.5 10.2 4.5 14.8 11.1 4.4 9.7 11.7

10.9 2.4 2.6 4.5 5.6 13.4

Unknown

Already introduced/ adopted

Unknown

Already introduced/ adopted

Not yet introduced

A system of employment for services in specified localities with no transfers elsewhere

A system of two-track career paths

Source: Ministry of Labour, Koyokanri Chosa Hokoku (1990).

All firms

Industry and firms of different sizes

T ABLE 1.19. Fractionalization of the personnel management system

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watch on the performance of their debtor firms, and also their role as lawyers in service of their client firms. One factor worthy of attention in this connection is that banks are trying to reduce their assets as a means of satisfying the Bank of International Settlements’ 8 per cent requirement on the net-worth ratio, and trying to do so by way of converting their credits into securities. This potentially threatens to destroy the long-lasting direct transaction relationships they have had with their client firms with regard to supplies of funds to the latter. At present, firms borrowing from banks are stubbornly refusing to have their debts converted into securities. Should the conversion of credits into securities take place on a large scale, banks’ roles as main banks to their borrower firms will be modified significantly. However, the most crucial question affecting the modification of companyism is whether the principle of providing white-collar employees of the same age group with equal opportunities for competition, and treating them with as little discrimination as possible for an extended period, is likely to be modified or not. Changes taking place at present in this respect seem aimed at modifying the principle of equal treatment of newly recruited white-collar employees by narrowing their eligibility for competition through intensified differentiation, and by accelerating the process of sorting them into different career tracks. On the part of employees, too, there is a marked increase in the number who change jobs in mid-career, landing jobs in firms which they believe are more in tune with their own vocational aptitude and which they believe to have a better future. These recent changes may be summarized as reflecting an increased dissatisfaction with the principle of equality in opportunity, and an increased demand for greater differentiation through competition. Let us look more closely into the reality. A 1987 survey found that companies adopting a two-track system with two career paths—sogoshoku (a career-track position leading upward into management) and ippanshoku (a general-track position leading nowhere in particular)—accounted for 32.2 per cent of the firms employing 5000 or more and 10.9 per cent of those employing between 1000 and 4999, with the percentage generally highest for the firms in the tertiary industry, such as financing and insurance.63 Table 1.19 summarizes the findings of a similar survey by the Ministry of Labour in the early 1990s, showing the percentage breakdown of firms adopting a personnel management policy based on two-track career paths, and a system of employing new recruits on a general-track path for services in specified geographical areas with no obligations to accept transfers elsewhere. The two-track career system, already adopted by 39.8 per cent of the firms employing 5000 or more, is likely to be adopted by a majority of larger firms in the near future. Also, the practice of assigning new recruits on a general-track path to services in specified geographical areas, and exempting them from transfers elsewhere, was more popular with larger firms than with

34.0 66.0 24.6 75.4

to the firm to specific jobs

43.9 56.1

the firm specific jobs

to the firm to specific jobs

58.9 41.1

All the respondent firms

17.9 82.1

40.1 59.9

59.2 40.8

91.5 8.5

5,000 or more

21.4 78.6

44.2 55.8

60.0 40.0

89.7 10.3

1,000–4,999

Firms of different size (no. of employees)

the firm specific jobs

Source: Ministry of Labour, Koyokanri no Jittai (1987).

Recruitment of career-switchers Recruitment for clerical posts Would rather recruit candidates Would rather recruit candidates Recruitment for technical posts Would rather recruit candidates Would rather recruit candidates

Recruitment of new school graduates Recruitment for clerical posts Would rather recruit candidates to Would rather recruit candidates to Recruitment for technical posts Would rather recruit candidates to Would rather recruit candidates to

Recruitment policy

T ABLE 1.20. Recruitment policies (%)

22.2 77.8

41.2 58.8

51.3 48.7

77.7 22.3

300–999

23.2 76.8

36.5 63.5

44.8 55.2

65.5 34.5

100–299

25.5 74.5

31.8 68.2

42.0 58.0

51.6 48.4

30–99

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smaller ones. It is highly likely that this practice will gain greater popularity with larger firms. The old practice of employing new recruits on an equal footing without discrimination seems to be on the wane.64 A growing number of firms are adopting hiring temporary workers through agencies for such jobs as clerical data processing and information processing.65 The number of career-switchers seems also to be on the rise.66 As shown in Table 1.20, a majority of firms, and especially larger ones, say that in recruiting career-switchers in technical fields they would rather recruit candidates to specific jobs than to the firm. This is in stark contrast to the policy adopted in the recruitment of employees fresh out of school for clerical jobs: a majority of firms, regardless of their size, say that they would rather recruit candidates to the firm than to specific jobs. Even in the recruitment of career-switchers trained in clerical jobs, a majority of firms say they would rather recruit candidates to specific jobs. The main reasons listed by larger firms for recruiting career-switchers include: ‘the need for talents with professional expertise’, ‘to expand preexisting operations’, ‘to make up for retiring employees’, ‘to prepare for the introduction of new technologies or for the entry into new business fields’, and ‘to revitalize the corporate structure by the recruitment of talents with diverse experience’.67 However, career-switchers who are employed to make up for retiring employees are mostly meant to fill vacant production or clerical jobs, but seldom those in supervisory or technical/engineering jobs. On the whole, career-switchers often seem to be recruited by firms as part of their restructuring efforts, and for the purpose of poaching the kinds of talent such firms lack. Nippon Steel Corporation’s policy on recruiting careerswitchers is a case in point. The company’s overriding concern was to ‘introduce and secure talents of proven technical competence unavailable within the company’; this was followed by the purpose of securing people capable of immediately assuming leadership positions in the execution of operations in new business areas such as electronics. ‘Revitalization of the corporate structure through the injection of outside blood’ was defined as an ‘accessory’ objective. With the increasing recruitment of career-switchers, the employment pattern has diversified.68 A survey focusing on career-switchers69 finds that a majority of them switch before they reach 40, and most of them have left their earlier jobs voluntarily out of dissatisfaction because these jobs have ‘not been in tune with their aptitudes’, have been ‘ill-paid’, have not ‘allowed them to give full play to their professional competence’, or have entailed ‘too much time commuting’. Though the paths trodden by career-switchers are varied, a dominant majority land jobs in industries different from those they have left, and a large number of them switch from small or medium-sized firms to larger ones. They prefer switching to specific jobs or to firms ‘with good futures’, where they can ‘give full play to [their] professional expertise and special skills’. In effect,

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T ABLE 1.21. Distribution of employees of different age groups promoted to supervisory/ managerial posts (%) Supervisory or managerial posts

Section manager Type I Type II* Type III Department head Type I Type II Type III Director Type I Type II Type III

Age group 30–4

35–9

40–4

45–9

5.1 1.2 2.7

12.8 25.9 13.5

66.7 42.9 64.9

15.4 20.0 18.9

2.8

10.3 9.9 8.1

2.7 3.0

6.3

50–4

55–9

53.8 53.1 56.8

30.8 35.8 29.7

2.6 1.2 5.4

12.5 5.5 15.2

65.6 56.2 45.5

15.6 32.9 36.4

60+

2.7

Source: Rosei Jiho 2957 (1989). The figures in the asterisked line are as presented in the original source.

career-switchers are abandoning, out of protest, those firms which fail to meet these requirements. These changes in employment practices seem to represent a shift away from the practice of treating employees of the same age group equally, as a group, to that of treating employees individually and differently. They also point to the possibility that a group of new entrants to a firm will, from the outset, be subjected to harsher competition and be differentiated from each other more clearly than previously.70 Attesting to the trend toward increased competition among employees is the fact that an increasing number of firms are adopting a ‘meritocratic’ personnel management policy, aimed at accelerating the process of sorting employees of the same age group into different career paths. Table 1.21 compares the distribution of employees of different age groups promoted to management posts at three different types of firm: firms which have reformed their performance evaluation schemes so as to facilitate the development of employees’ capabilities (Type I); those which are planning to carry out such reforms (Type II); and those which are not contemplating any such reforms (Type III). Although the differences among the three types of firm are not straightforward, higher percentages of employees at Type I or Type II firms are promoted to section managers at ages below 40, or to department heads at ages below 45, than at Type III firms. It is too early to conclude from this table that the practice of prolonged promotion is being modified definitively, but there is no denying that there is a drift toward accelerated sifting of employees into different career paths.71

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One instance of this is a system of ‘probationary promotion to supervisory posts’ adopted by Snow Brand Milk Products Co. in 1990. Under this system, promotions to supervisory posts are offered on a trial basis, in the sense that the newly promoted are subjected to severe performance evaluation, and those found to be incompetent are demoted unless they improve their competence up to the expected standards within a probationary period of one year or so. Although no one is reported to have been actually demoted under this scheme, its very introduction is symbolic of corporate efforts to treat employees differently according to their performance. A number of firms are adopting a system of letting their employees specify their preferred jobs/posts and using the information in making decisions on personnel changes. The system is in use by 86.7 per cent of the firms employing 5000 or more and by 68.7 per cent of those employing 1000 or more, and is expected to be adopted by many more firms.72 Sometimes employees are asked to consult with their superiors before specifying their preferred jobs/ posts, but allowing individual employees a certain amount of say about what sorts of career path they would like to pursue has the effect of making careerpath sorting more selective as well as more competitive than it used to be under the older practice, where the personnel department was unilaterally responsible for making personnel decisions. As such, this might be characterized as a shift from personnel management to development and nurturing of talent. One extreme manifestation of these changes in employment patterns is the tendency for larger firms to scout for and appoint in-house entrepreneurs to take charge of new venture businesses. In launching new businesses as part of their restructuring efforts, many firms are encouraging their employees to make suggestions about new prospective businesses, and also scouting for internal entrepreneurs to run the new ventures. Given that the applicants for the in-house entrepreneurial posts are mostly in their 30s, this scouting system offers ambitious younger employees chances to demonstrate their competence to nurture their business ideas into prospective ventures, and to be picked to head the new subsidiaries, bypassing the regular, prolonged promotion track.73 With the adoption of this sort of new arrangement for motivating younger employees to launch in-house ventures, entrusting them with much of the authority for the running of the ventures, and offering them chances for early promotion, the results of in-house competition will begin to be reflected in earlier promotions. It should be pointed out, however, that close cooperation between the departments in charge of new in-house ventures and the personnel department is instrumental in ensuring the success of these ventures. Moreover, the system of scouting for in-house entrepreneurs only began to be adopted in the late 1980s, so it is too early to know how the experience of launching and monitoring in-house ventures ought to be reflected in

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personnel evaluation, or whether the practice of scouting for entrepreneurs to take charge of in-house ventures represents a switch to a new principle of competition or not. All we can say for sure at the moment about the ongoing modifications in the structure of companyism is as follows. We can discern some tendencies for the principle of equality characteristic of companyism to be modified through the adoption of a system for self-choice of career paths, which, while keeping equality of opportunity in place, will shorten the duration of the ensured equality in results, and will thus put greater emphasis on competition.

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2 An Introduction to Japanese Company History: Stability and Change in the Ranking of Large Manufacturing Enterprises* YAMAZAKI HIROAKI

I. Introduction One of the key terms in this series and in the analysis of modern Japanese society is kaishashugi or ‘companyism’. While we can say that Japanese companies used their strength to unify employees, was this strength the premiss for success or rather the combination of their mutually stipulated relations? To unveil the secret of ‘companyism’, it is essential to clarify the mechanisms behind companies’ economic growth. This exercise will deal on the one hand with the compilation of case studies concerning the growth of representative companies and on the other with the companies’ necessity to generalize. One endeavour in this analysis of modern Japanese firms will be to understand and to characterize the miraculous growth of all Japanese companies. Delving further into these related themes, we will not simply provide a case study of the most representative enterprises, but will instead clarify all the main points of these cases in an attempt to create a framework. Grasping the characteristics of Japanese firms’ miraculous growth can be accomplished using a number of different methods; however, we have adopted one of examining the fifty largest enterprises according to their net profits, and the evolution in these figures from the prewar era. Using this ranking table allows us a sweeping view of Japan’s top companies, by focusing not on the value of their assets and sales but rather on net profits, in order to compare all industrial sectors on an equal basis. By ranking Japan’s largest enterprises by the same standards, we can obtain a bird’s-eye view of the changes they underwent as well as valuable evidence as to how they achieved this miraculous growth. The years we have selected are 1929, 1943, 1955, 1973, and 1987. In 1929, just before the Showa Depression, the prewar structure was in its complete * Translated by Julia S. Yongue.

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form; however, because of the war, after 1943 the ‘company yearbook’ could no longer be used as a reference. The changes from 1929 to 1943 were governed by panic and war, and the effects on the wartime economy were particularly great. Japan’s period of high economic growth began in 1955, and the changes which occurred from 1943 to 1955 were strongly influenced by the postwar reforms and reconstruction. The first oil shock was in 1973, and the changes which occurred between 1955 and 1973 were largely governed by the two surges in the growth rate. As for the changes after 1973, the two oil shocks and the rise in the value of the yen (endaka) were particularly influential. Finally, concerning the use of the tables in this chapter, as we have already examined the pertinent findings in another publication, we will simply summarize the results and continue to reconsider the significance of Japanese companies’ dynamism (commercial and mining industries).1 II. Changes in the Ranking by Company Profits Table 2.1, the foundation on which this chapter rests, features the changes in ranking according to pure profits, while Table 2.2 looks at the number of enterprises by industry. First, we must identify two points pertaining to the characteristics of the changes by industry shown in Table 2.2. The first characteristic is that, while all experienced abrupt fluctuations in prosperity, the electric power and the financial industries, to which banking is central, continued to occupy the most advantageous positions. After 1929 the electricity industry’s ranking shifted from 9 to 7 to 5 to 2 to 6, and the financial industry from 12 to 9 to 12 to 18 to 22. In the case of electricity, only two firms still remained in the ranking in 1973. Apart from one exceptional occasion, when the government feared that the swift rise in electricity rates would have an effect on general prices, and slowed its decision to permit electricity companies to raise their rates, electricity has consistently held its advantageous position. The financial industry was also clearly advantaged, and even in recent years has retained over 40 per cent of the places in the top 50. The second characteristic is that the mining and manufacturing industries’ positions, by contrast, have shifted abruptly. In 1929, mining and light industries held advantageous positions: 3 and 14 appear respectively in the subtotals. An itemization of the latter calls our attention to the 4 wool fibres/ cotton-spinning firms and the 3 sugar and 3 paper manufacturers, while just 2 heavy industries appear on the list. None the less, after 1943, the heavy industries achieved an advantageous position in the ranking. Indeed, in 1943 a subtotal of 16 heavy, 7 light, and 3 mining industries appeared; while in 1955 they rose to 20, 8, and 1 respectively. After 1955, with the high growth process under way, the advantageous positions of the heavy and chemical portions of the mining and manufacturing

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industries were decisive. Moreover, the subtotal ratios of the heavy and chemical industries to the total portion of mining and manufacturing were 20 to 29 (69.0 per cent) in 1955; 21 to 22 (95.5 per cent) in 1973; and 12 to 14 (85.7 per cent) in 1987. In 1973 and 1987, the heavy and chemical industries clearly held an overwhelmingly advantageous position. Further, we see shifts in emphasis among the heavy industries from steel manufacturing to petroleum refining and chemical fibres, then finally to electrical machines and automobiles. After 1943, the number of the various companies appearing in the ranking changed in the following way: 7 to 5 to 4 to 1 for steel manufacturing; 2 to 4 to 0 to 1 for petroleum refining; 2 to 3 to 3 to 0 for chemical fibres; 2 to 3 to 7 to 6 for electrical machines; and 0 to 1 to 3 to 3 for automobiles.

III. The Two Phases of Japanese Business History

1. The stable rankings of banks and electricity companies In the industrial ranking table, the finance and electricity companies had consistently occupied stable positions since the prewar period, and this same stable positioning was also prevalent on the individual firm level. Viewing the lineages of the electricity companies in Table 2.1, starting with the prewar period, we see that the enterprises which joined them continued to be stable and present among the 50 ranked. The transformations are as follows. 1. Tokyo Electric Light to Japan Electric Power Generation and Transmission; Kanto District Electricity Distribution to Tokyo Electric Power. 2. Daido Electric Power, Ujigawa Electricity, and Kyoto Electric Light to Japan Electric Power Generation and Transmission; Kansai District Electricity Distribution to Kansai Electric Power. 3. Toho Electric Power to Japan Electric Power Generation and Transmission; Chubu District Electricity Distribution to Chubu Electric Power. 4. Toho Electric and Kyushu Hydroelectric to Japan Electric Power Generation and Transmission; Kyushu District Electricity Distribution to Kyushu Electric Power. 5. Hiroshima Electricity to Japan Electric Power Generation and Transmission; Chugoku District Electricity Distribution to Chugoku Electric Power. 6. Hokkaido Electric Light to Japan Electric Power Generation and Transmission; Hokkaido District Electricity Distribution to Hokkaido Electric Power. The following lineages in the financial industry can be divided into two categories. One comprises financial enterprises which hardly changed in name

South Manchurian 21,276 Railway Tokyo Electric Light 17,295 Mitsui Bussan 8,761 Osaka Godo 7,570 Spinning Daido Electric Power 7,549 Yokohama Specie 7,311 Bank Toho Electric Power 6,879 Toyo Spinning 6,470 Kanegafuchi 6,211 Spinning Japan Kangyo Bank 6,079 Yasuda Bank 5,871 Tokyo Gas 5,256 Katakura Silk 5,032 Manufacturing Bank of Japan 4,952 Oji Paper Co. 4,772 Dai Nihon Spinning 4,728 Dai Nihon Breweries 7,673 Uji Rlver Electricity 4,179 Nihon Electric 4,151 Power Daiichi Bank 3,985 Mitsubishi Bank 3,924 Keihan Electric 3,795 Railway Tokyo Marine & 3,722 Fire Insurance Kyushu 3,705 Hydroelectric Power Mitsubishi Mining 3,701 Fuji Paper 3,565 Manufacturing Bank of Japan Japan Electric General & Transmission Mitsubishi General Industries South Manchurian Railway Hitachi Co. Japan Iron and Steel Kanto District Electricity Distribution Mitsui Bussan Sumitomo Metal Industries Manchurian Heavy Industries Kansai Distric Electricity Distribution Central Bank of Manchuria Japan Nitrogenous Fertilizer Oji Paper Co. Kanegafuchi Spinning Mitsubishi Mining Tokyo Shibaura Electric Japan Mining Mitsui Mining Japan Steel Pipe Osaka Mercantile Steamship Kobe Steel Works

Co. name

Co. name

Net profits (¥ 000)

1943 (first term)

1929 (second term)

11,573

13,560 12,811 12,188 11,568

14,818 13,644

15,172 15,078

15,664

17,524

17,862

21,390

22,889 22,441

34,746 31,312 29,772

42,444

42,870

78,129 46,295

Net profits (¥ 000) Japan Development Bank Bank of Japan Japan Express Toyo Rayon Yahata Iron and Steel Fuji Steel Tokyo Gas Tokyo Electric Power Toa Nenryo Kogyo Hitachi Co. Japan Steel Pipe Asahi Chemical Industry Kansai Electric Power Nihon Oil Matsushita Electric Industry Kawasaki Steel Fuji Bank Aijinomoto Co. Toyo Spinning Dai Nippon Spinning Ube Industries Nihon Cement Onoda Cement Chubu Electric Power Mitsui Steamship Mitsubishi Oil Teikoku Rayon Tokyo Shibaura Electric

Co. name

1955 (second term)

576 571 560 556

601 596 594 584

672 660 630 621 608

696 693

708

833 806 754 738

980 951 856

3,613 1,334 1,253 1,119

5,000

Net profits (¥ m.) Bank of Japan Toyota Motors (manufacturer) Nissan Motors Matsushita Electric Industry Shin’nippon Steel IBM Japan Hitachi Co. Sumitomo Bank Nomura Securities Tokyo Electric Power Fuji Bank Mitsubishi Bank Daiichi Kangyo Bank Japan Development Bank Sanwa Bank Industrial Bank of Japan Sony Corp. Tokai Bank Mitsui Bank Tokyo Shibaura Electric Toray Toyota Motors (dealer) Kawasaki Steel Long-Term Credit Bank of Japan Chubu Electric Power Daiwa Bank Teijin

Co. name

1973 (first term)

T ABLE 2.1. The change in the ranking of the top fifty companies in terms of net profits, 1929–1987

8,378 8,330

8,896

9,055 8,950

9,517 9,343

10,762 10,191 10,050 9,837

12,455 11,809

14,193

15,767 15,345 14,608

23,031 22,340 17,778 16,062 16,007 15,985

27,004 25,251

36,799 29,568

Net profits (¥ m.) Bank of Japan NTT Nomura Securities Toyota Motors Daiwa Securities Tokyo Electric Power Daiichi Kangyo Bank Fuji Bank Nikko Securities Mitsubishi Bank Kansai Electric Power Yamaichi Securities Sanwa Bank Sumitomo Bank Matsushita Electric Works Industrial Bank of Japan IBM Japan Chubu Electric Power Mitsubishi Trust Hitachi Co. Sumitomo Trust Fuji film Mitsui Bank Japan Development Bank Tohoku Electric Power Bank of Tokyo

Co. name

1987 (annual)

51,061

51,083

69,363 65,288 65,138 63,028 61,838 60,945 51,480

74,283

74,716

114,529 111,243 85,343

114,574

128,020 124,255 121,035 118,233

133,212

233,443 200,208 139,214 138,326

406,358 243,236

Net profits (¥ m.)

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2,138

2,165 2,142

2,239

2,295 2,268

2,371 2,361 2,305

2,455

2,587 2,505

2,742 2,717 2,697

2,912 2,909 2,889

3,022 3,018

3,139

3,439 3,417 3,141

Tokyo Express Trains 11,384 Toyo Spinning 10,432 Mitsubishi Bank 10,002 Japan Mail Steamship 9,926 Mitsubishi Shoji 9,794 Korean Electric 9,467 Enterprise Yasuda Bank 9,444 Tokyo Marine & 9,234 Fire Insurance Manchurian Electric 9,074 Works Nihon Kangyo Bank 8,969 Showa Steel 8,869 Manufacturing Works Kyushu District 8,664 Electricity Distribution Kawasaki Heavy 7,897 Industries Yokohama Specie Bank 7,875 Hokkaido Colliery 7,810 and Steamship Dai Nihon Spinning 7,733 Nihon Oil 7,688 Japan Soda 7,223 Furukawa Electric 7,201 Industry Dai Nihon Sugar 7,020 Refineries Chubu District 6,963 Electricity Distribution Imperial Bank 6,832 Honkeiko Coal and Iron 6,781 Dai Nihon Breweries 6,443 Sanwa Bank 6,420 Japan Steel Works Ltd 6,419 Japan Express 6,385 Meiji Sugar Refinery 6,203 Asahi Glass Mitsubishi Bank Japan Mining Tohoku Electric Power Mitsubishi Electric Industries Reorganized Tokai Bank Sanwa Bank Sumitomo Bank Mitsubishi Metal Mining Kyushu Electric Power Oji Paper Co. Japan Wool Textile Mitsui Bank Nikko Securities Co. Norin Chukin Bank Daiichi Bank Nihon Kangyo Bank Ltd Tokyo Marine & Fire Insurance Mitsubishi Mining Sumitomo Metals Toyota Motors (manufacturer) Hitachi Shipbuilding & Engineering 405

429 422 419

433

448 447 440 439

464 461 448

485

506 504 494 485

515

550 525 522 520 Sumitomo Metal Industries Asahi Chemical Industries Mitsubishi Heavy Industries Tokyo Marine & Fire Insurance Japan Steel Pipe Kashima Construction Kubota Iron and Machinery Works Taisei Construction Nikko Securities Tokyo Bank Matsushita Electric Works Mitsubishi Shoji Asahi Glass Mitsubishi Trust Sumitomo Trust Komatsu Manufacturing Co. Kyowa Bank Honda Motors Mitsubishi Electric Manufacturing Co. Bridgestone Tire Co. Daiwa Securities Co. C. Itoh & Co. Mitsui Trust 6,193 6,169 6,164 5,676

6,266 6,241 6,212

6,755 6,636 6,629 6,536 6,337

7,237 7,177 7,097 6,956

7,404

7,671 7,513

7,946

8,019

8,073

8,194

Mitsui Trust Long-Term Credit Bank of Japan Tokai Bank Kyushu Electric Power Honda Co. Yasuda Trust Taiyo Kobe Bank Nissan Motors Tokyo Gas Toyo Trust Japan Electric Toshiba Tokyo Marine & Fire Insurance Daiwa Bank Norin Chukin Kirin Beer Kyowa Bank Chugoku Electric Power Toa Nenryo Kogyo Asahi Glass Fujitsu Japan Kangyo Kakumaru Securities Shin Nihon Securities Shin’nihon Steel 31,883

32,042

32,518 32,066 32,049

32,559

35,118 34,446 34,059 33,711 33,704

43,637 42,449 41,345 38,584 37,724 37,670 37,477 37,040 35,980

50,117 44,444

51,056 50,935

Sources: For 1929 and 1955: Nakamura Seishi, Hiyakusha Ranking no Hensen (Changes in Ranking in the Largest 100 Companies in Japan), Chuokoron Keiei Mondai (Chuokoron Management Problems) Special Issue for autumn 1977; Toyo Keizai Shinposha (eds.), Kigyo Tokei Soran (Outline of Enterprise Statistics). Toyo Keizai Shinposha, 1943 and 1973; Jyojyo Kaisha Soran (Outline of Listed Companies), Tokyo Stock Exchange 1955; Kaisha Nenkan (Yearbook of Companies) Nihon Keizai Shimbun, 1975 and 1989; Kaisha Sokan (Yearbook of Listed Companies), 1975 and 1989; Ministry of Finance, Ginkokyoku Kinyunenpo (The Financial Yearbook for Banks), 1956, 1974, 1963. Ministry of Finance, Seifukankei Kikan Kessansho (Report of the Settlement of Accounts for Government-Related Organizations), 1955, 1973, 1988 supplements.

Note: Annual settling of accounts in 1987, for other years twice annually.

Nankai Railway Mitsui Mining Japan Mail Steamship Formosa Sugar Manufacturing Kyoto Electric Light Chiyoda Life Insurance Mitsui Bank Sumitomo Bank Hanshin Electric Railway Asano Cement Sanjushi Bank Hokkaido Colliery & Steamship Meiji Sugar Refinery Kyushu Electric Railway Japan Nitrogenous Fertilizer Hiroshima Electricity Japan Wool Textile Daiichi Life Insurance Nihon Oil Dai Nihon Sugar Refinery Sakaline Manufacturing Osaka Gas Hanshin Express Railway Hokkaido Electric Light

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TABLE 2.2. Distribution of the top fifty companies by industry Industry

1929

1943

1955

1973

Light industries Beer Sugar Other foods Cotton yarn Raw silk Wool fabrics Paper Cement Glass Total

1 3 – 4 1 1 3 1 – 14

1 2 – 3 – – 1 – – 7

– – 1 2 – 1 1 2 1 8

– – – – – – – – 1 1

1 – – – – – – – 1 2

Heavy and chemical industries Rubber Film Soda Chemical fertilizers Chemical fibres Oil Machinery Ships Electrical machines Motor vehicles Iron and steel Non-steel metals Total

– – – 1 – 1 – – – – – – 2

– – 1 1 – 2 2 1 2 – 7 – 16

– – – 1 3 4 1 1 3 1 5 1 20

1 – – – 3 – 3 – 7 3 4 – 21

– 1 – – – 1 – – 6 3 1 – 12

Mining

3

3

1

–

–

Construction

–

–

–

2

–

Public utilities Railways Electric power Gas

6 9 2

2 7 –

– 5 1

– 2 –

– 6 1

Tertiary Special companies Finance Securities Foreign trade Other trade Shipping Land transportation Communication

– 12 – 1 – 1 – –

1 9 – 2 – 2 1 –

– 12 1 – – 1 1 –

– 18 3 2 1 – – –

– 22 6 – – – – 1

TOTAL

50

50

50

50

50

Note: The special company listed is Manchurian Heavy Industries.

1987

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from year to year: the Bank of Japan, Mitsubishi Bank, Tokyo Marine & Fire Insurance, Mitsui Bank, Sumitomo Bank, and the Industrial Bank of Japan; the other comprises those which changed in appellation but retained stable positions in the ranking. All are banks except Tokyo Marine & Fire, and their lineage is as follows. 1. 2. 3. 4.

The Yokohama Specie Bank to The Bank of Tokyo. The Japan Kangyo Bank and Daiichi Bank to Daiichi Kangyo Bank. Yasuda Bank to Fuji Bank. The Sanjushi (34) Bank to Sanwa Bank.

The advantageous positioning of banks and electric power companies is, incidentally, unusual even by international comparison. We can illustrate this point using the 17 July 1987 issue of Business Week’s list of profits by industry in the United States, which reveals no evidence of a monopoly among banks, insurance, or electricity companies. The number of enterprises is as follows. Telecommunications: 9 Petroleum: 6 Health and personal care: 5 Merchandising: 4 Automobiles, beverages and tobacco, banking, multi-industry: 3 Utilities (electrical and gas), chemicals, data processing and reproduction, electrical and electronics: 2 Metals (steel), electronic components and instruments, food and household products, recreation and other consumer goods, financial services, insurance: 1 How did banks and electricity companies obtain such advantageous positions? In the case of electricity companies, production and capital were concentrated in the five largest companies during the interwar period; however, during the Second World War they were twice placed under government tutelage. The first time was when the government brought together local companies’ electric power and transmission facilities into a single, newly established enterprise, Japan Electric Generation & Transmission Co. The second was when it divided the country into nine regions in order to allow district-level suppliers to establish monopolistic control over the distribution of electricity. With the postwar reforms, the entire electricity supply system was reorganized in 1951. Japan Electric Power Generation & Transmission Co. was disbanded, and its generation and transmission facilities were affiliated with the district electricity distributors in order uniformly to devise the nationwide nine-district electricity system. In this way, the electricity industry, thanks to wartime government tutelage and postwar reorganization, increased its concentration level and consequently created 9–10 large-scale companies. The result was the emergence of a system composed of 9 companies, a rarity at

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T ABLE 2.3. Changes in the profit ranking of American commercial, mining, and manufacturing industries 1985

1929 Co. name

Net profits ($ m.)

General Motors US Steel Standard Oil of New Jersey Ford Motors Standard Oil of Indiana Dupont Anaconda Copper Mining General Electric Kennecott Copper Corp. Texaco Standard Oil of California Gulf Oil Bethlehem Steel Standard Oil of New York International Harvester Vacuum Oil F. W. Weyerhaeuser Union Carbide Humble Oil & Refining R. J. Reynolds Petroleum Allied Chemical and Dye American Tobacco Sears & Roebuck Singer Manufacturing Westinghouse Electric Western Electric Great Atlantic Pacific Tea Alcoa Prairie Pipeline American Can International Nickel Eastman Kodak Ligget & Meyers Tobacco Chrysler American Smelting & Refining Youngstown Sheet & Tube International Dairy Products Nabisco Jones & Rawling Steel International Match Republic Corp. Borden American Radiator Proctor & Gamble Goodyear Tire & Rubber United Fruit Pullman Shell Union Oil Atlantic Refining Warner Brother Pictures

247.3 197.5 120.9 88.4 83.0 72.3 69.1 67.3 52.1 48.3 46.6 44.5 42.2 38.8 36.8 36.8 35.7 33.6 32.3 32.2 30.2 30.2 30.1 27.5 27.1 27.0 26.2 25.3 22.8 22.7 22.2 22.0 22.0 21.9 21.8 21.6 21.6 21.4 20.8 20.6 20.5 20.4 20.0 19.1 18.6 17.8 17.7 17.6 17.3 17.3

Co. name

Net profits ($ m.)

IBM Exxon General Motors Ford Motors General Electric Standard Oil of Indiana Shell Oil Chevron Chrysler Standard Oil Ohio Dupont Sears & Roebuck Mobil R. J. Reynolds Industries Eastman Kodak Philip Morris Phillips Petroleum Boeing Proctor & Gamble 3M Unocal United Technology Teneco Coca Cola Occidental Petroleum Atlantic Richfield Hewlett Packard Dow Chemical Rockwell International Sun Oil Westinghouse Electronics Johnson & Johnson Pzitzer K Mart Merck Allied Chemical & Dye Digital Equipment Kraft General Foods Corp. Monsanto J. C. Penney Beatrice Foods US Steel Goodyear American Brands Anhaeser Busch Motorola ITT Union Carbide Halliburton Federated Department Stores

Note: Lines indicate identical companies (including joint-stock ventures), while the 50 from the lower ranks (over 50) and indicates leaving the list of 50.

6,582 5,528 4,517 2,907 2,280 2,183 1,772 1,534 1,496 1,488 1,431 1,323 1,268 1,184 923 889 810 787 763 733 700 645 631 629 569 567 564 549 545 538 536 515 505 499 493 488 487 456 439 435 414 414 411 407 392 387 349 341 330 329

indicates joining the

Source: G. H. Stein, Ikinokoru Kaisha Kieru Kaisha (Companies That Survive and Companies That Disappear) (TBS Britannica, 1988), 83–5, 168–70.

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the world level. In Europe municipal companies were predominant, while in the United States the majority of the firms were small, privately owned operations; none the less, the scope of business operations was small and only encompassed local-level business.2 By contrast, funds in the banking industry during both wars were continually concentrated in loans and deposits to the five largest banks: Mitsui, Mitsubishi, Sumitomo, Yasuda, and Daiichi. In 1932 the Sanjushi Bank merged with the Konoike and the Yamaguchi Banks to form the Sanwa Bank, making it commensurate in size with the others. During the war, government policy dictated the provision of low interest rate funding for dissolved public loan bonds, while the promotion of funding to respond to rising military demands accelerated the loans and deposits particularly as far as the six banks were concerned. In addition, while large-scale manufacturing enterprises were subject to postwar legislation forcing them to decentralize (the Deconcentration Law), banks were not. Furthermore, as this period marked the start of these enterprises’ high dependency on loans, banks continued to retain their advantageous positions. For banks too, government policies during and after the war also promoted the concentration of large banks, a reason in itself for ever higher concentrations of capital.

2. The changes in position of the commercial, mining, and manufacturing industries: their dynamism As explained above, large banks and electricity companies in Japan retained long-term stability in the rankings, while commercial, mining, and manufacturing industries fluctuated vigorously. Observing the structural changes by industry in Table 2.2, we see that over the approximately sixty-year period from 1929 to 1987, not a single one remains throughout. In the United States we find the complete opposite. The changes in the profit rankings from 1929 to 1985 appear in Table 2.3. Twenty-two American commercial and mining industries were listed in the top 50 in 1929 (over 40 per cent), and by 1985 their positioning was more stable and pronounced. In 1929 they occupied 14 spots (70 per cent) among the top 20—8 of which were among the top 10 (80 per cent), while in 1985, half the companies previously listed in the top 10 positions remained so, and one was ranked at 11. The top positions remained extremely stable, among which were major oil corporations, automobiles, general electronics, and general chemical makers. In other words, Japan, unlike the United States, experienced abrupt changes in the rankings of its commercial, mining, and manufacturing industries. These changes contributed to the dynamism of their growth, and became an enduring characteristic of Japanese business history. In the remainder of this chapter we will turn our attention to why this characteristic appeared, and how banks’ and electric power companies’ ranking positions stabilized.

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IV. How the Dynamism of Japanese Companies (Commercial, Mining and Manufacturing) Should Be Captured

1. Gerschenkron’s hypothesis and Akamatsu’s theory of the ‘goose flight pattern’ Table 2.2, a comparison of 1929 and 1987, shows that Japan rapidly developed into a more sophisticated producer, from its initial endeavours in light industry, particularly cotton-spinning and mining, toward assembled consumer durables such as electronics and automobiles. This was undoubtedly due to the ‘catch-up’ process illustrated by Gerschenkron’s hypothesis whereby undeveloped countries could develop immediately by introducing perfected technology from advanced nations.3 However, what should be noted here is that leadingindustry development was not a sudden, one-step process but gradual. What should also be noted in this discussion of the step-by-step industrial development process is the ‘goose flight pattern’ hypothesis devised by Akamatsu Kaname. This is more a theory than an explanation of the Japanese case. Akamatsu showed that the growth of industries in undeveloped countries can be characterized by the following cycle: importation to import substitution; domestic production to exportation; and the transition of the industrial structure from a consumption goods-based to a sophisticated financial goods-based (or high-quality products) industry.4 From Table 2.2, we clearly see the substitution in ranking from: mining and light industries, principally cotton-spinning to steel production; to petroleum refining and chemical fibre production; and finally to electronics and automobiles. This vividly illustrates the industrial development order or permutation of an undeveloped country, Japan. The chemical fibre industry in this table reached the synthetic-fibre stage, and many of the chemical-fibre enterprises built their foundations during the prewar period at the rayon stage of development. Since the development of steel roughly coincided with petroleum-refining, the more precise order of this process is: light industries (principally cotton-spinning) and mining to rayon production; then steel manufacturing and petroleum refining; followed by electronics and automobiles. In any case, we cannot overlook the fact that ‘catching up’ with developed countries did not occur all at once, but by the gradual substitution of or change in leading industries.

2. ‘Japan as Number One’ dating from the prewar period Japan did not simply introduce and digest foreign technology according to the industrial development process described above. If this were the case, Japan would have merely reproduced the developed countries’ model on a smaller scale. In reality, many of Japan’s leading industries were already positioned in the ‘number one’ spots in the prewar period.

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First, in 1933, Japan’s cotton-spinning industry overtook England’s and became the leader in the exportation of cotton products, a place it secured by at least 1929; then again in the postwar period, it was ranked first from 1951 to 1969.5 In 1936 Japan also overtook the US in terms of the quantity of rayon produced, a position it maintained until 1938.6 After the Second World War, Japan took first place over the US in terms of the volume of black and white televisions produced by 1967,7 while in terms of the volume of colour televisions it took first place after 1974.8 In the steel industry, its production of crude steel exceeded that of the US in 1980, placing it top among the countries of the free world, a position it continued to retain after 1982.9 After 1986, Japan was also first in the world market in terms of share of semiconductors,10 while the following year its production of passenger vehicles surpassed that of the US, assuring it first place in terms of the number produced per country.11 Therefore, as the leading industries, in particular light industry and mining, progressed from the fundamental to the development phase, they also became more sophisticated. This allowed Japan to catch up, even to surpass, developed countries in less than sixty years—even to capture first place in many cases. Here we can only conclude that some sort of unique factor accompanied the introduction of technology from developed countries. What could this special factor be? By examining the components of the leading industries’ international competitiveness, we can answer these questions.

V. International Competitiveness in Japanese Manufacturing Enterprises: A Consideration by Industry

1. The cotton industry The cotton-blending process is often cited as the secret of the Japanese cottonspinning industry’s international success. The standard product of the prewar Japanese spinning industry was #20 cotton thread. While British spinning companies used American raw cotton as the raw material for the production of this type of yarn, Japanese spinning companies devised a technology for blending the American raw cotton with a lower-quality raw cotton from India. As a result, they were able to produce the same #20 thread and succeeded in reducing their raw cotton expenditure. Another possible factor in spinning companies’ success was their enormous financial power. This was achieved through capital accumulation during and after the boom periods of the war, and this strong position gave them added leverage to invest at lower prices. They gained this position by becoming the largest buyers in the Indian cotton market. Buyers extended their purchasing networks into the distant rural production areas, where they could procure

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raw cotton directly. As they gradually became the largest buyers and dealt with the rural producers directly, they not only enjoyed exclusivity, but could even exercise a certain degree of control over the prices. Their strategies, which took advantage of the intense fluctuations in the price of raw cotton, were so successful that they could speculate and purchase at prices even below those of the local producers. Because of their strong position after the First World War, the Japanese spinning companies were alone in being able to secure their purchases of raw cotton at lower prices.12 To understand the international competitiveness of the Japanese cottonweaving industry, we must examine the production structure of the most powerful cotton textile production areas (Enshu, Chita, Sennan, Banshu, etc.), the weavers of cotton products for exportation. First, on the prefectural level, we see industrial experimental stations, established by the prefectural governments to support local manufacturers by experimenting with new products and new production methods. In addition, industrial unions served a variety of purposes, including buying raw materials and dyes, selling products in cooperation with the experimental stations, and undertaking inspections of the final products of the cotton textile-producing areas. In many cases, they cooperated by surveying the export market and by testing new products to fill a particular market need. Second, the experimental stations also offered technical assistance to union members for the development of promising products, and weavers utilized the finishing facilities of industrial unions whose establishment was financially supported by the central government. While it is often said that the lower wage levels in comparison to larger spinning companies made these weaving areas competitive, we must not overlook other important factors such as the organic nature of the networks, the governments, the experimental stations, the industrial unions, the weavers, and the wholesalers in the production areas.13

2. Rayon production The production of Japanese rayon was primarily undertaken by Teikoku Synthetic Fibre, established in 1918, and by Asahi Silk Weaving, established in 1922. Though domestic producers existed, until the mid-1920s their products accounted for less than half of the domestic market, and products from the top foreign makers, England’s Courtauld and Italy’s Snia Viscosa, were imported in large quantities. None the less, in 1926 four companies, Japan Rayon, Toyo Rayon, Toyo Spinning, and Kurashiki Silk Weavers, seized the opportunity presented by tariff reforms (higher tariffs imposed on foreign imports) and renewed production, thus provoking fierce competition. Consequently, makers not only began their conquest of the domestic market but also penetrated the export market by accelerating the production volume and increasing exports of rayon. Sustained competition in the weaving production areas promoted the increase

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in rayon cloth exportation and in turn the amount of rayon fibre. Of these four new participants, Japan Rayon was a subsidiary of Dai Nihon Spinning, and Kurashiki Silk Weavers one of Kurashiki Spinning. Dai Nihon Spinning and Toyo Spinning were two of the top three firms, and Kurashiki Spinning followed next in rank after the top three. On the other hand, Toyo Rayon was a subsidiary of one of Japan’s large trading houses (sogoshosha), Mitsui Busan. Consequently, among the leading industries at that time such as cotton spinning and foreign trade, it was the participation of large representative enterprises which later had an intense impact on the Japanese rayon industry’s development. Further, the acceleration in the exportation of cloth played a great role in the development of the Japanese rayon industry. This cloth, whether silk, cotton, or even wool, was woven in production areas which had much the same characteristics as those areas mentioned in the cotton-weaving case described above. These were the conditions which aided in the sustained and rapid development of both the organic networks located in textileproducing areas and the rayon industry itself. After 1933 the top remaining producers, the small to medium-sized spinning companies or large raw silk producers, and the large wool product manufacturers, began with even greater dynamism to develop the first-rate productive capacities which would even surpass those of the US in 1936. In under twenty years—from the time of the establishment of Teikoku Synthetic Fibre to the opening of its operations in 1918—Japanese rayon producers not only caught up with those in developed countries, but managed to surpass them. In this period development accelerated, with four new companies in 1926, and intense oligopolistic competition grew between the six leading enterprises. Further, it should be noted that three out of four companies had from the outset sought to introduce technology by installing machines procured from a German consulting company, Oscar Kohorn. While the powerful, wellestablished rayon makers in Europe and the US took passive stances toward the exportation of technology to Japan, Japan’s large spinning and trading companies, using the latter’s overseas networks, were both interested in and informed about this German consulting company, whose cooperation allowed them to introduce relatively inexpensive foreign technology. The successful introduction of rayon production technology, the intense oligopolistic competition between the six companies, and the organic nature of the network in the production centres provided the basis for rapid development.14

3. The steel industry The two great technological revolutions in the postwar steel industry were the adoption of an innovative steel-making process, using a BOF (a type of blast furnace generally referred to in Japan as an LD converter) and the continuous casting equipment utilized in naval construction. Although the Japanese

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steel industry did not have the scientists to develop these innovative technologies, they were more aggressively adopted in Japan than anywhere else. In Japan, the BOF adoption ratio from 1965 to 1974 was conspicuously high in comparison with the United States, Canada, and Europe, and the continuous casting adoption ratio in 1976 and 1981 also set Japan well apart from other countries and areas.15 This strengthened the Japanese steel industry’s international competitiveness by making both accelerated expansion and scale advantages possible. In passing, I must mention that the aggressive adoption of innovative technology resulted in great competition for equipment investment among the Japanese steel producers, or the six-member postwar system (Yahata Steel, Fuji Steel, Japan Steel Tubing, Kawasaki Steel, Sumitomo Metals, and Kobe Steel). Among the steel producers of the pre- and postwar periods, Japan Steel was overwhelmingly superior. None the less, according to the Deconcentration Law, it was divided into Yahata and Fuji Steel, and during the war, as Japan Steel Tubing was added, it became a tripartite, large-scale integrated producer. During approximately the same period, the steel division of Kawasaki Heavy Industries constructed a completely separate and independent firm, Kawasaki Steel, whose president, Nishiyama Yataro, planned to construct a large coastal steel production centre in Chiba. Nishiyama, though strongly opposed by the president of the Bank of Japan, Ichimada Hisato, was provided with the necessary capital by his company’s main bank, Daiichi, and the World Bank. Nishiyama, a specialist in open-hearth furnaces, constructed the latest in coastal-type factories and, to assure Kawasaki Steel’s supply of the necessary raw materials, began converting it as early as the prewar period into an integrated maker, in the hope of strengthening its international competitiveness. The transformation of Kawasaki Steel into an integrated maker provided the remaining two companies, Sumitomo Metals and Kobe Steel, with great impetus for change. In 1953 Sumitomo Metals merged with the small-scale integrated maker Kokura Steel, and in 1955 it announced the projected construction of a powerful coastal-type steel manufacturing facility. Likewise, Kobe Steel, having allotted funds to small-scale integrated maker, Amagasaki Steel, in 1954, was able to undertake the construction of a powerful steel manufacturing facility in 1957. Competition mounted as all these companies appeared on the scene with their powerful new equipment and facilities, a pattern which continued to escalate among the six large-scale integrated steel producers.16

4. The consumer electronics (television) industry American and European manufacturers developed new technologies and products for the consumer electronics industry whose most notable product is televisions. These makers continued to accrue large profits by: expanding domestic markets; large-scale advertising; sales of large-size, high-priced, high-volume

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television brands, and the collection of high royalty revenues from technologies provided to other countries. The Japanese makers began using foreign technology and, having gained benefits from advantageous trade and capital transaction limitations in the first phases, were able to secure the domestic market and finally to commence exportation. The initial development of the television industry in Japan was primarily undertaken by Matsushita, Sanyo, Yao (later changed to General), Sony, and other consumer electronics manufacturers; however, because of the subsequent participation of Toshiba, Hitachi Co., Mitsubishi, and other heavy electronics manufacturers, intense oligopolistic competition, spiralled. Parallel to these events was Japanese manufacturers’ adoption of a strategy of low prices and high-volume sales to what would become its largest export market, the US. By concentrating on selling high volumes of a small number of product lines, to the markets that American manufacturers had not yet claimed as theirs, Japanese makers could sell at aggressively low prices. In other words, Japan’s sale of inexpensive, small-sized televisions was primarily in the hands of private-label mass merchandisers or mail-order businesses, discount, chain and variety stores, etc. Having secured the foundations of the American market in this manner, they increased market share by adopting a new strategy: higher prices, diversified product lines, and the creation of their own brands.17 Therefore, the Japanese, continuing to rely on oligopolistic competition, adopted this niche strategy and quickly penetrated the American market. To compensate for their losses, the Americans finally transferred the production of assembled products and intermediate parts to foreign countries with lower wage rates.18 Having completed this rough sketch of the way competition developed between the US and Japan in both the black and white and the colour television industry, I will add an explanation of the conditions for the aggressive Japanese adoption of solid-state technology in the production of colour televisions. In 1976, Japan, having produced 10 million colour television sets, was able to rise to first place in television production . . . How did it achieve such a success? One factor is the way Japan so skilfully adopted the solid-state technology. With its adoption, it was able to go one step ahead of American producers in terms of technology, and because it was using ICs could reduce the amount of energy consumed and the number of parts, automate the production process, and improve quality control. Motorola developed a solid-state colour television in 1968, and began actual production in 1973. Had we promoted the superiority of this product, we could have sufficiently conquered the market; however, according to the judgement of top managers who were contemplating the cost of changing from vacuum tubes to transistors, the only use for this technology would be in

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high-quality console types. However, as console types cost more than $600, they would not have sold as well. What was most important at this stage was having an accurate perception of the future possibilities of solid-state technology, and it is indisputable that Japan did this by proceeding into the future with this industry as its commercial base. These televisions soon appealed to Japanese consumers for their conservation of energy achieved by the conversion to transistors, and for the rapidity in which the image appeared on the screen. Hitachi, the first to adopt this technology (in 1969), increased its domestic market share. The following year, most televisions had this new type of screen. A few years later, the American manufacturers also responded by producing a combination type using vacuum tubes. For Japanese manufacturers, surpassing their American counterparts with this technology was truly the turning-point.19 Here we see that the different stances of top managers vis-à-vis this particular colour television technology had important historical repercussions. This difference appears clearly in the symmetry between American passivity and the Japanese aggression. The divergence in top management stances was based on the undeniable difference in the length of the assessments of business performance. At the same time, we must not overlook the intensity of competition among oligopolistic Japanese enterprises, which also forced managers to take a more positive stance toward the introduction of new technologies.

5. The semiconductor industry The US industry, driven by venture business and venture capital in Silicon Valley, not only produced semiconductors but also developed the ‘dominant designs’ used in various products. Japan gradually improved upon these dominant American designs in some of the same ways as did the US,20 but differed in others, as production was primarily carried out by large-scale, diversified manufacturers.21 They include: 1. Communications equipment manufacturers: Japan Electric, Fujitsu, Oki Electric. 2. General electric machine manufacturers: Hitachi, Toshiba, Mitsubishi Electric Manufacturing Co. 3. Electrical appliance manufacturers: Matsushita ( battery production), Sanyo Electric, Sharp, and Sony. This industry is characterized by the importance of learning effects and by the brevity of product life-cycles. In the production of integrated circuits, the yield rate is low in the initial phases; however, with the learning effects in the production process, it increases. There is an empirical law which dictates that by doubling the accumulated production volume, average variable costs can be decreased by approximately 30 per cent. Therefore, the competition

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between enterprises to secure a high-volume system was more intense in this industry than in others. The development cycle proceeds in the following way: (1) competition for investment; (2) increases in supply; (3) lowered prices; and (4) greater demand, which only further exacerbates competition. In addition, the product life-cycles become extremely short: in terms of memory, it shifted in generation from 1 to 4 to 6 K bytes approximately every four years. Therefore, it was necessary for enterprises to amass growing investment capital in a short period of time in order to develop new products, as well as to secure their high-volume production systems.22 In an industry with such distinct characteristics, costs may be reduced by the learning effects in the production process, permitting Japanese makers to continue to invest aggressively even during economically depressed periods.23 As mentioned above, since Japanese semiconductor manufacturers were also large integrated producers, they could pool profits and engineers from other sections, giving them the possibility of continuous reinvestment. Was it merely this factor that was important, or was it also what is referred to as ‘Japanese management theory’? In other words, in Japan, managers were not bothered by shareholders’ demands for short-term profits, and this gave them the leeway for more long-term investment prospects; moreover, Japanese workers’ concern for quality contributed to the breadth of these learning effects. The products and market strategies of Japanese manufacturers also played a large role in increasing competitiveness. The two types of semiconductor in question are the bipolar and the MOS. The bipolar type, though high in electricity consumption, is quick, while the MOS type, characterized by its low speed, consumes low quantities of energy at low cost.24 Because of the MOS type’s ‘technically uncertain interface’,25 the semiconductor industry of an advanced country such as the US only employed the bipolar type in military and computer use. On the contrary, Japanese semiconductor manufacturers tended to use the MOS type, which is speedier and stronger than the American bipolar one. In the discussion of Japanese manufacturers’ effort to put the MOS type into use and this technology’s apparent uncertainty, we should also mention two factors other than the generally cited one, followers benefiting by aiming for the niches of their predecessors. First, its low level of energy consumption was tailored to the needs of ordinary Japanese consumers, which was projected to be high. Second, the development of applications for MOS-type memories, which were capable of both low heat dissipation and high integration,26 gave many Japanese computer producers greater demandside possibilities. Moreover, Japan witnessed an explosion in the sales of calculators and digital clocks. These factors led to accelerated demand, as well as to the promotion of electronic product applications for the general consumer.27 We might say that the adoption of these products and market strategies was stimulated by the fact that Japanese semiconductor makers were also powerful computer and appliance manufacturers.

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6. The automobile industry At the time Japanese automobile manufacturers were penetrating the American markets, they initiated a product-differentiation strategy emphasizing inexpensive small-sized vehicles, while American firms adopted standards to produce high-volume, large automobiles. The Japanese manufacturers responded by creating a strategy of getting rid of the American manufacturers large-size automobile accessories and replacing them with their own six-cylinder models, which sold at dramatically lower prices. And though they once thought of abandoning this strategy, it was revived. By continuing their efforts to design an automobile which could be clearly differentiated from the American model, Japanese manufacturers rapidly increased their share of imports to the American market sharply, to 4.6 per cent in 1962, to 11.2 per cent in 1969, to over 15 per cent in 1973. While American manufacturers, who uniformly adopted an increasingly risky strategy of high-volume, large, standardized automobiles were faced with the instability of the market, Japanese manufacturers, despite the environment of rocketing petrol prices, environmental and safety standards, and uncertain consumer tastes, beginning at approximately the time of the first oil shock, were able to increase market share with their strategy of product differentiation and fulfilling both consumer needs as well as the fragmented markets to which American manufacturers could not yet adapt.28 None the less, the Japanese automobile industry’s competitiveness did not simply originate from this strategy of product differentiation aimed at a particular market niche. The most comprehensive surveys of the competitive situation in the world automobile market are compiled in the reports of the MIT Commission on Industrial Productivity,29 the three-member joint report of the MIT International Automobile Research Project30 recognizing the superiority of the Japanese production system (the Toyota System). The following section paraphrases the main points of these reports.31 The two pillars of the Toyota System are the just-in-time system (including the kanban hoshiki ) and automation ( jidoka). Just-in-time is the automobile assembly process whereby the necessary parts reach the production line with only the necessary quantity, at only the necessary time interval. To achieve this, the following system was devised. Persons fulfilling the later steps may pick up the necessary items (parts and semi-finished goods)—and only these—from the persons fulfilling the previous step. Persons fulfilling the previous step may produce only the quantity to be picked up by persons fulfilling the latter steps. Consequently, the factory stocks of parts and semi-finished goods can be minimized. This kanban system was devised as the tool to indicate what should be passed along and how many. Though automation is a sort of mechanization process, it involves the use of human hands; and consequently, when trouble occurs in the machines or on the line, it can be stopped at once, the cause sought, and a solution made on-site. By thoroughly understanding this line of thought, constant incremental

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improvements in the production process become possible. Consequently, if something unusual occurs, then stopping the machines, in usual circumstances should on the contrary cause no need for condemning a particular individual; indeed, it is this idea which has aided the performers of these tasks to become multi-skilled. Furthermore, as simultaneous production occurs according to the just-intime system, if the variations in the final stages of the production process are great, then greater numbers of workers from the preliminary phases must be incorporated. To avoid this problem, lots must be reduced to the minimum and at the same time production standardized so as not to allow the same items to flow down the assembly line. In order to achieve this system in the pressing process, for example, the metal mould must be replaced often. Therefore, the speed of the assembly line depends on how quickly the mould can be replaced. Workers’ multiple skills and their strong desire to accelerate and improve both the production process and mould changes are the premisses for this system, and Japan’s wage and seniority systems and lifetime employment policies also serve to complement it. Indeed, Japanese workers are selling their ever-increasing stock of general skills rather than their specific ones; in other words, the system is adapted to the Japanese seniority system whereby wages rise in proportion to ability. Moreover, this wage system coheres with the idea of a lifetime employment system, heightens workers’ sense of belonging to the company, and stimulates their desire to accelerate kaizen (incremental improvement) activities or mould changes. Further, the just-in-time system can produce a ‘waste-free’ flow of items in the production and distribution processes, and eliminate the stocks of parts and semi-finished and finished products in and outside the factories by the introduction of relations between finished automobile manufacturers and parts manufacturers as well as to those between finished automobile manufacturers and dealers. Moreover, because of the relatively long-term transactions built on the minute exchange of information between finished automobile and parts manufacturers, the time required for creating new products and incorporating model changes can also be reduced.

VI. The Competitiveness of Japanese Manufacturers: Preliminary Conclusions from the Case Studies We have observed the competitiveness of Japanese industry, which frequently changes its position among the net profit rankings of the top 50 enterprises becoming ‘number one’ in the international arena. I will summarize the requisites or conditions governing Japanese manufacturing industries’ competitiveness.

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1. New conditions for competition The first characteristic is that the new sorts of condition which emerged in Japan’s economic development extended far beyond Gercshenkron’s general theory of the advantages of undeveloped countries. They included the top producers’ cotton-blending operations, the organic networks in the weaving areas, and the use of a consulting firm, the Oscar Kohorn Co., to introduce inexpensive technology in the rayon industry. The creation of a network organization in the weaving areas also contributed to the overall competitiveness of the rayon industry. As for the steel industry, Nishiyama Yanosuke of Kawasaki Steel was innovative in his aggressive introduction of new technologies. This sparked competition among producers, who rushed to construct large-scale steel facilities. Their efforts to excel led to the development of continuous casting techniques and the LD converter. In the colour television industry, it was the market niche strategy and the speed by which it developed all solid-state television products, while in the semiconductor industry it was the strategy of accentuating the use of MOS-type ICs and implementing a Japanese-style management system (especially its characteristics of managers’ freedom to make long-term investments, workers’ conscientiousness in regard to product quality, and scale advantages) which proved to be so advantageous. Finally, in the automobile industry, success was derived from the Toyota System (including car manufacturers’ and parts manufacturers’ relatively longterm transactions). It was, indeed, the acquisition of new competitive requisites or conditions which enabled these Japanese industries to attain a prime position in terms of world competitiveness.

2. The emergence of leading enterprises which were neither zaibatsu nor kigyoshudan The second characteristic is that the leaders or risk-takers which developed these industries were in general either non-zaibatsu or non-kigyoshudan, i.e. independent. Among the top three spinning enterprises, Toyo Spinning and Dai-Nihon Spinning were clearly non-zaibatsu, while one, Kanegafuchi Spinning, was a second-ranking subsidiary of a zaibatsu (Mitsui). One of the outstanding features of all of them is that, regardless of where their capital was derived, their managers were relatively independent in their decisionmaking. Teikoku Rayon, one of the two pioneering rayon producers, was led by two chemists, Kumura Seita and Hata Itsuzo, both graduates of Tokyo Imperial University, and received its backing from a newly developing trading company (sogoshosha), Suzuki Shoten. The other, Asahi Silk Weaving, was supported in its preliminary phases by Japan Nitrogen Fertilizer, which later developed a shinko zaibatsu, and by Japan Raw Cotton, one of the three largest raw cottonimporters. Later in 1926, three of the four which joined the industry were

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non-zaibatsu. In the steel industry Kawasaki Steel, the initiator of postwar inter-firm competition for equipment investment, established an independent steel production facility in the former Kawasaki shipyards. This shipyard, with its close relationship with the former Jugo (15th) Bank, had formed the socalled Sasshu zaibatsu,32 but after the 1927 Showa financial crisis this bank, having collapsed at the same time as the virtual dissolution of the zaibatsu, began to pursue its development as an independent. After the war Kawasaki Steel, with its desire to become an integrated manufacturer, sought closer relations with Daiichi Bank which, before forming the keiretsu, was a largely independent bank. In the consumer electronics industry, which includes televisions, Matsushita Electric Industrial and Sanyo Electric, Hayakawa Electric (later Sharp), Sony, and other home electronics specialists took the lead in the initial stages. However, while many others including the established zaibatsu later joined the competition, these home electronics specialists remained independent. In the automobile industry too, top automobile manufacturer Toyota was also an independent enterprise, as were Toyo Industry (Mazda), which fought to take third place, and Honda Motors. Nissan Motors, in second place, was an enterprise belonging to a Shinko zaibatsu, the stronghold of the former Nissan zaibatsu group; other existing zaibatsus such as Mitsui, Mitsubishi, and Sumitomo were passive in their pursuit of this industry. As mentioned above, in the semiconductor industry the largest producers of communications equipment, home electronics, and electrical devices led in the development of this industry, and were for the most part members of the six large, well-established kigyoshudan. In other words, the semiconductor industry was the only exception.

3. Competitive oligopolies A third characteristic is the market structure and its ‘competitive oligopolies,’ a term which has a double signification. In cotton-spinning, the English industry had a market structure which was infinitely more competitive, but the Japanese industry with its comparatively high concentration was oligopolistic. In the rayon industry and the other industries described below, both the American and European market structures were oligopolistic. None the less, the Japanese market differed in the level of active participation by powerful enterprises and the low incidence of withdrawal, a factor which further intensified this mutual competition between oligopolistic enterprises. From the point of view of world history, we see that intense competition developed between large numbers of enterprises in the cotton-spinning industry, one with low levels of fixed capital, while in the already gigantic rayon industry, as well as in the other industries explained below, competition naturally became oligopolistic. In Japan, the top six producers carried out their cotton-blending activities supported by their own relatively ample supply of capital, which

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contributed to the industry’s maintaining its competitive edge and to the development of a relatively oligopolistic market structure. It is precisely because these powerful enterprises formed that we see a pattern of industrial development rare in the world, one in which the spinning companies contributed to the participation of a rayon industry. As was mentioned above, from 1926 to 1927 four companies joined the two original enterprises (Teikoku Synthetic Fibre and Asahi Silk Weaving) to form the top six-company structure (Daiboseki); however, of the four new ones, three (Dai-Nihon Spinning, Toyobo Spinning, and Kurashiki Spinning) already occupied top positions. In the rayon industry this six-company structure to a great extent dictated the market structure of the synthetic fibre industry after the Second World War. Of the three principal synthetic fibres (nylon, polyester, and acrylic), Toyo Rayon pursued nylon in 1949 and, along with Teijin, polyester in 1957, both obtaining advantageous positions. In the nylon industry, five enterprises ( Japan Rayon, Kanegafuchi Spinning, Teikoku Rayon, Kureha Spinning, and Asahi Kasei) and in the polyester industry, three ( Japan Rayon, Toyo Spinning, and Kurashiki Rayon) all joined the competition. In the acrylic industry, four (Kanegafuchi Chemicals, Asahi Chemical Industry, Mitsubishi Rayon, and Japan Exran—Sumitomo Chemicals and Toyo Spinning’s joint venture) also participated. Consequently, fierce competition developed as the six rayon manufacturers which would eventually produce synthetic fibres were joined by Kanegafuchi Spinning, the last remaining from the top three cotton-spinning companies; Kureha Spinning, which was next in line after the top six spinning enterprises; and staple fibre manufacturer Mitsubishi Rayon.33 In the steel industry Japan Steel, according to the postwar Deconcentration Law, was divided into Yahata Steel and Fuji Steel, causing ever greater competition in the market. Moreover, Kawasaki Steel, Sumitomo Metals, and Kobe Steel, which were open-hearth furnace manufacturers before the Second World War, became integrated manufacturers; Japan Steel Pipe, which had undergone the necessary steps to become an integrated manufacturer, constructed a new furnace, and this intensified competition among the six enterprises for better facilities and equipment. The market share of the top two enterprises (just one after the foundation of Shin’nitetsu) consistently decreased.34 Turning to the television industry, we clearly see that the pioneers, Hayakawa, Matsushita, and Yao Electric, held the most advantageous positions in the black and white television market; however, three years later Toshiba took first place, and Hitachi Co. fourth. Hayakawa fell from first to third with a drop in share from 25 per cent to 11 per cent, while Yao lagged behind as it passed from third to sixth with a decrease from 11 per cent to 9 per cent. By contrast, Toshiba’s share quickly rose from 10 per cent to 21 per cent, and Hitachi’s from 4 per cent to 11 per cent. When the colour television era arrived, the share of Hayakawa Electric (in 1970, Sharp) dropped by 6 per cent in 1965, while Yao disappeared from the top six. Furthermore, if we look at the

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changes in companies’ share of colour televisions in 1965, 1969, and 1987, except for Matsushita, their fluctuations were sharp, and we can also note the tendency toward decreasing levels of concentration by the top three enterprises, which moved from 65 per cent to 63 per cent to 54 per cent.35 As Japan entered the colour television era, general consumer electronics, general electronics, and radio and television manufacturers began to compete furiously. As for the semiconductor industry, we do not have the appropriate data to show the production volume by enterprise. None the less, if we look at the fluctuations in microcomputers from 1977 to 1983 as well as those in ICs from 1985 to 1987, we can anticipate the general decline in the top manufacturer, NEC, the changes in the ranking order, the decline in foreign capital, and the rise of Fujitsu and Mitsubishi Electric.36 Moreover, intense mutual competition occurred between oligopolistic enterprises such as general electronics, general consumer electronics, communications equipment manufacturers and various foreign enterprises. It is said that ‘when there are several strategic groups present, heterogeneity within the industry increases, cooperative activities in the entire industry become chaotic and competition intensifies’.37 In the semiconductor industry’s case, because the types of enterprise differed, four strategic groups formed and competed intensely. Last, in the automobile industry, particularly in passenger vehicle production, Toyota and Nissan, the top manufacturers, were joined by seven other enterprises: Mazda (the 1984 abbreviation for Toyo Industries), Honda, Mitsubishi Motors, Isuzu, Daihatsu, Fuji Heavy Industries, and Suzuki Motors. Mazda and Daihatsu produced three-wheeled vehicles, Honda, Suzuki, and Fuji two-wheeled vehicles, while Mitsubishi and Isuzu shifted from truck and bus production to lightweight and then to passenger vehicles. Competition between the nine was intense, as can be illustrated by their uniform penetration and on-site production activities in the US. The share of the top two tended to drop, while the share of the group of companies ranked from third to fifth (Honda, Mazda, and Mitsubishi) rose.38

4. The role of SMEs The fourth characteristic is the role of SMEs. It is often emphasized that, in Japan, wage rate differentials vary greatly in proportion to the scale of the enterprise, and that larger enterprises can reduce product costs by using SMEs which pay lower wages. Table 2.4 compares the prewar wage differentials according to company scale in both the American and the Japanese textile industries; and though it is not overwhelmingly great, we see a considerable difference between the largest establishments and those with fewer than twenty employees.39 It is certain that the lower wages paid in the small weaving area businesses contributed to the international competitiveness of cotton product exports.

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T ABLE 2.4. The scale of wage differentials in the prewar cotton industry: a comparison between Japan and the United States US (1939)a No. of employees per factory 8.4 13.5 24.6 66.4 161.4 594.7 1,140.7

Japan (1934)b Wages per person

Value-added productivity

(74) 554 (90) 675 (94) 705 (92) 693 (85) 642 (95) 718 (100) 753

(41) 648 (91) 1,419 (101) 1,585 (79) 1,234 (66) 1,025 (76) 1,183 (100) 1,563

No. of employees per factory 8.4 14.5 23.0 45.5 99.3 454.7 880.8 996.0

2,669.8

754

Wages per person

Value-added productivity

(58) 162.3 (66) 184.8 (98) 272.3 (104) 289.4 (107) 299.3 (113) 313.8 (100) 279.0 (100) 278.9

(30) 400.8 (38) 504.7 (52) 694.9 (63) 846.6 (69) 920.5 (79) 1,050.7 (86) 1,155.7c (100) 1,337.9d

1,950

a

The numerical values of the scale of employees is close to that of Japan (average no. of employees = 1,140.7) and the ratios are distributed respectively on a scale of 100. b Figures for Japan include the Osaka Prefecture (excluding Osaka City) cotton textile industries. c Osaka Prefecture (cotton-spinning). d Figures for Osaka Prefecture (cotton-spinning) are average figures, excluding Osaka City. Figures in brackets for Japan indicate the % ratio of the figures in each scale to the average figure for cotton-spinning in Osaka City. Sources: US Dept. of Commerce, Bureau of the Census, 16th Census of the US: 1940 Manufactures, vol. i. Osaka City Govt. Office, Osaka-shi Kogyochosasho (Osaka City Industry Survey Report 1933). Osaka Prefecture, Kogyochosasho (Industry Survey Report, 1934).

On the other hand, when we compare the wage differentials in the automobile industry, we see that in 1958 (in the US, 1968) the differences were greater in Japan; however, as Japan entered its period of accelerated growth, these differences were less prominent. Indeed, by 1973 it was on approximately the same level as the US. Though the differentials according to scale would continue to widen, it was not an isolated tendency, as this trend was also occurring in the US. We can see that in recent years the differentials between the two are hardly noticeable.40 The wage differentials existed from the period of the postwar recovery to the beginning of the economic boom, but dissipated once this high economic growth period began.

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What I would like to mention in this discussion of SMEs is the functions of area organizations in the weaving industry, and the roles of machine industry subcontractors. A large number of small-scale weavers concentrated in powerful textile-producing areas could compile important market information through wholesalers in these areas as well as through trading companies (shosha) in central areas (Tokyo, Nagoya, Osaka). These weavers organized themselves by forming unions in each of the production areas, some of which became so powerful that they could initiate their own overseas surveys and share the use of equipment for dyeing and sorting among their union members. Moreover, in the most important areas, prefectural governments set up separate industrial experimental stations. Some of the stations were directed by talented graduates from high-level technical schools such as the Institute of Technology at Kuramae, who organized cooperative activities with the industrial unions to conduct research and guidance concerning manufacturing techniques and textile designs. Further, the Japanese government (the Ministry of Industry and Commerce and MITI) promoted these unions by providing financial assistance and funding at low interest rates. As a result, the close relations between area wholesalers, industrial unions, industrial testing facilities, and manufacturers contributed to the strengthening of both the cotton and silk industries’ international competitiveness, and the government’s policy of nurturing unions increased this contribution further by promoting the development of unions. Though we could not obtain sufficient data on the overall situation of the subcontracting system in the machine industry, using the survey41 of the contributions made by the Central Bank for Commercial and Industrial Cooperatives to subcontractors in the 1970, 1976, 1982, and 1988, we can point out the characteristics of the changes which have occurred over approximately the last fifteen years (Table 2.4). As for the link between parent enterprises and subcontractors, the ratio of enterprises whose dependency rate for transactions from the parent enterprise was less than 25 per cent declined from 23.1 per cent (1970) to 15.1 per cent (1986; it was 10.4 per cent in 1981). On the other hand, the ratios of receiving managers from parent enterprises tended to rise from 15.2 per cent (1970) to 25.9 per cent (1986). Further, the ratio of receiving capital from parent enterprises also rose from 15 per cent (1970) to 22.9 per cent (1981). Later in 1986, while it decreased slightly to 18.7 per cent, an annual survey indicated a small rise over the 18.4 per cent ratio in 1974. In conclusion, we see the overall deepening of the links between parent enterprises and subcontractors. While we know that this link activated their exchange of information, we can conjecture that, because parent enterprises’ financial and technical aid increased, the subcontractors’ technology also improved. If we refer to Table 2.5, showing the reasons for orders, we see that the ratio in the category of ‘original technical expertise’, which first appeared in 1981, rose from 41.9 per cent in 1981 to 46.5 per cent in 1986. In addition,

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T ABLE 2.5. Reasons for orders to subcontractors (%)

Receipt of capital or managers from parent companies Transaction results Proximity Low costs Product quality Strict delivery time Procurement of special equipment Original technical expertise Other

1975

1981

1986

10.0 72.2 24.5 25.9 62.8 43.8 26.0 – 7.6

13.6 72.7 23.1 29.8 61.3 38.7 – 41.9 4.0

12.0 64.7 19.9 27.5 59.9 37.6 – 46.5 5.8

Sources: Shoko Kumiai Choukinko (Central Fund of the Commercial Union), Shitauke Chushokigyo no Genkyo: Anteiseicho Keisaika ni Ikiterumichi (The Current Situation for SME Subcontractors: Surviving on the Road to Stable Economic Growth); Shitauke Chushokigyo no Shinkyokumen: Sono Jiritsukashiko to Shitaukesaihensei (The New Side of Small and Medium-Sized Subcontractors: Their Tendency toward Autonomy and Reorganization); Atarashii Bungyokozo no Kochiku o Mezashite: Endakaka no Shitauke Kikaigyo no Shintenkai (Toward the Construction of A New Division of Labour: New Developments Concerning the Machine Industry Subcontractors and the Endaka). An published by the Survey Section of the Central Bank for Commercial and Industrial Cooperatives.

the ratios of enterprises with their own products climbed from 23.8 per cent in 1970 to 30.5 per cent in 1974 and to 35.7 per cent in 1981. Further, a category was added to compare subcontractors’ levels of technological expertise both with the parent enterprises and with enterprises in developed nations such as Europe and the US in 1981. Those who indicated that their technological expertise was ‘about the same or better’ as head enterprises accounted for 51.1 per cent, while 41.7 per cent identified themselves as ‘inferior’. Comparing themselves to enterprises in Europe and the US, the subcontractors who indicated ‘about the same or better’ numbered 48.4 per cent, while 6.7 per cent categorically marked ‘inferior’. Already in 1981, the technological level of about half of the subcontractors was at least the same as, if not superior to, the parent enterprises. Against the backdrop of the generally rising technological level, subcontractors led by parent enterprises could adapt to the demands for lower unit prices. Concerning this question of the lowering of unit prices and the possibility of profit, the ratio of subcontractors which answered ‘possible’ was small: 1.2 per cent in 1974, 3.2 per cent in 1981, and 4.6 per cent in 1986. Over the same period, the ratio of those who selected ‘to some degree possible’ rose from 17.9 per cent to 34.4 per cent to 37.1 per cent. As a measure of managerial performance, we can look at the movement in sales figures per employee. Growth in the sales figures per employee in subcontracting firms was greater than in general enterprises.42 Subcontractors in the machine industry, who strengthened ties with the parent enterprises after 1970, managed to raise their level of technological expertise and also realize higher levels of productivity than general enterprises.

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Moreover, according to Table 2.5, which features the reason for increased requests from the parent enterprise, the prominent 70 per cent ratio for the category ‘transaction results’ strongly suggests that transactions occurred without interruption. We should again emphasize that this sort of subcontractor behaviour in the automobile industry, for example, resulted in a reduction of the time required for new joint product development and greatly contributed to the lowering of parts costs.

5. ‘Japanese-style’ management Fifth, Japanese-style management not only strengthened the machine industry’s competitiveness in particular but also played an important role more widely. We could supply a variety of definitions of ‘Japanese-style’ management; however, it originated in the early separation between owners and professional managers. These managers, not bothered by having to produce short-term profits for shareholders, could take a comparatively long-term view of investments. In the bulk of literature produced on the subject, many agree that the three tenets of Japanese-style worker relations are: separate company unions, lifetime employment, and seniority. In the Japanese production management system (process control), we find other special characteristics such as the Toyota System.43 Opinions diverge concerning both the separation between professional management and ownership, as well as the historical process by which the former seized actual control over the management of an enterprise, particularly in the assessment of their degree of progress at the prewar stage. None the less, they do converge concerning how the postwar zaibatsu dissolution, the sudden economic changes in the wartime, and the immediate aftermath reduced the number of large individual shareholders. Consequently, mutual shareholding between large enterprises became the core. They also converge concerning how the separation of ownership and professional management which secured control over the administration of the enterprise were accelerated by this change in share holding. In sum, Japanese managers who rose from the position of ordinary employee held a comparatively long-term view of the enterprises’ future, and were able to make thoughtful decisions concerning its development. Referring again to the three tenets of worker relations, workers were guaranteed their jobs by the system of lifetime employment, and were motivated to work long years by the seniority wage system. They were conscious that their own interests matched those of the economic development of the enterprise, and the separate enterprise union organization contributed to heightening this consciousness. This system united workers behind the company logic, and played a major role in the creation of harmonious worker relations.

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On the production and labour control side too, we can see the two important characteristics of the Toyota System, just-in-time and automation. In order to achieve smoother process flows and minimization of stocks during the production process, time minimization during the press process, mould changes, improvement of quality, and pursuit of the cause of troubles including on-site resolution were necessary. It was workers’ on-site attentiveness to product quality and to the production process as well as improvements in quality and efficiency which achieved these results. In Japan, according to this labour management system, workers are not employed for a specific position or a specific task; instead they are employed to fulfil many positions, and to perform a variety of tasks for which they are trained and promoted. This system, together with the implementation of the three tenets of Japanese labour relations, serve as strong incentives for conscientiousness and innovative skills at the production sites. This concludes the discussion of the common characteristics found in Japanese enterprises; however, to determine how they contribute to strengthening of enterprises in each industry requires a more specific, concrete consideration of each particular industry. Turning the focus toward such an investigation, I shall mention two points linked to the requisites for Japanese enterprises’ competition. The first deals with the Japanese television industry’s aggressive use of the all solid-state technology and the passivity of American manufacturers in adopting it. In the semiconductor industry, Japanese manufacturers because of their continued investment even in times of economic recession were able to increase market share and profits when the economic situation improved. None the less, these Japanese enterprises were large and integrated, and because semiconductor manufacturers affiliated themselves with the kigyoshudan of bank or financial keiretsu, they were supplied with capital even in times of economic recession. It is this combination of large and integrated enterprises with the long-term perspectives of managers which seems to have provided the greatest advantages. In any case, we must notice that increasing pressures of oligopolistic competition between enterprises in these industries caused managers considering the long term to introduce prospective technology early, and to continue to invest during recession periods. Second, we cannot ignore the implementation of the Toyota production system, the representative of the Japanese-style production system. It was this particular production system and its link with labour relations and production which proved such a great success in the automobile and the semiconductor industries. It was particularly in the case of latter that this strength became such a decisive condition for Japan’s competitiveness. We believe that these characteristics are intimately linked to the human factor, and that they demonstrate workers’ strength especially in the assembly industries, in which semiskilled commitment is high.44 In the assembly industries, the more complicated

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the process, the higher the degree to which these characteristics demonstrate workers’ strength. VII. Conclusions By using the ranking table from the early Showa years, I have been able to show that the financial and electricity companies have been consistently stable over time. Indeed, even when viewed from the individual enterprise level, those joined by a common lineage retained their top-ranking, stable positions. By contrast, we have witnessed abrupt changes in the positions of the commercial, mining, and manufacturing enterprises. Those which were once ranked in the prewar period have recently disappeared from the list, while others have again joined following the wartime economic period. In other words, the business history of large enterprises in Japan can be characterized by its sharp contrasts: the stability of the electricity and banking industries and the abrupt change in positioning of the commercial, mining, and manufacturing industries. This contrast is also prevalent when Japanese enterprises are compared with those of the US; American enterprises involved in electricity or banking ranked lower than their Japanese counterparts. Therefore, enterprises involved in these industries were consistently unable to maintain high positions. None the less, many of the American commercial, mining, and manufacturing enterprises (especially in the giant, most representative industries) did maintain stable positions in the ranking. Why did this two-dimensional contrast occur in the business history of Japan’s large enterprises? In the case of banks and electricity, this question is comparatively easy to answer. Suffice it to say that their stability was dictated by the developing concentration among firms having been promoted by government policymakers since the interwar period. By contrast, finding the answer to why the commercial, mining, and manufacturing enterprises, especially core manufacturing ones, changed so abruptly required the compilation of minute comparative research findings concerning Japan’s response to its foreign rivals. To find the clues necessary to research this topic, I have continued to examine the pertinent early as well as recent works of prominent business historians both in Japan and abroad. These documents, which serve as our base have aided in the development of hypothetical responses. Finally, we have organized our results in the following way. The transformation process in Japan’s leading industries from prewar mining and spinning industries to more recent ones, electrical machinery and automobiles, was rapid. This process did not simply amount to the transplantation of developed countries’ industries; many Japanese industries had indeed already secured ‘number one’ positions from the prewar period. Japan’s leading industries did not simply catch up with those of developed countries;

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they surpassed them by developing according to the continual repetition of this process. The following requisites made it possible for the development of Japanese industries and enterprises. (1) In the development of Japan’s leading industries, we were able to see evidence of the conditions for new breeds of advantageous competition. (2) The leaders of these industries were not affiliated with the already dominant zaibatsu or kigyoshudan, but were independent. (3) Enterprises affiliated with zaibatsu and kigyoshudan followed their lead and intense oligopolistic competition developed among them. (4) Japanese SMEs, until the start of the period of accelerated growth, could be characterized by their payment of relatively lower wages, but at the same time by their own original industrial organizations, which aided in the growth of large enterprises. (5) Finally, one of the structural characteristics of Japanese-style management, managers’ long-term perspectives, is linked to the intense oligopolistic competition, and hastened the development of Japanese enterprises. Another, the Japanese-style production system, demonstrated its strength especially in the assembly industries, with their high intensity of labour and provision of specific levels of knowledge and skills.

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3 Industrial Relations and the Union Movement* TABATA HIROKUNI

I. Introduction It is a truism that Japan’s labour–management relations are highly cooperative. This cooperation is widely believed to be rooted in particular features such as culture and employment practices such as lifetime employment and enterprise unionism. It is, however, a historical product rather than an intrinsic feature of Japanese society. Only since the mid-1970s has Japan’s harmonious system of industrial relations come to be highly praised. Before the oil crisis of 1973, many Japanese regarded the industrialized societies of the West, including their systems of labour–management relations, as models for emulation. Labour leaders generally believed in an ‘adversarial’ system of labour–management relations, in which labour and management might cooperate but had different interests. The labour movement sought to overcome the defects of enterprise unions by establishing a movement based on industrial unions and socialism (or social democracy); in essence, it strove earnestly to change itself into a Western-style labour movement. The spring wage offensive, or shunto, led by the left-wing labour federation, Sohyo, represented an attempt to conduct Western-style industrial unionism based on an adversarial relationship between labour and capital, whereas Domei, the right-wing labour federation, sought cooperative relations with management. Despite efforts to promote industrial unionism and other supposedly Western practices, the distinctive features of the Japanese employment system did not disappear. Indeed, they gained new prestige in the early 1970s when the OECD published a report praising the ‘three treasures’ of lifetime employment, seniority wages, and enterprise unions. Moreover, organized labour’s response to the oil crisis of 1973 presented a sharp contrast to the response of unions in the West. In Japan, as concern for the economy deepened, labour came to accept wage restraint and downsizing. The change in the labour movement’s economic strategy helped strengthen the Japanese economy’s international competitiveness from the mid-1970s, gaining favourable attention * Translated by Charles Weathers.

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for ‘Japanese-style industrial relations’ in other countries. The ideology of adversarial labour–capital relations receded, and cooperative enterprise consciousness became the centrepiece of labour–management relations. The change of labour strategy occurred much more quickly than in any other advanced industrialized nation during the 1970s. Why did Japan’s labour movement change so suddenly and alter its strategy during the period of the first oil crisis? Differently stated, why did the organized labour movement react so sensitively to changes in the economic environment? Clearly important to understanding this point are enterprise unions, which constitute the basic unit of union organization in Japan and which are by nature acutely sensitive to the performance of their firms. The industrial and craft unions of the West, having organizational bases outside enterprises, naturally react less flexibly to economic fluctuations. But it would be too simplistic to explain the behaviour of Japan’s unions only in terms of enterprise unionism since, as stated above, the labour movement long sought to form an industrial movement based on Western models. Moreover, industrial disputes were common between 1945 and 1973. However, a power struggle within the labour movement developed from the early 1950s between advocates of close ties to management and firms and supporters of socialism and industrial unionism. This essay refers to the guiding concept of proponents of the former as ‘enterprise consciousness’ and to that of proponents of an industrial union-centred movement as ‘labour unionism’. I use this conceptual dualism to elucidate the dynamic tension which existed within the labour movement prior to the establishment of close labour–management cooperation in Japan. Part II of the essay explains the dual nature of organized labour through historical analysis of the formation of enterprise unions. Part III examines shunto wage bargaining during the high-growth era from 1955 to 1973. During this period, many unions pursued an aggressive strategy based on an ideology propounding an adversarial relationship between labour and management; at the same time, however, proponents of enterprise consciousness steadily strengthened their influence within the labour movement. Part III examines the first oil crisis and its aftermath, when the leadership of the labour movement definitively passed from the left wing to the right wing. But this transition did not result from a simple contest for hegemony among labour leaders, nor from the mere existence of enterprise unionism. In addition to these factors, management strategies steadily strengthened the enterprise consciousness of unions during the previous two decades, notably in the pivotal steel industry, and the sudden onset of economic crisis in 1973 jolted the consciousness of workers and society. Thus the widely praised cooperative and non-contentious industrial relations practices of today have their origins in the workplaces of the 1950s and 1960s, but were fully institutionalized only in the mid-1970s. Finally, the conclusion offers a theoretical perspective on the transition to close cooperation in labour-management relations.

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II. Historical Preconditions

1. The historical formation of enterprise unionism A crucial difference between organized labour in Japan and in European countries with strong labour movements is that Japanese labour leaders failed to establish authoritative industrial unions prior to the Second World War, a consequence of efforts by government and business to repress independent unionism and create labour organizations tied to enterprises. In 1900 the government enacted the Public Order Police Law, Article 17 of which empowered the police to repress organized labour, and business thereafter opposed any attempts by reformist bureaucrats to fully legalize unions. Repression encouraged worker militancy, especially among small and medium-sized firms. Consequently, as in France and Italy, the tradition of radical unionism was deep-rooted. Employers and government sought to forestall the development of independent unionism by fostering worker loyalty to enterprises through practices such as seniority benefits and job security for their most valued workers. These practices created an internal labour market which influenced postwar employment practices. Before 1945, however, they were utilized in only a few large firms and benefited only a small number of workers. The combination of repression and attempts to bolster worker loyalty to firms undermined the efforts of moderate labour organizations such as Sodomei to establish industrial unionism. The political reforms of the American Occupation meant that labour unions, never more than grudgingly tolerated before 1945, became officially recognized actors. However, the prevalence of well-established internal labour markets and the lingering influence of the corporatist wartime industrial organization, Sanpo,1 inclined workers to organize on a workplace or enterprise basis, undermining the attempts of a reconstituted Sodomei to organize effective industrial unions. A survey conducted by the Social Science Institute of the University of Tokyo states, ‘Almost all of these unions appeared in workplaces through the everyday demands of the workers, with no outside guidance or intervention.’2 Union organization was spontaneous, but the new organizations remained committed to company wellbeing, at least as defined by the workers. Supported by the reformist policies of the early postwar period, labour unions formed quickly as workplace or enterprise units. A good example is the Mitsubishi Tokyo Steelworkers Union, one of the first unions to organize. Upon its establishment in October 1945, it issued the following founding principles:3 1. This union establishes, on the basis of building a new Japan, a democratic vision of labour in the expectation of contributing to global culture.

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2. This union establishes just relations between labour and capital, with the expectation of a progressive development of industry. 3. This union cultivates harmonious cooperation and morality and seeks to upgrade technology and to forge body and mind, with the expectation of bestowing social coexistence and coprosperity.

These principles reflect the popular perception that society had been reborn in a ‘new Japan’ in which a democratic vision of labour would undergird production. In an environment encouraging democratic egalitarianism, unions enjoyed considerable success in eliminating overt status differences between blue-collar and white-collar workers, and in winning wages based on personal factors such as family size and seniority.4 On the other hand, the Mitsubishi Tokyo Steelworkers Union’s statement that it would ‘strive to increase production for a new Japan with the goal of stable livelihoods for employees’ shows a link to a wartime consciousness, promoted by Sanpo, which encouraged a sense of national participation among workers. Sodomei indicated that organized labour intended to participate in economic reconstruction when stating in its founding principles that it ‘sought industrial democracy, as well as construction of a new Japan.’5 Even radical Sanbetsu Kaigi, the communistinfluenced labour federation, indicated the same desire to participate in national reconstruction when it proclaimed that it would ‘fight to restore Japan’s economy and build its culture’.6 Despite the efforts of Sodomei and Sanbetsu Kaigi, enterprise unionism became the predominant form of labour organization after 1945. An enterprise union usually includes all the employees, both blue-collar and white-collar, of a given firm and acts according to a principle of protecting the interests of members through enterprise-centred, rather than class- or occupation-based, activities. Enterprise unions tend naturally to become closely tied to management because of their concern for the stability of their firms. However, enterprise unionism does not automatically preclude the possibility of a leftist orientation or strong ties among unions. The high-growth era saw a struggle between managers and labour leaders to determine the direction of enterprise unions.

2. The postwar labour movement At the same time as workers were establishing thousands of enterprise unions, it was at the industrial and national levels that the two ideological currents of the prewar era were inherited and reproduced. Leaders of Sodomei sought to establish moderate industrial unionism, while communists drew on the radical tradition created in small and medium-sized firms. Sodomei’s right-wing labour unionism aimed at gradual social transformation in a framework of collective bargaining and labour–management consultation at various levels. According to the Sodomei Fifty-Year History, the

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main principle of ‘democratic labour unionism’ is a ‘way of thinking that rejects the attitude that unions are mobilization units of political struggle [in favour of ] a principle of economic struggle, and a way of thinking that rejects strike supremacy to stress collective bargaining’. It instead endorsed participation in management through management councils and participation in economic policymaking through ‘industrial democracy’.7 Sodomei’s strategy was to promote moderate social reform through industrial unionism. In contrast, Sanbetsu Kaigi sought radical social transformation achieved through unified political struggles. That meant ‘waging an all-out struggle against feudalism, militarism, and fascism participating in the democratic front and striving for the establishment of a democratic government supported by the people’.8 Thus two opposing conceptions of labour unionism coexisted in the labour movement. However, enterprise unionism was inimical to the principles of both these versions of labour unionism. The two sides adopted opposing ideologies, but both considered industrial or regionally based unionism to be organizing principles superior to enterprise unionism because they sought to benefit all workers rather than particular groups of workers, and Sodomei and Sanbetsu Kaigi expected to lead processes of social economic transformation. A wide gap separated the labour unionism-centred strategy of Sodomei and Sanbetsu Kaigi, both modelled on doctrines of Western unions, and the enterprise consciousness of enterprise unions. The difference persisted, or even widened, with the establishment of a new federation, Sohyo, in 1950.

III. Labour–Management Relations in the Period of Rapid Growth

1. The stable contentious structure The union organization rate, after reaching its peak of 55.8 per cent in 1949, quickly fell to a little below 35 per cent in 1955. Economic growth brought about a rapid increase in the number of salaried workers, but a decline in organization rate was evident. This indicates that organized labour confronted a difficult environment from 1950, as managers reasserted their authority. Labour suffered a series of setbacks, beginning in 1949 with the revision of the Labour Law and the enterprise restructuring prompted by the Dodge Line austerity programme. In 1950 the Red Purge enabled companies to fire many union activists, while the 1952 Densan (Electricity Workers Federation) dispute and the Nissan strike in 1953 dealt major blows to attempts to organize industrial unions. From 1955 to 1975, the organization rate remained stable at around 33–4 per cent. The workforce grew rapidly throughout this period, so the stability of the organization rate means that about one-third of the new employees

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T A B L E 3.1. Number of labour disputes, workers involved, and working days lost Date

1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

Disputes

920 1,035 1,517 1,414 1,487 1,186 1,233 1,277 1,247 1,345 1,330 1,680 1,864 1,709 2,222 2,483 2,287 2,016 2,422 3,051 3,687 3,024 3,882 5,283 4,551 6,681 5,808 9,459 10,462 8,435 7,974 6,060 5,416 4,026 4,376 7,660 7,477 5,562 4,480 4,826 2,002 1,839 1,879 1,868 2,071 1,292 1,138 1,084 1,136

Accompanied by dispute tactics

Strikes for half a day and over, and lockouts

Disputes

Workers involved (000)

Disputes

635 295 2,605 1,240 1,027 1,386 1,843 1,743 1,547 1,767 1,605 2,345 2,537 1,918 2,335 2,128 1,885 1,781 1,634 2,479 2,293 1,271 2,340 3,071 2,357 3,623 2,657 4,929 5,325 4,614 3,400 2,413 2,083 1,476 1,768 2,914 2,386 1,773 1,585 1,355 463 351 430 485 679 345 410 274 263

702 464 744 554 584 576 590 611 647 659 646 830 903 887 1,063 1,401 1,299 1,079 1,234 1,542 1,252 1,214 1,546 1,783 2,262 2,527 2,498 3,326 5,211 3,391 2,720 1,712 1,517 1,153 1,133 950 944 893 596 627 620 474 498 362 283 308 261 251 229

810 683 913 651 763 670 725 762 780 809 815 999 1,247 1,193 1,707 1,788 1,696 1,421 1,745 2,359 2,845 2,284 3,167 4,482 3,783 6,082 4,996 8,720 9,581 7,574 7,240 5,533 4,852 3,492 3,737 7,034 6,779 4,814 3,855 4,230 1,439 1,202 1,347 1,433 1,698 935 788 657 628

Source: Ministry of Labour, Survey on Labour Dispute Statistics,

Workers involved (000)

Working days lost (000) Total

Strikes

Lockouts

517 219 2,304 1,122 763 1,163 1,624 1,341 928 1,033 1,098 1,557 1,279 1,216 918 1,680 1,518 1,183 1,050 1,682 1,132 733 1,163 1,412 1,720 1,896 1,544 2,235 3,621 2,732 1,356 692 660 450 563 247 216 224 155 123 118 101 75 86 84 53 109 64 49

6,266 5,036 6,995 4,321 5,486 6,015 5,075 4,279 3,836 3,467 4,562 5,652 6,052 6,020 4,912 6,150 5,400 2,770 3,165 5,669 2,742 1,830 2,841 3,634 3,915 6,029 5,147 4,604 9,663 8,016 3,254 1,518 1,358 930 1,001 554 538 507 354 264 253 256 174 220 145 96 231 116 85

6,093 4,894 6,880 4,252 5,133 5,972 5,012 3,854 2,659 3,307 2,353 5,561 5,826 5,926 4,810 6,089 5,309 2,717 3,065 5,475 2,686 1,788 2,821 3,553 3,770 5,978 5,047 4,543 9,606 7,974 3,224 1,498 1,353 919 998 543 535 504 354 257 252 256 163 176 140 92 227 112 81

173 142 116 68 353 42 63 425 1,177 160 2,269 128 531 194 2,746 144 477 114 150 247 56 50 22 74 163 56 73 65 58 62 52 20 6 12 3 12 5 3 1 7 2 0.4 16 44 4 4 4 4 5

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joined unions (the unionization rate of male employees was much higher than that of females). Unionized employees were concentrated in large firms with union shop arrangements. From the 1960s to the early 1970s, an exceptionally tight ‘super-full employment’ labour market existed. Table 3.1 shows that a high level of industrial disputes continued throughout the high-growth period, but that disputes declined sharply from 1975. I use the term ‘stable contentious structure’ to indicate that disputes were a normal feature of labour–management relations during the high-growth period. The economy grew so rapidly from 1955 to 1970 that the numerous wage disputes did not disrupt either social or economic stability. High growth strengthened the bargaining power of labour while providing companies a margin capable of absorbing the costs of industrial disputes. The structure also remained stable in the sense that industrial unionism did not displace enterprise unionism as the dominant form of labour organization. During the course of the high-growth era, many Japanese came to regard enterprise unionism and lifetime employment as obsolete. This thinking was reflected in the government’s 1960 Plan to Double National Income, which claimed that the dual industrial structure and wage differentials between large and smaller firms was brought about by ‘several elements such as lifetime employment, special retirement allowances, and seniority wage systems which inhibit labour mobility’.9 However, managers and many enterprise-level labour officials continued to value enterprise-centred labour–management relations. How, after suffering numerous defeats in the early 1950s, was labour able to make contention over wages a routine feature of industrial relations? This was accomplished through the spring wage struggle, or shunto, described below, which the labour movement’s left wing developed as part of its campaign to promote industrial unionism and raise worker consciousness.

2. Sohyo and shunto Sohyo, the national labour centre established in 1950 by reformist leaders in Sanbetsu Kaigi and Sodomei, attempted to overcome the limits of enterprise unionism through collective action, but was hindered by divisions between its left and right wings. The Basic Principles of the federation state: ‘Through the massed power of all of Japan’s free and democratic labour unions, we intend to improve working conditions for workers, and to raise their political, economic, and social status. We expect to advance democratic revolution and, at the same time, to construct a socialist society.’10 Sohyo initially pursued a moderate path, as the the Basic Principles indicate: ‘Labour unions must conduct all of their economic activities in a constructive manner. . . . The many demands of the workers must be erected upon the basis of a proper relationship to the national economy.’ The latter part in particular shows the deep

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influence of Sohyo’s right wing. Nevertheless, socialist transformation remained a central goal of the labour movement, as indicated by other passages from the Basic Principles, such as the following: ‘For the sake of the liberation of the working class, it is extremely important to ensure that political authority is in the hands of the working class.’ The labour movement should, therefore, ‘resolutely join political parties attempting to create through peaceful and democratic means a socialist society’.11 The Korean War, the US–Japan Security Treaty, and other contentious political issues helped precipitate Sohyo’s turn to the left in 1951, and in 1952 four right-wing industrial unions left the federation to once again recreate Sodomei. But it should be noted that both Sohyo and the new Sodomei, as well as the latter’s right-wing successors, Zenro Kaigi (1954) and Domei (1964), considered themselves to be class-based organizations seeking the establishment of socialism, and they continued to support the Socialist Party. However, they were divided by opposing concepts of socialism. Whereas Sohyo believed in an antagonistic relationship between labour and capital, Sodomei was more inclined to favour cooperation. The right wing stressed ‘the idea that a free and democratic labour union12 should protect and expand the benefits of society in general’ and ‘contribute to raising productivity and developing industry’.13 Both Sohyo and, to a lesser degree, its right-wing rivals defined unionism in terms of class. The strong desire of workers to escape poverty provided support from below for Sohyo’s class-based approach and for the socialist path. Both Sohyo and the right-wing federations continued to be influenced by the socialist ideals inherited from the prewar era. Sohyo organized the first shunto in 1955 to be the centrepiece of its campaign to gain wage raises and heighten political consciousness through unified industrial struggle. According to Ota Kaoru, the father of the shunto strategy, ‘Japanese labour unions are, above all, enterprise unions. . . . The feeling among enterprise unions and their members when it comes to fighting is that, whatever the case, we don’t want to be the first to fight.’14 Given this premiss regarding the nature of enterprise unionism, ‘without relying on unified industrial struggle, we cannot increase the rewards from before’.15 Unified struggle would compensate for the bargaining weakness of isolated enterprise unions. Ota’s shunto strategy represented a change from the so-called Takano Line, the contentious political strategy pursued by Sohyo under Takano Minoru in the early 1950s, to an approach emphasizing the everyday economic concerns of workers. The new leadership did not abandon political objectives—only the overtly political struggle. The coincidence of shunto and the high-growth era beginning in the same year, 1955, is highly suggestive. Since shunto was a key element in Japan’s industrial relations system throughout the high-growth era, the labour movement was able to coordinate activities, though not to achieve organizational unity, within the framework of wage bargaining.

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In order to break through the employers’ hard line on wage increases, the eight industrial unions taking part in the first shunto in 1955 made wage rises their central demand.16 But they also supported Sohyo’s broader political programmes, including opposition to the Mutual Security Assistance (MSA) Agreement.17 This stance gained strong support from a public firmly opposed to rearmament. Zenro Kaigi, however, criticized Sohyo’s strategy of linking wage and political issues. Unlike Sohyo, Zenro Kaigi accepted the established political and economic structures, as indicated in statements like the following: ‘We will both cooperate for the prosperity of the national economy and strive for the stability of labour–management relations’ and ‘Along with the essential element of living expenses, we are considering the important factors of productivity and enterprise efficiency.’18 This political cleavage in the labour movement contributed to the split in the Japan Socialist Party in 1960. Sohyo’s tactics sought to mesh the objectives of mass mobilization and effective wage bargaining. Guided by class-based thinking, the federation emphasized that industry-level wage determination was necessary to overcome the limits of enterprise bargaining, and it aimed at equal wages for workers regardless of enterprise size. Wage struggle was used as a means of inducing mass participation by blue-collar workers. Strikes would be the means of mobilizing this mass energy. Ota claimed, ‘Without the powerful strikes of united industries, we cannot gain large wage increases.’19 Sohyo rejected the logic of the ‘ability to pay’ principle used by employers to justify their pay offers. What did the contentious stable structure represented by shunto mean for rapid economic growth? I will examine this point from the perspective of wage rises and productivity. First, thanks to high growth, the incomes and living standards of workers rose spectacularly. Nominal shunto wage increases ranged from 6 to 8 per cent in the late 1950s, and passed the 10 per cent level in the 1960s, reaching 13–18 per cent in the latter half of that decade. Taking 100 as the level for the year 1960, 1970 wages were 311 in nominal terms and 177 in real terms. Although Sohyo pressed shunto campaigns vigorously, it is believed that labour market factors exerted a stronger influence in pushing wages upwards.20 None the less, since shunto served as the mechanism for negotiating wages, a sense that wage rises resulted from shunto naturally developed among the participants. By the late 1960s it became standard practice for unions to demand—and receive—wage raises exceeding those of the previous year. With Sohyo and the employers’ federation, Nikkeiren, playing the lead roles, shunto became a confrontation between the whole of labour and the whole of capitalism, and continuous wage rises made possible the continuation of shunto. The real increase in Gross National Product exceeded 10 per cent in the latter half of the 1950s and, apart from fluctuations, was over 10 per cent during most of the 1960s. But shunto wage rises (also in real terms) fell well below the tempo of economic growth. The 1971 Labour White Paper stated:

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Viewed internationally, the connection between Japan’s wage cost rises and economic growth with price increases and so on, even regarding the recent economic slump, compared to the wage explosion and rapid price increases in the West, create relatively good conditions. Viewed from that perspective, industrial competitive capacity has become even stronger.21

To summarize, wage rises under the shunto system increased income levels of employees at a pace which was rapid, but not as rapid as the high level of productivity growth. In contrast to Europe, wage demands lagged well below the rate of productivity increase. That factor contributed to business’s ability to accumulate capital rapidly and invest massively in plant and equipment. As observed in the 1972 Economic White Paper, from the mid-1950s, the selected objective of economic policy was to greatly expand growth in order to achieve full employment under the ceiling [within the limits] of low international revenues and expenditures. For that reason, exports were expanded and capital accumulation promoted. . . . Even entering the second decade of the 1960s, there was no shift away from the endorsement and encouragement of capital investment and export-led growth.

In addition to restraining wage demands, enterprise unions also cooperated on rationalization in order to maximize gains for their firms. Thus enterprise unionism supported the highly competitive practices of Japanese capitalism. Without the support of unions for capital investment and technological innovation, the large recorded gains in labour productivity would not have been possible.

3. Enterprise-based industrial relations and the two ‘labour unionisms’ The steel industry played a central role in transforming shunto from a Sohyoguided campaign intended to mobilize workers to a system for strengthening labour–management cooperation in wage bargaining. Steelworkers’ unions became the labour movement’s principal advocates of close ties to management. In addtion, comprehensive management strategies toward wage bargaining strongly influenced labour’s own strategy. The major steel companies defeated leftist-led strikes in 1957 and 1959 and established the use of the ‘one-shot offer’ (ippatsu kaito), intended to eliminate, not the principle of negotiation, but the usefulness of strikes as a bargaining lever. An anticipated liberalization of trade encouraged managers to adopt the one-shot offer and take a hard line on wages. The largest and most important of the five major affiliates of the Federation of Steelworkers’ Unions (Tekko Roren) was Yawata Steel Corporation Union. During the 1950s, this union consistently opposed the aggressive wage strategy

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adopted by the leftist leadership of the federation. In its union history, which appeared in 1960, Yawata Steel Corporation Union summarized its position: during the struggle process, we received blame and even censure [from other unions] but . . . we perceived an important viewpoint within the Federation of Steelworkers’ Unions and from beginning to end called for prudent responsibility. . . . . . . the practice at Yawata is to proceed as far as possible with collective bargaining, and if we realize that bargaining alone has not reached a resolution, establishment of strike rights first becomes a problem. But at other companies, custom in general is that at the beginning strike rights are aimed at and on that basis collective bargaining is advanced. Apart from the issue of which is right or wrong, we perceive Yawata’s custom in its own way to be correct.22

During the 1960s, Miyata Yoshiji of Yawata Steel Corporation Union seized control of the Federation of Steelworkers’ Unions and used it as a base to extend his influence throughout the labour movement. Miyata became the Federation’s Vice-General Secretary in 1959, and was appointed General Secretary in 1960. He was the main figure in the formation of the International Metalworkers’ Federation-Japan Council (IMF-JC), founded in 1964. In the late 1960s and early 1970s, the IMF-JC displaced Sohyo as organized labour’s wage bargaining leader. Yawata Steel Corporation Union strove for what it deemed a realistic approach entailing ‘not “materialistic” and “selfish” disputes or conceptual political struggles all the time, but resolution of real problems’.23 Realism meant an enterprise-centred thinking which linked the protection of employment to support for firms through participation in company management.24 Miyata explained the union’s formula for dealing with the one-shot offer as follows: ‘Until the company’s offer was made, the Federation of Steelworkers’ Unions negotiated tenaciously and on the day designated for a response made the management side present its best offer.’25 The formula suggests that by coordinating demands as closely as possible with information on the financial situation, plans for capital investment, and market conditions of enterprises, reaching a loose consensus would not be difficult. From the management side, Orii Hyuga, once a director of labour management at Nippon Kokan (today NKK Corporation, Japan’s second largest steelmaker) explains: ‘Whether or not there were strikes, companies ordinarily tried to make the best possible response to the demands of the unions.’26 According to Orii, the underlying system making strike-free negotiations possible is as follows: 1. The five major steelmakers, in full agreement that ‘inter-enterprise competition must rest upon the same base’, solidify their unity in order to determine wages at the enterprise level. 2. ‘A comprehensive everyday labour management’ including ‘the preparation of communication systems’ comprising labour–management consultation, offers of management information, and contacts with union officials and informal groups.27

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3. Through efficiency pay systems linked to production, ‘real pay increases exceed nominal [wage] increases’.28 In other words, incentive payments decreased the importance of the formal wage settlement while heightening worker motivation. Establishing a uniform wage level among the major firms in the steel industry meant that wages were nominally determined at the industrial level. As seen in Orii’s explanation, the wage level was detemined not so much through negotiation at the industrial level as through coordinated consideration of each firm’s performance by managers after consultations with unions. As Matsuzaki Tadashi argues, the issue of the 1957 and 1959 steelworker strikes was not ‘determination of wages at the enterprise level as such’ but ‘leadership of collective bargaining’.29 The issue, in other words, was that the Federation of Steelworkers’ Unions, when dominated by its left wing, sought to undertake the leadership functions of an industrial union and to shift away from the enterprise-centred nature of unionism in Japan. However, managers defeated the unions, weakening the left wing and enabling the right wing led by Miyata to take control of the Federation of Steelworkers’ Unions, which thereafter accepted the legitimacy of the management bargaining approach. Prior to the liberalization of trade and capital in the 1960s, labour and management sought to improve cooperation in order to strengthen the competitive power of the steel industry. Even at that time, firms were in the process of weakening the influence of unions over workers by transforming foreman practices, workplace organization, and compensation systems.30 According to a 1963 survey of worker consciousness at Nippon Kokan, the typical bluecollar worker felt a much stronger sense of membership in the company than in the union. Among foremen and senior workers, the sense of membership in unions as well as companies was quite strong because they were viewed as mutually supporting organizations.31 While steel industry managers redesigned workplaces, the right-wing leaders of the Federation of Steelworkers’ Unions took the lead in reorganizing the labour movement. Their most important activity was establishing the IMF-JC, which brought together unions from all four national centres in the nation’s major export manufacturing industries: steel, autos, shipbuilding, and electronics.32 During the process of its establishment, the Steel Industry Contact Conference, comprising the leaders of the Federation of Steelworkers’ Unions, produced a publication of its general principles called ‘About Labour Unionism’ which stated: Our premiss being that the prosperity of the enterprises makes possible improved lives for workers, and the enterprise ensures its prosperity through rationalization, we take a fundamentally cooperative stance. Further, regarding the fruits of cooperation, we will make demands and fight to improve the working conditions of workers.33

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Zenro Kaigi also underwent steady reorganization, becoming Domei Kaigi with the addition of new union affiliates in 1962, and then Domei in 1964. Domei became Sohyo’s bitter ideological rival, and steadily increased its share of the work force in manufacturing industries at the expense of the leftist federation. Miyata, the leading proponent of enterprise-centred labour unionism, explained his reasoning as follows: Managers’ intentions and the workers’ demands must be fundamentally in agreement, as they are none other than the stability of employment. Just as managers wish for the existence, maintenance, and development of enterprises, workers hope to protect employment, so on that point the interests are in accord.34

The result of this enterprise-centred viewpoint is endorsement of a social structure free of ideology. Miyata states that he supports ‘gradual reform, and opposes class struggle’, and adds that in his desired society, ‘the existing capitalist structure of society can be improved through [establishment of ] a welfare society’. This represented a difference in approach from Domei, whose 1964 Charter proclaimed the importance of ‘building a democratic and socialist society’ and ‘strong unions centred on industry-level organizations’. Following defeats of the left in 1960 in protests against renewal of the US–Japan Security Treaty and the Miike mine strike, Sohyo once again deemphasized politics for economic considerations. The federation’s 1960 document, for the Advance of the Labour Movement,35 symbolized the change.36 Nevertheless, because of its powerful base in the public sector unions, the impact of enterprise consciousness was greatly attenuated in Sohyo. The federation remained militant and committed to socialist transformation. Sohyo’s modified version of labour unionism contrasted strikingly with the enterprise consciousness of the Federation of Steelworkers’ Unions. The influence of the steelworkers’ unions expanded rapidly during the 1960s, especially among manufacturing sector unions, while Sohyo’s strength increasingly rested upon public-sector unions. This change in the dynamics of the labour movement exerted an important impact upon shunto bargaining following the 1973 oil shock. IV. Labour Relations during the Oil Crisis

1. A change in consciousness from the high-growth era The 1973 oil crisis quickly changed economic expectations formed during the previous two decades, when people had come to take continuous high growth for granted. Continuous growth had raised standards of living, reduced income differentials, and promoted egalitarianism. Further, toward the end of the highgrowth era, criticism of growth-oriented economic policies and demands for

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improvements in welfare facilities had grown stronger. But the oil crisis ended ‘the blissful coexistence of growth and welfare’.37 After 1973, a strong sense of national insecurity led the public to support management strategies of supporting economic growth and protecting large corporations, even at the expense of living standards and worker income. Thus economic strategy became free of ‘social restrictions’, meaning the high wage rises and welfare demands of the end of the high-growth era. People had come to a large degree to equate the condition of the national economy with corporate wellbeing. By altering national consciousness, the oil crisis prepared the path for Japan to become an economic superpower from the end of the 1970s. The sense that there were economic limitations on livelihoods and incomes first became apparent in labour–management relations as a new consensus formed favouring the protection of jobs even at the expense of wage rises. A large 1974 wage increase was followed by tight wage restraint in 1975, while enterprises steadily downsized. Real incomes fell, consumption dropped off, and savings rose markedly. As the 1975 White Paper on National Livelihood stated, people’s economic behaviour shifted drastically from ‘an inflationary mind-set to a deflationary mind-set’.38 Before people fully comprehended the depths of the economic crisis, however, their first reaction was heightened inflationary consciousness. An unprecedented outbreak of strikes took place in early 1974, as can be seen in Table 3.1, and led to an average wage settlement of 32.9 per cent, the highest in shunto history. Ironically, the high wage raises agreed in the 1974 shunto generated fears of cost-push inflation, setting the stage for the moderate 1975 shunto settlement. That year, the average wage rise was only 13.1 per cent, and prices exceeded that figure by only a small amount. The real wage rise in manufacturing industries was 1.4 per cent in 1974 and minus 0.3 per cent in 1975. By establishing the pattern of wage moderation which has since characterized collective bargaining in Japan, the 1975 shunto became the startingpoint for a ‘stable harmonious structure’ of labour–management relations in which industrial disputes were rare. From 1976, nominal settlements were well below 10 per cent. In the manufacturing sector, real wage increases after 1975 ranged from zero to 1 per cent most years (the exceptions were 1976, 1978, and 1979, when real wage rises were in the 2–3 per cent range). Tight wage restraint from 1975 is credited with helping to suppress inflation and revive the economy. In contrast, most Western countries experienced long bouts of stagflation.

2. The ‘People’s Shunto’ and the ‘economic adjustment thesis’ What factors led to the huge wage increases of 1974? Contributing to the outcome was an increasingly radical social climate in which people criticized business practices yet expected high growth to continue indefinitely.

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1. Following the first oil shock in October 1973, Sohyo proclaimed People’s Shunto for 1974. The federation’s 1974 Shunto Platform stated: ‘Thinking that high growth makes rises and a full welfare system possible, and that without it nothing can be done, is a doctrine limited by growth-centred thinking.’39 In short, Sohyo believed that large wage rises and an extensive welfare system remained possible even without high growth if accumulation of capital in large firms could be curbed. Criticism of ‘growth-centred thinking’ underpinned much of the public criticism of high growth from the late 1960s, when ‘From growth to welfare’ expressed general public opinion. Sohyo accordingly adjusted its class-based criticism to attack the nature of the growth strategy utilized by capital, and linked this criticism to its desire to transform society. Important leftist election gains from the late 1960s in both the Diet and in local government encouraged Sohyo to believe that a capitalist crisis which would bring about socialist transformation was at hand. In short, Sohyo’s demand for wage increases indicated that its criticism of ‘growth-centred consciousness’ was directed at a high-growth economic policy subordinated to the accumulation system of monopoly capital and not to growth itself. The oil crisis did not at first fundamentally alter Sohyo’s view of the economic system. The federation claimed that without ‘democratic regulation of “market mechanisms” and “freedom of private capital” which could only be utilized by Big Capital’, policies such as restricting the money supply would ‘ultimately swell the profits of large capital . . . and the costs would be imposed on all workers and hardworking people’.40 Sohyo wished to deal with the economic disruptions of the oil crisis through the adversarial form of labour– capital relations of the high-growth era. Thus the left wing amplified its call for ‘labour unionism’ in the wake of the hyperinflation which followed the oil crisis. Similarly, Domei made its 1974 slogan ‘Large wage increases to thrust aside inflation and raise shares’. It claimed that economic thinking should not be dominated by a temporary recession, stating: ‘We must transform Japan’s economy through large wage raises that [transform] the distributional structure and greatly expand social security.’41 Sohyo intensified its shunto campaign in 1974, when it proclaimed the People’s Shunto. Encouraging the federation’s militancy was intense public criticism of distortions caused by high growth, by the strengthening labour bargaining power brought about by tight labour markets in the late 1960s, and by the worldwide inflation of the early 1970s. From 11 to 13 April, 72 industrial unions in Sohyo and the left-leaning Churitsu Roren with 4.74 million members (77 industrial unions with 4.78 million members including Domei affiliates and Zendoro) staged the largest strike in Japanese labour history. At that time, Ministry of Labour officials believed that this mass participation and joint struggle heralded ‘a turning-point in the history of the labour movement.’42

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Although the economy was already beginning to slump during the period of the 1974 shunto bargaining, many firms continued to amass large profits. Moreover, large enterprises saw their standing damaged by sharp public criticism of alleged price manipulation, a factor which contributed significantly to the willingness of managers to concede high wage settlements. Consequently, the settlement easily exceeded the media’s forecast of a 25 per cent and ¥25,000 rise. Following the shunto settlements, Nikkeiren warned that the ‘selfish’ settlements of individual enterprises had broken the resolution of employers. Spurred by fear of inflation, Nikkeiren organized the Ohaba chinage no yukue kenkyu iinkai—literally, ‘Where high wage rises will lead us research committee’—which fanned public fears of inflation and supported the employers’ campaign for wage restraint.43 2. In contrast to the People’s Shunto of 1974, the 1975 shunto could be called the Economic Adjustment Shunto. The Federation of Steelworkers’ Unions first introduced the term ‘economic adjustment’ (keizai seigosei) at its August 1974 convention. There, Miyata Yoshiji argued that the nation faced a transition from high growth to stable growth: ‘There must be change to a shunto that aims to match real wage increases to economic growth.’ (Miyata later claimed that he proposed a 15 per cent guideline before Nikkeiren did.44) The practice of demanding wage rises higher than those of the year before would have to be abandoned.45 Guided by the economic adjustment thesis, labour did not take growth for granted, as it had under the previous shunto strategy. Instead, unions made improvement of wages and working conditions conditional upon the prosperity of the national economy and major corporations. Whereas the demands of both Sohyo and, to a lesser extent, Domei called for an expansionary economic growth policy to maintain wage rises, the Federation of Steelworkers’ Unions was more concerned with the inflationary consequences of continued high growth, and more disposed to accept wage restraint to protect long-term corporate growth. Above all, the steelworkers’ unions wished to support management strategies for promoting international competitiveness. Another important feature of the 1975 shunto was that the government and employers organizations played important roles in promoting wage restraint. In its publication ‘The Influence of Springtime Wage Rises and Future Economic Management’ (May 1974), the Economic Planning Agency predicted that the 32 per cent wage increase would lead to a 9.5 per cent rise in wholesale prices and consumer price rises in the 10 per cent range, and called for holding 1975 rises to the 16–20 per cent range. Finance Minister Fukuda Takeo stated in May that high wage rises, were a major cause of price rises, and appealed for a ‘democratic means of guidelines’, meaning a sort of unofficial incomes policy. The government’s actions showed that it had suffered a rude shock from the large wage increase of 1974. Its reasoning was that wage

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increases are not a dependent variable decided by prices, enterprise profits, or labour markets, but an independent variable which exerts an influence upon them. With supply constraints and excess liquidity generating severe inflation between 1974 and 1975, the government rigidly repressed demand in order to moderate wholesale price increases and then reduce consumer prices. The policy of restraint proved successful, but ‘the decisive factor in quieting inflation was the movement of shunto wage increase rates’.46 In early 1975, the government intensively pursued contacts with labour. Fukuda and Labour Minister Hasegawa Shun met frequently with labour leaders in the Private Sector Labour Union Joint Action Committee, formed the previous year by ten industrial unions including the Federation of Steelworkers’ Unions. The government pledged to exercise responsibility in restraining inflation in exchange for a promise of cooperation by the unions in restraining wage increases.47 This marked the beginning of cooperative initiatives by government and labour. Nikkeiren also worked to create conditions favouring wage restraint through Anti-Inflation Policy Meetings held with Domei. The system of government–labour–business cooperation was established with Domei and the IMF-JC representing right-wing labour unionism. The key to this cooperation was the common belief that it was necessary to help the economy in crisis. For example, Domei chairperson Amaike claimed, during the federation’s January 1975 convention: ‘If we go ahead with a large wage rise, the Japanese economy will collapse in the future.’48 What participants demanded in the actual negotiations, which were conducted informally and privately, differed considerably from their official positions. Domei, for example, argued that ‘labour unions must exercise their social responsibility’, but also claimed that too much restraint risked worsening the recession by reducing consumption. The federation set its demand at 27 per cent, well above the Nikkeiren target of 15 per cent, and continued to demand development of the welfare system.49 Similarly, the IMF-JC officially called for a 25 per cent increase.50 These figures, which were much higher than the numbers actually being discussed, contrasted sharply with Sohyo demands for a 30 per cent wage increase. Sohyo and Churitsu Roren refused to moderate the previous year’s strategy, claiming that ‘the so-called “wage self-restraint debate” ’ would not succeed with regard to either pay or inflation.51 The 3 per cent differential from Domei’s 27 per cent demand, and the 5 per cent differential from the IMF-JC’s 25 per cent (the differences were considerably larger in terms of real wages) signified the sharply contrasting attitudes of the left and right wings of the labour movement. The resulting settlement, in which the major steel firms played a leading role, was 13.1 per cent, well beneath even the 15 per cent guideline called for by Nikkeiren. Nikkeiren claimed that its two appeals—to ‘protect worker livelihoods from prices and unemployment’ and ‘protect enterprises from recession and bankruptcy’—had meshed together admirably. Naturally, labour

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did not accept this evaluation unreservedly. Sohyo was highly critical, while Domei affiliate Zensen Domei (textile workers) complained that Domei’s ‘halfbaked [chuto hampa] idea of a social contract was exploited by the government and the zaikai to legitimize wage restraint’.52 Even IMF-JC leaders reflected that the outcome revealed that it was necessary ‘to strengthen labour power’ and ‘establish an economic policy for labour’.53 The timing of the negotiations helped to consolidate IMF-JC leadership over wage bargaining. Two industrial unions closely involved in formulating the shunto settlement, the Federation of Steelworkers’ Unions and the Federation of Shipbuilders’ Unions, received the highest wage settlements at 14.9 per cent and 15.1 per cent respectively, partly because they settled first when economic conditions remained favourable, and partly because their industries were still robust. In the following weeks, a deepening recession, deliberately aggravated by the Finance Ministry’s policy of drastically tightening the monetary supply, steadily weakened the bargaining position of other unions. This situation strengthened the perception that steelworker and other metalworking sector unions were pace-setters in shunto negotiations. In future shuntos, the wage settlements of the metalworking industries generally marked the upper limits to wage settlements for most workers. The combination of a hard line taken by employers, monetary stringency by the Ministry of Finance, and enterprise consciousness accounted for the drastic change between 1974 and 1975. Although the IMF-JC provided important support for the position of the employers and the Ministry of Finance, the wage restraint line was backed within organized labour primarily by ‘individual unions under the umbrella of Sohyo and Domei’.54 Government–business– labour cooperation also encouraged moderation, but high-level organizations could only recommend an upper limit for wage rises, and neither the IMFJC or Domei had sufficient authority over affiliates to enforce the provisions. Nevertheless, industrial unions saw their strategies crumble as enterprise unions turned to face the worsening positions of their enterprises. 3. Nikkeiren, observing that the 1975 settlement had transformed a twentyyear foundation of shunto practice, stated quite accurately that its most important feature was ‘a shift to wage determination responding to the conditions of enterprises by industry and by region’.55 The locus of wage determination had conspicuously shifted to the enterprise level. The 1975 shunto put an end to Sohyo’s campaigns for unified, egalitarian wage increases, and meant that settlements in small and medium-sized enterprises became more subject to market pressures. Unsurprisingly, the 1976 Labour White Paper stated that wage rises agreed in 1975 showed the greatest dispersion by industry and by size of enterprise in the postwar era.56 Consequently, organized labour perceived the situation quite differently at the national and enterprise levels. The IMF-JC proclaimed the need for

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‘appropriate’ rises, and Domei called for ‘economic adjustment’ which still included improvements in the welfare system. But at the enterprise level workers were presented with a supposed choice between ‘wages or jobs’.57 Ultimately, the economic adjustment thesis had little impact on industrial relations at the enterprise level, because labour as well as management became preoccupied with protecting individual firms. In fact, the economic adjustment thesis proved largely irrelevant during the 1975 shunto. The gap between labour pronouncements and labour actions needs to be considered. As Hyodo Tsutomu has pointed out, ‘The union movement regards the real economy as a given condition’.58 In other words, the industrial and national-level labour organizations, particularly Domei, consistently formulated demands and strategies which ignored the active role of workers in shaping the economy. Furthermore, Japan’s industrial and national-level labour organizations lack the authority to regulate the behaviour of enterprise unions, whose commitment to market-driven behaviour has grown stronger since 1975.59 Following the 1975 shunto Sohyo, arguing that enterprise consciousness was the fundamental weakness of the labour movement, ‘called strongly on unions not to enclose themselves within their enterprises’.60 Domei pointed out that, ‘because of enterprise unions, organizational weaknesses are created at every level’.61 Industrial unions attested to the problem posed by enterprise consciousness as they tried to coordinate the widely varied demands of their affiliates. ‘Industrial ego and enterprise consciousness escalated [during the 1975 shunto campaign],’ noted Zendentsu (Nippon Telephone and Telegraph Corporation Workers).62 4. The most important of the differences between the 1974 shunto and the 1975 shunto was the transition from labour unionism to enterprise consciousness. This change transcended the hostility between Sohyo and the IMF-JC and Domei and became a general phenomenon. Neither Sohyo’s People’s Shunto (which nominally continued in 1975) nor the economic adjustment thesis of Domei and the IMF-JC had significant influence over individual union activities. The economic adjustment thesis and the wage self-restraint line helped to hold down wage demands, but company conditions and public opinion played the decisive roles in influencing enterprise union behaviour. The influence of enterprise unionism and enterprise consciousness continued to grow stronger within the labour movement following the 1975 shunto. The Federation of Steelworkers’ Unions praised the settlement and the role of organized labour. ‘There is criticism of today’s [agreement] as “the upper limit of a low amount”, yet in some way our basic strategy has been attained,’ it claimed. ‘Through the organization of the private sector, or, rather, with our help, a way was found to handle the greatest problem, halting inflation.’63 What primarily guided labour in the 1975 shunto was not the labour unionism of Domei, but the enterprise consciousness of the IMF-JC and the

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Federation of Steelworkers’ Unions, with its emphasis on the bond of profit unifying labour and management.

3. The transformation of the structure of labour–management relations 1. The 1975 shunto became the starting-point for the transformation from the high-growth era structure of labour–management relations to that of the low-growth era. The change was not basically one of movement from Sohyo’s ‘class-based’ unionism to the cooperative principles of Domei and the IMFJC; rather it was the loss of influence of the national organizations over their affiliates and the assertion of the interests of individual enterprise unions. The change of leadership from Sohyo to Domei and especially to the IMF-JC is the result of the assertion of enterprise union interests. Without this understanding, it becomes impossible to explain the profound change which occurred between 1974 and 1975. Enterprises began reducing first production and then the size of workforces in 1974. They utilized a series of measures to reduce labour costs such as reducing overtime, halting new recruitment, and imposing temporary layoffs. After two decades of constant growth, employment in non-agricultural sectors declined in late 1974, and the rate of job turnover fell dramatically. (The rate of job turnover in manufacturing was around 30 per cent during the high-growth period, falling to 20 per cent in the early 1970s, and then dropping again toward 10 per cent from 1974.) The separation rate fell in the early 1970s despite a labour shortage largely because employers attempted to improve working conditions. But separation rates continued to decline from 1974 as workers evinced stronger concern for protecting jobs. Enterprise unions responded to the demands of their core members, full-time male employees, so that employment adjustment led to large declines in the employment of women. The employers’ bargaining logic of ‘wages or jobs’ had a strong persuasive power at the enterprise level. Whereas the tight labour market of the high-growth era had brought ‘freedom of movement’ to individual workers and strong bargaining power to labour, the oil crisis strengthened the attachment of individual workers to enterprises, greatly reducing labour’s bargaining leverage. The attitudes of the workers became the foundation upon which labour unions cooperated with managers to restrain wage demands and rationalize production. As described earlier, improvements in labour management in major steel firms and other large enterprises and the trend toward enterprise consciousness in organized labour had begun in the 1960s. However, the leadership of the Federation of Steelworkers’ Unions and the IMF-JC began to assert itself strongly only from the time of the oil crisis. At that time, movements favouring the economic adjustment thesis found propitious circumstances as public

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support for economic expansion faded and labour–employer disputes over income shares dwindled. In addition, Sohyo saw its influence undermined when its aggressive public unions suffered reversals in the courts in 1973 and in the massive National Railways strike in 1975. 2. Stronger enterprise-centred consciousness, along with the broader socioeconomic transformation, put an end to Sohyo’s leading position in shunto. However, the economic adjustment thesis of Domei and the IMF-JC, while compatible with economic conditions, also failed because the possibilities for action by enterprise unions were limited by the economic performance of their firms. The deflationary line of the IMF-JC, Nikkeiren, and the government took precedence as Miyata equated the interests of export-oriented big business to that of the nation at large. From 1976, major firms in the steel, shipbuilding, electronics, and auto industries resumed their leadership in wage determination. In the same year, employers formed the Eight-Firm Discussion Group64 to exchange information and interact with the four main industries of the IMF-JC. These organizations underpinned a system in which the ability to pay, as decided by employers concerned to maintain industrial competitivness, set the upper limit to wage settlements in order to maintain international industrial competitiveness. The resulting system of wage restraint has received much of the credit for the economy’s rapid recovery from the oil crisis and the subsequent superb export performance of the Japanese economy. In reality, wage settlements centred on individual enterprises in no way contradict the principle of the IMF-JC-guided economic adjustment thesis because both are premissed on the prosperity of enterprises. This is quite different from Domei’s earlier proposal for industrial democracy.65 The Federation of Steelworkers’ Unions believes that macro-level economic adjustment depends on the prosperity and growth of firms, and therefore supposes no conflict between macro-level and micro-level adjustment. Therefore, this version of the economic adjustment thesis is premissed on free actions by enterprises, and envisions a flexible adjustment of industries and the national economy emerging from the aggregate activities of enterprises. The focus of activity by union élites was displaced from wage struggle to participation in policymaking. However, what unions were demanding was not social transformation but incremental economic reforms such as tax code revision, curtailment of agricultural subsidies, a more active employment policy, and a more aggressive anti-inflation policy. The Trade Union Council for Policy Promotion, established in 1976, became a means through which major private-sector unions began earnest ‘policy struggles’.66 Through policy consultation, organized labour intensified its interaction with government agencies and the LDP. 3. The development of enterprise-level labour–management consultation facilitated adjustment, while intensive rationalization enabled Japanese manufacturers

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greatly to increase productivity. The process of downsizing also reduced the number of full-time jobs in manufacturing, and triggered the initial decline in the labour union organization rate. But the important point is that the national-level labour organizations did not slow, and even encouraged, the movement to enterprise-centered labour–management relations and the shift in labour focus from aggressive wage bargaining to support for conservative economic policymaking.

V. Conclusion Labour and management have continued to refine the practices instituted following the oil shock. First, the widespread sense that determined efforts of managers had overcome the difficulties of the post-oil crisis economy and forged a successful adjustment from high growth to slow growth elevated the prestige of enterprises. Unquestionably, this sentiment contributed to a social environment propitious to the rise of enterprise consciousness within the labour movement from 1975. This consciousness manifested itself in the creation of a succession of new organizations intended to unify labour. Private-sector unions established the Committee to Promote Labour Movement Unification (Toitsu Suishinkai) in 1980. It was succeeded in 1982 by the Japan Private-Sector Trade Union Council (Zenmin Rokyo) and in 1987 by the Japanese Private-Sector Trade Union Confederation, better known by its Japanese acronym, Rengo. In 1989 Sohyo dissolved itself into ‘New Rengo’ (generally also known as Rengo). The Federation of Steelworkers’ Unions and other IMF-JC unions played key guiding roles in the unification process. Second, the Sohyo-led movement which had supported the high-growth era style of labour movement virtually ended with the privatization of the national corporations in the 1980s, which weakened Sohyo’s important publicsector unions prior to the federation’s entry into Rengo. Once Rengo absorbed the bulk of the former four national centres (Domei, Sohyo, and two smaller centres, Churitsu Roren and Shinsanbetsu), ‘class-based’ (and left-wing) labour unionism was virtually confined to two newly created but small labour federations, Zenroren and Zenrokyo, both composed largely of civil servants and unions in small and mid-sized enterprises. Third, the oil crisis stimulated the sustained rationalization of production which generated a subsequent economic recovery and steady growth despite the slowdown of the global economy. The rationalizing style of management has continued uninterrupted to this day. The second oil crisis in 1979 and the rising value of the yen since 1985 have demonstrated the instability of the economic environment, providing justification for the defensive strategies of

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enterprises. Under increasing market pressure, domestically as well as internationally, manufacturing firms dared not lag in efforts to improve efficiency and cut costs. Pressured by market forces, enterprise unions supported rationalization strategies at the same time as they were being reshaped by rationalization. Moreover, the labour market was quite soft throughout the 1980s, yet to judge from separation rates employees were remaining for long periods with employers. The 1980s proved to be the culmination of enterprise consciousness. The apoliticism of enterprise consciousness encouraged the increasing conservatism of politics, while ‘harmonious’ industrial relations fostered Japan’s development into an economic superpower. The improvement of productive efficiency effected by rationalization offset the nation’s lack of natural resources and increased international competitiveness. This story is well known, but it also had important implications for labour union bargaining strength. Labour’s share of national income rose quickly during the first half of the 1970s, then stagnated and declined from 1976. Sustained heavy investment and wage bargaining restraint contributed to this distributional stability,67 indicating that labour–management relations posed almost no obstacle to capital accumulation after the oil crisis. 2. Japan’s enterprise unions have proved to be highly sensitve to their economic environment. This is easily comprehensible if we consider enterprise unions to be essentially associations of employees dedicated to protecting their interests as members of particular firms. For that reason, they often link the interests of workers and managers, while managers use the unions to look after the interests of employees. Enterprise unionism contributes to the high flexibility of industrial relations practice in Japan, in contrast to the unions of the West, which are ‘rigidly’ organized by occupation or industry rather than by firm. However, this high flexibility has been too one-sided. Labour unionism receded markedly following the oil crisis, to be replaced by strengthened enterprise consciousness which helped heighten productivity and profitability but did little to improve working conditions (notably working hours) or to further the creation of social capital. So far, the establishment of Rengo has done little to change matters, since the new federation strongly supports the existing system.68 Instead, as an Economic Planning Agency report suggests, the bargaining power of labour unions seems to have declined relative to the growth of the national economy.69 The EPA’s report indicates that regulation, administrative guidance, and the labour market—and not labour bargaining power—account for recent wage rises and reduced working hours. Further, the very recent economic situation suggests that the competitiveness of Japanese firms resulted in harsh trade friction and a rapidly appreciating yen, which ends in the transfer of manufacturing capacity to other countries and the contraction of internal labour markets at home.

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Through harmonious labour–management relations and the fierce corporate competition which they reflect, enterprise unions have minimized labour– management disputes and made an important contribution to improving productivity. In this regard, they have played important roles in the efforts of Japanese governments to promote economic development and to minimize social restrictions on enterprises. In ways positive as well as negative, enterprise unions support the ‘enterprise-centred’ structure of Japanese society.

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4 The Weakness of the Contemporary Japanese State* WATANABE OSAMU

I. The Japanese State Attracts Attention

1. Contradictory images Japan perplexes the world. It has become a major world power, yet it does not behave the way most of the world expects a world power to behave; sometimes it even gives the impression of not wanting to belong to the world at all. At the same time, Japan’s formidable economic presence has made it a source of apprehension both to the Western countries and to some of its Asian neighbours. The relationship between Japan on the one side and the United States and Europe on the other is in serious trouble. In the late 1980s the West is beginning to harbour doubts about Japan as a responsible partner in politics and trade. In Japan it has become common for officials and prominent commentators to suggest that their country has fallen victim to widespread international ill-will, and they are apt to dismiss unfavourable analyses as ‘Japan-bashing’.1

So begins Karel van Wolferen’s The Enigma of Japanese Power, a best-selling work that has been translated into many languages. Recently, journalists and researchers in the United States and Europe have turned their attention to the problem of Japan’s extraordinary emergence as a global economic power, and the deep impact that its ‘unilateral and destructive economic growth’2 has been having on the world economy. Theories of ‘the Japan threat’ have appeared many times in the past, and have usually sought the grounds for Japan’s uniqueness in its society and national traditions. More recent versions exhibit a new trend by pointing to the peculiar structures of the Japanese state and its political system. Theories of the Japanese state have now become something of a fashion. Yet even a cursory look at the new thinking about the state reveals two contradictory patterns. One—the thesis of the strong Japanese state—assumes that a carefully calculated, consistent policy on the part of the state lay behind Japan’s emergence as an economic superpower; the other denies this. * Translated by Rikki Kersten.

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The ‘strong state’ thesis

When the US Department of Commerce first advanced the ‘Japan Inc.’ theory3 in the early 1970s, Japan and the US were already in the first round of a trade dispute over textiles. As trade frictions continued, the idea of ‘Japan, Inc.’ became entrenched. Soon Ezra Vogel’s Japan as Number One4 and Chalmers Johnson’s MITI and the Japanese Miracle,5 published in 1979 and 1982 respectively, became the representative works of the ‘strong state’ thesis. Vogel, who pioneered the recently popular ‘Japanese model’ of postindustrial development, sought the main factors for Japan’s success in its ‘specific organizational structures, policy programs, and conscious planning rather than in its national character and traditional virtues’.6 Study the Japanese system to rebuild America’s declining economy, he urged his countrymen. He particularly lauded the organizational and planning ability of the Japanese government and bureaucracy. In fact, Vogel argued, Americans ought to emulate these essential features above all others. For over a hundred years . . . the Japanese government had to assume leadership in dealing with broad issues in planning, restructuring, modernizing, and phasing out declining industries, a leadership America is only now beginning to consider desirable.7 (emphasis added)

Vogel stated that the bureaucratic institutions that had systematically supported Japanese industrial development were superb, whereas in America government intervened in industry only in order to ‘oversee the business community and uncover deceptions’.8 The American political sphere lacked the coherence of its Japanese counterpart. By contrast, the bureaucratic elite of Japan . . . tries to provide a framework that best enables business to prosper in the long run. Japan is not without regulatory agencies, and indeed parts of the American bureaucracy encourage business; but the Japanese elite bureaucrats’ sense of responsibility for overall economic success is broader and deeper.9

Furthermore, these deliberate policies of Japan’s political and bureaucratic institutions have not only supported Japan’s industrial development. They have made possible a high standard of living, as evidenced in areas such as education and public safety. Through ‘a basic rule of Japanese political life, “fair share” ’,10 Japan has also achieved an egalitarian society. For Vogel, in short, the Japanese model converges on the superior leadership of its state and bureaucracy. Theories such as this contain errors that are hard to ignore. Overall, however, they stress that the Japanese state has systematically promoted and protected economic growth.

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The ‘weak state’ thesis

A second way of thinking about Japan—the ‘weak state’ theory—seeks the basis for Japan’s recent economic expansion and its ‘inappropriate’ behaviour in the state’s structural weaknesses. James Fallows, who won notoriety with his sensationally titled book, The Containment of Japan,11 is one of its proponents. Fallows claims that Japan’s ‘unrestrained and unbalanced economic growth’12 is controlled neither by the market nor by the political system. As an example, he cites the muchvaunted Maekawa Report produced under the Nakasone cabinet. It bore no fruit, argues Fallows, because Japanese politics is dominated by so-called ‘tribes’ (zoku) and their ‘special interest politics’,13 which prevent the state from exercising leadership. Van Wolferen emphasizes this point with greater clarity. He divides the state in the wide sense into two entities, ‘nation’ and ‘state’, and says that in Japan there is a ‘nation’, but no ‘state’. A nation is defined by a shared language and a sense of cultural separateness. Japan is clearly a nation. The state . . . is the ultimate repository and arbiter of power within a country. Where in Japan, then, must one look to find the state?14

There are many other countries where power does not reside in the parliament, the institution where constitutionally it is supposed to reside. But in Japan’s case neither the parliament nor the parties nor what Vogel and Johnson regarded as the nucleus of the Japanese state—the bureaucracy and zaikai (the leaders of the big business federations)—have ultimate power. Japanese authority is a ‘system’ composed of each of these groups of power-holders who form alliances and regulate each other. But no central regulatory organ controls this ‘system’.15 And this, says Van Wolferen, produces incomprehensible behaviour on the part of Japan. If Japan seems to be in the world but not of it, this is because its prime minister and other power-holders are incapable of delivering on political promises they may make concerning commercial or other matters requiring important adjustments by one of the components of the System.16

This calls to mind Tsuji Kiyoaki’s explanation of the difficulty of decisionmaking in Japan’s emperor system, which was a result of the various departments of the state vying with others to protect and advance their own interests.17 In any case, Van Wolferen’s explanation of Japan’s unique modus operandi as a lack of a state renews our attention. For he claims that Japan’s distinguishing feature is precisely this lack, rather than the ‘unity of purpose’ of the state which the Department of Commerce and Vogel argue.

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2. The ‘restoration of the state’ It is not only in the United States and Europe that much has been made of theories of the Japanese state. Especially since Japan gained economic superpower status in the 1980s, calls have arisen for it to discard economism and play an international role as a great power. The prime minister who revived discussion of ‘the state’

When Prime Minister Nakasone Yasuhiro began referring to ‘the state’ in speeches made in the mid-1980s, he reopened debate on the ‘restoration’ of a powerful state. Until this time, Conservative party governments had carefully avoided the word ‘state’ especially since the clashes over renewal of the Japan– US Security Treaty in 1960, preferring instead such terms as ‘the economy’ and ‘the people’.18 References to ‘the state’ evoked the spectre of a revival of prewar Japanese militarism. Nevertheless, in the summer of 1985 Prime Minister Nakasone, speaking at the Liberal Democratic Party’s Karuizawa seminar, made references to ‘the state’ and actually advocated its ‘restoration’: What surprises me most when I go to foreign countries is that in their eyes Japan appears, more than we can ever imagine, to be a very powerful country. . . . Japan must advance rapidly as an international state, and from this standpoint it is extremely important to reevaluate Japanese ‘identity’. . . . In prewar days we had the so called ‘imperial state view’ of history. After defeat the ‘Pacific War view’ of history was introduced. When one is defeated in war . . . a tendency develops to look down on oneself; everywhere in Japan today there is a mea culpa tendency to say Japan is wrong whenever something happens. . . . I am against that way of thinking. In Japan in particular, the state is not contractual but has been generated over a long period of time as a natural community, and we are therefore still a state whether we win or lose. Since glory and shame alike belong to the people, it is our duty as a state and as a people to advance, seeking glory and abandoning shame.19

This type of ‘state revival’ argument prevailed among ideologues of the ruling élites in the late 1980s, when they began to advance the line that Japan should escape from mere economism. For instance, one writer argued that Japan had only ‘industry’ and no ‘state’, and thus was headed in the same direction as Carthage and Venice, which had only developed strong economies. To avoid that fate, Japan should ‘make the Japan–US alliance its lifeline’; as the hegemon, the United States should carry more of the burden; and Japan should develop a ‘grand strategy’ to ‘rein-in’ the march of Japanese industry. Today it is only natural for enterprises to consider their corporate warriors to be fighting on the front line of overseas expansion. But what Japan now needs is a grand strategy that forces them to reconsider their struggle from the perspective of the state and its citizens.20

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The Iraq crisis and the state

The argument that Japan needs a state that will transcend the ‘economy’ and the ‘enterprise’ rose an octave higher with Iraq’s invasion of Kuwait in the summer of 1990. Since the Gulf War ended, the argument that ‘the state’ needs to be restructured has finally made a huge dent in the politics that once gave exclusive priority to the economy. The PKO (United Nations Peacekeeping Operation) Cooperation Law was enacted in June 1992. Under its guise, token numbers of Self Defence Force troops were dispatched for the first time to Cambodia, Mozambique, and even distant Ruwanda. Invigorated by these symbolic developments, proponents of the need for a strong state (‘kokka’ no hitsuyoron) gained additional strength. Under the leadership of Ozawa Ichiro, they finally broke free from the politics of the Liberal Democratic Party (LDP), which had been hard-pressed by its own practice of giving priority to the economy. Ozawa’s ‘normal state’ meant breaking through interest politics and the principle of economics-first, so that Japan could contribute to the maintenance of world order as one of the great powers of the North.21 Ozawa’s argument achieved the completed form of the argument for reviving state power which had been pending since the late 1980s. Never in the postwar period has the word ‘state’ been as brazenly and widely used as it is today. Earlier, ‘the state’ disappeared from view, and was not mentioned. When it reappeared it received strong criticism at home and abroad, and tended to undermine the stability of conservative domination. Thus the recent popularity of ‘the state’ clearly indicates a major shift in this dominant postwar trend.

3. The 1960s and 1970s-type state as the prototype of the contemporary state The special features of the Japanese state have become a subject of discussion at home and abroad; but regardless of how we evaluate those features, every thesis tends to highlight only one aspect of the state. Furthermore, there is an intrinsic relationship between the state that is censured at home and abroad for causing chaos in the international economy, not assuming the responsibilities that accrue to a major power, and lacking leadership, and the theory advanced by Vogel not so long ago that the Japanese state had achieved world leadership and America ought to emulate it for the sake of its own economic renewal. The coexistence of these two faces is the special character of the contemporary Japanese state. The prototype of the Janus-faced Japanese state

The state structure noted by Vogel and Johnson in which national policy concentrated on the single goal of economic growth was established in the 1960s

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and 1970s. In this period the state relied heavily on the United States for its own defence while paying a minimum amount for that defence. The state during the 1960s and 1970s focused exclusively on economic growth and behaved very passively in international affairs. In other words, it was the type of state that proponents of the ‘state restoration’ thesis rail against. At the same time, the state that Van Wolferen talked about, the state regulated by a ‘system’ and close to paralysis, was none other than this state of the 1960s and 1970s, when politics, finance, and bureaucracy were structurally interlinked. At present the Japanese state is attracting much criticism. This is because the 1960s–1970s-type state, representing a structure devoted to advanced economic growth, has proven remarkably conducive to capital accumulation while, on the other hand, frustrating Japan’s ability to assume a leadership role and fulfil its international responsibilities. The state’s economic character has also become a barrier to the reconstruction of Japanese nationalism. However, in order to investigate the structure of the Japanese state we must clarify how this state with two faces was constructed. The current international debate is inadequate, because it focuses on only one dimension of the state structure and fails to explore the foundations of such a system. Outline of the state during the 1960s and 1970s

The key to understanding the contemporary state is the state of the 1960s and 1970s. During this era the two faces of the state appeared in their representative form. The state constructed in the 1960s and 1970s had particular structures with domestic and external orientations. Externally, this state depended on the international community through its total dependence upon the United States. Domestically, it was under the firm command of industry, which built up within society a particularly powerful dominance over the workers. Both dimensions enabled it to create a climate conducive to economic growth, to promote this growth, and to realize stable conservative domination. On the other hand, this state also incorporated internal and external weaknesses. Externally, Japan’s dependence upon the United States qualified it for admission into the sphere of dominance backed by US military might, but it was also able to economize on its own defence needs. On the other hand, despite the magnitude of its economic strength, Japan was unable to make nationalism a dominant ideology or even to demonstrate a need for nationalism. The existence of Article 9 of the constitution and a lingering hatred and distrust of prewar militarism inhibited the promotion of nationalist ideology. In this way, despite being able to realize stability because of economic growth, the state of the 1960s and 1970s was unable to procure loyalty and unity towards a strong ‘state’. Furthermore, since the formation of military and diplomatic power commensurate with this economic power was retarded, the external dimension of the state was extremely weak.

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As for the internal dimension, behind the formation of a powerful enterprise society was the complete seizure of the ‘state’ by the ‘enterprise’, weakening the state’s relative autonomy. Essentially, the interests of capital were carried out even in areas such as education, which were now affected by the costs and benefits of capital accumulation in the narrow sense. On the other hand, various policies of the state which were developed by restricting capital accumulation such as labour, welfare, and environmental policies could not reach their full potential. These policies were judged according to the exigencies of the economy, and in some cases even emasculated. Seen from the perspective of capital accumulation, the state during the 1960s and 1970s was unmistakably strong. But from the perspective of having a raison d’être apart from the costs and benefits of capital, it could only be seen as weak. During the 1980s, the state came under pressure for major reorganization. Externally, the weaknesses associated with economism had to be overcome; conversely, domestically speaking, the state had to develop its weaknesses even further. However, attempts at reorganization did not go well. The structure of the enterprise-dominated state was stronger than the ruling élites had imagined. The criticism of the Japanese state that arose at home and abroad during the early 1990s seems to have been generated by exasperation at the surprisingly strong resistance to reorganization of the established structure of the state. I would now like to examine the unique features of the Japanese state on the premiss that those features were determined by the distinctive structure of contemporary Japanese society.

II. The Formation of the Distinctive Structure of the Japanese State during the 1960s and 1970s: the Duality of Weakness

1. Enterprise society and the structure of political rule It is logical to begin by analysing the structure of the state formed during the 1960s and 1970s, for this period witnessed the development of the prototype for the contemporary state that has continued down to the present day despite attempts to revamp it in the 1980s. To fully understand the state in that era, it is necessary to clarify the enterprise-centred structure of domination that was established within society at that time. Here we can discover the secret that enabled the state to take the shape it did. During the era of high economic growth in the 1960s and 1970s, enterprises, especially large advanced ones, established an unusually strong structure of control over workers, which in turn further accelerated economic growth. Corporate domination of workers in turn created an enterprise union movement, which led to the stagnation of the social democratic movement and facilitated

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the one-party dominance of the LDP. Corporate domination also left its mark on the nature of the Japanese state.22 Strong control over workers in corporations

There is unlikely to be any disagreement that the predominant feature of contemporary society is the continuous economic growth that continued apace despite two oil shocks and the strong yen. Of course, economic growth in itself is not unique to Japan. Indeed, it was common in all advanced capitalist societies after the Second World War. As Baba Hiroji emphasized, ‘modern capitalism’ regards continuous, high economic growth as its hallmark.23 However, compared to the general growth of ‘modern capitalism’, Japan’s economic growth stands apart because of its speed and continuity. To explain Japan’s case it is not enough just to elaborate the common features of the growth of ‘modern capitalism.’ We will consider later the very favourable international context, that was the first unique factor in Japanese capitalism. One can isolate several features of the domestic scene, but the most significant is the pattern of behaviour of Japanese corporations. In this pattern, the must notable feature is the structure of control over workers, which, I believe, corporations established during the late 1950s. This structure generated the fierce loyalty of workers to their enterprises, and was the motive force behind growth. Corporate domination has been common to all advanced capitalist countries. But the corporate control over workers that sustained the growth of postwar Japanese capitalism was a particularly powerful kind of domination which exceeded the power of capital in general.24 How else can we explain the phenomenon of ‘death by overwork’ (karoshi) or other social problems, such as extremely long working hours and separating workers from their families (tanshin funin), which do not appear in other countries? However, it is more than coercion which drives this system. Mere external compulsion cannot produce the ‘spontaneous’ sacrifices to corporations that can lead to karoshi. In order to create this fierce loyalty to the company, there must be something in workers themselves that is receptive to that domination.25 Up to now, people have explained this loyalty in terms of the collective consciousness of workers as well as the family-like corporate structure and restricted competition which is a known characteristic of ‘Japanese-style management’; however, I think that the heart of this phenomenon is the special mechanism which pushes workers to constantly compete for advancement and higher wages.26 Conventional explanations may be able to explain the sense of belonging to a corporation, but they cannot explain the accompanying uniquely powerful ethic of hard work. What became the heart of the competitive structure of enterprises was the removal of status differences between blue- and white-collar workers via the unification of the system of promotions.27 Japanese corporations removed the disparity between the two categories of workers which had undeniably existed

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in Japan and still exists in European industry. They involved not only whitecollar workers in the competition for promotion within the enterprise but also the large class of blue-collar workers: the nucleus of the labour movement that had long turned its back on such competition and promotion. In large enterprises, starting with the steel industry, the structure of promotions was streamlined in the process of technological innovation during the late 1950s. As a result of abolishing status differences, even blue-collar workers could advance up the ladder and improve their lifestyles if they were loyal and gave their utmost to the corporation. A representative slogan of the times was the ‘blue skies promotions system’ of the Yawata Steelworks. By adopting such slogans, corporations organized competition among workers by introducing an extremely detailed performance assessment system (satei). This made the condition for promotion of workers not ability alone but also their tangible and intangible contributions to the corporation. Corporations also bound workers more tightly to the company, heightening their consciousness of belonging by means of welfare and health systems, and loan systems for purchasing homes.28 Along with the establishment of this competitive structure the perception became universal, especially amongst regular workers, that ‘the most realistic way to improve our standard of living is to receive repeated promotions and salary increases through being loyal to the corporation’. This led workers to distance themselves from labour unions. The labour unions, in turn, become enterprise-type unions which supplemented the company’s structure of domination.29 This type of corporate domination over workers was not destroyed even when the oil shocks ruined growth. On the contrary, company control over workers became much stronger as the pie shrank and competition for survival grew fiercer. During this period, the competitive Japanese-style ‘QC’ (quality control) movement stabilized. Workers were split up into small groups which would devise proposals and act to improve occupational safety and productivity. Thus companies tightened their grip over workers from within the labour process itself. In addition, as subcontracting by small and medium-sized firms became more prevalent during the recession following the oil shocks, the keiretsu (corporate groupings) structure reached small and medium-sized corporations. With the ‘administrative reforms’ of the late 1970s this structure of domination extended further into the realm of public corporations and became fully established.30 The formation of enterprise unions

In the labour union movement which had fallen into step with the corporate control over workers, the cooperative union movement centred on large private enterprises became the dominant trend after the 1960s. This movement secured salary increases by enlarging the pie. That is to say, instead of

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opposing the domination of workers which was developing in large corporate enterprises, the workers positively cooperated in raising productivity and increasing business for the enterprise. In this way workers tried to enlarge their own base for existence. As a result, contrary to the situation in other advanced capitalist countries, Japanese unions generally refrained from obstructing the accumulation of capital. This served to accelerate economic growth; on the other hand, workers lost the protection of the union ‘umbrella’ and became directly enveloped in the nature of capital. After the oil shocks, while cooperating in reducing business operations, enterprise unions expanded to include the unions of subcontracting firms. In the late 1980s, with the formation of Rengo, they finally succeeded in grasping hegemony over the entire labour front.31 What must be emphasized here is that the current of the cooperative union movement which emerged in the 1960s had its own unique character which was not limited by the character of cooperative unionism in general. Writers have identified two types of cooperative union movement, the classical and the contemporary.32 By ‘classical’ I mean the variant that had its origins in late nineteenth-century Germany, which was prevalent throughout Western Europe after the First World War, and became the bearer of the ‘welfare state’. This type represented a broad cross-section; its organization featured a centralized authority which gathered consensus from its ranks and negotiated with capital to secure a result. Opposed to this is the contemporary variant, a new trend which appeared in Japan after the Second World War. Its outstanding feature is its enterprise centredness. This trend seeks to realize its aims exclusively through the corporate unit. For this reason, industry-based unions or those with a national centre covering a cross-section of corporations fell into second place. In contrast to the structure of classical cooperative unions, whose organizations extended across occupations and had a national centre, the cadre of contemporary cooperative unions are concentrated in companies. If the cadre loses its corporate backing, it loses its authority. Because contemporary cooperative unions seek to satisfy their demands through helping to improve the corporation’s performance, corporate competition frequently takes priority over cross-sectional solidarity, and their authority also becomes compartmentalized within each corporation. What is remarkable is their political strategy. Classical cooperative unions sought to realize their political goals by establishing their own independent, reformist labour party and acquiring political power. By contrast, the contemporary cooperative union movement sought to secure its demands through the expansion of its respective corporations. Therefore it tends to support the established political parties which systematically assist corporate activity. In contemporary Japan, this is the main reason why political parties of labour do not grow in tandem with the growth of the working class and the LDP could continue its domination of politics even after the era of high economic growth ended.

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Cooperativism was established in Japan in the mid-1960s, when the IMFJC formed unions of heavy chemical industries producing consumer durables, and that fact symbolizes the ‘contemporary’ character of Japanese cooperative unionism. In any case, I think the basis for political rule and the unique character of the state is the cooperative enterprise union, a key to explaining the unique political arrangements of contemporary Japan. The fragility of social democracy and the LDP’s one-party dominance

Most important in this context is the slump in social democratic political forces in contemporary Japan and the dwarfing of their influence in the political structure. It is especially this weakness of social democracy that constitutes a major difference between the economies, societies, and states of Japan and Western Europe, despite the fact that they are all capitalist countries.33 For example, the underdevelopment of the ‘welfare state’ and of policies and laws protecting workers can be explained from this viewpoint, and I shall turn to this later. Because of the weakness of the specific forces promoting welfare and labour policies, they were unable to force the state to develop such policies. At the same time, this very weakness on the part of social democratic forces was most beneficial for capital accumulation. Japan was able to overcome the recessions induced by the oil shocks ahead of other advanced industrialized countries precisely because these forces of social democracy were weak. Thus government and corporations were able to concentrate on promoting policies for overcoming the recessions. The main reason why the LDP was able to sustain its one-party rule despite urbanization resulting from high economic growth was also rooted in the formation of this sort of social-control structure. Among the many hypotheses offered to explain the one-party dominance of the LDP, the premodern nature of Japanese society is often cited. In recent years, one group of political scientists has argued that the reason for the continuation of LDP politics rests exclusively with subjective factors within the party itself. In reality, however, two pillars have prolonged the life of the LDP: one is economic growth provided by the dominance of the corporations, and the other is the growing weakness of social democracy due to the political activities of the enterprise unions. This is not to say that there are no subjective factors within the LDP which explain its continuous rule. On this point I would like to highlight the change in direction that occurred in 1960. Until then, the LDP government had sought to ‘restore’ control structure resembling that of the emperor system. In the face of mass democratic protests against the revision of the Police Duties Law and the Security Treaty, the LDP government dramatically changed its formula for rule. It abandoned its aims of ‘restoration’ of the emperor system. By giving top priority to growth policies—centred on investments in the foundation for capital accumulation—the LDP government aimed to create a new era of stability through enterprise-centred control. It is

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here that subjective factors came into play. The year 1960 was epoch-making in terms of the creation of a distinctive type of state. However, one cannot overlook the formation of enterprise control and the decline of social democratic forces that lay behind the tremendous success of the LDP’s change of direction.

2. Corporate power and the state What sort of features were imprinted on the state under the corporate control and political system that formed during the 1960s and 1970s? Let us explore this question in detail. The establishment of zaikai: the formation of a mediator between the state and the will of the corporations

Along with the formation of the enterprise society, the power of the corporations was also established within society. In effect, a situation developed wherein the state was captured by the large enterprises. All of the state’s functions shifted completely to promoting, systematically, the capital accumulation of enterprises. For the record, when I say that the state was captured by enterprises, I do not mean that state policies were often determined by the will of dominant enterprises, or that the will of the enterprise automatically became the will of the state. Rather, I am referring to the special subordination of the state which cannot be explained by the general characteristics of a capitalist state. How then did a situation emerge wherein the enterprise was able to capture the state? I think the answer lies in the existence of that unique postwar entity known as the zaikai, or financial world. In postwar Japan, the zaikai acted as the intermediary between individual corporations and the state. In the era of high growth, the formation of enterprise control was manifested in the transformation of the zaikai and the increase in its power. The zaikai was established under the Occupation, when it became necessary to intervene systematically in the state’s administrative and financial policies in order to speed up Japan’s economic reconstruction. Instead of managers who had to be absorbed in the reconstruction of their individual corporations, zaikai became the essential representative of capital as a whole, communicating between individual corporations or industrial sectors and the bureaucracy and conservative political parties. Immediately after the defeat in 1945, such an entity was gradually formed by the executives of organizations such as the Keizai Doyukai, Nikkeiren, Keidanren, and others. Within those organizations, the main current of the zaikai during the 1940s and 1950s was the labour policy group which gathered together under the auspices of Nikkeiren. In the latter half of the 1940s not only was there a

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powerful labour union movement spanning all enterprises, but in large corporations there were almost no experts who had experience with labour problems, and no expertise in handling labour offensives. This is why Nikkeiren, with its labour policy veterans, represented the zaikai, to the point where it was said that ‘Nikkeiren equals the zaikai’.34 Furthermore, the mainstream of the zaikai at this time were not experts experienced in labour problems; but they were able from time to time to control state funds. The source of their power to control individual companies and to communicate their wishes to them lay in their ability to stabilize labour– management relations and to procure capital.35 Generally speaking, the members of the zaikai who emerged in the era of reconstruction did not come from large corporations themselves. Rather, many of them were simply individuals with skills that led them to be employed as heads of corporations with the task of rebuilding those corporations. Most of them indeed derived their power from their own individual capabilities.36 Zaikai members in those days used their own personal connections to collect money, and contributed that money to their old allies in politics. In return, the zaikai was able to realize the demands of capital. Thus, the links between members of zaikai and politicians were direct. A classic example is Miyajima Seijiro, who had a close relationship with Yoshida Shigeru and was able to influence policy by supplying Yoshida with funds.37 There were examples of the opposite as well. The zaikai leadership felt alarmed by Hatoyama Ichiro, who wanted to effect a rapprochement with the Soviet Union, and planned to force him out of office; Kono Ichiro was not cooperative with the zaikai, so the latter prevented him from becoming prime minister.38 However, this individualistic, direct character of the zaikai changed greatly as domination by the enterprises took shape. First, the zaikai mainstream shifted from Nikkeiren to Keidanren and its members likewise changed to individuals supported by large corporations.39 The reason for this change was that control over labour was established in large enterprises. As the pattern of spring offensives (shunto) for wage increases began to form, the role of Nikkeiren was absorbed by the individual corporations. In its place, Keidanren, the federation of large corporations, now emerged as the leader of the zaikai. Second, as the enterprise-centred society took shape, the contents of the zaikai’s demands on the state changed. In the era of corporate reconstruction, the zaikai’s role was to guarantee government fiscal and monetary involvement. Later, however, the corporations wanted the government not to intervene but to provide a level playing-field for inter-corporate competition. State intervention through the distribution of state funds and foreign currency to corporations became less and less welcome. Corporations in this period strongly rejected government intervention in the economy, and they especially rejected bureaucratic control.40

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Third, there was a major change in the way the zaikai and the political sector joined together. Instead of the personal and direct links made between these spheres, a more systematic, indirect type of relationship developed. As far as political funding is concerned, after the shipping scandal (zosen gigoku) a committee called the Economic Reconstruction Discussion Group was formed in 1955 to prevent rapprochement between individual corporations and politics. Then, in 1960, the Kokumin Kyokai was established to regulate the procurement of funds for political donations. It included medium and smallsized companies as well as large corporations. Through the Kokumin Kyokai, financial donations were systematically channelled to the LDP.41 The Kokumin Kyokai symbolized the zaikai’s financial face and, in the process, obscured the identities of individual corporations and zaikai members. By the 1970s, the Kokumin Kyokai had ballooned into an organization comprising 5000 corporate organizations and 60,000 individual members,42 even so, it was the large corporations that made most of the financial contributions. As financial contributions for political purposes lost their individualistic dimension, members of the zaikai started to express their wishes by participating in deliberative councils or through reports issued by various member organizations. Opportunities for action by individual zaikai members became fewer and fewer. From the outside this seemed like a weakening of its power.43 In reality, through this system the zaikai was able to systematically have its wishes expressed as the wishes of the state. Moreover, after the period of high economic growth, the zaikai again resituated itself as a mechanism for systematically conveying the wishes of corporations to the state. In this way, the process whereby corporations ‘captured the state’ was realized through the changing nature of zaikai and its insinuation into the decision-making processes of the state. The formation of a ‘state’ which systematically promoted capital accumulation

The change in bureaucratic institutions: from ‘regulatory agencies’ to ‘policy agencies’. The capture of the state by corporations occurred first in a process whereby bureaucratic organizations fell under zaikai’s influence. This involved a change in the form of bureaucratic intervention in the economy away from a regulatory and authoritative involvement and toward a policy-oriented and guidance type of intervention. Similarly, from the late 1940s through the 1950s, bureaucratic institutions, just like the early zaikai, also exercised direct, authoritative regulation for the sake of the postwar reconstruction of Japanese capitalism. This was a familiar way of doing things for bureaucratic organizations under the emperor system state. These bureaucratic organizations were forced to change radically in the era of high economic growth, as can be seen in the case of the Ministry of International Trade and Industry (MITI).44

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MITI was established in 1949, when the Ministry of Commerce and the Trade Agency merged. It strove to nurture and protect industry, in the name of the ‘national interest’, through slogans such as ‘promotion of industry’, ‘strengthening of international competitiveness’, and ‘promotion of exports’. MITI first seized the right to allocate foreign capital and foreign exchange for technological upgrading and for securing raw materials for goods intended for export. When approving foreign capital inductions, it tried to control excessive competition by denying foreign exchange to some firms while assisting others to get capital from the Japan Development Bank. It also gave favourable tax treatment to some firms. By behaving in the same way as bureaucratic institutions under the emperor system state, MITI maintained continuity in its modus operandi with the interventionist methods of the period of wartime control. In a significant sense, this situation greatly assisted the accumulation of capital, but in the eyes of the bureaucrats it was above all for the ‘state’, and MITI’s attitude towards corporations was quite high-handed. The protagonist in Shiroyama Saburo’s novel Kanryotachi no natsu (The Bureaucrat’s Summer) was modelled on Sahashi Shigeru, the man known as ‘Mister MITI’. He truthfully expressed the feelings of bureaucrats by always boasting about ‘the public interest and the state’ (tenka kokka). In his words, ‘the economic policies of the state must not be governed by the wishes and interests of politics and finance’.45 The ‘state’ in this case meant the bureaucracy, which formulated and carried out policies unaffected by the interests of enterprises and ‘political parties’. However, as the era of high economic growth unfolded, these people were gradually forced to retreat. When trade and foreign exchange were liberalized, the system of foreign specie allocation was abolished; regulations on exports and imports disappeared; and MITI lost its biggest weapons. In the early 1960s MITI, preparing for trade and foreign exchange liberalization, aimed to enact an emergency law to promote special industries. It claimed that such a law would enhance the power of industry in international competition by promoting cartels and amalgamations of companies, thereby checking excessive corporate competition.46 This law sought to kill two birds with one stone by using the state not only to enhance the competitiveness of corporations but also to replace its own power to distribute foreign reserves with another type of power. However, MITI’s bill was defeated in the face of opposition from the Fair Trade Commission and also from banks, who feared that they would be forced to supply finance to firms outside their keiretsu. The bill also encountered opposition from the most important enterprises themselves. This concept, however, was later realized in the form of the Industries Special Promotion Law.47 So we cannot believe that corporations were genuinely disturbed about the substance of MITI’s original plan. Rather, the problem here concerned who was to take the leadership in carrying out the policies. Zaikai did not want completely to forbid state intervention when advocating a ‘free

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economy’. The real meaning of their slogan was to establish a system whereby the ‘state’ would intervene under the direction of zaikai and not at the independent discretion of bureaucrats. The defeat of this Special Promotion Law symbolized the retreat of authoritative state intervention characteristic of the emperor system bureaucracy. Thereafter state intervention shifted to a new mode under the zaikai’s slogan of a ‘free economy’. The state now took charge of forming and maintaining the framework for competition by enterprises, which it did by encouraging industry through inducements and administrative guidance. This has been called ‘the regression of MITI’ or its transformation ‘from a regulatory to a policy agency’, but it is not necessarily the case that MITI either regressed or lost its regulatory powers. It did mean that, with the establishment of corporate domination, bureaucratic organs could no longer serve the state just as they pleased; they had to act to maintain the order which they themselves created under the will of zaikai. Education’s absorption into economic policy

The second and greatest result of ‘corporations capturing the state’ manifested itself in a situation where the various policies of the state blurred the relative autonomy of other independent areas. That is to say, all policies came to be directed towards the goal of promoting capital accumulation, and were absorbed into the realm of economic policy. The relative autonomy of the contemporary state seems to have two slightly different aspects. One aspect is that, along with the separation between the economic and political ruling classes, which in a capitalist society corresponds to the separation between state and civil society, the interests of the political rulers are characteristically transmuted into policy. In this sense, the autonomy of the state is revealed in the areas of military and diplomatic affairs, public safety, and education. A second aspect of the state’s relative autonomy is that, apart from the economic ruling class when the state is engaged in decisionmaking, the wishes of other forces, even though secondary, still exert influence. In contemporary Japan, however, both dimensions of this relative autonomy of the state seem weak. First, in order to see how the autonomous nature of the state became weak, let us examine education policy. In order to lay the foundation for modern Japan, the state under the emperor system emphasized education; and to form education policy under the name of Imperial Rescripts on educational matters, it overrode the demands of capital and even the Diet. Education, one of the pillars of the emperor system state, was subsequently forcibly reformed by the Occupation authorities. Nevertheless, even in the postwar period education tenaciously retained its autonomy. How this was altered by the advent of the enterprise society in the 1960s is my next subject.

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Having undergone huge changes as part of the postwar reforms, education policy confronted another enormous change in the 1950s. This was the attempt to take the democratic system of education and change it back to what it had been under the emperor system state. Supporting this reform was a sense of crisis—a feeling that postwar education had forced a loss of patriotism, slighted discipline and standards, and fostered individualism and liberalism. In addition, the educational aims of the Japan Teachers’ Union (Nikkyoso) had been implemented.48 It was argued that if matters were left as they were, Japan would not be able to recover. The goal of education policy in this period was to ‘restore the power of the state’ in education. On this point, the Ministry of Education and the conservative parties were completely in accord, and this facilitated the imposition of restorationist policies during the 1950s. Various reports of the Central Educational Deliberative Committee (Chuo kyoiku shingikai), formed in January 1953 to succeed the Educational Printing Deliberative Committee, basically shared the same objective. The main goal of educational policy around this time was to check the unions and the political activities of teachers belonging to the Japan Teachers’ Union, who were the bearers of postwar education. Based on a January 1954 report from the Central Educational Deliberative Committee, entitled ‘Report on Maintaining Teachers’ Political Neutrality’,49 two education laws were enacted. The first, a partial revision of the Special Law for Public Education Employees, banned political activity by teachers. The second, the Special Measures Law, concerned the maintenance of political neutrality in all schools where compulsory education was taught. It penalized any teacher who either supported or opposed a particular political party in the classroom. Furthermore, to counter teachers’ unions, a teacher evaluation system was implemented, over the strong opposition of the Japan Teachers’ Union. The second goal of education policy was to reconstruct and strengthen state control over education, which was the institutional premiss behind ‘restoring state authority’. The abolition of public elections for school committees and the strengthening of the system for screening textbooks was carried out, based on the Central Committee’s 1955 report, ‘Measures to Improve the Textbook System’.50 The third objective, premissed on the other two goals, was nationalistic control over the contents of education, which was the essential aim. This reform aimed at promoting patriotic education and, based on the reports of the Central Committee, it called into question ‘biases’ in social studies. These ideas were realized in the 1958 revision of the teaching guidelines. This established a special hour for the teaching of morals, and imposed the hoisting of the Japanese flag and the singing of the national anthem. But the education policies of the 1950s had a special characteristic compared to the reforms that followed. First, the goal of these policies was clearly focused on the state. Frankly, the ‘state’ was none other than the prewar emperor

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system state with the emperor at its core. In 1951, Minister for Education Amano Teiyu proposed a ‘Practical Outline for Citizens’ to replace the Imperial Rescript on Education, and for this he was widely criticized. In it he said: ‘The position of the emperor has the nature of a moral centre as the symbol of the state.’ This is but one small example.51 Education policies of this period identified the Japan Teachers’ Union as the enemy because its members, in the name of peace and democracy—the goals of postwar education—emphasized direct opposition to the emperor system state. The second characteristic of this era was that education policy was entirely in the hands of bureaucrats of the Ministry of Education and conservative members of the ruling party. Third, as a corollary to the above, the zaikai at this time did not yet have a powerful voice in determining education policy. This sort of education policy changed dramatically when it came to the 1960s. The zaikai’s shift from partial intervention in education policy to the total seizure of education drove the change. The era of change in education policy coincided with the ‘income-doubling’ plan presented by the Ikeda cabinet in 1960. Ikeda’s plan involved doubling the national income within a decade by increasing GNP by 9 per cent annually, thus accelerating the high rate of economic growth which had already started. This shift in policy served to stabilize LDP rule thereafter. But, in fact, Ikeda’s plan also had an almost revolutionary impact on educational policy. As one plank of his economic plan directed at doubling income, Ikeda located education as ‘a part of economic policy’, citing the ‘raising of individual abilities and the promotion of scientific and technological education’. The biggest feature of contemporary society and economy is the era of technological renovation supported by sustained high economic growth and rapid scientific and technological development. In order to adequately understand and utilize this science and technology, make society conform to the needs of industry, and maintain a high level of development in the society and economy of the future, it is essential to make the improvement of human capabilities a part of economic policy.52

Upon learning of this plan, the Education and Training Subcommittee of the Economic Deliberative Council (Keizai shingikai) delivered a long report on 25 October 1960,53 in which it indicated concretely the contents of education policy as ‘a part of economic policy’. This report disavowed the narrow technological educational requirements of Nikkeiren in the 1950s and demanded that education in general meet the requirements of capital. The report emphasized the expansion of middle school education and the fulfilment of technological education connected with general education and basic skills education: Technical renovation depends more than anything else on large numbers of qualitatively superior workers. Consequently, in nurturing scientists, engineers, and technicians, a higher standard of education than ever before is required of them. It is particularly

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important to acquire a basic level of knowledge and skills so as to keep pace with constant changes in technology. There is less and less need for narrow practical knowledge and old apprenticeship skills or craftsmen’s tricks of the trade. What technological renovation requires is late middle school education that goes beyond junior or early middle school levels. The basic difference in technological education between advanced and newly industrializing countries is that technical education in the former is tied to general education and to basic specialized education, whereas in the latter this type of education is slighted.54 (emphasis added)

Of course, this report adopted the policy of respecting the existing system in principle. It sought ‘some diversity in view of the need to expand scientifictechnological education’, but concerning the one-track postwar educational structure it still did not go so far as to present the nature of capitalism vis-àvis educational policy.55 It was in January 1963 that the inherent logic of capital was brought out in a report from the Economic Deliberative Council, ‘Tasks and Measures for Developing Human Capabilities in Economic Development’.56 This report went a step further than the previous one, and recommended giving priority to ‘competence’ (noryoku shugi) as the basic principle for the ‘development of human capabilities in education’. It also proposed that the ‘one-track’ postwar education system be made ‘diverse’. Thereafter these two principles of ‘competence’ and ‘diversity’ rapidly permeated the education system, which really meant that capital had captured the education system. First, this report advocated bringing the competitive principle of ‘competence’, which is the principle of industry’s control over labour, into education: These historic changes [concerning labour] required a system for evaluating and using individuals based on new criteria. Frankly, this means that priority should be given to competence both in education and society. . . . Because of the postwar education reforms there was an epoch-making improvement in the equality of opportunity in education and in the standards of education amongst the people as a whole. On the other hand, there was tendency for uniformity, and many problems in identifying the special abilities and talents of individuals and systematically encouraging the development of their skills.57

Next, the report recommended that the tracking or streaming of children at the middle and high school levels be strengthened in order to give priority to competence. This was an epoch-making view of education. Certainly, modern Japanese education also incorporated a principle of fierce competitiveness. But the aim was to encourage people to compete to become loyal supporters of the state. In education under the emperor system, all children were equally ‘children’ (sekishi) of the emperor, and were trained to become the foundation of the state. Against this, the 1960s reports brought into education the principle of giving priority to competence, that is to say, classifying children according to their ability. This was an entirely new idea.

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The second feature of the report of 1963 was that it proposed nurturing a ‘highly talented’ workforce as a corollary of the principle of competence.58 The report divided children into 3 per cent who were highly talented and the rest, and said that education should be tailored accordingly. Consequently, the report criticized the ‘one-track’ educational structure and advocated that education respond to competence and become ‘pluralistic’ and ‘multifaceted’.59 Clearly, the 1963 report should have had a great impact on education. The Ministry of Education follows along. The Education Ministry was expected to resist the report, because even in the 1960s it intended to extend nationalistic control over education and to implement teacher evaluations which the Ministry had been pursuing ever since the 1950s.60 But the anticipated resistance did not materialize, and the Education Ministry was rapidly drawn into the educational policies advanced by the zaikai. The November 1962 White Paper of the Ministry of Education, ‘Japan’s Growth and Education’, included new phrases hitherto unseen in education such as ‘the development of human resources skills’ and ‘investment in education’. This was clear evidence of strong theoretical support for the Economic Deliberative Council’s report. As one commentator remarked, ‘This idea will not easily penetrate our country’s deeply spiritual educational environment’.61 However, this way of thinking did penetrate the Ministry of Education. ‘The Expansion and Consolidation of Late Middle School Education’, a report issued in October 1966 by the Central Educational Deliberative Council,62 followed the Economic Deliberative Committee’s report: ‘The Economic Committee’s report was our reference at the outset.’63 Of course, the Central Council did not merely duplicate the Economic Committee’s report. There was a need to reconcile past and present educational objectives. Thus, ‘The Desirable Image of a Human Being’, which was an appendix to the Central Council’s report of 1966, was the eclectic product of the educational requirements of capital and the requirements of past educational policy.64 This was produced as the joint product of two contradictory demands: one was the demand for a new version of the Imperial Rescript on Education, which the restorationist faction pursued ever since Amano Teiyu; the other was the new image of labour demanded by capital. What is noteworthy is that the workers incorporated into the enterprise society during the 1960s wanted their own children to secure a good start in the enterprise society. So they tended to make them study hard, which in turn intensified the competition in school entrance examinations. The revival of moral education and education in emperorism, which were pursued by Education Ministry bureaucrats, gradually disappeared.65 In the midst of this, the restorationists who had such high hopes for the new Imperial Rescript in the form of ‘The Desirable Human Image’ discovered that they were almost completely ignored, Education Ministry’s bureaucrat and went so far as to

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say: ‘Today almost no one talks about it’.66 Because this sort of school competitiveness was a system wherein students competed to get into better schools rather than to achieve a good education, it was not necessarily the sort of education that the zaikai had wanted to deliver. Nevertheless, that same fierce competition and standardized labour power produced a large supply of the labour power needed for the enterprise-centred society. Thus education in toto came under the control of capital.67 The weakness of the state in regulating capital accumulation: labour policy as a material

The seizure of the state by the enterprise also caused the weakening of various state functions which regulated capital accumulation. The weakness of the state at this level can be traced back to the weakness of labour’s power in a society where the state was expected to display various powers. Let us glimpse this process in the realm of labour policy. Labour policy in the Occupation era. Great changes in labour policy occurred around 1960. Up to that time labour policy had had a certain amount of influence. The Labour Ministry was separated from the Health and Welfare Ministry and inaugurated in 1947 under the Katayama cabinet. But, symbolic of the fate of future labour policy, this would not have happened without the intervention of the Occupation authorities. What the Labour Ministry initially aimed at was a healthy labour union movement and, under it, the formation of ‘modern labour–capital relations’. It also sought the abolition of premodern labour relations.68 The Ministry found it could not achieve a desirable outcome on account of the militant labour union movement; only after the Occupation authorities intervened did it succeed in controlling the labour unions. As for its second objective, both the labour union movement and the Occupation authorities who focused on ‘modernization’ became the motive force and made a new framework for labour–capital relations. Thus, the ‘premodern’ practices entrenched during the war were forcefully corrected. For Labour Ministry bureaucrats, the union movement was a huge nuisance as far as their first objective was concerned; but they regarded the labour union movement as an essential motive force for promoting their second policy objective. The Sohyo type of labour union movement and labour policy. After the signing of the Peace Treaty, labour policy continued to follow the path laid out during the Occupation. The dissolving of the Sanbetsu Congress of Industrial Unions in 1958 greatly decreased the power of the militant labour union movement. However, Sohyo, the union organization created to fulfil the Occupation authorities’ ambitions for a ‘healthy trade union movement’, became more militant and, unlike Sanbetsu, developed a horizontal union movement. In addition,

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corporations still had not formed a postwar structure for dominating the workforce, and employers were unable to confine workers within corporations. In the context of confrontational labour–capital relations during the 1950s, labour policies continued to nurture a healthy labour union movement and to stabilize labour–capital relations. Secondly, the Ministry’s policies also tried to improve the remnants of premodern labour relations. Regarding the first aim, the Labour Ministry strove to control the ‘radicalizing’ union movement in the public sector, which was reacting to the ban on their right to engage in strikes. On the other hand, a need arose to control the conservative parties’ peacepreserving line of thought and the revived and strengthened management. In addition, the Labour Ministry clashed sharply with management and the conservative parties on the issue of correcting their premodern labour practices, and management denounced the ministry as ‘the instrument of Sohyo’.69 However, despite this situation, labour policies during the 1950s were able to develop with the Sohyo type of union movement in the background. The Labour Ministry, aiming at stabilizing labour–capital relations, first enacted a strike control law, and in so doing achieved a general settlement of policy for controlling the militant labour movement. But in the late 1950s it was forced to grapple with the ‘normalization’ of labour–capital relations in the public sector. Despite the fact that those unions had been completely deprived of their right to strike, the government sabotaged the implementation of the arbitration of disputes which was to have been a compensatory measure for the loss of the right to strike. This created an atmosphere where the resort to strikes by public-sector workers, seeking pay raises or improvements in working conditions, had great appeal. In this situation in 1957, the government declared that it would make sincere efforts to respect and implement arbitration (chusai saitei) for the public-sector labour committees. This was an epoch-making change in labour policy. By recognizing labour’s right to mediation in recompense for a denial of its right to strike, the government took a huge step towards stabilizing labour–capital relations. Behind this government decision lay the efforts of Ishida Hirohide, chief cabinet secretary in the Kishi government.70 But behind him was the Labour Ministry’s policy of ‘modernization of labour–capital relations’. That same year Ishida became Labour Minister, and developed the famous labour policies that came to be known as ‘Ishida’s policies’. The implementation of arbitration had to overcome opposition from within the Liberal Democratic Party.71 At the same time as Ishida was promising to implement arbitration, he was severely critical of disputes conducted by publicsector unions. It was precisely this two-pronged policy which exemplified the wishes of the Labour Ministry. This type of labour–capital policy was established by affirming the private-sector standard for wage increases in the public sector after a meeting between Prime Minister Ikeda and Sohyo’s General Secretary Ota Kaoru on the eve of the 17 April 1964 strike. This sort of labour

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policy was far from the demands of public-sector workers, who sought to have their right to strike restored. Nevertheless, it disavowed the peace-preservation type of labour policy that amounted simply to the use of force against publicsector unions. Utimately, behind these developments lay the influence of Sohyotype unionism. The elimination of various restrictions in Article 4, Section 3 of the PublicSector Union Law (koroho) came as a belated result of Japan’s ratification of the 87th International Labour Organization Treaty (ILO Treaty). This was also an achievement of Labour Ministry policies.72 Using this regulation as a shield, the authorities had been blocking collective negotiations with unions whose officials had been discharged because of their strike activities. Therefore, other labour unions such as Kiro and Zentei, claiming this to be an infringement of their labour union rights, appealed to the ILO. The ILO advised them, however, that Article 4, clause 3 of the Public-Sector Union Law (conflicted with Article 87 of the ILO Treaty. Thus the relationship between the ILO Treaty and the Public-Sector Union Law surfaced as an issue of dispute. In response to this problem, the Labour Ministry persuaded the governing party to ratify Article 87 of the ILO Treaty, which had been pending since Ishida’s stewardship. After several setbacks, the government finally ratified the ILO treaty in 1965. Within the LDP, opposition to the ILO Treaty was so strong that one LDP member said: ‘You only have to hear the words “ILO” to sense the feeling of revulsion within the LDP.’73 Other ministries and agencies who had their own unions were also against it, feeling ‘extreme trepidation’ that the ratification of the treaty would ‘invite outsiders into the union’.74 Without the influence of Sohyo, the Labour Ministry would never have been able to overcome opposition and ratify the treaty. Full implementation of arbitration, ratification of the Article 87 of the ILO Treaty, and intercession in the Miike strike (which I shall discuss later), all the epoch-making changes in labour policy occurred under the leadership of Ishida. The fact that even today the phrase ‘Ishida labour policy’ resonates within the Labour Ministry is evidence both of nostalgia and of admiration for the way that Ishida handled labour, corporations, and government and pursued his policy goal of stabilizing labour–capital relations. But, it is essential to appreciate that Ishida was able to adopt his unique position amid labour, industry, and politics because the strength of labour was so great at that time. Turning to the Labour Ministry’s second policy aim—correcting premodern labour relations—progress could be seen in the 1950s. Whereas the enemy of labour policy in the public sector was the LDP, when it came to rectifying premodern labour relations the enemy was the zaikai. At the time of the 1954 Omi Textile human rights dispute, the company totally ignored the Labour Standards Law and omitted reference to safety measures. It forced women and minors to work overtime and on holidays. The Labour Ministry declared

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the company to be in violation of the Labour Standards Law, indicted it, and sent it in to the Office of the Public Prosecutor.75 As this intervention in the Omi Textile dispute reveals, overall the 1950s saw an emphasis on supervisory procedures for small and medium-sized corporations that clung to premodern practices. But the zaikai expressed strong misgiving about these new procedures, saying that if the Labour Standards Law was applied uniformly even to small to medium-sized corporations, management could not function. The zaikai centred on Nikkeiren demanded a revision of the Labour Standards Law that would enable legal recognition of differences in labour conditions. Nikkeiren believed that these Labour Ministry policies would hinder the reconstruction of Japan’s economy, and so they pushed for revision of the law.76 Faced with this pressure, in August 1955 the Labour Ministry established a special committee to investigate the Labour Standards Law and the problems associated with it. But the committee’s May 1957 report rejected the demands of medium and small-sized industry and said that the law should not be revised. Compared to this 1957 report, there was a remarkable difference in labour law administration during the late 1980s. Then, labour bureaucrats formed their policies by first recognizing the reality which managers asserted concerning the problem of regulating working hours and protecting part-time workers. On the one hand, vis-à-vis middle and small industries, the report advocated that the uniform application of the Labour Standards Law should be restrained, while administrative guidance should be strengthened. Nevertheless, one can clearly see here that labour policy was headed in the direction of independent development. A turning-point: controlling the Miike dispute. The highlight of labour policies based on ‘modernization’ policies in the wide sense was the control of the Miike coal mine dispute. The Miike dispute was epoch-making in the history of the Japanese labour union movement.77 As previously stated, from the mid-1950s onward technological renovation prompted large private corporations to begin developing control over workers in competitive enterprises. This corporate domination influenced the labour union movement. It was most advanced in the steel industry. There the cooperative union cadre within the Yawata Steel Corporation Union, the most powerful union within the Federation of Steelworkers’ Unions (Tekko Roren), seized the leadership. Along with this, a shadow began to fall over ‘workplace struggles’ which had supported the militancy of labour unions of the Sohyo type during the 1950s.78 Enterprise control over workers began to transform the workplace from a site of unity to one of competition. In this connection, the Miike Labour Union affiliated with Tanro (the Japanese Coalminers’ Union), which became the main force on the union side during the Miike dispute, and made a name for itself in workplace struggles.

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Following ‘the 113-day struggle without a hero’, the Miike Labour Union prevented dismissals and rationalization. The Miike union extracted one concession after another from the company by means of workplace struggles and thus maintained its militancy. When faced with the necessity to reduce personnel because of the depression in the coal industry (caused by the energy revolution), the company believed that it could not recover unless it not only retrenched in personnel terms but also got rid of the ringleaders of the workplace struggles. Thus the company attempted to force the dismissal of the union activists. For this reason the Miike dispute tested the backbone of Sohyo unionism—workplace disputes—and the struggle over rationalization had ramifications for industry as a whole. Against this, the chairman of the Churoi (Central Labour Committee), Nakayama Ichiro, intervened in November 1959 with a conciliation plan, saying that ‘if the number of voluntary redundancies does not reach the target, then the remainder should be decided through consultation between labour and management’; but labour and capital both rejected this idea and the dispute intensified. Within industry, particularly amongst the Coal Cooperative Council, there was a strong inclination to accept this conciliation plan. However, the leaders of Nikkeiren, starting with Sato Kiichiro of the Mitsui Bank which stood behind Miike, rejected the plan and this led to industry as a whole rejecting it.79 At this stage, the zaikai clearly decided that in the Miike dispute it would force the submission of Sohyo-type labour union movements, and use this occasion to change the power relations between labour and capital. On 16 October 1959, Nikkeiren opened an extraordinary general meeting and put forward the emergency plan, ‘On Supporting and Cooperating in the Rationalization of the Coal Industry’. At this meeting, director Maeda Hajime expressed his determination to take this up ‘as a problem of industry as a whole’: In the Tanro struggle we expect a very serious situation because there is no doubt that Sohyo will support it with all its might. One misstep in dealing with this matter, will invite social unrest and we fear that it might even threaten our capitalist system. Therefore we must not leave this as a problem that concerns one industry but take it up as a problem that concerns industry as a whole.80 (emphasis added)

In this way the Miike dispute became a confrontation between combined capital and combined labour. Receiving this sort of support from the zaikai, the company strengthened its demands for the dismissal of designated individuals. In January 1960 the company locked out the workforce of the entire mine, whereupon the union embarked on an indefinite strike. In the midst of this intense conflict between labour and capital, expectations rose of intervention by the Labour Ministry. Just at this time Ishida Hirohide became labour minister in the Ikeda Cabinet, formed on July 18, right after the resignation of the Kishi Cabinet. Two days later, after the first

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cabinet meeting, Ishida decided to intervene and asked the Central Labour Committee for compulsory arbitration.81 Upon receiving this request, the Central Labour Committee sent requests to labour and management on July 20 at 3 a.m., thus avoiding a clash scheduled for later that same morning. At this time, capital expressed its unwillingness to accept unconditionally the Central Committee’s request for conciliation. The zaikai was determined to completely destroy the Miike union, and would not accept any conciliation plan that required concessions. And so the company side rejected the conciliation plan. Ishida then met over breakfast with Prime Minister Ikeda and the zaikai leaders who had already decided to deal with the strike. He implored them to accept the conciliation plan. Meanwhile, he visited each of the zaikai leaders— Kobayashi Chu, Sakurada Takeshi, Moroi Kanichi, Sato Kiichiro, and others —and did his best to persuade them to accept the conciliation plan.82 He also attended a meeting of the General Affairs Committee of the LDP, which had been pushing for strong police action against the strikers, and appealed for a peaceful resolution.83 Through his energetic actions, Ishida managed to bring the situation under control. This dramatic struggle was the high point of the Labour Ministry’s activity in mediating between the zaikai, backed by the LDP, and labour. After the Miike dispute, conciliatory unionism made further advances and ‘the age of managers’ began, just as director-general Maeda Hajime predicted at the 1959 general meeting of Nikkeiren.84 Labour–capital relations in the public sector stabilized, and the ‘modernization of labour–capital relations’ in the private sector was also somehow achieved just as the Ministry of Labour planned. Ironically, labour policy thereafter rapidly lost its power. The growing ineffectualness of labour policy. After the early 1960s, as amicable relations formed between the labour control of the corporations and the enterprise-oriented unions, the Labour Ministry gradually lost its ability to intervene in labour–capital relations in the private sector. Inflation in the aftermath of the 1973 oil shock, and the wage increases that featured in Spring Offensives, provided the Labour Ministry with a good platform for intervention. In fact, in August 1974 the Ministry of Labour established the Wage Problem Discussion Group as an advisory organ.85 But instead of the government being instrumental in restraining wage demands, it was the cooperative action by the union side and the ‘Eight Companies Discussion Group’ (Hassha kondankai), which was composed of two representatives from the major industries: steel, automobiles, shipbuilding, and electronics. There were also guidelines from the Labour Problems Research Committee of Nikkeiren. These were the groups that controlled the wage offensive.86 On the other hand, in the midst of the struggle by the unions to restore the right to strike in the public sector during the 1960s, there was still room to develop labour policy. In November 1965, the Public Service System Deliberative

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Council was formed, and began considering these problems. However, even from this perspective, as the Sohyo type of trade union developed a lopsided presence in the public sector alone, and with the right to strike as a precondition, it seemed that the stabilization of labour–capital relations, which the Labour Ministry sought, could not be realized. The total ban on strikes continued, and with the failure of the 1975 right-to-strike campaign87 the union movement experienced a setback, and the status quo hardened. In this context, the policies protecting workers that had shown some development in the 1950s regressed on all fronts during the 1960s. Accompanying high economic growth, there was a remarkable increase in the rate of labour accidents. The Labour Ministry intensified its efforts to address these problems, but as the succession of coal and gas explosions testified, their regulatory power had significantly decreased. There were 458 deaths in 1963, beginning with 839 carbon monoxide poisoning casualties at the Miike mine, and a succession of gas explosion accidents accompanied coalmine rationalization during the 1960s. Yet the Labour Ministry’s repeated warnings had no effect whatsoever. Neither the companies nor the other agency interested in coalmine safety, the Ministry of International Trade and Industry, took any notice of the Labour Ministry’s warnings. Other policies for protecting workers stagnated during the 1960s. For instance, during the era of high economic growth an abundance of labour power in the form of temporary workers and subcontracting workers poured into industry. Meanwhile female labour power appeared in the labour market in the form of part-time workers, and the severity of their working conditions became a major social problem. However, enterprise-type labour unions centred on regular employees of the large enterprises showed no interest in the labour conditions of these workers; therefore labour administration was remarkably slow in addressing their problems. In addition, as far as sexual equality in the workplace was concerned, administrative guidance was ineffectual in correcting the system of discrimination in large corporations where there were discriminatory age limits and women who married were forced to retire. Administrative guidance was powerless to rectify this. The improvement of these aspects was largely due to litigation, beginning with the 1963 action taken against Sumitomo Cement’s unconstitutional policy of compulsory retirement upon marriage. In 1972 the law on working women’s welfare was passed.88 It represented a change in legislation protecting workers during the 1960s. That is to say, this law merely obligated corporations to address the problem but had no legal effect apart from that. Legislation concerning part-time female workers and leave for childbearing could not be passed because of strong opposition from corporations. Only leave for child care barely passed, in the form of an encouragement fund for corporations.89 On the whole, labour policy could no longer influence the use of labour power by industry which was going through an era of high growth and fierce

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competition. Industry would no longer be restricted as it had been during the 1950s. All that was possible was to give encouragement funds to corporations so that they could carry out some social services for workers. On the other hand, during the 1960s new policies were systematically developed to promote capital accumulation. Worker protection policies, which were apt to impede accumulation, could not be realized. Capital strongly demanded a new type of labour policy. Of particular note was the systematic promotion of policies developed to encourage mobility in the workforce in response to the serious shortage of labour in the early 1960s.90 From the late 1950s onward, an employment policy perspective was injected into unemployment countermeasures to rectify the imbalance in the labour market. This had the nature of unemployment relief and labour protection aimed at relieving unemployment and protecting workers. In 1961 an employment Promotion Business Group was established to promote labour mobility; a Labour Market Centre was also established to facilitate the promotion of occupational exchange in wide areas. Similarly, in 1962 the Employment Stabilization Law and the Emergency Unemployment Countermeasures Law were revised in the face of strong opposition from unemployed workers, thereby reducing the number of organizations that cared for the unemployed.91 In 1966 a Basic Plan for Employment, based on the enactment of the 1966 Employment Countermeasures Law and a system of payments to workers for changing employment, was implemented. In addition, in order to make labour power in the agricultural and forestry sector mobile, farmers were given training to enable them to change occupations. In 1971 a law to promote industry in rural areas was enacted.92 All of these laws were part of the policy to promote mobility of labour. Furthermore, in the period of ‘business retrenchment’ following the oil shock, a series of measures were implemented to assist unemployed workers, such as the Employment Adjustment Grant System to furnish necessary assistance to temporarily suspended workers and employment stabilization projects to assist employers who were giving educational training to temporarily suspended workers.93 Thus labour policy was developed to support the structure of enterprise control. The above is a glimpse of how during the 1960s, along with the formation of enterprise control and enterprise-oriented unions, policies to protect workers weakened and, conversely, labour policy developed as part of economic policy to promote capital accumulation.

3. How a particular international framework contributed to the weakness of the state During the 1960s and 1970s, the state was shaped internally and externally by the great power of corporations and promoted their accumulation of capital.

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On the other hand, a structure was produced that was remarkably weak in regulating corporate accumulation. Meanwhile, the state acquired a peculiar weakness vis-à-vis the outside world. Subordination to the United States and the ‘cycle of good fortune’

The economic growth that laid the foundation for the structure of enterprise control during the 1960s and 1970s was itself made possible by an international framework especially favourable to growth. Subordination to the United States enabled Japan to rely on imports of raw material and fuel from nations within the American sphere of military control. Japan also succeeded in importing the most advanced American technology, improving it, and furthering its own industrialization. Financially, too, Japan relied on the United States and sought markets for its commodity exports there and in nations belonging to the American sphere. In addition, military subordination to the United States enabled Japan to lighten the great economic and political burden of providing for its own defence. With the American military presence as its premiss, Japan could direct its savings into basic investments for capital accumulation. Bearing these facts in mind, it is no exaggeration to say that without Japan’s subordination to the United States, high economic growth would have been impossible. At that time, all the United States sought was a Japanese guarantee of freedom for US military activity, including American aggression in Vietnam, and that Japan serve as a staging and logistics base for the American military. Of the Self-Defence Forces (SDF), America expected only that it purchase armaments made by American military industry. Of course, as the United States became bogged down in Vietnam, it also demanded that the SDF be dispatched. However, the United States had to avoid jeopardizing its secure use of Japanese bases; ultimately, it did not force the issue of sending the SDF to Vietnam. Similarly, for strategic reasons, the United States agreed to return the administration of Okinawa to Japan. Also, in later years the United States did not even seek to increase Japan’s share of the defence burden. This was the most favourable situation for Japan to devote itself to economic growth under the American military umbrella. This international framework supported the growth of Japanese capitalism, but at the same time it left a major mark on the state. Deformity of the military structure: subordination and the constitution

The first feature was the peculiar weakness of Japan’s military organization, which derived from two factors. One was its subordination to the United States; the other was Article 9 of the Japanese Constitution, made under the American occupation.

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The subordinate nature of the Self-Defence Forces. The United States placed Japan under its military control, initially, because it wanted to prevent a revival of Japanese imperialism and also because it wanted to safely control Asian markets captured from Japan. But as the Cold War unfolded, and especially after the success of the Chinese revolution, Japan was re-evaluated as the keystone for America’s Far Eastern strategy. The United States had planned to forbid the revival of the Japanese military in order to prevent the revival of Japanese imperialism, which is why it inserted Article 9, the disarmament clause, into the constitution. But when Japan’s role changed during the Cold War, the United States pressed Japan to change its demilitarization policy. Immediately after the outbreak of the Korean War in 1950, the US achieved the start of Japan’s rearmament in the name of the National Police Reserve.94 At first, the United States wanted to deploy the Japanese army on the Korean battlefront. To this end it demanded a ‘revision’ of Article 9 and a major increase in Japanese ground forces. The Yoshida Cabinet, however, did not respond to this request, on the ground that the Japanese people had a strong aversion to the revival of prewar militarism. Thus, while promoting rearmament, Yoshida maintained the constitution intact.95 Because Japan’s rearmament began under such circumstances, the rebuilt military came under strong American influence in its equipment and its entire organizational structure, becoming an appendage to the American military. First, this meant that Japan was able to rebuild its defence forces at a bargain price compared to what would have happened if it had to do so on its own. After the SDF was established in 1954, defence costs as a proportion of the general account declined annually, to the point where in 1960 they sank below 10 per cent; in 1972 they fell to 7 per cent, and in 1977 to below 5 per cent. Relatively low defence spending, together with the small expenditure on welfare, made it possible to invest the nation’s assets in the basis for capital accumulation. Japan’s military subordination to the United States was not merely quantitative. The composition of the SDF also had the attribute of subordination to the United States. For instance, initially the United States furnished all of the equipment for the SDF; even after Japan began to make its own annual defence plans, those plans presupposed the use of the same equipment as the American military used. This tendency grew stronger at the request of American armaments manufacturers. European arms makers were simply shut out. A classic example was the large-scale introduction of P3C Orions, early-warning anti-submarine planes, used by the American navy for antisubmarine surveillance activities. Japan’s P3Cs gathered data which they could not decipher themselves, so the American Navy would decipher it for them.96 In this way, the P3Cs were totally integrated into the American military. Unlike the NATO armies, the Japanese SDF did not possess an integrated headquarters with the American forces. Each side maintained the right of

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command,97 so that it seemed as though compared to NATO Japan was more independent. However, since the power relationship between the two nations was so disparate, the American military did not consider that the SDF had the power to fight. So it did not even bother to seek command integration with Japan. The uncoordinated character of the Self-Defence Forces. As a result of its strong subordination, the SDF developed as a very uncoordinated organization, most unlike an independent military organization. One consequence was that the SDF developed a tendency to disfavour its rear (logistics) support base. Under constitutional restrictions, defence costs were kept comparatively low so that Japan became a suitable market for American military industry. The US government fully supported that situation. The proportion of defence spending allocated to state-of-the-art hardware expanded. This produced a tendency for the SDF to reduce spending on ammunition, facilities for protection and camouflage of equipment, and the provisions essential to its own defence. Generally speaking, military establishments have that tendency, but it was especially pronounced in the SDF, which depended on the United States for its defence. Even in audits on defence costs conducted by the Finance Ministry, spending on ‘frontline equipment’ sailed through, whereas ‘no money was made available for the rear base’. As a result, ammunition reserves were extremely depleted, and as far as the defence of the rear was concerned, base facilities degenerated to the point that ‘the aircraft belonging to the army, navy, and airforce were kept in private aircraft hangars, almost at the mercy of the wind and rain’.98 Because there was no need for self-defence, national defence plans could not be drawn up in Japan, and several defence plans were ‘little more than shopping lists’ of weapons to purchase from the United States.99 In fact, the most important thing for the SDF was to procure the most advanced weapons. As a result, a unique disposition for corruption developed within the SDF. The expansion of finance that occurred during high economic growth generated numerous scandals in many ministries during the 1960 and 1970s, but the scandals of the Defence Agency and the SDF were on a much larger scale. Naturally, where the purchase of weapons is concerned, corruption is universal because of the high prices involved and the fact that the choice of armaments cannot be decided by price alone. In Japan, where there was no unified defence plan, decisions on the adoption of weapons could not help but become subjective. The third example of the SDF’s poor coordination was the separation of the three services. Subordinated to the United States and not forced to make their own national defence plan, the army, navy, and air force had almost no communication, and tried to expand as independent services, making their

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separation even more extreme. In order to supervise the three services, a combined chiefs of staff council was created, copied from the American Joint Chiefs of Staff. Above the general staff council was placed a chief of the combined general council. But faced with the desire of the services to remain independent of each other, he was not given the power to unite them and, even legally, acted as ‘little more than a mediator’.100 Another factor accelerated the separation of the services. Because the SDF came under the command of the American military from the outset, each branch was tied to its American counterpart in a vertical relationship. As each jockeyed to expand their areas of authority, the conflicts among them intensified. Kaihara Osamu, a defence bureaucrat who served in the Agency from its start until the early 1970s, describes the situation this way: ‘Japan’s sea and sky is under the jurisdiction of the Defence Agency, but the ties between our navy and airforce and their respective American counterparts are far more intimate than their ties with each other.’101 The weakness of the constitutionally constrained Self-Defence Forces. Along with the SDF’s subordination to the United States, and the weakness and uncoordinated nature of each of the services, their smooth growth was impeded by the constitution. The fact that Article 9 of the Constitution still retained its restraining power from the 1960s through the 1970s was, of course, due to the strength of the peace and democracy movements. But people were also aware that, because of pacifism and ‘light’ armaments, high economic growth would contribute to higher living standards. From its inception the SDF was attacked for being unconstitutional, and its constitutionality was always in doubt. In the 1950s the government tried to promote constitutional revision. When that avenue was blocked, it reverted to emphasizing the legitimacy of the SDF under Article 9.102 From the 1960s through the 1970s the SDF endured a succession of legal challenges. Eventually its existence was broadly acknowledged, but because of that the government was forced to place considerable limitations on its activities. By paying that price, the SDF was able to avoid challenges to its constitutionality. The biggest restrictions were that they had to declare that there would be no conscription, no troop deployments overseas, and an adherence to the 1976 cabinet decision to keep defence spending within 1 per cent of GNP. Furthermore, there was the declaration of three non-nuclear principles and three peace principles banning the export of weapons. Of these restrictions, the last two were devised in the process of arguments between the ruling and opposition parties, and were brought to a decision in the Diet. Despite the fact that the SDF has now become a large, powerful force, these restrictions still constitute a huge barrier to military growth. These constitutionally based limitations restricted the SDF’s activities, not only directly, but also indirectly. For instance, since the weapons procured by

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the SDF must be for defence, they cannot procure mid-air refuelling equipment, bombing equipment, or long-range fighter aircraft103 because these are not considered defence equipment. Furthermore, they cannot acquire new land for training exercises for fear it will spark a constitutional debate; and so the inadequacy of training facilities persists.104 Also, since the ‘Three Arrows’ map exercise was disclosed in 1964, even the guarantee of military activity in an emergency and the examination of emergency legislation could not be conducted openly until the ban was lifted in 1977. This was due to fear that the enactment of such laws would set off a constitutional debate. Despite this, studies of emergency legislation progressed toward the end of the 1970s; but because emergency legislation, including revision of the SDF Law could not be enacted, the SDF’s freedom of action in an emergency has not been legally guaranteed. ‘Because emergency legislation has not been enacted, the SDF can hardly budge.’105 Using these constitutional limitations as a weapon, the opposition parties pursued the matter in the Diet, and that greatly restricted the growth of the SDF during the 1960s and 1970s. With LDP politics devoted to high economic growth, the SDF’s freedom of action was not a matter of urgent necessity. On top of that, the opposition parties’ questions in the Diet concerning defence problems became a bargaining chip in negotiations over various bills that the government wanted to have passed. The LDP tried its best to avoid giving these issues to the opposition parties. Thus LDP politics also became a major bottleneck for the growth of the SDF. It was generally understood that what obstructed the strengthening of the state or defence power was not ‘politics’ but, more accurately, party politics. Thus the defence bureaucrats concluded that ‘politics was entirely to blame’ for preventing the SDF from becoming a military.106 ‘They [the politicians] are only concerned with “winning their own seats”, this is their main priority. Whatever interferes with their campaign is a problem for them.’107 And so politicians have always avoided policies that contradicted the pacifism of the electorate and threatened to become a constitutional issue. The military that has not been established. Given the dual weaknesses outlined above, subordination to the United States and constitutional limitations, military organizations had little influence over state decision-making. Because military organs were weak, Japan did not use military force as an instrument to realize political objectives in the postwar period. Because of this, even within the bureaucracy the status of the Defence Agency and the SDF was low. Their status was so far from that of the armed forces in the prewar emperor system state as to make comparison irrelevant. Even the bureaucratic positions within the Defence Agency were always filled by officials deployed from the police and other organizations. The Defence Agency itself was unable to produce its own internal élite.

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The problems inherent in this weak military institution were noted again by the ruling élites once the international framework of the 1960s and 1970s began to crumble. During the 1960s and 1970s Japan only had to concentrate on economic growth and subordinate itself to the United States. Despite becoming an economic superpower, Japan could not possess a commensurate level of political or diplomatic influence. Its leaders began to wonder whether this was because Japan did not possess the necessary military power to exert influence in international society and, in particular, because it lacked freedom of military activity. But in order to secure this power, the need arose to fundamentally reform the consensus and customs which LDP politics had created during the 1960s and 1970s. And so in the 1980s the need to recognize ‘the state’ emerged. Even what the nation does not like, I would like to declare for the sake of the state. That is what a statesman does. As far as defence is concerned, the time has arrived.108

We will look at that issue later. The immaturity of an independent Japanese foreign policy

Foreign policy which follows behind that of the United States. In the framework of subordination to the United States, Japan was also hindered in fully developing an independent foreign policy. Postwar Japan’s foreign policy depended on the United States for information and decisions, and developed in accordance with Washington’s wishes. Thus, a huge gap appeared between Japan’s economic development and its diplomatic capabilities. Even if we look at the number of Foreign Ministry personnel, especially those residing abroad, in 1975, at the maturation point of the 1960s–1970s-type state, compared to America’s 4395 diplomats and Britain, France, and West Germany’s 3974, 3829, and 3847 respectively, then Japan, with 1433 personnel, had far fewer diplomats than Italy, Belgium, Australia, and India.109 Depending on the United States in this way, the biggest concern of the Foreign Ministry became maintaining the Japan–US relationship, and experience in Europe and especially in America became the essential condition for promotion. The fact that almost all the Vice-Ministers of the Foreign Ministry had the experience of being a minister either in the US or in Britain and not a single one had experience as an Asian bureau chief reveals the bias toward Europe and the United States within the Ministry.110 Even in the 1980s, the fact that the security section was located inside the America Bureau showed that Japan only thought of security in the context of its relationship with the United States.111 After its entry into the United Nations in 1956, Japan advocated ‘UN diplomacy’. But if we take the period from the 11th to the 17th General Assembly, Japan followed America in its voting on international disputes 94 per cent of the time.112 Clearly, not only in intelligence but even in diplomatic decision-making Japan followed America.

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Trial and error in pursuing an independent foreign policy, and its stagnation. During the 1960s Japan began to show a desire for an independent diplomacy. One example was its attempt to pursue an Asian diplomacy. Asia had been the target of Japanese imperialism, and even afterwards, as Japan recovered in the postwar era, there was still a strong desire to advance once again into Asia. The Kishi Cabinet’s three major foreign-policy directions—‘UN centred diplomacy’, ‘cooperation with the free world’, and ‘maintaining our position as a member of Asia’—revealed a desire for an independent foreign policy. Along with this, within the Foreign Ministry itself a pro-Asia faction emerged which tried to have postwar Japanese diplomacy act in concert with the countries of Asia.113 This emergence of an ‘Asia faction’ made itself felt in June 1960, when Indonesia was embroiled in a bitter dispute with the Netherlands over possession of West Irian, and Japan refused permission for a Dutch fleet to enter the port of Yokohama as part of celebrations commemorating 350 years of Netherlands–Japan friendship.114 However, incidents such as this were rare, and the overall supremacy of the Ministry’s pro-America faction was not challenged. The second attempt to strengthen an independent diplomacy appeared as a movement to raise Japan’s profile within the United Nations. However, it was thought that Article 9 posed too great an obstacle to Japan’s sending its troops abroad and participating in UN peacekeeping activities. From the 1960s onward, the Foreign Ministry began groping toward sending SDF troops to participate in UN actions. The February 1961 argument by Ambassador to the UN Matsudaira Yasumoto, in favour of sending Japan’s troops abroad to particpate in UN actions, was a test balloon for the Foreign Ministry. Similarly, when the gist of the ‘Plan for UN Cooperation’ was leaked to the press in 1966 it indicated a similar attempt.115 Of course, as in the case of the expansion of the military organization mentioned earlier, the government feared that the opposition parties would pursue it and so never let the matter go any further. When it came to the 1970s, the Foreign Ministry began to indicate, through the Foreign Minister’s speeches and in other ways, Japan’s desire to join the Security Council. But without concomitant military and diplomatic power there was little prospect of success. Despite the Foreign Ministry’s irritation, the government of the day did not put in place measures to strengthen an independent foreign-policy line, because there was no need for an independent diplomacy for pursuing the line of high economic growth. Instead, it was disadvantageous for the government to stir a constitutional debate. Here too, the movement to strengthen ‘the state’ was crushed by the government. Middle Eastern diplomacy as a symbol of Japanese diplomacy. Middle Eastern diplomacy symbolized the essential weakness of Japanese diplomacy at this time. One of the pillars of the high economic growth that began in the mid-1950s

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was the move from coal to oil. As a result, Japan’s dependence on oil rose to 75 per cent, the highest in the advanced industrialized world. At the time oil was being discovered in one Arab country after another, and under the dominance of the major oil companies its price was kept extremely low. By becoming an oil-based economy, Japan was able to obtain energy more cheaply than ever before, even after deducting the cost of transportation. However, this was, in a sense, an extremely dangerous policy. Ninety-nine per cent of Japan’s oil was imported; and of that, 80 per cent came from the Middle East.116 From an economic perspective alone, this energy structure was supposed to have strengthened diplomacy with the Middle East. But Japan’s Middle Eastern diplomacy remained at an extremely weak level because it relied on imports from the major American oil companies, which dominated the Arab world around that time. The oil shock greatly changed Japan’s Middle East diplomacy. With the start of the fourth Middle Eastern war in 1973, OPEC invoked an oil strategy and decided to decrease oil supplies to Western nations supporting Israel by 5 per cent. Even after this OPEC decision, the Foreign Ministry felt constrained to follow America’s support of Israel, and engaged in a fierce confrontation with MITI, which advocated revising Japan’s policy to support the oil-producing Arab countries.117 Ultimately, this conflict was resolved through the intervention of Prime Minister Tanaka Kakuei, and Japan’s Middle East policy underwent a radical change of direction, after which Japan backed the Arab countries even at the UN. When the Arab countries put forward a resolution at the UN General Assembly on December 17, 1973, reaffirming their sovereignty over natural resources in territory under Israeli occupation, Japan went against the United States and the rest of the Western world by voting in favour of the resolution.118 This expansion of diplomacy towards the Arab states, however, was spurred by strong pressure from Japanese corporations suffering from oil restrictions, and did not mean that Japan’s diplomacy had strengthened. The immaturity of ‘state’ ideology

The weakness of the state during the 1960s and 1970s also manifested itself as an immature state ideology. This phrase might invite misunderstanding. To say that the ‘state’ ideology is immature does not mean that the dominant ideology of those times was fragile. Rather, in the 1960s and 1970s a strong dominant ideology unique to contemporary Japan was formed under the enterprise society and high economic growth, and that ideology captured the mind of the nation. What I wish to stress here is that this dominant ideology did not always take the form of a ‘state’ ideology. The strong sense of belonging to the ‘country’ and the feeling of dissatisfaction towards the ‘state’. In this era of the enterprise society and high economic growth a particular national awareness was created. The feeling of belonging

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to the country (kuni) called ‘Japan’ heightened. In public opinion polls, in response to the question, ‘Are you glad to be born a Japanese?’ 88 per cent of respondents answered, ‘Yes, I am glad’, and 10 per cent answered, ‘I am more or less glad’. Even if we deduce that the number of affirmative responses to such a question could be expected to be high, those percentages were still high, and at the start of the 1970s they became higher still.119 Furthermore, the ‘Japan’ in question was not the Japan of old, but the postwar Japan, which enjoyed peace and high growth. This is why in the 1960s and 1970s positive responses to the question increased. Also, to the question, ‘What are you most proud of in contemporary Japan?’ ‘Japan’s economic development’ was the leading answer, at 36 per cent.120 However, these feelings of support for postwar Japan did not lead to support for the ‘state’ in the narrow sense. The people did not necessarily attribute postwar successes to the policies of the government. To underscore this point, feelings of satisfaction with ‘politics’ were on a downward spiral during the same period. The satisfaction rate of government in 1969 was 40 per cent, but in the 1970s it fell below 30 per cent, and stayed at that low level during the 1980s. On the other hand, dissatisfaction in 1972 was in the 60 per cent range, and in 1973 it exceeded 80 per cent.121 ‘Companyism’, or the anti-welfare society and the ideology of the pacifist state. This sort of national consciousness was clear evidence of the enterprise-centred society and dependence on the Security Treaty—in other words, it tells us that the structure of small military and economic growth had become widely diffused in this era. At the same time, it signifies that support for the prewar emperor system state had diminished. It also reflects the fact that this sort of postwar structure was not led by ‘the state’ but by the leadership of the corporations. In this period a systematized, dominant ideology based on this sort of national awareness arose and implanted itself in popular consciousness. Sakamoto Jiro’s ‘Company-ism’ was noticeable as a new ideology which positively affirmed a system of economic growth which gave priority to the corporation.122 Sakamoto’s ‘Company-ism’ argument had the following characteristics. First, Sakamoto identified Japan’s prosperity as a product of following the pacifist route without expanding militarily. He also emphasized that Japan’s economic growth was achieved under the leadership of the corporations, and evaluated that positively. Furthermore, Sakamoto argued that postwar Japan’s modus operandi contrasted with ‘the Western European style of welfare state’. On pacifism, Sakamoto emphasized that, while the ‘Western Europeanstyle welfare state’ continued as a military state, Japan was not developing a nuclear capacity and was able to create a state that was close to the ideal of disarmament. Japan neither possesses nor desires a nuclear capacity. There is also strong domestic opposition to importing such materials into Japan. As far as the idea of total

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disarmament is concerned, we cannot say that Japan has achieved it yet. . . . However, Japan certainly has the fewest defects among the advanced industrialized countries. . . . While Japan’s industrial power is one-third of that of the United States, its per capita defence spending is one-fiftieth that of the United States. Thus it keeps its defence costs to a minimum compared to its economic strength. Second, Japan has fewer interest groups that profit from war. . . . Third, Japan is probably the country with the narrowest definition of ‘the principle of defence’. Even if the UN demanded it, Japan would not easily countenance the sending of troops abroad.123

This ‘pacifism’ of Japan is the first characteristic that distinguishes Japan from the ‘Western European-style welfare state’. Furthermore, Sakamoto said that the private-sector leadership of the postwar Japanese state also differed from the Western European-style welfare state. ‘Japan has two distinguishing characteristics. One is the strength of its dynamism, another is its strong spiritual demand.’124 This ‘dynamic nature’ originated from the ‘reckless drive of the process of creative destruction’ caused by the Japanese economy’s ‘super-high growth’. This goal of growth prevented corruption and decay of the nation, the enterprise, and the state, and kept a strong spirit going.125 Second, as a corollary to the above statement, Sakamoto said that the ‘company’, not the ‘state’, had become the nucleus of the unity of the Japanese people. He also argued that the Japanese people as a ‘race’ had a strong sense of belonging to the ‘state’, but that they did not have strong expectations about the ‘state’ as an organization of political power. Sakamoto’s fascinating argument not only coincides with the national awareness seen in public opinion surveys; he also accurately pointed out the distinguishing feature of the Japanese state based on the domination of the enterprise. In a discussion with disputants who had a strong sense of crisis regarding this sort of Japanese state and who asserted that Japan should become a stronger state, Sakamoto declared: ‘no one will die for the Japanese race, but many are dying for the company.’126 This is indeed a frighteningly accurate observation concerning contemporary Japan, where ‘death by overwork’ has become a profound social problem. Third, Sakamoto criticized the ‘Western European type of welfare state’. The focus of his criticism was that welfare states contravene current trends in that they aim at ‘a big state’. In contemporary society, ‘the government . . . does not relate to the people in a spiritual sense. . . . compared to the people’s sense of solidarity with the company, their sense of spiritual solidarity with the state is insignificant’.127 Also, in today’s society, where change is so dramatic, organizational bodies must change accordingly, but ‘government is very slow to change, while companies change rapidly’.128 Generally speaking, companies are more efficient. That is why Sakamoto gives credit to Japan for not becoming a Western European-style welfare state. By criticizing

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the welfare state, Sakamoto in the 1960s was prematurely developing a neoliberal type of argument. Sakamoto’s argument was the pure form of the Japanese dominant ideology in the enterprise society. Well then, what were the general characteristics of this dominant ideology? First, it is noticeable that the welfare state ideology did not become dominant in Japan during the 1960s and 1970s as it did in other advanced industrialized countries. Although not as thoroughgoing as Sakamoto, many Japanese ideologues were very sceptical about ‘the welfare state’. This scepticism sharply reveals the special structure of the contemporary Japanese state and society. Second, this dominant ideology denied the nationalism seen in emperor system ideology, and had the characteristic of positively accepting the primacy of the economy and the peace state. Apart from Sakamoto, there were others, such as Kosaka Masataka, who re-evaluated Yoshida Shigeru, who had been extremely unpopular during the 1950s. Yoshida consciously entrusted responsibility for Japan’s defence to the United States and created a system which gave priority to economic growth, thus laying the foundations for prosperity. By re-evaluating Yoshida as a contributor, Kosaka justified Japan’s choice at that time.129 The same ideology could be seen in the ‘Security Treaty prosperity’ argument,130 which claimed that prosperity was made possible because the Security Treaty reduced Japan’s defence costs and allowed the savings to be used for economic growth. Apprehension about ‘the weak state’. Of course, not all of the ruling élites admired the situation of the postwar Japanese state. On the contrary, I think many felt strong apprehension about the weakness of the state. At the heart of their fears was the small military and the economic growth line under the constitution, and the subordination to the United States. Typically this was expressed by the arguments of the hawks who wanted to revive the emperor system state. Even they did not believe that they could return the country to the prewar emperor system state by severing its subordination to the United States. However, they could not help fear that Japan was losing the state by specializing in the economy. For example, Hayashi Fusao declared: ‘Post-surrender Japan is only half a state. . . . We have a powerless military that is backed up by the Security Treaty, and special mobile police that even students can kill . . . That is all this half state has.’131 Hayashi had a strong sense of foreboding about such a Japan: ‘Politics is not economics and the state is not a company.’132 I want Japan to quickly escape from this situation of a half-state and retrieve its statehood. . . . In order for Japan to become a state again, we must first revive spiritual nationalism; somehow we must strengthen today’s vague emperor system, abolish the MacArthur constitution, and create our own constitution; and of course we must rearm openly.133

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These arguments struck a chord with leading ideologues but could not become the dominant ideology. The stable structure of the ‘weak state’ prevented the development of this sort of ideology. In sum, the state took shape during the 1960s and 1970s, with a unique structure which set it apart from both the European ‘welfare state’ and the American ‘hegemonic state’, supported by enormous military, political, and diplomatic power. III. Reorganization of the Contemporary Japanese State and its Constraints The state formed in the 1960s and 1970s underwent large-scale reorganization during the 1980s as movements arose to overcome its weaknesses.

1. Attempts at overcoming the weakness of the state vis à vis the outside world, and obstacles in the way The ‘growth state’ of the 1960s and 1970s was only possible under exceptional international conditions: namely, Japan’s total dependence on the United States, which happened to be enormously strong. Once these ‘fortunate’ circumstances deteriorated, the system would have to be reformed. Addressing the gap at being an economic superpower, but not a political or military power

The changes in the international system that forced the reform of the 1960s– 1970s-type state were revealed in the following two forms. American demands for Japan to increase its military strength. First, the United States abandoned its formerly generous attitude, and strongly pressed Japan to increase its share of defence. For the United States, Japan was vitally significant only as a logistics support base for pursuing global US strategy.134 Under the Security Treaty, the US was satisfied if it had free use of bases in Japan and could secure in Japan the materials essential for its strategic military activities. With its overwhelming military and economic superiority, the United States neither really relied on Japan’s SDF nor even asked Japan to cover the costs of the US military presence in Japan. However, with the advent of the Johnson Administration, which carried out policies of aggression in Vietnam and ‘Great Society’ policies, American strength begin to exhibit signs of crisis. This crisis deepened in 1971 with the Nixon shock (President Nixon’s abrupt announcement of the decision to stop conversion of the dollar into gold), and further in 1973 with the oil shock.

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But behind the Arab oil shocks lay the decline in US military power, which was unable to restrain the nationalistic movements of the Arab countries. The ensuing fall of Saigon in 1975 symbolized the decisive decline of American military power. In response, America tried to maintain its global security strategy by putting pressure on its Allies to assume more of the burden of their defence. The first step was the 1969 Nixon Doctrine, and this intensified under the Carter Administration. Under Carter, the argument arose that Japan was getting a ‘free ride on defence’, and strong voices sought to have it assume a major share of the burden. First, the United States demanded that Japan pay more to support the US troops stationed in Japan. It was in effect a demand for Japan to take over the expenses that it had hitherto been agreed the US would pay. The so-called ‘consideration money’ that originated under the Fukuda Cabinet was Japan’s response to the US demands.135 Second, the US demanded that Japan expand its defence budget and strengthen the system of joint operations with the US. Specifically, it demanded that the SDF take over the defence of the western Pacific from the US, particularly anti-submarine operations.136 In this way, from the late 1970s US– Japanese cooperation on the military level suddenly became closer, and in 1978 the two governments agreed upon the US–Japan Military Cooperation Guidelines.137 The Self Defence Force’s stress on ‘sea lane defence’ was also in response to US demands.138 The overseas advance of Japanese capital. The second factor that spurred a reorganization of the 1960s–1970s-style ‘lightly armed’ state was internal. On Japan’s part, there was a growing sense that relying on the US for defence and concentrating only on economics was unnecessary. The sudden rise in oil prices as a result of the oil shock had already demonstrated that there was no security in relying on the US. As previously stated, from this time onwards in order to maintain its oil supply Japan adopted an independent foreign policy line. This intensified the trend, as concurrently Japan expanded its exports of not only goods but, along with them, capital. Furthermore, in a sense the structure of Japan’s capital exports demanded an increase in Japan’s military strength. In other words, the advance of Japan’s capital exports, which had increased remarkably from the late 1970s, had an unusual structure which can be described as placing heavy emphasis on developing countries.139 For example, if we take the level of direct investment in developing countries at the end of 1980, compared to the US at 26.4 per cent and West Germany at 21.5 per cent, Japan’s direct investment in developing countries was 54.5 per cent, of which as much as 26.8 per cent was in Asia.140 There are various reasons why Japan’s capital advance assumed this structure. Firstly, Japan’s use of direct investment to obtain raw materials has always been comparatively large, and this increased in the wake of the oil

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shock, raising direct investment particularly in the Middle East and in SouthEast Asia. Secondly, unlike direct investment in advanced industrialized countries, direct investment in developing countries was advantageous. Labour was cheap, and environmental regulations were weak. Furthermore, the governments of those countries were able to create circumstances favourable to capital such as restricting the activities of trade unions.141 Of course, compared to advanced industrialized countries these developing countries carried various risks such as revolution, political instability, war, and debt, and while the profits were high so were the risks. And so Japan came to demand the establishment of a system which prevented those situations from arising, and secure the rights of their capital if those events did occur. To date, Japan had relied entirely on US military might to protect Japanese activities abroad. Japan’s capital advance increased in inverse proportion to the decrease in US military might. And yet in the view of Japan’s capital the stability provided by the presence of US forces was indispensable. And so circumstances in Japan likewise contributed to the demands for Japan increasingly to share the defence burden. In addition, in response to this situation there arose a call for Japan to enhance its military and political strength independent of the US. That is to say, when a crisis did arise in a developing country, Japan could not match the US when it came to mobilizing forces to quell or control it, but it was also insufficient for Japan merely to rely on the US. The presence of Japan’s own power was indispensable. And so from the 1980s the zaikai suddenly began to criticize the Japanese state’s lack of capability in this regard; and because Japanese corporations could not protect themselves in these circumstances, they called for the state to transcend its economic sphere of activity. Addressing the risks of direct investment in developing countries necessitated expanding the foreign ministry’s reporting capabilities, increasing the state’s accumulation of oil and rare metals stocks, expanding the ODA, increasing Japan’s share of the defence burden carried by the US, and increasing Japan’s own defence capability.142 The government also responded to the zaikai’s demands, and from the end of the 1970s it increased ODA, and incorporated strategic considerations into the aid programme. But while these types of assistance might help avoid a crisis in developing countries, if a dispute broke out their effect would be minimal. For instance, during the Iranian revolution and the Iran–Iraq War, as far as protecting the activities of Japanese enterprises and nationals and maintaining Japanese interests in that region were concerned, Japan revealed weakness in putting pressure on the governments involved in these disputes because it could not dispatch the SDF. Thus Japan encountered many difficulties.143 An SDF official said, ‘ODA cannot stop a tank’.144 This signified that Japanese bureaucrats were aware of the limits of economic assistance.

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Diplomatic and military power commensurate with economic might. However, even though the demand to deploy the SDF was so acute, it was not so easy to increase military power and create a system whereby such power could be deployed freely. For this meant rejecting the fundamental direction Japan had taken during the postwar period—and in particular the direction it had consciously pursued during the 1960s and 1970s, which was deeply rooted in society. When the ruling élites decided that they wanted to strengthen their military capability, they saw before them a state that had kept defence spending low and had guaranteed that Japanese troops could not be sent abroad, and through these means had ensured the stability of conservative rule. During the 1980s the ruling élites sought fundamental reform of the 1960s– 1970s-style state. This meant strengthening the military and diplomatic dimensions of the state relative to its economic strength, to make it ‘a normal state’. Reform of the state during the 1980s was advocated in the name of restoring the state, which was symbolized by Shimizu Ikutaro’s slogan, ‘Japan! Become a State!’145 Hayashi Fusao advocated this during the 1960s and 1970s, but to little effect. As Shimizu said, ‘Postwar illusions and taboos should be smashed, and Japan should develop military power commensurate with its economic power.’146 Expanding and reforming military power

In this context, moves to expand military power and deploy it freely became active during the 1980s. This went beyond merely increasing military expenditure, and was accompanied by a reform of the modus operandi of the existing military itself. Changing the hypothetical enemy. When it came to the 1980s, the hypothetical crisis which justified the expansion of military power changed greatly. Until then, the enemy had been the Soviet Far East. This remained powerful in the 1980s as a result of the Soviet Union’s invasion of Afghanistan, but in addition the problem of the Middle East, notably the Persian Gulf, appeared. The shift in the late 1970s to ‘sea lane defence’ in order to protect Japan’s supply of oil from the Arab countries was another indicator of this new threat perception. The Middle East threat was demonstrably more real than the threat of invasion from the Soviet Union. The reality of Japan’s superpower status was encapsulated within that new hypothetical threat. The hypothesis of US–Japan joint operations. The second major change in the 1980s was that for the first time joint US–Japan operations were openly discussed. Until then, Japan’s defence plans had presupposed independent Japanese SDF action until help arrived from the US in the event of a Soviet invasion. In fact, until the mid-1970s the US–Japan joint consultations had not been very close. But in the mid-1970s, the guidelines developed to facilitate joint consultations

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brought the two sides closer together and for the first time the notion of joint operations entered into defence planning in Japan. This study by the SDF on US–Japan joint operations though replete with the thinking that Japan was a lone operator; none the less it did clearly state that the duty of the SDF was to defend and protect the US bases in Japan to ensure the latter’s freedom of action;147 likewise, the mission of the navy was to use P3Cs to ‘attack or supply information about the whereabouts’ of Russian nuclear submarines, as a ‘contribution to the US’148 in a manner that was unprecedented. After those guidelines, it was the Japanese services which took the initiative in examining US–Japan joint operations in the Japanese context; but then, with the outbreak of the conflict on the Korean peninsula, the frame of reference expanded to encompass ‘the Far East’.149 This was when US–Japan joint operations came to be considered realistic for the first time. At the same time, rationalization of weaponry came urgently to be called for.150 Moves to consolidate the US–Japan joint operations cast the SDF as one corner of the US military, and from the outside it looked as though the SDF were merely following after the US military. However, the apparently deepening dependence of the SDF on the US forces was actually accompanied by the growth of the SDF’s capabilities. Constitutional revision and the great chorus of restoring ‘the state’. Thirdly, in the 1980s defence commentators began publicly to demand that, instead of merely increasing the costs borne by Japan, the way ought to be made clear via legislation for Japan’s forces to operate freely abroad. But the constitution stood in the way. And thus moves to revise the constitution emerged from within military ranks. These three developments which emerged in the 1980s changed shape somewhat emerging stronger after the collapse of the Cold War system at the 1989 Malta Conference and the ensuing invasion of Iraq in August 1990. First, the hypothetical enemy shifted squarely to the Middle East. After Malta the Soviet threat lost its credibility, and the theory turned to the threat of regional conflicts in the Middle East which arose as a result of the decrease in US–Soviet conflict. In this way the Middle East threat could be portrayed as directly infringing Japan’s national interests. Second, with the rise of the argument that Japan had to protect its interests in the Middle East and other regions, arguments were no longer caged in terms of defence against Soviet aggression, rather military-strategic arguments were stated in more openly offensive terms. For example, possession of offensive weapons, which had not been referred to because of the constitutional restrictions on the SDF, now began to be demanded in the name of protecting interests in the Middle East or ‘making an international contribution’.151 It was said that transport ships were essential to transport minesweepers, and that light aircraft carriers were also indispensable. These demands are ongoing. The Air and Sea SDF are saying that they

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need large refuelling KC10s capable of transporting personnel, while the Ground SDF says that instead of the heavy armaments needed to repel a Soviet invasion they now needed ‘a lightly armed special force, an advance force’.152 It is immediately clear that these armaments are intended for use in developing countries, beginning with the Middle East and Asia. The SDF is now aiming at becoming the force which protects the interests of Japan’s expanding capital, just like an imperialist army. ‘Japan, which has become an international economic superpower, must become involved with conflicts that occur anywhere in the world.’153 Further, ‘Japan must shift from a singlepronged defence strategy aimed at the Soviet Union to one which anticipates multiple threats in the form of regional conflicts.’154 Third, together with this Imperial Army concept, constitutional revision to facilitate the dispatch of the SDF overseas became urgent. It is only natural for arguments for revision of the constitution to emerge, for the Constitution is no longer appropriate for the times. It is a ‘remnant of the Cold War’. World peace is a prerequisite for the prosperity of Japan’s economy. If that peace is endangered, Japan’s economy could be destroyed. . . . It stands to reason that the Self Defence Forces are part [of the UN force]. . . . Arguments for revision of the constitution and for revision of the two defence laws are indeed precious lessons produced by the Gulf crisis.155

Fourth, the recent defence debate noted at the start of this section caused a great commotion on the subject of ‘the state’. In particular, this refers to the view that the establishment of the SDF as a military was the indispensable means for Japan to become a ‘state’. a country without considerable military power cannot be called an independent nation. The military prerogatives of Japan’s Self Defence Forces are not recognized; the SDF has not become a military organization of the nation. It is a bureaucratic aggregation that has the colouration of a police garrison force for the home islands. . . . Revise the two defence laws and the constitution, and, without question, the ‘military’ will be restored.156

However, underneath these strident voices I do not think that the internationalist weaknesses of the 1980s state have disappeared. Certainly, at the start of the 1990s when the Cold War ended, the state finally took the first step in sending the SDF overseas in the name of making an international contribution to multilateral peacekeeping efforts. The SDF, however, is still prohibited from exercising force overseas, and constitutional revision for the purpose of legalizing such use of force remains unrealized. Thus, the Japanese state is far from having the system needed to assert itself as a political superpower with membership in the UN Security Council.

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2. ‘Administrative reform’ and carrying through the principles of the state In the 1980s, in direct contrast to movements to strengthen the state vis-à-vis the outside world, movements arose which sought to carry through the principles of the 1960s–1970s-style state. This first appeared as part of the second round of ‘administrative reform’. Let us begin there. The particular characteristics of Japanese-style ‘neo-liberalism’

There is not enough space here to give a detailed overview of the development of ‘administrative reform’.157 Rather, I will examine the Japanese version of the neo-liberalism that swept the advanced industrialized countries in the 1980s, namely the ‘administrative reform’ and its Japanese characteristics. The non-revolutionary character of the ideology of the Special Reform Council. The first question regarding the second ‘administrative reform’ is whether or not it had revolutionary significance like its neo-liberal counterparts in Britain and the United States—I shall not judge here whether this was in fact the case. What Reagan and Thatcher faced originally was the welfare state promoted by the Democratic Party and Labour Party during the 1960s and 1970s. They sought to demolish this monstrosity, which they believed obstructed the accumulation of capital, but because they failed thoroughly to criticize the ‘welfare state’ ideology that permeated society, they could not even scratch the surface of it. Their promotion of ‘small government’ was meant to be a revolutionary denial of ‘welfare state’ ideology. In Japan’s case, the recession following the oil shocks was promptly overcome, and the ‘welfare state’ structure did not become an obstacle to capital accumulation. Furthermore, in the 1960s and 1970s ‘welfare state’ ideology was never acknowledged as the dominant ideology and never permeated society as it had in Britain and the United States. Rather, what seized the Japanese people in the 1960s and 1970s was the neo-liberal doctrine of economic growth through competition. In this sense, we can say that the ideology of administrative reform was not a revolutionary denial of the 1960s–1970s-style state, but instead its purest manifestation. The two faces of the Council’s administrative reform, and their inconsistency. Second, ‘administrative reform’ did not just stop at ‘small government’. It also promoted a goal which was in direct contrast to that of ‘small government’. This became apparent in the two ideals put forward during the second round of ‘administrative reform’.158 These ideals were ‘building a dynamic welfare society’ and ‘positive contributions to international society’.

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In order to respond to these new tasks, reform of the 1960s–1970s-style state became unavoidable. For this purpose the Special Reform Council (Dai ni rincho) devised three categories of administration, and separate types of reform for each one. The first group—agriculture, social security, and educational administration—could cut their expenditures in order to revitalize social dynamism. The second group—diplomacy, economic cooperation, and defence—could increase their expenditures in order to carry out the responsibilities of the state. The third group—land development, housing, real estate, energy, science, technology, and so on—had to be selectively strengthened in order to accumulate capital.159 This gradation of categories and values was vastly different from that of the 1960s and 1970s-style state. At that time, the third group was given decisive preference; the first group was also considered important for stabilizing LDP rule, and the second group was regarded as relatively less important. However, with this dualistic ideology and its hierarchical ranking, administrative reform encompassed great contradictions. That is to say, from the perspective of capital accumulation the notion of a ‘dynamic welfare society’ meant raising efficiency and rationalization, whereas ‘positive contributions to international society’ meant, at the very least, expanding some areas of administration. In addition, the conflict of these two ideals could also be expressed as the theory of ‘the corporation’ versus the theory of ‘the state’. These two theories have certain things in common, but they also have conflicting aspects. For instance, if we use the theory of ‘the corporation’ as the base, then defence and economic assistance must be rationalized and made efficient. But if we look at it from the perspective of ‘the state’ it is not scaling down but expansion that is required. Actually, even within the Special Reform Council there was criticism of the policy of exempting defence expenditures from reduction and reconsideration. However, for the sake of ‘the state’ these critics came to terms with failing to reach their target. Kamei Masao, who was the zaikai’s representative and head of the Council’s First Special Committee overseeing expenditure reduction, stated why he removed diplomacy and defence from the deliberations on expenditure reductions. The Foreign Ministry and the Self Defence Agency were not included in the consultations. I think that issues of international cooperation and defence should be approached on an individual basis. Of course, some persons are of the view that Japan is too weak, or that there should be an increase in expenditures, and so I decided not to call them at this time.160

I can see here Kamei’s predicament of believing in the logic of the ‘enterprise’ yet having to recognize the logic of the ‘state’. It also indicates symbolically the contradictions of the Janus-faced strategy of the Special Reform Council.161

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The contradiction between two ideals of education reform

Education revealed most vividly the contradiction between the two ideals advocated by Japanese neo-liberalism. ‘The corporation’ and ‘the state’ in education. Judging from the logic of the enterprise in administrative reform, the sphere of education should have become a target of improved efficiency and reduced expenditure. The zaikai in the 1960s and 1970s was fully satisfied with education policy. Japanese education supplied a large and steady stream of competitive workers, trained to suit the needs of the corporate world, and it met all the requirements of finance. However, in the late 1970s the organizations of the zaikai began to harbour strong doubts about education, as revealed in their many policy recommendations at that time.162 The zaikai questioned whether the excessive horizontal competitiveness of the examination system and the hierarchy resulting from grade allocation were causing children to lose their dynamism and competitiveness. At the same time, while the increased ferocity of horizontal competitiveness had raised high-school graduations to 90 per cent and had a similar knock-on effect on university entrance, the zaikai doubted the abilities of those students. It demanded that differentiation occur earlier in the students’ education so as to eliminate horizontal competitiveness. In response to those concerns, the reports of the Special Reform Council included education alongside social welfare and agriculture as a target for increased efficiency. But in the 1980s another concern assailed education. This was the fact that attitudes of the 1960s and 1970s had become obstacles to the expansion of Japan’s defence capability, and it was thought that education, in response to the demands of ‘the state,’ had to change in order to influence national consciousness about this issue. Through education, the next generation would be unified under the banner of nationalism. Clearly, the Special Reform Council’s first ideal, of ‘a dynamic welfare society’, responded to the concerns of the enterprise, while their second ideal, of a ‘positive contribution to international society’, answered the concerns of the state. However, these demands contained contradictions. In order to respond to the state’s demands, it was necessary to monitor education to ensure that it was uniform and nationalistic, whereas in the case of the enterprise, free textbooks had to be abolished, and the contents of education diversified. As a result, education shifted from being the object of cutbacks to being given more priority, and the creation of the Special Educational Council (Rin Kyo Shin) alongside the Special Reform Council was in response to the state’s demands. The establishment of this Special Educational Council signified a tacit change in the location of education in the Special Reform Council. The conflict between the two currents within the Special Education Council. These conflicting demands on education became two currents within the Special

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Education Council.163 The first group might appropriately be called the liberal faction,164 headed by Kayama Kenichi and backed by Nakasone; the second was the Ministry of Education group, which could be called the state faction. The liberal faction, like the zaikai, believed that the decline of education was caused by horizontal competition and the 6 : 3 : 3 : 4 system which engendered that competition. They believed that the root of the evil was the parents’ motivation to send their children through high school and university in order to place them in an advantageous starting position within the enterprise society. Thus they argued that the problem of excessive competition for entrance examinations could be solved if children were classified by ability at an early stage. The talented would be given an élite education while the remainder would be sent into society as soon as possible. That would alleviate the pressure of the examination system. Further, the liberal faction also argued that the public education system should be privatized, laws governing education should be overhauled, and education should be made more dynamic by increasing competition among schools and among teachers. Thus the liberal group called for privatization, administrative reform, the freedom to choose schools, and reform of the authorization system for textbooks. The Ministry of Education group was vehemently opposed to this position.165 They also thought that the examination system was too competitive, but did not believe that this could be remedied in the way the liberal group suggested, and feared that the liberal prescription would destroy public education. Their disquiet about the examination system stemmed from their belief that because education had become obsessed with examinations it was unable to concentrate on ‘basic knowledge,’ which for them included teaching the glorious history of the Japanese race. They believed that, by a combination of the Nikkyoso type of education and this fierce system of examinations, education was being harmed and could not teach what needed to be taught by the state. For instance, in the 1985 Curriculum Guidelines, the flag and the national anthem were included. At the same time, the necessity of special ethics education was alluded to. However, as competitiveness accelerated, the ethics hour was replaced by study classes and an examination curriculum. Because teachers were deeply concerned with their students’ success in the exams, ethics education could not be inserted into education the way the Education Ministry had anticipated. Even after thirty years, its idea of ethics education has still not taken root.166 It was judged that this situation was producing delinquent children and retarding the teaching of patriotism. From this standpoint, the Ministry of Education wanted to crush the liberal faction’s initiatives within the Special Education Council, and to protect the existing textbook authorization system, and the provision of free textbooks. They saw these things as integral to maintaining uniform textbook

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standards. Thus the Ministry incorporated in its plan the cultivation of patriotic feeling by making the raising of the flag and the singing of the national anthem compulsory, and by strengthening controls over teachers through a system of training and special seminars for new teachers. Their report also called for the expansion of moral education. They hoped to use their report as a lever to influence educational administration in the future. The further weakening of labour policy

If education was caught in the clash between the two ideals of the Special Reform Council, then the ideal of efficiency was realized most thoroughly in the spheres of labour, welfare, and environmental administration. Let us examine the case of labour administration. As previously stated, in the 1960s and 1970s in the realm of labour policy the policies that protected workers and thus hindered capital accumulation were weakened, and capital accumulation was promoted through more flexible labour policies. In the 1980s, labour policy was completely dedicated to this purpose. Encouraging outward-looking labour policy. In the 1980s labour policy became more outward-looking. Movements developed to totally reorganize existing labour laws, such the advent of equal-opportunity employment legislation, moves to protect part-time workers, measures to deal with itinerant workers, and to limit working hours. The zaikai responded nervously, fearing administrative guidance would be applied to small and medium-sized enterprises and labour hours would be regulated. Further, in the 1982 edition of the Report of the Labour Problems Study Committee, Nikkeiren for the first time touched upon the Labour Ministry’s shortening of working hours: those problems are mostly ones which ought to have been solved by employers and employees themselves within the enterprise concerned. The Ministry of Labour should avoid administrative intervention, thoroughly carry though the rationalization of administration, and respect the autonomous nature of the relationship between labour and capital within the parameters of the Labour Standards Law.167

Finally, the 1986 edition of Nikkeiren’s report added a paragraph criticizing the Labour Ministry and emphasizing once again that problems in labour–capital relations should be resolved autonomously. ‘Many of those problems should be resolved between labour and capital within individual enterprises and intervention which contravenes the relaxation of regulations ought to be avoided.’168 The conclusion to chapter 7 of the 1986 edition again took up this problem under the title ‘From Labour Offensive to Labour Ministry Offensive’. Here Nikkeiren was indicating that, despite the decline in labour union influence, regional economic associations were expanding their influence. This expressed the sense of crisis experienced by local managers confronted

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with the severe regulations of the Labour Ministry concerning working hours and other matters. Thus, Nikkeiren declared that a Labour Ministry offensive had been launched in place of the labour offensive.169 But this Ministry of Labour activism that Nikkeiren was so concerned about was only for show. This was because workers after the oil shock were under the umbrella of enterprise unions and totally incapable of regulating capital accumulation. The reverse side of the slogan ‘From labour offensive to Labour Ministry offensive’ was that labour had lost its militancy. Nikkeiren advocated that employers and employees resolve their differences within the corporation, because such negotiations always went the way the corporation wanted. In these circumstances, no matter how severe US–Japan trade frictions became, the Ministry of Labour found it difficult to intervene. What Nikkeiren meant to convey to the Ministry of Labour was that, as far as employers who had achieved stable labour relations were concerned, ministry intervention even in small and medium-sized enterprises was an obstacle to their efficiency. In the 1980s, the ‘Labour Ministry Offensive’ under corporate dominance promoted large-scale industrial restructuring. The structure of labour changed dramatically with the introduction of large numbers of flexibly deployed parttime and itinerant workers, and the unions were incapable of dealing with these new circumstances; the Labour Ministry could not help but intervene to deal with them. Absorption into economic policy. Consequently, during the 1980s labour regulations were enacted and reformed one after another, and all had common features.170 These labour laws were little more than attempts to codify changes that had already taken place, rather than designed from the perspective of protecting workers. Second, labour laws favoured labour–employer resolution rather than ministry intervention.171 For example, on part-time workers’ conditions, the Ministry of Labour said: ‘apart from violations of the Basic Labour Law, we regard administrative intervention as inappropriate’,172 and advised that such matters ‘should be resolved by employees and employers themselves’.173 The revised Labour Standards Law even stated that employers and employees were to determine working hours themselves. It is clear how things such as the conditions of part-time workers and working hours would work out when left up to employers and employees. Yet it was precisely this situation about which Nikkeiren’s Labour Problems Research Committee constantly warned the Ministry of Labour. Third, as a result of the above, in the 1980s labour laws had little effect in regulating capital accumulation because they had the interests of capital at their core.174 The revised Labour Standards Law, which should have shortened working hours, established a multi-tiered system which, instead of determining the 40-hour week and the 8-hour day, merely left these as ‘objectives’,

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and failed to implement a gradual decrease in working hours from 46 to 44 to 40 hours. Even with the 46-hour week, the Labour Ministry exempted transport and construction companies with fewer than 300 employees, manufacturers with fewer than 100 employees, and so on. On the other hand, the law greatly encouraged flexible labour time and other ways to make labour time more flexible, which tertiary industries really desired.175 Even with the Equal Employment Opportunity Law,176 which was supposed to deliver gender equality, the obligation for employers was limited to ‘as far as is possible’. As far as the Labour Standards Law’s protection of female workers was concerned, restrictions were relaxed on overtime and night work. Labour policy thus lost its influence. Rather than regulating capital accumulation, it became absorbed into economic policy-making that was designed to promote capital accumulation.

IV. Conclusion: The Narrow Path of State Reorganization in the 1980s If we look at the way the 1980s state was reinvented, by such methods as administrative reform, we can see that, with the exception of educational reform and a few other things, for the most part reforms that sought fully to develop the principles of the 1960s–1970s state succeeded, whereas those reforms which sought to restore ‘the state’ by changing those advanced industrialized nation principles that had supported the 1960s–1970s-style state did not always succeed. Put another way, the society and state structure that formed the foundation of the corporation-dominated state of the 1960s and 1970s remains as strong as ever, and continues to influence the directions taken in the 1990s. The foundation of this structure’s strength was also demonstrated in the initial defeat of the UN Cooperation Bill following Iraq’s invasion of Kuwait. This setback revealed the great strength of the 1960s–1970s-type state. The following words by Kato Koichi, chairman of a special committee of the Lower House, shows what Hayashi Fusao had referred to disparagingly as the ‘half state’, comprising corporate dominance plus ‘pacifist’ economic growth plus LDP vested-interest politics. This speaks of the ongoing reality of this situation today. The people hate what they hate, and at present they hate war . . . ‘Sir, are you going to send my brother to the battlefield? If so then I will resign from your support party (koenkai).’ We LDP politicians cannot afford to forget about the next election. . . . Whether we like it or not, about half of our supporters have been educated under the new constitution.177

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This logic prevented the dispatch of troops overseas, the revision of the constitution, and the liberalization of rice imports. At the same time, it sustained the LDP’s one-party regime. Thus, in the early 1990s, the politicians of the LDP began arguing that, in order to overthrow politics governed by economism and pacifism, the politics of the LDP itself had to be destroyed. The ‘political reform’ which arose during the 1990s was a plan from the right to destroy the state of the 1960s and 1970s. This movement produced the coalition cabinet of Hosokawa Morihiro during the 1993 political change, and overthrew the LDP regime which had governed for thirty-eight years. Thereafter, a succession of cabinets made great progress in overcoming the external weakness of Japan. They normalized the overseas dispatch of the SDF in the name of peacekeeping; the main opposition Socialist Party reversed its policies and endorsed the constitutionality of the SDF. A political reorganization was carried out by adopting the system of small electoral districts. Thus two main conservative party lines developed. Today, the forces resisting the process of Japan’s becoming a political superpower seem to have been dwarfed politically. Nevertheless, the people’s strong consciousness of pacifism and conservatism, the bedrock of the 1960s–1970s state, still strongly asserts itself. The conservative parties cannot advocate constitutional revision, and are far from being able to justify publicly the right of collective defence.178 On the other hand, under the 1960s–1970s type of state, the logic of corporate domination seized hold of society. Today, ‘karoshi’, workers separated from their families, the disintegration of the family, and various problems unique to Japan have appeared. Excessive examination pressures and the deterioration of education stem from the same cause. I am sure that the residents of this society are not satisfied with the contemporary Japanese state. On the other hand, the state is also becoming extremely problematic for the ruling élites. In the 1990s, movements for reform of the state will continue.

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5 Japanese Companyism and the End of the Cold War* BABA HIROJI

I. An Overview of the History of the Postwar Period Social scientists cannot experiment to test their theories.1 Nevertheless, society spontaneously provides continuously repeating experiments through the process of change. At times gradual change provokes sudden transformation of social structures and challenges prevailing views of society. Social scientists can use such instances of social change to test and refine their theories.2 Change is becoming ever more rapid and complex, forcing us to continuously review our theories. The period since the Second World War has been characterized primarily by the Cold War, economic growth, and complex interactions between these two features. The Cold War produced an enormous and wasteful expenditure on armaments, and terrified people with the prospect of global annihilation. Politically, it tended to concentrate power and to create stalemate. Economic growth tended to work in the opposite direction, encouraging stability and optimism and eventually ending the Cold War.

1. The Cold War Though many Marxists call the Cold War imperialist, it was fundamentally ideological. The reason the Cold War lasted half a century was because of the contradiction between the powerful ideologies of the United States and the Soviet Union and because of the enormous military strength each possessed. The US, the Soviet Union, and China were all revolutionary countries. In order to sustain its legitimacy, each revolutionary government constantly emphasized the superiority of its own social system and the universality of its own ideology. Moreover, each of the three countries comprises a vast territory and a huge multi-ethnic population that is a microcosm of the larger world. A universal ideology was essential to ensure the unity of diverse peoples. This emphasis on ideology for domestic reasons meant that foreign * Translated by Susan Yamada.

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policy also inevitably became permeated with ideology. Fixation with ideology led the major Cold War powers to intervene in the affairs of other nations. Though intervention often terrified small, weak countries, the perpetrators usually had good intentions. The ideological principles of the two main Cold War antagonists were diametrically opposed. The founding principle of the US was that the people should control politics. This was achieved through such means as the constitutional separation of powers between the executive, legislative, and judicial branches, political participation through elections, and the decentralization of power. Because dissent was allowed, there were often serious clashes of opinion. Yet such clashes have actually tended to reinforce the foundations of the society. Although liberalism originated in Western Europe, it became more broadly encompassing in the US as a result of such historical experiences as the assimilation of immigrants, frontier settlement, and unprecedented rates of economic growth. There was no experience of war, apart from the Civil War, nor of occupation, which could undermine the ideology or discourage adherence to it. Over time American ideology was, in a sense, transformed into a creed about the right to higher standards of living. In contrast, the most important feature of the ideology of the Soviet Union and China was its support for party dictatorship. For a long time the ideology, which was in effect a state religion, unified the ruling class. As long as the masses submitted to one-party dictatorship, it was unnecessary for the rulers to constantly underscore their ideological superiority. Because alternative opinions were suppressed, the social elements that might have produced dissent withered and were absorbed by the state. These countries were not truly socialist, but etatist and their ideologies proved fragile because of their inflexibility. The sharp contrast between American political principles and socialism is revealed in the history of American political parties and the trouble the US has had in formulating social welfare policies.3 American ideology is based on the abstract principles of individualism, freedom, decentralization, and local self-government. American political principles support free markets and private ownership of property. Such a system tends to create a materialistic outlook, single-minded pursuit of business opportunities, and the complete monetization of various social values.4 In contrast, the guiding ideology in the Soviet Union was Stalinism, which was derived from Marxism. Stalinism supported party dictatorship, suppressed freedom of speech, and imposed a command economy, based on nationalization, planning, and gigantism. Although the Soviet Union called itself socialist, it was really a left-wing dictatorship for economic development dedicated to wiping out such evils of capitalism as economic instability, corruption, business cycles, bankruptcy, and unemployment. The conflict between the US and the Soviet Union was not simply over contrasting economic systems. During the Cold War each of the two countries

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in fact enjoyed considerable economic success. The very economic strength and technological development of the two countries created military power on both sides that, unleashed in war, could completely destroy both countries. Because of this, rivalry generated not only hatred but fear. The economic burden of military rivalry ultimately became too great even for the two superpowers. The rivalry between the US and the Soviet Union began during the Second World War.5 The division of the world into spheres of influence under the secret agreement at Yalta put most of the advanced industrialized countries into the Western camp, under US control. The political system of the Soviet Union was forced on the regions which fell into its sphere and, thus ‘the East’ was formed. This boundary between East and West held fast until 1989. None the less, the division of the world under the Yalta agreement was by no means comprehensive. In the first place, the Eastern bloc included Yugoslavia and China, which both developed autonomous revolutions through their struggles for liberation against Germany and Japan, and both asserted their independence from the Soviet Union. In the second place, ‘the South’ emerged, partly as a result of the Second World War and the weakening of the imperialist powers. The success of the Chinese revolution also played an important role in encouraging independence movements, especially in Asia. The newly independent countries typically became part of neither the West nor the East. On the Korean peninsula, the combined effect of the independence movement and the Cold War was to split the country into two. The same factors led to a prolonged confrontation in Indo-China. The line between East and West was drawn in 1949. In that year, Stalin blockaded Berlin to counter the three Western allied powers’ creation of a semiindependent German Economic Council in their occupation zones, raising the prospect of a partitioned Germany. In response, the West organized the Berlin air-lift. As a result of these events West Germany became a unified nation, and within a month East Germany was also formed as a separate nation. In that same year, Chiang Kai-shek was defeated and escaped to Taiwan, which he ruled as a military despot. With the partition of the Korean peninsula in 1948, there were now three divided nations. Subsequently, the struggle over spheres of influence came to focus on the unstable nations of the South, and it was only here that the Cold War erupted into shooting wars. When the peoples of the south sought independence or unity, they found that the closeness of these goals to Cold War themes tended to invite superpower military intervention. Such interventions caused suffering in the South, but out-andout warfare was confined to limited regions. The US and the Soviet Union never directly attacked each other, though there were many instances which posed the risk of nuclear war. The Korean War from 1950 to 1953, the Vietnamese War of Independence against France, which ended in 1954, the war between Vietnam and the United States from 1965 to 1973, and the war

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between Afghanistan and the Soviet Union from 1979 to 1989 were all similar. The first two cases resulted in no significant boundary shift between East and West. In the latter two cases, the US and the Soviet Union each sustained great moral, military, and economic damage, were defeated, and were unable to maintain the Cold War boundary. The Cuban missile crisis of 1962 was also a case of a nation of the South being caught in the struggle between East and West, though no actual battles took place. The Cold War was futile as a struggle to expand spheres of influence. Since the players had all acquired nuclear weapons—the US in 1945, the Soviet Union in 1949, and even China in 1964—actual war could have meant total annihilation. Reasons of state precluded direct hostilities or limited nuclear strikes, even if they might in some narrow sense seem militarily advantageous. In this sense, the Cold War created a military freeze. Yet, despite the freeze in direct military action, intensified rivalry created a spiralling cycle of hatred, quarrels, terror, and the virtually unlimited accumulation of unusable military armaments. The scale of the arms race eventually helped encourage the dismantling of the Cold War, as the participants came to perceive that the political usefulness of amassing military weapons was declining and that the economic burden which they imposed was increasing.

2. Economic growth Economic growth is a postwar phenomenon. It is also an essential component of the present global system. The United Nations, various other international organizations, and the vast majority of individual nations have made economic growth one of their main policy objectives. In no other historical period has economic growth been intentionally pursued on such a global scale. Even the West, which already exhibited advanced stages of economic development, placed great importance on economic development. The fear that another Great Depression could fatally undermine the justifications for capitalism led them to the intention of economic growth. Providing jobs became the central goal. Because war-damaged Western Europe and Japan had lost considerable ground economically they also had the goals of economic recovery, economic independence, and greater international competitiveness. The East was in even more need of economic growth, both because they were mainly agricultural countries and because many had sustained even more war damage than the West. Moreover, having asserted the supremacy of the socialist system, they had to demonstrate that their actual rates of economic growth exceeded those of the West. The result was competition between East and West over economic growth rates. The South, needless to say, also desired economic development. The economic distortions created by resourceextracting colonization needed to be corrected in order to support nationbuilding and political stability. But because these countries were between East

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and West they often adopted complex development strategies. Both East and West tried to use development issues to bring the nations of the South into their own spheres. The immediate postwar situation was such that history and ideology weighed heavily on economic policy. Economic development was strongly desired, and the whole world did in fact enjoy unprecedented growth rates. Rapid economic development did not happen just because people wanted it. In economic processes, objective conditions are of more significance than intentions, and, in the course of economic development, the intentions themselves could be strengthened.6 While the West has only one-sixth of the world’s total population, it produces more than two-thirds of world GNP. In all the countries in the Western camp which can be considered the most advanced industrialized nations, finance capital was already established before the war. Existing finance capital became the basis for further accumulation and, in combination with unusually favourable market conditions, produced rapid growth. Shortages of any of three resources, technology, labour, or oil, might have slowed growth, but all proved unexpectedly abundant. The main technological development took place in the United States. Here, labour-saving technology and raw-material-intensive mass production techniques had been developed early on. Such technologies were applied in large-scale industries that had production systems utilizing standardized, interchangeable parts and simplified tasks for labour. Like Western Europe, the United States developed coal, heavy steel products, and railroads before the First World War, but in the interwar period it pushed far ahead of Western Europe in developing such new mass production industries as oil-refining, electric-power generation, automobiles, electrical machinery and appliances, and light steel products. By the end of the Second World War, production levels in the United States were by far the highest in the world. In Western Europe the mass production of such consumer durables as cars was just beginning, while in Japan even steel production only became well established during the war. American technological development continued at an even faster pace after the war, with the establishment of new mass production industries such as aircraft, electronics, and petrochemicals. It was not only manufacturing which used labour-saving production methods; such techniques were also applied to agriculture and coalmining. New American technologies were swiftly transferred to Western Europe and Japan. Japan lagged the furthest behind, but rapidly absorbed both American and European technology. Europe’s previous high levels of technology and skills enabled it to develop technology independently and quickly after an initial period of economic recovery. Thus, from the end of the war until the 1973 oil crisis the countries of the West increased productivity at unprecedented rates.7 Accelerated technological development was essential for the sustained and rapid growth of the postwar period.

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The supply of labour was plentiful, in part because rising productivity in such sectors as agriculture and retail sales released workers for manufacturing work. Britain was the only country in which the agricultural population was less than 10 per cent of the total employed population. Japan had the highest proportion with close to 50 per cent, and Germany, France, and Italy had between 20 and 40 per cent. These percentages not only indicate roughly which countries were more backward, but also correspond almost exactly to the rankings of long-term growth rates up until the oil shock. The end of the war also created a short-term population increase because of demobilization, the return of evacuees from colonies, and the flight of refugees from the Eastern bloc in Europe. In Germany, the influx of refugees from the East continued until 1961, when the Berlin Wall was built. The total number of refugees into Germany was virtually the same size as the agricultural population. Over the longer term, the labour force grew because of the postwar baby boom, the participation of more women, immigration into Europe and the United States, and the economic mobilization of blacks in the United States. Technological development facilitated the employment of this more diverse labour force. The supply of oil was also abundant due to large deposits in the Middle East. The major oil companies used a strategy of selling large volumes at low prices. In the 1960s, despite the formation of the Organization of Petroleum Exporting Countries (OPEC), the price of oil fell to less than two dollars a barrel. Cheap oil became one of the conditions encouraging the adoption of production techniques which were labour-saving and natural-resource-intensive. Together with expanded economies of scale and rising productivity, it helped postpone limitations on production from labour scarcity. The abundant supply of technology, labour, and oil played a role in and of itself in expanding demand. As the unit labour cost of production is reduced, the rate of surplus value rises, assuming the workers’ standard of living is unchanged. The rise in the profit rate increased both the willingness to invest and the availability of funds for investment. Increased investment in turn increased demand for capital goods and, by raising employment, consumption demand increased as well. The postwar period was also characterized by unusual sources of demand: postwar rebuilding and the implementation of the IMF system. In Europe and Japan, both production facilities and social infrastructure (such as homes and schools) had been destroyed. Immediately after the war there were also shortages of food and daily necessities. In the United States, the demand for certain consumer goods had been postponed until after the war. Increased purchasing power accelerated postwar production recovery. US economic assistance through such means as the Marshall Plan played an important role in expanding purchasing power in other countries as well. Until recently, most thought that demand expansion resulting from dissemination of Keynesian theory was

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responsible for producing stable growth in the postwar period. However, even if Keynesian policies had not been adopted, inflation would have happened anyway in Japan and Western Europe during the period of postwar reconstruction, due to supply shortages arising from war damage, increasing demand pressures from mass democracy, and the weakening of political authority. After 1950, when reconstruction was complete, the IMF system helped countries indulge in creeping inflation. Its effects were aggravated by the expansionary effects of American overseas aid and military expenditures. Under the IMF fixed exchange rate system, the dollar, pegged to gold, was the key currency. The exchange rate of other currencies was fixed in relation to the dollar, though they were allowed to fluctuate within certain narrow bands. It became the norm that the United States would only convert dollars held by foreign monetary authorities into gold, though during the long global dollar shortage few actually requested conversion into gold. When a dollar surplus later arose, countries continued the practice of not converting their dollars into gold, thus sparing the US from restricting spending in accordance with its gold reserves and allowing slow inflation to continue. And other countries could also maintain rates of inflation as high as that in the United States without worrying about exchange reserve shortages. The dispersion of American dollars to other countries through military expenditures and economic assistance permitted even faster inflation, and IMF rules helped in the event of payment deficits. Within this framework, nations could use inflationary fiscal and monetary policies. This is how Keynesian policies really worked. Expanded demand combined with abundant supply conditions stimulated the accumulation of capital. The rise in productivity represented a deepening of the economy, and was paralleled by an increase in employment which can be considered a widening of the economy. The power of finance capital generated an economic boom of a magnitude seldom encountered in history.8 Virtually every country in the West attained unprecedented growth rates. Even Britain, which grew the slowest, had a long-term growth rate equal to that of its apogee in the nineteenth century. Growth rates in the US were only surpassed by those reached from the end of the nineteenth century until the First World War—the period of mass immigration and westward migration. Continental Europe and Japan attained the highest growth rates in their histories; Japanese long-term growth rates appear to have been faster than those of any country at any time in history. And because both growth rates and productivity increases were faster in those countries that were less developed economically, productivity levels and per capita income became more equally distributed among the various countries of the West. The period of rapid growth continued for longer than the division of the globe into East, South, and West. The Soviet economy grew faster than any capitalist economy until the end of the 1950s. Even in the 1960s, Japan was the only country to grow faster than the Soviet Union. When Khrushchev

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took power in 1955, he proclaimed that the Soviet Union would use economic reforms to overtake the United States. Soviet growth was undoubtedly faster than America’s and it achieved some notable military technological successes, but later the growth rate slowed considerably. Under Brezhnev the reform programme proposed by Khrushchev was effectively shelved. The high growth rates in the immediate postwar period were probably due, in the first place, to the fact that growth was starting from the very low level to which the Soviet Union had been reduced by the war. The supply of labour was boosted by demobilized soldiers and the return of those who had been interned in German camps. In addition, growth was promoted by the fact that agricultural products could be commandeered through collectivization. Primitive socialist accumulation methods were still feasible. Under Khrushchev agricultural goods were still being commandeered, but the policy had now reached its limits. In Arthur Lewis’s terms, the Soviet economy in the 1960s was beyond its turning-point. By this point, if growth were to be maintained, it was necessary for productivity in the modern sectors of the economy to rise. Although economic reforms were proposed in order to achieve this, they were not thoroughly carried out, and were eventually terminated due to political resistance. Thus Stalin’s dream of overtaking the United States was never realized.9 Many other countries in the East were also relatively less developed and had not yet reached their turning-points—in other words, they were in the stage of primitive accumulation. It is, therefore, not remarkable that their growth rates were generally higher than those achieved by the countries in the West. The more difficult question to consider is why was there such a clear downward trend in the Soviet growth rate. The mood of the countries in the South was initially boosted by the promotion of such political objectives as independence, non-aligned neutrality, and peaceful coexistence, but soon economic problems resulted from the destruction and exhaustion of capital stocks due to war, the population explosion, food shortages, and, most seriously, the downward trend in the prices of primary exports that began after the end of the Korean War.10 The West realized that the countries of the South might decide to adopt development policies similar to those of the East.11 To deal with the North–South problem, President Kennedy and others proposed a ten-year United Nations Development Programme, and overseas aid policies for less developed countries were adopted by many countries and international agencies. However, the countries in the South wanted a more independent form of development. The UN Conference on Trade and Development (UNCTAD), organized in 1964, called for the new development strategies such as import substitution, and changes in the international economic order, such as preferential tariffs for developing countries. Ten years later, the New International Economic Order (NIEO), which included the principle of sovereignty over natural resources, was proclaimed. That tenyear period was when moves to deal with the ‘North–South problem’ were

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at their maximum. Paradoxically, by rendering imperialism impossible, the Cold War promoted economic growth in the South and its independent development. The debates over the North–South problem raised the level of consciousness of the gravity of the situation. In absolute terms, the South continued to achieve higher growth rates than the West. But, due to the population explosion, per capita growth was lower than in the West, and consequently the gaps between standards of living actually widened. The North–South problem was based on the discontent of the countries in the South, with their low standards of living. But the unity of the South began weakening as soon as the NIEO was proclaimed.12 One reason for discord among the countries of the South was the 1973 OPEC oil shock. The oil shock provided a practical lesson in capitalism: it made some countries rich, but hurt many countries in both the West and the South. A second cause of disunity was the success of the Newly Industrializing Countries (NICs) due to their openness to foreign investment and trade.13 The South was thus divided into at least three different groups instead of being united by UNCTAD. In actuality, there were even finer divisions and groupings. The Asian NICs that had paid off their national debts could go ahead of ASEAN countries, which were beginning to grow faster, and Japan, whose productive strength was now greater than that of any country in the West. There were signs that this group would constitute a type of economic development in the western Pacific, based on their common features of advanced development and excess supply capacity.

3. Stagflation 1973 was an epochal year in the history of the postwar world. In that year, the US finally retreated from Vietnam and, with the collapse of the IMF fixed exchange rate system, an era of fluctuating exchange rates began. In the final months of that year, moreover, the oil shock occurred. Commentators on economic affairs announced that it was the end of the age of rapid economic growth, and, indeed, the long-term growth rate was virtually halved. Stagflation, the coexistence of both recession and inflation, hit Japan briefly but hard in the mid-1970s, and lasted much longer in other countries. Aggravated by the second oil shock of 1980–1, it lasted in the United States until the early 1980s and in Europe until the mid-1980s. Stagflation also lasted about a decade in the developing countries, where it was compounded by the added strain of large foreign debt. The new phenomenon of simultaneous unemployment and inflation undermined the credibility of the dominant economic theory, Keynesianism, which held that there was a contradiction between the two. The root cause of stagflation was that significant supply constraints reduced the rate of surplus value. This resulted in a deep recession and a crisis of financial confidence. Attempts to deal with the slump by creating an inflationary financial structure

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and Keynesian fiscal policies resulted in a long period of simultaneous recession and inflation.14 During the first twenty years of the postwar period, global economic deepening and widening occurred simultaneously but eventually ran into supply constraints. During the Vietnam War economic boom in the late 1960s, the West faced labour shortages. The United States enjoyed growth in the workforce due to the coming of age of the baby-boomers, but American productivity growth slowed. In Europe, wages shot up. Five years later, when OPEC took advantage of the Vietnam War boom to raise oil prices, the resulting drop in oil supplies reduced profits and productivity growth in all the oil-importing countries. The jump in wages and the price of oil cut profits and the rate of surplus value. Under the gold standard this would have generated a major recession, but the gold standard was defunct. In 1968 the gold pool collapsed, in 1971 the convertibility of the dollar was suspended, and finally, in 1973, after a period of floating exchange rates, the IMF fixed exchange rate system was scrapped. The outflow of dollars during the Vietnam War contributed to the inflationary situation, together with financial reforms which made it easier to raise funds, including petrodollars and an increasing volume of Eurodollars in international financial markets. Stagflation occurred in the wake of the oil shock when inflation accelerated at the same time as reduced oil consumption slowed economic growth. Because of the dominance of Keynesian ideas, governments only tried halfheartedly to rein in inflation. Industrialized countries averaged 5 per cent unemployment and 10 per cent inflation. Pro-growth policies in the late 1970s only exacerbated inflation. In order to reduce inflation, both the United States and Europe had to move away from their anti-unemployment orientation. Paul Volcker took office as Chairman of the Federal Reserve Board and Margaret Thatcher as Prime Minister of the United Kingdom, both ready to lead the charge against inflation in 1979, the year of the second oil shock. In three years Volcker’s tight money policies brought inflation down from the double digits to below 6 per cent. Unfortunately, his policies also produced doubledigit levels of unemployment and interest rates. High unemployment pulled down real wages and weakened labour unions. But during a financial crisis in Mexico, the Federal Reserve Bank put the US economy on course for a long period of stable growth by shifting to an expansionary policy of monetary loosening, while avoiding actions which could have generated a global financial panic.15 Europe followed a roughly similar path, but because Europe was slow to loosen up tight monetary policies, because its industrial structure was not sufficiently transformed, and because labour there remained fairly strong, European performance was worse than that of the US and stagflation continued for many more years. Although it is possible to explain stagflation in economic terms, its social and political aspects are often overlooked. When stagflation occurs, certain social dynamics that developed during the rapid-growth period continue through

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their own momentum. These holdover social dynamics are no longer functional, and serve to aggravate and reinforce stagflation. The only political action which could correct this drag on economic growth was a radical switch from welfare state politics to neo-conservatism. The era of rapid growth was characterized by full employment, rising real wages, and workforce expansion, which strengthened labour’s bargaining power with capital. Although unionization rates did not rise, unions were able to gain concessions in such areas as wage rules, working hours, and job classifications. Standards of living rose, and social democratic political parties and labour unions increased their influence on government and expanded social welfare policies. Not only did labour unions and social democratic parties demand expanded social welfare policies, but conservative parties were persuaded to reduce their opposition to such policies. The principle of complete social security was internationally recognized through its adoption by the United Nations. The principle gained momentum through pressure from reform movements and mass democracy, and was widely implemented because of rapid global economic growth.16 The increased power of labour unions to regulate the workplace slowed productivity growth. The larger share of GNP going to wages and the expansion of social security payments tended to produce excess demand. The implementation of social welfare policies created large government bureaucracies, expenditures, and deficits, while monetary policies to mop up unemployment encouraged inflation. As long as there was excess supply capacity, increased government and private expenditures promoted demand-led growth and inflation was a politically acceptable by-product.17 So far continues happy cohabitation between economic growth and welfare programme. But when excess supply capacity disappeared, welfare programmes and progressive policies intensified stagflation. Now people had to choose between creeping socialism and capitalism, between sharing and growth, between equity and efficiency. People who had benefited from rapid growth were more attracted to growth-oriented policies, which ultimately prevailed. Neo-conservative Thatcherism and Reaganism represented the pro-growth, anti-welfare pole of political opinion. Neo-conservative, anti-welfare ideas evolved differently in different national contexts. Thatcher’s Britain, the birthplace of traditional liberalism, had fallen behind internationally due to the effects of two world wars and a long period of low growth rates. The sting of economic inferiority was all the sharper because it represented such a contrast to the very recent apogee of the British Empire. Compared with the United States, the effects of creeping socialism in Britain seemed greater, as did the potential benefits of reforms. Another reason for the strength of neo-conservatism was concern that Britain was losing its ability to bring in capital and goods from overseas. Still, the welfare state was not easily dissolved, even though it had never been that solidly entrenched in the first place.

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Liberalism was so thoroughly ingrained in the United States that socialist reforms had never occurred to the extent they had in Britain. Even when progressive reforms were implemented, strong conservative opposition limited them. The ideological conflict of the rapid-growth period foreshadowed Reagan’s neo-conservative crusade. Events such as defeat in the Vietnam War and the emancipation of African-Americans through President Lyndon Johnson’s Great Society social programmes had undermined the principle of popular control of government. Although initially this merely provoked debates and discussions, it was not long before the thorough damage to democratic beliefs became evident. The new anti-democratic attitude was in response both to the Soviet Union’s taking advantage of American disarmament to increase its relative military strength, and to tax increases arising from the explosion in welfare costs and inflation. Though Reagan’s rhetoric was radical, his actual policies were pragmatic. Thus theory and practice were different, the gap between them was far greater than that in Thatcher’s Britain: Reagan cut taxes and increased military spending, as promised, but actually increased spending in welfare services. The result was a huge budget deficit, which eventually forced some restraint in military expansion. The United States was able to maintain large budget deficits without immediate economic repercussions because the central role of the dollar in the international currency system enabled it to increase overseas borrowing. On the European continent, socialist policies were stronger than in the US or Britain. In most of the Western continental countries unionization rates were high, social democratic parties were in office or at least shared power through coalition governments, and welfare systems were firmly entrenched. The inevitable outcome was income policies and corporatism. Stagflation lasted for a long time because the strong resistance exerted by creeping socialism made it difficult to restrain public expenditures or wages. Wage growth in Europe was extremely inflexible, even when unemployment exceeded 10 per cent. An additional reason for persistent stagflation was that technical innovation and industrial restructuring by European companies lagged behind those in Japan and the United States, in part because of Europe’s style of labour– management relations. In general, Europeans gave priority to social stability over growth, though some countries began to see a conservative pro-growth backlash. In Germany a conservative government weakened the social welfare system and labour unions. Left-wing reform emerged under the Mitterrand government in France, but it eventually withered due to the constraints of the international financial system. Subsequently, under joint conservative–reform rule, France shifted to neo-conservative policies. In Sweden and Italy, economic policies were implemented which could be termed ‘creeping liberalism’, because they were carried out under social-democratic governments, though these new conservative policies were not as far-reaching as those in the United States or Britain.

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Japan overcame stagflation most quickly, in part because the government acted appropriately to tighten fiscal and monetary policy, but more importantly because private firms responded effectively. Socialism in Japan did not produce practical policies that could cope with stagflation, although it loudly proclaimed its radicalism. Yet, even in Japan, creeping socialism made considerable headway during the last stage of the high-growth era. Indeed, the conservative government was boasting about the establishment of major new welfare policies in the year of the first oil shock. ‘Companyism’, under which workers were to put company interests before all else in return for the company’s guaranteeing their jobs until age 55, became stronger under stagflation. The biggest effect of Japan’s new welfare policies was reinforcing companyism and expanding production rather than expanding working-class consumption. Because of strong worker loyalty, companies could prevent wages from rising unless backed up by productivity gains, and could mobilize workers’ intellectual capacities to increase productivity. Rapid technological innovation and industrial restructuring boosted Japan’s international competitiveness, and solved the problem of constraints on supply which is the primary cause of stagflation. Thus, with the root causes of stagflation taken care of, there was no need for neo-conservative reforms. Nevertheless, in the 1980s Japan jumped on the neo-conservative bandwagon because of a supposed need to cut public spending and carry out administrative reform. In hindsight, these changes went too far in strengthening the economy and raising efficiency for the sake of mere financial benefits while grinding down society. It is only recently, because of the speculative bubble in land and other asset prices, and because of persistent trade surpluses stemming from over-production and under-consumption, that people have begun to recognize that neo-conservative policies were a mistake.

4. The creation of excessive enrichment Since postwar economic growth was especially rapid in the poorer industrialized countries, all Western countries achieved excessive enrichment. In 1982 GNP per head surpassed $10,000 in most of the countries of the West. I would argue that countries with real GNP per head over $5000 in 1982 were excessively enriched. Other indications of excessive enrichment are car ownership by more than half of households or an Engel’s coefficient (food expenditures/total household expenditures) below 30 per cent. Under excessive affluence, food consumption rises and people become gluttonous. At more advanced stages, food expenditures drop as a percentage of total outlays, absolute expenditures increase, and more luxury items are consumed. Expenditures on cars and food are simple measures, but probably serve well enough to signal a larger shift in lifestyles. When the industrial structure changes enough that the masses are able to buy cars, increased mechanization

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means that less physical labour is required. There may be an increase in mental stress, but physical strain is alleviated and the proportion of manual workers needed goes down. Mass production makes available a plethora of durable consumer goods, such as cars and home appliances, reducing housework and the effort expended on commuting. Greater productivity makes higher real wages both necessary and feasible, particularly for the upper strata of workers. The effects of less work and too much food are health problems even for the lower classes, and dieting and jogging to combat obesity become widespread. Many countries now have an average annual income of $5000 per person, ownership of cars by the majority of households, and an Engel’s coefficient of less than 30 per cent. Roughly speaking, the United States reached this level of consumption in the late 1920s, Britain, France and West Germany in the late 1960s, and Japan and Italy in the early 1970s. Few countries from the South or East achieved excessive enrichment, except for some oil-producing countries and island nations like Singapore. Several NICs and the Eastern European industrialized countries came close, but did not really become excessively affluent. Even though there are different degrees of affluence among the countries of the West, the distinctions between the West, South, and East are much more marked. Average GNP in the West is four times the world average and ten times greater than in other countries. Although the South and the East want Western standards of living, this is difficult, since they have five times as many people as the West, since they are still experiencing rapid growth, and since the West also wants continued economic growth. These trends are the root cause of the global environmental crisis. If the rest of the world achieved the West’s level of consumption, the world economy would be four times as large as now. Assuming that production techniques are substantially unchanged, consumption of natural resources, like oil and scarce metals, would grow fourfold and the world’s forests would be wiped out in just over a generation. It is unlikely that grain consumption would grow four times, but the world’s agricultural land could not even double the supply. Pollution of the environment would also proceed at four times the current pace, and accidents on a scale of Three-Mile Island or Chernobyl would probably occur every year. Under the added impact of other environmental disasters such as floods, desertification, and land subsidence, the world would soon lose its ability to sustain life. In sum, even though the South and East want Western standards of living and the West wants even more economic growth, Western levels of affluence are excessive and untenable on a global scale. Affluence brings about a complex of mutually reinforcing social changes, such as urbanization, a greater emphasis on education, an increase in the female labour force participation rate, a decrease in family size, and an increase in

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the proportion of the elderly in the population. These changes create the conditions which make welfare policy necessary.18

5. The end of the Cold War The US fought the Vietnam War without regard for moral principles. Although President Johnson tried to expand the welfare system through his Great Society programme, his unprincipled handling of the Vietnam War lost him the trust of the American people.19 International criticism of the war contributed to the collapse of the gold pool in March 1968. Post-Johnson America had lost the war and much international prestige. President Richard Nixon chose to end the war, promote disarmament, and, to his supporters’ surprise, expand welfare. China and the Soviet Union, although at odds with one another, both aided Vietnam’s fiercely tenacious war effort. One factor contributing to America’s defeat in the war was probably the fact that the US economy was growing so much more slowly than those of China and the Soviet Union. In addition, the lag of American economic growth behind other countries in the West diminished its political influence over them. The US defeat was the first step towards the end of the Cold War. The bipolar structure of rivalry had already begun to change. Conflict between the Soviet Union and China had been heightened by border incidents. The US interest in ending the Vietnam War made the idea of restoring direct relations with China acceptable. Relations were in fact normalized, partly in order to facilitate nuclear disarmament. At roughly the same time as the American withdrawal from Vietnam, antagonism between China and the Soviet Union over Indochina began. The Arab–Israel conflict was rekindled with another war in the Middle East, which also triggered the first oil shock. The Iran–Iraq war, a fight between two Islamic nations, produced the second oil shock. The United States was unable to control events in Indochina, and neither the US nor the Soviet Union could resolve the issues in the Middle East, although both exerted some influence there. Previously, the US had controlled the West and the Soviet Union the East, and the two superpowers fought boundary wars in the South. But as the strength of both the US and the Soviet Union declined, to the point that neither could even govern its own camp, there was no chance they could exert control over territorial disputes in the South, which was subject to neither of them. The loss of American power was clearly a result of the relative stagnation of the US economy and the economic burden of the Vietnam War. But the Soviet Union also faced the problem of its own slow growth, compared to that in both other Eastern and Western countries. During the period of reconstruction after the Second World War the Soviet Union received reparations from Germany, but these payments hampered

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reconstruction in the newly formed East Germany, which ought to have been the showcase of the socialist world. Although Yugoslavia’s estrangement from the Eastern bloc and the antagonism later between the Soviet Union and China appeared superficially to be over ideological disagreements, the latent reason was economic rivalry. Had the Soviet Union developed a stronger economy it might have granted its allies more economic autonomy, offered more economic assistance, and provided a genuinely appealing economic model instead of adopting mutually damaging, hardline international policies. The Soviet Union might have avoided the estrangement of its allies that was expressed in the Hungarian uprising, the Prague Spring, the repeated unrest in Poland, and the independent stance taken by Romania. Strong economic development in the Soviet Union would probably have strengthened its influence on non-military organizations in the South as well. Despite its economic troubles, the Soviet Union did not easily give up on the Cold War, but met American arms reductions with a naval build-up and advances into Angola, Ethiopia, South Yemen, and Afghanistan. Although from the Soviet point of view military expansion aimed merely at catching up with the United States, it provoked the US into resuming military expansion. The war in Afghanistan caused a shock to the Soviet Union just as the Vietnam War had to the United States, and heavy military expenditures eventually ruined the Soviet economy. Leonid Brezhnev’s suppression of economic reforms that were unpopular with both the masses and the élite bureaucracy was probably intended to strengthen domestic stability. Military expansion had a similar effect in that it bolstered the nation’s prestige. But how was it possible for Soviet leaders to adapt such economically irrational policies when Soviet economic growth was slowing, and falling even behind American levels? The answer is that the upheavals in the world economy provided resources which eased Brezhnev’s political difficulties. The collapse of the gold pool caused a sudden jump in the international price of gold. The Soviet Union exported about 100 tons of gold per year. After 1974, the value of this gold jumped ten times, to some $1000 million.20 Since total Soviet hard-currency exports before the oil shock were less than $3000 million, the rise in the price of gold exports was a terrific boon. Higher gold prices made it easier to import grain, which was important in years of poor harvests. The OPEC price hike also benefited the Soviet Union because it is a large oil-producer. The Soviet Union’s 1970 oil exports of 60 million tons were worth $10,000 million at $2.50 a barrel.21 The same volume of oil after the rapid rise in oil prices due to the oil shock would have been worth $40,000 million. Although export earnings in hard currency were probably actually less than this figure, they did increase dramatically.22 These price increases allowed the government to suspend economic reforms and try to gain popular support through military expansionism while maintaining domestic stability. In short, economic growth

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in the West was both a challenge that provoked Soviet military expansion and a factor that permitted it, by enabling the West to pay high prices for gold and oil. Soviet military expansionism in turn revived American military expansion. In this sense, the Cold War and economic growth were intertwined. The Soviet Union foolishly intervened in Afghanistan in 1979, despite the lesson of Vietnam. During its eight years of combat there, the Soviet Union sustained greater damage than the US had in Vietnam. In response to the Soviet intervention, Presidents Carter and Reagan increased military spending from 4 to 6 per cent of GNP. The cycle of reaction between the two strongly ideological states, the US and the Soviet Union, caused an escalation of military spending in both nations. American postwar spending averaged 7.3 per cent of GNP or 9 per cent of personal income. British defence spending in the mid-nineteenth century was only 3 per cent of GNP, and Britain and Germany spent only 4 per cent on defence during their naval arms race at the beginning of the twentieth century. Postwar American military spending was high because it was aimed not merely at self-defence but at global hegemony. The Soviet Union never disclosed its full military budget, but if the 1988 figure of 77,300 million roubles is close to the true figure, it would amount to more than 10 per cent of national income. Western commentators argue that actual expenditures may have been as much as 18 per cent of national income. Even if the proportion of national income spent on the military had been the same as that of the United States, the burden on the Soviet economy would be greater, because it was unable to quickly increase supply to meet new demand. Excessive military expenditures always restrict economic growth over the long term, and this erodes a country’s international standing and authority. Nevertheless, both the US and the Soviet Union were racing down the road of military expansionism in the 1980s. Increased military spending, together with the Reagan administration’s increased social welfare expenditures, created a federal deficit and an overall supply shortage. The dollar’s status as the key global currency enabled growth to continue without being restricted by supply conditions. Shortages could be covered with an increase in the trade deficit and an inflow of funds from overseas. By late 1985, however, the United States had gone from the world’s largest creditor nation to the largest debtor nation. Concerns that the US was giving up not only its world leadership role but its own economic sovereignty led to the 1985 passage of the Gramm–Rudman Act. The Act’s stated goal was to reduce the government deficit, but it also implied putting a brake on military expansion. In the same year, Mikhail Gorbachev became president of the Soviet Union and initiated perestroika, which brought with it the beginning of a process of arms limitation. Foreign observers could now begin to perceive the startling depth of Soviet economic problems. Thus, the United States and the Soviet Union each wanted to cut military spending because of the economic burden it imposed. A 1987 summit

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between Presidents Reagan and Gorbachev started a rapid process of arms cutbacks. In the autumn of 1989 momentous events upset the political systems in the Eastern bloc of countries in rapid succession, eventually shattering the wall separating the East and the West. The Malta summit was held at the end of the same year, and in 1990 the Cold War was declared over. One of the main factors bringing about the end of the Cold War was the fact that heavy military spending kept the two superpowers from keeping up with the strong postwar economic growth enjoyed by other countries. Though heavy military spending was perhaps not the principal cause of slow economic growth in the US and the Soviet Union, it was an important cause. Slower growth compared to other countries undermined the superpowers’ prestige and authority and forced them to negotiate arms limitations. Economic imperatives won out over political aims and the folly of the Cold War has ended, at least for the time being. However, it is unclear how completely these two large, well-armed nations have converted to pacifism. The US still has massive military strength compared to Russia. It can more easily maintain both a strong economy and military because it can easily import and attract investment funds from overseas. Its interventions in Panama and Nicaragua indicate that it has not left behind its aggressive, imperialistic tendencies. Russia, meanwhile, has been pushed into a corner, and it is not clear whether or not economic reconstruction will work. It has disarmed more thoroughly than the US, yet its handling of the Baltic nations betrays a lingering great-power arrogance. The end of the Cold War may actually be only a breathing space to allow the superpowers to rebuild their economies; either nation might well return to a policy of expansionism. It will take time before we can say for certain whether the Cold War is over. II. Companyism Since within the framework of the Cold War Japan was merely a small, subordinate country in the American sphere of influence, it could concentrate on economic growth. The structure of the Cold War, including its intermittent flare-ups and rapid global economic growth, provided an excellent environment for the Japanese economy. Japan’s defeat in the Second World War and its relative backwardness within the Western bloc also gave it a low economic base from which to grow at rapid rates. These favourable postwar conditions for growth had dissipated by the time of the oil shocks. But ‘companyism’, a uniquely Japanese phenomenon which contributed greatly to Japan’s rapid increase in productivity, has actually become stronger since the oil shocks. Rising Japanese productivity levels, in the midst of global stagflation, led to a rapid rise in Japan’s international competitive strength and overall economic performance.

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Unusually rapid growth made Japan an economic superpower, almost without people realizing it was happening. The resulting erosion of American economic dominance was one cause of the end of the Cold War; in this way, Japanese companyism undermined the international environment that had supported it. The post-Cold War international environment will probably continue to change in the direction of promoting economic development, and the Japanese company system is looked to both as a development model and as a source of economic aid. However, Japan is ignoring the accumulated social costs of growth, both at home and abroad. The domestic and international consensus that allowed Japan to act like a small, poor country in need of international support and a patient citizenry is crumbling.

1. What is companyism? ‘Companyism’ will be used here both to mean a high degree of employee loyalty, as expressed in the term ‘company-man’, and more broadly to describe the overall Japanese system. The goals of postwar Japan were to become a modern democracy and a nation of culture and peace. Though these ideals were not completely illusory, in actuality Japan became a country centred on economic growth. Growth was achieved through private enterprise, and was not the result of state planning or even state guidance. Large enterprises established before the war were the main locomotives of growth, but were joined by a large number of fast-growing smaller companies. Large companies played a role greater than their objective weight in the economy because their practices became the standard of behaviour for small companies. And the patterns big companies imposed on their employees’ lifestyles became the social norm for Japan as a whole. Since big companies were the driving force in the nation, and since Japan was focused on economic growth, companyism came to pervade modern Japanese society. ‘Companyism’ does not mean the same thing as ‘Japan, Inc.’, which has to do with the role of the government in economic growth and the relationships between the government and big business.23 This approach emphasizes the close ties between government, bureaucracy, and business, but pays little attention to business organization. The concept of Japan, Inc. has been associated with the view of Japan as exceptional which has been adopted by some US scholars in recent years. In contrast, the companyism approach looks at firm organization and behaviour, and allies itself with broader Japanese-style management approaches. Japanese-style management has become familiar as a system of industrial relations comprising lifetime employment, seniority-based promotion, and enterprise unions. The concept took shape gradually, beginning with Ujihara Shojiro’s attempts in the 1950s to use his field research to counter the prevailing academic views of wage labour as feudalistic.24 Westerners came to use

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the term ‘Japanese-style labour relations’ widely in the 1970s, and, perhaps encouraged by their own economic success, the Japanese followed their lead.25,26 Japanese observers originally viewed the peculiarities of their employment system as signs of backwardness. But as often happens, Western praise caused the Japanese to view their own institutions more favourably as one of the causes of economic development. Lifetime employment, seniority-based promotion, and enterprise unions alone are sufficient so far to explain Japan’s rapid economic growth. The job security and mutual trust created by Japanese-style management allowed firms to keep wages low and introduce labour-saving innovations, which in turn led to rapid national economic growth. The term ‘companyism’ appears to have been coined by Sakamoto Jiro in 1966, but did not immediately gain wide currency.27 Though the term was not commonly used, it occurred to me in the early 1980s that it aptly described Japanese capitalism. At that time exchanges with Chinese and Soviet economists were becoming more frequent, and many of these commented that Japan seemed like a socialist country. Since the social order was strong, workers were content and enthusiastic in their work, and the economy was growing fast, Japan seemed more truly socialist than either China or the Soviet Union. Japan is in fact not socialist, and in certain respects is even more capitalist than Western Europe or the US. But, on reflection, Japan does have some features that make it appear socialist. Overall, class distinctions are slight. Weak control of companies by the owners of capital means that there are few big capitalists, and income is fairly equally distributed. Within companies, wage differentials are small, status differentiation based on job classification is limited, and worker participation is common. Socialism has, in a sense, infiltrated the very core of capitalism, the production process of private firms. The term ‘companyism’ originates in a pun. The words for ‘society’ and ‘company’ in Japanese use the same two Chinese characters with the order reversed, shakai and kaisha. These form the root words of socialism (shakaishugi) and companyism (kaishashugi). Although I started out using ‘companyism’ as a joke, I found that it described the Japanese system quite well, and began using the word seriously.28,29

2. The development of companyism The structure of companyism was originally established during the development of heavy industry in the interwar period. At that time, large firms were taking the first steps toward establishing lifetime employment, senioritybased wage and promotion systems, and enterprise-based labour unions. Companyism did not develop along a straight course, because it went through both the period of wartime controls and the period of postwar reforms. Although economic policies in the two periods were contradictory in many

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ways, companyism became stronger during both of them, and became firmly established during the period of rapid growth.30 Companyism and rapid economic growth were mutually reinforcing. Loyal employees were willing to work diligently for long hours. Because workers were committed to their companies’ success, they were willing to cooperate with efforts to raise productivity as long as these did not result in layoffs.31 Enterprise unions carried out few strikes and held back from pushing for higher wages during recessions. This supported the growth of firms, and of the economy as a whole. Rapid growth allowed the economic structure simultaneously to widen and deepen; in other words, employment expanded and technical innovation occurred. There were large numbers of young workers from rural areas who were willing to work in industrial jobs for low wages and who were eminently trainable. On-the-job training, combined with frequent job reassignment, created skilled, adaptable workers interested in the wider company business. This system of training strengthened both seniority-based promotion and lifetime employment. Employees were reluctant to change jobs because it was difficult to transfer skills learnt in one company to another job setting. And companies avoided dismissing workers because they would lose the returns on their investment in workers’ training. The gradual growth in industrial employment meant that there was little need for layoffs and there were plenty of opportunities for promotion. Thus, rapid economic growth strengthened the three principal characteristics of companyism: lifetime employment, the seniority system, and employee loyalty. Rapid economic growth was accompanied by an increase in the number of large-scale companies, which were generally suited to companyism, but small companies also aspired to practising companyism. Large companies were by no means able to absorb all workers, and many workers were employed at lower pay and with generally poorer working conditions in smaller firms. The persistence of this dual economic structure increased the hold of large companies over their employees, who constituted a privileged sector of the workforce. The employment rigidity created by lifetime employment was compensated for by the use of additional temporary workers, reassignment of lifetime employees to different jobs depending on company needs, and the use of variable bonuses to give firms wage flexibility. These factors also strengthened company control over employees. Therefore, even if labour unions favoured class struggle for ideological reasons, union members’ company loyalty effectively turned them into enterprise unions. Rapid economic growth was the necessary base which made companyism possible. When growth slowed, economic widening (increase of employment) came to a halt; even an accumulation by decreased labour occurred. At this point, the economy could only grow if economic deepening occurred, but the rate of productivity increase fell to half of former rates. None the less, because

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productivity growth was still high compared to that of other Western countries, Japan grew too fast and won excessive international competitiveness. The principal reason for the rapid productivity was companyism. The processes which boosted productivity since 1974 are rather different from those operating during the period of rapid growth. Labour-saving and energy-saving investment shifted production toward more finely designed, smaller, and lighter products and more efficient production processes. The labour force shifted towards administrative and other white-collar jobs in the service sector. Whereas previously competition and investment in large-scale plants had been the key to raising productivity, now firms began to concentrate also on improving the quality of goods by setting up more flexible manufacturing systems that would be more responsive to market demands, producing a greater variety of goods, making them more reliable, and offering extensive after-sales service. It was companies’ human capital of knowhow and skills, often expressed in rankand-file ideas and initiative, that made the shift possible.32,33 It was, of course, due to companyism that firms had such high-quality labour. Since the economy was no longer widening, competition among firms intensified and workers came under increased pressure. The gradual decline in working hours stopped, white-collar employees were forced to work overtime without pay, and death from overwork (karoshi) became a problem. Under the companyism of the rapid-growth period, rapid technological innovation and frequent job reassignments went hand in hand. Workers were expected to switch jobs frequently and master a variety of skills. Because workers were multi-skilled and accustomed to change, they put up little resistance to rapid changes in equipment and operations. Manufacturing improvements simplified operations and lowered the level of necessary skills at the same time as workers were becoming more adaptable and innovative. An increasing share of the work force was occupied in such activities as maintenance, plant administration, and production process engineering. Companyism also helped firms compete technologically—competition which was becoming increasingly important. A project would be undertaken at a company-wide level and engineers and technicians, again with flexible and broadly applicable skills, would tackle small tasks in succession. Large teams able to divide up tasks effectively worked fast. Since one of Japanese companyism’s primary features is solid shop-floor grounding, it was easy for product design and manufacturing process engineers and technicians to work together, ensuring that new designs quickly led to new products. After economic growth slowed, companyism not only survived but was reinforced. Companyism was strengthened in order to bolster the power of management, and it was modified in certain ways that were to workers’ disadvantage. Companyism enabled Japan to be the only economy quickly to overcome stagflation following the oil shocks. This increased the confidence of Japanese

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managers in their approach, and attracted attention in other Western and Asian countries to the success of Japanese-style management. Foreign praise further boosted Japanese managers’ self-confidence. Japanese management also became stronger vis-à-vis labour. Though labour pushed through big wage increases in 1974, in 1975 management beat it back in the face of right-tostrike stoppages. Subsequently, strike activity slowed because of management pressure to cut costs. In the period of high growth rates, economic widening increased labour union power and gave it a strong say in company matters. Not surprisingly, with slowed economic growth, management began to push its own interests more boldly. It was in this context that a companyist agenda and ideology were openly pursued, as witnessed in Prime Minister Nakasone Yasuhiro’s privatization programme and the 1985 propaganda campaign about the supposed high yen recession. Obviously, what management was trying to do was reinforce employees’ commitment to their employers. Companyism is a subtle blend of both capitalist competition and corporatist or socialist relationships. Consequently, it has been an extremely effective mechanism for promoting productivity improvements ever since the establishment of heavy industry. The dual nature of companyism can be seen in four ways. First, control of firms by the owners of capital is weak. There are few large capitalists, shareholders’ annual general meetings lack substance, and auditors have little importance. The separation between management and ownership, though customary in all modern companies, is carried to the limit in Japan, where companies are really controlled by employees rather than shareholders. Top managers come up from the ranks of regular employees. Because companies do not face buyouts or stockholder intervention or pressure for high dividends, they can pursue long-term strategies aimed at furthering employee interests by enhancing productivity. Management rarely aims at high profits, but instead makes its primary goals maintaining employment, increasing market share, or developing new products or technologies. The company, none the less, is a profitmaking organization, and the shareholders’ annual general meetings are used as an excuse for requiring rises in productivity. A second way in which companyist capitalism is moderated is that there are few status distinctions or cleavages between employees. A company is by its nature an authoritarian, hierarchical organization, but under companyism these features are not made conspicuous. There are no sharp distinctions between job classifications either in wage structures or decision-making power. The high chance of promotion from lower-ranked jobs also has the effect of blurring the boundaries between different grades. This is partly due to longterm employment and the seniority system, but also to management techniques. The system gives employees predictability and security, increases their participation in management, and makes them compete more fiercely. All these factors raise the company’s productivity. Competition, whether it be

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between companies, between individual factories within a company, or between work groups within the factory, certainly shapes the way employees perceive their own interests. Since employees are committed to a company over the long term, they know that minor distinctions in promotion will have a major impact on them over the long run. This makes employees quite competitive with one another. Personnel evaluation is done in a complicated and meticulous fashion which inspires confidence that merit will be rewarded.34 Consequently, rivalry is compatible with solidarity among employees, and stimulates production contributions to the company. It was rapid economic growth that made such a pattern possible. The third feature which indicates an amalgam of capitalism and socialism is the importance given to the factory floor. The reason distinctions between job classifications of status or remuneration are slight compared to other countries is that the work itself is organized in a way that minimizes blue–white-collar distinctions. White-collar workers have generally had experience on the factory floor during their training, often visit it, and many times work alongside bluecollar workers. Some blue-collar workers are engaged in technological development or are promoted to white-collar jobs. Blurring the boundaries between ranks encourages a cooperative spirit and tranquil industrial relations, but also enhances productivity and speeds up product improvement and development.35 A fourth way in which Japanese capitalism is moderated is that its business relations are long-term. Just as lifetime employment is the normal practice within companies, relations between companies are typically long-term. As Hashimoto Juro writes, long-term relational contracts produce efficiency.36 Firms are cautious about entering into a business relationship, but once they do they often develop an implicit long-term commitment, much like that between firms and their employees. Long-term relational contracts enable each party to become quite familiar with the other’s abilities and circumstances, which reduces transaction costs. And since long-term relationships give suppliers the stability and time to develop technology, their buyers also benefit. Relational contracts are, of course, not set in stone. Suppliers compete on quality, price, and promptness of delivery, and buyers are free to switch suppliers if they are dissatisfied. It is the combination of long-term competition and cooperation, both within and between companies, that raises productivity. Companyism makes workers dedicate themselves to boosting productivity, both out of competition and out of a communal commitment to the company, even though it represents the interests of capital. The result is such a surge in productive effort that employees literally kill themselves from overwork.

3. The history of companyism To borrow Uno’s term, companyism is a form of ‘dominant capital’. Though Japanese companyism has somewhere near the global influence that British

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manufacturing capital had in the nineteenth century, it has been as important a challenge to the Pax Americana as German financial capital was to the Pax Britannica. Uno understood the ‘dominant form of capital’ as the form of capital that created the largest productive capacity and the fastest growth in production. He argues that at different stages of development capitalist accumulation takes different specific forms. The form of accumulation creates conditions, such as specific ways of organizing manufacturing, that determine the level of productivity and the quality of the end-product. The type of capital at different stages which maximimizes productivity (British commercial capital, then British industrial capital, German finance capital, and then American finance capital) is the ‘dominant form of capital’. Since the stage of classical imperialism, the dominant forms of capitalism have been finance capital followed by managerial capital, and now companyism.37 Finance capital took the form of joint-stock companies closely tied to banks, and produced massive fixed investments in heavy industry. The large scale of plants in heavy industries inevitably led to the formation of monopolies. Rudolf Hilferding, who did much to advance our understanding of monopoly, limited his discussion of managerial organization to the increase in the total number of shareholders, and the shift in control to a small number of stockholders and a new industrial bureaucracy interested in rational management. Uno’s theory is also limited by the same emphasis on shareholders and managers. None the less, these concepts are the starting-point for the development of the theory of companyism. In his analysis of the history of management in the United States, Alfred Chandler Jr.’s concept of finance capital is essentially similar to Hilferding’s. Chandler described the succession from industrial capitalism to finance capitalism to managerial capitalism. It was necessary to transform capitalism based on individual ownership into finance capitalism, in order to establish large companies in the areas of railways, communications, mass production, and large-scale retailing. In due time, managers arose who rationalized company administration and promoted investment in technology in order to achieve long-term growth. This new managerial capitalism replaced finance capitalism, which was controlled by shareholders concerned primarily with short-term profits. Managerial capitalism developed in the early twentieth century, and was well suited to consumer durable industries such as automobiles and home appliances. Companyism developed in Japan in the postwar period. Although it inherited many of the features of managerial capitalism, it made the distinct innovation of making even blue-collar workers identify strongly with the company and participate in management. Companyism was first established in largescale heavy industry, stimulating improvements in productivity and product quality. Companyism then enabled Japan to take the lead globally in developing new, refined products in smaller factories and firms. It has become a

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model for European and American firms, and has been highly influential in the rapid development of the Asian region. There may be some limits to the development of companyism. Hasty restructuring measures are reducing the number of employees on the factory floor at the same time that excessive affluence makes young people avoid factory work. These trends have undermined skill formation through on-thejob training, which was formerly the bedrock of companyism. Change in the industrial structure is shifting the workforce from ordinary blue-collar jobs to higher-skill jobs. Companyism may none the less survive, even though the number of employees working under it is declining. The immigration of workers from other parts of Asia may shore up companyism in Japan, and the relocation of Japanese plants to other parts of Asia may expand its field of operation. While companyism may have its limits, it has nevertheless become the driving economic force in the postwar world. It may be that the pressures that are restraining the expansion of companyism may at the same time make it stronger and more durable. III. The Tragedy of Historical Materialism38 Historical materialism, which holds that materialist forces drive historical change, is regrettably still the best approach for understanding society. The fact that the Cold War, having dominated events for almost half a century, was swept aside by economic growth can be interpreted as the outcome of economic forces determining political events. In the sense that economics is based on production, the materialist view has won out. But there are several phenomena which historical materialism cannot explain: the division of the world into American and Soviet spheres, the expansion of the Eastern bloc’s power, development of welfare states in the West, or the establishment of an authoritative voice by the South through such organizations as UNCTAD. Though historical materialism does not explain all of world politics, its fundamental validity is confirmed by the fact that, in the half-century since the war, it has been those countries and political systems which increased production which became more influential. None the less, the triumph of materialist forces has followed a twisted path. Although in theory the Eastern bloc countries made historical materialism their state religion, they actually adopted a development system based on left-wing dictatorship, so that ‘politics determined economics’.39 The political system flew in the face of materialist claims and slowed down economic growth. Eventually the Eastern bloc countries were forced to abandon their state religion and undertake thorough economic reforms. Paradoxically, historical materialism as an ideological and political system was overwhelmed by the very materialist forces which it had revealed

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as the principal moulders of human society. This is one of the tragedies of materialism. The defeat of the Eastern bloc in the Cold War was no real victory for the West. Though the ideologically induced arms buildup in the United States was not as heavy as the Soviet buildup, it undermined the American economy and American hegemony. Thus, in the American case as well, ideology was overcome by economics, again confirming the materialistic interpretation of history. Similarly, UNCTAD’s development strategy of import-substitution was sabotaged by the OPEC cartel and outperformed by the outward-oriented development strategy of the NICs. Another example of economic forces thwarting ideological forces was the unsuccessful attempt of neo-conservatives to rein in the welfare state. Rising affluence has brought about social changes, such as urbanization and an increasing population of retirees, that make dismantling welfare programmes impossible. Another example is NIC governments which used right-wing dictatorship to industrialize, but which were compelled by their very economic success to grant new freedom and democracy and to build a welfare state. When historical materialism was being formulated, economic history could only be described as the establishment of capitalism. Recent economic and political phenomena could not have been incorporated into the original materialist interpretation of history, but they can help us understand the meaning of society and socialism. The fact that the motive forces in postwar history have been productivity gains, economic growth, and increasing mass affluence shows the correctness of the materialism interpretation of history. The power of economic forces that we have witnessed also suggests that we are trapped in the capitalist system even more tightly than were people in early capitalism. Under classical capitalism, only capitalists tried to accumulate capital; workers were alienated from the process of accumulation as mere factors of production. But contemporary capitalism, under pressure from mass democracy, deliberately distributes the fruits of capitalist accumulation even to the working class. In other words, the masses jointly own part of the capital and its returns. Part of the distribution of the returns on capital is through the welfare state, and an important way in which ownership at the production stage is expressed is through companyism. Because companyism has proved effective for improving productivity, raising skill levels, and responding to workers’ demands for more equality, it may well become more influential and widespread. If this leads the masses more fully to embrace capital accumulation as a goal, it will become more difficult for people to choose political options outside the framework of a capitalist commodity-based economy. Excessive mass affluence has freed people from worrying merely about survival, but at the same time it has limited their choices to superficially different lifestyles within a capitalist framework. This restricted range of choices is one of the fundamental reasons the materialistic interpretation of history is

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valid even today. Even though there are constant warnings about the global environmental crisis, people’s desire for ever more affluence makes continuous economic growth necessary for political stability. This shows just how difficult it would be to escape the constraints on people’s choices imposed by capitalism. Strident warnings about the global environmental crisis have come from many quarters over the past decade, including The Limits to Growth, published by the Club of Rome, and Jimmy Carter’s message on the environment, ‘The World in the Year 2000’. While environmental awareness has been heightened, there is no prospect of an international agreement to take aggressive action, for example by banning economic growth or reducing excessive affluence. The only alternative for dealing with the environmental problem is new technology, but this brings its own risks. No fundamental solutions can be achieved as long as the objective of economic growth is paramount and people are thinking merely about short-term goals. This inability to take drastic measures to deal with the environmental crisis is the most severe constraint companyism has placed on Japan. The materialist interpretation of history has provided a tragic perspective on history. The tragedy is not just that even regimes espousing historical materialism were unable to withstand the economic pressures that eventually washed them away. Rather, the tragedy is that it is still so useful for analysing society, despite the fact that the historical materialist approach was devised 150 years ago and that we now live in the midst of excessive affluence. As long as people continue to act as historical materialism would predict, unconstrained economic development will continue to drive us toward environmental disaster.

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PART II Historical Origins

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6 The Social Order of Modern Japan* NARUSAWA AKIRA

I. Introduction: A First View of Modernity The print entitled ‘The Army’s Drill Ground at Sakurada-gai, Tokyo’ (Plate 6.1) is rather peculiar as a depiction of a military drill. In contrast, Plate 6.2 is clearly a picture of a drill. A military band is placed in the foreground and, led by music then new to the ears of the common people, a well-ordered army unit enters the scene. The viewer of the picture is himself the observer of the event. However, a tall white-painted fence is drawn in the centre of Plate 6.1, dividing the entire picture horizontally into two. In the upper section there is a sturdy black painted fence, and in the parade ground between the fences, a group of uniformed infantrymen, without distinguishable individual faces, are being made to march in rows. When I first saw part of the picture on the dustjacket of Yokose Yau (ed.), Meiji shonen no seso (Social Conditions in Early Meiji),1 I remember being very impressed by the red colour of the infantrymen’s trousers.2 However, the focus of the picture is clearly the foreground, which occupies the bottom half. On a wide street, a carriage is passing and rickshaws are being pulled. The road bustles with pedlars coming and going, errand boys, parents and children, and a woman holding a parasol. There is some Western clothing, but most of the figures are in Japanese dress that clearly shows the differences in social class and occupation, as in the Edo period, and they are each carefully drawn. There are more wheeled vehicles, but traffic regulations have not yet become severe; the picture is a good depiction of early Meiji city manners and customs. What relationship between the top and bottom halves did the artist have in mind when he combined them in one picture? His subject is not the drilling soldiers themselves, nor is the print a ‘depiction of manners and customs’, despite its resemblance to the genre. If it is neither of these, perhaps the artist’s main intention was to contrast the two parts. In the upper portion, the men’s bodies are covered with identical uniforms, their heads are bent forward, their pelvises are pulled back, and they move simultaneously in single file in the direction they are ordered. According to the rules for ‘marching and rapid marching’ in the infantry drill manual of 1891, soldiers had to * Translated by Timothy S. George.

P LATE 6.1. The Army’s drill ground at Sakurada-gai, Tokyo (Torashige, Tokyo Metropolitan Government Archives)

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P LATE 6.2. The Grand Drill at Etyujima (Kunisada, 1871, Asai Collection)

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bring the left foot forward when ordered to move, without lifting it far above the ground, point the front of the foot down and slightly out, straighten the back of the leg, bring the upper body slightly forward, place the foot down level 75 centimetres ahead of the right foot, move the full weight of the body over the foot when it is placed down, as the left foot is placed down raise the right heel off the ground, bend the knee slightly, bring the foot forward in the same way as explained for the left foot, placing it down at a point the same distance ahead, and continue marching.

Under the vigilant eyes of the officers, the movements of every single soldier’s body are controlled down to the smallest detail. In contrast, the people in the lower half of the frame are walking to the left and right in small groups. Their various styles of walking differ according to class, occupation, age, and sex. Of course, they are not completely unregulated. There are the dress restrictions that had become customary under the bakuhan (shogunate and domains) system, and there were also traffic regulations. For example, Since ox-carts, handcarts, and horse-carts on the roads are dangerous, warnings have been issued since long ago. However, many people have been ignoring this recently, using the roads with such horse-drawn carts and ignoring pedestrians, which is very bad. There have even been injuries, so it shall now be announced throughout the city that such persons shall be punished according to the severity of their crimes.3

And in early Meiji there were regulations imposed by the Ishiki Kai’i Jorei (Minor Offences Law). For example, those who ‘rode horses or drove horsecarts rapidly and knocked down pedestrians’ (Minor Offences Law, ch. 13) or ‘inconvenienced pedestrians when passing with baggage carts or rickshaws’ (Minor Offences Law, article 40) were punished by fines, flogging, or detention. However, when patrolmen were not watching these regulations were of limited effectiveness. The restrictions imposed by customs and mores alone did not control people to the extent of forcing them to move as a single group. Unlike the area inside the fence, there is variety and freedom here. In effect, uniformity and variety, or absolute regulation and relative freedom, are contrasted in this picture. But the artist’s intent was not merely to set them in opposition. The fence in the middle does not completely separate the two parts. In its centre is a wide-open gate to the interior, and several curious onlookers are peering in through it. Since the gate is open so wide, one assumes that the army welcomes the people’s observation of its absolutely disciplined bodies. A view from a rapidly disappearing world to a new order in the process of creating itself is delineated here. One might even call this a first glimpse of ‘modernity’. And in fact, there are concealed in this scene a structure and logic of which those on either side of the fence are not fully aware. What did the birth of the army bring to Japanese society after the Meiji restoration? The military class lost its monopoly of the right to bear arms,

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and military service became a duty of ‘subjects’. Through this service, as is often stressed, families temporarily lost their breadwinners, and commoners received militaristic education in the barracks and were moulded into soldiers of the emperor. However, the influences that probably persisted most deeply and strongly were those resulting from the orderly regulation of soldiers’ daily activities. For example, such things as acting in groups, at fixed times, according to a schedule; organizing living space according to a fixed system; and conducting superior–inferior relations according to fixed rules of ‘etiquette’ were practised in peacetime army life. Of course, this standardization of action was in line with the fundamental purpose of the army, which was to mobilize most effectively groups of commoners for battle under its orders. Under the old Edo class system, the basic unit for the training of bushi (samurai) groups was the family (ie). Those of the same status (such as ashigaru, ‘foot soldiers’) were never required to leave their home for group training for a specific period in a specific place. And never were males aged 20 and above required to assemble, regardless of class, and to have their slightest actions controlled. The shotai units that developed in several domains during the Bakumatsu period were the first attempts at organizing military groups not based on class distinctions, but they did not go so far as to standardize the organizational patterns of daily life. The establishment of the Meiji military, which was based on the conscription decree and regulations, laws, and ordinances developed after study of the French, German, and British systems, was an epoch-making event. More than the establishment of the military itself, the detailed regulation applied there to the human body spread beyond the military and was a revolutionary development in Japanese society. It was often said that ‘good soldiers are good citizens’. This could serve to emphasize the army’s role as an educational institution, if the saying meant that ‘good soldiers can become good citizens’. On the other hand, if it meant ‘being a good soldier is all that is necessary to be a good citizen’, the saying implied a view of the army as the single most important school for social order. The saying ‘a soldier is a model for society’ is an example of the latter view. In schools as well, the army was the model for group activity. This was true for ways of lining up and marching, for salutes, and for uniforms and hairstyles. The classroom emphasis on ‘cleanliness’, ‘order’, and the like may have resulted less from military influence than from the universal need for some order in a group consisting of a large number of people crowded together. However, under the teachers’ college law promulgated in 1886 by Minister of Education Mori Arinori, the teachers’ colleges were to be administered according to the army training system, ‘military-style physical education’ was adopted, and the dormitory system meant that students were watched and controlled day and night by dormitory masters and upper-classmen.

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(a)

(b)

F IG . 6.1. A prototype of school design (J. P. Wickersham, trans. Mitsukuri Rinsho, Gakko Tsuron, 1874)

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The dormitories were organized like barracks, and it was mainly the teachers in charge of military-style discipline who assisted the dormitory master. There were up to ten people per room, and each person was assigned three shelves about three shaku [90.9 cm.] wide, one above the other. Uniform, undershirts, and underpants were kept properly folded on the shelves, and below the shelves, knapsack, sword belt, and shoes were hung in the proper order. From morning wakeup until bedtime, a bugle announced the hour, and there were inspections in the morning and at night.4

This regulation down to the smallest detail provoked resistance from the students in the teachers’ colleges, and was often the cause of rebellions in the schools. On the other hand, it created the ‘teachers’ college style’ type of students, unthinking and inflexible. Students, after five years of this type of education and controlled life-style, were excused from their military service obligations after only six weeks of training in active service (others were drafted for three years).5 After this, they brought military order to the schools as teachers. The excursions that were a regular school activity often assumed the form of military marches. The student body was divided into large and small units, and ‘marched correctly at a proper pace’.6 At ‘sports days’, large banners reading ‘Peacetime Battles’ were displayed,7 and whatever their content, these events took on the trappings of military drills.8 Thus began the militarization of the schools. But the military model does not fully explain all the systems of order that took shape inside various organizations after the Meiji restoration. For example, at the Tomioka silk-mill dormitories, every morning at the first whistle, mill-girls ‘marched properly’ to their workplaces with the directors in the lead (Teihon Tomioka nikki (Authentic Tomioka Diary) ).9 ‘Whether outside or inside, deport yourselves prudently, and never disregard proper feminine manners. Take care never to violate the rules against joking, singing vulgar popular songs, speaking in a loud voice, and removing clothes. Both body and clothing must be kept thoroughly clean’ (notice in a mill-girl dormitory, 1872).10 Though descriptions and rules such as these imply a basic view of order similar to that in army units, at present their roots must be traced separately. The origins of the school as a space in which one teacher faces many students in neat rows, and teaches a single text or a single subject (Fig. 6.1, Prototype classroom Plan;11 ‘a’ indicates the teacher’s desk, ‘b’ indicates a writing table, etc.), and in which students submit to fixed behavioural regulations, can be traced to the influence of the simultaneous importation from the United States of methods of instruction, school administration, and building design. Looking back further, precedents can be found in the Edo domain schools. The terakoya (temple schools) that had served as spaces for education of commoners were disorganized assemblies of people taught individually by a particular shi (master, teacher), so strict order was not always maintained

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F IG . 6.2. A space for people’s education (‘Terakoya’ Watanabe Kazan, Isso-hyakutai-zu, Tokyo: Iwasaki Bijutusha)

in the classroom. Arrival and departure times, texts, and progress all differed from person to person; the schools were not premissed on a fixed, unified system. Moreover, there was no need to establish and maintain order to make all students pay attention to the shi at a certain time and listen attentively to a lecture (Fig. 6.2). However, in educational establishments for children of the samurai class (which consisted mainly of the domain schools established in large numbers in the late Edo period), whether the Chinese classics or practical subjects were studied, the practice was often to teach one text to many students at the same time, so serious consideration had to be given to order in the classroom. And where dormitories were built, it was also necessary to regulate life in them. For example, we have the detailed rules of the Shoheizaka Gakumonjo (the Bakufu’s Confucian school, also known as the Shoheiko) regulating writing, time periods, and entry and exit.12 These can probably be traced back to temple rules (cf. Eiheiji shuryo shingi (Eiheiji Commoners’ Lodging Rules) ). In addition, there are rules to regulate people’s activities in the cities. The Ishiki Kai’i Jorei (Minor Offences Law) issued by the Tokyo prefectural government in 1872 began the restriction of citizens’ activities by regulating the punishment of minor crimes against the fixed order deemed necessary in such areas as public health, transportation, business, and public morals. The formation of social order in these various locations might also be described as the expansion of governmental opportunities and machinery outside the schools for educating the public in the new order. The government’s

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policy of ‘in the village, no home without learning; in the home, no person without learning’ (Education Order of 1872) was realized through the many opportunities the government provided to educate the populace. But the objects of this education included not only children but also adults, and the social order prescribed for each came from models with different origins. These various forms of social order have several common characteristics. Below I should like to sketch the outlines of the social order that appeared after the Meiji restoration and clarify its special characteristics, and as far as possible to trace the origins of views on social order. In other words, this is an attempt to clarify contemporary cosmology. Since the period of focus is the latter half of the nineteenth century and the beginning of the twentieth, and since the goal here is to reconstruct the prototype, I shall have little to say about its later development. The social order discussed here is different from the ‘public peace’ established by the authorities through peace preservation laws; it takes a much more detailed form. II. Time When many people are crowded together in a limited space with clearly defined boundaries separating inside from out, and act together at fixed times, then whether that space is an army unit, school, or factory, or even a prison, hospital, or private association, the necessary systems of order are similar in nature. First is the system of time. Before the restoration, time varied depending on the seasons, regions, the people who announced the time, and the equipment used to measure it, and there was no single time system used nationwide throughout the year. In a system in which one day was divided into twelve ‘hours’, six each for the light and dark parts of the day, it was impossible to establish a common time with units of minutes and seconds, and there was no sense of any need for this. For people who worked and lived by mountains, fields, rivers, and sea, a time system divided according to the rhythms of nature was sufficient. Yet even from the early Edo period, the custom of regulating life according to an artificial time system was more widespread than one might imagine, in cities and even in farm villages. Particularly after the mid-seventeenth century, temple bells proliferated rapidly. It is estimated that in the nation’s 50,000 villages there were between 30,000 and 50,000 bells. And this proliferation appears to have been due more to demand for bells to give the time than to Buddhist religious needs.13 Such things as working hours for commoners such as craftsmen, day labourers, and servants in merchant houses,14 and hours of water use for villages sharing irrigation systems, were regulated to about half an ‘hour’ (one modern hour) by the ringing of bells and by

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sundials. In castle towns, the castle bell regulated retainers’ working hours, and for other residents of the towns bell towers were built to strike the hours. In such a loose time system, differences according to the weather or the observer in determining the time of sunrise and sunset were unavoidable, and Japanese clocks were built with various mechanisms (karakuri) to compensate for such things. All of this is not only evidence that Japanese of the period had begun to become accustomed to a social order structured and maintained according to the dictates of time; it was also psychological and social preparation for the post-restoration proliferation of Western-style mechanized clocks. In November 1872 the lunar calendar was abolished and Japan switched to the solar calendar and a nationwide standard time system, but since communications between regions were undeveloped at first, it took time for the system to become widely established. The chief object was not merely utility; it was to enlighten the people about their ethical duty to conform to the rules of time, and so the new system denied the common people’s religious faith based on the cycles of the old calendar. The need to value time and work industriously has been frequently proclaimed. It is for this purpose that drums to beat the hours have been set up in every school, that the solar calendar is now being adopted and the time system revised, and that all districts throughout the country must keep the same time. People should keep time all the more seriously than ever: 1. Take care not to be late in disregard of time commitments to others, or to do such things as waste time in idle talk or disturb the work of others. 2. To avoid differences in working hours caused by long and short days, carpenters and other day labourers are urged to contract for wages based on working from a certain time in the morning to a certain time in the afternoon, without regard for the time of sunrise and sunset. 3. With the abolishing of the old calendar, all sales of publications such as astrological explanations of karma surrounding past, present, and future lives, and compatibility between men and women, must absolutely stop. 4. Furthermore, telling ghost stories is prohibited by law. In order to develop talent and wisdom and not fall into barbarism, evil customs of the past, including telling ghost stories to frighten and quiet crying children, are prohibited by the clear laws mentioned above, which warn against telling or listening to falsehoods. (Proclamation of the governor of Kyoto, ‘Warnings Accompanying the Solar Calendar’, Nov. 1872)15

Following this, a nationwide standard time was established. Japan attended the 1884 international conference on meridians held in Washington, and in 1888 adopted a Japan Standard Time based on longitude 135˚ East. In the West, social demand for a standard time system arose from the development of domestic and international railroad, shipping, and telegraph systems.16 In

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Japan at the time, railroad lines such as those between Shinbashi and Kozu, Kobe and Kyoto, and Ueno and Takasaki were just beginning to be built (after 1886 both national and private railways entered a period of rapid expansion), but telegraph lines had been extended the length of the country. Conforming to international standards and unifying the nation politically and socially were state goals. From the third decade of Meiji (1887–96), as the development of transportation and communications accelerated, and as this made possible an army mobilization system, the standardization of time permeated even daily life. The people did not discard the patterns of life linked to the time divisions of the old calendar, though, so there was a long period in which the old and new calendars coexisted. Second, activity was regulated according to divisions of time. There were activities on particular days of the week and at particular times of the day. ‘Inspections’ of military units were ‘weekly’, drills were not held on Wednesday or Saturday afternoons or on Sundays, and leaving barracks was permitted on Sundays. Such patterns made up a cycle of activities with the ‘week’ as the basic unit. The ‘week’ became a part of the general population’s daily life through its adoption as the unit of work in government offices (in April 1876) and as the basis for school schedules, but the influence of military experience was great as well. (In pre-Meiji times, except for the use of days of the week in calendrical calculations, there were no patterns of activity based on sevenday periods.) It was also only after the restoration that the day was divided into small units of time, with organized group activities at fixed times. In the Edo period there were fixed times for employees of domain governments to arrive at and leave work, and fixed work hours for servants, but the regulation of activities at fixed times proceeded no further. More became necessary in the training for mass activities in functional groups, such as the army, schools, and factories. The goal of this type of regulation was to raise educational and productive efficiency, as measured in units of time determined by mechanical clocks. This also made it possible to forecast that a certain time period of work would give a certain result. For the individual, increased efficiency became a moral duty. ‘Strict observance of time’ became, in the new order of time after the restoration, a necessary component of morality. For example, with the introduction of the factory system there appeared rules for managing workers that had not existed (since they had been unnecessary) under the old contract system of labour relations. The main purpose of these was to enforce time regulations. They fixed and strictly enforced times for arriving at and leaving work and for taking breaks. Penalties were set for arriving late, leaving early, and slacking during work hours. To enforce of all these rules, a system of shop-floor supervision was established. The ‘Rules and Directions for Workers’ in the Ministry of Industry’s ‘Factory Rules’ of February 187617 state:

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Article 1. Workers shall begin work at 8:00 am, they shall take their afternoon meal from 12:00 until 1:00 pm, they shall then return to work until 4:00 pm, and all shall leave at 4:10 pm.18 If a worker is late four times, one day’s pay shall be subtracted from his wages. Article 2. Each shall do his own work with care, and must not waste time by giving his attention to other things.

Also, the ‘Rules for Factory Officials’ said: Officials (whether Japanese or European) in charge of factories shall be responsible for all that is done within them, and must ensure that orders are carried out rapidly and effectively. Article 2. Ten minutes before work begins, the official shall inspect the factory, noting which workers are in their places and which are not, and shall then enter these names in the records.

The seeds of such factory work rules were visible in 1871 in the first mechanized factory, the Nagasaki steelworks, but these can in turn be traced back to June 1864, when it was operated by the Bakufu, and Dutch engineers and others submitted a proposal for internal factory administration.19 Railroads also played an important role. According to the timetable published by the Railway Bureau when operations began (1872), the train departing Yokohama at 7:00 arrived at Shinbashi at 7:58; arrival, departure, and stopping times in minutes (one or two minutes) are given for the intermediate stations. There is even a warning note on the schedule to help passengers become accustomed to the schedule system: ‘Those wishing to board should arrive at the “station” at least ten minutes before the times indicated in this schedule to purchase tickets and complete other necessary procedures . . . so as not to delay departure, the door of the “station” will be closed three minutes before departure time.’20 Here the passengers are treated like children who must be taught to follow a time schedule. The station became a school. Moreover, the railroads not only educated passengers, but also created the first group of workers governed by time regulations;21 in these ways the railroads were one huge educational institution. One might even say that in this period all public spaces were schools. Roads, barracks, hospitals, and prisons all had as their goal education in order and discipline. The third system of order related to time involves speed. Requiring people to act ‘rapidly’ and ‘without delay’ became essential points in systems of order. I have argued elsewhere that even in the Edo period, beginning in the Genroku era (1688–1704), speed was valued.22 In ‘urban society’ as it was then constituted, the use of currency increased consumption, and the trend toward assigning greater value to new things than to old was widespread. Consciousness of change and fashion raised the value of speed, but in the early modern period ‘speed’ was not yet an essential part of systems for ordering

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groups. Only in the Meiji period did speed become one measure of a wellordered functional group. It was natural for the army to attempt to increase the speed of its actions in competition against an enemy; and in factories and schools too, the principle of competition meant that speed in reaching goals was demanded, and the rules governing these groups were made more strict. The faster transport and communications became, the more speed was desired and the further this trend intensified. To enlighten the masses about these systems of time and to create new control mechanisms, it was necessary to establish one common system of time. This was a sacred and separate national time: imperial time. Specifically, this meant establishing unified national holidays, which had not existed in the Edo period or earlier. Festival days, sacred times distinguished from ordinary days, had originally been different for different regions, for people of different occupations and statuses, and according to different popular religious beliefs. Political authorities did not interfere in the people’s custom of distinguishing between sacred and secular time, and there was no need for them to do so. This was natural, since most of these so-called ‘annual events’ were closely tied to the movements of the heavens, to the seasons or the weather, or to other rhythms of nature. There had been an official calendar since ancient times, heavily influenced by the Chinese calendar, and second to this in importance were the popular calendars, but no religious calendar was enforced nationwide. Then the solar calendar was forced on the country, ending regional variations, severing ties to the rhythms of nature, and imposing artificial units of time. Soon after, in 1873, holidays for the Emperor’s Birthday and National Foundation Day were proclaimed by the Dajokan (Grand Council of State). Celebrating the Emperor’s Birthday in a nation with no custom of celebrating birthdays of either sovereigns or commoners, and celebrating National Foundation Day when the people had no awareness of the date of the founding of the state (the date on which the mythical first emperor assumed the throne) were attempts to imitate Western customs and prepare to join the ranks of the Western powers. To these holidays were added others, including the New Year’s Festival, the Shinto Festival of New Rice, the Shinto Harvest Festival, and the spring and autumn Equinox Festivals (All Imperial Ancestors’ Days). These holidays included ceremonies performed in the imperial house since ancient times, but they were meaningless to the people. There was some popular opposition: Since the calendar was abolished they’ve got rid of important days like the Gosekku [the ‘five seasonal festivals’] and Obon, and now we celebrate days like the Emperor’s Birthday and National Foundation Day for reasons we don’t understand. . . . I see no reason to celebrate holidays people have no feeling for, or to be forced by the government to put out lanterns or that flag that looks like a sign for a shop selling red balls [the rising sun flag].23

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From mid-Meiji, however, holiday ceremonies were regularly held at elementary schools, and ‘imperial time’ became established. These ceremonies were attended and observed by teachers, students, ‘mayors of cities, towns and villages and other city, town and village officials concerned with educational affairs’, and ‘fathers, mothers, relatives, and other residents of cities, towns, and villages’. They centred on the worship of the imperial portrait and the reading of the Imperial Rescript on Education (Ministry of Education directive, ‘Rules for Holiday Ceremonies at Elementary Schools’, 1891). More significant than anything else was the fact that these ceremonies educated the people in the existence of the emperor as the reason for these sacred occasions.24 The system of one era name per emperor was part of the same logic. Eras could no longer be changed according to things unrelated to the life and death of the emperor, such as auspicious events, disasters, or years of special significance according to the old calendar. Eras had to begin and end with the reign of the emperor, who now ‘ruled’. The Imperial House Act did not allow for abdication, which made it necessary for the people to have a time consciousness that recognized the emperor’s physical death as ‘the end of an era’. The system of numbering years from the mythical accession of the first emperor (in 660 BC) was never as widely used as the new era name system, but it did serve to convey the impression of a permanent time (‘a line unbroken from ages eternal’) that did not end with the deaths of individual emperors. It was not only the establishment of ‘imperial time’, however, that put the emperor at the pinnacle of the time order. As symbolized by his annual (from 1899) imperial gifts of silver watches to honours graduates of Tokyo Imperial University, the emperor also reigned as a monarch who enlightened his subjects in ‘modern’ time. It is well to note that this period also saw the end of the view among the nobility that they and the imperial family embodied a cultural gap because they lived in a traditional time world different from that of commoners. ‘Diamond’ is a famous poem by Empress Shoken, wife of the Meiji emperor: ‘As the hands of the clock turn without pause, he who wastes no time and works diligently can accomplish anything.’ This was presented to the peers’ girls’ school in 1887, so it was not intended to encourage diligence only in commoners. From the beginning of the drive for ‘civilization and enlightenment’, it was the imperial family that led the people toward a Western life-style of Western food, clothes, chairs, and beds, taking the lead in the destruction of old traditions and customs. It is true that a peerage system was established; but in the sense that qualitative differences in modes of life and action disappeared, the old class system may be said to have collapsed. The modern social order was an order that spread from the upper to the lower social strata. A key feature of the modern emperor system was that it was not defined by cultural criteria. After the aesthetics of courtly refinement went out of fashion, no new aesthetic system was established by the Meiji

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nobility. There was no hint of the existence of an ‘emperor’s Japanese’ along the lines of ‘queen’s English’. III. Space ‘Good order’ (seiton) and ‘proper arrangement’ (seiri) are overused expressions. The Guntai naimusho (Rules for Barracks Administration) informs soldiers that ‘after one’s face is washed, weapons must be wiped clean and clothing put in order’ (ch. 19, article 3). In workplaces such as factories, and in schools, these terms, along with ‘cleanliness’ (seiketsu) were the most frequently used expressions. These Chinese compounds were less often used as terms relating to things occupying space than in commands and rules for ‘organizing’ soldiers or keeping the people ‘in order’; and there is virtually no evidence of their having been in general use in the Edo period or earlier. In referring to the arrangement of things, they are probably new words that came into common use after the restoration, as situations in which numbers of people lived together became more common. They resulted from the effort to distinguish order from chaos and from constant attempts to remake the visible order of space, and imply a purposeful logic in which useful things were placed in fixed locations from where they were always accessible if needed. When this was done with particular thoroughness, such order could even be valued for its aesthetic qualities. ‘Proper order’ meant that each soldier folded his undershirts, underpants, and overcoat into squares, with each side (each fold) equal in length to the width of his knapsack. Stacked on his ‘organizing shelf ’ to the right of a small box were, from bottom to top, two pairs of trousers for other seasons, a pair of trousers for the current season, his work trousers, undershirts and underpants for other seasons, undershirts and underpants for the current season, overcoat, and raincoat; next were his neck cloth, socks, and shoelaces; and on top of all this he placed his knapsack. . . . The front of this pile of clothes was as flat as if it had been planed; this showed true skill in neat arrangement. Each soldier flattened the creases of his folded clothes by pressing down on them with a flattening board while tapping the sides of the pile with another board, making the sides straight and the corners sharp. . . . There were even some soldiers who went to such pains in this that they put saliva on thumb and forefinger and rubbed the creases to tighten them.25

The results of such attention to detail were spaces ‘as neat as if they had been planed’, alike in every visible respect. (Fig. 6.3 shows these things arranged horizontally above a soldier’s bunk.) The order required of things was demanded of people as well. For example, during inspection of guards, ‘the adjutant on duty for the week should stand just slightly forward of the ranks, lining up the sergeants on duty for the week in a single line, and then

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F IG . 6.3. Equipment in barracks (Rules for Barracks Administration, No. 1)

put them in good order’ (Guntai naimusho (Rules for Barracks Administration), ch. 18, article 7. This use of ‘good order’ (seiton) is close to the Chinese usage). The group of people standing abreast ‘formed a line’ without the slightest bit of disorder, and, acting with all possible individual differences removed, marched in columns. This constituted the aesthetics of military parades. The most minute details of such ‘ordered’ people and things were exposed to and regulated by the gaze of the senior officers who reviewed and inspected them. At the highest levels, these were imperial inspections.26 An ‘ordered’ space was

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a space controlled from a single viewpoint. But the people subordinated to this order did not simply submit passively. They were sustained by the spontaneous emotional and spiritual uplift of participating in an aesthetic order. The second element of this modern spatial order was ‘cleanliness’. This is separate from the bodily cleanliness that will be discussed later; I shall limit my focus here to space. For those managing a space in which a large number of people live crowded together, the greatest concern is the outbreak of infectious diseases. To prevent cholera, typhus, and dysentery, which spread rapidly after the number of open ports was increased and residential restrictions for foreigners were eased in the Bakumatsu period, the government imported public health concepts and developed public health administration. The key elements in this were disinfecting polluted areas, closing transport routes, forced isolation of patients, and, for prevention, detailed management of space. And this was carried out using the full authority of the state, particularly the police (who monopolized public health administration27). There was some consideration given to independent regional public health administration through cooperation by doctors, patients, and city, town, and village public health associations (in the 1890 revised directives on prevention of cholera), but this was soon abolished.28 The purpose of public health administration was less the health of residents than public peace and the wealth and power of the state. ‘Public health in a narrow sense means the health and welfare of individuals; in a broader sense it is the wealth and power of the state.’29 The Guntai naimusho (Rules for Barracks Administration) includes detailed rules for the removal and exclusion of foreign substances (such as mud and excrement), and for keeping inside air fresh, when cleaning barracks. For schools, too, the ‘Instructions for Elementary School Teachers’ (1881) made management of space a teacher’s duty as a part of health education: ‘Physical education includes not only athletics. Pay attention when cleaning school buildings to ensuring appropriate light, temperature, and circulation of air.’ Moreover, an 1897 directive by the Ministry of Education, ‘How to Clean Schools’, gave detailed directions for maintaining cleanliness in classrooms and dormitories. In areas such as factories, prisons, and hospitals, where groups of people lived in close quarters, similar control of space was imposed due to similar hygienic considerations. Mostly this involved the ordering of visible things, but there were also regulations for smells and sounds. Not only have vapours produced in hot weather in places where cows and pigs are raised harmed people. . . . In all areas where houses are close together, raising cows and pigs is strictly prohibited. [Dajokan declaration, 15 May 1873] We sometimes hear complaints of injuries to the health of neighbours caused by night soil and noise from iron-cutters, blacksmiths’ shops, and bathhouses. These three types of establishment

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shall be regulated by the following stipulations. [Osaka prefectural government proclamation, May 1877]30

In the urban society of the Edo period, too, there was rising concern for the health of the body, and many theories and regimens for health were put forward, but only later were links between the regulation of space and the regulation of the body first recognized. Moreover, the ‘modern’ concept was not an application of the rules of nature to the body. Only in an artificially constructed space can a logic for regulating the body arise. Thus, the removal from the centre of elements of disorder and confusion, such as dirty things and offensive smells, can constitute a politics and aesthetics of space. The Tokyo prefectural government’s purchase of all land in the Hashimotocho slum of Kanda in January 1881, and its forcible relocation of the residents, was the beginning of this kind of ordering of space, and of its other side, the eviction of the poor. The prefecture gave as its reasons for purchasing the land public health, fire prevention, and ‘the honour of the capital city’.31 Since poor people brought the disorder of epidemics, fires, and crime, their very existence was antithetical to order. This, combined with an aesthetics that spoke of stains on the ‘honour’ of the city, provided the logic for their removal. Later an army physician, Mori Rintaro (Mori Ogai), made a scathing attack on the contradictory logic behind this sort of order: ‘If, as they urge, these dangerous poor people are driven outside the boundaries, we will be abandoning public health along with them, because the wealthy people who remain within the boundaries make up only a small part of the public. Without the public there is no public health.’32 Yet, as Mori himself said, the creation of sanitized space that began with slum cleanup was a manifestation of ‘the general vigour of present-day Japan’. The regulation of highways and city streets was done for a mix of public health and other reasons. The 1872 Ishiki Kai’i Jorei (Minor Offences Law) lists as criminal offenders ‘those who abandon filth or dead birds or animals on roads’ (article 36) and ‘those who neglect to clean in front of their homes, and those who do not clean the ditches’ (article 38). Though the former article is based on hygienic considerations, the latter, like a number of other sections in this law, seems to represent a type of order imposed by a government mindful of how Japan would appear to Western eyes. These laws were later reorganized as the Regulations for Cleaning City Streets (1879). They were based on the assumption that foreigners were to be excluded, exemplified by the listing as criminal offenders ‘those who lodge foreigners without registering’ and ‘those who have foreigners living together with them’ (articles 14–15). There was also a trend toward regulating behaviour in ways absolutely unheard of in earlier times, out of concern for appearances to foreigners. Offenders included ‘those who are nude or bare-breasted, and those

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who indecently expose their private parts’ (article 22). (In the Edo period, being naked above the waist or tucking up one’s loincloth had never been considered shameful.) It was now clear that foreigners were considered in two ways: as outsiders to be excluded, and as observers who must not be offended. In the Edo period, cleaning the road in front of one’s house was not a required daily chore, but necessary only when the retinues of important persons passed. This is suggested by a newspaper article from after the restoration: Those stubborn people of Aomori prefecture! To give just one example, last year there was a government directive cautioning the people about night soil, but no matter how much care the police take on their rounds to politely remind people, the lower classes absolutely do not comprehend it. Recently in the town of Hirosaki, when an official was staying at the home of a wealthy man who provides lodging for officials, a policeman on patrol severely reproached one of the employees there about the horse manure that was piled high under the eaves. The clerk was very concerned, and immediately called an apprentice to clean it up. When the proprietor saw this he was so surprised that he immediately donned formal hakama and haori, prostrated himself before the official lodging there, and asked, ‘Who is it that is passing by today?’ (Yubin hochi shinbun, 15 Jan. 1874)

Also, records of imperial tours in the Meiji years suggest that requirements for cleanliness and neatness along the emperor’s route became stricter as the years passed. This is probably because, unlike the dignitaries of the Edo period, the emperor himself had to appear as the symbol of cleanliness in order to effect the ordering of space in this period. In earlier times the emperor, as a ceremonial religious ruler, embodied purity. But this ‘purity’ was an aesthetic ideal achieved by the ritual elimination of impurity, not a hygienic ‘cleanliness.’ After the restoration, the emperor and imperial family took the lead in educating people in the new view of order, thereby reducing the relative importance of the old impurity–purity paradigm. At the same time, the dual nature that the concept of impurity had had in earlier times was lost as the cleanliness–dirtiness paradigm became dominant. There had been a belief that things such as human waste and dead bodies could be transformed, through rituals of exorcism or purification, from things to be avoided into things conveying a sort of life-force, or into powerful deities. There are cases of bodies of drowning victims being deified as Ebisu (the god of wealth) and thereby becoming gods protecting against shipwrecks or bringing big catches of fish;33 and of things to which impurities could be attached (e.g. mikoshi (portable shrines), flagpoles, and currency) being carried to the edge of a village and then esteemed as bringers of fertility.34 However, in the Meiji period impurity came to be seen simply as uncleanness, and the common understanding of impurity as having ritual significance was lost.

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The young men of Naka Hirai village in Minami Katsushika gun, in order to exorcise the village of cholera, took the box containing the Sutra of Great Wisdom out of Shofukuji temple in Kami Komatsugawa village, carrying it around their village shouting ‘Send the cholera to the neighbouring village, send it, send it!’ When people in the neighbouring Shimo Hirai village heard this, in order to send the cholera back they shouldered the lion’s head which was carried by two people and kept in the shrine of their tutelary deity, and walked around in the same way, shouting, ‘Send the cholera away, send it to the neighbouring village.’ Two days earlier, the two sides had fought each other with flags, shouting, ‘The losers will get the cholera; let’s not lose, let’s not lose!’ The conflict rapidly escalated through stone-throwing to become a pitched battle with spades and hoes. Patrolmen were quickly dispatched from the Sixth Area substation, and quietened it down. . . . (Tokyo nichi nichi shinbun, 5 Sept. 1879)

Cases were even reported of people asking inns in which the emperor stayed on his tours to give them chamber pots, excrement, etc. from the emperor as objects of worship.35 It was common practice to use human waste as manure, and it seems there was even the belief that the more filthy it was, the more powerful would be its fertilizing effect. According to a ‘story of shockingly foolish people’ reported in a newspaper in the period when Japan was importing ‘civilization’, ‘in the villages of Ono gun in Gifu prefecture, someone said that the vomit of cholera victims was good for fertilizing fields. When the police station head that everyone was burying it in potato and other fields, they immediately dispatched patrolmen to dig up and disinfect the fields’ (Choya shinbun, 14 Sept. 1879).36 Here the police had the burden of enforcing the spatial order. They entered a space structured by the old purity–impurity value system, and attempted to regulate it from the viewpoint of maintaining hygiene and social order. As a result, impurity lost its dual nature, and became simply dirtiness, something to be got rid of. The change in the way beggars were viewed is another example of this type of transformation. Earlier, beggars were not seen simply as poor people: ‘Beggar was once a general term applied to wandering monks, travelling entertainers, and others for whom vagabondism was a way of life.’ These ‘guests’ (marebito; ‘unusual people’) ‘evoked mixed emotions’: because they appeared strange to villagers, they were objects of fear and contempt, and because they were dirty they were detested; yet at the same time they were revered and welcomed because they were out of the ordinary.37 But in 1870 the government banned the sixty-six-station pilgrimages and the mendicant priests of the Fuke sect. Next, in 1872, it banned all mendicant activities by priests. Even after the ban was lifted in 1881, licensing of mendicants and regulation of their activities brought beggars under state (police) control. Even a newspaper supporting the Freedom and Popular Rights movements argued that ‘pilgrims must be refused and turned away; beggars must be driven away’ (Doyo shinbun, May 1876). Beggars came to be generally

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viewed only as carriers of infectious disease, as a reserve army for crime, and as sources of trouble and harm when they died on the roadways.38 Of course this transformation was not effected overnight. In the early days of public health administration, popular resistance rooted in traditional ways of thinking took various forms. It is well known that in the cholera riots that began in 1877, commoners attacked doctors and policemen in the belief that forced confinement in isolation hospitals was for the purpose of removing people’s livers, and that disinfecting was in fact the scattering of poison. The clean space that the officials and doctors of Western medicine were attempting to construct was, to the people, a bizarre place of death. (‘At isolation hospitals, flags of yellow cloth marked with black “Q”s, and signs prohibiting entry, should be placed at the hospital boundaries to prevent the entry of outsiders’—Provisional Regulations for Isolation Hospitals, article 2, 1877.) The riots continued to occur sporadically until 1890, and the popular belief in impurity and purification remained strong even after this. But the important point is that for the authorities in charge of preventing epidemics, cleanliness was the measure of spatial order, and this was the beginning of the dismemberment of the people’s endangered folk customs. This was true, for example, in the case of the disposal of dead bodies. A Dajokan proclamation of October 1884, ‘Rules for the Regulation of Cemeteries and Burials’, stipulated that cemeteries and crematoria must be ‘restricted to areas for which the competent authorities have given permission’, and ‘must all be supervised by the competent police station’. This was the first step in turning graveyards, which previously had been private or village sacred places, into purely secular spaces managed by public authorities. As part of this process, according to ‘Standards for Similar Rules’ (issued by the Home Ministry to the Metropolitan Police and the prefectures), ‘when new cemeteries are constructed, locations must be selected which are not along national roads, prefectural roads, railroads, or large rivers, which are at least 60 ken [109 m.] or so away from dwellings, and which are on high, dry land and will not harm drinking water’ (article 2). ‘For purposes of cleanliness, cleaning and maintenance of cemeteries must not be neglected’ (article 5); they were required to be clean spaces that would not cause harm to (i.e. lack of order in) the environment.39 It was further stipulated that ‘sites must be chosen for crematoria which are at least 120 ken [218 m.] or so away from, and not upwind of, dwellings and gathering places, smokestacks must be attached to the furnaces to prevent noxious odours, and walls must be constructed around the perimeter’ (article 6). The smoke from Toribeno cemetery no longer reminded people of the impermanence of human life and led them to ponder the whereabouts of the spirits of the departed; it became simply a foul odour to be got rid of. As a result of the logic of modern order, the concept of a sacred space created by the ritual purification of the impurity of death and dead bodies faded, as secular public spaces resulting from hygienic treatment of dirtiness and water and air expanded.

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The dirtiness swept out of the centre accumulated on the periphery, but for order to sustain itself it was not sufficient just to remove the disorder to the outside. It had to be isolated and controlled there in order to prevent the invasion of the centre by this major disturber of order. In the past, it was not unusual for cemeteries to be located on the grounds of estates or near homes; now they were built far from homes, and trees were planted around them to confine the dirtiness in a space from which it could not escape. The establishment of isolation hospitals for patients suffering from infectious diseases began in 1879, but this was done less for the purpose of treating the sick than because the state gave priority to the maintenance of health, public peace, and social order. The most extreme examples of this are the sanatoriums for Hansen’s disease patients. After the passage of the ‘leprosy prevention law’ in 1907, a policy of complete isolation was enforced, with patients made objects of control by being confined in hospitals surrounded by earthworks and walls. (They were constantly watched by staffs that included policemen, and escapees were arrested and incarcerated. Later, the 1916 revision of the law gave sanatorium directors arrest and punishment powers.) Since there was no effective treatment, the primary objective was to isolate patients in order to protect the healthy social order.40 Moreover, since the disease was not highly infectious, the very goal of protecting society from infection was based on prejudice. The main justification for removal and isolation was the fear that the form of the disease (the outward appearance of the patients) would upset the aesthetic order. Since this discrimination was rooted in aesthetic sensibilities, it was not easily overcome. Prior to Meiji, ‘leprosy’ was believed to be a hereditary disease, and people with grotesque appearances were not only despised and discriminated against but at the same time also revered as divine. There was a different concept of spatial order, which never gave birth to the kind of total discrimination that resulted in lifetime confinement in hospital-prisons. The isolation of the mentally ill was also enforced under police authority. A March 1874 Metropolitan Police proclamation stated: Those who go insane and wander aimlessly are not infrequently carriers of disease, and in severe cases they start fires or cause bodily harm to others. In the final analysis this arises from lack of supervision by their families; this is truly a sorry situation. Therefore from now on, when it becomes clear that a person has gone insane, his family must strictly control him. If they neglect to provide such supervision and the insane person wanders away, they must be held responsible. In these cases, full information must be gathered and reported, without neglecting to disclose even the smallest detail.

Further, according to a January 1884 proclamation by the same agency, confining people at home required the submission to the police of ‘the recent signatures of at least two relatives, plus a doctor’s certificate’. In the public

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and private insane asylums established one after another beginning in 1875, bodily restraint using equipment such as manacles and leg-irons was common practice. This strengthening of confinement, exclusively because patients were defined as potential perpetrators of crimes such as starting fires and causing bodily injury, was done to ensure a spatial order to benefit ‘normal people’, who reserved for themselves the right to define ‘normality’.41 The isolated spaces created as part of the administration of public health were part of the third characteristic of modern space, its dual open–closed structure. Up through the Edo period, natural environmental restrictions maintained the closed nature of populated areas, and the sphere of daily activity for the farmers who made up the greater part of the population was extremely narrow. And the political structure, divided into spheres of influence, intensified the closed nature of space through barriers on the roads and gates in the towns. Of course, there were not a few bushi (warriors) who travelled between castle towns and fields, and merchants, itinerant craftsmen, people of mountain villages and fishing villages, and other non-farming people moved about with greater frequency and speed than we might imagine but it can not be denied that the world of the stationary farmers was quite limited. The changes of the Bakumatsu and restoration periods speeded up as international transportation and contacts expanded, stimulating the movement of people and goods between domains, and as the cities modelled on castle towns opened up to the outside. Barriers and gates were removed, travel restrictions were lifted, and the development of roads, railroads, and communications steadily expanded horizons. The world depicted by Fukuzawa Yukichi in Minjo isshin (Transition of People’s Way of Thinking, 1879) was growing: ‘Steam, the telegraph, and the other modern conveniences, if really given free rein, make no distinction between town and country. They are truly transforming the whole country into a single great city.’42 This, of course, presents a familiar view of the opening up of space by the modernization process, but there were at the same time people subjected to new restraints on their movement. Farmers were denied the right to enter the mountains behind their villages, and the people of the mountains were robbed of the freedom to roam mountain forests to find living space and materials for handicrafts, when land was divided into public and private and the land tax was imposed. Such changes clearly established private possession of space and demarcated land borders. These people were of no concern to the enlighteners. Also, small remnants of the enclosed spaces existing into the Edo period appeared as islands here and there in the newly broadening world. First there were army squads (initially called supply squads; the basic living and work units of 30–40 soldiers). Conscript soldiers (and the few volunteers) and the non-commissioned officers lived together twenty-four hours a day in a space structured according to the rules of the Guntai naimusho (Rules for Barracks Administration). Curfew restrictions meant that to enter and exit barracks

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gates, permission had to be obtained for a specific day. Visitors from outside could only be received for limited lengths of time, and only in specified locations. The outside world was called chiho (‘the provinces’), and was a rather disordered space. In order to minimize the danger of bringing confusion into the regulated, ordered internal space, the entry and exit of mail, and even the contents of letters, were placed under the supervision of senior officers. Military service was obligatory, and during this three-year period the individual had no freedom to reject the internal order of this space and return to the disorder of the outside. There was no legal way for those outside to find out exactly what was being done to those confined inside. This type of closed space was relatively effective in enabling concentration on academic and technical education and training, and in regulating life in the army. It was a particularly efficient way to inculcate a common understanding of a social order different from that outside. The structure of this order was determined by various army rules and regulations, and it was difficult for disruptive influences from outside to enter. The structure of the closed space described above was shared by boardingschools. In military schools, of course, and in some government middle schools, but especially in the teachers’ college dormitories, life was regulated according to this model. The recollections of graduates from this period illustrate this: Everything was done army style. If you were even one minute late returning from the twice-weekly excursions, you were immediately ordered confined to the dormitory. . . . On the school grounds we could absolutely never read daily newspapers. . . . There were always three full-time dormitory supervisors, whose sharp eyes never missed a thing, so the students always tried not be seen.43

The structure of the dormitory system in factories was no different from that in the army and in schools. Such spaces were an efficient way to operate factories twenty-four hours a day using two shifts. The dormitories are usually long, two-storeyed wooden buildings. Those housed there are normally allotted a space of one tatami mat each, but since in the spinning industry there are day and night shifts, each person occupies two mats except on holidays. . . . As for supervision, there are several male or female supervisors appointed, and one person is appointed to head each room; since they are the eldest they are able to directly monitor the comings and goings of the mill girls. . . . Restrictions on going out are on the one hand for the purpose of moral supervision of the workers, but on the other hand they are undeniably intended to prevent the workers from absconding. . . . As for the mill girls’ letters . . . both those sent and those received are first received and inspected in the office, and then only those deemed unobjectionable are passed on. (Ministry of Agriculture and Commerce, Factory Working Conditions, 1903. Quotations are from the ‘workers’ housing’ sections for various types of workers.)

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This was a space that first appeared when the factory production system and the workers’ dormitory system developed as a set. In fact, many of these facilities were extremely poor; there was the danger of fires and other disasters, hygienic conditions were bad, and many factories lacked even the space necessary to regulate their workers’ daily lives. Prison spaces shared the organizational characteristics described above. Though Edo prisons were as a rule places for confinement of unconvicted prisoners, and not for penal incarceration, from the Meiji period onwards imprisonment for the purpose of punishment became the norm, and prisons (gaols) became facilities for incarceration, labour, education, and reform (with the 1872 enactment of the penal servitude law). As a result, they became spaces in which prisoners were supervised down to the tiniest detail. In line with this purpose were the cross-shaped prison buildings (where all could be observed from a single point), which, as is obvious from the ‘Prison Rules and Diagrams’ of the same year, were Western-style. The law was later revised in the Meiji 20s (1887–1896), but there was no change in the fact that it regulated the supervision of prison life.44 The fourth requirement for modern space was that it had to be bright. It is no coincidence that gas lamps were one of the symbols of ‘civilization and enlightenment.’ In the cities of the Edo period, lamps lighted at night at street corner guard stations helped to maintain public peace, but the area they lighted was extremely limited. Completely lighting all the streets in a particular area was a post-restoration phenomenon (Yokohama streets were lighted in 1872, and Tokyo’s Ginza, from Kyobashi to Kanasugibashi, in 1874). In Europe, it was in the late seventeenth century, during the age of absolute states, when street lamps were placed in large cities, mainly to maintain public peace and to prevent crimes.45 Their introductuion into Japan was first and foremost probably for the purpose of imitating the brightness of Europe’s city spaces. Progressively brighter and safer forms of indoor lighting (oil lamps, gas lights, and electric lights) were first installed in public buildings such as postal service dormitories, in telegraph offices, and in the Engineering College (later part of Tokyo Imperial University). In the Meiji 20s (1887–1906) they gradually spread to factories, shops, and homes (though electric lighting first appeared only at the very end of the Meiji period). The spread of indoor lighting rapidly expanded the hitherto limited space and time for night-time activities (both production and consumption), expanding night operation of factories and improving the operating efficiency of theatre and shops. In addition to artificial lighting, the use of plate glass and translucent shoji paper, along with changes in architectural styles, played important parts in the spread of brightness. Yanagita Kunio wrote that the brightening of the home tore apart the patriarchal system that had been centred on the hearth, and with this ‘breaking up of the fire’ the psychological independence of the younger generations was hastened, and ‘the living-room of the heart was also broken up into small pieces’.46

P L ATE 6.3. A patient of the plague under treatment at Osaka Municipal Hospital of Momoyama, in 1900 (Tatsukawa Shoji, ‘Meiji Iji Orai’, 1900; Tokyo: Shinchosha)

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The idea that a bright indoor space was necessary for health was probably imported from the West. According to a book consulted by the Ministry of Education in designing schools, ‘Light is essential for the maintenance of health. People who live in houses with plenty of light get sick less often than those who live in dark houses, and those living in bright houses are cheerful and active.’47 Here too, spatial order and bodily order are linked. The pursuit of brightness not only affected spatial order; it changed time order as well. In the days when darkness reigned after sunset, night was the time when ‘evil spirits of mountains and rivers’ were active, a time of opposition to order, and a time that aroused fear and wonder about the mysteries of space and time. The spread of lighting in combination with the quantification of time brought about by a standardized time system and mechanical clocks erased the qualitative difference between day time and night time. Soon, this homogenization was accelerated by commercial demand, giving rise to Tanizaki Jun’ichiro’s cultural criticism in ‘In Praise of Shadow’. Yet at the same time it is a fact that ‘the beautiful colours of the lamplight’ added to the attractiveness of night in the city, and the attractions of darkness were forgotten.48 The fact that ‘brightness’ was part of the order of ‘knowledge’ is apparent in the way the metaphors of mei (light) and an (darkness) are used in the works of the so-called ‘enlightenment thinkers’: ‘the progress of civilization [bunmei]’, ‘the discovery [hatsumei] of truth’, ‘the feeble-minded [angu] people’, ‘the enlightenment [kaimei] of human understanding’. Hattori Seiichi enumerated the areas of ‘brightness’ in academics, politics, customs, and crafts: ‘There are all sorts of new things, all of them giving rise to what is signified by the single character mei [brightness] in the word enlightenment [kaimei]’; ‘Ah, brightness, and again brightness; all must become bright.’ Later he wrote, in praise of the lighting that meant civilization, that ‘the fulfilment of enlightenment’ was ‘gas light’.49 This was an age (Meiji) in which the ‘brightness’ (mei) of ‘knowledge’ was a necessary condition for ‘ruling’ ( ji). If brightness has a colour, it is white. It is said that in Europe, concern for hygiene grew from about the mid-eighteenth century, and the custom of cleaning the body spread. Well-washed clothing, and pure white undershirts and underwear, became symbols particularly of the upper class, and proof of superiority over the lower classes.50 The spread of Western clothes in Japan probably began with officials, and the white of their collars, sleeves, and gloves symbolized authority. Haikara (‘high collar’) meant stylishness, and high collars had to be white. Stylishness was an import, brought by white people. White-walled Western buildings were spaces that enlightened. White was also the colour of cleanliness, the colour of public health, and the colour of authority. There were white caps, white masks, white gowns, white cloth (Plate 6.3), and milky white disinfectant (lime). The people feared the ‘men in white suits’, the quarantine officials who forcibly isolated and disinfected them, and records of the cholera riots indicate that these officials were sometimes attacked.

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White was not an unknown colour before the country was opened. A white complexion, whiter even than those of Caucasians, was an essential component of feminine beauty from ancient times. (The ‘southern barbarians’, as Europeans were called, were treated as spectacles more for their ‘red hair and blue eyes’ than for their skin colour.) ‘Whitener’ was a name for a white powder used as makeup. But this was done merely for aesthetic purposes, to show that one was of a status that made it unnecessary to work in the sun. In general, ‘white was an ominous colour. In Japan, except as clothing for festivals of the gods and for mourning, it had not been worn before.’51 It was, in other words, a colour for times and spaces that were out of the ordinary. ‘Civilization and enlightenment’, then, was a process of using disinfectant to remove the spiritual aspects of this colour, of secularizing it. In Yanagita’s words, ‘colour, too, was one area liberated by modernity’. In time, white clothing changed from clothing worn in times of misfortune to become regular formal dress, and mourning clothes became black. White was needed to dot the landscape of ‘modernity’ with brightness. From the above four conditions for modern space there comes a fifth, the ‘artificialization’ of space. Limited space was brought as far as possible under human control, and for this purpose buildings were built to withstand wind, rain, and fires (a change from the days when ‘fires were the flowers of Edo’ to the promotion of fireproof buildings). They were bright, clean, and neat on the inside, and all outside influences were as far as possible excluded. ‘Nature’ included many elements that were difficult to control, with unpredictable power to disrupt the social order, so it became necessary to minimize its potential to do so. ‘Birds and animals must not be kept in barracks’ (Guntai naimusho (Rules for Barracks Administration), ch. 19, article 21); ‘When coming indoors, mud must be carefully wiped off boots’ (Ibid., article 18); ‘Outdoor footwear must be prohibited inside dormitories’ (Ministry of Education Directive No. 1, ‘How to Clean Schools’). However, to prevent these artificial spaces from harming the nature that inhered in the body (as explained later, the physiology that remained even after mechanization), enclosed, artificial ‘natural’ spaces (‘parks’) within the city became necessary. As the city becomes more and more prosperous, it becomes further removed from nature, its residents are enmeshed in complex social groupings, their natural vigour is drained, the dirty air gives rise to various unnatural conditions, and people who live in this situation give in to exhaustion. If we want to avoid urban decrepitude, and actively and continually renew the city, we must build numerous parks and make use of the marvellous effects of the fresh air from their trees, shrubs, grass, and bamboo, and comfort and amuse the people by providing them with pleasures. In this way they can for a while escape their human troubles, receiving into their hearts the spirits of nature, and finding peace.52

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Artificial things require straight lines rather than crooked, and smooth rather than irregular surfaces; they must appear able to withstand both changes in the weather and frequent use. Plate 6.4 shows a scene in which an artificial space fulfilling these conditions cuts the existing scenery in two and loudly proclaims its existence. This long, huge space, made possible by iron, bares its form of vertical, horizontal, and diagonal lines, and occupies over a third of the picture. One can imagine how this must have seemed oppressive and out of place to people accustomed to relatively small, curved, wooden bridges. Yet the explanatory note on this 1887 woodblock print reads: ‘Tokyo’s best suspension bridge; length 86 ken [156.5 m.], width 7 ken [12.7 m.]; a famous bridge the likes of which was never seen in former ages.’ The enlightenment eye rapidly accepted the new. Such rapid transformation, occurring in a mere twenty years after the restoration, was perhaps an essential part of ‘the vigour of Meiji’. ‘To dismiss the vast changes wrought by the culture of iron as mere unmitigated dreariness is to ignore the feelings of vast numbers of people.’ In fact, ‘the masses were filled with wonder at the sight of the new age, even toward that disturber of the peace and belcher of smoke and noise’, the railroad.53 In this picture space is measured using the old system, but the Weights and Measures Law promulgated in 1891 (to take effect in 1893), while keeping shaku (30.3 cm.) and kan (3.75 kg.) ‘standard’, made the metric system legal. The law was passed because Japan had joined the metric system in 1886 (thereby joining in the international ordering of space), but the shaku-kan system was still allowed, and it took time for the new system to be accepted. The use of the metric system actually began with the army. In the infantry drill manual quoted in the first section of this essay, ‘centimetres’ are the units of measure for strides, and since Bakumatsu times, ‘centimetres’ and ‘millimetres’ had to be used as units of measure for imported weapons and in the mathematics of military technology (though the English system of yards and pounds was also sometimes used). Here too, the army led the way to the new unified order. Through the Edo period, standards for weights and measures differed from region to region, and the scale and measuring box za (makers’ guilds) were allowed to regulate themselves. The Weights and Measures Act of 1875 abolished the rights of the za, imposed state-designated official standards, and adopted international standards. The same principles of standardization and unification that were applied to time were also applied here. Seen from another viewpoint, this virtually eliminated regional variations in time and space, and was the first step in taking away the freedom of those who made their living using traditional measures. In 1891 the law cited earlier prescribed fines for those who made or sold measuring instruments without licences issued by the Minister of Agriculture and Commerce, or who knowingly sold ‘inaccurate’ instruments or ‘used them for commercial purposes’. (The old system

P LATE 6.4. The newly built Azumabashi (Kunimasa, Tokyo Metropolitan Government Archives)

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had made falsification of measuring instruments a crime, and under current law, which made the metric system the single standard after the war, unlawful use of scales can be punished by imprisonment.54) However, this ordering of space did not spread rapidly or without opposition. For example, the symbol of urban ‘enlightenment,’ the Ginza ‘Brick Town’ built in 1874, was surrounded by controversy the very next year due to the disorder caused by the area residents. The blocks of brick buildings from Kyobashi to Shinbashi are truly splendid, but the mats hung between the trees on both sides of the road make for a very mixed scene. For a time these were decreasing in number, but now they are coming back. As many are saying, they are like flies on a bowl of rice. Of course if the Tokyo government puts out a notice, things will probably be cleaned up the next day, but what the inhabitants of those brick buildings do is worse. They build crude wooden sheds with unsightly canopies between those impressive columns, lower the height of those intentionally tall doorways with strange additions to the walls, put up old rain shutters and oiled shoji paper doors, make huge piles of firewood and empty sacks under the eaves, make long rows of empty casks, and set up street stalls. This is not merely unsightly, but also a serious fire hazard, and the areas in back of the buildings are unspeakably filthy. In Shanghai and Yokohama, when Chinese rent Westerners’ shops and move in, they immediately make these magnificent, towering buildings filthy. Westerners laugh at this and Japanese slander them too, but with what is being done by the residents of the foremost brick buildings in Tokyo, Japan’s capital, they have no right to blame people from other countries. (Tokyo nichi nichi shinbun, 23 May 1875)

The contrast between disorder and order later became visible everywhere, but it is important to understand what ‘order’ meant at the time, and what was meant by an ‘unsightly’, ‘dirty’, ‘mixed scene’. The critics at the time were well aware of this. While ordering of spaces was well realized within individual spaces, with nothing tying them together the city remained disordered. As is clear from analysis of the drafting and implementation of Tokyo’s district renovation (urban planning) plans over the thirty years beginning in 1884,55 the urban autonomy that should have been central to the plan was weak, and the conflicting demands from within the government and from business circles dissipated the government’s ability to decide what to focus on and to carry out the plans over the long term. They created districts with some sense of coherence only in the limited areas of Ginza, Tsukiji, and Marunouchi. Rather, the entertainment quarters such as Tokyo’s Asakusa, Ueno, and Ginza in this urban space were spaces where confusion and disorder created amusement, and gave city dwellers a place to escape.56

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IV. The Body The ordering of time and space is done through the body, and creates an order within the body. If the body itself is a type of ‘nature’, then artificially transforming and controlling this ‘nature’ is one aspect of modernity. The enlightenment thinker Nishi Amane said in an 1878 speech entitled ‘The Virtues of the Warrior’57 that the worldwide trend in military systems and codes was toward the refinement of ‘mechanism’ (or ‘mechanization’). Mechanization did not refer only to weapons. It was ‘the concept of using people as if they were machines’. In the language of Chinese military science this meant ‘well-tempered [strictly controlled] soldiers,’ but ‘truly moulding the soldiers’ wills is a modern concept’. The first thing making such tempering possible is ‘rules’, and with rules ‘even an army of several million will be absolutely uniform’. Second is ‘group calisthenics’, in which every single action is regulated, making an army of 1000 soldiers and 10,000 horses operate as one. In other words, the army’s goal after the restoration was for the body to embody order. In fact, Nishi believed this goal had been ‘largely achieved’ ten years after the restoration, and since what was important from then on was ‘moral’ education, his main theme in this speech was the virtues of the warrior. He felt that in the Seinan Senso [Satsuma Rebellion] of the previous year, the government army had achieved victory due to its tempering, defeating the ‘bandits’ who had relied solely on their ‘united warrior spirit’. This interpretation underlay the ideas in Yamagata Aritomo’s Imperial Rescript to Soldiers and Sailors (1878) and Admonitions to Soldiers and Sailors (1882). Because until now those who have discussed the spirit of the Japanese military have focused exclusively on this ‘moral’ aspect, the regulation of the body by accomplishing the ‘mechanism’ Nishi touched on has been neglected. Here, however, I shall focus on this regulation. The mechanization of the body meant, first, the making of each individual body into a part so that the whole army could be run as a machine. Since they were parts in a machine, all individual characteristics developed in these bodies before they reached draft age had to be erased, and they had to remade in standardized (average) form. It is an established fact that different occupations result in different body shapes. Specifically, students’ shoulders become unbalanced, and it is not at all unusual to see a 70–30 slope. Many people from the mountains have bent legs, farmers and porters’ legs are bowed, sawyers’ arms are bent and cannot be easily extended, and dyers’ legs are knock-kneed. It is essential to rectify these structural deformities rapidly after new recruits enter the army. For this purpose, gentle calisthenics or individualized drills should be used, in the proper order and without haste, impatience, or interruption, at every opportunity, modifying the drills until the recruits can join in their unit’s training. (Matsumoto Koshu, Heiei kan (Barracks Views), 1906)

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F IG . 6.4. An adviser to physical examinations (Shimizu Isao (ed.), Bigo Nihon Sobyou shu, A Sketch of Japan by G. Bigot, 1988). The classification of new recruits. Note the differences between the body on the measuring platform and those waiting to be measured.

If the training was effective, ‘when the regimental commander in front of you at an inspection said, “Let’s try a right face”, you would move just like a machine. You felt as though your body moved of its own accord’ (Onoe Shinbei and Uzaki Ippo, Riku kai gunjin seikatsu (The Lives of Soldiers and Sailors), 1897). The soldier’s natural body was made into a part for a machine. The first step in this remaking of bodies was the classification of people based on their body types in the draft inspection system, which was already being standardized (Fig. 6.4). The 1873 draft law, in its rules for exemption from regular army service, listed ‘those whose height is less than five standard shaku one sun [154.5 cm.]’58 and ‘those unfit for military service due to weakness, chronic infirmity, deformity, etc.’ as eligible for exemption. After those bodies that could not be moulded into machine parts due to weakness, chronic disease, physical handicaps, or shortness were excluded, those who passed inspection were classified into three ranks according to their quality as raw material. The draft age of 20 was perhaps a little late, considering the flexibility and trainability of the body. In order to more easily turn the body into a part in a machine, preparatory training in school was essential. For this purpose, physical examinations were conducted regularly in schools, comparing height, weight, and chest measurements with standards (Ministry of Education, ‘Regulations for Student Physical Examinations’, 1900. From this time until the

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present, Japan has kept records of physical examinations of schoolchildren.) Through physical education and events such as sports days, bodies have been trained for controlled group life. The ordering of bodies was carried out through anatomical knowledge of the body and the establishment of ‘normal’ standards for the form and function of each body part, and finally the evaluation and sorting of individual bodies using these standards. As time passed, the examinations became more detailed. For example, according to the 1928 Rules for Army Physical Examinations (Army Ministry decree), article 23, Examinations, part 3, examiners were to check the length, breadth, and depth of the chest. Pay particular attention to any constriction of the upper chest. Examine the condition of the collarbone, sternum, ribs, and costal cartilage, checking for disease or deformity. Next, have the examinee take a deep breath, and observe the ease or difficulty of breathing and the movement of the chest. If necessary, measure the difference between the inhaled and exhaled positions. Next, after noting the pulse, examine by tapping and using a stethoscope.

Similar examinations of each part of the body were repeated, and in this way the authorities extended their control to the smallest details. This collection of parts constituting a machine would operate like a single body when perfected, as is clear from Nishi Amane’s phrase, ‘like using the four limbs and the fingers and toes’. Well before the detailed theory of the organic state, when the machine model did not yet symbolize anything concrete, the body model expressed the functional relationship between the whole and the parts. ‘The whole’ could be a military unit, or the emperor’s entire army, or the state. The individual body was under the control of the whole (the state). The statement by Nagayo Sensai, first head of the Home Ministry’s Hygiene Bureau, that ‘public health in a narrow sense means the health and welfare of individuals; in a broader sense it is the wealth and power of the state’ could only have been made in an era when the health of the people could not be considered separately from the objectives of the state. Through the Edo period, the individual body was given moral significance through the virtues of filial piety (‘The body is a gift from one’s parents and must not be harmed’) and self-sacrificing loyalty to the sovereign. But at that time, each warrior took pride in his name and honour, so the body was not conceived of as an interchangeable part, and there was no need for standardization. Furthermore, in the Meiji period the body had to be healthy, normal, and clean. Meiji individuals did not gradually become concerned about health and cleanliness. They were pushed toward it by three forces. The situation was qualitatively different from the Edo urban society’s increasing interest in yojo (‘preservation of health’).59 The first force was public health administration, by which, as analysed earlier in the case of space, cleanliness and health became socially necessary conditions. The ordering of space could not be complete unless it penetrated the

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body. Not only sick people but also prostitutes were forced to undergo physical examinations from early Meiji. The second force came from the need to nurture a strong army. Hygiene was the rule in army units: ‘The greatest danger to health comes from dirtiness. The whole body must be kept clean by washing head, face, hands, and feet, trimming nails, and brushing teeth’ (Guntai naimusho (Rules for Barracks Administration), article 23). Robust, healthy bodies were required for training. As a result, physique tended to become the measure of health.60 The third force was related to the fact that Japanese seem to have had an inferiority complex vis-à-vis Westerners concerning their bodies. Since Westerners were taller and brawnier, and stood and walked quite erect, Japanese must have felt somewhat cowed. Conversely, Westerners visiting Japan saw Japanese bodies as ‘small, ugly, kindly-looking [in other words, lacking in strength], shrivelled, bandy-legged, round shouldered, concave-chested’.61 These critical views were passed on to the Japanese themselves, and amplified their complex. Aside from its importance for building a strong military, most intellectuals at this time considered the improvement of the Japanese body an essential element of ‘civilization and enlightenment’. The strategy usually proposed was improving the Japanese diet—namely, Westernizing it. Attention began to focus especially on the nutrition of food. Fukuzawa Yukichi exmplified this trend: Not everything a person eats is transformed into bones and flesh. First it goes to the stomach, where it is broken down into its component parts. Those which make up bones are transformed into bones, and those which make up flesh are transformed into flesh. These are called the nutritious components of the food. . . . So we must judge the quality of foods according to the amount of nourishing components they contain.

This is reasonable, but he goes on to say: ‘Chicken, meat, fish, milk,62 eggs, and the like contain much of these components, while such things as potatoes, daikon, greens, and rice contain little.’ Here he overestimates the importance of meat. Perhaps at the time ‘nutrition’ in the broad sense was a general term for animal protein. In any case, criticizing the traditional diet from the standpoint of ‘nutrition’ alone opened the door to a denial of its cultural importance and regional variation. It was not only Fukuzawa for whom Westernization of the diet meant the encouragement of meat-eating; the same view can be found in many newspaper articles of the time. The world portrayed in Kanagaki Robun’s Gyudana zatsudan: agura nabe (Beef Shop Tales: Round the Stew Pot, 1871) promoted the same ideas. By saying ‘Wise or foolish, poor or rich; people who do not eat beef stew are uncivilized’, he promoted beef as a ‘medicinal food’. Even now there are foolish, uncivilized people who say that it is an evil, barbarian custom, and say that eating meat will pollute you and make you unqualified to worship

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the kami and buddhas; these people do not recognize scientific fact. These barbarians ought to read Fukuzawa’s ‘On Meat-Eating’. Why have we not eaten such a clean food as this before now? (vol. i)

This powerful trend was supported by enlightenment thought. Western science had proved the ‘medicinal’ value of meat-eating. And it was said that meat ought to be eaten since it was ‘pure’ and good for the body, not polluting. The vocabulary and logic of Fukuzawa’s ‘Nikushoku no setsu’ (On Meat-Eating) were adopted, and the body was liberated from religious taboos. Priests, the social stratum that opposed change and supported tradition, had been weak since early modern times. The upper class took the lead in abandoning tradition. ‘Our court had prohibited meat-eating since ancient times, but even the emperor considers this unreasonable. It has been decided in the imperial household that meat may now be enjoyed’ (Shinbun zasshi, Jan. 1872). Later, in the Meiji 30s (1897–1906), Mori Ogai wrote as an army doctor on the relationship between diet and soldiers’ physiques, and explained the value of the traditional diet. The Japanese diet, with rice as its staple food, when well seasoned nourishes both body and mind well. In this it is no different from Western food. . . . Japanese have small torsos. If the torso is small, it demands relatively less food, and the body is relatively weaker. But this does not mean it is fragile, or that this situation is due to its plain food. In a labouring society such as that of Japan, muscles are well developed. Many Westerners admire the Japanese capacity for labour. (Nihon hei shoku taii (The Diet of Japanese Soldiers) )63

Though his conclusion that the rice-based diet should not be replaced was the opposite of Fukuzawa’s, Ogai too relied on the observations of Westerners such as Erwin von Baelz to support his argument. Furthermore, the concept and tradition of bodily pollution and purity was weakened, and the cleanliness/uncleanness standard took its place. As discussed earlier, pollution lost its dual nature, and according to enlightenment concepts bodies came to be evaluated along a single dimension. The item that symbolized this bodily ‘cleanliness’ was soap. A customer in (Robun’s) meat shop, too, spread the scent of civilization: ‘He was black as could be, but it seems he uses soap morning and night so the bad stuff went away and his complexion improved.’ As the cleanliness/dirtiness and health/sickness dichotomies were sharpened, the civilized/uncivilized dichotomy was added, and the modern aesthetics of sight and smell took form. The psychological dichotomy of ‘normal’ and ‘abnormal’ also developed in the Meiji period. A normal (governed by logic) psychological state was posited, and abnormality was determined according to the degree of divergence from this standard. This was a creation of the new age, as was the distinguishing of the mind from the body and the placing

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of psychological abnormality in a category (character abnormalities rather than functional problems) separate from physical ailments. It was easy to regard mental illness as incurable, and to conclude that isolation from normal society had to be strict. As mentioned in the section on ‘space’, the isolation policy began with the 1874 Metropolitan Police proclamation: ‘Those who go insane must be strictly controlled by their families.’ This policy classified the ‘insane’ as potential arsonists and murderers, and its goal was public peace. In the modern spatial order, disorders that could not be solved by logic could not be allowed to exist. Therefore the physical existence of ‘monsters and ghosts’ was denied, and they were ascribed to confusion of the ‘mind’ (‘temporary insanity’) (Tsuda Mamichi, ‘Kaisetsu’ (Strange Rumours), 1874). ‘Since it is now said that ghosts do not exist, and that they are nothing but the result of mental illness, the professors of civilization hate ghost stories’ (San’yutei Encho, ‘Shinkei kasanegafuchi’ (True Tales from Kasanegafuchi), mid-1880s). Distinguishing between living and dead bodies was done by an outsider called a doctor, whose judgement was a diagnosis based on ‘science’. Death, the departure to another world of a human being who combined flesh and spirit, was determined only on the basis of symptoms of the flesh. This was a development of the Meiji era. The legal importance of the death certificate meant it was now the state the recognized the body’s physical end, and classified it as dead. The categorization of living bodies proceeded apace. The 1871 law forbidding nudity was followed in 1872 by the Tokyo Ishiki Kai’i Jorei (Minor Offences Law), which listed as offenders ‘those who are nude or bare-breasted, and those who indecently expose their private parts’ (article 22). As noted earlier, throughout the Edo period it had never been illegal to bare part of the body simply out of custom or because of one’s work. From the Meiji period on, out of concern for appearances toward foreigners and for public health,64 nudity was banned as an offence against order. It was referred to as ‘indecency’, and other offenders listed included ‘those who perform male–female sumo, snake charmers, and others who perform indecent spectacles’ (article 25). Clearly there was a fixed aesthetics concerning the ordering of the body. ‘Indecency’ disturbed order. The body was ordered only when clothed. Yet augmenting the body was to be strictly avoided, and makeup was to be as natural as possible. The Ishiki Kai’i Jorei (Minor Offences Law) (article 11) included as offenders ‘those who tattoo their bodies’, and a February 1870 Dajokan ordinance stated: ‘It is proclaimed that from now on members of the nobility shall cease dying their teeth and painting their eyebrows.’ Fukuzawa appealed to Confucian virtues in support of the abolition of the blackening of teeth and the painting of eyebrows: ‘The body is received from heaven. Recklessly harming it is an offence against heaven’ (‘Katawa musume’ (Deformed Girl),65 1872).

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The old hairstyles that had indicated social status were abolished, and short hair became standard. Shaven heads were compulsory in the army and in prisons. ‘Male prisoners assigned to perform labour must have their hair cut short, and those with beards must shave them off ’ (Prison Regulations, article 29). This was partly due to concern that long hair was unhygienic, but in army units, as spaces for ascetic training, there may have been a semiconscious adoption of the same type of rule regulating the body as in temples. Uniforms were the symbols of order. ‘The uniform is the best way to accustom soldiers to military discipline. Nothing about soldiers must be more constantly watched than their clothing, because the condition of a unit’s clothing is a direct indicator of its reputation’ (‘Orders Concerning Military Drills’, 1889).66 Whether a soldier had fully absorbed military discipline or not could be determined by whether he wore his uniform correctly or not. Surface appearance was a true indicator of what lay underneath. The ‘human machine theory’ of La Mettrie was an attempt to explain anatomically the relationship between mind and body. In this case, the relationship between mind and clothing was constantly analysed according to observations. Concern spread to smaller and smaller details, and at its extremes went beyond strictness and became caricature (e.g. ‘The testicles may be on the left side of the trousers’ (Ministry of the Army), ‘How to Care for and Preserve Clothing’, ch. 3, ‘Putting On Clothing’, 1917). This type of thinking spread from the army to the schools, and remained strong in later generations. Uniforms had to be Western-style clothing. Western clothing was not only ‘convenient for the movement of the body’ (‘Her Majesty the Empress’ Written Opinions on Women’s Clothing’, Jan. 1887);67 it was also a symbol of the new order. Soldiers, officials, and policemen wore uniforms, and leading figures in towns and villages wore Western clothes, displaying their authority and ‘civilization’ to the majority of their countrymen who still wore old Japanesestyle clothing. The standardization of body movements was one form of regulation. In each branch of the military, drill manuals specified posture, procedures for handling guns and swords, close-order formations, and actions in time of battle. The manuals gave detailed instructions for sword-fighting and shooting. In this way the soldiers’ bodies absorbed the rules for standardized behaviour. The body was first disassembled, each part was shaped into its proper geometric form, and the parts were reassembled and made to operate together. This was based on the assumption that the sum total of all the parts was a whole body. Standardization reached its extremes in the denial of movement (‘standing at attention’). Place the heels on a single line. Open the feet a bit less than 90 degrees. Force the knees to face slightly outside in the same way. The upper body should be directly above the hips but leaning slightly forward. The shoulders should be pulled back,

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with the arms hanging down naturally, palms facing slightly out. The fingers should be bent slightly, with the little fingers touching the trousers just behind the seams. The head should be held naturally, with the neck straight and the chin slightly down toward the neck. The eyes should look straight ahead, and should not look down at the ground.

In or out of the barracks, soldiers had to learn and follow the rules for daily life and etiquette. For example, When saluting outside the barracks, pay attention to eye contact. Stand properly, and raise the right hand with the fingers together. Touch the index and middle fingers to the right side of the visor. Face the palm slightly out, with elbow and shoulder aligned. Direct your attention to the person whom you are saluting or to whom you must show respect. (‘Army Salutes’, 1887)

In the schools, too, through ‘directives’ to teachers and students, and under the direction and observation of principals and teachers, students’ bodies were trained to act according to a fixed order. ‘Teachers should maintain proper mental and physical health by consuming proper daily food and drink, and taking proper procedures to divert their minds and to exercise’ (Ministry of Education notice, ‘Directions to Elementary School Teachers’, 1881). Students ‘should put away their shoes upon arriving at school, enter the waiting room and place their lunch boxes at their own seats, greet their friends, quietly enter the classroom at the teacher’s direction, and bow to the teacher upon arriving at their seats’ (Kanagawa Prefecture Educational Affairs Department, ‘Directions to Elementary School Students’, 187968). Guidance extended to activities outside of school. ‘Bad games on the way “to or from school” are not allowed; this also applies to walks on holidays’ (Osaka prefecture, ‘Directions for Elementary School Students’, 187269). ‘Bad games’ were judged from an adult’s point of view, and this opened the way to more general controls on children’s play. There were government notices telling teachers and parents to ‘warn’ students strictly against (in effect, forbid them from) ‘playing by the waterside and swimming after school,’ or ‘playing bad games on the streets in town’ (e.g. Osaka prefecture, 1876, 1878). There were various reasons given, such as the danger of ‘violent death’ or ‘obstructing traffic’, but it is important to note that children’s play had not been regulated in the Edo period, and that the invasion of children’s bodies for purposes of safety and health began in this later period. An extension of this type of regulation was the encouragement of competitions and exercises performed according to rules, and of games used to control and train students in school.70 In prisons, too, regulations for movement of groups within the prison for labour, exercise, meals, and baths, and guidelines for form and etiquette in daily activities, were gradually established after the early years of Meiji. These were virtually all based on military models, but were even more detailed. For

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example, at the order to take a bath, prisoners were to ‘face the tub one row at a time, rinsing their bodies simultaneously, and when ordered to enter the tub, get in the tub in order. When ordered to get out of the tub, each should follow the person in front of him out of the tub, and line up at the side of the tub. When ordered to scrub, they must scrub their bodies clean’ (‘Rules to Be Observed by Convicts and Those Being Punished’, 1899, Oita Prison).71 Such rules were mainly to ensure that groups would serve their appointed purpose and work efficiently, but in rules of etiquette especially there was another purpose: to embody the ‘ordering of human relationships’. And it was thought that the order visible on the surface had to be based on something internal. ‘First cultivate proper morality internally. Then arrange your external bearing’ (preface to the Jan. 1887 ‘Army Etiquette’ by Minister of the Army Oyama Iwao). ‘Executing a “salute” smartly, making it look like an art, and expressing one’s inner respect and integrity, depend on the quality of moral education; they therefore reflect the quality of that training and determine the worth of the unit’ (‘Orders Concerning Military Drills: Instructions to Commanders Concerning Military Education’; emphasis added). Whether one’s ‘inner respect and integrity’ was sufficient or not was decided not by oneself but by officers or teachers. Since visible, external signs were not sufficient, supervision and punishments were strengthened in order to strengthen the constant regulation. Standardization went beyond objective rationalism to become a moral imperative. A certain form was assumed, and soldiers were ordered to bring their inner beings in line with this; spontaneity was forced on people by outside pressure. Yet it was not enough for soldiers to have to be constantly aware of what they were being forced to do; through supervision and training their bodies were forced to make military discipline a habit. ‘Through constant observation of the soldiers’ bodies, and long habit, the obedience that constitutes military discipline should become second nature for soldiers’ (‘Instructions to Commanders Concerning Military Education’). By making into a daily habit the type of observation ‘that does not miss even the slightest fault’ of his men the officer had to ‘mechanize’ the process of looking for these faults. The significance of the corporal punishment often meted out in order to realize the ordering of the body can be understood in light of the above. In the army, it was forbidden to supplement the formal punishment prescribed by courts martial for offences against military discipline with private corporal punishment. And in the schools, the Education Law (1879) forbade ‘corporal punishment (such as hitting or tying up) of students’ (article 46). Yet corporal punishment did not disappear, and it became commonplace in the army.72 In Edo educational philosophy, using corporal punishment to discipline students was looked down upon, and the Education Law’s prohibition of corporal punishment was virtually without precedent in the contemporary West.73 Yet

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in the Meiji period, when Japan tried to adopt in a short period of time the new regulation necessary for group activities, the military ‘morality’ forced on the people had to rely on corporal punishment. One can also see behind this the idea that the spirit could be awakened, purified, and strengthened by force. This concept may be traced back to Zen temples: if people were free to act according to their true nature they would easily fall into idleness, licentiousness, and wildness, so it was necessary to train them, and therefore corporal punishment was done for the individual’s own good. The standardization of bodies was based on the standardization of language. Koizumi Yakumo (Lafcadio Hearn) wrote in his diary that when he first entered the classroom at Matsue Teachers’ College, he was ‘saluted in . . . military fashion’. At the command of the class head, the students all stood ‘with a springy movement as if moved by machinery’, and bowed their heads.74 To mechanize group activities, the words and phrases used to give orders had to be standardized. Through repeated drills, soldiers memorized the standard forms specified in drill manuals and battle plans for spoken and written commands such as ‘Stand up!’, ‘Salute!’, ‘Attention!’, ‘At ease!’, ‘Crawl . . . forward!’, ‘Shoulder arms!’, ‘Hit the dirt!’, and ‘Kneel!’, which were used verbally and in written form in reports, dispatches, and communications. To carry out orders properly, soldiers had to understand the meaning of expressions such as ‘crawl’ and ‘kneel’, and know how to read, write, and pronounce them properly. Education in standardized language was a by-product of controlled drilling in the army and the schools.75 The ‘national language’ was defined (by Ueda Mannen) as ‘the language in general use in educated society in Tokyo’. Military language probably included vocabulary and grammar that originated elsewhere. In any case, this artificial language was created in a short time. By eliminating speech distinctions due to region, age, and occupation, it aided in the achievement of the goals of functional groups. V. Conclusion The models of order that have emerged from the preceding analysis took shape in the Meiji 20s and 30s (1887–1906), but of course they did not spread rapidly and equally throughout the country to all classes. There is no space here to sketch a full picture of their spread and the opposition, compromises, and adjustments involved, so I shall give only two or three examples. First, there were anti-order actions by the élite class. For example, the ‘shabby clothes, tattered hat, unkempt hair’ style of students in higher boardingschools, based on a spirit of ‘self-government’ and ‘freedom’, ignored codes of conduct demanding ‘self-respect, courtesy, quiet, and cleanliness’ (‘First Higher School Dormitory Rules’)76 They flaunted tolerance of, and even pride in, wildness and dirtiness. The more firmly social order (public peace) took root,

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the more students attempted to prove their élite status by demonstrating their ‘freedom’ to deviate. ‘Absorbed in dreams of public peace, looking down on prosperous streets, soaring sprits of the vigorous youth of the five dormitories, towering on Mukogaoka’ (First Higher School dormitory song, 1902). Yet their ‘freedom’ lasted only for a short period between middle school, when they were still controlled as children, and university, when they conformed to the social order as ‘gentlemen’. Second is the advocacy of ‘familism’, the psychological equipment that supplied a machine-like order. The 1908 revision of the Guntai naimusho (Rules for Barracks Administration) stressed ‘soldiers are a family which lives with joys and sorrows, death and life’, ‘mutual love by superior and inferior’, ‘the strengthening of the whole unit as a single group, through all-pervasive peace and harmony’. The same concept was shared by the family state ideology that developed at the same time, and the corporate familism intended to smooth labour–capital relations.77 Third are the forms of group resistance through ‘disturbances’ such as the cholera rebellions, the rebellions against compulsory military service, and strikes by workers; and individual deviance such as the running away of soldiers, factory girls, and disease victims from the spaces in which they were isolated. In not a few cases such resistance resulted in the strengthening of management, regulation, and preventive supervision. All of these served as axes along which to measure the meaning of the modern social order, while the model itself steadily continued to fulfil its own logic. Familism served to make obedience spontaneous in order to support the superior–inferior order; it did not deal with the foundations of the order of functional groups. Though there were times when familism collapsed and control weakened, the fundamental principles of order did not change. It is wrong to assume that military discipline was wholly supported by oppressive measures such as punishments and sanctions, and by the fiction of the army company as family.78 Rather, it was supported by the regulation and order that permeated time, space, and body. Moreover, as reminiscences of the fifteen-year war (1931–45) by farmers show, there were not a few who gladly accepted an order that controlled the whole body: When two people who’ve been in the army talk while walking along the road, before you know it they fall in step with each other. Ah, it’s a great feeling. . . . The Commander in Chief, His August Majesty. . . . The feeling you get when you hear those words, draw your feet together, and stand straight and still!—I’ll never forget that wonderful feeling.

And, while complaining that today’s young people have grown flabby, one old man lamented the abolition of the army: ‘If you eat soldiers’ food for a year, you’ll be as straight and tough as a pole.’79 Submitting to order could

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bring both physical pleasure and aesthetic satisfaction. Also, after a time in which there were complaints that ‘the current situation in our country is such that there are those who dislike the army because the clothes soldiers wear are extremely dirty and their appearance is very bad’ (Kyoto Shiga shinpo, 4 May 1883),80 there was a gradual trend toward praising soldiers’ conduct and bearing and the appearance of their clothing. The impulse toward order and the aesthetic attraction of order provided a firm foundation for the system. The ‘modern’ order of time, space, and body is created by expelling the natural and expanding the artificial as much as possible. Because nature includes elements of chance, and is difficult for people to understand or control, it is chaotic; it must be replaced by an order that is controllable. It is standardized and homogenized, qualitative differences are removed, it is multiplied, and it is made more understandable and controllable. As a result, quality control of people and things is improved. At the same time as movement of information, people, and things becomes easier in this rapidly expanding space, human activity in closed spaces is organized further. This results from the creation of orders fitting the goals of various groups, and serves to further rationalization, industrialization, and modernization. These result from order. Yet there are reasons for the existence of chaos and disorder. First, there are people expelled from the centre of the order, such as the sick, the handicapped, burakumin (outcasts), the poor, prisoners, and resident foreigners. Most are objects of discrimination. It is by contrast with them, or by expelling them, that the order is constructed. In such a structure, the existence of an outside, of surroundings, raises the value of the inside, the centre. To maintain an order that can perpetuate itself without depending on the outside, authority is necessary, and this authority gains its stability from the continued existence of order. Second, there is the logic that extracts parts of things and classifies them: only the useful parts are taken from nature and used, while those remaining are discarded or ignored as being of little value. An example is the category ‘miscellaneous’ (meaning unclassified or undesirable), as in ‘miscellaneous weeds,’ ‘a copse of miscellaneous trees’, and ‘miscellaneous grains’. In a natural ecosystem there can be no ‘miscellaneous’ category. Only when we attempt to separate out the ‘useful items’ does such a category begin to have meaning. There is also the ‘purifying’ process, in which ‘impurities’ are removed through ‘bleaching, refining, and polishing’. Only those who doubt the benefits of purification can notice the fact that things deemed ‘impure’ include useful components. Nature is a single whole, with no inside or outside, but since an artificial order can be created only in a limited space and time, the more we try to perfect this order in a part, the more we lose sight of the whole. At the same time, our level of tolerance for what statisticians call scattering is reduced. Since it is often difficult to support order by objective rationalism alone, criminal law and morality are mobilized next. Nishi Amane explained ‘virtue’ after discussing the efficacy of ‘mechanism’. Yamagata Aritomo stressed the

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importance of the development of the ‘spirit’ in addition to ‘a system of laws and regulations’ (‘Admonitions to Soldiers and Sailors’); and soon afterwards the ‘Rescript to Soldiers and Sailors’, by saying ‘If your heart is pure, anything can be accomplished’, ordered total reliance on absolute virtue. At first, it was argued that morality would supplement discipline, but finally this was simplified to the point where if one merely had virtue, all things were possible. Furthermore, at the same time that the social order assumed a morality deriving from functional rationalism, there was also a trend toward an aesthetic order. In a bright, clear, neat, artificially created and controlled space, more or less homogenized people, according to a standard time schedule, at an appropriate speed, act in standardized ways in an orderly manner. Individual actions, appropriate to group goals and functions, are valued as aesthetic. Historically, artificial spaces generally take the form of cities, so aesthetics are refined as urban aesthetics. The German pastor Carl Munzinger, who lived for several years in Tokyo beginning in 1880, recorded his keen observations of the morals and aesthetics that were part of ‘the Japanese spirit’. He wrote of the Japanese habits of cleanliness in body and home (giving as examples baths, removing shoes, and the use of disposable chopsticks), the emphasis given to education in courtesy and manners, control of the emotions, and the love of ‘harmony’ that ran through all of these. In this way the aesthetic becomes a force pervading one’s whole life, the force giving form to all things external and some internal. But I can say without hesitation that aesthetics are valued far above morality, and in the general way of thinking, manners and ceremony rank far above morality. It is natural that such a force is self-perpetuating.81

The people he observed were not Japanese suddenly transformed in the Meiji period, but more likely Japanese educated in the customs of previous generations. Just as words newly popular in the Meiji period, such as keppeki (‘fastidious’), keppekisho (‘fastidiousness’), and keppekika (‘fastidious person’) imply hatred for both dirtiness and injustice, it is certain that the ‘modern’ sense of order gave birth to a new combination of aesthetics and morals. Moreover, because moral and aesthetic order have no limits and always tend toward further completeness, they must inevitably give rise to an excess of order. Intolerance of foreign substances, dirt, bad smells, darkness, slow things, and uneven things; in general, of the by-products of order itself (or the things it expels); increases virtually unnoticed. Modern society, by creating such a fixed order, achieves its functional goals but at the same time gives rise to excessive order. The more we process the nature we perceive as ‘disorder’ to make an artificial, ‘orderly’ order, the broader becomes the gap between nature and humans, and humans unconsciously or even gladly shut themselves into an artificial time and space.

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7 Labour and Farmers’ Movements in Prewar Japan* NISHIDA YOSHIAKI

I. Introduction The core of the labour movement in Japan today is one of ‘harmonist’ enterprise unionism built around the Rengo labour federation. It should be clear that enterprise unionism became the mainstream as a result of the increased power of the corporations and the setting in stone of corporatist labour relations, which were fostered by as well as helping to contribute to the high-speed growth of the 1960s. Watanabe Osamu’s analysis, which suggests that these developments are deeply rooted in the characteristics particular to modern Japanese society, is especially illuminating here.1 It is of course possible to find reasons why the labour movement has found it difficult to go against the general trend and has taken a turn to the Right in the changes among its leadership or in its ‘mistaken strategies’. It ought to be understood, though, that even these developments are themselves the products of contemporary Japanese society. However, labour’s shift to the Right as an enterprise-based, ‘harmonist’ union movement is a characteristic not only of modern Japan but of the prewar labour union movement as well. This chapter will focus primarily on the key reasons why this form of labour organization became the mainstream of the prewar Japanese labour movement. At the same time, I shall also take a close look at how labour’s experiences differed from those of the other pillar of prewar social activism, the farmers’ union movement. Labour was not the only social movement in prewar Japan to have an anti-establishment, Leftist element. It was joined by the farmers’ union movement, by the campaign for hisabetsu-buraku† liberation, and by the women’s movement as well. II. Support for the Labour and Farmer’s Unions In the historical research to date on the labour and farmers’ movements, there has been a tacit understanding that both came into their own after the First * Translated by Kerry Smith. † Hisabetsu-buraku stands for hamlets of former outcaste residents who were discriminated against by other Japanese.

11.1 (66.7) 2 10.0 (33.3) 1 10.7 (100.0) 3

20.5 (96.9) 31 1.5 (3.1) 1 14.8 (100.0) 32 14.3 (100.0) 4

22.2 (100.0) 4

23.2 (98.3) 42,987 1.0 (1.7) 734 16.9 (100.0) 43,721

5.3 (53.3) 8 10.8 (46.7) 7 6.9 (100.0) 15

5.6 (20.0) 1 40.0 (80.0) 4 17.9 (100.0) 5

Elected

Candidates

Elected

Votes

16.6 (78.1) 25 10.8 (21.9) 7 14.8 (100.0) 32

Candidates

49.4 (77.0) 91,718 37.4 (23.0) 27,451 46.0 (100.0) 119,169 Regional Proletarian Parties

50.0 (69.2) 9 40.0 (30.8) 4 46.4 (100.0) 13

Japan Farmers’ Party

49.7 (69.4) 75 50.8 (30.6) 33 50.0 (100.0) 108

6.3 (38.3) 11,752 25.8 (61.7) 18,948 11.9 (100.0) 30,700

Votes

14.6 (77.8) 27,018 10.5 (22.2) 7,700 13.4 (100.0) 34,718

Votes

100.0 (69.9) 151 100.0 (30.1) 65 100.0 (100.0) 216

Candidates

Total

7.9 (41.4) 12 26.2 (58.6) 17 13.4 (100.0) 29

Candidates

100.0 (64.3) 18 100.0 (35.7) 10 100.0 (100.0) 28

Elected

11.1 (66.7) 2 10.0 (33.3) 1 10.7 (100.0) 3

Elected

Social Democratic Party

100.0 (71.7) 185,479 100.0 (28.3) 73,309 100.0 (100.0) 258,788

Votes

6.5 (39.4) 12,004 25.2 (60.6) 18,476 11.8 (100.0) 30,480

Votes

Sources: Showa 2 nen rodo undo nempo, 431–41.

Notes: 1. Rural districts are defined as gun (county) electoral districts; urban as shi (city) or ku (ward) electoral districts. 2. Figures for vote totals are not the same as those that appear in Showa 2 nen rodo undo nempo, pp. 428–9, and reflect corrections in the addition by the author. 3. Figures in the upper rows and in brackets are percentages.

TOTAL

Urban districts

Rural districts

TOTAL

Urban districts

Rural districts

Elected

Candidates

Votes

Candidates

Elected

Japan Labour–Farmer Party

Labour–Farmer Party

T ABLE 7.1. Election results for the proletarian parties, 1927 prefectural assembly elections

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World War, and that the two had a great deal in common. Hayashi Yûichi, for example, has used the labour and farmers’ movements to represent the social activism of the period. He has argued that, together with independent youth organizations and the campaigns for hisabetsu-buraku and women’s liberation, the labour and farmers’ movements ‘tried to subvert the status-based social order and seek equality as citizens, and in so doing shared a common set of issues’.2 Hayashi suggests as well that the labour and farmers’ movements ‘displayed universal characteristics present in all the social movements of the time’.3 I am inclined to agree with his analysis, but at the same time I think it is important to point out that, although the labour and farmers’ movements are often lumped together, there are in fact significant differences between them. By clarifying these differences we can more fully grasp the nature of prewar Japanese society.4 One major difference between the two movements is evident in the political company they kept and the ideas they espoused. The prefectural elections of September and October 1927, held in two metropolitan districts and thirtyseven prefectures, were the first national elections in which the new universal male suffrage applied. How well the proletarian parties would do in the elections was closely watched. Of the 1448 successful candidates, 1387 (93.2 per cent) were from the two mainstream parties, Seiyukai and Minseito. The proletarian parties had 216 candidates on the ballot but managed to get only 28 elected (1.9 per cent of the total). There is at least one interesting observation to be made regarding how well each of the various proletarian factions did in terms of votes garnered and candidates elected. As Table 7.1 suggests, the leftist Labour–Farmer Party offered by far the largest number of candidates, and ended up with both the largest number of elected candidates and the largest number of votes. With the exception of the Social Democratic Party and the regional proletarian parties, an overwhelming majority of the votes for the proletarian parties came from rural districts. The Labour–Farmer Party accounted for thirteen of the twenty-eight proletarian candidates elected. Voters in rural districts elected eighteen candidates from all of the proletarian parties combined, many more than the ten sent to the assemblies by voters in urban Japan. Akamatsu Katsumaro, a member of the Social Democratic Party’s Central Committee, offered the following interpretation of his party’s failure to win more than three seats in the prefectural elections of 1927. Among proletarian parties, if we look at the successful candidates of the most successful party, the Labour–Farmer Party, base of support the modern proletariat. . . . Given this, one topic that ought to give us food for thought is that the Labour–Farmer Party, which supports Communism, got most of its votes from farmers, a group that is the least able to grasp Communism, and received very little support from the urban proletariat, the source of communism. In contrast, the Social Democratic Party, which espouses a moderate, realistic socialism, obtained most of its votes from the urban proletariat, particularly the organized working masses, who should be the most sympathetic to

14.3 (100.0) 1 12.5 (100.0) 1

18.0 (91.7) 11 3.7 (8.3) 1 13.6 (100.0) 12

14.6 (95.1) 42,056 1.1 (4.9) 2,147 9.0 (100.0) 44,203

4.9 (50.0) 3 11.1 (50.0) 3 6.8 (100.0) 6 14.3 (100.0) 1 12.5 (100.0) 1

Elected

Candidates

Elected

Votes

16.4 (76.9) 10 11.1 (23.1) 3 14.8 (100.0) 13

Candidates

51.7 (77.3) 149,257 21.7 (22.7) 43,790 39.3 (100.0) 193,047 Regional Proletarian Parties

100.0 (50.0) 1 14.3 (50.0) 1 25.0 (100.0) 2

Japan Farmers’ Party

52.5 (80.0) 32 29.6 (20.0) 8 45.5 (100.0) 40

6.1 (37.9) 17,705 14.4 (62.1) 29,061 9.5 (100.0) 46,766

Votes

20.9 (69.5) 60,244 13.1 (30.5) 26,454 17.7 (100.0) 86,698

Votes

100.0 (69.3) 61 100.0 (30.7) 27 100.0 (100.0) 88

Candidates

Total

8.2 (29.4) 5 44.4 (70.6) 12 19.3 (100.0) 17

Candidates

100.0 (12.5) 1 100.0 (87.5) 7 100.0 (100.0) 8

Elected

57.1 (100.0) 4 50.0 (100.0) 4

Elected

Social Democratic Party

100.0 (58.8) 288,538 100.0 (41.2) 202,215 100.0 (100.0) 490,753

Votes

6.7 (16.1) 19,276 49.8 (83.9) 100,763 24.5 (100.0) 120,039

Votes

Sources: Showa 3 nen rodo undo nempo, 870–5.

Notes: ‘Urban districts’ in which proletarian party candidates stood for election include Wards 1, 2, 4, and 6 in Tokyo, Ward 1 Kyoto, Wards 1, 3, and 4 in Osaka, Ward 1 in Kanagawa, Wards 1 and 2 in Hyogo, Ward 1 in Aiichi, Ward 2 in Fukuoka. All others are counted as ‘rural districts’. 2. The author’s calculation of the total number of votes for the Japan Labour–Farmer Party is 1,000 votes higher than the figure appearing in the Tobetsu tokuhyosushirabe. The figure above is as it appears in the original. 3. Figures in the upper rows and in brackets are percentages.

TOTAL

Urban districts

Rural districts

TOTAL

Urban districts

Rural districts

Elected

Candidates

Votes

Candidates

Elected

Japan Labour–Farmer Party

Labour–Farmer Party

T ABLE 7.2. Election results for the proletarian parties, 1928 national Diet elections

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socialism’s anti-capitalist spirit . . . This is obviously an ironic development. Still, we can’t simply set this aside as a coincidence, however ironic. We cannot overlook the fact that this ironic phenomenon contains within it something that reveals quite clearly the basic nature of the proletarian parties . . . The victory of the Labour–Farmer Party was not one of insistence on principle; the typical farmer has very weak critical-thinking skills. The Labour–Farmer Party succeeded by skilfully taking hold of the farmers’ sense of contrariness, of opposition, and using it to the Party’s advantage. If the Party’s true goal, which is to put into effect the plan for Japan spelt out by the Third International, were to be laid bare for all to see, then its greatest hope, the farmers, would likely turn against the Party as one.5

Akamatsu’s interpretation stressed the importance of the party’s achievements despite its poor showing in the elections. Though his comments have the peculiar bias of someone within the executive body of the party, Akamatsu’s argument hits the mark when he points out that the ‘the Labour–Farmer Party, which supports communism, got most of its votes from farmers, a group that is the least able to grasp communism’, and ‘the Social Democratic Party, which espouses a moderate, realistic Socialism’ ‘got most of its votes from organized labour’. ‘This ironic phenomenon’, he concluded, ‘contains within it something that reveals quite clearly the basic nature of the proletarian parties.’ By any standard the Social Democratic Party had suffered a crushing defeat, but in relative terms the party’s loss was due to the fact that the Labour–Farmer Party did best in the rural districts, and the Social Democratic Party won most of its votes from urban voters. In fact, this pattern of rural support for the Left and urban support for the Right changed little after the election. In the National Diet elections of February 1928, the first held under universal male suffrage, there was a great deal of harsh electoral interference directed at the Labour–Farmer Party and the Japan Labour–Farmer Party. As Table 7.2 helps to demonstrate, though the two parties together received more than 200,000 votes only one of their candidates was chosen by rural voters (Yamamoto Senji, of Kyoto’s second electoral district). The Social Democratic Party, meanwhile, fared the best of all the proletarian parties in having four of its candidates elected to the Diet. It is safe to say that they had overcome the stigma of the previous year’s defeat in the prefectural assembly elections. All their successful candidates, however, were from urban electoral districts. They had no showing to speak of in the countryside. The Japan Federation of Labour (Nihon Rodo Sodomei, hereafter Sodomei), the parent organization of the Social Democratic Party, offered this interpretation of the election results, and provided some insight into the organization’s hopes as well: We see no reason to reiterate here the fact that the urban working class has pinned its hopes on our party. . . . The popularity of the communist parties in the countryside is a

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HISTORICAL ORIGINS

T ABLE 7.3. Changes in labour union membership by ideological tendency 1923 Anarchist

Communist

(11.1) 2,627 (14.4) 3,416 (74.6) 17,714

Left-wing social democratic Left-wing total

(100.0) 23,575

1924

1925

1927

1928

(3.2) 4,900

(1.0) 2,153

(1.0) 2,000

(1.2) 3,000

(0.8) 2,000

(36.0)

(9.6) 21,110 (33.5)

(13.7) 30,000 (19.2)

(15.0) 39,000 (12.7)

(4.3) 11,000 (11.2)

54,700 (39.2) 59,600

73,615 (44.1) 96,878

42,000 (33.8) 74,000

33,000 (28.8) 75,000

28,400 (16.4) 41,400

(16.0) 35,000

(19.2) 50,000

(30.7) 77,800

Right-wing social democratic

Social-reformist

1926

(60.8) 92,300

(55.9) 122,816

(50.2) 110,000

(51.9) 135,000

(52.9) 134,000

(100.0) 23,757

(100.0) 151,900

(100.0) 219,694

(100.0) 219,000

(100.0) 260,000

(100.0) 253,200

125,551 434,596

228,278

254,262

284,739 540,512

309,493 527,103

308,900 517,158

National socialist

Nationalist (Japanist) TOTAL

Labour union membership Mutual aid bodies membership

temporary phenomenon during a transitional period. In time, though it may be a while in coming, as the consciousness of the farmers develops, they will come to understand and support our party. We can state with confidence that this will come to pass.6

As Table 7.2 suggests, since the Social Democratic Party took half of all the votes for proletarian parties cast in urban electoral districts, it seems clear that the party’s base of support in the cities had grown. On the other hand, half of the rural votes for proletarian parties went to the Labour–Farmer Party. If we add to these votes the ones that went to the leftist, social-democratic Japan Labour–Farmer Party, it is evident that rural support for the Left had in fact grown significantly since the previous year’s prefectural elections. The Social Democratic Party’s success only made clearer the emerging pattern of urban support for the Right and rural support for the Left. Did the countryside ‘come to understand and support our party’, as Sodomei had predicted?

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1929

1930

1931

1932

1933

1934

(0.4) 1,198

1935

243

1936

(0.0) 152

(0.0) 145

(4.0) 10,600 (15.3)

(6.2) 17,728 (19.3)

(3.2) 9,738 (24.8)

(1.4) 4,765 (7.0)

(0.7) 2,000 (6.1)

(0.3) 1,000 (5.0)

(0.1) 200 (4.7)

(unknown)

40,900 (19.3) 51,500

55,053 (25.5) 72,781

74,215 (28.0) 83,953

22,957 (8.8) 28,920

18,726 (6.8) 20,726

15,762 (5.3) 16,762

15,902 (4.8) 16,254

23,285 (6.7) 23,430

(80.7) 215,170

(74.5) 213,163

(72.0) 215,684 (81.5) 269,068 (2.9) 9,448 (6.9) 22,870

(81.2) 247,414 (2.2) 6,621 (9.8) 29,916

(72.6) 229,258 (0.2) 743 (21.9) 69,041

(70.0) 236,036 (6.3) 21,339 (18.8) 63,439

(64.6) 226,917 (0.2) 731 (28.5) 100,308

(6.6)

(100.0) 266,670

(100.0) 285,944

(100.0) 299,637

(100.0) 330,306

(100.0) 304,677

(100.0) 315,804

(100.0) 337,068

(100.0) 351,386

330,985

354,312

368,975

377,625 559,834

384,613 436,762

387,964 641,197

408,662 769,049

420,589 817,444

Notes: The 3,416 figure for 1923 is for those falling between anarchism and communism. The figures falling between right-wing social democratic and social-reformist (1929–31) represent those described as ‘right-wing pragmatists’ (genjitsu shugi) in the original. Figures for social-reformist after 1931 include members of right-wing social democratic unions, such as the Sodomei, which were by then very close to the social-reformist position. Sources: 1923–4 from the Rodo undo gaikyo of those years; 1925–36 from the Rodo undo nempo, also from each year.

Tables 7.3 and 7.4 draw on analyses that appeared in Rodo undo nempo reports, and trace shifts in support for the different wings of the labour and farmers’ unions. The 1923 Rodo undo gaikyo described all labour unions as leftist, and within that broad category as either ‘anarchist’ or ‘communist’. Since the report’s figures identify the ideological leanings of only 23,757 union members, or 18.9 per cent of a total labour union membership of 125,551, we cannot conclude that support for the labour union movement was confined to the Left. However, it is worth noting that the Home Ministry’s Social Bureau was concerned only with those leftist unions, beginning with Sodomei,

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HISTORICAL ORIGINS

T ABLE 7.4. Changes in farmers’ union membership by ideological tendency 1923

1924

1925

1926

Communist

1927

1928

(60.2) 62,020 (69.4) 67,876

Left-wing social democratic Left-wing total

(100.0) 39,980 (100.0) 39,980 (100.0) 11,764

(79.1) 64,343 (79.1) 64,343 (3.7) 3,031b

Right-wing social democratic

Social-reformist

(69.4) 67,876

(61.8) 50,916 (13.1) 13,486 (73.3) 75,506

(61.8) 50,916 (8.6) 7,094c

(1.9) 1,868d (5.6) 5,500f (23.1) 22,607i

(1.6) 1,607e

(3.9) 3,245

(25.1) 25,902

(25.6) 21,068

(17.2) 14,000 j Japanist TOTAL

Tenant union membership Landlord–tenant cooperative union membership

(100.0) 11,764 163,931

(100.0) 39,980 232,125

(100.0) 81,374 307,104

(100.0) 97,851 338,704

(100.0) 103,015 347,429

(100.0) 82,323 325,983

47,580

70,446

95,988

113,097

129,296

143,218

that were classified as ‘leaning towards an ideology of centralized communism’.7 If we look at the changes in the strength of the unions as broken down ideologically by the government’s own reports, it is evident that support for the left in general was collapsing, and that the right was moving ahead. The rapid collapse of the left wing, which encompasses everything from ‘communist’ to ‘leftist social democracy’, was a completely natural development given the harsh oppression it faced after the Incident of 15 May 1928. That crackdown resulted in the banning of the JCP and its affiliate, the Japan Council of Labour Unions (Nihon rodo kumiai hyogikai, hereafter Hyogikai). Nevertheless, support for the Left had fallen to 30 per cent by 1927. The single most important cause for this decline was the addition of the ‘nationalist’8 and ‘social reformist’9 Naval Labour League and the Japan Seamen’s Union to the ideologically categorized list of labour unions put together by

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PREWAR LABOUR AND FARMERS’ MOVEMENTS

1929

(61.2) 44,041

(61.2) 44,041 (8.5) 6,118 (7.8) 5,624

(22.5) 16,234

1930

(56.8) 43,386

(56.8) 43,386 (6.6) 5,075 (1.5) 1,180 (15.2) 11,642g (19.8) 15,133

1931

(67.4) 44,235 (2.1) 1,400a (69.5) 45,635

1934

1935

245

1932

1933

1936

(35.2) 25,503

(30.5) 19,882

(11.3) 6,725

(5.9) 3,249

(0.3) 168

(40.2) 29,163 (75.4) 54,666

(42.4) 27,674 (72.8) 47,556

(61.7) 36,693 (73.0) 43,418

(59.0) 32,229 (64.9) 35,478

(65.8) 34,599 (66.1) 34,767

(1.8) 1,329

(2.6) 1,666

(2.8) 1,654

(2.8) 1,546

(3.8) 2,015

(24.6) 16,046l

(24.2) 14,392

(32.2) 17,600

(30.0) 15,778

(30.5) 19,998h

(22.8) 16,498k

(100.0) 72,017 301,326

(100.0) 76,416 286,852

(100.0) 65,633 271,154

(100.0) 72,493 256,297

(100.0) 65,268 246,172

(100.0) 59,464 235,099

(100.0) 54,624 203,454

(100.0) 52,560 203,550

169,462

170,353

169,784

155,546

153,004

152,747

139,742

133,758

Notes: Membership figures that fall between categories are for unions with mixed ideological characteristics. (a) Yamagata Prefecture Farmers’ Union; (b) Chubu Nihon Farmers’ Union; (c) Chubu Farmers’ Union; (d) Tottori Prefecture Tenant Federation; (e) General Federation of Japanese Farmers’ Unions; (f) Chubu Japan Jarmers’ Union; (g) Fapan Farmers’ Union Yamanashi Prefecture Federation; (h) Japan Farmers’ Union; (i) All Japan Farmers’ Union Federation, etc.; ( j) Northern Japan Farmers’ Union; (k and l) Japan Farmers’ Union. Source: As for Table 7.3.

the labour section of the Social Bureau. It should also be pointed out that Sodomei, which had been classified as ‘communist’ in 1923, underwent an about-face in 1924. While continuing to espouse the same platform, namely that ‘the working class and capitalists cannot coexist’, Sodomei shifted its emphasis to a more pragmatic approach, and moved its own position to one of ‘leftist social democracy’. In 1925, Sodomei expelled a group of communist sympathizers from its ranks,10 and in 1926 it forced out a group of Leftist

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HISTORICAL ORIGINS

social democrats as well.11 One result of these splits was that Sodomei became far more ‘rightist (closer to social reformist than social democratic)’ than before.12 By eliminating the leftist and centrists in its ranks, Sodomei, which was considered both by its members and by outside observers to be at the centre of the organized labour movement, moved itself rapidly from the ‘communist’ camp to that of ‘right-wing social democracy’. In doing so it carried the labour movement with it to the Right, and brought about the decline of support for the Left at the same time. That support fell sharply to only 16.4 per cent in 1928, but returned to 1927 levels by 1930, when the Left claimed a 25.5 per cent share, and maintained a healthy 28 per cent share into 1931. However, we should note that although support for the Left had returned to pre-crackdown levels, it had come to mean something quite different. In 1927 Hyogikai, which was on the far Left, had accounted for much of the support given to the Left as a whole. By 1931, ‘the left’ consisted primarily of moderate, left-leaning social democrats. With its more radical elements crushed, what remained of the Left had moved to the Right. Support for the Left within organized labour dropped drastically in 1932 as the labour movement in general began moving even further to the Right. Supporters of both national socialism and ‘Japanism’ surfaced in the aftermath of the Manchurian Incident, and together with the right-wing social democrats of the Sodomei they began to construct a new platform for labour. Where Sodomei had once insisted that ‘the working class and capitalists cannot coexist’, in 1932 it was possible to suggest: ‘Given the situation facing the nation, it is our hope to bring about a fundamental reform of capitalism, and through it to build a stable, new society.’13 The class issues that had once been so important had been dropped. These revisions helped make even clearer Sodomei’s social-reformist character, a quality that even the government’s reports had picked up on since 1926. The Congress of Japanese Labour Unions (Nihon rodo kumiai kaigi) formed in 1932, brought together the various Right-leaning unions of Sodomei, the Japan Seamen’s Union, and the Maritime Officers’ Association, and helped spur on the labour movement’s shift to the Right. Furthermore, supporters of Japanist labour unions like the National Defence Fund Labour Association, which was further to the Right than even the Congress of Japanese Labour Unions, really came into their own in 1932. That year, those groups that had been classified by the government as ‘right-wing’ all along really did take a turn to the Right. The Japanist labour union movement, which strongly supported an end to class conflict, the unity of labour and capital, and the promotion of a nationalist, moralist spirit, grew quickly after 1932. The Congress of Japanese Labour Unions and others on the Right stressed ‘production harmonyism’ (sangyo kyoryoku shugi) even as they embraced national socialism. Support for the left wing of the labour movement, meanwhile, had dropped to less than 5 per cent of total membership. By 1936, labour’s move to the Right was complete.

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The group that Akamatsu Katsumaro had described in 1927 as ‘the urban proletariat, and particularly the organized workers, who all should be the most sympathetic to socialism’s anti-capitalist spirit’ was in 1936 in complete support of the harmony of capital and labour, and the other tenets of ‘production harmonyism’ and Japanist thought. Akamatsu himself had converted to a Japanism of the far Right. And while they were not labour unions, the rapid expansion after 1933 of the charities and cooperative bodies that espoused cooperation between labour and capital also has to be taken into account. It seems to me that there can be no doubt that prewar workers had been entirely drawn into a corporatist, ‘harmonist’ position. What about the other pillar of the proletariat, the farmer’s unions? As Table 7.4 suggests, developments in these organizations were completely unlike those evident in the labour unions. The Left’s share of farmers’ union membership, which had been nonexistent in 1923, reached 100 per cent in 1924. In 1930 it still had not fallen below 50 per cent. In the years that followed, support actually increased, so that in 1936 the Left’s share was 66.1 per cent. The formation of the Japan Farmers’ Union (Nihon nomin kumiai, hereafter Nichino) in 1922 marked the beginning of an organized national farmers’ union movement. Nichino’s charter stated: We farmers take as our goal the fostering of knowledge, the development of technology, the nurturing of morals, the enjoyment of rural life, and the fulfilment of a rural culture. We aim to improve rural life through the power of mutual love and assistance, trust in each other. We aim to reach the ideal of cooperation through moderate, steady, rational and legal means.14

All this is quite similar to social reformism. However, soon after it was formed Nichino rapidly expanded its membership and became involved in leading local tenancy disputes. In doing so it quickly took on a more combative edge. In the opening statement of the issue of the union’s magazine published immediately after the 2nd General Meeting, Nichino President Sugiyama Motojiro stated: Of late, the various government spokesmen and the parties as well have acted as if they are of a like mind with us, but don’t be so easily deceived. They are the landlords, they are the capitalists, they are the ones who up till this very day have exploited us and oppressed us. No matter what their change of heart has been, it is not something that can happen overnight . . . Tenants of Japan, organize! Organization is the one and only strength we have.15

We can see that by as early as 1923 Nichino had recognized the existence of class struggle, and was espousing social democracy. Furthermore, at its 3rd General Meeting in 1924, in response to Sodomei’s move to the Right,

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Nichino revised the qualifications for union membership better to reflect the importance of class status: ‘The membership should be all tenants, tenantowner-cultivators, farm labourers, and others who are recognized by the union.’16 The union had also decided to create a Youth Division to counteract the ‘government-manufactured youth groups’ of the bourgeoisie. It is safe to say that in taking these steps Nichino had for all practical purposes moved to the Left, and to a position of leftist social democracy. In 1926 Nichino suffered its first split, brought on by the problems of organizing and supporting a proletarian party. The circumstances of the break-up are not at all like those surrounding Sodomei’s first split, however, in which it expelled its leftist members as part of its move to the Right. In this case, Hirano Rikizo, and others like him who were opposed to the degree to which Nichino had moved to the Left, quit the union and established the All Japan Farmers’ Union Federation (Zen Nihon nomin kumiai domei). The group claimed 20,000 supporters after the split, far fewer than the 67,000 remaining in Nichino. That same year Nichino revised its platform at its 5th General Meeting. The new version made the union’s emphasis on class issues even more prominent. Through the organization and activities of the union, we intend to liberate the rural proletarian masses from feudalistic, capitalistic, and subordinate thinking. We will cooperate with the urban proletarian class movement to bring about the creation of a new culture.17

Nichino was edging towards communism, and in an entirely opposite direction from that of Sodomei. The second split within Nichino came in 1927, and occurred as the union was deciding its stance towards the Labour–Farmer Party. Beginning with Nichino President Sugiyama, who did not want to recognize the admittance of far-left factions into the Labour–Farmer Party (Hyogikai among them), Nichino’s right wing and some who were dissatisfied with the move to the right by the Sodomei joined together and in December 1926 formed the Japan Labour–Farmer Party. Party supporters within Nichino organized their own faction, and in so doing made clear their opposition to the union’s leadership. In February 1927 Nichino expelled those involved in the establishment of the Japan Labour–Farmer Party. The following month those expelled created the All Japan Farmers’ Union (Zen Nihon nomin kumiai), a moderate, leftist social democratic union, which again split Nichino. It is important to note, though, that these splits were quite different in character from those that the Sodomei had experienced. When the left wing of Sodomei split off to establish the Federation of Japanese Labour Unions, the right-wing membership it left behind far outnumbered it. The post-split Nichino, on the other hand, changed its platform in important ways. It increasingly emphasized its communist character, and had far more members that did the All Japan Farmers’ Union.

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At this stage, the main force of the farmers’ union movement was on the far left. The splits in the labour movement had created a completely different situation. Harsh suppression of the left began in 1928 with the 15 March Incident. Support for leftist farmers’ unions did decline (see Table 7.4) even as the various elements of the movement were coming together in new ways. The 15 March Incident destroyed the Kagawa Prefecture Federation, one of Nichino’s key sources of support. The union received another serious blow when the Labour–Farmer Party was banned. Support for the All Japan Farmers’ Union declined as well, and since the two organization’s platforms and beliefs were identical, in May 1928 they came together to form the National Farmers’ Union (Zenkoku nomin kumiai, hereafter Zenno). Zenno brought together communists and left-wing social democrats in a single, leftist union. This amalgamation led to others. In July 1928 the social reformist elements from the All Japan Farmers’ Union Federation, along with the Niigata Prefecture Kanbara Farmers’ Union, and the former All Japan Farmers’ Union Kagawa Prefecture Federation came together under the banner of the (new) All Japan Farmers’ Union (Zen Nihon nomin kumiai). According to the Rodo undo nempo, this union ‘should be viewed as wholly a continuation of the All Japan Farmers’ Union Federation’,18 which is another way of saying that it was a right-wing union. The supporters of the farmers’ unions were thus split into factions of the Left and of the Right. Of the two, the left wing had emerged far and away triumphant in terms of support. The Left’s strength in the face of the severe repression directed against it stands in sharp contrast to the developments in the labour movement. This pattern continued more or less unchanged until 1930, despite the collapse of support for Zenno. In 1931 Sodomei merged its rural counterpart, the General Federation of Japanese Farmers’ Unions (Nihon nomin kumiai sodomei) with the All Japan Farmers’ Union to form the (new) Japan Farmers’ Union (Nihon nomin kumiai). This was the most significant of the rightwing mergers since 1928, one which effectively divided supporters of the farmers’ unions into the Zenno on the Left and the Japan Farmers’ Union on the Right. Despite the merger, support for the Japan Farmers’ Union dropped off precipitously. Zenno that same year absorbed the Chubu Farmers’ Union, the Tochigi Prefecture Farmers’ Union, the Chubu Japan Farmers’ Union, the All Yamanashi Farmers’ Union Eastern League and other powerful local unions, and at one point was reported to have ‘taken in about 10,000 new members’.19 By the end of the year, though, the union had retained fewer than 1000 of these new members due to confusion brought on by internal discord between the communists and leftist social democrats over whether to support the National Labour–Farmer Masses’ Party (Zenkoku rono taishuto). The mainstream within Zenno supported the National Labour–Farmer Masses’ Party. The communists

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did not, and formed their own faction (the Zenno zenkai) to challenge support for the party. However, and despite these problems, since membership in rightist unions that year declined significantly, and since membership in those on the Left grew, overall support for the Left within the farmers’ union movement approached 70 per cent. That year also saw a recovery of left-wing strength within the labour movement as well, though it was limited to 30 per cent. The 1932 edition of the Rodo undo nempo referred to ideological trends within the labour union and farmers’ union movements by touching first on the conflict among Zenno, the (new) Japan Farmers’ Union, and the General Federation of Japanese Farmers’ Unions, which had again split off from the Japan Farmers’ Union. It went on to note: However, support is somehow unlike that found within the labour union movement, as there is a sense that the leftist, moderate Zenno is by far the most powerful, and the other two cannot reach its level.20

Even the Home Ministry’s Social Bureau had begun to notice the differences between the labour and farmers’ movements. From 1933 on, the right-wing Japan Farmers’ Union began to espouse Japanist views, advocating ‘the unity of the ruler and the ruled’, and support for the Imperial Way Association (Kodokai). Zenno, meanwhile, remained split along factional lines for several years. In 1934 members of the Zenno zenkai faction began returning to the mainstream’s camp, after the arrest one after the other of the faction’s leaders. By 1936 the communist faction had been all but eliminated. With the formation of the jingoistic Imperial Farmers’ Association (Kokoku nomin domei) in 1933 and the Imperial Farmers’ Union Association (Kokoku nomin kumiai domei) in 1936, membership in the farmers’ unions and organizational strength alike both fell away sharply. While the labour unions were able to expand their organizational strength during this period by moving to the Right, membership in the farmers’ unions declined as the left wing suffered oppression and arrests. However, as the Labour Bureau of the Welfare Ministry pointed out: Patterns of support for the farmers’ unions are not at all like those within the labour union movement. Zenno is by far the most powerful, and the other two [the General Federation of Japanese Farmers’ Unions and the Japan Farmers’ Union] are unlikely to catch up.21

Support for the left remained strong, despite the earlier assertion by the leaders of Sodomei that ‘the popularity of the communist parties in the countryside is a temporary phenomenon during a transitional period’. The prediction was on the mark in a narrow sense, since once the communist political parties were declared illegal they lost whatever ‘popularity’ they might have had. However, communists remained within the Zenno in significant numbers until 1933. Even in 1936, after they had been reduced in strength through

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oppression and arrest, the government continued to describe Zenno as occupying a key position on the Left among the country’s tenant farmers’ unions.22 Since Zenno was at the core of the farmers’ movement, one must conclude that Sodomei’s prediction was fundamentally incorrect. The suggestion that support for the Social Democratic Party in the countryside would increase over time was especially misguided. The General Federation of Japanese Farmers’ Unions, established as the very embodiment of the Social Democratic Party for the countryside, never had more than 5000 members and was never a significant presence in the countryside. In moving to the Right, the prewar labour union movement adopted corporatist labour–capital ‘harmonism’ as its main tenet. The farmers’ union movement, in contrast, held on to leftist ideals to the end. There is no indication of increased support either for landlord–tenant cooperative unions or for organizations to further the growth of corporations. Groups like this in the countryside either stagnated or lost ground. How are we to explain the differences between the the labour and farmers’ movements? This, it seems to me, is the important question. Even as we acknowledge that there are some similarities in these two social movements, the differences ought to intrigue us even more. III. Labour and Tenancy Disputes As a first step towards illuminating the differences between the labour and farmers’ movements, I shall take a close look at labour and tenancy disputes. It is, after all, against the background of these conflicts that the two movements show their true colours. Table 7.5 provides figures for walkouts, work slowdowns, and plant closings. The first thing that stands out about these numbers is that the prewar peaks for both the number of strikes (998 in 1931) and the number of participants (81,329 in 1930) came during the Showa depression. If we were to include varieties of labour disputes other than those shown in Table 7.5, the peak year for frequency would still be 1931, when there were 2456 disputes of all kinds, while the peak year for participation was immediately after the end of the First World War. (In 1919, 335,225 people engaged in labour disputes.23) What these figures suggest is that there were at least two periods of frequent labour conflict in the prewar period, the first immediately after the First World War and the second during the Showa depression. During the first period, most if not all of the disputes were over demands for increased wages, or some other ‘positive’ claim. Demands for higher wages accounted for 400 of the 497 labour disputes in 1919 that led to work stoppages or plant closings, or 80.5 per cent of that total. In contrast, and as Table 7.5 suggests, during the depression most disputes were defensive in nature.

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T ABLE 7.5. Labour disputes and participants, by major demand Totals

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

Positive demands

For higher wages

Passive demands

Incidents

Participants

Incidents

Participants

Incidents

Participants

Incidents

Participants

(100.0) 270 (100.0) 333 (100.0) 293 (100.0) 495 (100.0) 383 (100.0) 397 (100.0) 576 (100.0) 906 (100.0) 998 (100.0) 893 (100.0) 610 (100.0) 626 (100.0) 590 (100.0) 547

(100.0) 36,259 (100.0) 54,526 (100.0) 40,742 (100.0) 67,234 (100.0) 46,672 (100.0) 46,252 (100.0) 77,444 (100.0) 81,329 (100.0) 64,536 (100.0) 54,783 (100.0) 49,423 (100.0) 49,536 (100.0) 37,734 (100.0) 30,900

(65.9) 178 (52.9) 176 (47.4) 139 (55.6) 275 (41.5) 159 (40.1) 159 (23.8) 137 (12.7) 115 (22.8) 228 (26.2) 234 (50.3) 307 (54.3) 340 (47.5) 280 (51.7) 283

(63.4) 22,978 (66.4) 36,208 (39.5) 16,093 (35.1) 23,627 (43.8) 20,460 (51.5) 23,839 (13.3) 10,266 (12.3) 9,999 (30.4) 19,594 (31.6) 17,330 (52.4) 25,877 (46.2) 22,874 (54.6) 20,594 (56.2) 17,371

(43.7) 118 (40.2) 134 (34.1) 100 (45.7) 226 (24.5) 94 (27.5) 109 (15.8) 91 (8.8) 80 (16.7) 167 (21.9) 196 (42.0) 256 (47.1) 295 (38.3) 226 (41.7) 228

(42.2) 15,303 (43.3) 23,637 (19.4) 7,903 (21.7) 14,610 (18.4) 8,610 (36.6) 16,903 (7.5) 5,807 (9.9) 8,045 (21.4) 13,800 (26.4) 14,485 (41.9) 20,702 (37.3) 18,458 (40.5) 15,289 (46.1) 14,259

(17.0) 46 (17.4) 58 (17.7) 52 (16.8) 83 (36.8) 141 (33.2) 132 (48.1) 277 (76.3) 691 (66.1) 660 (62.7) 560 (38.5) 235 (30.8) 193 (35.1) 207 (30.3) 166

(15.7) 5,708 (11.9) 6,481 (16.7) 6,811 (10.4) 7,203 (33.9) 15,845 (27.7) 12,812 (40.2) 31,137 (74.4) 60,492 (61.2) 39,469 (49.3) 27,005 (24.0) 11,847 (41.5) 20,575 (24.9) 9,387 (23.9) 7,376

Opposition to cuts in wages, disputes over firings, and demands for reinstatement were common. The economic changes brought by the Showa depression profoundly affected the nature of labour disputes. Together with the impact of the Manchurian Incident on the political environment, these developments helped bring about both a temporary return of leftist strength within the labour movement and its equally rapid demise. A second key feature of prewar labour disputes is the gradual decline in the number of people involved in each dispute. Disputes with fewer than fifty participants became more and more common. In 1921 the number of participants per dispute reached its highest prewar level. Disputes that year at the Kawasaki and Mitsubishi shipbuilding yards in Kobe sent the average up to 191. The factory council system made its appearance in the larger firms not long after this, which meant that disputes in those enterprises were sharply constrained. The focus of labour disputes shifted to small and medium-size enterprises as a result, which of course reduced the scale of the disputes.

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Against wage cuts

Against firings or reinstatement

Others

Incidents

Participants

Incidents

Participants

Incidents

Participants

(10.7) 29 (9.0) 30 (14.0) 41 (9.5) 47 (15.7) 60 (14.60) 58 (22.4) 129 (32.1) 291 (21.7) 217 (15.7) 140 (8.5) 52 (5.1) 32 (13.9) 82 (11.0) 60

(6.7) 2,446 (5.9) 3,227 (15.3) 6,245 (6.9) 4,643 (13.1) 6,129 (10.3) 4,762 (23.8) 18,441 (42.1) 34,201 (18.4) 11,888 (12.8) 6,990 (6.1) 3,011 (23.7) 11,749 (9.1) 3,432 (10.6) 3,281

? (13.3) 6,214 (11.4) 5,260 (9.5) 7,360 (11.9) 9,702 (17.3) 11,165 (18.3) 10,022 (8.8) 4,361 (10.9) 5,400 (7.9) 2,968 (6.8) 2,099

(17.0) 46 (29.7) 99 (34.8) 102 (27.7) 137 (21.7) 83 (26.7) 106 (28.1) 162 (11.1) 101 (11.0) 110 (11.1) 99 (11.1) 68 (14.9) 93 (17.5) 103 (17.9) 98

(20.9) 7,575 (21.7) 11,837 (43.8) 17,838 (54.4) 36,584 (22.2) 10,367 (20.8) 9,601 (46.5) 36,041 (13.3) 10,838 (13.3) 5,473 (19.1) 10,448 (23.7) 11,699 (12.3) 6,087 (20.5) 7,754 (19.9) 6,152

(0.8) 4 (13.8) 53 (7.6) 30 (14.2) 82 (14.1) 128 (18.4) 184 (21.4) 191 (13.4) 82 (12.5) 78 (8.0) 47 (8.2) 45

253

Disputes of fewer than 50: share of all incidents

55.6 52.6 55.6 59.6 59.5 64.7 64.4 69.0 72.3 71.8 66.6 68.5 74.7 75.3

Notes: 1. Figures for incidents and participants are for strikes, slowdowns, and plant closings, although 1923 does not include slowdowns. 2. Figures in brackets are percentages. Source: Nihon rodo undo shiryo, x. 468–71, 516.

What sort of patterns are evident in tenancy disputes? As Table 7.6 helps make clear, the number of disputes peaked first in 1926 and fell off slightly before beginning another long rise towards the prewar record in 1935. The number of participants, meanwhile, hit its highest level in 1926. These two measures of tenancy-related conflict suggest that the key periods came before and after the depression, and not during it, as was the case with labour. Up until 1926 more than 80 per cent of the disputes involved demands, including calls for reduced rents, that were designed to improve the conditions of tenancy. More defensive claims characterize the depression years, as tenants tried to cope with landlords taking back their land and struggled to win continuances of existing tenancy contracts. By 1936 more than half of all disputes were over issues such as these. In this limited sense, we can see in tenancy

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T ABLE 7.6. Tenancy disputes Year

Incidents

1923

1,917

1924

1,532

1925

2,206

1926

2,751

1927

2,052

1928

1,866

1929

2,434

1930

2,478

1931

3,419

1932

3,414

1933

4,000

1934

5,828

1935

6,824

1936

6,804

Tenant demands

Participants

Related to rent

Related to tenancy rights

Landlords

Tenants

1,872 (97.6) 1,433 (93.5) 1,957 (88.7) 2,324 (84.4) 1,508 (73.5) 1,238 (66.3) 1,595 (65.5) 1,357 (54.7) 1,918 (56.0) 1,464 (42.8) 1,285 (32.1) 2,479 (42.5) 2,877 (42.1) 2,117 (31.1)

15 (0.7) 24 (1.5) 162 (7.3) 313 (11.3) 417 (20.3) 464 (24.8) 703 (28.8) 996 (40.1) 1,315 (38.4) 1,468 (42.9) 2,305 (57.6) 2,668 (45.7) 3,055 (44.7) 3,674 (53.9)

31,712 (16.5) 27,223 (17.8) 33,001 (15.0) 39,705 (14.4) 24,136 (11.8) 19,474 (10.4) 23,505 (9.7) 14,159 (5.7) 23,768 (7.0) 16,706 (4.9) 14,312 (3.6) 34,035 (5.8) 28,574 (4.2) 23,293 (3.4)

134,503 (70.2) 110,920 (72.4) 134,646 (61.0) 151,061 (54.9) 91,336 (44.5) 75,136 (40.3) 81,998 (33.7) 58,565 (23.6) 81,135 (23.7) 61,499 (18.0) 48,073 (12.0) 121,031 (20.8) 113,164 (16.6) 77,187 (11.3)

Notes: Figures within brackets under ‘Tenant demands’ are percentages of the total number of disputes; under ‘Participants’, figures are numbers of tenants and landlords per incident. Source: Kosaku chotei nenpo, Kosaku nenpo, various years.

disputes the same transition that was evident in labour. In both sets of conflicts, the depression years saw struggles to improve conditions for workers and tenants give way to efforts to keep matters from getting worse. Tenancy disputes were unlike labour disputes, though, in that after the depression their number rose rapidly, involving more than 100,000 participants in 1934 and 1935. It is also worth noting that the increase in the absolute number of incidents was not due solely to a rise in so-called ‘defensive’ disputes. There were more tenancy disputes over rent and other ‘positive’ issues than ever before. It seems clear that these developments are closely linked both to the

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move to the Right by the labour movement and to the maintenance by the farmers’ union movement of its leftist stance. Another characteristic of this period’s tenancy disputes is of particular interest. As had been the case with labour disputes, the number of participants per dispute declined. It is likely that this development reflects the rapid increase in the number of disputes as tenants responded to demands by landlords for the return of their land. The scale of the disputes was quite small, as the following quote from a Ministry of Agriculture and Forestry report suggests: As for tenancy disputes having to do with the return of rented land, in general these are disputes involving individuals, so that most pit one individual against another or in any case don’t involve very many people.24

It is perhaps natural that as the number of small-scale disputes involving struggles over tenancy rights grew, the overall scale of tenancy struggles would be reduced. However, and as I suggested earlier, the absolute number of disputes over rent levels increased as well. In areas in which there were a comparatively large number of these disputes after the depression, large-scale conflicts continued to arise. For example, by 1933 the average number of participants per tenancy dispute had fallen to 12, but in the 10 prefectures with the highest number of participants per incident, the averages were as follows: 48.4 in Osaka, 33.5 in Nara, 40.4 in Saitama, 42.7 in Kyoto, 14 in Niigata, 35.5 in Gifu, 24.1 in Okayama, 44 in Aichi, 17.2 in Mie, and 9.3 in Fukuoka.25 It is obvious that many areas did experience large-scale disputes, though they were on a somewhat smaller scale than those that arose prior to 1926. What this tells us more generally is that even after the Showa depression tenants in many regions continued to organize disputes as they had in the past, in an attempt to improve their situation. Another key difference between labour and tenancy disputes has to do with their duration (see Table 7.7). Most labour disputes lasted for ten days or under, whereas most of tenancy disputes lasted for more than a month. There are some similarities, of course. During the depression years the number of lengthy, complicated conflicts increased both for workers and for tenants, and after the crisis was over both types of dispute grew shorter. Nevertheless, the basic opposition between the short-term nature of the labour disputes and the long-term nature of the tenancy disputes remained unchanged. In 1936 only 2.4 per cent of labour disputes lasted for more than one month, compared to 54.2 per cent of tenancy disputes. The Rodo undo nempo commented as follows on the post-1930s differences between tenant and labour disputes: When we look at the length of the disputes in days we see that tenancy disputes are distinct in that they last much longer than labour disputes. That is, labourers are likely to have little money to sustain the disputes or to pay for living expenses and

(100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0)

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

270 333 293 495 383 397 576 907 998 893 610 626 590 547

Total disputes

Year

Labour disputes

(43.7) (39.9) (41.6) (30.1) (37.6) (40.1) (28.8) (20.5) (27.2) (32.1) (43.1) (52.1) (47.5) (57.8)

118 133 122 149 144 159 166 186 271 287 263 326 280 316

< 3 days (31.5) (33.6) (32.8) (37.2) (30.8) (34.0) (34.2) (35.0) (30.6) (30.0) (32.3) (32.3) (33.1) (32.0)

85 112 96 184 118 135 197 317 305 268 197 202 195 175

< 10 days

T ABLE 7.7. Labour and tenancy disputes, by duration

(19.3) (23.1) (22.9) (20.2) (17.8) (17.9) (25.3) (29.7) (24.4) (22.1) (16.9) (10.9) (12.4) (7.7)

52 77 67 100 68 71 146 269 244 197 103 68 73 42

< 30 days (4.8) 13 (3.3) 11 (2.7) 8 (12.1) 60 (12.0) 46 (6.3) 25 (9.7) 56 (12.1) 110 (14.8) 148 (13.2) 118 (6.7) 41 (4.5) 28 (7.1) 42 (2.4) 13

> 30 days

(0.2)

(0.4) (1.8) (1.8) (1.9) (2.8) (3.0) (2.6) (1.0) (0.3)

(0.7)

2 – – 2 7 7 11 25 30 23 6 2 – 1

Naturally dissipated or unresolved

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(100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0)

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

(19.3) (13.0) (12.8) (17.3) (11.4) (13.0) (14.6) (11.0) (14.3) (8.7) (10.0) (17.4) (15.9) (17.4)

322 167 147 225 151 129 169 154 236 167 243 539 708 874

< 10 days (24.5) 408 (21.1) 271 (20.8) 238 (24.9) 324 (17.3) 230 (16.3) 162 (20.4) 235 (18.8) 264 (20.2) 333 (20.2) 387 (28.0) 682 (30.3) 941 (30.5) 1,357 (27.9) 1,400

< 1 month (31.0) 516 (38.9) 500 (34.4) 394 (29.3) 382 (20.5) 272 (22.5) 223 (29.0) 335 (25.4) 357 (29.7) 490 (29.3) 560 (30.0) 729 (29.0) 901 (32.4) 1,441 (31.6) 1,584

< 3 months (14.7) (17.1) (17.6) (13.4) (30.6) (14.9) (14.9) (16.9) (17.0) (16.1) (12.7) (10.0) (11.8) (11.9)

245 220 202 175 406 148 172 237 280 308 310 310 524 594

< 6 months (5.8) (7.3) (9.0) (9.0) (14.0) (12.5) (10.9) (12.7) (11.8) (10.5) (7.9) (6.7) (5.4) (6.3)

96 94 103 117 185 124 126 179 195 200 193 208 239 314

< 1 year (0.9) (1.1) (3.9) (4.0) (5.6) (20.4) (9.1) (14.5) (7.2) (14.9) (10.9) (5.3) (3.8) (4.4)

15 14 45 52 74 202 105 204 119 285 264 164 170 219

> 1 year

(0.3) (0.5) (1.3) (0.2) (0.5)

(3.9) (1.5) (1.5) (1.3) (0.6) (0.3) (0.3) (0.7)

65 19 17 17 8 3 3 10 – 6 11 39 10 25

Unknown

Sources: Showa 11 nen rodo undo nempo, 541–2, 775.

Notes: 1. Labour disputes include strikes, slowdowns, and plant closings. Figures for 1923 do not include slowdowns. 2. Figures for tenancy disputes differ from those published by the Ministry of Agriculture and Forestry, but figures from the Nempo are used. 3. Figures for tenancy disputes in 1926 and 1929 appear to be incorrect, but they are as in the original. Figures for 1932 appear in the original as 2,913 incidents, but the correct figure, and the one that appears in the table, is 1,913.

1,667 1,285 1,146 1,302 1,326 992 1,154 1,405 1,651 1,913 2,432 3,102 4,449 5,010

Disputes resolved

Year

Tenancy disputes

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thus will be in a hurry to settle. In contrast, tenants have in their possession the agricultural goods which they harvested through their own effort. Part of that has to go to the landlord as rent, but during disputes it is often a strategy not to hand over the rent. This reserved rent is then used to pay for the costs of the dispute so that there are no instances of people being unable to pay their living expenses because of the struggle.26

The report suggests that tenants were never unable to pay their living expenses because of the struggle; but in especially lengthy disputes there were many instances of people receiving aid to help defray their costs. Moreover, the imposition of temporary injunctions made life more difficult. Such injunctions included prohibitions on entering land, of which there were 109 cases in 1930, seizure of unharvested crops (142 cases in 1930), and the seizure of personal effects (128 cases in 1930). The government’s report probably spoke too generally on this issue. On the other hand, the suggestion that tenancy disputes lasted as long as they did because ‘Tenants have in their possession the agricultural goods which they harvested through their own effort’ seems correct. Labourers did not possess the goods that they themselves produced at the workplace. The fact that tenants do have possession of what they produce is reflected both in the differences between their ability to hold out and in the ability of labourers to do the same, and in the duration of the conflicts in which they are involved. Let us next look at the way in which labour and tenancy disputes were handled through an examination of attempts to mediate them. The Labour Disputes Conciliation Law went into effect in July 1926, and the Tenancy Conciliation Law in December 1924. A key factor in the process leading up to the passage of these two laws is that, although a series of bills for the creation of a Labour Union Law and a Tenancy Law were examined and proposed to the Diet, in the end none was passed into law. The failure to provide legislative backing in the form of a Labour Union or Tenancy Law meant that even though the Labour Disputes Conciliation Law and Tenancy Conciliation Law went into effect, their significance was sharply constrained. That failure also meant that attempts to put labour and capital on an equal legal footing, and to win recognition of a tenant’s ability to challenge property rights, would end in frustration. The differences between labour and tenants are evident in the legal arena as well. The key legal foundation for the Labour Disputes Conciliation Law was the Labour Union Law. For the Tenancy Conciliation Law, however, the proposal was not for a Tenant Union law but for a Tenancy Law.27 Though there were important differences between the Wakatsuki and Hamaguchi cabinets’ versions of the bill,28 their common purpose was to give legal recognition to the unions. Such a step would have made possible negotiations between labour and employers on an equal legal footing, which in turn would have created a premiss (zentei) for the resolution of labour disputes. There is

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no reason to suppose that the Labour Union Law itself would have provided concrete standards for settling disputes. The implications of this are important. Despite its failure to pass the Diet, the Labour Union Law had nevertheless been intended to provide a legal framework within which the Labour Disputes Conciliation Law could operate. There was nothing in the bill, however, that dealt with the practical matter of settling labour disputes. What about the Tenancy Law, which would have provided a similar legal framework for the Tenancy Conciliation Law? The bill proposed in 1931 was a detailed document that included eight chapters and seventy-four supplementary provisions.29 The draft Labour Union Law of the same year, in comparison, had only thirty supplementary provisions. The draft Tenancy Law touched on the following topics: Leasing and renting land. This category would include lending rights, tenancy rights, the transfer and sale of permanent tenancy rights. Terminating leases. Rental periods, procedures for termination and renewal, indemnity in cases in which tenanted land is to be returned, and the establishment of payment for separation from farming. Subleases. The negation in principle of subleases, and exceptions. Permanent rights of tenancy and their termination. The period of permanent tenancy, and procedures for renewal. Changing the conditions of tenancy. Procedures for requests for reducing rent, and procedures for dealing with those requests. Depositing rent. Conditions for stopping provisional seizures. Clearly, such a law would have provided a set of concrete standards for the resolution of tenancy disputes. Of course, since the Tenancy Law was not passed, it was impossible to make use of it in conjunction with the Tenancy Conciliation Law. As a result, tenancy officials found that their ability to act was greatly restricted.30 They also found, though, that, passed or not, the draft Tenancy Law was of use to them (and in this it clearly differs from the draft Labour Union Law). At a conference of tenancy officials in June 1930 that preceded the introduction of the draft Tenancy Law, those in attendance were asked for their opinions about two documents, one the recently published ‘Outline of Matters That Should Be Determined by a Tenancy Law’ and the other a draft version of a Tenancy Law.31 The officials considered in detail the problems of solving actual tenancy disputes.32 In addition to demonstrating that the Tenancy Officials and the Ministry of Agriculture and Forestry alike felt that the passage of a Tenancy Law was essential to the effective use of the Tenancy Conciliation Law, this undertaking also provided a criterion of sorts for those officials struggling in the dark to solve tenancy disputes. Several years later the Ministry of Agriculture and Forestry addressed the issue of the bill’s continued importance:

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Since the public release of the draft of the Tenancy Law its effect has been making itself felt throughout Japan, and there have been many instances of settlements based on the provisions of the draft. It has got to that point that in some ways it is as if the law was in fact in effect.33

The differences in the frameworks of the Labour Dispute and Tenancy Dispute Conciliation Laws are equally evident in their application. To begin with, the Labour Dispute Conciliation Law was almost completely ineffective. A Social Bureau report noted: ‘The present law is in practice so inconvenient that people avoid chances to apply it, and in fact it has only been made use of six times.’34 The Tenancy Conciliation Law, in contrast, saw frequent application. As Table 7.8 helps demonstrate, the number of cases of conciliation based on the law increased yearly, and numbered more than 2000 after 1934. The Labour Disputes Conciliation Law stated: ‘A Conciliation Committee will be established at the request of both parties to the dispute’,35 so that mediation under the protection of the law could occur only if desired by both sides. It is clear that this approach was much less convenient than the one adopted by the Tenancy Conciliation Law, in which any of the concerned parties could request conciliation.36 An annual report on labour dispute conciliation noted: Of late, there has been a gradual increase in the number of those involved in disputes who want to use a Conciliation Committee to bring about a resolution; this is true of the labour side in particular. However, in most instances the employer will not permit it. The result is that many disputes that require a rational settlement through a public process like that provided by the Conciliation Committee slip through the cracks. This would suggest that revisions to the law are necessary.37

However, the main reason that the Labour Disputes Conciliation Law was completely ineffective has less to do with the law itself than with the fact that there were no formal or informal standards (dealing with conditions of work or procedures for firing, for example) for the resolution of disputes. For example, even if conciliation was applied for under the law, since there was no applicable standard for settling the dispute, it should come as no surprise that neither side had any expectation that the law would lead to a resolution of the dispute. In its response to a draft report issued by the Commission on Social Policy in December 1929 on the creation of a Labour Union Law, Sodomei’s Committee to Promote the Passage of the Labour Law (Rodo rippo sokushin iinkai) pointed to a lack of ‘general provisions for collective agreements’ as the law’s first ‘shortcomings’.38 Sodomei’s sense of a collective agreement was ‘the determination under actual economic conditions of just and appropriate working conditions’39 (emphasis original), suggesting the necessity of defining the labour conditions at issue in the dispute through negotiations on an equal footing between labour and employers. Sodomei continued to emphasize the need for

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the establishment of collective bargaining in order to resolve the increasingly serious depression-era disputes involving medium and small enterprises. It even requested of the Hamaguchi Cabinet that: The government’s plan to establish a separate law for the regulation of labour contracts is fine, but the rules about labour contracts are the most important element in the Labour Union Law. We therefore ask that it be presented to the Diet this time along with the Labour Union Law.40

Sodomei argued as well that ‘Leaving out the provisions for collective agreements is like painting a dragon and not adding the eyes’.41 Sodomei’s drive to win collective agreements was rapidly transformed into a campaign for industrial cooperation from 1932 on, and was one of the reasons for the general shift to the Right by the labour movement as a whole. What this suggests is that when the problem of introducing the Labour Union Bill to the Diet arose, it was not enough just to provide legal recognition to the unions. There had to be standards for concrete definitions of conditions of work. Moreover, the fact that the only legal framework for the Labour Conciliation Law was what would have been provided by the Labour Union Law points to another weakness, and to an explanation of why the Tenancy Conciliation Law was effective and the Labour Conciliation Law was not. The formal procedures for conciliation set out by the Labour Disputes Conciliation Law were little used, so it is certainly safe to say that the law itself was without effect. However, there were a number of cases of mediation that took place outside the formal framework laid out in the legislation, many of which were overseen by the bureaucrats originally appointed to implement the law. By comparing the figures for conciliation of labour disputes (Table 7.9) with similar figures for tenancy disputes (Table 7.8), we can obtain useful insights into the differences between these two types of conflict. Until the Showa depression, the majority of mediations were handled by official mediators, ‘public works subcontractors, members of the Kokusuikai [National Essence Society], labour union officials, monks and other local notables’.42 From the depression on, the share of cases involving police officials rose dramatically, and accounted for more than 60 per cent of the total by 1936. In the case of tenancy disputes, on the other hand, until the latter half of the 1920s most mediators came from the ranks of local notables, which included district, town, and village heads, ward chiefs, hamlet representatives, assembly members, and officials from the local agricultural association or agricultural cooperative. Once the depression began, even though the officials designated by the law began to get more involved, the number of cases involving local notables remained significant. The police were increasingly active in mediation efforts in the years after the depression, but as late as 1936 they accounted for only 25 per cent of the total case load: the courts and other intermediaries designated by the Conciliation Law continued to account for

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

Year

(4.2) 36 (13.1) 165 (14.7) (24.3) (28.5) (31.5) (35.3) (35.0) 676 (42.6) 884 (60.7) 1,529 (53.9) 1,955 (56.2) (50.1)

Conciliation committee

(0.6) 5 (3.9) 49 232 280 280 415 514 (7.0) 136 (4.7) 97 (1.2) 29 (2.3) 82 2,532 2,463

Court

(10.0) (14.0) (13.8) (18.5) (18.2) (16.8) (18.6) (13.7) (14.2) (10.0) (10.0) (9.2) (5.8)

86 176 218 213 179 222 271 264 294 253 362 416 286

Tenancy officials

(28.2) (29.2) (24.1) (17.9) (14.2) (14.4) (11.8) (8.8) (8.9) (7.1) (4.6) (5.0) (4.1) (3.6)

178 250 302 282 164 142 155 128 172 148 116 181 184 177

Mayors, village headmen

TABLE 7.8. Mediators of tenancy disputes under the Conciliation Law

(29.0) (15.3) (14.4) (16.4) (8.0) (9.0) (10.4) (6.7) (6.6) (4.8) (2.7) (5.7) (3.7) (2.0)

183 131 181 259 92 89 137 98 127 99 68 205 166 100

Ward and hamlet officials

(5.1) 32 (4.1) 35 (2.9) 36 (4.4) 70 (4.4) 51 (4.9) 48 (3.1) 41 (5.3) 78 (4.0) 78 (4.2) 88 (4.8) 120 (5.9) 215 (11.8) 532 (25.4) 1,246

Police officers

(3.5) (3.3) (4.6) (4.3) (3.1) (3.2) (3.0) (2.6) (2.1) (1.7) (1.0) (1.6) (1.0) (0.6)

22 28 58 68 36 31 40 38 40 35 24 58 47 30

Diet and assembly members

(18.2) (16.3) (13.1) (14.9) (14.8) (12.7) (13.3) (14.3) (13.4) (11.7) (9.3) (8.3) (7.8) (5.7)

115 140 164 234 170 125 175 209 258 242 235 302 352 278

Regional men of influence

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(8.5) (6.3) (3.7) (4.4) (4.4) (4.2) (4.6) (2.0) (2.8) (2.2) (1.4) (2.4) (1.0) (0.7)

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 (1.0) (0.7) (0.6) (1.1) (2.1) (1.6) (2.6) (1.1) (1.0) (0.7) (0.5)

16 8 6 15 30 31 55 28 36 32 26

Court mediation

(7.6) (10.7) (6.1) (8.1) (7.6) (4.4) (4.4) (4.3) (5.0) (4.2) (3.3) (4.0) (4.4) (5.5)

Other

48 92 77 127 87 43 58 63 96 88 84 144 199 272

(100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0)

Totals

632 857 1,255 1,575 1,152 984 1,318 1,458 1,932 2,076 2,521 3,626 4,503 4,912

1,558 1,254 1,692 2,169 1,459 1,352 1,820 1,776 2,604 2,696 3,239 4,919 5,754 5,695

Settled disputes

Sources: Kosaku chotei nempo and Kosaku nempo, various years.

Notes: 1. There is some overlap in the categories, so that the ratio of mediated cases to all those settled will be somewhat high. 2. ‘Assembly member’ includes members of the Diet, as well as prefectural or local assemblies. 3. Figures in brackets are percentages.

54 54 47 69 51 41 60 29 54 46 35 86 43 34

Agricultural association, industrial cooperative members

Year

T ABLE 7.8. part 2

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1,202 1,013 1,408 2,183 2,456 2,217 1,897 1,915 1,872 1,975

1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

351 250 386 659 685 627 602 601 746 817

(40.5) (34.8) (32.9) (36.7) (37.1) (28.7) (25.2) (25.0) (22.4) (20.4)

142 87 127 242 254 180 152 150 167 167

Mediation officials

(7.6) (8.3) (7.4) (8.0) (8.0) (5.5) (5.7) (4.6) (2.9)

19 32 49 55 50 33 34 34 24

Employer

(16.8) (17.4) (15.3) (13.7) (8.6) (12.0) (10.8) (13.1) (11.8)

Workers

42 67 101 94 54 72 65 98 96

Sources: Nihon rodo undo shiryo, x. 518–19.

(8.8) (8.0) (11.1) (13.3) (12.9) (9.1) (8.3) (7.1) (5.1)

Both

22 31 73 91 81 55 50 53 42

45 50 93 159 176 204 210 241 416 505 (1.6) 4 (2.3) 9 (0.8) 5 (0.9) 6 (1.4) 9 (1.3) 8 (1.5) 9 (1.6) 12 (0.7) 6

Other officials

(66.8) 167 (66.3) 256 (66.2) 436 (65.0) 445 (70.5) 442 (73.4) 442 (75.2) 452 (75.2) 561 (80.2) 655

No mediation requested

(12.8) (20.0) (24.1) (24.1) (25.7) (32.5) (34.9) (40.1) (55.8) (61.8)

Police officials

Mediated disputes and the mediators

Mediated disputes and the initiators of mediation

(100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0)

Total

Note: Figures in brackets are percentages.

1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

Year

T ABLE 7.9. part 2

New disputes

Year

T ABLE 7.9. Mediators of labour disputes, and initiators of mediation

(8.8) (6.4) (10.1) (8.5) (7.2) (5.6) (4.5) (4.3) (1.7) (0.7)

31 16 39 56 49 35 27 26 13 6

Headmen, mayors, other public officers (37.9) (37.2) (30.6) (29.9) (29.2) (31.7) (34.1) (29.1) (18.5) (16.3)

Other

133 93 118 197 200 199 205 175 138 133

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the bulk of mediations. Police were far more involved in resolving labour disputes than they were in doing the same for tenancy disputes. There is a clear contrast between the rapid increase in police-mediated labour disputes and the shift in the countryside away from mediation by local notables and towards the application of the provisions of the Conciliation Law. It was uncommon for workers, owners, or the two together to request mediation during a dispute. It was far more common, and increasingly so over the years, for mediation to occur despite there having been no request for help from any of the parties involved. The police and others ‘usually consulted with both parties and began mediation on their own initiative, even though for whatever reason neither side had requested it’.43 More often than not, disputes were mediated because officials and police officials in particular ‘took an active interest’ in getting the disputes resolved.44 Mediation of tenancy disputes was quite different. Although comparisons using the categories provided in Table 7.9 will not be possible, Table 7.10 does provide data about who initiated mediation and the results of the mediation conducted under the Tenancy Conciliation Law. The first point is that there were far more cases in which the Conciliation Law was applied to tenancy disputes than cases in which mediators were involved in resolving labour disputes. The draft of the Tenancy Law had been useful in providing a standard for the resolution of tenancy disputes, so that those involved had real hopes that the mediation law could in fact be used to resolve their dispute. A second point is that tenants themselves account for approximately 60 per cent of all requests for mediations. The significance of this lies in the use by tenants of mediation as a strategy in their legal battles with landlords. Because the Civil Code treated rights of ownership as ‘real’ rights and those associated with renting or borrowing only as claims, landlords could initiate a civil lawsuit as a means of ending the dispute. Many of these suits were ‘requests for payment of rent’ or for ‘surrender of land’. So long as there was no tenancy law in effect, there was really no chance that these lawsuits would result in anything but a settlement in favour of the landlord. However, according to Article 9 of the Tenancy Conciliation Law, ‘In cases in which mediation is undertaken, when there are lawsuits involved, the suit will be suspended until mediation has been completed’.45 Once mediation began, tenants could put a stop to the lawsuit’s progress and thus head off a settlement in the landlord’s favour. Despite the fact that ‘the use of the Tenant Conciliation Law by tenants to draw out mediation, or to cancel lawsuits or court orders, goes against the original purpose of the law’,46 it was in fact ‘a natural outcome of the law’.47 Indeed, there are too many examples to count of the law being used precisely for these reasons. In 1932, of the 1168 cases of mediation initiated by tenants, 422 (36 per cent) were in some way involved in a lawsuit.48 In contrast to the Labour Disputes Conciliation Law, which could not be used by workers to settle labour disputes, the Tenant Conciliation law,

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T ABLE 7.10. Mediated tenancy disputes, initiators of mediation, and outcomes Year

1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

Reported cases

(100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0)

27 654 954 1,551 1,686 1,583 1,637 1,703 2,020 2,853 3,323 4,274 4,249

Initiator of conciliation Landlords

Tenants

(40.7) 11 (47.1) 308 (33.0) 315 (31.9) 495 (31.6) 533 (35.1) 556 (33.2) 543 (38.8) 660 (35.7) 721 (34.8) 993 (32.3) 1,074 (33.7) 1,441 (34.2) 1,452

(59.3) (50.0) (58.1) (62.5) (56.6) (59.2) (62.1) (55.3) (57.8) (61.3) (63.9) (62.2) (62.8)

Both

16 327 554 970 954 937 1,016 942 1,168 1,750 2,125 2,658 2,670

(2.9) (8.9) (5.5) (11.8) (5.7) (4.8) (5.9) (6.5) (3.9) (3.7) (4.1) (3.0)

– 19 85 86 199 90 79 101 131 110 124 175 127

though limited by the fact that a tenancy law had not been passed, did play a useful role for tenants in helping to settle their conflicts with landlords. A third issue is that local notables retained a key role in negotiating an end to tenancy disputes until the Showa depression, when they were displaced by court-supervised mediations and by conciliation councils in particular. This meant that very few negotiations were handled by the police (in contrast to the situation with labour, where very few were not). It goes without saying that tenancy disputes were conflicts between landlords and tenants over rent and tenancy rights, but there were also many instances in which social problems of the region, the hamlet, and the village were involved. Labour disputes, on the other hand, were almost always conflicts between workers and employers within a particular enterprise: local social issues were seldom significant. According to the examples studied to date and reports by tenant officials,49 tenant unions and farmers’ unions alike became more politically active because of their involvement in tenancy disputes. Tenants also were able to improve their positions within village and ward councils, agricultural associations, agricultural cooperatives, and fire-fighting unions. The ‘reformation’ of local society was closely linked to these disputes over land and farming. For the tenants, it was possible to appeal to local public opinion as part of a successful dispute strategy. That is, tenants would not only ‘form alliances to use the power of their organization to refuse to hand over part or all of the rent’, but would also frequently ‘take measures that included pulling all their children out of school as a group, resigning from public posts, such as membership in a fire fighting union, agreeing not to pay local taxes and fees, and other steps that appealed to society’.50 Since tenancy disputes thus quickly became

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Outcome

267

Civil court cases

Successful

Unsuccessful

Withdrawn, dismissed

Unresolved

Brought by landlords

Brought by tenants

(55.6) (67.1) (62.6) (61.4) (64.4) (62.5) (67.7) (70.8) (70.8) (76.5) (78.5) (78.4) (74.0)

(11.1) (2.9) (3.2) (2.9) (2.5) (5.7) (3.8) (2.6) (1.9) (1.6) (0.9) (1.1) (0.5)

(25.9) (25.4) (27.7) (27.9) (25.2) (23.8) (22.2) (20.2) (24.4) (19.3) (18.2) (19.1) (18.0)

(7.4) (4.6) (6.5) (7.8) (7.9) (8.1) (6.3) (6.4) (2.9) (2.6) (2.4) (1.4) (7.6)

2,240 2,317 4,174 4,808 2,473 3,014 2,808 2,277 2,416 2,409 2,287 2,548 2,563

13 12 10 41 15 36 47 49 38 41 26 26 17

15 439 597 952 1,085 989 1,109 1,206 1,430 2,182 2,609 3,351 3,143

3 19 31 45 42 90 62 44 38 46 29 48 21

7 166 264 433 425 376 364 344 493 551 606 817 763

2 30 62 121 134 128 103 109 59 74 79 58 322

Note: Figures in brackets are percentages. Sources: Figures for initatiors of conciliation, and results are from Kosaku nempo, 1935 and 1936. Figures for civil court cases are from Kosaku chotei nempo and Kosaku nempo, various years.

problems for the entire local community, it should come as no surprise that public figures from the area were involved in trying to resolve them. How are we to interpret the rise after the depression in the number of cases in which conciliation committees were involved? The first thing to note is that the Tenancy Conciliation Law spelled out the selection procedures and requirements for committee membership. ‘Although committee members are to be chosen by the chief magistrate of the local court,’ the law stated, ‘the actual selection should be done in consultation with the Tenancy Official who is aware of local conditions’.51 The standards for selection included the following: First, individuals who are neutral and not allied to either landlords or tenants; second, ‘individuals who are trusted’ by the landlords; third, ‘individuals who are trusted’ by the tenants; fourth, ‘individuals who are trusted’ by both sides’.52

In practice, what happened was that local notables who were ‘trusted’ became members of the tenancy conciliation committees. In 1933, a year in which the number of conciliation cases handled by the committees increased significantly, of the 13,626 individuals in the committees nationwide, 5103 were landlords, 730 were cultivating landlords, 136 were tenanted landlords, 2969 were owner-cultivators, 1129 were owner-tenants, 1604 were tenants, and 1955 fitted into none of these categories. Most members were ‘men of high repute and people well informed about conditions in the area of the dispute’.53 Thus, even though the number of court-supervised mediations increased significantly, the previous pattern of mediation at the hands of local notables remained

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unchanged. It is as if the Tenancy Conciliation Law gave legal recognition to the practice of mediation by local men of influence. The provisions of the conciliation which settled the dispute had a significant impact on local society, regardless of whether it was done though the law or not. The Kosaku nempo referred to this by noting: In many cases the content of the mediation has to do not only with the immediate problem at hand, but also determines the various conditions of tenancy in the future as well. . . . Having seen the establishment of mediation in one case, there are many instances in which landlords and tenants in nearby areas solve their problems peaceably, reaching an appropriate agreement based on the specifics of the conciliation, and there are many instances in which the effect on the conditions of tenancy in a given area is quite significant.54

To the extent that they influenced the conditions of tenancy, tenancy disputes must also have had some measure of influence on the tenants and landlords of the area. By their very nature, disputes over land and farming shook up the order of local society. Therein lies the explanation for the role played by local notables in resolving these disputes, since it was up to them to preserve and re-create that very order.

IV. The Relationships Between Employers and Workers, Landlords and Tenants Here is a brief summary of the key issues that have concerned us so far: The move to the Right by the labour movement, and the continued presence of a leftist mainstream in the farmers’ union movement. The decrease in the number of labour disputes and an increase in the number of tenancy disputes from the depression years on. The brevity of labour disputes when compared to disputes over land. The frequent application of the Tenancy Conciliation Law and the infrequent use of its counterpart for labour disputes. The fact that the vast majority of labour mediations were handled by police officials while most conciliations of tenancy disputes were overseen by local notables. These issues are, of course, a consequence of the differences in the relationships between employers and labour, landlords and tenants. They are also a reflection of the ways in which workers’ lives differed from those of tenants. I begin by examining household income for workers (see Table 7.11.) The first point that stands out is that the head of the household accounts for a

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T ABLE 7.11. Worker’s household income Households surveyed

Total income

Head of household’s income

Spouse’s income

Other family members’ income

Non-wage income

1926–7

1,744

1931–2

992

(100.0) 90.38 (100.0) 83.43

(86.3) 78.03 (90.2) 75.27

(3.5) 3.13 (1.7) 1.42

(1.9) 1.68 (1.5) 1.28

(8.3) 7.54 (6.5) 5.46

Notes: Average monthly income for the periods Sept. 1926–Aug. 1927, and Sept. 1931–Aug. 1932. Sources: Naikaku tokei kyoku, Kakei chosa hokoku, Sept. 1931–Aug. 1932, 46–7.

very large part of the total family income, and the spouse or other family members very little. The lives of a worker’s family depended in a very basic way on the head of the household.55 Second, it is clear that, as the total household income dropped during the depression, the share accounted for by the head of the household rose. Defensive actions against wage reductions and firings increased in the early 1930s, and I have already touched on the fact that the labour movement’s shift to the Right took on momentum in 1932. It was against this background that not only did household income drop but sources of income other than the head of the household were reduced. Workers’ families found their financial stability threatened as a result. What impact did this heavy dependency on the income of the head of the household have on the relationship between workers and their employers? The key issue in this case is that of employee firings. Table 7.12 includes data from the Rodo undo nempo for all those fired, and for all those fired because of labour disputes. It may be that the data in Table 7.12 is not complete, since the Social Bureau reported that there were 569,000 or so industrial workers fired in 1930.56 However, it is clear that the number of those fired overall and the number of those fired because of disputes peaked in 1930 and 1931 respectively. It is also worth noting that, although the number of workers fired owing to disputes rose in absolute terms, they actually fell as a percentage of the total number of firings. What this pattern suggests is that during the depression many firings resulted from plant and business closings, from owners leaving the business, and from work reductions, all of which happened before a dispute could begin. If we look at statistics about what happened to workers after they had been fired (see Table 7.13), about 30 per cent of laid-off workers in the 1920s had found work either in the same industry or in a different field. During the depression, that figure fluctuated between 15 and 20 per cent, and the number of those who ‘returned to the village’ or ‘were still out of work’ increased. Most workers who were laid off during the depression and lost their family’s main source of income, including those who

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HISTORICAL ORIGINS T ABLE 7.12. Factory and mine dismissals

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

Dismissed workers

Dispute-related firings

60,449 (40,396) 19,629 18,132 22,028 32,327 14,152 26,588 157,758 157,581 23,600 11,875 15,591 12,841 14,616

(0.4) (32.2) (39.8) (45.9) (28.8) (49.3) (38.5) (11.8) (12.0) (41.4) (61.5) (39.0) (46.5) (49.9)

272 6,313 7,210 10,112 9,324 6,979 10,235 18,637 18,971 9,780 7,306 6,074 5,969 7,291

Note: Figures within brackets for 1923 are for firings attributed to the Great Kanto earthquake. Sources: Rodo undo nempo, various years.

‘returned to the village’ and were for all practical purposes unemployed, found that their situation was at least uncertain and often all but impossible. That these developments brought with them a great deal of social unrest during the depression goes without saying. In fact, the Home Ministry’s Social Bureau recognized: ‘Once someone loses their job, finding work again is extremely difficult. For labourers in particular, being fired is a matter of life and death.’57 The Bureau issued a directive to Labour Dispute Conciliation officials: In light of the importance of the matter, in addition to taking all the steps you normally would, do your utmost to resolve the situation in such a way as to keep the number of those fired to an absolute minimum.58

When faced with the life-and-death question of firings, what sort of choices did labourers have? Fired workers had to decide between switching jobs, being content with unemployment, and attempting to resist the layoffs themselves. Those workers who had escaped being fired and were still with the company faced other choices, since the danger of additional layoffs was especially strong during a depression. Should they join forces with the workers who were opposing the firings, or, thankful that the firings had not reached them, should they take a more cooperative stance towards their employer? In cases like these, choices would depend on how long workers could maintain opposition to the firings, whether they could actually prevent them, and whether, if fired, they would be able to get a settlement beneficial enough to allow them to get by.

(100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (100.0)

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936

978,072 1,044,409 910,305 842,204 684,568 655,096 671,936 569,433 656,114 483,853 524,937 568,535 663,806 726,957

(21.4) (24.3) (21.4) (20.8) (18.3) (20.2) (17.1) (13.7) (12.0) (15.4) (15.3) (19.6) (18.9) (25.8)

208,921 254,145 194,578 175,592 125,081 132,706 115,144 77,805 78,662 74,466 80,269 111,363 125,350 187,471

Working in the same industry

Source: Nihon rodo undo shiryo, x. 208.

Total

Year

T ABLE 7.13. Status of dismissed workers

(12.9) 126,437 (12.9) 134,326 (11.3) 102,578 (11.4) 95,804 (9.3) 63,964 (7.8) 50,913 (7.4) 49,529 (8.0) 45,526 (4.5) 29,524 (5.9) 28,634 (6.7) 35,076 (7.8) 44,460 (8.9) 59,374 (13.7) 99,769

Working in a different industry (34.0) (30.9) (33.8) (32.6) (36.1) (36.5) (39.1) (39.0) (43.3) (44.6) (44.0) (38.1) (36.6) (25.1)

332,398 322,268 308,120 274,197 274,045 239,324 262,890 221,990 283,951 215,809 231,179 216,313 242,729 182,856

Returned to the farm

(10.6) (11.6) (12.4) (12.1) (10.8) (16.4) (12.2) (14.0) (16.3) (12.0) (12.8) (13.7) (15.0) (13.7)

103,836 120,884 112,814 102,019 74,183 107,465 81,986 80,033 106,967 57,742 67,100 78,012 99,935 99,579

Found other employment

138,656 141,586 126,283 112,302 70,515 59,456 83,444 83,275 76,529 63,989 68,473 74,132 92,832 78,323

Unknown

(6.9) 67,824 (14.2) (6.8) 71,200 (13.5) (7.2) 65,932 (13.9) (9.8) 82,290 (13.3) (15.2) 103,780 (10.3) (10.0) 65,232 (9.1) (11.8) 78,943 (12.4) (10.7) 60,804 (14.6) (12.3) 80,481 (11.6) (8.9) 43,213 (13.2) (8.2) 42,840 (13.0) (7.8) 44,255 (13.0) (6.6) 43,586 (14.0) (10.9) 78,959 (10.8)

Not yet employed

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To put it more directly, whether or not the workers had an organization strong enough to prevent layoffs or to win a severance payment good enough to guarantee the worker’s financial stability would determine how workers reacted when faced with layoffs. However, the Yuaikai’s goal around the time of the First World War had been the creation of craft-based unions that would aim for ‘monopolies on the supply of labour’.59 Of course that did not come to pass, and organization in heavy industry became ‘not craft-based but “vertically integrated unions” organized within a single enterprise’.60 The huge strike at the Mitsubishi and Kawasaki shipyards in 1921 did little to improve the situation. As one scholar noted, ‘Even if working conditions were changed in part, as separate labour struggles they ended with the labour unions’ members being fired in large numbers’.61 One effect of these developments was the spread of the enterpriseand factory-specific factory council system.62 In addition, large enterprises began to introduce the cultural organizations and company unions that had been established by other companies as institutions to foster mutual understanding. Labour unions were ‘recognized’ in the naval arsenals and in marine transport, but their right to negotiate was limited. They were really nothing more than cooperative unions created to head off disputes.63 ‘Recognized’ unions in general were cooperative bodies organized around a particular company or plant. Unions organized around craft, able to regulate working conditions and the supply of labour, were not a part of the corporate landscape in the 1920s. The factory council system is a clear sign of the class-based labour movement’s retreat in the years after the depression, and of its move to the Right. ‘The function of the labour unions (the maintenance of working conditions and reform)’, noted one scholar, ‘was gradually lost.’64 As the cooperative unions of the naval and army arsenals transformed themselves into Japanist organizations, they put more and more emphasis on the unity of labour and capital.65 A system of corporatist cooperation between labour and capital was taking shape within Japan’s largest enterprises. Those elements of the labour union movement excluded from big business turned instead to small and medium enterprises, and were most active there from the latter half of the 1920s on. Sodomei, at the heart of the labour union movement, continued to push for collective bargaining agreements. In a sense this had a positive side, in that it sought to make labour standards objective and fair. In the years after the depression, though, as Sodomei moved towards ‘production harmony’ (sangyo kyoryoku shugi), its focus shifted to ‘the three functions of binding labour union rules, cooperation between labour and capital to bring profit to the enterprise, and assistance within the cartel system’.66 There was no role at all for the regulation of working conditions or the supply of labour. Union involvement in disputes declined after reaching its peak in 1931. Most of the disputes in small and medium enterprises involved disputes between the owners and workers within the plant, so that any horizontal links

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T ABLE 7.14. Farm household income

Owner-cultivators Owner-tenants Tenant-owners Tenants

Year

Income from farming

Other income

Farm household income

1926 1931 1926 1931 1926 1931 1926 1931

(81.4) 1,312 (75.7) 514 (81.7) 1,227 (75.7) 784 (83.9) 996 (79.9) 401 (76.0) 1,022 (70.2) 288

(18.6) 300 (24.3) 165 (18.3) 275 (24.3) 251 (16.1) 191 (20.1) 101 (24.0) 323 (29.8) 122

(100.0) 1,612 (100.0) 679 (100.0) 1,502 (100.0) 1,035 (100.0) 1,187 (100.0) 502 (100.0) 1,345 (100.0) 410

Sources: Kayo Nobufumi, Kaitei Nihon nogyo kiso tokei (Tokyo: Norin tokei kyokai, 1977), 498–501.

among the workers were lost.67 No horizontally organized links were created among workers in enterprises of any size from the period of the First World War on. Enterprise-specific, vertically organized unions became the norm. Accordingly, as long as workers’ households were structured in such a way that they relied almost entirely on the wages of a single worker for most of the household’s income, workers facing the life-or-death problem of layoffs had no choice but to cooperate and to demonstrate loyalty to the firm. These connections were made clear after the ‘resolution through mass firings’ of the huge strike in 1921. The rapid spread of the factory council system in large enterprises, and labour’s shift to the Right and espousal of ‘production harmonism’ during the large-scale firings of the depression years, soon followed. What are the particular features of the lives of the tenants, lives which defined the tenant–landlord relationship at it most basic level? Since there is no data on farm household income during the depression from the Kakei chosa hokoku (Report on Household Surveys), I rely instead on figures from the Noka keizai chosa (Survey of Farm Household Economics). According to Table 7.14, the income of farm families in 1931 dropped markedly for all classes. While workers who were still employed continued to earn wages at more or less the same level, farm families in general experienced a sharp drop in income. The depression’s impact on farming communities was indeed severe. As the income of farm families dropped, their reliance on non-farm income increased. For tenant families, money earned in activities other than farming accounted for as much as 30 per cent of the total family income. The experience of labour families was almost exactly the opposite, since they became more dependent on the head of the household’s income, not less. For tenants, therefore, the situation closest to that of worker being fired would be that of having one’s rented land reclaimed by the landlord, a practice that grew more common during the depression. There can be no doubt that, for tenants, having one’s farm land taken back as their household incomes were dropping was a serious matter. For small-scale tenants who rented all

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their land from a single landlord, having their land taken back would deal them a blow much like that of being fired for a worker. In the case of a dispute that broke out in January 1934 in the village of Hirano, in Fukushima Prefecture’s Shinobu county, a tenant had been renting 1 cho, 1 tan, and 1 se of upland fields (a little more than a hectare) and 123 tsubo (407 m2) of residential land from a single landlord, and had received a demand for the return of it all. The story of what happened is a tragic one: The tenant took a strong stance against the landlord’s demand for his land back, but finally concluded that his side could not prevail. Given the situation, he felt that it would be best to just choose the path of starting over anew, and emigrated with this whole family to Hokkaido.68

Not all the cases of returned land ended with the family leaving the village. In a tenancy dispute in the village of Gokamura, in Nagano’s Hanishina county, demands for the return of land occurred regularly between 1931 and 1933. Many tenants did cut back on the amount of land they rented as a result, but there was only a single individual who lost all the land he was renting.69 Tenants often rented from more than one landlord, so that even though having to return land to one landlord would be a sharp blow, it did not mean that all the land under cultivation was lost. Rather, it was common for tenants to borrow land from a number of landlords, which is perhaps not surprising given the small and convoluted plots of farm land for which Japan is known. It was not only the so-called ‘pure’ tenants who were at risk of having land reclaimed by landlords. Many households supplemented what they themselves owned and farmed by renting additional land. If the ratio of land owned to borrowed was high, the impact of having to return the rented land to the landlord would be that much less. In general, having land taken back was not the same sort of experience for tenants as being fired was for workers. How spread out one’s borrowing was and the amount of land owned determined how severe the blow would be. The case studies to date have suggested that those households most caught up in the commercialization of agricultural production, primarily upper-level tenants and farmers who both owned and rented land, were increasingly sensitive to the contradictions of very high rents, and were often at the centre of tenancy disputes. At the same time, though, it was these households that could best cope with a landlord’s demand for the return of land. The role of the landlord for tenants was not at all like the role of the enterprise for workers. As the landlord system was being created and established, it was unavoidable that some farmers would collapse and become tenants dependent on landlords. However, around the time of the First World War the growth in the productive power of agriculture and the rapid expansion of the commercial market for agricultural commodities allowed tenants (including landowning tenant farmers) to become key players in private, small-scale

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commercial agriculture. Tenants soon reached the point where they were able to demand reductions in rent from landlords on an organized basis.70 Large landholders in particular began to divest themselves of their land in response to the threat they perceived from tenants.71 For tenant farmers, this class of landlord was not someone on whom they were unavoidably dependent, but rather a barrier to their own economic progress. To put it more directly, tenants were quick to realize that they could do without landlords. Workers were in completely the opposite situation. So long as they had no horizontal organizations to turn to, there was nothing workers could do but hope that their employers continued to do well. The actions and intent of tenants began to undermine the existing landlordcentred power structure in the villages. Given that the structure of village and regional society was built on an axis of landlord–tenant relations, shifts in that relationship would make themselves felt as agitation in local society. Here again is a difference between workers and tenants: shifts in the labour– employer relationship had absolutely no effect on local society. For example, in the 1925 elections for city, town, and village councils, ‘communities in which a tenant was elected’ numbered 3142. Of that number, 761 were ‘communities in which tenants accounted for more than a third of all elected candidates’ and 340 were ‘communities in which [they] account for more than half ’.72 Tenants made tremendous political gains in local society. There is no comparable ‘survey’ that examines how well workers did in town or village council elections. Even Sodomei’s ‘Political Report’ began by acknowledging that ‘it is the farmers’ unions that have a direct advantage’. The report went on to state that: If we list the unions affiliated with Sodomei that were involved in this election, they are the Ashio Federation, Noda Federation, the Fujioka and Omama branches of the Kanto Brewery Labour Union (both in Gumma Prefecture), the Akita Lumber Union (Akita Prefecture Noshiro cho), and others.73

Only a handful of unions that had a foothold in local production were involved. The contact between labour unions and the surrounding areas was quite superficial when compared to that of the farmers’ unions. These patterns held true during the 1929 and 1933 city, town, and village council elections. In the 1929 election, Zenno came in first among the proletarian parties with 256 successful candidates. In other words, the various proletarian parties did best in towns and villages. They fielded 67 successful candidates in urban districts, 215 in towns, and 676 in villages.74 In 1933 the government conducted a ‘survey of cities, towns and villages in which the proletarian parties did comparatively well’; all thirty of the communities covered by the report were villages.75 These local elections offer further evidence for a pattern in which proletarian parties did well in the countryside, where they could count on the support of the farmers’ unions, and much less well in urban settings.

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As we have seen, there were fundamental differences in the nature of the relationships between labourer and employer and between landlord and tenant. Given the lack of a horizontal organization among workers, and the lack of a connection to the locale, workers confronted with the life-and-death problem of being laid off for the most part had no choice but to accept reintegration into ‘enterprisism’. It was these characteristics of the relationship between labour and capital that set the stage for the decline in the frequency of disputes, and for the move to the Right by the labour movement itself in the years after the Showa depression. The landlord system, meanwhile, was losing ground. Tenants were increasingly involved in small-scale commercial activity, and the outbreak of tenancy disputes put a great deal of strain on tenant–landlord relations. These disruptions, tied as they were to the tenant’s political gains, also upset what had been a local society ordered around local men of influence, and dominated by landlords. The gains made by tenants and owner-tenants, the groups able to hold out against the seizures of land that were the landlords’ response to this unrest, was also remarkable. Local men of influence became involved by using their good offices in negotiating resolutions to tenancy disputes, but were ultimately unable to resist the efforts of tenants who viewed the existence of landlords as a hindrance. It was these characteristics of the relationship between landlords and tenants that set the stage for the increase in the number of tenancy disputes, and for the Left’s continued hold on the farmers’ movement in the years after the Showa depression. The government was even forced in the Agricultural Land Adjustment Law (Nochi chosei ho) of 1938 to make it possible in some instances for third parties to challenge cultivation rights. The continued absence of a labour law, meanwhile, led to the establishment of the Industrial Patriotic Association (Sanpo) labour system. The contrast between the two worlds of labour and farming could hardly be clearer.

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8 The Wartime Institutional Reforms and Transformation of the Economic System* OKAZAKI TETSUJI

I. Introduction Studies of Japan’s wartime economy made rapid advances in the latter half of the 1980s, affording innovative accounts of the wartime economic system. New perspectives viewed Japan’s wartime economy as a planned economic system distinguished from a market economy, and analysed its structure and functions with a broad range of tools of economic analysis including comparative economic system theory.1 Alongside these developments, comparative institutional analysis (CIA) has in recent years been opened as a new field in economics, one which adds theoretical analysis of systems and structures to the objects of existing comparative system theory.2 Drawing on these advances, this chapter seeks first to clarify the character of Japan’s economy in the Second World War as an economic system, using the framework of CIA. CIA essentially investigates the means through which different economic systems solve the common task of coordinating and giving incentives for the activities of numerous economic units. The analysis examines how information is exchanged so as to create an effective division of labour, and also looks at how each unit is motivated to play its own particular role. CIA also focuses on institutional complementarity. This refers to the phenomenon where the elements of a system enhance the function of one another, and become the foundation of its stability. By extension, change in the economic system requires considerable time or a large external shock; in other words, there is the phenomenon of path dependence in the evolution of the system. From that perspective, the great external shock of the war can be seen as a source of irrevocable change in the economic system. Thus, this chapter also examines the various institutional reforms adopted in the process of building the wartime economy. I aim to situate this period in the broad context of the history of the evolution of the Japanese economic system. * Translated by Andrew DeWit.

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170 160 150 140 130 120 110 100 90 1936

1937

1938 Japan

US

1939 Europe

1940

F IG. 8.1. International comparison of price levels (Jan. 1936 = 100). Source: Bank of Japan, 1868 –1962 Wholesale Price Index (1964); Toyo Keizaishinposha, Economic Annual (1937–41).

II. The Planned Economic System in the First Stage of the War It is well known that Japan’s wartime economic controls were prompted by the balance of payments crisis caused by the inflation of late 1936. To respond to the rapid growth of imports, in January 1937 the government implemented trade controls through the control of foreign exchange. And after the initiation of hostilities with China, the net of economic control was spread further through the application of the Temporary Measures Law for Import and Export Goods and the Temporary Funds Adjustment Law.3 It is not difficult to confirm that the controls had a significant influence on the Japanese economy: prices in Japan diverged greatly from prices both in the US and in the UK from the beginning of 1937, and after the end of that year they kept rising while prices in the US and UK began to decline (Fig. 8.1). That divergence clearly indicates that price arbitration between Japan and foreign countries was restricted by the controls on trade. After putting the Profiteering Supervision Ordinance in operation as a temporary measure, the government responded to the rise in prices by enacting the Commodities Sales Price Control Ordinance in July 1938. Through this means the government designated the maximum price for each commodity according to notices from the Minister of Commerce and Industry.4 The result was that prices of controlled goods in Japan differed markedly not only from international prices but also from market-clearing prices. The cut-off rates of demand in the materials mobilization plan (MMP) indicate the volume of ex-

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T A B L E 8.1. Outline of the 1939 economic plans Trade plan (¥ m.) Receipts from overseas Exports Specie shipments Payments to overseas Import capacity

2,763 1,873 325 367 2,395

Materials mobilization plan (steel products, 000 tons) Demand (allotted) Military needs Production expansion Governmental needs Yen-bloc exports Other-areas exports General civilian needs Supply Production

6,248 1,429 2,008 481 781 282 1,266 6,248 5,798

Production capacity expansion plan Production expansion (steel products, 000 tons) Production Materials (steel products) allotted

5,719 504

Labour mobilization plan (000 persons) Demand Munitions industries Production expansion plan Supply New elementary school leavers New rural labourers

1,042 161 143 1,139 467 256

Fund control plan (¥ m.) Demand Public bonds Industry Yen bloc Supply Bank deposits

10,525 6,025 3,600 900 10,000 4,350

Source: Ishikawa Junkichi, Kokka Soudouinshi (A History of State General Mobilization) i; and Nakamura Takafusa and Hara Akira (eds.), Gendaishi Shiryo (Materials on Modern History) xliii.

cess demand which occurred under the regime of controlled prices. In place of prices, the government’s economic plans and the control of production, distribution, and consumption based on those plans shouldered the function of resource allocation. Economic plans with stepped-up government interference were put into effect beginning with the MMP in 1938. After 1939, production capacity expansion

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plans (PCEP) were drafted annually, following the four-year plans for production capacity expansion. Also, trade control plans, labour mobilization plans, transportation and electric power mobilization plans,5 and funds control plans were added, thus largely completing the system of economic planning.6 Taking 1939 as an example, I illustrate the system of economic plans. Table 8.1 shows the skeleton of these plans. Export amounts were determined for each commodity, and the total was estimated as ¥1.873 m. ‘Import capacity’ is the amount remaining when expenditures overseas unrelated to trade were subtracted from the total of receipts, including income from marine transportation, shipments of specie, and the like. This import capacity was thought of as a strategic variable in the MMP. In these plans, production of each commodity was based on two factors: the production capacity determined by the PCEP, and the allotment of import capacity to raw materials. Supplies thus determined were then allotted for each purpose: army requirements (A), navy requirements (B), PCEP (C2), government requirements (C3), yen-bloc area exports (C4-a), exports to foreign countries (C4-b), and the needs of the general public (C5). Steel materials are listed in Table 8.1 as an example, but including steel there were 275 materials subject to the 1939 plan. The C4-a allotment of a material conforms in principle to that material’s planned export amount listed in the trade control plan. Moreover, the production plan itemized in the MMP essentially corresponded to the production plan in the PCEP concerning the same items. However, the PCEP was limited to thirty-six items (in fourteen industries) that were deemed long-term targets for production increases. An important aspect of the PCEP was its role as an investment plan. Investment in equipment and the distribution of necessary materials (e.g. steel, copper, aluminium) were estimated, as well as the production of each of the firms in the targeted industries. The total amount of materials distributed to all the targeted industries in the PCEP coincided, in principle, with the C2 distribution of concerned materials in the MMP. The supply and demand for labour and capital, which were fundamental production factors for the PCEP, were adjusted by the labour mobilization plan and fund control plan respectively. The labour mobilization plan estimated the labour requirements in the expansion of the munitions industry, industries slated for the PCEP, and others; the plan sought to meet these labour requirements from such supplies as recent graduates of primary school and the unemployed in rural districts. In the funds control plan, the financing needs of the government, corporations, and overseas (Manchuria and China) agencies were coordinated with household savings available through bank deposits, postal savings, and the direct purchase of securities. In other words, the balance of investment and savings (I-S) was planned for each sector. Regarding the above, it is clear that ex ante balances were intended concerning international trade (via the trade control plans and the MMP), the labour

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market (via the labour mobilization plan), financial markets or the I-S balance (via the funds control plan), and each commodity market (via the MMP). This means that the aim was literally a planned economy. As explained above, there was a great interdependence among these plans. Massive inputs of resources were required in order to make such systematic plans coherent and feasible. The plans for 1939 were made by the organizations and procedures described below. The planning board, instituted in October 1937, performed the central role in drafting the economic plans. This agency consolidated its internal structure after the fall of 1938, prior to the adoption of systematic economic planning in 1939. In line with the Cabinet’s September 1938 resolution, seven operational committees for national mobilization, including the mobilization planning committee, were established by the beginning of the following year. Separate from this development, the production capacity expansion committee was established in March 1939 in order to draw up the PCEP. The various committees, from the materials mobilization committee to the funds control committee and the production expansion planning committee, took their respective roles in the above economic plans. The materials mobilization committee comprised eight divisions organized according to different material groups, while the production expansion planning committee included six divisions organized by materials or industry and two divisions that corresponded to factors of production (see Fig. 8.2).7 The process of constructing the MMP and PCEP in September 1939 was as follows. The ‘resolution on drawing national mobilization plans of 1939’ was approved by the Cabinet. The resolution sought ‘to plan the mobilization of important materials; and in order to carry this out effectively, it has been decided to make as synthetic and concrete a plan as possible for mobilizing the required supplies of labour, electric power, and transportation, as well as the control of funds and trade’. Each ministry and agency was to submit the information necessary for planning to the planning board by the end of that year. At the same time, the ‘outline for surveys of the materials mobilization plan of 1939’ was established as a manual for preparing materials for ministries and agencies. The manual consisted of outlines for assessing the demands of, and supply capacities for, the army, navy, government, and civilian sectors. Research conducted by the Ministry of Finance for implementing the budget was used concerning munitions and government resource requirements. As for civilian requirements, it was decided that commodities required for implementing PCEP should be appropriated after determining the PCEP, and commodities for export industries should be appropriated after determining export plans. Other civilian requirements were calculated on the basis of actual records for the latter half of 1938. Because the distribution in the C2 and C4-b categories were regarded as the key linkages between the MMP and the PCEP and

General affairs subcommittee (general) First subcommittee (steel) Second subcommittee (light, non-ferrous, other metals) Third subcommittee (railways, ships, vehicles, electricity) Fourth subcommittee (coal, oil, substitute fuels) Fifth subcommittee (soda, industrial salt, ammonium sulphate, wool, pulp) Sixth subcommittee (machine tools, general machinery) Seventh subcommittee (manpower) Eighth subcommittee (funds)

Labour mobilization committee Transport and electricity mobilization committee Trade control committee Funds control committee Resource recovery committee

Materials mobilization committee

General affairs subcommittee (general) First subcommittee (steel) Second subcommittee (non-ferrous metals) Third subcommittee (cotton, wool, pulp, etc.) Fourth subcommittee (coal, oil) Fifth subcommittee (chemicals) Sixth subcommittee (machinery) Seventh subcommittee (foodstuffs) Eighth subcommittee (other imported materials)

Source: Ishikawa Junkichi, Kokka Sodouinshi (A History of State General Mobilization) ii (Tokyo: Kokka Sodouinshi Kankokai, 1984), 11; Yamazaki Shiro, ‘Seisanryoku Kakuju Keikaku no Tenkai Katei’ (The Development of Production Capacity Expansion Plan), in Kindai Nihon Kenkyuukai (ed.), Senji Keizai (The Wartime Economy) (Tokyo: Yamakawa Shuppansha, 1987), 40–1.

F IG. 8.2. Organization for drawing up economic plans in the planning board (April 1939).

Production capacity expansion committee

Committee of state general mobilization

General mobilization planning committee General mobilization legal committee

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trade control plans, as noted above, careful adjustment between those plans was thought to be necessary. As for supply capacity, production capacity and materials needed for production (separated into quantities available domestically and via import) were surveyed. Research concerning raw materials was necessary to keep the production plan coherent with the allotment of foreign exchange. These assessments gave a major role to the Ministry of Commerce and Industry’s (MCI) temporary commodities coordination bureau. This bureau had compiled tentative results of its surveys of supplies and civilian requirements by January 1939. The planning board’s materials mobilization committee began work on the distribution of materials for each purpose around February based on the investigations. Those procedures involved studies of the effects of hypothetical reductions in materials alloted for civilian purposes. A planning board official, Yoshisada Mishima, in charge of the steel section of the MMP in 1939, said later that ‘due to the lack of adequate information in 1939 concerning the adjustment of civilian needs, the effects were adjusted after having deliberately cut allotments’.8 Mishima gave as an example opposition to the reduction in the allotment of steel when the horse administration bureau of the Ministry of Agriculture and Forestry demanded an increase due to a shortage of horseshoes. This episode indicates that each ministry and agency tried to have local information on its jurisdiction reflected in the plan through successive amendments via the planning board and the individual ministries and agencies. The method was the same as the iteration process that planning authorities used in drawing up the materials balance in the Soviet Union’s socialist planned economy.9 Iterative amendment of the plan was also done for the adjustment between MMP and the PCEP.10 The production plans drafted by the production capacity expansion committee and MCI were assessed and curtailed by the materials mobilization committee referring to allotments to C2 in the MMP, and the former agencies demanded restoration of the allotment. In the final adjustment they used the principle of avoiding a reduction in the materials allotment that would influence the production plan of 1939. That is, facilities for immediately increasing production in 1939 were given priority over those required for increasing production from 1940 and afterwards. And in terms of planning techniques, the point was to control the effect of the MMP’s materials allotment on the production plan, and to avoid complications that might arise from interdependence among the plans. Besides, though details are not available, there is evidence that the trade committee made requests for materials to the person in charge of devising the MMP. Presumably, similar iteration occurred inside the governmental organizations concerning coordination between the MMP and Trade Control Plans. The next issue for study is the system for implementing the plans developed according to the procedures explained above. Controlling imports, the foundation of the MMP, was accomplished comparatively easily through foreign

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exchange controls wielded by the Ministry of Finance. The exchange controls were reinforced in August 1937, and imported goods categorized into munitions and resource materials of grades 1–4 in accordance with their relation to munitions industries. Ministry of Finance authorities conducted strict screening and restriction of materials in grades 3 and 4, whose association with munitions was tenuous.11 Important roles were played in the production and distribution of materials by MCI itself as well as trade associations for each industry under the ministry’s purview. Fig. 8.3 illustrates the essential elements of the 1939 system for controlling this production and distribution. For the convenience of presentation, input–output relations are simplified. It is assumed that the only input to the coal industry is machinery; to the steel industry only coal, scrap steel, and pig iron; and to the machinery industry only steel. Machinery per se was not an item in the MMP, as we can see in the illustration.12 Hence, the demand and supply balance for machinery was adjusted via the allotment of basic materials such as steel. Materials for machinery, in other words, were alloted to users of machinery, who then placed orders with the appropriate manufacturers according to the available materials. For instance, the allotment of steel to the A-division in the MMP meant that the right to place orders for machinery using those materials was held by the army. According to the plan, the army would issue certificates of steel allotment within the total allocated to them by the iron and steel control council under the MCI, and then deliver the certificates to machinery manufacturers. This outline is simple because the production category and the user readily correspond; but C2, C4, and C5 categories involved users in various industries. Therefore, those users’ materials for machinery were alloted as a package to the Japan steelprocessing industry federation, the main organization for machinery manufacturers, by the steel control council. That allotment was, in turn, reallocated to affiliated industrial associations, and each association issued materials allotment certificates to affiliated companies. In the process, each association compiled orders for affiliated companies, screening them so that the demand for materials did not exceed the quantity allocated.13 The above system of issuing certificates was not a sufficient distributive method to meet the various categories of civilian demand designated in the MMP by itself. A supplementary role was played by the order approval system, which was adopted from the second quarter of FY1939, corresponding to C2’s gaining independence in the plan with the start of the PCEP in the same year. Machinery was needed to fulfil investment targets in industries identified in the PCEP. The machinery bureau of MCI issued written approvals for orders on behalf of corporations that invested within the C2 allotment, and those corporations then submitted their machinery orders to the relevant manufacturers along with the approval. Those manufacturers taking orders could

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have materials certificates issued preferentially by submitting the approval paper to the industry association they belonged to.14 Machinery manufacturers who received certificates through this process then submitted them for the purchase of materials to the materials distribution control organizations—or, if it was steel, to the Japan Iron and Steel Sales Company Ltd. Meanwhile, the iron and steel control council under MCI informed the Japan steel federation, an association of iron and steel manufacturers, of the production volume corresponding to the MMP. The Japan iron and steel federation assigned production to the iron and steel manufacturers following this instruction, and also issued certificates for pig iron allotments to those manufacturers.15 As for coal, the coal distribution control council under MCI advised the Showa Coal Company Ltd. of the distribution plan, and then Showa Coal distributed coal to iron and steel manufacturers accordingly. Coal to be distributed was secured through the coalmining federation’s allotments of production to coal companies according to instructions given by the coal production control council under MCI.16 As is clear from the above, the MMP was eventually parcelled out at the level of the firm, and was implemented through production allotment and the screening of orders by industrial associations. Materials distribution was linked to this system, with the distribution controlled by the certificates. In the labour mobilization plan, the employment placement system played an important role. The 1938 revision of the law for employment placement offices shifted their management from the municipal to the national level, and put the offices under the authority of the employment division that had been newly established in the Ministry of Health and Welfare. Afterwards, the employment placement system was changed from a relief measure for unemployment to a means for mobilizing labourers according to government plans.17 The ordinance on workers’ employment restrictions of April 1939 required the employment placement office director’s approval when an employer wished to hire workers in any of ninety-three industries related to heavy chemicals and mining and who also met certain requirements. The measure was aimed at preventing the labour force in the munitions industry from transferring elsewhere.18 Moreover, the national draft ordinance of June 1939 made it possible forcibly to draft and employ workers who had certain specified skills—people subject to the national ability report ordinance—for general mobilization by the government.19 The funds control plan was enforced by applying the Temporary Funds Adjustment Law. The main thrust of the law was to construct a system of government approval for loans for equipment and establishing companies, increasing capital, and the flotation of bonds.20 In principle, the temporary funds examination committee consisted of individuals from the ministries of finance, commerce and industry, and agriculture and forestry, as well as the Bank of

Coal Distribution Plan Bill

Coal Distribution Plan

Army and Navy

Steel Materials Allocation

New Federation of Machinery Industries

Steel Materials Allocation

Regional Federation of Machinery Industry

Steel Materials Allocation

Each industrial Each industrial Each industrial association association association Assessment Assessment Steel Assessment Assessment Materials Steel Steel Materials application Certificate Materials Application Certificate Certificate Machinery Machinery Machinery enterprises enterprises enterprises

Steel Materials Certificate Steel Materials Steel Materials Certificate Machinery

Japan Steel Sales Company

Steel Materials

Machinery

Steel Allocation Japan Steel-Processing Industries Federation

Steel Materials Allocation

Japan Machinery Industry Federation

Steel Materials Certificate Order Approval

Steel enterprises

Japan Scrap Iron Control Company

Japan Steel Federation

Iron Ore Production Plan, Pig Iron Allocation

Steel Control Association

F IG. 8.3. System for implementing the materials mobilization plan (partial, from the second quarter of 1939).

Showa Coal Company

Pig Iron Certificate

Japan–Manchuria Steel Sales Company

Scrap Iron Cooperative Purchasing Association

Instruction for sale

Coal enterprises

Coal Production Allocation

Scrap Iron Allocation

Pig Iron Certificate

Coalmining Federation

Steel Materials Certificate

Materials Mobilization Plan

Scrap Iron

Coal Production Plan Steel Materials Allocation

Scrap Iron Certificate

Ministry of Commerce and Industry Coal Production Control Association Scrap Iron Distribution Control Association

Scrap Iron Certificate

Coal Distribution Control Association

Pig Iron

Planning Board

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Steel Materials Allocation

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Japan. They assessed each case in accordance with ‘industrial fund adjustment standards’, and the Minister of Finance ostensibly gave approval to those applications that passed the above examination. The standards classified industries in three ranks, based on their relation to the following considerations: (1) the PCEP, (2) munitions, (3) the balance of international payments, and (4) current levels of production and the supply of materials. In actual application, financial institutions’ associations organized according to business field (banking, trust, insurance, securities) made adjustments in a ‘self-governing’ manner based on the ‘standards’, discussing with the Bank of Japan only those cases in which the amount of funding under consideration was great. The Bank of Japan reported particularly important cases to the temporary funds examination committee.21 Characteristics of the above planned economic system include, first, the fact that plan-related information was for the most part exchanged only within the confines of government organizations. Participation of private industry associations was restricted to implementing plans that had been determined by the government. Feedback mechanisms for information dispersed among firms to be reflected in government plans, had not yet been institutionalized.22 Second, government policy gave importance to past results when allotting production and materials by industrial associations.23 Consideration of social policy measures to equalize the burdens attendant on wartime control was given priority over the coordination of efficient production. In general, the market functions to enhance efficiency by selecting companies with high productivity, but Japan’s wartime planned economic system did not in its early stages have an alternative screening mechanism. Also, this policy of distribution relates to the first point. In order to draw up plans for individual companies maximizing productivity, the production plans of each industry were not independent of production allotment to each firm. Thus constructing MMPs without information about each firm would in fact be quite difficult. A third point is that control during the implementation process was generally negative. The flow of materials, labour, and funds into non-priority industries was restricted, but control was not directed to increasing the production of priority commodities or actively developing materials distribution to the priority industries. As explained earlier concerning funds control, achieving the assigned production was not a legal obligation to companies, and the compulsory draft of workers was limited to people with specific skills. In sum, the early stages of the planned economic system lacked adequate mechanisms for making efficient plans and effectively carrying them out. However, the achievement rate of the production plans was rather good in 1938, in which year only the MMP itself was undertaken. The fundamental reason for the good performance of the production plan, in spite of the handicaps discussed above, lay in the relative price. The orderly control of prices guaranteed high levels of corporate profitability. Hence, the allotment of

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production and materials was a controlled distribution of rents, and as such represented an incentive for increasing production.24 III. The New Economic System Drastic relative price changes, following increased import prices due to the outbreak of the war, undermined these conditions. Hence the production plan achievement rates generally declined.25 The problem was that the low-price policy of the government caused companies to lose their incentives for increasing production. In early 1940, this ‘contradiction between the low-price policy and the production expansion policy’ became a focus of argument, and turned into a dispute concerning the choice of economic system. Business circles insisted that profits were essential for the increasing production. For instance, in a meeting of managing directors of Nippon Steel in February, 1940, company chairman Hirao Hachisaburo cautioned the Director of the MCI Iron and Steel Bureau, who attended the meeting as a supervising official, as follows: At current prices, we steel manufacturers cannot help but gradually reduce our level of activity due to financial losses. Because of that, a decrease in production is inevitable. But if the government implements the MMP expecting increased production of iron and steel while ignoring our plight, it will definitely cause a great shortage of goods, worse than this year, and it is natural that various products will be in short supply, contrary to the expectations of production expansion. Hence we hope the the MCI will closely look into these circumstances, and give serious warning to the people in charge of the MMP.26

Also there was strong lobbying in the Diet for a coal price increase in order to stimulate production; but on the other hand, radical criticism was aimed at the very assertion that production increases required profit.27 The former position assumed that companies, as basic units of the economic system, operate for the purpose of making profits; the latter stance called instead for changes in corporate goal or object function itself. The planning board took the latter view. In early 1940, it sought ‘to establish planning in all areas of the economy and effective control for the enforcement of the plans’. To this end, it first determined to ‘organize each industry, and make them work as agents for the state in executing production control’. Second, concerning companies’ behavioural principles, it insisted that it was ‘necessary to shift them from what Western scholars refer to as the endless pursuit of profit, to a principle that places production first’. In such a revised economic system, it was thought that ‘the adjustment of supply and demand, the expansion of production, and the maintenance of the trade balance should be planned and executed’ quantitatively and that ‘prices would no longer function to adjust supply and demand’. The basic design of the economy was to be a three-tier structure with

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the government at the apex, companies below, and supporting agencies of the government in the middle; the design saw the economy operate according to quantitative orders—rather than prices—from the upper to the lower tiers.28 The planning board sketched a fairly developed design of the new economic system in the original draft ‘Outline for Establishing a New Economic System’ (Planning Board, 13 Sept. 1940).29 The draft declared that ‘the national economy should operate under a comprehensive plan for national defence’. It also announced that ‘people would be elements of the comprehensive planned economy, and companies should be managed to secure quality and quantity in production, freed from the control of capital, whose first purpose is the pursuit of profits’. The proposal rejected the company’s role in the market economy, and offered to provide firms with a public purpose determined by the government. It was a typical model of the planned economy operated according to government commands. A lot of information and a strong administrative system are required for coordinating economic activities unitarily by plans and ordinances by the government. Control associations were established to that end as core organizations of the ‘New Economic System’. Concerning the restructuring of industrial associations, the ‘Outline for Establishment of the New Economic System’ (28 Sept. 1940)30 suggested allotting part of drawing and implementing of plans to industrial associations. The precondition was clarification of the command relationship between the government and industrial associations, and between the associations and individual companies. In concrete terms, the new economic organizations, later called ‘control associations’, were charged with ensuring that information was communicated to the government, and plans were divided among firms and carried out. The associations were also to control and supervise companies within their purview, and investigate the status of production and distribution. This delegation of functions to the control associations was meant to solve certain faults, noted above, in the earlier version of the planned economic system. First, the control association’s participation in drafting the plan greatly improved the flow of information, as it provided a mechanism to channel information upwards from the firms at the lower tier of the economic system.31 Second, it was expected that the control association would allot production based on firms’ productivity.32 Hence, the control association had to compile information on the productivity of each company. The association organized efficient production by monitoring the productivity of companies, and directed that information to the government economic planners. The common feature among these three items concerns information, which the control association collected and fed into the structures of planning and implementation. In short, the control association was given an essential position within the information network of the planned economic system, which was to replace the market economic system’s price-based flow of information.

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Beginning with the establishment of the Iron and Steel Control Association in May 1941, twenty-one others were set up in all fields of industry. The following account draws on the case of the iron and steel industry as an example for elucidating the shift to coordination of economic activities, following the establishment of the control associations. The Iron and Steel Control Association was a large organization with more than 300 full-time staff, and immediately started to collect information on member companies which would later become the base of its activities. Acting on instructions from the chairman, the association obliged member companies to report important information concerning equipment, materials, production, and distribution ex ante, and to submit status reports once every ten days and every month ex post. The association also conducted field surveys and cost inspections.33 Through such activities, the Iron and Steel Control Association participated in planning for iron and steel production in the MMP and the PCEP after 1941. The following mechanism was evident in the case of the iron and steel production plan of the fourth quarter in 1941, made with the anticipation of war with the UK and the US.34 As is well known, normal trade relations with foreign countries were blocked due to America’s freezing of Japanese assets in 1941. One result was that the strategic variable controlling the scale of the MMP was changed from ‘import capacity’ to marine transport capacity. War preparations by the army and navy against the US and UK based on the ‘Outline for Executing the Imperial National Policy’ (Sept. 1941) saw changes in the allotment of marine transport capacity. This greatly affected the iron and steel sector, which depended heavily on marine transport for shipping most of the materials and products it used. Information concerning these changes to the transport capacity allotment was relayed to the Iron and Steel Control Association on successive occasions by the government; and each time the association adjusted plans for the supply and demand of iron, steel, and related materials according to that information, relaying the plans to the government. The process is shown in Table 8.2. Responding to reductions in marine transport capacity for iron and steel, coal, and iron ore, the Iron and Steel Control Association updated its calculation of transport capacity allotment and its production plans, in order to minimize the effect on iron and steel production. For instance, the following case reveals the measures taken in response to the reduction in the allotment for marine transport capacity for iron and steel in October of 1941. The MCI announced to the Iron and Steel Control Association a reduction of the allotment of shipping space to 60 per cent of what the association had requested (210,000 tons/month). Consequently, the association drew up three plans for the allotment of 210,000 tons on 27 October. Depending on the allotment of the 210,000 tons to pig iron, semi-finished goods, steel materials, and scrap iron, the short shipment of each material and the quantity of steel productions is determined. The plan which min-

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T A B L E 8.2. The process of formulating the steel production plan for the fourth quarter of 1941 6 Sept. Oct. 8 Oct.

Oct.

10 Oct.

23 Oct.

25 Oct.

27 Oct.

17 Nov. 26 Nov. 29 Nov. 8 Dec.

Imperial headquarters and government conference produced ‘Outline for Implementing Imperial National Policy’. Iron and Steel Control Association advised that the iron ore allotment would be at 55% of the 1941 Transport Mobilization Plan. Iron and Steel Control Association produced the ‘Iron Ore Special Countermeasures for Latter Half of 1941’. The report indicated that production could be maintained if stocks are drawn down. Ministry of Commerce and Industry informed the Iron and Steel Control Association that allocation of coal to factories in Honshu for the latter half of 1941 would be 75% of the 1941 MMP. The Iron and Steel Control Association produced ‘Emergency Counter-measures for the Latter Half of 1941’. The plan indicated a reduction in steel production with a focus on output from high-producing plants and a cutback at inefficient plants. The Iron and Steel Control Association produced ‘A Report on Counter-measures to Production Decreases Based on the Assumption that Honshu Steel Manufacturers Receive Reduced Supplies of Iron Ore’. The report indicated restrictions on shipping allocation for steel materials. The Ministry of Commerce and Industry advised the Iron and Steel Control Association that shipping capacity for products would be 60% of the latter’s request. The Iron and Steel Control Association produced a report, ‘The Influence of Inadequate Shipping Capacity for Steel’. The report suggested it was necessary to shut down 5 large-scale blast furnaces and to trim personnel. The Iron and Steel Control Association produced the draft ‘Steel Production Plan for the Latter Half of 1941’. The Iron and Steel Control Association produced ‘The Outlook for Japanese Steel Production in the Fourth Quarter of 1941’. The Iron and Steel Control Association produced ‘Materials for Materials Mobilization Plan for the Fourth Quarter of 1941’. The Planning Board produced ‘Operational Plan for Materials Mobilization for the Fourth Quarter of 1941’.

Source: Suitsu Documents, ph-2.

imized the reduction in the supply of steel materials sought to balance the reduction in steel materials production, stemming from lower shipments of pig iron, with the reduction in the transport of steel materials. Hence the control association opted for that plan. At the same time, the association stressed that even the least drastic plan foresaw 50,000 fewer tons per month in the production of steel materials. The shortfall would make it necessary to shut down five blast furnaces, cease operations at nine open-hearth companies, and reduce the operating hours of five open-hearth companies by 50 per cent. In total, 9750 workers in open-hearth companies would be affected. After receiving further reports on the allotment of marine transport from the government and responding with updated iron and steel production plans, the

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Iron and Steel Control Association produced the ‘1941 Draft of the Iron and Steel Production Plan’. That plan was included in the MMP of 1941. To sum up, the government allotted marine transport capacity to the Iron and Steel Control Association, a resource restriction that was common to every industry. Given the allotment, the Iron and Steel Control Association determined the most efficient allocation of marine capacity within its sector, drew up an iron and steel production plan, and notified the government. The production plans were compiled after determining the most efficient allotment of production to companies and factories. The government notified the control association of transport availability a second time, after considering the production plan and changed circumstances in other sectors, and the same process was repeated thereafter. The establishment of the control associations thus saw the MMP formulated on the basis of iterative exchanges of information between the government and the control associations. Hence the control associations functioned as foreseen in the planning board’s outline, bringing information up from the level of the firm and into the government’s economic planning. In addition to the set up of the control associations, the original draft of the ‘Outline for the Establishment of the New Economic System’ contained an important policy concerning industrial organization. The policy was to restructure small and medium-sized companies in relation to other companies, in order to promote increased productivity. Concrete expression of this policy came in the memoradum of the MCI Vice-Secretary, ‘Outline for Adjustments in the Machinery and Iron and Steel Processing Industries’ (Dec. 1940) which calls for study of the subcontracting system.35 The subcontracting system currently attracts attention concerning its role in supporting the competitiveness of Japan’s machinery industry, and studies of the system’s wartime development are making substantial progress.36 For this chapter, what is most interesting is the fact that short-term transactions with subcontractors through the medium of brokers increased during the industry’s rapid expansion in the early stages of the Sino-Japanese war. To cope with the technological and quality problems this phenomenon caused, the ‘Outline for Adjustments in the Machinery and Iron and Steel Products Industries’ emphasized the need for a subcontractor designation system as its central feature.37 The role of the brokers symbolizes the fact that the early wartime economic system depended greatly on the market mechanism in machinery production, where coordination was especially important. Also the fact that the brokers’ role led to technological and quality problems suggests there were limits to the information exchange in a market mechanism. The government, through the ‘Outline’, introduced long-term subcontracting relations as a new mechanism for coordinating the complicated division of labour in machinery production, and anticipated that various types of information, including technology, would thus be relayed between assembly companies and subcontractors.

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The above is one example of how, in the movement to the new economic system, the coordination of production and distribution of commodities underwent great changes. Institutional reform in the financial sector, consistent with the above, was also promoted through the ‘new financial system’. This system had various aspects, but the most important was the introduction of a system of indirect finance to substitute for direct finance, or the stock market, which had played the largest role in industrial finance in prewar Japan. The stock market became sluggish after 1940, due to the dividend controls and decline of rate of return by the low price policy. Also contributing to the bearish climate was government policy concerning the corporate governance structure, as is discussed below.38 Stock price declines might have been investors’ signalling their opposition to corporate reforms and economic controls. This condition brought about a stagnation in investment and consequently a rise in the debt–equity ratio, which increased banks’ lending risk and caused them to take a cautious attitude towards further lending. It was difficult to cope with this situation via the Temporary Funds Adjustment Law of 1937, as its focus was controlling the supply of funds to non-essential industries. Securing funds thus became difficult even for A-rank (according to the ‘enterprise fund control standard’) priority industries. The allotment system did not function smoothly due to deteriorating incentives, and hence the finance sector experienced the same problem evident in the ‘contradiction between the low price and production expansion policies’. The difficulties impelled the institution of the new financial system. The planning board sought to reform the financial system using concepts resembling those of the new economic system. In the ‘Outline of Financial Policy’,39 presumed to have been drawn up by the planning board in August and September 1940, the section on ‘Changes in Concepts of Finance’ states: when the foundation of finance is the reliability of repayment, no finance exists where there is no profit. Thus, industries could not aim at securing the supply and quality of materials for the state while compelled to pursue profits, though finance should aim at promoting industries needed to realize the purposes of the state.

The intention was to alter the loan principle of the financial institutions, giving priority to security, and make them provide sufficient funds for munitions industries with high risk and low profitability.40 However, the new financial system was a retreat from the above conception because of opposition from financial circles and the Bank of Japan. The compromise went instead in the direction of expanding cooperative financing.41 The ‘Outline of the Basic Financial Policy’, approved by a Cabinet meeting in July 1941, was designed to ‘establish a system wherein the investment, financing, and collection practices of financial institutions would conform with policies of the government, and promote a close financial relationship between those institutions and the Bank of Japan, engender a spirit of cooperation so as to encourage cooperative

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investment and financing’, and ‘foster close ties between industry and finance’.42 These were natural conclusions that derived from the fact that excessive intervention in the activities of financial institutions would imperil depositors’ trust in the financial system and cause it to collapse. In response to the above, Finance Minister Ogura Masatsune gave a speech to banking representatives at the Tokyo Bank Association in August 1941, in which he stated: I believe that lending by ordinary banks has targeted commercial finance up to the present time. However, the situation has changed, and consequently requires that banks place more stress on industrial finance rather than commercial finance . . . thus, banks must change their business practices, and henceforth adopt methods that are suitable for industrial financing.

In line with this objective, he insisted that the indirect financing system should be prepared so as to supply long-term funding, which had previously been supplied through the stock market.43 Cooperative lending was posited as a central feature in preparing the indirect financing system.44 The successor to the spontaneous cooperative lending that had become increasingly active since 1939 was the Emergency Loan Syndicate, established by the Industrial Bank of Japan and eleven major city banks. The Syndicate saw multiple banks cooperatively finance loans to companies that were monitored by their leading correspondent bank, or main bank; in other words, it was a system of delegated monitoring, or a ‘main bank system’, although the delegation was explicit.45 The 1942 establishment of the National Finance Control Association saw the above system superseded so that mediation of loan consortia became the purview of the new control association. The loan consortia expanded rapidly,46 and the control association or what was effectively its secretariat, the Bank of Japan, mediated loan consortia based on assessments and monitoring conducted by the main banks. Banks thence reinforced their internal organization for monitoring, in an effort to shift to a system centred on indirect financing. The five major banks, Mitsui, Mitsubishi, Sumitomo, Yasuda, and Daiichi as in Table 8.3, did not have independent credit analysis departments or sections prior to the Second World War. Mitsubishi’s 1941 creation of such a department independent of its domestic division preceded the other banks’ (see Table 8.3). Afterwards, in January 1943, the Yasuda Bank established a section for credit analysis in its operations department, and the Sumitomo Bank set up a department charged with credit analysis. And in April 1943, following the merger of the Mitsui and Daiichi banks, the new bank (Teikoku Bank) established two such departments. Hence, all five (four) major banks came to have independent departments or sections for credit analysis. When the monitoring and funding capacities of the stock market or stockholders declined, there had to be a shift to indirect financing. Loan risks increased due to increasing debt–equity ratio,

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T A B L E 8.3. Formation of monitoring organizations of major city banks, 1941–1945 July 1941 August 1942 January 1943 April 1943 January 1944

February 1944

March 1944 April 1944 August 1944 May 1945 April 1945

Mitsubishi Bank separated its domestic section into a business affairs department and a credit analysis department. Yasuda Bank set up an independent credit analysis section separate from the first business affairs section of the business affairs department. Sumitomo Bank set up a credit analysis department. Mitsui Bank and the Daiichi Bank merged to form the Imperial Bank, with the institution of the first and second credit analysis department. At Yasuda Bank, a munitions loans section was made independent of the loans section of the loans department and organized as the munitions loans section of the business affairs department. The Mitsubishi Bank set up a sixth section to supervise munitions loans in the credit analysis department. The Yasuda Bank credit analysis section absorbed the examination section. The Imperial Bank set up a munitions loans section. The Mitsubishi Bank renamed the sixth section of the credit analysis department to the munitions loans section. Sumitomo Bank set up a munitions loans department. Mitsubishi Bank separated the munitions loans department from the munitions loans section of the credit analysis department. The Imperial Bank merged the first and second credit analysis department and set up the ordinary loans department.

Sources: Company histories of each bank.

and hence the system of monitoring and dispersing risk for indirect financing was adopted. The mediation of the National Finance Control Association or the Bank of Japan facilitated the movement to the new system by supporting the main bank’s reputation and its ability of monitoring. The information route between banks and companies was built into the economic system alongside that between the government and companies via industrial control associations and that between parent companies and subcontractors through the long-term subcontracting system. As noted above, the adoption of the ‘new system’ changed the mode of coordination among economic units. In relation to that, there was a transformation in the internal structure of the units constituting the economic system, with the most important being change in the ‘corporate governance structure’.47 Japanese firms in the prewar era were dominated by stockholders in various ways, including the fact that the percentage of large stockholders among directors was high. By contrast, the original draft of the ‘Outline for the Establishment of the New Economic System’ asserted, as we have seen, that companies should break away from the control of capital and its emphasis on the pursuit of profit. In order to remove profits from corporate goals, the plan was to eliminate the leverage of stockholders thought to be forcing management to focus on profitability. In concrete terms, it was proposed that commercial law be changed, separating ownership from management,

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so that managers would have a public character and could devote themselves to increasing production without interference from stockholders. Also, changes in managerial incentives were proposed. These included adopting incentives for managers’ ‘contribution to the nation’, which would link the managers’ bonuses to achievement of the state’s goals of production as opposed to the prewar link to corporate profits. The planning board’s original draft was strongly opposed by business circles, and revision of commercial law was not possible.48 However, the ‘Outline’ discussed above, and adopted by the Cabinet, defined a company as ‘an organic unit of capital, management, and labour’. Moreover, specific reforms of various institutions that shaped the corporate governance structure were undertaken. First, the incentive system for company managers was revised and dividend controls were reinforced by the Company Accounting Control Ordinance of October 1940.49 One purpose of the order was to restrict the link between executive bonuses and coporate profits by controlling the bonus.50 The new financial system was also in certain respects a policy concerning corporate governance. The government authorities understood that one of the reasons for the corporate pursuit of profit was the need to raise capital, and hence it was thought that the problem would not be solved without a planned supply of capital from financial institutions. In other words, the intent was to use the new financial system to eliminate stockholders’ control of management through capital markets.51 But the new concepts in finance proposed in the plan were not implemented, and instead the system turned toward delegated monitoring by main banks. Thus corporate monitoring by the financial markets shifted from stockholders to banks, especially main banks. On the other hand, the related reform of industrial relations was carried out. The original draft of the ‘Outline for Establishing a New Labour System’ (planning board, department 3, Oct. 1940) was explicitly framed as an element of the new system. The plan proposed to ‘establish the status of labour’, and clearly stated a shift from corporations based on the primacy of capital to corporations that gave priority to the ‘substantial management body’, composed of managers as well as engineers, white-collar workers, and blue-collar workers.52 Corresponding to the decline in the stockholders’ status, the plan tried to raise the status of employees as well as managers. The original draft of the ‘Outline’ proposed the institution of production cooperation councils in order to discuss a wide range of issues such as pay, working conditions, and welfare (fringe benefits). This plan for production cooperation councils was realized after August 1941, via unification of the industrial patriotic societies and the companies’ administrative organizations. If we look at the new system from the viewpoint of corporate governance, it is evident that the new economic system, the new financial system, and the new labour system are closely interrelated—indeed, they are mutually complementary. The new financial system undermined the status of stockholders

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by supporting corporate reforms in the new economic system, and at the same time set up new mechanisms for supplying funds and monitoring corporate activities via the main banks. In addition, the status of managers and workers was improved; and the latter, who had formerly been merely outside providers of labour, became proper members of the firm alongside stockholders and managers.53 Changes to the corporate governance structure were reflected in the membership of directors. Nippon Steel and Tokai Automobiles carried out a drastic reshuffle of executives, corresponding to the New Economic System;54 and in major mining and manufacturing industries changes were for the most part made to the composition of boards of directors. According to research on twenty important mining and manufacturing companies conducted by the author, the percentage of members promoted internally, out of the total number of executive members, increased from 34 to 51 per cent between 1935 and 1942. By contrast, the percentage drawn from major shareholders (the top 10) declined from 15 to 9. The change is especially salient among non-zaibatsu companies, in which large stockholders had often become directors in the prewar period. The percentage of directors drawn from the ranks increased from 32 to 54 per cent between 1935 and 1942, whereas the percentage of major stockholders among the executive class decreased from 23 to 11. These figures bear evidence of the remarkable number of internally promoted directors, even in companies that had not implemented such personnel policies prior to the Second World War.55 IV. Institutional Reform at the Final Stages of the War Construction of the ‘New System’ planned economy progressed during 1941 and 1942. The New System literally meant a new economic system, and the fact that the achievement rate for production targets rose in several industries in 1941 owes much to this.56 However, in 1942, the achievement rates for the production plan declined again, and Japan’s wartime economy was faced with a serious crisis. One of the main reasons for this crisis was that the New Economic System did not solve the fundamental problem of profit motive. In fact, attempting to manage the economy while ignoring the motivation engendered by the pursuit of profit posed a hurdle to economic activity. Faced with failures to achieve targeted levels of production, government circles again discussed seriously the propriety of using profit as an incentive.57 The planning board continued to advocate the policy of maintaining low prices and suppressing the profit motive, whereas the Minister of Commerce and Industry insisted on assuring corporate profits by the appropriate application of price controls. The latter’s perspective clearly viewed corporations as being motivated by the pursuit of profit, notwithstanding the new economic system and its associated principle of giving ‘priority to public welfare’.

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A revision of price controls was even requested by the control associations. The Iron and Steel Control Association noted that the existing prices of iron and steel ‘are not reasonable under the current circumstances of production and seem to be making it difficult to achieve production targets’. The association hence appealed to the government that ‘existing prices be revised immediately’. These statements were registered in the association’s ‘Measures for Increasing Iron and Steel Production in the Latter Half of 1942’.58 The request was accepted by the government, and in November 1942 the Cabinet passed the ‘Emergency Measures for Securing Iron and Steel Production for the Latter Half of 1942’.59 Concerning certain steel materials of which supplies were especially short, the document stated that ‘to secure production, special treatment should be taken concerning prices, and compensation from the state should be considered’. The need to stimulate production increases via price was thus authorized. It was also generalized into the ‘Outline of Emergency Measures for Price Control’, which was approved by the Cabinet in February 1943. The decision was taken to raise production prices through subsidies, thus encouraging companies to increase production, and to carry out this policy as quickly as possible. The use of the profit motive was therefore brought explicitly into the New System, which had naïvely been designed to operate through quantitative commands. The second fundamental cause of the 1942 fall of achievement rates in the production plan was poor results in materials supply. Taking the example of iron and steel again, in May 1942 the Iron and Steel Control Association (raw materials department) noted that ‘the stock of coal is insufficient to keep every workplace operating, and hence immediate measures should be taken to deal with the situation’;60 the association therefore advocated a production decrease for blast furnaces. The fact that the association dealt adeptly with the situation at those workplaces, and proposed countermeasures, offers evidence that control associations were effectively functioning as an information system. However, the limits of the system were becoming clear in 1942. In September 1942 the Iron and Steel Control Association and officials from MCI discussed measures for iron and steel production for the second half of 1942. At this meeting, an MCI official pointed to insufficient efforts of the control association at the workplace level. The MCI official said that ‘the control association should enter workplaces to supervise, advise, and consult on daily activity’, and noted that ‘the activities of the workplace representatives of the control association are inadequately used’. The MCI officials further suggested: ‘there is no other way but to face problems squarely and settle them on the spot. If there are not enough trucks, work on that problem with the company, and give guidance on measures concerning electricity and labour.’61 The criticism was highly significant. In the model of the New Economic System an economy should be managed so that the central government and control associations made plans and implemented them uniformly on the basis

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of commands. The above criticism indicates that the system was not dealing adequately with various concrete problems that arose in actual workplaces. The MCI’s solution was to propose state control of factories. At that point, the supervisors at the worksite were expected to ‘instruct, support and give advice’, rather than supervise and control the production process. The purpose of the late 1942 decision to implement state control of factories in the iron and steel sector was to acknowledge publicly the limit of centralized coordination by the government and control associations, and take proper steps according to the situation at individual workplaces. Adaptation at the workplace was also pursued by the administrative inspection system beginning in May 1943.62 In summary, the new economic system was designed as a planned economic system managed by the central authorities. The essential revisions to the system involved the use of prices for incentives and decentralized adaptation according to the situation at the worksite. The Munitions Corporation Law (Oct. 1943) advanced movement in the above direction even more. The Law stated: ‘concerning munitions corporations, controls or supervision that could suppress production by those companies can be removed or exemption can be made’,63 and it further stressed in its application that ‘complicated control regulations are to be relaxed or removed’.64 Managers of munitions corporations were expected to display their ‘unrestricted abilities’,65 and incentives were to be centred on profits. Kishi Shinsuke, the Minister of State, explained to the Diet concerning the operation of price controls that production should not be disturbed by inadequacies in the price system, and that the price system should stimulate efficiency and production.66 The movement to decentralize coordination, as mentioned above, was also consistently seen in policies towards the subcontracting system. The Cabinet in June 1943 passed the ‘Outline of Corporate Adjustment for Bolstering Warfighting Capacity’ which proposed reinforcement of ‘corporate groups’.67 To this end, the Ministry of Munitions had companies organize a cooperative association of their subcontractors, which would promote a better flow of information between the assembly companies and subcontractors, and would also discuss matters regarding organic linkages among operations, the allotment of materials and orders, mutual education and advice concerning technology, flexibility on materials and labour, and controlling production costs. Large assembly companies, especially munitions companies, saw their role in coordinating their subcontractors become more important. The background of decentralizing institutional reform was the change in the wartime economy’s environment. Fig. 8.4 shows that, as the fortunes of war turned against Japan, marine transport capacity was constantly short of planned levels after the second half of 1943. In this situation successive readjustment of the plans by the centralized administrative power was quite difficult, and it became necessary to decentralize authority to some extent in order to deal with this problem.

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Tons (m.) 6

5

4

3

2

1

0 1941.4

1942.1 Key:

1943.1 actual

1944.1 planned

1945.1

F IG. 8.4. Marine transport capacity. Source: A History of the Shipping Management Association (Senpaku Uneikaishi) (Tokyo: Shipping Management Association, 1947), 589–92.

The Munitions Corporation Law is also very important from the viewpoint of corporate governance. The managers of munitions corporations obtained not only freedom from government control, as mentioned above, but also freedom from stockholders. The presidents of munitions corporations were appointed as ‘persons responsible for production’ by the government, and this system functioned to guarantee the position of the president at stockholders’ meetings. The presidents gained authority to implement original draft plans without stockholders’ consent. Legal restrictions of stockholders’ powers were thus realized, though such had been difficult when the New Economic System was pursued. Moreover, control by financial institutions was also weakened because quick financing by designated financial institutions was guaranteed to munitions firms.68 However, the last point needs to be qualified somewhat. Financial authorities raised questions early on about the relaxation of financial discipline or the ‘soft budget constraint’ implicit in the designated financial institution system. An April 1944 meeting of department and branch managers of the Bank of Japan discussed the case of a munitions company that ‘purchased a restaurant and other items at excessive prices’. To this, the manager of the Fukuoka Branch replied: though the designated banks take responsibility for financing munitions, in fact they are controlled by the munitions companies, which is unreasonable. It is thus

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necessary to consider instituting a system whereby bank staff work concurrently in the accounting division of those companies and have direct connection to the company management.69

As a result of that discussion, in July 1944 the outline for the designated financial institution system was revised. This new outline required the financial institutions to collect, on a quarterly basis, the monthly budget data of related munitions companies and submit them to the bank insurance bureau of the Ministry of Finance via the Bank of Japan.70 It was a system whereby banks could monitor munition companies’ finances. The trend was further promoted by the January 1945 Special Treatment Law of Munitions Finance, which legislated for the designated financial institution system. It is notable that the law stressed ‘efficiency in the use of funds’ as well as ‘smooth supply of funds’ (article 1).71 Correspondingly, the designated financial institutions were required to ‘see that the concerned corporations used the funds most efficiently’ (article 4). Because of such regulations, the financial institutions selected a person to be in charge of each munitions company they were dealing with (article 7). Also, if the government recognized it as necessary, they could legally have the Bank of Japan, the appointed financial institution, and the finance staff of the control association inspect a munitions firm’s financial records (article 22). Moreover, according to the regulations for the enforcement of the above law (article 12), the deposits of munitions companies were concentrated in the designated financial institutions.72 This measure was to facilitate monitoring the receipt and disbursement of funds. In other words, the system had designated financial institutions monitor the finances of munitions companies as well as seek to promote the efficient use of funds. The government gave thought also to the incentives for financial institutions to act as monitors. When the government covers financial institutions’ losses, ‘banking authorities do not take their responsibilities seriously and are not very prudent in financing’. Hence, the government did not insure the loans of the designated financial institutions; and instances where finance institutions could not absorb the risk were reported to the government individually, which then dealt with those cases.73 An example from the banks’ side is seen in the case when the Imperial Bank responded to a request from the Ministry of Finance that companies’ fund management be examined more carefully, and that efforts to encourage austerity be made. The bank decided always to fund according to the amount of materials, to control excessive expenditures, to lend according to actual needs in separate categories, and to pay attention to the efficient use of the funds, ensuring they were not applied to other purposes.74 Also, Mitsubishi Bank instructed every branch office to deal with corporations as a management consultant giving supervision and advice. Do not view them simply as clients for financing as previously was the case, and

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always seek to understand the financial conditions by communicating closely with the persons in charge. . . . Monitoring corporate receipts and payments is useful for assessing the condition of the accounts; and thus strictly enforce collections and closely observe the condition of current accounts at all times.75

As mentioned earlier, since price controls guaranteed munitions companies’ profits, discipline from the designated financial institutions was not strong. However, the institution of information flow between designated financial institutions and munitions companies, as depicted above, seems to have played an important role in developing close connections between banks and firms. V. Conclusions The planned economic system constructed in the first half of the SinoJapanese war was incomplete in various aspects. It did not, for example, have a feedback system to channel information from individual companies into the plans of the government, and economic activity could not be efficiently coordinated via the planning structure alone. In addition, the loss of incentives that supported the comparatively good early perfomance of the planning created a serious crisis after the second half of 1939. The consequent movement toward the New Economic System sought to overcome the above problems. With the control associations as the central institution, the main bank and subcontracting systems were adopted, creating new information channels between government and corporations, banks and corporations, and among corporations themselves. Also, reform of the prewar stockholder-controlled corporate governance structure was attempted, in order to relieve management of the need to pursue profits and thus perhaps remove a source of friction with the new system. Moreover, the corporate order was changed in a more cooperative direction, a development aided by the complementary institutional reform of finance and industrial relations. The new system of economic planning was soon faced with a crisis in 1942, and was further revised. Rapidly changing circumstances made it both imperative to acknowledge the role of the profit motive in the economy and to decentralize authority in the economic system. That trend brought about changes in corporate governance, strengthening the mechanisms of information exchange between banks and firms as well as among firms themselves. These various institutions were carried over into the postwar era, and provided the foundation for economic recovery and rapid growth.76

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Notes Unless otherwise indicated, place of publication of works cited in the notes is Tokyo. Japanese names are ordered according to the convention family name first, followed by first name.

INTRODUCTION

1. Takahashi Kamekichi, Zaikai Shiwa (A Business History of Meiji Japan) (Chugai keizaisha, 1952), 1. 2. Keizai Kikakucho (ed.), Showa sanjuichinen keizai hakusho (The White Paper on the Economy of 1955) (Shiseido, 1956), 22. 3. James G. Abegglen, The Japanese Factory: Aspects of Its Social Organization (Glencoe, Ill.: Free Press, 1958; repr. Salem, NH: Ayer, 1984), 1–2. 4. Hyodo Tsutomu, Nihon ni okeru roshi kankei no tenkai (Development of Management–Labour Relations) (Tokyo: University of Tokyo Press, 1971); R. P. Dore, British Factory–Japanese Factory: The Origins of National Diversity in Industrial Relations (Berkeley, Calif.: University of California Press, 1973). 5. Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925–1975 (Stanford, Calif.: Stanford University Press, 1982). 6. See Ch. 5 below. 7. Noguchi Yukio, 1940 nen taisei ron, saraba ‘Senji Keizai’ (The 1940s System: Goodbye to the Wartime Economic System) (Tokyo: Toyo keizai shimpo sha, 1995). 8. Albert Craig, Japan: A Comparative View (Princeton, NJ: Princeton University Press, 1979), 5–8. 9. See Andrew Gordon, The Evolution of Labor Relations in Japan: Heavy Industry, 1853–1955 (Cambridge, Mass.: Harvard Council on East Asian Studies, 1988). 10. On the importance of labour unions’ commitment to their firms, see Ishida Mitsuo et al. (eds.), Roshi kankei no hikaku kenkyu (A Comparative Study of Management–Labour Relations) (University of Tokyo Press, 1993), 1–8. 11. Rodo 292 (Nov. 1935), 21. 12. Rodo 289 (Aug. 1935), 21. 13. Rodo 287 ( June 1935), 16. 14. Rodo 265 (Aug. 1933), 13. 15. Rodo 282 ( Jan. 1935), 8. 16. Hazama Hiroshi (ed.), Nihon romu kanri shi shiryoshu (Sources for the History of Japanese Management–Labour Relations), vi (Gozan shoten, 1987), 7–9. 17. Rodo 274 (May 1934), 20.

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18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.

NOTES

Ibid. 21. Minsei 8 (11) (Nov. 1934), 53. E. H. Pickering, Japan’s Place in the Modern World (London: Harrap, 1936), 162–3. Ibid. 152. Ibid. 141–3. Ibid. 81. Ibid. 94–5. Ibid. 161–2. Ibid. 167. Ibid. 169. Matsuura Masataka, Nitchu senso ki ni okeru keizai to seiji: Konoe Fumimaro to Ikeda Shigeki (Politics and Economy during the Sino-Japanese War: Konoe Fumimaro and Ikeda Shigeki) (University of Tokyo Press, 1955).

1. CORPORATE STRUCTURE AND THE JAPANESE ECONOMY

1. See Un’ei Iinkai (Research Project Steering Committee), ‘Joron: Gendai Nihon Shakai no Kozo to Tokushusei’ (Introduction: The Structure and Peculiarities of Contemporary Japanese Society), and Baba Hiroji, ‘Gendai Sekai to Nihon Kaishashugi’ (The Present-day World and Japanese Companyism), in Tokyodaigaku Shakai Kagaku Kenkyusho (Institute of Social Science, University of Tokyo) (ed.), Gendai Nihon Shakai, i: Kadai to Shikaku (Contemporary Japanese Society, i: Themes and Perspectives) (University of Tokyo Press, 1991). 2. Hashimoto Juro, ‘Kigyo Keiei to Roshi Kankei’ (Corporate Management and Industrial Relations), in Baba Hiroji (ed.), Shirizu Sekai Keizai 4: Nihon (World Economies 4: Japan) (Ochanomizu Shobo, 1989), later revised and included in Hashimoto, Nihon Keizai Ron: 20-seiki Shisutemu to Nihon Keizai (A New Perspective on the Japanese Economy: The 20th-Century System and the Japanese Economy) (Kyoto: Mineruva Shobo, 1991), ch. 4; and Hashimoto, ‘Gendai Nihon Kigyo no Soshiki to Kodo’ (Organizations and Behaviour of Present-day Japanese Corporations), Keizai Shirin 27 (1) (Hosei University) (1990). 3. Some recent findings of these schools can be found in Imai Ken’ichi and Komiya Ryutaro (eds.), Nihon no Kigyo ( Japanese Corporations) (University of Tokyo Press, 1989). 4. Kiyonari Tadao, Chusho Kigyo Dokuhon, Dai 2-han (A Reader on Small and Medium Firms, 2nd edn.) (Toyo Keizai Shimposha, 1990), 47–8. 5. M. J. Piore and C. F. Sabel, The Second Industrial Divide (1984), 20. 6. The income of an individually owned firm tends to be overestimated as it includes an imputed house rent, and as many of these firms do not hire employees on a continuous basis. 7. The figures cited are from Keizai Kikakucho (Economic Planning Agency), Kokumin Keizai Keisan Nempo (Yearbook of National Economic Accounting), 1991

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NOTES

8.

9.

10.

11.

12.

13.

14. 15.

16.

17.

305

edn. The relative sizes of the income of private corporations and that of individually owned firms were reversed for the first time in early 1988. The period 1979–89 saw the number of corporations increase by approx. 560,000, of which approx. 530,000, or 94.1%, were family concerns with paid-up capital of less than ¥50 million. See Kokuzeicho (National Tax Administration Agency), Hojin Kigyo no Jittai (The Actual State of Private Corporations), 1980 and 1990 edns. Examples of small and medium firms that went bankrupt are described e.g. in each annual edition of Chushokigyocho (Small and Medium Enterprise Agency), Chusho Kigyo Hakusho (White Paper on Small and Medium Enterprises). Kiyonari Tadao, Nihon Chusho Kigyo no Kozo Hendo (Structural Changes in Japan’s Small and Medium Firms) (Shin-hyoronsha, 1970), and Koike Kazuo, Chusho Kigyo no Jukuren (Skill Improvements in Small and Medium Firms) (Dobunkan, 1981), ch. 3. The data are taken from Chushokigyocho, Chusho Kigyo Hakusho, 1990 edn., 121–3. The declining percentage of small and medium firms newly established as independent entities means that the entry barrier has grown higher since the soaring of the yen’s value. This seems to explain why business incubation systems and science parks are drawing so much attention even in Japan, with its fairly dense and extensive distribution of small and medium firms. Tanishiki Hiroshi, Chusho Kigyo Tosan no Kozu (The Patterns of Bankruptcies of Small and Medium Firms) (Tsusho Sangyo Chosakai, 1986), 36. The second most common career followed by the owner-operators of small and medium firms that go bankrupt is to ‘go missing’. The owner-operators of failed firms who follow this path and those who become employees of small and medium firms add up to 77%, highlighting the severity of competition faced by entrepreneurial capitalists. Even in small and medium firms, there are extensive and deep career development paths (from blue-collar to white-collar jobs), and the period of employment tends to be growing longer. See further Miwa Yoshiro, Nihon no Kigyo to Sangyo Soshiki ( Japanese Firms and Industrial Organizations) (University of Tokyo Press, 1990), ch. 3. The immediate factor disrupting the dealership linkage is the rapid growth of specialized mass retailing chains and discount shop chains, which in turn reflects increasingly diverse consumer needs and tastes, and the fact that product reliability has been improved to the extent of making after-sales services unnecessary. The data cited are from Chushokigyocho, Dai 7-kai Kogyo Jittai Kihon Chosa Hokokusho: Sokatsu-hen (Report of the Seventh Survey on the Realities of Industries: General Summary) (1990). Here the term ‘non-family concerns’ is used to connote both non-family concerns and family concerns which are run as non-family concerns. Corporations in the latter category can be seen as subsidiaries of family concerns. The period 1979–89 saw family concerns decrease by a net of 2857, while ‘family concerns which are run as non-family concerns’ increased by 18,386, or 49.1% (according

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18. 19.

20. 21.

22. 23. 24.

25.

26.

27.

28.

NOTES

to Kokuzeicho, Hojin Kigyo no Jittai). The increase of the latter seems to have been caused by the restructuring and spin-offs to be discussed later. Baba Hiroji, ‘Gendai Sekai to Nihon Kaishashugi’, p. 71. The quotations that follow are from pp. 71–4. Imai Ken’ichi and Komiya Ryutaro, ‘Nihon Kigyo no Tokucho’ (Characteristic Features of Japanese Firms), in Imai and Komiya (eds.), Nihon no Kigyo; Komiya Ryutaro, Gendai Chugoku Keizai (The Present-Day Chinese Economy) (University of Tokyo Press, 1989), chs. 2 and 3. Kuwabara Yasuo, ‘Nihonteki Keiei-ron Saiko’ (The Thesis on the Japanese Management Method Reconsidered), Nihon Rodo Kyokai Zasshi 342 (1988). As reported by Nihon Keizai Shimbun, 8 May 1991, in an article entitled ‘Kabunushi Junan no Jidai’ (The Age of Hardship for Stockholders), based on 874 responses to a questionnaire from presidents of companies whose shares are either listed or traded on the over-the-counter market. Aoki Masahiko, Genkai no Kigyo (Present-Day Corporations) (Iwanami Shoten, 1984), 106–10. Ronald Dore, British Factory–Japanese Factory (Berkeley, Calif.: University of California Press, 1973), 117. The ‘combination of capitalist competition and communal or socialistic relationships’ mentioned earlier is explicated in four points, and this is the first of the four. The Company Law prescribes that a shareholder holding continuously for a minimum of six months 3% or more of the outstanding stocks of a company is eligible to request the convening of a shareholders’ meeting and to institute a law suit seeking the removal of a company official on account of his or her misdeeds. The figure is somewhat of an underestimate, as it excludes firms bearing individual names that are essentially run as individual operations but still satisfy the criterion adopted here. Of the top 100 firms in terms of non-financial asset holdings as of FY1986, as identified by the Fair Trade Commission in its 1988 report entitled Shuyo Daikigyo no Kabushiki Shoyu Jokyo ni tsuit (On the Stockholding Situation of Major Companies), Kajima Corporation (ranked 30th), Kumagaigumi Co. Ltd (39th), and Daiei Inc. (60th) are deemed to have strong characteristics of family concerns, while Bridgestone Corporation (89th) is considered to have rid itself of such characteristics. See Kigyo Keiretsu Soran (Toyo Keizai Shimposha, 1991). It should be pointed out that Kajima Corporation appointed a non-member of the Kajima family as its chief executive officer. In contrast, Daikyo (85th) should be regarded as a concern run directly by its owner/founder. Criterion B requires the presence of individual shareholders holding 3% or more of the outstanding stocks of the firm concerned. None the less, the representative firms counted in accordance with this criterion include Maeda Construction Co. Ltd, S. & B. Shokuhin Co. Ltd (foodstuffs), Daishowa Paper Mfg. Co. Ltd, Hisamitsu Pharmaceutical Co. Inc., Isetan Co. Ltd (a department store chain), and Suruga Bank Ltd; and these are the firms which tend to choose their chief

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NOTES

29.

30.

31. 32.

33. 34.

35.

36. 37. 38.

39.

307

executive officers from among the members of their founding families, or which are under the strong influence of members of such families. The data are taken from Toyo Keizai Shimposha, Kigyo Keiretsu Soran, 1991 edn. The maximum percentage of the share a financial institution is allowed to hold in a non-financial corporation is 10%. The presidents of Mitsukoshi Ltd in 1985 and of Itoman & Co. in 1990 were removed under shareholder influence. But the decisions on the removals were made not by shareholders’ meetings but by the boards of directors, without involving open, express proposals from shareholders. Nihon Keizai Shimbun, 28 May 1991, and Nihon Kogyo Shimbun, 31 May 1991. Whether or not banks can survive long-term competition ultimately depends on their ability to increase the loanable funds at their disposal; this explains why banks have been competing fiercely for greater shares of deposits, and why the size of deposits amassed by a bank has come to be used as the index of its ‘power’. Another point to be made is that, while a merger between two independent, large firms on an equal footing is very rare in Japan, such a merger between two banks is by no means rare, because a merger is a very effective means of increasing at a stroke the operational funds of the newly consolidated bank. And banks often become strong shareholders of business companies, because holding large percentages of shares in such companies makes it possible to carry out transactions with these companies more advantageously. Miwa Yoshiro, Nihon no Kigyo to Sangyo Soshiki, ch. 6. The data are based on Kigyo Keiretsu Soran (1991). The status of main banks tends to be secure in stable larger firms with long histories, with which they have cultivated a wide range of business relations. Miwa Yoshiro, Nihon no Kigyo to Sangyo Soshiki, asserts that replacements of the main banks can be an option even for firms in bad shape, and that the main banks do not serve as the last resort for them. The following description draws on Osawa Shokai (Osawa & Co.), Sogyo Hyakunenshi (One Hundred Years since the Founding) (1990). The data are based on Yukashoken Hokokusho Soran: Kabushikigaisha Osawa Shokai (Comprehensive Financial Statements: Osawa & Co.), 93rd–97th settlement terms. In stark contrast, the relations between Mitsubishi Corporation, the largest trading firm, and financial institutions in the same period were as follows: aside from its borrowings from the government-run Export–Import Bank of Japan, the largest private financier of its long-term funds changed from Meiji Mutual Life Insurance Co. to Mitsubishi Trust & Banking Corporation, and then to Mitsubishi Bank Ltd, but, in terms of both the amount of short-term loans and the total amount of loans, Mitsubishi Bank remained the largest financier. The data are based on Yukashoken Hokokusho Soran: Mitsubishi Shoji Kabushikigaisha (Comprehensive Financial Statements: Mitsubishi Corporation), FY1979–83. See further Nihon Keizai Shimbunsha, Hokai (The Collapse) (Nihon Keizai Shimbunsha, 1977), and Sumitomo Bank, Showa 50-nendai no Ayumi (Developments in the Fifth Decade of the Showa Era) (1986).

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NOTES

40. Daiwa Bank and Bank of Tokyo acted in the same manner when Eidai Co. Ltd, faced bankruptcy (see Miwa Yoshiro, Nihon no Kigyo to Sangyo Soshiki), and so did Daiwa Bank when Sanko Steamship went bankrupt. More recently, in the reorganization of the Itoman group companies, which reached the verge of collapse due to their failures in land speculation, Sumitomo Bank extended the necessary additional loans almost in their entirety. The total borrowing of the Itoman group firms grew by ¥400 bn., from ¥1110 bn. in Aug. 1990 to ¥1510 bn. in Dec. 1990, with ¥370 bn. of the net increase borrowed from Sumitomo Bank. See Mainichi Shimbun, 8 Feb. 1991. 41. See testimony accounts of Echigo Shoichi, then board chairman of C. Itoh & Co.; Nikkei Bijinesu, June 1998, and Nihon Keizai Shimbun, 5 Jan. 1991. 42. This section is based primarily on NHK Keizaibu, Gokuhi Shirei: X-sha wo Baishuseyo (A Top Secret Order: Buy Out Company X) (Nihon Hoso Shuppan Kyokai, 1990). 43. Toyo Keizai Shimposha, Kigyo Keiretsu Soran (1987 edn.). 44. One reason why Mitsubishi Bank, the third largest lender to Sankyo, rather than Hachijuni Bank, the largest financier, played the leading role among financiers seems to have been that Hachijuni Bank had Minebear as one of its major customers. 45. Similar schemes to attain safe majority shareholders’ blocs seem to have been put into effect on the initiative of the main banks in a number of other cases of attempted share-cornering and/or aborted takeover bids, such as the cornering of shares of Kokusai Kogyo and Janome Sewing Machine by Koshin; those of Chujitsuya, Inageya, Nagasakiya, and Isetan by Shuwa; those of Koito Seisakusho by the American company Boon; and those of Kori Tekkosho by Japan Bulker; but the details remain unknown. 46. The date cited here are from Kigyo Keiretsu Soran. 47. See e.g. Shukan Asahi (ed.), Shacho e no Kaidan (Corporate Ladder to the President) (Asahi Shimbunsha, 1989). 48. On this point, Yukashoken Hokokusho (Financial Statements) of the firms concerned offer the relevant data in the greatest detail. 49. Kuwabara Yasuo, ‘Kanrisha, Keieisha Kyaria Keisei no Mekanizumu’ (The Mechanism of Managers’ and Executives’ Career Formation), in Kamishiro Kazuya and Kuwabara Yasuo (eds.), Gendai Howaitokara no Rodo Mondai (Contemporary Labour Problems of White-Collar Workers) (Nihon Rodo Kyokai, 1988), points out that a screening process is clearly at work both in the selection of section managers to be promoted to department heads and in the selection of department heads for promotion to board members. 50. The data are based mainly on ‘Yakuin no Shogu ni kansuru Sogo Jittai Chosa Kekka Matomaru’ (Findings of a Comprehensive Survey on the Treatment of Corporate Directors Compiled), Rosei Jiho 2999. The survey was conducted in Sept.–Oct. 1990. 51. See e.g. John Fields, Tono to Juyaku (the Japanese edn. of The Lord and His Directors) (East Press, 1991), 111–12.

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309

52. Uekusa Eki, ‘Kokigyo no Min’eika: Haikei to Seika’ (Privatization of Public Corporations: Background and Achievements), in Imai Ken’ichi and Komiya Ryutaro, Nihon no Kigyo. 53. See n. 50 above. 54. The following description is based mainly on Koike Kazuo (ed.), Daisotsu Howaitokara no Jinzai Keisei (Skill Formation of College-Educated White-collar Employees) (Toyo Keizai Shimposha, 1991). See also Aoki Masahiko, Koike Kazuo, and Nakatani Iwao, Nihon Kigyo Gurobaruka no Kenkyu (Studies on the Globalization of Japanese Firms) (PHP Kenkyusho, 1989), 160–74; Koike Kazuo, ‘Daisotsu Shain no Jinzai Kaihatsu’ (Skills Development of College-Educated Employees), in Nihon Keizai Shimbunsha (ed.), Zoku Gendai Keieigaku Gaido (A Sequel to the Guidebook on Contemporary Business Administration) (Nihon Keizai Shimbunsha, 1989). 55. This is synonymous with what Ishida Hideo calls noryoku byodo-shugi (the principle of equality with little regard to competence), which he defines as the practice of ‘refraining as much as possible from openly distinguishing some employees from others on the basis of their competence and performance’, based on the belief that open discrimination is detrimental to the morale of the entire workforce, or that promoting employees slowly and with as little discrimination as possible over an extended period enhances the productivity of the workforce as a whole. See Ishida Hideo, Nihon Kigyo no Kokusai Jinji Kanri (International Personnel Management of Japanese Firms) (Nihon Rodo Kyokai, 1985), 7. 56. ‘Kanrishoku no Chingin Suijun to Shokakusa no Jittai’ (The Reality of Supervisors’ Salary and Other Differentials), Rosei Jiho 2973 (1990). 57. ‘Saikin no Shikaku Seido to Chingin Seido no Un’yo Jittai’ (The Recent Qualification and Salary Systems in Actual Operation), Rosei Jiho 2880 (1988), and ‘Jinji Koka Seido ni kansuru Jittai Chosa’ (A Survey on the Actual Conditions of the Personnel Evaluation Schemes), Rosei Jiho 2853 (1987). 58. Anki Suguru, ‘Nihon Kigyo ni okeru Jinji Koka Seido no Jittai to Kadai’ (The Reality of and Problems with the Personnel Evaluation Schemes of Japanese Firms), Mita Shogaku Kenkyu 32 (2) (1989). 59. Hideo, Nihon Kigyo no Kokusai Jinji Kanri, 11–14. 60. The figures are as of 1989, taken from Bank of Japan, Keizai Tokei Nempo (Yearbook of Economic Statistics), 1990 edn. 61. It is also important to note that cash holdings and deposits of larger corporations increased dramatically. Thus these firms have ample cash surpluses and, with their majority shares held by safe shareholders, they can successfully resist the pressure coming from the stock market. For further discussion, see Horiuchi Akiyoshi, ‘Bei Bun-sha wa Naze Koito ni Haijosaretaka’ (Why the American Company Boon was Repelled by Koito Manufacturing), Ekonomisuto, 30 May 1989, 81–2. 62. This can be interpreted as revealing that small and medium firms were more actively playing zaiteku, or financial-engineering money games, than were larger

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63.

64. 65. 66. 67. 68. 69.

70.

71.

NOTES

firms. Another way of putting this is that, given the declining marginal returns on investments in productive facilities, it was—of the inhabitants of the ‘two different worlds’—capitalists who opted to act in pursuit of maximizing their profits in the short run. Inagami Takeshi, Tenkanki no Rodo Sekai (The World of Labour in a Transition Period) (Yushindo, 1989), 12; Ministry of Labour, Koyo Kanri no Jittai (The Actual Situation of Employment Management), 1987 edn. Ibid., 1988 edn. Ibid., 1989 edn. Ibid., 1975, 1987, and 1990 edns. report surveys on career-switchers, but fail to specify their numbers relative to the total workforce. Ibid., 1990 edn. Koyo Shokugyo Sogo Kenkyusho, Wagasha no Saiyo Senryaku (Our Companies’ Recruitment Strategies) (1989), 14–15. The following description is based on Koyo Kaihatsu Senta (Employment Development Centre), Tenshoku Hakusho (White Paper on Career Switching) (Niki Shupan, 1990), ch. 3. Two corporate employees sought my personal advice on their career-switching in 1989–90, and allowed me glimpses into the processes they went through before they landed their new jobs. Both were in their early thirties at the time, and both were trying to change jobs from trading firms to banks, with the prospect of being promoted to core managerial positions. In both cases, the screening process took nearly one year, involving several rounds of interviews (with each new round conducted by interviewers holding higher positions than those of the preceding round), and the submission of a few written reports (possibly for reviewing the applicants’ motivations for career-switching, willingness to work under the new environments, and career backgrounds). The time-consuming evaluation process seems to have been meant not only to evaluate the applicants’ competence but also to determine exactly where in the corporate ladder they should be ranked upon their employment. As a matter of fact, after their employment, the two career-switchers were treated more or less on a par with college graduates of the same age group who had started working for the banks immediately after their graduation. In these particular two cases, the career-switchers in their earlier jobs had been treated the same as their fellow college graduates of the same age group. It should be noted that the effects of two factors pointed out by Nakatani— the raising of the retirement age under the pressure of the ageing of society, and the baby-boomers’ rise along the corporate ladder to posts just below those of supervisors—if left alone, can lead to delayed promotions. However, Nakatani does not use the term ‘delayed promotions’ (see Nakatani Iwao, Tenkansuru Nihon Kigyo ( Japanese Companies under Transformation) (Kodansha, 1987), 109). Given these factors, the efforts to accelerate the process of sorting out employees of the same age group may be seen as a readjustment aimed at maintaining the system of slow-track promotion.

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72. Ministry of Labour, Koyo Kanri Chosa Hokoku (Report of a Survey on Employment Management), 1990 edn. 73. Kihata Akira, Shacho Rikkoho (Applying for Candidacy as Presidents of In-House Venture Businesses) (Nikkan Shobo, 1991). 2. AN INTRODUCTION TO JAPANESE COMPANY HISTORY

1. Yamazaki Hiroaki, ‘Senzen/Sengo no Nihon no Daikigyo: 50 sha rieki rankinghyo no Kosatsu’ (A Glance at the Ranking of the Pre- and Postwar 50 Largest Japanese Enterprises According to Net Profits), in Yonekawa Shin’ichi, Shimokawa Koichi, Yamazaki Hiroaki (eds.), Sengo Nihon Keieishi (Postwar Japanese Business History) i (Toyokeizai Shimpo, 1991). 2. Thomas K. McCraw (ed.), America Tai Nihon Nichibeikeizai no hikakukenkyu (America and Japan: Comparative Research on the Japanese and American Economies) (TBS Britannica, 1987), 27. 3. Alexander Gerschenkron, Economic Backwardness in Historical Perspective (Cambridge, Mass.: 1962), 1. 4. ‘The Goose Flight Formation receives its name from the shape of the follower countries’ development curve: the initial importation of industrial goods is followed by production and finally by exportation. In this threefold transition, there is a lapse of time between consumer products and capital products as well as between articles of inferior quality and those of refined quality. . . . We call the successive industrial development from importation to production to exportation, the fundamental form of the development in the Goose Flight Formation. The successive transition of the leading industries from consumer to capital goods, i.e. from basic to sophisticated goods, forms its secondary pattern.’ Akamatsu Kaname, ‘Nihon Sangyo Hatten no Ganko Keitai’ (The Goose Flight Formation in Japanese Industrial Development), in Sekai Keizai Kenkyu Kyokai Hen (The World Economic Research Association Edition) (ed.), 1985 Sekai Boeki (1985 World Trade) i: Nihon Boeki no Kozo to Hatten (The Structure of Japanese Trade and Development) (Shiseido: 1972), 16, 17. 5. Takashi Murayama, Sekai Mengyo Hattenshi (The History of the World Cotton Industry) ( Japan Cotton Spinners’ Association, 1961), tables 142, 143; Seki Keizo, Nihon Mengyoron (The Theory of the Japanese Cotton Industry) (University of Tokyo Press, 1985), supplementary tables 49, 59, 62; and Nihon Boseki Jijyo Sankosho (The Japanese Cotton Spinning Industry’s Annual Reference) (Osaka). 6. Ohara Soichiro, Kagaku Sen’i Kogyoron (The Theory of the Chemical Fibre Industry) (University of Tokyo Press, 1961). 7. Kokuseisha, Nihon Kokuseizue ( Japanese National Statistics) 1956 edn., 342–4. Until 1971 Japan continued to surpass the US in production volume of black and white televisions, but after 1972 the position was again reversed. None the less, this change was due to its concentration on the production of colour televisions, not to a decrease in its productive superiorities.

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8. ‘It was in 1976 that the number of colour televisions produced exceeded 10 million, sending it to first place in the world as a television producer’; J. Baranson, trans. Makino Noboru, Nihon no Kyosoryoku America no Gyakushu o Fusegeruka ( Japan’s Competitiveness: Can It Protect Itself from the American Countershock?) (Diamond, 1982), 55. In 1978–9 and after 1983, the US surpassed Japan in its production of colour televisions; however, this was due to OMA (order by marketing agreement), which occurred over three years starting in 1977, as well as to production by Japanese manufacturers in the US. 9. Kokuseisha, Sekai Kokuseizue ( Japanese National Statistics) 1990–1, 309. 10. Itami Hiroyuki and Itami Kenkyushitsu (Itami Research Centre) Gyakuten no Dynamism Nichibei Handotaisangyo no Hikakukenkyu (The Dynamism of Turnabouts: Comparative Research of the Japanese and American Semiconductor Industries) (NTT Press, 1988), 204. 11. Nissan Motors (ed.), Jidosha Sangyo Handbook (Automobile Industry Handbook) (1989), 108. 12. Yamazaki Hiroaki, Nihon Mengyo Kozoron Josetsu: Nihon Mengyo no Hattenjoken ni Kansuru Ichishiron (Preface to the Theory of the Structure of the Japanese Cotton Industry: The Conditions for Development) (Hosei University Keiei Shirin, 1968), v (3), 41–51. 13. Yamazaki Hiroaki, Ryotaisenkanki ni okeru Enshu Men Orimono Gyo no Kozo to Undo (The Structure and Activities of the Enshu Weaving Industry during the Wars) (Hosei University Keiei Shirin, 1969), vi (1–2), 145–8. Abe Takeshi, Nihon ni okeru Sanchi Men Orimono Gyo no Tenkai (The Development of a Textile Industry Area in Japan) (University of Tokyo Press, 1989), 258, 259, 267–70, 292–306, 320–38. 14. Yamazaki Hiraki, Nihon Kasensangyo Hattatsu Shi Ron (An Essay on the History of Japanese Chemical) (University of Tokyo Press, 1975) ch. 3. 15. Table 6 in Yamazaki Hiroaki, ‘Nihon Kigyoshi Josetsu: Daikigyo Ranking no Antei to Hendo’ (An Introduction to the History of Japanese Enterprises: Stability and Change in the Ranking of Big Businesses), in Institute of Social Science, University of Tokyo (ed.), Gendai Nihon Shakai v: Kozo (Contemporary Japanese Society v: Structure) (University of Tokyo Press, 1991). 16. This is from Yonekura Sei’ichiro’s ‘Tekko: Sono Renzokusei to Hirenzokusei’ (Steel: Its Continuity and Discontinuity), ch. 5 of Yonekawa Shin’ichi et al., Sengo Nihon Keieishi (Postwar Japanese Business History) i. 17. Northwestern University Center for the Interdisciplinary Study of Science and Technology, The US Consumer Electronics Industry and Foreign Competition (1980), 10, 11. Itagaki Hiroshi, ‘Color Terebi Sangyo no Taibeishinshutsu’ (The Colour Television Industry’s Penetration of the United States Market), in Sasaki Takao and Esho Hideki (eds.), Nihon Denkisangyo no Kaigaishinshutsu (The Penetration of Japanese Electronics Industry’s Overseas) (Hosei University Press, 1987), 39–42. 18. Ibid. 11–12. 19. Barenson, in Nihon no Kyosoryoku, 55, 151–2. 20. A dominant design is one which originates from the sum of individual technical innovations from separate introductions in past products. Its most important

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21. 22. 23. 24.

25. 26. 27. 28.

29. 30.

31.

32. 33. 34. 35. 36. 37.

313

economic consequence is that it compels manufacturers to incorporate a certain degree of product standardization, and therefore permits the pursuit of scale merits in production. Moreover, it provides a turning-point of the functional level for competition, which when carried out effectively can result in a simultaneous substitution of product function and cost as the base. With this dominant design in place, major innovations will cease to occur at the same frequency, and incremental improvements in the specifically focused products and processes will become the major concentration. Imai Ken’ichi and Sakuma Akimitsu, ‘Sentangijutsu O Meguru Nichibei Boeki Masatsu: Handotai o Chushin ni mita Sangyososhikiteki Bunseki’ (High Technology and Japanese–American Trade Frictions: Analysis of Industrial Organization Concentrating on Semiconductors), Quarterly Gendaikeizai (Spring 1983), 72. A pioneer in this field was Itami and the Itami Kenkyushitsu; see Dynamism, 16–18, and Imai and Sakuma, ‘Sentangijutsu’, 66. Ibid. 65. Itami, Dynamism, 137. Sei’ichi Ishisaka and Murakami Koji (eds.), Sentangijutsu o Sasaeru Handotai (Semiconductors: The Support for High Technology) (MITI Industrial Survey Association, 1984), 18. Itami, Dynamism, 74. Ibid. 73, 74. Ibid. 64. J. Ziesman and L. Tyson (eds.), trans. Kuninori Morio, Hanada Teruo, Matsumura Masatoshi, Ochi Hisao, and Ooka Akira, Nichibei Sangyokyoso no Choryu: Keizaimasatsu no Seijikeizaigaku (Currents in Japanese and American Industrial Competition: The Political Economics of Economic Friction) (Rikotosho, 1990), 251–5. Michael L. Dertouzos et al., Made in America, trans. Yoda Naoya (Soshi, 1990). J. P. Womack, D. Roos, and D. T. Jones, trans. Sawada Hiroshi, Lean Seisanhoshiki ga Sekai no Jidosha Sangyo o ko kaeru (This Is the Way the Lean Production System Changes the World Automobile Industry) (Keizaikai, 1990). For the content of this summary, I am indebted to Kobayashi Nobuo, ‘Seisan System ni Okeru Kakushin-Toyota no Case’ (Innovation in the Production System: The Case of Toyota), in Itami Hiroyuki, Kagono Tadao, Kobayashi Takao, Sakakibara Kiyonori, and Ito Motoshige (eds.), Kyoso to Kakushin: Jidosha Sangyo no Kigyoseicho (Competition and Innovation: Growth of Enterprises in the Automobile Industry) (Toyokeizai Shinposha, 1988). Mishima Yasuo, ‘Sasshu Zaibatsu no Seiritsu to Hokai’ (The Establishment and Collapse of the Sasshu Zaibatsu), Keieishigaku (Business History) 15/1 (1980). Suzuki Tsuneo, ‘Goseisen’i’ (Synthetic Fibres), in Sengo Nihon Keieishi i, 124, 130–2, 137, 138. Yamazaki, Nihon Kigyoshi Josetsu, chart 2. Ibid., table 7. Ibid., table 8. Imai and Sakuma, ‘Sentangijutsu’, 66.

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NOTES

38. 39. 40. 41.

Yamazaki, Nihon Kigyoshi Josetsu, chart 3. Ibid., table 10. Ibid., table 11. Shokokumiai Chuokinko Chosabu (Survey Section of the Central Bank for Commercial and Industrial Cooperatives), ‘Shitauke Jittaichosa Hokoku’ (Report on the Actual Situation for Subcontractors), Shokokinyu (Commerce and Industry Finance) 21/7 (1971). Shitauke Chushokigyo no Genkyo: Anteiseicho Keizaika ni ikiru Michi (The Current Situation for Small and Medium-Sized Subcontractors: The Path for Survival under Stable Economic Growth) (1977). Shitauke Chushokigyo no Shinkyokumen-Sono Jiritsukashiko to Shitauke Saihensei (The New Phase for Small and Medium-Sized Subcontractors: Their Intention to Become Autonomous and Their Reorganization) (1983). Atarashii Bungyokozo no Kochiku o Mezashite: Endakaka no Shitauke Kikaikogyo no Shintenkai (Aiming for the Building of a New Structure for the Division of Labour: New Developments in the Subcontracting Machinery Industry Faced with Endaka) (1989). 42. Yamazaki, Nihon Kigyoshi Josetsu, table 13. 43. For discussion on ‘Japanese-style’ management theory from a business historian’s point of view, see the following comprehensive works of Nakagawa Kei’ichiro: the introduction to Nihontekikeiei: Sono Hikaku Keieishiteki Kosatsu ( Japanese-Style Management: A Consideration of Comparative Business History) in Nakagawa (ed.), Nihonteki Keiei ( Japanese-Style Management), Nihon Keieishi Koza (A Course in Japanese Business History) v (Nikkei Shimbun, 1977); ‘Japanese Management in Historical Perspective: Informal, Integrative, Democratic and Focused on the Long-Term’, Japanese Yearbook of Business History (1988); ‘Nihonkigyo no Keieikozo Hokakushiteki Kosatsu’ (A Consideration of the the Management Structure of Japanese Enterprises from the Viewpoint of Comparative History), in Nakagawa (ed.), Kigyo Keiei no Rekishiteki Kenkyu (Historical Research into Company History) (Iwanami, 1990). 44. The following should provide persuasive arguments: Suzuki Yoshiharu, ‘Nihonteki Kigyo System to Kokusai Kyosoryoku: Nihonteki Seisan System no Kyosoryokuteki Bunseki’ (The ‘Japanese-Style’ Enterprise System and International Competitivity: Analysis of the Competitivity of the ‘Japanese-Style’ Production System), in Keizai to Keiei (Economics and Management) 21/2 (Sapporo, 1990), 91, 92.

3. INDUSTRIAL RELATIONS AND THE UNION MOVEMENT

1. Sources on Sanpo (Industrial Patriotic Federation) and its influence on postwar union formation include Saguchi Kazuro, Nihon ni okeru sangyo minshushugi no zentei (Prerequisites to Industrial Democracy in Japan) (University of Tokyo Press, 1991) and A. Gordon, The Evolution of Labor Relations in Japan: Heavy Industry, 1853–1955 (Cambridge, Mass.: Harvard Council on East Asian Studies, 1985), 263 and ch. 8.

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315

2. Okochi Kazuo (ed.), Rodo kumiai no seisei to soshiki (Labour Union Formation and Organization) (University of Tokyo Press, 1968), 9–10. A work emphasizing the continuity from prewar to postwar among union organizers over the spontaneous creation of postwar unions is Yamamoto Kiyoshi, ‘Sengo rodo kumiai no shuppatsuten’ (The Starting-Point for Postwar Labour Uunions), in Sumiya Mikio (ed.), Nihon roshi kankei shiron (Historical Essays on Japan’s Labour–Management Relations) (University of Tokyo Press, 1977). 3. Mitsubishi Tokyo Steelworkers’ Union (ed.), Rodo kumiai nijunen shi (Labour Union Twenty-Year History) (Mitsubishi Tokyo Steelworkers’ Union, 1966). 4. Okochi Kazuo, Ujihara Shojiro, and Fujita Wakao (eds.), Rodo kumiai no kozo to kino (The Structure and Function of Labour Unions) (University of Tokyo Press, 1959), 47. 5. Ujihara Shojiro and Rodo Undo Kenkyukai (eds.), Shiryo rodo sensen toitsu (Materials on Labour Front Unification) (Rodo Kyoiku Sentaa, 1988), 5. 6. Ministry of Labour (ed.), Shiryo rodo undo shi (Materials on the History of the Labour Movement), 1945–6 edn., 568. 7. Sodomei gojunen shi kanko iinkai, Sodomei gojunen shi (Sodomei Fifty-Year History) (3 vols., Sodomei gojunen shi Kanko iinkai, 1968), iii. 9–10. 8. Ministry of Labour, Shiryo rodo undo shi, 1945–6 edn., 570. 9. Economic Planning Agency (ed.), Kokumin shotoku baizo keikaku (National IncomeDoubling Plan) (Finance Ministry, 1961), 39. 10. Uhihara and Rodo Undo Kenkyukai, Shiryo, 16. 11. Ibid. 17. 12. This principle is derived from the basic principles of the International Confederation of Free Trade Unions. 13. The passage is taken from Zenro Kaigi’s (1954) founding convention proclamation. Cited in Ujihara and Rodo Undo Kenkyukai, Shiryo, 28. 14. Ota Kaoru, Gendai no rodo undo (The Contemporary Labour Movement) (Rodo Jumposha, 1964), 2. 15. Ibid. 50. 16. Industrial unions exist but, in Japan’s case, rarely exercise authority over their affiliated enterprise unions. One purpose of the Sohyo-led shunto was to make industrial unions the primary bargaining agents, as they are in many European countries, and thereby increase their influence and that of the labour movement. 17. Ministry of Labour, Shiryo rodo undo shi (Materials on the History of the Labour Movement), 1955 edn., 21–3. 18. Ibid. 961, 962. 19. Ota Kaoru, Shunto no shuen: teiseichoka no rodo undo (The End of Shunto: The Labour Movement under Low Growth) (Chuo Keizaisha, 1975), 92. 20. Economic analyses of wage determination include Koike Kazuo, Nihon no chingin kosho ( Japan’s Wage Bargaining) (University of Tokyo Press, 1962); Okochi Kazuo (ed.), Sangyo-betsu chingin kettei no kozo (The Structure of Industrial Wage Determination) (Nihon Rodo Kyokai, 1965); Takanashi Akira, Nihon tekkogyo no

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21. 22.

23. 24. 25. 26.

27.

28. 29.

30.

NOTES

roshi kankei (Industrial Relations in Japan’s Steel Industry) (University of Tokyo Press, 1967); Sano Yoko, Koike Kazuo, and Ishida Hideo, Chingin kosho no kodo kagaku (The Action Science of Wage Negotiations) (Toyo Keizai Shimposha, 1969); Sano Yoko, Chingin kettei no keiryo bunseki (Weight Analysis of Wage Determination) (Toyo Keizai Shimposha, 1970); Koshiro Kazuyoshi, Nihon no roshi kankei ( Japanese Industrial Relations) (Yuhikaku, 1983); and Shimada Haruo, Rodo keizaigaku (Labour Economic Study) (Iwanami Shoten, 1986). Sohyo itself later confirmed that, ‘Objective conditions such as high growth and the accompanying tight labour market greatly assisted labour union bargaining strength [and compensated for] market structure weakness’; see Kozuma Yoshiaki, Shunto: Sohyo shi no danmen (Shunto: Profile of Sohyo History) (Rodo Kyoiku Sentaa, 1976), 313. In addition, Kozuma’s Shunto: sono rekishi to kadai (Shunto: Its History and Themes) (Rodo Jumposha, 1965), which pursues Sohyo’s movement in more depth, says that shunto’s achievements resulted from ‘the accomplishments of high economic growth, not from the achievements of shunto leadership, but, as it were, from unexpected good fortune’ (p. 109), and offers the view that ‘the highest merits [of shunto’s success] were . . . high economic growth’s objective conditions’ (p. 232). Ministry of Labour, Rodo hakusho (Labour White Paper), 1971 edn., 108. Yawata Steel Corporation Labor Union (ed.), Yawata Seitetsu rodo undo-shi (Yawata Steel Corporation Labor Union History), last vol. (Yawata: Yawata Steel Corporation Labour Union, 1960), 80. Ibid. 1326. See ‘On Production Strategy’, ibid., 1365. Miyata Yoshiji, Kumiai zakkubaran (Union Frankness) (Toyo Keizai Shimposha, 1982), 36. Orii Hyuga, Romu kanri nijuu-nen: Nippon Kokan (kabu) ni miru sengo Nihon no romu kanri (Twenty Years of Labour Management: Japanese Labour Management Seen at Nippon Kokan ( joint-stock company) ) (Toyo Keizai Shimposha, 1973), 177. On informal groups, see Yamamoto Kiyoshi, ‘Daikigyo no roshi kankei: “foomaru” kiko, “infoomaru” soshiki’ (Labour–Management Relations in Large Enterprises: ‘Formal’ Structures, ‘Informal’ Organizations), in Tokyo Daigaku Shakai Kagaku Kenkyujo (ed.), Gendai Nihon shakai (Contemporary Japanese Society) v (University of Tokyo Press, 1991). Orii, Romu, 187–8. Matsuzaki Tadashi, ‘Tekko Sogi (1957/59)’ (Industrial Disputes in the Steel Industry), in Yamamoto Kiyoshi (ed.), Nihon no rodo sogi (Labour Disputes in Japan) (University of Tokyo Press, 1991), 193. Kumazawa Makoto, ‘Shokuba shakai no sengoshi: tekkogyo no romu kanri to rodo kumiai’ (Postwar History of Workplace Society: Labour Management and Labour Unions in the Steel Industry), in Shimizu Shinzo (ed.), Sengo rodo kumiai undoshi ron (Essays on the Postwar Labour Union Movement) (Nihon Hyoronsha, 1982).

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317

31. Orii, Romu, 39. 32. Watanabe Osamu, ‘Yutaka na shakai’ Nihon no kozo (‘Affluent Society’ Japan’s Structure) (Rodo Jumposha, 1991), ch. 3. On the thought of the IMF-JC, see Takagi Ikuro, ‘Nihon rodo kumiai undo ni okeru “uha” no keifu: Sodomei to JCgata no doshitsusei to ishitsusei’ (The Genealogy of the ‘Right Wing’ of the Japanese Labour Movement: Sodomei and JC-type Homogeneity and Heterogeneity), in Shimizu, Sengo. 33. Tekko Roren Renraku Kaigi (Steel Industry Contact Conference), ‘Rodo kumiaishugi towa: rodo kumiai-shugisha no katsudo no tame ni’ (About Labour Unionism: Reasons for the Activities of Proponents of Labour Unionism). See also Miyata, Kumiai, 213. 34. Ibid. 59–60. 35. Rodosha Doshikai, ‘Rodo undo no zenshin no tame ni’ (For the Advance of the Labour Movement), in Ujihara and Rodo Undo Kenkyukai, Shiryo, 36 ff. 36. Sumiya Mikio, Nihon Rodo Undo Shi (History of the Japanese Labour Movement) (Yushindo, 1966), 248. 37. Baba Hiroji, ‘Gendai sekai to Nihon kaishashugi’ (The Contemporary World and Japanese Company-ism), in Gendai Nihon Shakai (Contemporary Japanese Society) i. 47–8. 38. Economic Planning Agency, Kokumin Seikatsu Hakusho, 1975 edn., 2. 39. Ministry of Labour, Shiryo rodo undo shi, 1974 edn., 26. 40. Shiryo rodo undo shi, 1973 edn., 244–5. 41. Ibid., 1974 edn., 60. 42. Ibid. 51. 43. In Jan. 1975 the four major zaikai (business and employers organizations) appealed for ‘resolute discipline against the economic situation’ (Shiryo rodo undo shi, 1974 edn., 495). However, such appeals were a staple of the zaikai from the time of the 1960 US–Japan Security Treaty demonstrations. 44. Miyata, Kumiai, 35. 45. Nihon Tekko Sangyo Rodokumiai Rengokai (ed.), Tekko Roren undo shi (Steel Workers Federation History) (Tekko Roren, 1981), 341. 46. Kanamori Hisao (ed.), Sairon keizai hakusho: sengo keizai no kiseki (New Economic Debate White Paper: Locus of the Postwar Economy) (Chuo Keizaisha, 1990), 28. 47. Ibid. 218–19. 48. Shiryo rodo undo shi, 1975 edn., 721. 49. Ibid. 53–6. 50. Ibid. 62. 51. Ibid. 14. 52. Ibid. 141. 53. Ibid. 68. 54. Sohyo Policy Bureau (ed.), 1989-nen Sohyo chosa nenpo (Sohyo Annual Research Report, Final Version): Sengo rodo undo no totatsu ten (Overview of Postwar Labour Movement) (Rodo Keizaisha, 1989), 38.

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NOTES

55. Shiryo rodo undo shi, 1975 edn., 96–7. 56. Ministry of Labour, Rodo hakusho (Labour White Paper), 1976 edn., 18. 57. The 1976 Labour White Paper compares the macro-level demands of labour with the micro-level claims of management (p. 19). Apart from the matter of whether that examination is accurate or not, the 1975 wage raise was based largely on the profitability of enterprises, with the result that worker demands were consistently rebuffed. 58. Hyodo Tsutomu, Gendai no Rodo Undo (Contemporary Labour Movement) (University of Tokyo Press, 1981), 121. 59. Zensen Domei (textile workers), in a penetrating critique of the economic adjustment thesis, stated, ‘We are doubtful about the the composition of the “social contract” between us [labour unions] and the LDP. England and Germany have their own foundations, but Japan doesn’t yet have one.’ Shiryo rodo undo shi, 1975 edn., 721. 60. Ibid. 656 and 662. 61. Ibid. 59. 62. Ibid. 221. 63. Ibid. 391. 64. Miyata, Kumiai, 40–1. 65. Commenting on the JC-led labour movement, Takagi (‘Nihon rodo Kumiai’, 395) comments that ‘even Matsuoka [Komakichi], in order to evade [various economic and political problems], accused an enterprise-centred position’. 66. Sources on the Trade Union Council for Policy Promotion (seisui kaigi): Miyata, Kumiai, 199–203; Takahashi Hirohiko, Gendai seiji to shakai minshushugi (Contemporary Politics and Social Democracy) (Hosei University Press, 1985); and Shinoda Toru, Seikimatsu no rodo undo (The Labour Movement at the End of the Century) (Iwanami shoten, 1989). 67. Rodo hakusho (Labour White Paper), 1986 edn., 58–9. 68. Rengo’s Declaration of Principles, ‘The New Path and Our Role’, describes the low living standards and the weaknesses of enterprise unionism relative to national economic growth and corporate performance, but also praises the role of the labour movement: ‘Since the war, Japan has enjoyed rapid growth and development to account for one tenth of the world’s GNP and become the second leading economic power. In addition, by means of struggles aimed primarily at raising wages (shunto, chinto, etc.), workers have steadily improved their working conditions. During that time, two oil crises have assaulted the global economy but the response of labour unions both qualitatively and quantitatively was superb, enabling Japan’s economy to rise above difficulties and, compared to other nations, to achieve a smooth transition.’ This excerpt is from Rengo’s Rengo kessei taikai giansho (Rengo’s First Convention Report) (1987), 6. The same passage appears in an edition marking the establishment of New Rengo in 1989. 69. Keizai Kikakucho Sogo Keikaku Kyoku (Economic Planning Agency General Programme Bureau), Naiju kakudai to seika haibun (Expansion of Domestic Demand and Distribution of Fruits) (1987).

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319

4. THE WEAKNESS OF THE CONTEMPORARY JAPANESE STATE

1. Karel van Wolferen, The Enigma of Japanese Power (London: Macmillan, 1989), 1. 2. Omae Masaomi (trans.), James Fallows, More Like Us (Nihon fuji kome) (TBS Britannica, 1989), 98. 3. Ohara Susumu, Yoshida Toyoaki (trans.), Kabushiki gaisha Nihon ( Japan Inc.) (Simul Shuppankai, 1972). 4. Ezra F. Vogel, Japan as No. 1: Lessons for America (Cambridge, Mass.: Harvard University Press, 1979). 5. Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy 1925–1975 (Stanford, Calif.: Stanford University Press, 1982). 6. Vogel, Japan as No. 1, ix. 7. Ibid. 7. 8. Ibid. 65. 9. Ibid. 65. 10. Ibid. 117. 11. Omae Masaomi, More, 204. 12. Ibid. 207. 13. Ibid. 217. 14. Van Wolferen, Enigma, 26. 15. Ibid. 5. 16. Ibid. 6. 17. Tsuji Kiyoaki, ‘Tochi kozo ni okeru kakkyosei no kiin’; ‘Nihon fashizumu no tochi kozo’; both in Shinpan Nihon kanryosei no kenkyu (A Study of Japanese Bureaucracy, 2nd edn.) (University of Tokyo Press, 1969). 18. For more detail, see Watanabe Osamu, ‘Hoshu seiji to kakushin jichitai’, in Rekiken, Nihon shi kenkyukai (eds.), Koza Nihon rekishi 12 gendai 2 (Lectures on Japanese History vol. 12, Contemporary No. 2) (University of Tokyo Press, 1985); and Watanabe Osamu, Nihon koku kenpo ‘kaisei’ shi (History of the ‘Revision’ of the Japanese Constitution) (Nihon Hyoronsha, 1987). 19. Included in Akahata hyoron ban, special edn., Oct. 1986, No. 20. 20. Ito Kenichi, ‘ “Kokkyo naki keizai” e no keisho’ (Alarm Bells about ‘Borderless Economics’), Bungei shunju (Dec. 1987), 150. 21. Ozawa Ichiro, Nihon kaizo keikaku (Kodansha, 1993). 22. See e.g. Watanabe Osamu, ‘Gendai Nihon shakai no keni teki kozo to kokka’ (The Structure of Authority in Contemporary Japanese Society and the State), in Fujita Isamu (ed.), Keni teki chitsujo to kokka (University of Tokyo Press, 1987); Watanabe Osamu, ‘Gendai Nihon shakai no kozo: sono rekishi teki keisei’ (The Structure of Contemporary Japanese Society: Its Historical Construction), Shakai kagaku kenkyu, 30/3 (1988); and ‘Yutaka na shakai’: Nihon no kozo (The Structure of ‘Affluent’ Society: Japan) (Rodo Junposha, 1990). 23. Baba Hiroji, Gendai shihon shugi no toshi (Looking Through Contemporary Capitalism) (University of Tokyo Press, 1981), 66. Refer to this text also for the hidden meaning of ‘contemporary capitalism’.

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320

24. 25. 26. 27.

28. 29. 30. 31. 32.

33. 34. 35.

36. 37. 38. 39. 40. 41.

42. 43. 44.

45.

46.

NOTES

For more detail, see Watanabe Osamu, ‘Gendai Nihon’, 185–6. Ibid. 186. For more detail, see ibid. 192. Ibid. 195. I have received suggestions on this point from Kumazawa Makoto, ‘Shokuba shakai no sengo shi’ (The Postwar History of the Workplace Society), in Shimizu Shinzo (ed.), Sengo rodo kumiai undo shi ron (The History of the Postwar Labour Union Movement) (Nihon Hyoronsha, 1982); repr. in Kumazawa, Shokuba shi no shura o ikite (Chikuma Shobo, 1986); Orii Himuka, Romu kanri niju nen (Twenty Years Administering Labour Policy) (Toyo Keizai Shinposha, 1973). See ibid. and Motojima Kunio, Daikigyo rodosha no shutai keisei (Forming the Workforce in Large Corporations) (Aoki Shoten, 1982). For more detail, see Watanabe Osamu, ‘Yutaka na shakai’, ch. 3. For more detail, see Watanabe Osamu, ‘Gendai Nihon’, 208 ff. See Watanabe Osamu, ‘Yutaka na shakai’, ch. 5. For more detail, see ibid. ch. 3. On the two types of cooperative union, see Takagi Ikuo, ‘Nihon rodo kumiai undo ni okeru “uha” no keifu’ (The Lineage of ‘the Right’ in the Japanese Labour Movement), in Shimizu Shinzo, Sengo rodo. For more detail, see Watanabe Osamu, ‘Yutaka na shakai’, ch. 3. Shirai Hisanari, Kiki no naka no zaikai (Financial World in the Midst of Crisis) (Simul Shuppankai, 1973), 180. Miki Yonosuke, Zaikai shunobu (Financial Headquarters) (Bungei Shunju Shinsha, 1962); and Yamashita Tsuyoshi, Zaikai shiteno (Four Emperors of the Financial World) (Paru Shuppan, 1985). Tawara Soichiro, Sengo zaikai sengokushi (History of the Warring States in the Postwar Financial World) (Kodansha, 1986), 11, 17. Miki Yonosuke, Zaikai shunobu, 7–17; Yamashita Tsuyoshi, Zaikai shiteno, 14. Tawara Soichiro, Sengo, 18, 61–5; Yamashita Tsuyoshi, Zaikai shiteno, 72 ff. Tawara Soichiro, Sengo, 75–6. Shirai Hisanari, Kiki no naka, 7. Ibid. 42. For information on the zaikai’s political contributions, see Hanamura Nihachiro, Seizaikai paipu yaku hanseiki (Half a Lifetime of Linking the Political and Financial Worlds) (Shinbun Shuppankyoku, 1990). Shirai Hisanari, Kiki no naka, 42–3. Ibid. 230. On MITI in this period, see Johnson, MITI; Hayashibara Kazuhiko, Uchimaku tsusansho (Inside MITI) (Eru Shuppan, 1977); Honda Yasuharu, Nihon neo-kanryo ron (Theory of Japanese Neo-Bureaucracy) (Kodansha, 1974); Akaboshi Jun, Shosetsu tsusansho (Story of MITI) (Dayamondo Sha, 1971). Shiroyama Saburo, Kanryotachi no natsu (The Bureaucrat’s Summer) (Shincho Bunkoban, 1980). See also Sahashi Shigeru, Ishoku kanryo (Bureaucracy of a Different Hue) (Dayamondo Sha, 1967). For further information on the Tokushin-ho, see e.g. Hayashibara Kazuhiko, Uchimaku, 92 ff.; Sahashi Shigeru, Ishoku, 245 ff.

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321

47. Hayashibara Kazuhiko, Uchimaku, 113–14. 48. On the restorationalists nature of education in this period, see Nagata Mitsuo and Yamashita Takeshi, Kowa go ni okeru waga kuni kyoiku kaikaku no kenkyu (Study of the Education Reforms in Japan After Independence) (Taiku Sha, 1984); Ota Takashi, Sengo Nihon kyoiku shi (History of Education in Postwar Japan) (Iwanami Shoten, 1978). 49. This report is included in Yokohama National University Modern Education Research Institute (ed.), Zohan Chukyoshin to kyoiku kaikaku (The Central Deliberative Committee on Education’s Report and Education Reform, expanded edn.) (Sanichi Shobo, 1971). 50. For more detail, see Nagata Mitsuo and Yamashita Takeshi, Kowa, 206 ff. 51. For more detail, see ibid. 9 ff. Ota Takashi, Nihon, 195 ff. 52. ‘Kokumin shotoku baizo keikaku’ (Plan to Double Citizens’ Income), in Yokohama National University Modern Education Research Institute, Zohan, 221. 53. Ibid. 203 ff. 54. Ibid. 205. 55. Ibid. 214. 56. Ibid. 225. 57. Ibid. 226. 58. Ibid. 226. 59. Ibid. 228 ff. 60. Naito Takasaburo, Sengo kyoiku to watashi (Postwar Education and Myself ) (Mainichi Shinbunsha, 1982), 142. 61. Yamazaki Masato, Jiminto to bunkyo seisaku (The LDP and Education Policy) (Iwanami Shoten, 1986), 46. 62. Yokohama National University Modern Education Research Institute, Zohan, 90 ff. 63. Yamazaki Masato, Jiminto, 54. 64. Yokohama National University Modern Education Research Institute, Zohan, 96. 65. See Watanabe Osamu, Gendai Nihon no shihai kozo bunseki (An Analysis of the Structure of Dominance in Modern Japan) (Kadensha, 1988), ch. 7; and ‘Naze ima “Hi no maru”, “Kimi ga yo” ka’, repr. in Kyoiku kagaku kenkyukai and Yamazumi Masami (eds.), Anata wa kimi ga yo o utaimsau ka (Do You Sing ‘Kimi ga yo?’) (Kokudosha, 1990). 66. Amagi Isao, ‘ “Daisan no kyoiku kaikaku” zengo’, in Kida Hiroshi (ed.), Shogen sengo no bunkyo seisaku (Testimony About Postwar Education Policy) (Daichi Hoki Shuppan, 1987), 424. 67. See Watanabe Osamu, ‘Hachi-ju nendai no kyoiku kaikaku’ (Education Reform in the 1980s), Rodo horitsu junpo, 1189 (Apr. 1988). 68. Rodo Shinbunsha Shuppanbu (ed.), Rodo gyosei san-ju nen no ayumi (Thirty Years of Labour Administration) (Rodo Shinbunsha, 1977), 157, 172. 69. Rosei Kenkyukai (ed.), Ishida rosei: sono ashiato to tenbo (Ishida’s Labour Policies: Aftermath and Prospects) (Rodo Gyosei Kenkyujo, 1978), 290. 70. Ibid. 26, 64.

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71. 72. 73. 74. 75. 76. 77.

78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96.

97. 98.

NOTES

Ibid. 53. For more detail, see ibid. 87 ff. Ibid. 96. Ibid. 99. Rodo Shinbun Sha Shuppanbu (ed.), Rodo gyosei san-ju nen no ayumi (Thirty Years of Labour Administration), 174. Ibid. 175. On the significance of this, see Shimizu Shinzo, ‘Sengo rodo kumiai undoshi josetsu’ (Introduction to the History of Postwar Labour Unions) and ‘Miike sogi shoron’ (Short Discourse on the Miike Dispute), in Shimizu (ed.) Sengo rodo kumiai undo shiron. Shimizu Shinzo, ‘Sohyo san-ju nen no baransu shiito’, in Shimizu, Sengo rodo, 346 ff. See also Watanabe Osamu, ‘Yutaka na shakai’, ch. 3. See Rosei Kenyukai, Ishida rosei, 149. Ministry of Labour (ed.), Shiryo rodo undo shi: Showa san-ju yon nen han (Documents on the History of the Labour Movement: 1959 edn.), 839. See Rosei Kenyukai, Ishida rosei, 203–4. Ibid. 203–4. Ibid. 182. Ministry of Labour, Shiryo, 840. Rodo Shinbun Sha Shuppanbu, Rodo, 170. Watanabe Osamu, ‘Yutaka na shakai’, 333 ff. Kumazawa Makoto, ‘Suto ken suto: 1975 nen Nihon’ (Strikes for the Right to Strike: Japan in 1975), in Shimizu, Sengo rodo. Rodo Shinbun Sha Shuppanbu, Rodo, 192. Ibid. 193. Ibid. 197 ff. Ibid. 198. Ibid. 200–1. Ibid. 204. For more detail, see ch. 2 in Watanabe Osamu, Nihon koku kenpo ‘kaisei’ shi (History of Japanese Constitutional ‘Revision’) (Nihon Hyoron Sha, 1987). Ibid. Kaihara Osamu, Takeda Goro, and Haesegwa Kentaro, Toron jietai wa yaku ni tatsu no ka (Debate on Whether the Self-Defence Forces Are Useful) (Bijinesu Sha, 1981), 117. Ibid. 58. Ibid. 127. See also Oga Ryohei, Takeda Goro, and Nagano Shigeto, Nichibei kyodo sakusen ( Japanese and American Joint Operations) (Kojimachi Shobo, 1982), 61. Ogawa Kazuhisa, Kaso Tekikoku Nippon ( Japan as a Potential Threat) (Kodansha, 1989), 171, also points out that for the Air Self-Defence Force the only place with two usable runways is Chitose, and that as far as ammunition and refuelling tanks are concerned, compared to those of the US army and other advanced countries Japan’s are totally inadequate.

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323

99. Oga Ryohei et al., Nichibei, 240. 100. Kaihara Osamu et al., Toron, 64. 101. Kaihara Osamu, Nihon boei taisei no uchimaku (Behind Japan’s Defence System) ( Jiji Tsushin Sha, 1978), 170. 102. See further Watanabe Osamu, Nihon, chs. 3–5. 103. Kaihara Osamu et al., Toron, 19. 104. Ibid. 54. 105. Oga Ryohei et al., Nichibei, 81. 106. Kaihara Osamu et al., Toron, 38. 107. Ibid. 38. 108. Oga Ryohei et al., Nichibei, 241. 109. Nagano Nobutoshi, Gaimusho kenkyu (A Study of the Foreign Ministry) (Simul Shuppankai, 1978), 126. 110. Ibid. 93. 111. Ibid. 165. In 1985 the Information and Research Division was newly established, including a Security Office which was responsible for collecting information about security matters. See Nagano Nobutoshi, Nihon gaiko no subete (All About Japan’s Foreign Policy) (Gyosei Mondai Kenkyujo Shuppankyoku, 1986), 312. 112. Nagano Nobutoshi, Gaimusho, 212. 113. Ibid. 195. 114. Ibid. 115. Ibid. 212–13. 116. Gendai Sogo Kagaku Kenkyujo (ed.), Hachi-ju nendai Nihon no sogo anzen hosho ( Japan’s Comprehensive Security in the 1980s) (Kyoiku Sha, 1978), 46. 117. Ibid. 205. 118. Ibid. 208. 119. NHK Yoron Chosajo (ed.), Gendai Nihonjin no ishiki kozo (The Structure of Consciousness in Contemporary Japan) (Nihon Hoso Shuppan Kyokai, 1985), 120. 120. NHK Hoso Yoron Chosajo, Nihonjin no kokka kan ( Japanese Views of the State) (Nihon Hoso Shuppan Kyokai, 1967); see also Sakamoto Jiro, Taikoku Nihon no Kadai (Issues in Superpower Japan) (Yomiuri Shinbunsha, 1971), 268. 121. NHK Yoron Chosajo (ed.), Zusetsu sengo yoron shi dai ni han (Introduction through Statistics to the Postwar History of Public Opinion, vol. ii) (Nihon Hoso Shuppan Kyokai, 1982), 143. 122. The word ‘companyism’ is later used by Baba Hiroji in a particular sense. See the introductory section, ‘The Structure of Contemporary Japanese Society and Its Particularity’, and Baba Hiroji, ‘Gendai Sekai to Nihon Kaishashugi’ (The Present-day World and Japan’s Companyism), Tokyodaigaku Shakai Kagaku (Institute of Social Science, University of Tokyo) ed. Gendai Nihon Shakai, 1: Kadai to Shikaku (Contemporary Japanese Society, 1) (University of Tokyo Press, 1991). ‘The Present-Day World and Japanese Companyism’. The meaning of ‘corporatism’ as employed here by Sakamoto Jiro differs from that of Baba, in that it

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324

123.

124. 125. 126. 127. 128. 129. 130. 131. 132. 133. 134.

135. 136. 137. 138. 139.

140. 141. 142.

143.

NOTES

focuses on the ideology of the 1960s and 1970s Japanese state. While he does not use the word after this, the concept none the less permeates our analysis of Japan after that time. Sakamoto Jiro, ‘Nihon-gata fukushi kokka no kozo’ (The Structure of the Japanese-Style Welfare State), Chuo Koron (Dec. 1964); and Nihon-gata fukushi kokka kozo (Perikan Sha, 1967), 289–91. Ibid. 292–3. Ibid. 293. Nihon Bunka Kaigi (ed.), Nihon wa kokka ka (Is Japan a State?) (Yomiuri Shinbunsha, 1969), 178–9. Sakamoto Jiro, ‘Nihon-gata’, 295. Ibid. 296. Kosaka Masataka, Saisho Yoshida Shiegeru (Prime Minister Yoshida Shigeru) (Chuo Koron Sha, 1968). Watanabe Osamu, Nihon, ch. 5. Nihon Bunka Kaigi, Nihon, 315. Ibid. Ibid. 317. Ogawa Kazuhisa, Zai Nichi Beigun kichi (US Bases in Japan) (Kodansha, 1985); Asahi Shinbunsha (ed.), Sotenken Nichibei anpo (General Critique of US–Japan Security) (Asahi Shinbunsha, 1982), 10 ff. Kanemaru Shin, Waga taiken teki boeiron (My Direct Defense Administration Experience) (Eru Shuppan, 1979). Asahi Shinbunsha, Sotenken, 86 ff. Ibid. 7 ff.; and Maeda Tetsuo, Jieitai wa nani o shite kita no ka (What Have the Self Defence Forces Done?); Chikuma Shobo, 1989, 225 ff. Ibid. 251 ff. See Giga Soichiro, ‘Nihon no “Ta kokuseki kigyo” to keizai kozo shusei’, in Keizai Henshubu, Nihon kigyo no kaigai shinshutsu no jittai (The Real Situation of Japanese Corporations Penetration Abroad), 1988; Giga Soichiro, Takokuseki kigyo (Multinational Corporations) (Aoki Shoten, 1981); Sasaki Ken, Nihon gata takokuseki kigyo ( Japanese-Style Multinational Corporations) (Yuhikaku, 1986). Tsusho Hakusho (Industry White Paper), 1982, 1983. e.g. Kamata Satoshi, Ajia zetsubo kozyo (Asia’s Hopeless Factories) (Kodansha, 1986). Round-table discussion, ‘Atarashii kokusai kankyoka ni okeru wagakuni keizai katsudo no arikata’, Keidanren geppo (Nov. 1981), 21; and ‘Keizai anzen hosho mondai o kangaeru’, Keidanren geppo (Keidanren Monthly Report) (Apr. 1981), 8–9, 13. See also Watanabe Osamu, ‘Kyuju nendai Nihon kokka to tennosei’, Bunka Hyoron Rinji Zokan zoku: Tennsei wo tou (Oct. 1990), 39; Denisu Yasutomo, Senryaku enjo to Nihon gaiko (Strategic Assistance and Japanese Diplomacy) (Dobunkan, 1989). Asahi Shinbunsha (ed.), Suna arashi no naka de (In a Sandstorm) (Asahi Shinbunsha, 1982), 5 ff.

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325

144. Denisu Yasutomo, Senryaku, 5. 145. Shimizu Ikutaro, Nippon yo kokka tare ( Japan: Become a State) (Bungei Shunju Sha, 1980). 146. Ibid. 96; Watanabe Osamu, ‘Boei ron ni miru shihai teki ideorogi no tokushitsu’, Ho to Minshushugi (Law and Democracy) 156 (Apr. 1981). 147. Oga Ryohei et al., Nichibei kyodo sakusen, 77. 148. Ibid. 93. 149. Asahi Shinbunsha, Suna, 17–19. 150. Ibid. 20. 151. Nagano Shigeto, Waga kuni no anzen hosho (Our Nation’s Security) (Human Dokyumento Sha, 1990), 158 ff. 152. Ibid. 160. 153. Ibid. 79. 154. Ibid. 152. 155. Ibid. 157. 156. Ibid. 165. 157. Watanabe Osamu, ‘ “Sengo seiji no sokessan” e: sengo shi no naka no hachiju nendai’ (The 1980s, an Era of Change in Postwar Japanese Political History), in Rekiken: Nihon shi kenkyukai eds., Nihon Dojidai Shi, vol. 5 (Aoki Shoten, 1991). 158. ‘Rinji Gyosei Chosa Kai Dai Ichiji Toshin’, in Rinji Gyosei Chosa Kai OB Kai (ed.), Rincho to Gyokaku (The Special Reform Council and Administrative Reform) (Bunshinkai, 1983), 238. 159. Ibid. 283. 160. Kanbara Masaru, Tenkanki no seijikatei (Politics in Times of Change) (Sogo Rodo Kenkyujo, 1986), 78. 161. Kosai Yutaka, ‘Zaisei saiken no tame no nishomen sakusen o’, in Ushio Jiro et al., Tenkanki no kokka no yakuwari (The Role of the State in Times of Change) (PHP Kenkyujo, 1986), 73. 162. Watanabe Osamu, Hachiju nendai no kyoiku kaikaku (Education in the 1980s), Rodo Horitsu Junpo, 44 ff. For the finance report, see Rinkyoshin to kyoiku kaikaku, vol. 1 (Kyosei, 1985), 268. 163. On the Rinkyoshin, see Watanabe Osamu, Hachiju. 164. See ibid.; and Harada Saburo, Rinkyoshin to kyoiku kaikaku (Sanichi Shobo, 1987). 165. On the Ministry of Education group, see ibid.; Ishiyama Morio, Monbu kanryo no gyakushu (Counterattack by Education Bureaucrats) (Kodansha, 1986). 166. Seto Malcoto, ‘Dotoku kyoiku no autorainu’, in Kokoro no Kyoiku (Educating their Hearts) (Zokango, 1988), 74. 167. Nikkeiren, 1982 Labour Problems Research Committee Report: senshin koku byo ni ochiiranai tame ni, 30. 168. Nikkeiren, 1986 Labour Problems Research Committee Report: seisansei kijun genri o jiku ni katsuryoku to antei no kakuho o, 28. 169. Ibid. 47.

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NOTES

170. Onuma Kunihiro, ‘Rodo seisaku no doko bunseki: rodo rippo no kicho henka ni kanren shite’ (A Study of Contemporary Labour Policy—Focusing on the Change of the Labour Statutes), in Kansai Daigaku Keizai Seiji Kenkyu jo Kenkyu Sosho, Gendai Nihon no kokyo seisaku (Public Policy in Contemporary Japan) (1988); Tsunoda Kunishige, ‘Rodo hosei no doko to kenri toso no kadai’ (The Characteristics of the Labour Statutes and the Role of the Labour Movement), Rodo horitsu junpo 1135–6 (1986); Tabata Hirokuni, ‘Sengo Nihon no rodo seisaku no henka to shorai no hoko’, Rodosha no kenri (Workers’ Rights) 160 (1985); and ‘Hachiju nendai no roshi kankei to kokka’, Ho to kagaku (Law and Science) 17 (1989). 171. Onuma Kunihiro, ‘Rodo’, 156 ff. 172. Roki ken hokoku, Pato taimu rodo taisaku no hoko ni tsuite (Basic Measures to Cope with Part-time Workers), 1986. 173. Ministry of Labour, ‘Pato taimu rodo taisaku yoryo’, in Pato taimu rodo no jittai (The Real Situation of Part-Time Workers) (Rodo Kijun Chosakai, 1986), 98. 174. Onuma Kunihiro, ‘Rodo’, 158 ff. 175. On the revision of the Basic Labour Law, see Kondo Akio, ‘Rodo jikan hosei kaisei an no hihan teki kento’, in Rodo Ho (Labour Law) 143 (1987); Tsunoda Kunishige et al., round-table discussion, ‘Kaisei rodo jikan hosei no mandaiten to kadai’ (2 parts), Rodo Ho 146 (1988). There was a fierce debate about this revision in the academic community. This is also related to the discussion in the text concerning labour law in the 1980s; Fukaya Nobuo, ‘Rodo kijun ho kaisei o meguru ronso wa nani o teiki shita no ka’, Ibaragi Daigaku Seikei gakkai zasshi 57 (1989). 176. On the Equal Employment Opportunity Law, see Kataoka Noboru, ‘Fujin no koyo byodo no kenri to “Koyo kokai kinto hoan” ’, Rodo Horitsu Junpo 1099 (1984); Honda Junryo, ‘Danjo sabetsu no kozo to koyo kikai kito hoan no mondai ten’, Rodo Horitsu Junpo 1107 (1984). 177. Shukan Asahi 23 (Nov. 1990), 178. 178. See Watanabe Osamu, Seiji kaikaku to kenpo kaisei (Political Reform and Revision of the Constitution) (Aoki Shoten, 1994).

5. JAPANESE COMPANYISM AND THE END OF THE COLD WAR

1. The methodology of this chapter is based on the 3-level system of analysis devised by Uno Kozo: Uno Kozo Chosaku-shu (The Collected Works of Uno Kozo) xiii (Iwanami, 1973–4). 2. In Uno’s system, in a formal sense, there can be no feedback from the third stage of contemporary theory to the first two stages of development theory and theory of principles. However, if new situations are encountered, it is inevitable that they will provide a check on the effectiveness of the first two stages and remedy their limitations. According to Yamaguchi Shigekatsu, reinterpretation

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3.

4. 5.

6.

7.

8. 9.

10. 11. 12. 13.

327

of the principles of the theory can be viewed as having such a meaning in practice: Keizai Genron Kogi (Lectures on Economic Theory) (University of Tokyo Press, 1985); Kachironn no Shatei (The Effective Range of Value Theory) (University of Tokyo Press, 1987). With reference to a theory of stages, there is not yet anything more than a partial and preliminary essay on the topic. Baba Hiroji, ‘Uno’s Stage Theory and Capitalism Today’, Journal of Social Science 41/2 (Aug. 1989). For a history of social welfare policies, see Baba Hiroji, ‘The New Deal and the “Great Society” ’, in Institute of Social Science, University of Tokyo, Fukushi Kokka (The Welfare State) iii (University of Tokyo Press, 1985). The problem can be seen as excessive commoditization of society: Baba Hiroji, ‘An Excessively Efficient Society’, Journal of Social Science 40/6 (Mar. 1989). There is a useful account of the history of the Cold War in Saito Takashi, ‘The End of the Second World War and the Postwar World’, in Iwanami Koza Sekai Rekishi 29 Gendai 6 (Iwanami Lectures on World History 29) (Iwanami Shoten, 1971). A more detailed account is in Baba Hiroji, ‘Postwar Capitalism’, in Baba (ed.), Series Sekai Keizai 1: Kokusaitekirenkan (World Economies, 1: International Relations) (Ochanomizu Shobo, 1986), ch. 1. The whole of this series provides further details about economies in the postwar period. A. Maddison, Phases of Capitalist Development (Oxford: Oxford University Press, 1982), 212. The long-term rate of growth of GNP per man-hour, as a simple (unweighted) average of the 6 countries, was less than 2% in the period before the First World War, and 2.7% between 1913 and 1938. It jumped to 5.5% in the period 1950–1973. Baba Hiroji, Fuyuka to Kinyushihon (Mass Enrichment and the Financial Capital) (Kyoto: Minerva Shobo, 1986), ch. 5. A rough numerical estimate of Soviet growth rates can be found in Miyazaki Saiichi, Okumura Shigetsugu, and Morita Kiriro (eds.), Kindai Kokusai Keizai Yoran (An Outline of the Modern International Economy) (University of Tokyo Press, 1981), ch. 10. For an analysis of the growth rate data, precise figures will be found in Tabata Shinichiro, ‘An Inquiry into National Income Statistics in the Soviet Union’, Slavic Studies 34 (1989). (University of Hokkaido). An indication of how persuasive the plans for growth in the Soviet Union were is in Tabata Shinichiro, ‘Reform and Economic Growth’, in Hakamada Shigeki (ed.), Motto Shiritai Soren (More Facts about the Soviet Union) (Tokyo: Kobundo, 1988). Baba Hiroji, ‘An Introduction to the “North–South” Problem’, Journal of Social Science 35/1 ( July 1983). O. Franks, ‘The International Balance: Challenge to the Western World’, Saturday Review, 16 Jan. 1960. Baba Hiroji, ‘The Japanese Economy and the NICs’, Journal of Social Science 40/4 (Nov. 1988). OECD, The Impact of the Newly Industrializing Countries (Paris: OECD, 1979).

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NOTES

14. For an account of the process of stagflation, see Baba, ‘Postwar Capitalism’; for a theoretical analysis, see Baba Hiroji, ‘The Logic of Stagflation’, Journal of Social Science 39/5 (Feb. 1988). 15. Baba Hiroji, ‘The Context of Reaganism’, in Institute of Social Science (University of Tokyo) (ed.), Tenkanki no Fukushi Kokka (The Turning-Point of the Welfare State) i (University of Tokyo Press, 1988). The tight money policy has been mistakenly termed ‘Reaganomics’, but in fact was instituted by Paul Volcker; Reagan‘s role was just to provide political support. In fact, the characteristic features of Reaganomics produced a budget deficit, which had the opposite effect of tighter monetary policy. 16. Fukushi Kokka vi; Tenkanki no Fukushi Kokka i, ii. 17. Baba, ‘Uno’s Stage Theory and Capitalism Today’, 48. 18. Affluence increases the demand for traditional direct personal services, but the increased adherence to the principles of democracy and equality reduces the supply of such services. Mass enrichment therefore has an inherent contradiction. This is one of the reasons why the cost of living is high in affluent countries and why the Japanese do not feel as rich as their nominally high income levels suggest they should. The introduction to Baba, Fuyuka (Mass Enrichment and the Financial Capital) includes a brief attempt to calculate the impact of these changes. For a more comprehensive treatment, see Baba Hiroji, ‘The Standard of Living and Welfare Policies’, in Baba, World Economy Series ii: The USA (1987), ch. 6. This section is based largely on the same article. For details about the US, see M. Feldstein (ed.), The American Economy in Transition (National Bureau of Economic Research/University of Chicago Press, 1980), 433. For Europe, see A. Boltho (ed.), European Economy Growth and Crisis (Oxford: Oxford University Press, 1982), 214. These changes have not been in evidence for as long in Europe, but conditions there have become more and more like those in the US. 19. The main theme of this section, particularly with respect to the US, is derived from Baba, ‘The Context of Reaganism’, and ‘The Retreat of the USA’, American Studies 24 (Mar. 1990). 20. Gold sales were not officially announced. I learnt this interesting point from Nakayama Hiromasa; see Nakayama, ‘Soviet Agriculture and Foreign Relations’, Economic Studies 64 (Meiji Gakuin University) (1982). 21. In Yano Tsunetaro Memorial Society (ed.), Sekai Kokusei Zue (Graphic Illustrations of Economic Situations of the Countries) (Sept. 1990), 224. Oil exports were 66.8 m. tons in 1970 and 125 m. in 1986. 22. Exports of oil and petroleum products from the Soviet Union to OECD countries in 1970 were 41 m. tons and in 1975 were 48 m. The earnings from all hardcurrency exports amounted to $7100 m. in 1970 and $33,200 m. in 1975. The weight calculations are found in J. P. Stern, Soviet Oil and Gas Exports to the West 1987 (Aldershot, Gower), 91. Tateyama Yutaka drew my attention to these records. Because the amounts were originally unannounced, comparisons cannot be made between the results of the calculations.

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23. The term ‘Japan, Inc.’ began to be used in the late 1960s. Herman Khan’s The Emerging Japanese Superstate and its Japanese translation were published in 1970, and the concept of ‘Japan Incorporated’ was based on the interpretation of the term ‘Japanese joint-stock corporation’. There are other similar examples. The theme of ‘Japan, the government–business relationship’ is found in US Dept. of Commerce, Japan Incorporated (Washington, DC, 1972). 24. The term ‘enterprise unions’ was first used in Institute of Social Science (ed.), Sengo Rodo Kumiai no Jittai (Labour Unions after the Second World War) (Nihon Hyoronsha, 1950), ch. 3. It is subsequently found in Okochi Kazuo (ed.), Rodo Kumiai no Seisei to Soshiki (The Formation and Organization of Labour Unions) (University of Tokyo Press, 1956). The seniority-based system is outlined in Okochi Kazuo, Ujihara Shojiro, and Fujita Wakao (eds.), Rodo Kumiai no Kozo to Kino (The Structure and Functions of Labour Unions) (University of Tokyo Press, 1959). 25. Lifetime employment was termed ‘lifetime commitment’ in James Abbeglen’s book, but he includes in this term the concept of lifetime employment: The Japanese Factory: Aspects of Its Social Organization (Glencoe, Ill.: Free Press, 1957). Abbeglen is often considered the originator of Japanese management studies, but he emphasized the lifetime commitment and seniority-based promotion without looking much at enterprise unions. Such unions are treated fully in Solomon B. Levine, Industrial Relations in Postwar Japan (University of Illinois Press, 1958). The 3 features are integrated in an OECD report, Manpower Policy in Japan (trans. and ed. Ministry of Labour, The OECD report on Japanese Labour Conditions, Japan Institute of Labour, 1972). The term ‘Japanese management’ appears in Hazama Hiroshi, Nihonteki Keiei no Keifu (The Genealogy of Japanese Management) ( Japan Management Association, 1963). 26. The previous section has benefited from suggestions by Nitta Michio. 27. Sakamoto Jiro, ‘A Statement on Companyism’, Chuo Koron, (May 1966), 81–5. 28. In Gendai Yogo no Kisochishiki (Encyclopaedia of Contemporary Words). Companyism is defined in the 1977, 1978, and 1979 editions as ‘loyalty to the company’. In the 1980 edition, the definition is altered to ‘the cult of the company’. Both definitions were subsequently dropped. 29. My understanding of industrial relations has been influenced by the work of Koike Kazuo. On-the-job training, which is always required in heavy industries, leads to the establishment of an internal labour market. Internal labour markets have been especially well developed in Japan because it was a backward country. Integrating these ideas with the theory in Uno Kozo’s system has the effect of highlighting the meaning of the theories of labour–management relations in corporations, which do not appear in Uno’s studies, and theories about management structures. (Refer to Koike’s books and articles, of which one example is Shokuba no Rodo Kumiai to Sanka (Labour–Union Participation in the Workplace) (Toyo Keizai, Shinpo Sha, 1977), and Baba, Fuyuka, 211 nn. 15, 17, 235 n. 39.) The features of management structures in Japan are described in Nishiyama Tadanori,

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30.

31.

32.

33.

34.

35.

36.

37. 38.

39.

NOTES

Shihai Kozo Ron (The Structure of Management) (Bunshindo, 1980). It is a useful text so long as the phrase ‘the collapse of capitalism’ is ignored. The structure of ownership is described in Okumura Hiroshi, Hojin Shihonshugi (Corporate Capitalism) (Ochanomizu Shobo, 1984), and Nihon no Kabushikigaisha (The JointStock Company in Japan) (Toyokeizai Shinposha, 1986). It is very interesting to observe that, although this was not the intention of the author, these texts indicate the process whereby the significance of ownership is declining. Matsumoto Koji, Kigyoshugi no Koryu (The Rise of the Japanese Corporate System) ( Japan Productivity Centre, 1983, trans. into English 1991) The Rise of the Japanese Corporate System (London: Kegan Paul International, 1991). My writings on companyism are collected for the most part in Fuyuka, chs. 6 and 7, and Kyoiku Kiki no Kezaigaku (The Economics of Education in Crisis). The theories are later taken up in ‘The Japanese Economy and the NICs: An Excessively Efficient Society’, ‘Uno’s Stage Theory and Capitalism Today’, and ‘The Crisis of Socialism and Social Science’, all published in Journal of Social Science 40/4, 6; 41/2, 6. The concept also appears in Baba, ‘The Retreat of the USA’. Nitta Michio, Nihon no Rodosha Sanka (Workers’ Participation in Japan) (University of Tokyo Press, 1988). The first chapter describes the remarkable effectiveness of the Jishu kanri movement in raising productivity in the iron and steel industry. Koike Kazuo and Inoki Takenori (eds.), Jinzaikeisei no Kokusai Hikaku (An International Comparison of Human Capital Formation) (Toyo Keizai: Shinposha, 1987); and Shimada Haruo, Human-Ware no Keizaigaku (The Economics of ‘HumanWare’) (Iwanami Shoten, 1988). There has not yet been an adequate study of how promotions are decided, but the following texts investigate practices in the workplace. Nomura Masami, ‘Industrial Relations in the Car Industry (I) (II) (III)’, Journal of Economic Studies (Okayama University) 20/2–4 (1988, 1989); Ahn Hee Tak, ‘The System of Personnel Rating in Japanese Companies and Its Problems’, Mita Shogaku Kenkyu 32/2 ( June 1989). See R. Dore, British Factory–Japanese Factory: The Origins of National Diversity in Industrial Relations (Berkeley, Calif.: University of California Press, 1973). But even this excellent study does not adequately explore the benefits of blurring the lines between white- and blue-collar jobs. Hashimoto Juro, ‘Industrial Development after the Oil Crisis’ and ‘Corporate Industrial Relations’, in Nihon Keizai Ron (A New Perspective on Japanese Economy) (University of Tokyo Press, 1991). Baba, ‘Uno’s Stage Theory and Capitalism Today’ No. 5, section B. The phrase ‘the tragedy of historical materialism’ was first used on 5 Oct. 1988 at a Tokyo University symposium. However, the discussion at the symposium was not published. The phrase was first published in the foreword of Baba (ed.), The Japanese Economy (World Economies Series vol. vi). Nakayama Hiromasa, Perestroika no Naka ni Sunde (Living in the Midst of Perestroika) (Yomiuri Shinbunsha, 1984), 191.

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6. THE SOCIAL ORDER OF MODERN JAPAN

1. Repr. edn., vol. iv (Ron Shobo, 1974). 2. According to the 1873 requirements for officers’ uniforms (adopted from France), formal trousers for infantry field officers, company officers, non-commissioned officers, and rank-and-file soldiers were to be ‘scarlet wool’. When a switch was made to the German style in 1886, they became ‘dark blue wool’. See Ota Rin’ichiro, Nihon kindai gunpuku shi (A History of Modern Japanese Military Clothing) (Yuzankaku Shuppan, 1972). 3. 1722 (Kyoho 7)/8 (Ofuregaki kanpo shusei (an official compilation of Tokugawa shogunate proclamations), no. 2649). 4. Murakami Toshisuke et al. (eds.), Meiji bunka shi (A History of Meiji Culture) iii: Kyoiku dotoku hen (Educaiton and Morals) (Yoyosha, 1955), 183. See also Karasawa Tomitaro, Kyoiku no rekishi (The History of Education) (Sobunsha, 1955). 5. On the relationship between this system and draft evasion, and on later revisions of the law, see Kikuchi Kunisaku, Chohei kihi no kenkyu (Research on Draft Evasion) (Rippu Shobo, 1978). 6. Juyo Bunkazai Kyu Kaichi Gakko Shiryoshu Kankokai (ed.), Shiryo Kaichi Gakko (Documents on the Kaichi School) i (Matsumoto: Densan shuppan Kikaku, 1988): school diary, Nov. 1888, autumn term sports day. 7. There is a photograph in Mosu korekushon shashinhen: hyaku nen mae no Nihon (Photographs from the Morse Collection: The Japan of a Century Ago) (Shogakukan, 1983), 152–3. 8. Shiryo Kaichi Gakko lists events such as capture the flag, ball-throwing, hurdling, and three-legged races. There is even an entry saying that a ‘grand mock battle’ was held (Oct. 1892). 9. Wada Hide (rev. Kamijo Hiroyuki), Teihon Tomioka nikki (Authentic Tomioka Diary) (Sojusha, 1976), 18–19. 10. Sano Akira, Dai Nihon sanshi (Great History of Silk in Japan) (1898). 11. See Fujimori Terunobu (ed.), Nihon kindai shiso taikei 19: Toshi, kenchiku (Modern Japanese Thought 19: Cities and Architecture) (Iwanami Shoten, 1990). 12. Ministry of Education, Minister’s Secretariat, Report Section, Nihon kyoiku shi shiryo (Documents on the History of Japanese Education) vii (1892). 13. Tsunoyama Sakae, Tokei no shakai shi (The Social History of Clocks) (Chuko Shinsho, 1984), 66 ff. Sasamoto Shoji, ‘Toki no kane’, in Chusei no oto, kinsei no oto (The Sound of the Middle Ages, the Sound of Modern Times) (Meicho Shuppan, 1990) traces the spread of the concept of time back to the Sengoku period. 14. Ujiie Mikito, Edo hantei monogatari (Tales of Daimyo Residences in Edo) (Chuko Shinsho, 1988), includes a requested pay schedule (higher pay for night work) from the head of a day labourers’ group (p. 33). This shows the beginning of wage labourers as the number of hereditary servants declined. 15. Kyoto Furitsu Sogo Shiryokan (ed.), Kyoto fu hyaku nen no shiryo (Documents from Kyoto’s Past Century) iv: Shakai (Society) (Kyoto: Kyoto-Fu, 1972), 21–2.

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NOTES

16. S. Kern, The Culture of Time and Space, 1880–1910 (Cambridge, Mass.: Harvard University Press, 1983), 11–12. 17. Naikaku Kiroku Kyoku (ed.), Hoki bunrui taizen (Categorized Collection of Laws and Regulations) i: Kanshoku mon (Civil Servants), 16: Kansei (Civil Service System), Kobusho (Ministry of Industry, 1891). 18. The working day was 7 hours apparently because this was a factory for practical training of engineering students. Nakanishi Yo, Nihon kindaika no kiso katei (The Basic Process of Japan’s Modernization ii) (University of Tokyo Press, 1983), 547. 19. Ibid. 542; i. 137. 20. Tetsudo Ryo (Railway Bureau), Tetsudo ryokyaku oyobi kamotsu chinsen hyo (Chart of Railway Passenger and Freight Charges), c.1874 (repr. Aki Shobo, 1986). 21. See Enami Shigeyuki and Mitsuhashi Toshiaki, Saimin kutsu to hakurankai (Slums and Expositions) ( JICC Shuppankyoku, 1989), 199 ff. 22. Narusawa Akira, ‘Toshi shakai no seiritsu’ (The Development of Urban Society), in Seiji no kotoba (The Language of Politics) (Heibonsha Sensho, 1984). 23. Ogawa Tameharu, ‘Kaika mondo’ (Questions and Answers on Civilization and Enlightenment) (1874), in Meiji bunka zenshu (Collected Works on Meiji Culture) xii. 24. Ubukata Toshiro, Meiji Taisho kenbun shi (The History of Information in Meiji and Taisho) (Chuko Bunko Ban, 1978) describes the aesthetics of ceremonies on the ‘three big holidays’, attended by officials from gun (county) heads, judges, heads of tax offices, and police chiefs downwards, at which the ‘fair-skinned’, ‘dignified and proper’ school principal, wearing a ‘frock coat’, read the imperial rescript ‘in a ringing voice’ (p. 61). 25. Onishi Kyojin, Shinsei kigeki (The Comedy of The Sacred) (Bunshun bunkoban, 1982) i. 83 ff. Though this covers the Pacific War period, it closely resembles the extreme aesthetic order resulting from ‘good order and proper arrangement’. 26. Takashi Fujitani, trans. Yoshimi Shun’ya, ‘Kindai Nihon ni okeru gunshu to tenno no pêjento: shikakuteki shihai ni kansuru jakkan no kosatsu’ (Crowds and Imperial Pageantry in Modern Japan: Some Thoughts on Visual Domination), Shiso (Nov. 1990) analyses the process by which both soldiers and the viewing masses at grand military parades ‘were transformed into thoroughly obedient objects of the emperor’s gaze’. 27. Nagayo Sensai, Shoko shishi (Shoko’s Private History) (1902, ed. and annotated Ogawa Teizo et al.), Matsumoto Jun jiden: Nagayo Sensai jiden (The Autobiographies of Matsumoto Jun and Nagayo Sensai) (Toyo Bunko, Heibonsha, 1980), 175. 28. Ibid. 170 ff. 29. Nagayo Sensai, Eisei gairon (Introduction to Public Health), preface. See also Tanaka Kazuo, ‘Meiji matsunen ni okeru “kenzen naru shintai” ’ (The ‘Healthy Body’ in Late Meiji), Shakai kagaku (Social Science) 33 (1984). 30. Oda Yasunori, Toshi kogai no keisei (The Evolution of Urban Pollution) (Sekai Shisosha, 1978), 13.

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31. Tokyo Fukai (Tokyo Prefectural Assembly), Meiji 14-nen Tokyo 15 ku rinjikai gijiroku (Minutes of Special Assemblies of Tokyo’s 15 wards in 1881) i, in Fujimori Terunobu (ed.), Nihon kindai shiso taikei 19: toshi, kenchiku (Modern Japanese Thought 19: Cities and Architecture). In his plan for ‘relocating the poor’, an Osaka police official denounced slums as hotbeds of crime and epidemics. See Hirota Masaki (ed.), Nihon kindai shiso taikei 22: sabetsu no shoso (Modern Japanese Thought 22: Aspects of Discrimination). 32. Mori Rintaro, ‘Shiku kaisei wa hatashite eiseijo no mondai ni arazaru ka’ (Is Not Rearrangement of the City Wards a Public Health Issue?), Tokyo iji shinshi (New Tokyo Journal of Medicine) (Feb. 1899) (repr. in Ogai zenshu (Complete Works of Ogai) xxviii; Iwanami Shoten, 1974). 33. Namihira Emiko, ‘Suishitai o Ebisu to shite matsuru shinko no bunseki’ (An Analysis of the Worship of Bodies of Drowning Victims as Ebisu’, Minzokugaku kenkyu (Folklore Studies) 42/4 (1978). 34. Shintani Naoki, Kegare kara kami e (From Defilement to Gods) (Mokujisha, 1987), 87 ff. 35. Haga Noboru, Meiji kokka to minshu (The Meiji State and the People) (Yuzankaku, 1974). 36. In France also, until the mid-nineteenth century, popular faith in the ‘purifying power’ of certain types of ‘dirtiness’ remained. See Kitayama Seiichi, Oshare no shakai shi (The Social History of Dandyism) (Asahi Shinbunsha, 1991), 48 ff. 37. Mano Toshikazu, Tabi no naka no shukyo: junrei no minzoku shi (Religion in Travel: An Ethnographic History of Pilgrimage) (Nihon Hoso Shuppan Kyokai, 1980), ch. 7. 38. Ibid. 219–20. 39. It has been suggested that the stipulation that they be kept some distance from roads and railroads ‘can only be because the purity–impurity concept that was the foundation of the Meiji government’s Shintoism had combined with public health concepts derived from modern science to create a desire to keep the impurity of death away from public, state facilities such as roads and railroads. The basic motive was probably the idea that places through which the emperor and his army and officials passed must not be polluted by death’; Takatori Masao, Shinto no seiritsu (The Formation of Shinto) (Heibonsha Sensho, 1979), 186. It is difficult to determine whether the lawmakers had a Shinto concept of the defilement of death, but it is likely that in this period the concepts of purity–impurity and of public health were not yet clearly separated. See also Hirota Masaki, ‘Nihon kindai shakai no sabetsu kozo’ (The Structure of Discrimination in Modern Japanese Society), in Nihon kindai shiso taikei 22: sabetsu no shoso (Modern Japanese Thought 22: Aspects of Discrimination) (Iwanami Shoten, 1990). 40. Tama Zenshoen Kanja Jichikai (Tama Zenshoen Patients’ Association), Ku’e issho: kanja ga tsuzuru Zenshoen no 70 nen (All Together in One Place: The Seventy Years of Zenshoen, as Told by Patients) (Ikkosha, 1979). 41. Kure Shuzo and Kashiwada Goro, Seishin byosha shitaku kanchi no jikkyo oyobi sono tokeiteki kansatsu (The Truth about the Confinement of Mental Patients to Their

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42. 43. 44. 45.

46. 47.

48.

49. 50.

51. 52.

53. 54. 55.

56.

NOTES

Homes, and a Survey of the Statistics) (1918), is critical of the system, saying that because the sole purpose of confining patients to their homes or to public facilities was ‘the maintenance of a peaceful social order’ rather than care and treatment of the patients, they were treated ‘more harshly than convicts’. In Fukuzawa Yukichi zenshu (Complete Works of Fukuzawa Yukichi) v (1959). Karasawa Tomitaro, Gakusei no rekishi (The History of Students) (Sobunsha, 1955), 67–8. Shigematsu Kazuyoshi, Zukan Nihon no kangoku shi (Illustrated History of Japanese Prisons) (Yuzankaku Shuppan, 1985), 4 ff., 62 ff. Wolfgang Schivelbusch, trans. Ogawa Sakue, Yami o hiraku hikari: 19 seiki ni okeru shomei no rekishi (translation of Lichtblicke: Zur Geschichte der künstlichern; published in English as Disenchanted Night: The Industrialization of Lighting in the Nineteenth Century) (Hosei Daigaku Shuppankyoku, 1988), 88 ff. Yanagita Kunio, Meiji Taisho shi seso hen (A History of Meiji and Taisho Social Conditions), (1930), ch. 3. James Pyle Wickersham, trans. Mitsukuri Rinsho, Gakko tsuron 1874 translation of School Economy: A Treatise on Organization, Employments, Government, and Authorities of Schools (Philadelphia: J. B. Lippincott, 1864); Fujimori, Toshi, kenchiku. Yanagita, Meiji, ch. 4. See also Inoue Isao, ‘Kaika no hikari soshite kage’ (Light and Shadow of Enlightenment), in Bunmei kaika (Civilization and Enlightenment) (Kyoikusha, 1986). Hattori Seiichi, Tokyo shin hanjoki (New Record of Tokyo’s Prosperity) (1876), ch. 6, in Chikuma ban, Meiji bungaku zenshu (Complete Collection of Meiji Literature) iv. Philippe Perrot, trans. Oya Takayasu, Ifuku no arukeoroji (Les dessus et les dessous de la bourgeoisie: une histoire du vetement au XIXe siecle (1981); published in English as Fashioning the Bourgeoisie: A History of Clothing in the Nineteenth Century) (Bunka Shuppankyoku, 1985), ch. 8. Yanagita, Meiji, ch. 1. Koda Rohan, ‘Ikkoku no shuto’, in Rohan zenshu (Complete Works of Koda Rohan) xxvii (1954), 91 ff. This essay, with its hypersensitivity to ‘cleanliness’, ‘light’, ‘health’, and ‘good health’, is in effect Rohan as modern man expounding his own city plan for Tokyo. Yanagita, Meiji, ch. 4. See also Ei Rokusuke, ‘Keiryo ho o funsai seyo’ (Destroy the Weights and Measures Act), in Meiji kara no dengon (Messages from Meiji) (Bungei Shunju, 1977). Ishida Yorifusa, Nihon kindai toshi keikaku no hyaku nen (A Century of Modern City Planning in Japan) ( Jichitai Kenkyusha, 1987); Fujimori Terunobu, Meiji no Tokyo keikaku (Tokyo’s City Planning in the Meiji Period) (Iwanami Shoten, 1982); Mikuriya Takashi, Shuto keikaku no seiji (The Politics of City Planning in the Capital) (Yamakawa Shuppansha, 1984). Yoshimi Shun’ya, Toshi no doramaturugi (The Dramaturgy of Cities) (Kobundo, 1987) sees the ‘entertainment quarters’ of Meiji and later as theatrical spaces, and attempts to analyse them as dramatic performances.

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57. In Okubo Toshiaki (ed.), Nishi Amane zenshu (Complete Works of Nishi Amane) iii (Munetaka Shobo, 1963). 58. In fact there were differences according to types of troop; e.g. artillery soldiers had to be at least 5 shaku 4 sun (164 cm.): ‘Rokkan chindai choin narabinishiki’, Ministry of the Army, Jan. 1873. 59. Narusawa, ‘Toshi shakai’. 60. Tatsukawa Shoji, Meiji iji orai (Changes in Meiji Medicine) (Shinchosha, 1986), 28. 61. Isabella Bird, Unbeaten Tracks in Japan (London: John Murray, 1911), 4. The author travelled extensively in Japan for several months in 1878. 62. When Fukuzawa was stricken with typhoid fever in 1870, he drank milk and tested its effects. When he recovered, he wrote promotional literature for a milk company. By drinking milk, the ‘one medicine for 10,000 ills’, ‘your incurable illnesses will be cured, you will have eternal youth, your body will be healthy and your mind active, and for the first time you will not be ashamed to be called Japanese’ (‘Nikushoku no setsu’ (On Meat-Eating) ), in Fukuzawa Yukichi zenshu xx. Along with meat, milk was particularly symbolic of the westernization of the Japanese diet. In the Europe of the late nineteenth and early twentieth centuries, too, consumption of animal foods increased rapidly. With progress in the dairy industry, advances in preservation techniques such as pasteurization, and the increased ability to distribute it over wider areas as railroads developed, milk became part of the diet of urban dwellers, and the ‘age of milk’ began: Minami Naoto, ‘Toshi seikatsu to miruku: “kindaiteki” shoku seikatsu no ichi sokumen’ (Milk and Urban Life: An Aspect of the ‘Modern’ Diet), in Mi’ichi Masatoshi et al. (eds.), Aoi Kyofu, shiroi machi-korera ryuko to kindai Yoroppa (Blue Terror, White City: Cholera Epidemics and Modern Europe) (Heibonsha, 1990). Milk as a food product fits in very well with modern cosmology. It is white. It is purified (pasteurized). And though this was not yet done in Fukuzawa’s day, later it was homogenized. It comes in standardized containers. The containers are sealed. It is consumed quickly. All these characteristics reflect the trends in most modern foodstuffs (which are cleaned and bleached, standardized as far as possible, homogenized, packaged, and instant). In 1900 the Ministry of Home Affairs’ ‘Milk Industry Regulations’ began the detailed ‘hygienic’ regulation of the production and sale of milk. 63. In Ogai zenshu (Complete Works of Mori Ogai) xxxiii (1974). 64. ‘Going outside naked or bare-chested is prohibited’ (1877 Ministry of Home Affairs directive on the prevention of cholera). 65. In Fukuzawa Yukichi zenshu iii. 66. In Yui Masaomi et al. (eds.), Nihon kindai shiso taikei 4: guntai, heishi (Modern Japanese Thought 4: The Military and Soldiers) (Iwanami Shoten, 1989). 67. Choya shinbun, 9 Jan. 1887. Preceding the passage quoted is: ‘Present-day Western women’s clothing is like styles formerly worn in this court, the kimono and mo [an ancient skirt; i.e. separate items of clothing for the upper and lower body],

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68. 69.

70. 71. 72.

73. 74. 75.

76. 77. 78. 79. 80. 81.

NOTES

and is appropriate for a standing life-style [i.e. using tables and chairs rather than sitting on the floor].’ This is an attempt to find continuity. Even in the ritualized world of the palace, ‘reform’ of the ‘old style’ was urged for ‘convenience’. In Kaigo Muneomi et al. (eds.), Nihon kyokasho taikei, kindai 1 (An Overview of Textbooks in Japan: Modern Period, 1) (Kodansha, 1961). Osaka Fu Kyoiku Iinkai (Osaka Prefecture Board of Education), Osaka fu kyoiku 100 nen shi (History of a Century of Education in Osaka Prefecture) ii: shiryo (Documents) (1) (Osaka: Osaka Fu Kyoiku Iinkai, 1971), 10. In Enami and Mitsuhashi, Saimin Kutsu, ch. 2, pt. 5, there is a pioneering and detailed analysis of this point. Shigematsu, Zukan Nihon, 164 ff. ‘Unofficial corporal punishment as part of unit training came into general use after the Sino-Japanese War, in the Meiji 30s [1897–1906].’ See Ohama Tetsuya, ‘Tetsu no kubiki ni torawareshi mono’ (Prisoners of Iron Yokes), in Kindai minshu no kiroku 8: heishi (Records of the People in Modern Times 8: Soldiers) (Shin Jinbutsu Oraisha, 1978). See Emori Ichiro, Taibatsu no shakai shi (The Social History of Corporal Punishment) (Shin’yosha, 1989). Lafcadio Hearn, Glimpses of Unfamiliar Japan (repr. 1894; repr. AMS Press, 1969) ii. 434. ‘Hey, thanks to the army I learned to read, and I can even write letters’; ‘Before he went into the army that kid couldn’t speak in front of others; he’s really changed.’ Omura Ryo, Mono iwanu nomin (Silent Farmers) (Iwanami Shinsho, 1958), 109. Karasawa, Gakusei, 83. Fujiwara Akira, Tennosei to guntai (The Emperor System and the Military) (Aoki Shoten, 1978), 90 ff. Ibid. 80 ff. Omura, Mono iwanu nomin, 110–11. Kyoto fu hyaku nen no shiryo (Documents from Kyoto’s Past Century) iv. 74. Carl Munzinger, trans. Sakuma Aya, Doitsu senkyoshi no mita Meiji shakai (Meiji Society as Seen by a German Missionary; translation of Die Japaner: Wanderungen durch das geistige, soziale und religiöse Leben des japanischen Volkes) (Shin Jinbutsu Orai Sha), 74 ff. Originally published in 1899.

7. LABOUR AND FARMERS’ MOVEMENTS IN PREWAR JAPAN

1. Watanabe Osamu, ‘Yutaka na shakai’ Nihon no kozo (The Structure of Contemporary Japan’s, ‘Wealthy Society’) (Rodo jumpo sha, 1990), esp. ch. 1. 2. Hayashi Yuichi and Yasuda Hiroshi, Shakai undo no shoso (Aspects of Social Movements), Rekishigaku kenkyukai, Nihonshi kenkyukai Koza Nihon rekishi Kindai 3 (The History of Japan, Modern Period 3) (University of Tokyo Press, 1985), 174. 3. Ibid. 175.

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4. The English-language scholarship on the prewar social movements in Japan is extensive. G. Oakley Totten III’s The Social Democratic Movement in Prewar Japan (New Haven, Conn.: Yale University Press, 1966) covers both movements in detail. Stephen S. Large, Organized Workers and Socialist Politics in Interwar Japan (Cambridge: Cambridge University Press, 1981) and Sheldon Garon, The State and Labor in Modern Japan (Berkeley, Calif.: University of California Press, 1987) provide useful insights into the political activities of organized labour and its attempts to shape labour policy. Two books by Andrew Gordon, The Evolution of Labor Relations in Japan (Cambridge, Mass.: Council on East Asian Studies, Harvard University, 1985) and Labor and Imperial Democracy in Prewar Japan (Berkeley, Calif.: University of California Press, 1991) touch on labour relations at the factory level, and on labour’s broader social identity. Although rural activism has been less extensively studied, Ann Waswo’s ‘In Search of Equity: Japanese Tenant Unions in the 1920s’, in Tetsuo Najita and J. Victor Koschmann (eds.), Conflict in Modern Japanese History: The Neglected Tradition (Princeton, NJ: Princeton University Press, 1982), 367–411, her Japanese Landlords (Berkeley, Calif.: University of California Press, 1977), and T. R. H. Haven’s Farm and Nation in Modern Japan (Princeton, NJ: Princeton University Press, 1974) all deal with questions of conflict in the countryside. Nevertheless, to the best of my knowledge, there have been no studies to date, in either Japanese or English, which focus on the differences between the labour and farmers’ movements in this period. 5. Akamatsu Katsumaro, ‘Fusen dai issen to rodo kumiai no tachiba’ (The First Election Under Universal Male Suffrage and the Stance of the Labour Unions), Nihon rodo sodomei honbu, Rodo (Nov. 1927). Emphasis here and in other selections is mine unless otherwise indicated. 6. ‘Sosenkyo shuryo: igi fukaki sono kyokun’ (Lessons from the General Election), Rodo (Mar. 1928). 7. Shakai kyoku, Taisho 12 nen rodo undo gaikyo (The State of the Labour Movement in 1923), 2. 8. ‘In general, the better part of the Kansai-based Japan Labour Union Alliance [Nihon rodo kumai rengo], the Naval Labour League, and maritime officers’ groups ought to be classified as nationalist. (Membership of the right wing amounts to 92,300.)’ Taisho 13 nen rodo undo nempo (Annual Report on the Labour Movement 1924), 4. 9. ‘In general, the better part of the Kansai-based Association for Advancement of Naval Labour League and maritime officers’ groups ought to be classified as social reformist. (Membership of the right wing amounts to approximately 120,000.)’ Annual Report on the Labour Movement 1925, 14. 10. Those expelled went on to set up the Hyogikai. 11. This faction had been opposed to the plan put forth by the leaders of Sodomei to abandon the Labour–Farmer Party and establish a new party, the Social Democratic Party. Members of the faction wanted instead to create the Japan Labour– Farmer Party (Nihon ronoto). Those expelled established the Japan Labour Union Alliance (Nihon rodo kumiai domei).

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12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

26. 27.

28. 29.

30.

31. 32.

NOTES

Annual Report on the Labour Movement 1926, 53. Annual Report on the Labour Movement 1932, 194. Nihon nomin kumiai, Tochi to jiyu (Land and Freedom) 4 (25 Apr. 1922). Sugiyama Motojiro, ‘Jinushi no chosen (Kosakunin danketsu seyo)’, Tochi to jiyu 4 (25 Apr. 1922). Tochi to jiyu 27 (25 Mar. 1925) or Taisho 13 nen rodo undo gaikyo (The State of the Labour Movement 1924), ch. 4, 52. Tochi to jiyu 51 (7 Apr. 1926). Annual Report on the Labour Movement, 1928, 537. Annual Report on the Labour Movement, 1931, 443. Introduction to ibid. 1932, 12. Introduction to ibid. 1936, 23. Introduction to ibid. 675. ‘Rodo sogi nenji betsu shirabe’ (Annual Survey of Labour Disputes), in Annual Report on the Labour Movement 1936, 515–16. Norinsho nomukyoku, Showa 9 nen kosaku nempo (Annual Report on Tenancy 1934), 5. From ‘Kosaku sogi ichiranhyo’ (Summary of Tenancy Disputes) of ‘Kosaku sogi ni kansuru chosa shohyo’ (Tables on Surveys of Tenancy Disputes), which appears in Annual Report on Tenancy 1933. Annual Report on the Labour Movement 1936, 773. Since it was thought that in order to settle labour disputes ‘fairly’ it would be necessary to put workers on an equal legal footing with employers by recognizing their right to organize, to bargain, and to strike, it is reasonable to think of the Labour Union Law as providing a legal framework for conciliation. The Tenancy Law was supposed to play the same role for tenancy disputes, since the landlord’s property rights and the tenant’s cultivation rights would have to receive equal weight in order to settle those struggles ‘fairly’. Nishinarita Yutaka, Kindai Nihon rodo kankeishi no kenkyu (The History of Industrial Relations in Modern Japan) (University of Tokyo Press, 1988), 307–11. Nochi seido shiryo shusei hensan iinkai, Nochi seido shiryo shusei (A Collection of Materials on the Agricultural Land System) v (Ochanomizu shobo, 1968), 91–100. Kawaguchi Yoshihiko, Kindai Nihon no tochiho kannen (The Concept of Land Law in Modern Japan) (University of Tokyo Press, 1990), 303–17; Nishida Yoshiaki, ‘Nomin undo to nogyo seisaku’ (Farmers’ Movements and Agricultural Policy), in Oishi Kaichiro (ed.), Nihon teikoku shugi shi (The History of Imperialism in Modern Japan) ii (University of Tokyo Press, 1987), 305–10. The first was a report issued in Oct. 1926 by the Kosaku chosa kai, and the second was from a Mar. 1927 Kosaku chosa kai report released by the Nomukyoku. Norinsho nomukyoku, Dai 7 kai chiho kosakukan kaigi roku (Proceedings of the 7th Regional Tenancy Official Conference), June 1930, 51–93, in Chiho kosakukan kaigi roku, iv (Ochanomizu shobo, 1980).

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33. Annual Report on Tenancy 1933, 123–4. 34. Shakai kyoku rodobu, Showa 11 nen rodo sogi chotei nempo (Annual Report on Labour Dispute Conciliation 1936), 8. 35. Ibid. 1927, 109. 36. The first article of the Tenancy Conciliation Law stated: ‘When disputes arise over rent or other tenancy-related matters, those involved can apply for conciliation at the district court with jurisdiction over the disputed land’, so that it was not necess-ary for both parties to make the request. Norinsho nomukyoku, Kosaku chotei nempo dai ichiji (The 1st Annual Report on Tenancy Dispute Conciliation), Feb. 1926, 279. 37. Annual Report on Labour Dispute Conciliation 1936, 11. 38. ‘Rodo kumiai ho yokyu undo no igi’ (What Is Behind Our Demand for a Labour Union Law), Rodo (Apr. 1930). 39. ‘Dai 19 kai zenkoku taikai hokoku (bassui)’ (Report of the 19th Annual Convention (Excerpts) ), Rodo (Dec. 1930). 40. ‘Rodo rippo sokushin iinkai no shuseian’ (The Committee for Promoting a Labour Law’s Amended Bill), Rodo (Feb. 1931). 41. ‘Sekai shuyo kakukoku no rodo kumiai ho’ (Labour Union Laws in the Principal Nations of the World), Rodo (Feb. 1931). 42. Mediators who fit into none of these categories fell into that of ‘other’. Annual Report on Labour Dispute Conciliation 1927, 5. 43. Ibid. 1932, 11. 44. Ibid. 1936, 10. 45. First Annual Report on Tenancy Dispute Conciliation, 279–86. 46. Kawaguchi, Kindai Nihon no tochiho kannen, 321. 47. Ogura Takekazu, Tochi rippo no shiteki kosatsu (A Historical Study of Land Legislation) (Norinsho nogyo sogo kenkyujo, 1951), 412. 48. Annual Report on Tenancy 1932, 66. 49. For these case studies and tenant–official reports, see Nishida, ‘Nomin undo to nogyo seisaku’, 325, n. 25. 50. Annual Report on Tenancy 1931, 17. 51. Ibid. 1933, 28. 52. Ibid. 29. 53. Ibid. 31. 54. Ibid. 123. 55. Originally this pattern came into being after the First World War. Prior to that the lifestyles of workers in heavy industry were not that different from that of the urban lower classes. See Hyodo Tsutomu, Nihon ni okeru roshi kankei no tenkai (The Development of Labour–Management Relations in Japan) (University of Tokyo Press, 1971), 206–13, 316–20. 56. Rodo undo shiryo iinkai, Nihon rodo undo shiryo (Materials on the Japanese Labour Movement) x (Rodo undo shiryo kanko iinkai, 1959), 208. 57. Annual Report on the Labour Movement 1932, 298.

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NOTES

58. Instructions from the Rodo bucho in ‘Shakai kyoku ni okeru rodo sogi chotei jimu uchiawase kaigi’ (Preliminary Meeting for the Administration of Labour Dispute Conciliation in the Social Bureau), Annual Report on Labour Dispute Conciliation 1932, 89. 59. Hyodo, Nihon ni okeru, 342. 60. Ibid. 351. 61. Hayashi and Yasuda, Shakai undo no shoso, 178. 62. Hyodo, Nihon ni okeru, 393. 63. Hayashi and Yasuda, Shakai undo no shoso, 185–8. 64. Nishinarita, Kindai Nihon, 342. 65. Ibid. 346–8. 66. Ibid. 352. 67. Ibid. fig. 29, p. 349. 68. Norinsho nomukyoku, Kosakuchi henkan ni kansuru sogi jirei (Examples of Tenancy Disputes Related to the Confiscation of Land) (Nov. 1934), 10. 69. Okado Masakatsu, ‘Showa kyoko no dageki to keizai kozo no tenkan’ (The Impact of the Great Depression and the Transformation of the Structure of the Economy), in Oishi Kaichiro and Nishida Yoshiaki (eds.), Kindai Nihon no gyoseison (The Administrative Village in Modern Japan) (Nihon keizai hyoron sha, 1991), 431. 70. Nishida Yoshiaki, ‘Nomin undo no hatten to jinushisei’ (The Development of the Farmers’ Movement and the Landlord System) in Nihon Rekishi, vol. 18 ( Japanese History) (Iwanami Shoten, 1975), 173–7. 71. For references to changes in land holdings by various landlords, see Nishida Yoshiaki, ‘Nihon jinushisei ni okeru Nishihattori ke no ichi’ (The Nishihattori Household’s Position in Japan’s Landlord System), in Oishi Kaichiro (ed.), Kindai Nihon ni okeru jinushi keiei no tenkai (Ochanomizu shobo, 1985), 631–706. 72. Nochi seido shiryo shusei 3 (1969), p. 72. 73. Annual Report on the Labour Movement 1925, 135. 74. Ibid. 1929, 960–2. 75. Ibid. 1933, 671–3. 8. THE WARTIME INSTITUTIONAL REFORMS AND TRANSFORMATION OF THE ECONOMIC SYSTEM

1. Okazaki Tetsuji, ‘Senji Keikakukeizai to Kakaku Tosei’ (The Wartime Planned Economy and Price Controls), in Kindai Nihon Kenkyukai (ed.), Nenpo Kindai Nihon Kenkyu ix (Tokyo: Yamakawa Shuppansha, 1987); ‘Dai Niji Seikaitaisenki no Nihon ni okeru Senji Keikakukeizai no Kozo to Unko’ (The Structure and Working of Japan’s Wartime Planned Economy), Shakaikagaku Kenkyu 40/4 (1988). 2. Aoki Masahiko, ‘System toshiteno Nihon Kigyo’ (The Japanese Firm as a System), Kikan Riron Keizaigaku 43/5; Okuno Masahiro, ‘Gendai Nihon no Keizai System’ (The Contemporary Japanese Economic System), in Okazaki Tetsuji and Okuno Masahiro (eds.), Gendai Nihon Keizai System no Genryu (The Origins of the Contem-

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3.

4. 5.

6.

7.

8.

9.

10. 11. 12. 13. 14. 15.

16. 17.

18. 19.

341

porary Japanese Economic System) (Nihon Keizai Shinbunsha, 1993); Paul Milgrom and John Roberts, Economics, Organization and Management (Englewood Cliffs, NJ: Prentice-Hall, 1992). Hara Akira, ‘Nicchu Senso-ki no Gaika Kessai’ pt. 1 (Foreign Currency Settlement During the Sino-Japanese War), Tokyo University Keizaigaku Ronshu 38/1 (1972), 18–19. Okazaki Tetsuji, ‘Kakaku Tosei’, 177. An explanation of this is omitted because the projections for the Transportation and Electricity Mobilization Plans are not available. Unlike the period following 1941, when marine transport capacity became a strategic variable, it seemed not to play an important role in this stage. Nakamura Takafusa and Hara Akira, ‘Shiryo Kaisetsu’ (A Commentary on the Materials), in Nakamura Takafusa and Hara Akira (eds.), Gendaishi Shiryo (Materials on Modern History) xliii (Tokyo: Misuzushobo, 1970). Ishikawa Junkichi, Kokka Sodoinshi (A History of State General Mobilization) i (Kokka Sodoinshi Kankokai, 1983), 11. Yamazaki Shiro, ‘Seisanryoku Kakuju Keikaku no Tenkai Katei’ (The Development of the Production Capacity Expansion Plan), in Nenpo Kindai Nihon Kenkyu ix. 40–55. Mishima Yoshisada, ‘Shoki Busshi Doin Keikaku no Kaiko’ (Recollections of the Early Materials Mobilization Plans), in Boeicho Boeikenkyosho, Kenkyu Shiryo (Research Materials), supplement 96 (1955), 15. Regarding the Materials Balance Method (Butsuzai Baransuhou), see Aoki Masahiko, Soshiki to Keikaku no Keizairiron (The Economics of Organization and Planning) (Iwanami Shoten, 1971), 51–62. Yamazaki Shiro, ‘Seisanryoku’, 41–2. Hara Akira, ‘Nicchu Senso-ki’, 39–40. Mishima Yoshisada, ‘Shoki Busshi’, 13. Hashii Makoto, Kikai no Jukyuu Tosei (The Control of Supply and Demand for Machinery) (Shoko Gyoseisha, 1940), 34–53. Ibid. 219–36. Hirai Tomisaburo, Tekko Tosei (Iron and Steel Controls) (Shoko Gyoseisha, 1939), 33–4. Scrap steel certificates were issued by the Scrap Steel Cooperative Purchasing Association organized by the steel manufacturers. Hokkaido Tanko Kisen Co. Ltd., Sekitan Kokka Toseishi (A History of State Controls of Coal) (Nihon Keizai Kenkyusho, 1958), 219–25. In Koseisho 20-Nenshi (A Twenty-Year History of the Ministry of Health and Welfare) (Kosei Mondai Kenkyukai, 1960), 134, it is stated that the ‘Labour Mobilization Plan was started in 1939, and the employment placement offices played a central role in implementing the plan’. Oohara Shakaimondai Kenkyujo, Taiheiyo Sensoka no Rodosha Jotai (The Condition of Workers During the Second World War) (Toyokeizai Shinposha, 1964), 4. Rodo Gyoseishi (A History of Labour Administration) 1 (Ministry of Labour, 1961), 946–7.

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NOTES

20. Hara Akira, ‘Shikin Tosei to Sangyo Kinyu’ (Fund Controls and Industrial Finance), Tochi Seidoshigaku 34 (1966), 66–7. 21. Nihon Ginko Hyakunenshi (A Hundred-Year History of the Bank of Japan) iv (Bank of Japan, 1986), 291–3. 22. Okazaki Tetsuji, ‘Kozo to Unko’, 28. 23. Miyajima Hideaki, ‘Senji Keizai Tosei no Tenkai to Sangyou Soshiki no Henyo’ (The Development of Wartime Economic Controls and the Transformation of the Industrial Organization), pt. 1, Shakaikagaku Kenkyuu (39/6), 35. 24. Okazaki Tetsuji and Okuno Masahiro, ‘Gendai Nihon’, 21–2. 25. Okazaki Tetsuji, ‘Kakaku Tosei’, 186–7. 26. See Hirao Nikki (Hirao Diary) (on file at Kohnan University), 15 Feb. 1940, and Okazaki Tetsuji, ‘Kozo to Unko’, 14. 27. Dai Nanakai Teikoku Gikai Kizokuin Giji Sokkiroku (Proceedings of the 7th Imperial Parliament House of Peers), 6 Feb. 1940, and Dai Nanakai Teikoku Gikai Shuugiin Giji Sokkiroku (Proceedings of the 7th Imperial Parliament House of Representatives), 6 Feb. 1940. See also Okazaki Tetsuji, ‘Kakaku Tosei’, 186–7. 28. Kikakuin, ‘Butsudo Keikakuw o Chukaku to suru Waga Senjikeizai no Genjo Narabini Kongo no Mitoshi’ (Current Conditions and Prospects for the Wartime Economy, Centring on the Materials Mobilization Plan), in Nakamura and Hara, Gendaishi Shiryo xliii. 469–95; Okazaki Tetsuji, ‘Kakaku Tosei’, 187. 29. Kokusaku Kenkyuukai Bunsho G-4 (Documents of the Research Group on National Policy). Concerning the following, see Okazaki Tetsuji, ‘Kozo to Unko’, 27–8. 30. Nakamura Takafusa and Hara Akira, ‘Keizai Shinteisei’ (The New Economic System), in Japan Political Science Society (ed.), Nenpo Seijigaku (Iwanami Shoten, 1972), 124–5. 31. Okazaki Tetsuji, ‘Kozo to Unko’, 28. 32. Miyajima Hideaki, ‘Senji Keizai’, 134. 33. Okazaki Tetsuji, ‘Kozo to Unko’, 47–9. 34. Ibid. 66–7. 35. Ueda Hiroshi, ‘Senji Keizai Tousei to Shitaukesei no Tenkai’ (Wartime Economic Controls and the Development of the Subcontracting System), in Kindai Nihon Kenkyukai (ed.), Nenpo Kindai Nihon Kenkyu ix (Yamakawa Shuppansha, 1987), 205. 36. See also Minato Tetsuo, ‘Ryotaisenkan ni okeru Nihongata Shitaukeseisan Shisutemu no Hensei Katei’ (The Process of Forming the Japanese-Style Sub-contracting System Between the Two World Wars), Aoyama Kokusai Keizaironshu 3 (1987); Ueda Hiroshi, ‘Senjiki Osaka ni okeru Shitaukesei no Tenkai (1)’ (The Wartime Development of the Subcontracting System in Osaka), Kikan Keizaikenkyuu 15/1 (1992); Ueda Hiroshi, ‘1930 Nendai Kohan no Shitauke Seisaku no Tenkai’ (The Development of the Subcontracting Policy in the Latter Half of the 1930s), Kikan Keizaikenkyuu 16/3 (1993); Suzuki Takao, ‘Kosaku Kikai Kogyo no Shitaukeka’ (Development of the Subcontracting System in Machine Tool Industry), Seikei Kenkyu 59 (1989); Imai Hisato, ‘Senjiki no Shitauke ni kansuru Ichi-kosatsu’ (A Study of Wartime Subcontracting), Keizai Kagaku 37/4 (1989); Nagashima Osamu,

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37. 38. 39.

40. 41. 42. 43. 44. 45. 46.

47.

48. 49.

50.

51. 52. 53. 54.

343

‘Kigyou Seibi to Keiretsuka’ (Industrial Readjustment and the Formation of Industrial Groups), in Shimotani Masahiro and Nagashima Osamu (eds.), Senji Nihon Keizai no Kenkyu (Research on the Wartime Japanese Economy) (Koyo Shobo, 1992). A classic study is Fujita Keizo, Nihon Sangyo Kozo to Shitaukesei (The Japanese Industrial Structure and the Subcontracting System) (Iwanami Shoten, 1965). Minato Tetsuo, ‘Ryotaisenkan’, 99–103. See Okazaki Tetsuji, ‘Kigyo Shisutemu’ (The Corporate System), in Okazaki Tetsuji and Okuno Masahiro (eds.), op cit. Yamazaki Shiro, ‘Kyocho Kin’yu Taisei no Tenkai’ (The Development of the Cooperative Financial System), in Imuta Toshimitsu (ed.), Senji Taiseika no Kin’yu Kozo (The Financial Structure under the Wartime System) (Nihon Keizai Hyoronsha, 1991), 451. The new financing concepts, as noted later, were closely connected to the policies concerning the structure of corporate governance. Yamazaki Shiro, ‘Kyocho Kin’yu’, 454–61. Bank of Japan Research Bureau (ed.), Nihon Kin’yushi Shiryo (Materials on Japanese Financial History) xxxiv (Bank of Japan, 1973), 152–4. Ginko Tsushinroku (Record of Bank Communications), 20 Sept. 1941, 188. Tokyo Bank Association, Research Section, ‘Kyodoteki Toyushi no Genjo’ (The Conditions of Cooperative Finance), Nihon Kin’yushi Shiryo xxxi (1971), 479–80. Teranishi Juro, ‘Meinbanku Shisutemu’ (Main Bank System), in Okazaki Tetsuji and Okuno Masahiro (eds.), op cit. Okazaki Tetsuji, ‘Dainiji Sekai Taisenki no Kin’yu Seido Kaikaku to Kin’yu Shisutemu no Henka’ (Financial Reforms During the Second World War and Transformation of the Financial System), in Hara Akira (ed.), Nihon no Senji Keizai ( Japan’s Wartime Economy) (Tokyo University Press, 1995). Okazaki Tetsuji, ‘Senji Keikakukeizai to Kigyo’ (The Wartime Planned Economy and the Firm), in Tokyo University, Social Science Research Institute (ed.), Gendai Nihon Shakai (Modern Japanese Society) iv (Tokyo University Press), 386–8. Nakamura and Hara, ‘Keizai Shintaisei’, 96–104. Over the top 10 largest corporations in zaibatsu-affiliated and non-zaibatsuaffiliated mining and manufacturing industries, dividends decreased from the prewar 0.70 to 0.55, and the ratio of dividends to profits also decreased from 0.71 to –0.34. See Okazaki Tetsuji, ‘Senji Keikakukeizai to Kigyou’, 376–7. The limit on executives’ bonuses as a percentage of profit for the leading 20 corporations in the mining industry was 0.0057 in the postwar period (1961–70), and 0.0248 before the war (1921–36). See Okazaki Tetsuji, ‘Kigyo Shisutemu’ 106. Okazaki Tetsuji, ‘Senji Keikakukeizai’, 387–8. Kokusaku Kenkyukai Bunsho G17–1; and Okazaki, ‘Senji Keikakukeizai to Kigyou’, 388–9. Ibid. 387–9; and Okazaki Tetsuji, ‘Kigyo Shisutemu’, 138–9. Ibid. 113.

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NOTES

55. Concerning the above, see ibid. table 4.4. However, note that in Column B for 1939 zaibatsu figures, there is a misprint such that the number 16 appears rather than the correct figure of 6. 56. See fig. 8 in Okazaki Tetsuji, ‘Kakaku Tosei’. 57. Ibid. 190–1. 58. See Suitsu Shiryou (Suitsu Papers), Ph2-2 (Hitsotsubashi University Centre for Economic Statistics); Okazaki Tetsuji, ‘Kozo to Unko’, 104. 59. Kokusaku Kenkyuukai Bunsho (Documents of the Research Group on National Policy, University of Tokyo Library), Aa-1. 60. Steel Control Association Materials Division, ‘Tekkoyo Sekitan no Kyokyu Fuan nitsuite’ (Concerning Instability in the Supply of Coal for Steelmaking), in Suitsu Shiryou (Suitsu Papers), Ph2-2. 61. See ibid.; and Okazaki Tetsuji, ‘Kozo to Unko’, 106–7. 62. Yamazaki Shiro, ‘Taiheiyo Senso Kohanki ni Okeru Kokuki Zosan Seisaku’ (Policies for Increasing Aircraft Production in the Latter Half of the Pacific War), Tochi Seido Shigaku 130 (1991), 31–2. 63. Kitano Shigeo (Section Chief, Ministry of Munitions Literature Division), Gunjusho oyobi Gunju Gaisha Ho (The Ministry of Munitions and the Munitions Corporation Law) (Takayama Shoin, 1944), 94. 64. Preparatory Committee for Munitions Firms’ Conference, ‘Gunju Kaisha Kondankai Junbi Keikaku Hokoku’ (Preparatory Report for Munitions Firms’ Conference), in Juyou Sangyo Kyogikai/Kigyou Seibi, Senji Kigyo Taisei Iinka/Gunju Kaisha Kondankai (Important Industries Cooperative Committee/Enterprise Adjustment, Wartime Enterprise Structure Committee/Munitions Firms’ Conference) (in the Ishikawa Ishiro Papers in Tokyo University’s Faculty of Economics). 65. From statements by the Minister of State and the Vice-Minister for the Ministry of Munitions to the House of Peers, in ‘Gunju Gaisha Hoan Tokubetsu Iinkai Giji Sokkiroku’ (Proceedings of the Special Committee on the Bill for the Munitions Corporation Law) i. See also Okazaki Tetsuji, ‘Senji Keikakukeizai to Kigyo’, 393. 66. See House of Representatives, ‘Gunju Gaisha Houan Tokubetsu Iinkai Giji Sokkiroku’ (Proceedings of the Special Committee on the Bill for the Munitions Corporation Law) ii; and Okazaki Tetsuji, ‘Senji Keikakukeizai to Kigyo’. 67. Ueda Hiroshi, ‘Senji Keizai’, 210. 68. Okazaki Tetsuji, ‘Senji Keikakukeizai to Kigyo’, 392–3. 69. Nihon Ginko Hyakunenshi, 308–9. 70. Ministry of Finance, Bank Insurance Bureau Chief, ‘Gunju Gaisha ni taisuru Shikin Yuzu Jisshi Yoryo ni Kansuru Ken’ (On Outline of Implementation of Loans for Munitions Firms), in Nihon Kin’yushi Shiryo (Materials on Japanese Financial History) xxxiv. 421–3. 71. Ibid. xix (1967), 739. 72. Government official’s reply to 86th Diet’s House of Representatives Committee; ibid. xix. 752.

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345

73. Ibid. 759. 74. Dai-ichi Ginko 80-Nenshi Kohon (Manuscripts of the 80-Year History of the Daiichi Bank) iii. 391–4. 75. Mitsui Ginko Shi (A History of Mitsui Bank) (1954), 351–2. 76. See Okazaki Tetsuji and Okuno Masahiro, ‘Gendai Nihon no Keizai Shisutemu to sono Rekishiteki Genryuu’ (The Contemporary Japanese Economic System and Its Historical Roots), in Okazaki and Okuno (eds.) op cit., 28–32; Okazaki Tetsuji, ‘Rekishiteki Shiten kara Mita Nihon no Seifu: Kigyoukan Kankei’ (The Japanese Government–Firm Relationship in Historical Perspective), Gendai Shiso (Dec. 1993); Okazaki Tetsuji, ‘Government–Firm Relationship in the Postwar Japanese Economic Recovery: Coordinating Coordination Failure’, in Aoki Okuno-Fujiwara and H. Kim (eds.), The Role of Government in East Asian Development: Comparative Institutional Analysis (Oxford: Oxford University Press), 1997; Okazaki Tetsuji, ‘Evolution of the Financial System in Postwar Japan’, Business History 37(2) (1995).

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Index Note: Most references are to Japan, unless otherwise indicated. Abegglen, James G. 2 accidents, labour: increase in 135 administrative reform 154–60 advisors (komon) 42 aesthetic order 236 affiliated firms 18 board members from 39 executives nominated by parent companies 30–1 affluence, excessive 174–6, 188–9 Afghanistan: Soviet invasion 164–5, 177, 178 Agricultural Land Adjustment Law 276 agricultural workers: retraining for 136 Agriculture and Forestry, Ministry of 255, 259–60 aid programmes 150, 169 Akamatsu Kaname: goose flight pattern hypothesis 64 Akamatsu Katsumaro 239– 41, 247 All Japan Farmers’ Union 248, 249 All Japan Farmers’ Union Federation 248, 249 Amano Teiyu 126 anarchist labour unions 242, 243 Arab–Israeli conflict 176 arbitration measures: public-sector workers 130 see also conciliation armaments 138, 139, 152–3 constitutional constraints 140–1 see also nuclear weapons army, see military arrangement: job 43–4 proper (seiri) 207 artificialization of space 220–1, 235–6 Asahi Rayon 74 Asahi Silk Weaving 66, 74, 76 ASEAN countries 170 Asia 153 investment in 149 newly industrialized countries 170 relations with 143 assembly industries 82–3, 84

assessment system (satei), worker 117 see also performance evaluation assets, corporate: owned by top 100 firms 20–1 Ataka & Company 35–6 automation ( jidoka) 72–3, 82 automobile industry 65, 74, 75, 82 growth of international competitiveness 72–3 oligopolistic competition 77 in profit ranking tables 57 subcontracting system 81 wage differentials 78 automobile ownership: as indication of excessive affluence 174–5 Baba Hiroji 21, 22–3, 38, 116 Bank of Japan 287, 288, 294, 295, 300–1 banks and banking: board members from 39 as creditors 31–8, 47–9 indirect financing system 294–6 main bank system 31–8, 294, 295, 296, 302 munitions industry and 300–2 in profit ranking tables 56, 57–63, 83 beggars 212–13 behaviour: regulation 210–11 bells, temple: for time 201–2 board members, see executives bodies: cleanliness 219–20, 226–7, 228 health 210 social order and 193–201, 224–33 body and mind dichotomy 228–9 bonuses: managers 296 Brezhnev, Leonid 169, 177 bridges 221, 222 brightness: space and 217–19 Britain, see UK brokers, role of: World War II 292 buildings 220, 223 bureaucracy 111 bureaucratic institutions: from regulatory to policy agencies 122–4 Business Week 61

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348

INDEX

calendars 202 secular and religious 205 solar 202, 205 capital: dominant 185–6 finance 186 managerial 186 overseas advance of 149–50 capital accumulation: education and 115 forms of 186 labour policies and 136, 159–60 promotion by state 122–9 weakness of state in regulating 129–35 capitalism: classical and contemporary 188 cars, see automobile career change 49, 50, 51–2 career paths 52–4 slow-track system 42–3 two-track system 49–51 Carter, Jimmy 149, 178, 189 cemeteries 213–14 Central Educational Deliberative Committee 125 Central Labour Committee 134 centralization: World War II economic system 298–9 Chandler Jr., Alfred 186 chaos: reasons for 235 chemical industries: employment in World War II 285 in profit ranking tables 56–7 Chiang Kai-shek 164 Chiba Bank 33, 35 chief executive officers: appointment of 39–40 as most successful employees 38–9 retirement of 44–5 children: standardization of games 231 China 164 Cold War 162–3; end of 176–7 cholera 212 cholera riots 213, 219 Churitsu Roren 99, 101, 106 cities: regulations 200 class 181 classnessness 22–3, 116–17, 184–5 dress and 233–4 food and 228 time and 206 unionism and 92, 247–8

classical capitalism 188 cleanliness: body 219–20, 226–7, 228 space and 209–15 clocks 202 clothing, see dress Club of Rome 189 coal industry: Miike dispute 132–4 in World War II 285, 288, 298 Cold War 162–5, 187–8 end of 176–9 collective bargaining 6, 7, 260–1, 272 Commerce and Industry, Ministry of (MCI) 278, 283, 284, 288, 290, 297, 299 commercial industries: development patterns 64–5 in profit ranking tables 63, 83 Commodities Sales Price Control Ordinance 278 communism: farmers’ unions 239, 241–2, 249–51 labour unions 243–4 Nichino 248 Sodomei 245–6 companies, see enterprises Company Accounting Control Ordinance (1940) 296 companyism 55, 179–80, 188 definition 180–1 development 181–5 history of 1–11, 185–7 modifications of 45–54 pacifism 145–7 structure of 21–45 comparative economic system theory 277 comparative institutional analysis (CIA) 277 competence (noryoku shugi): in education 127–8 competition: in education 128–9, 156, 157 executives 40–2 international: case studies 65–73; conditions for 73–84 oligopolistic 82, 84; importance of 75–7; rayon industry 67; television industry 69, 70 workers 49–52, 116–17, 184–5 complementarity, institutional 277

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INDEX conciliation: landlord and tenancy disputes 258–68, 276 conciliation committees 266, 267–8 Congress of Japanese Labour Unions 246 consideration money 149 constitution: Article 9 114, 137, 138, 140–1, 143 revision 152, 161 consumption, excessive 174–6, 188–9 contemporary capitalism 188 contracts, long-term 185 control associations: World War II 290–2, 298, 299, 302 cooperation, industrial 261, 272 cooperative associations: subcontractors 299 cooperative union movement: classical 118 contemporary 118–19 coordination: World War II economic units 277, 289–92, 292, 295, 298–9, 302 corporal punishment 232–3 corporate groupings structure (keiretsu) 117 corporate power 161 state and 120–36 corporate shareholders 23, 24, 26, 27–31 corporation, theory of 155 education ideals 156–8 corporations, see enterprises corruption: armaments purchase 139 cosmetics 229 cotton-spinning industry 5, 10–11 growth of international competitiveness 65–6 independence of 74–5 oligopolistic competition 75–6 in profit ranking tables 56 wage diffentials 77–8 council system, factory 252, 272, 273 councillors (san’yo) 42 craft-based unions 271 Craig, Albert 3–4 creditors: influence of 31–8, 47–9 crematoria 213 crisis management: by main banks 32–8 Cuban missile crisis 165 Daiichi Bank 75, 294–5 Daiichi Kangyo Bank 36 Dai-Nihon Spinning 67, 74 darkness 219 day: division of 203

349

dealership linkage 19 death: determination of 229 disposal of bodies 213–14 death by overwork (karoshi) 116, 146, 161, 183 Deconcentration Law 63, 68 defence: costs 114, 138, 139, 146, 147, 155 investment in developing countries and 150 US and 114, 137–42, 147, 148–9 see also military; Self-Defence Forces Defence Agency 139, 140, 141 democracy, industrial 89, 105 developing countries: Japanese investment in 149–51, 153 diplomacy: weakness of 143–4, 151 directors, see executives disease 209–10 cholera 212, 213, 219 isolation of 214–15 dismissals, employee 269–72, 276 disorder: reasons for 235 disputes, labour, see labour disputes distribution system 19 diversity: in education 127 Domei 92, 97, 106 cooperative relations with management 85, 101 economic adjustment thesis 103, 105 enterprise consciousness 104 wage bargaining 99, 100, 102–3 dominant capital 185–6 Dore, R. P. 2, 22 dormitory system 216–17 drafting: World War II workers 285, 287 dress: boarding school pupils 233–4 regulations 210–11, 229 uniforms 230 Westernization 219, 230 East: economic growth 165–6, 169 excessive affluence 175 East Europe: Cold War 164; end of 177 excessive affluence 175 economic adjustment (keizai seigosei) 100, 103, 104–5

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350

INDEX

Economic Deliberative Council: education policy 126–8 economic growth: global 165–70 Japan 93–4, 168; rapid 182; slow 182–3 Economic Planning Agency 100, 107 Economic Reconstruction Discussion Group 122 economic system: World War II: first stage 278–88, 302 revised 288–97 final stage 297–302 Edo period: body 226 children’s play 231 cleanliness 211 corporal punishment 232 health 210 lighting 217 schools 199–200 time system 201 weights and measures 221 education: economic policy and 115, 124–9, 161 military influence 197–9 reform 156–8, 160 in social order 200–1, 204 standardization of language 233 see also schools Education, Ministry of 125, 126, 128–9, 157–8 physical standards 225–6 school cleanliness 209 school lighting 219 Eight Companies Discussion Group (Hassha kondankai) 134 elections: council (1925) 275 National Diet (1928) 240, 241–2 prefectural (1927) 238, 239–41 electricity industry: in profit ranking tables 56, 57–63, 83 electronics industry, see television emergencies, military 141 Emergency Loan Syndicate 294 emperors and emperor system education 124–5, 125–6, 127 imperial time 205–7 Liberal Democratic Party and 119 nationalism 147 as symbol of cleanliness 211–12

Employee Stock Ownership Plan (ESOP) 21–2, 38 employees, see management; workers employers: prewar relationship with workers 268–73, 276 employers’ associations: cooperation with unions 105 wage restraint 100–1 see also Nikkeiren employment placement system: World War II 285 enclosed space: social order and 215–17 enrichment, excessive 174–6 enterprise consciousness 86, 94–7, 101–2, 107 transition from labour unionism to 103–6 enterprise society: state and 115–20 enterprise unions and unionism 86, 107–8, 115–16, 237, 272–3, 276 economic growth and 182 formation of 117–19 growth in influence of 104–6 high-growth era 89–91 historical formation of 87–9 enterprises: control of workers 116–17 family 17, 20 governance in World War II 296–7, 302 increased size of 10 relations between 185 see also companyism; large enterprises; small and medium enterprises entrepreneurship: importance of 24–7 internal 53–4 in small and medium enterprises 18 environmental crisis: global 175, 189 Equal Employment Opportunity Law 160 equality: in education 9–10 employee 8–9, 42–5, 49–52 gender 135, 160 equal-opportunity employment legislation 158 eras: an imperial era name 206 ethics education 157 Europe: economic growth 168 neo-conservatism 173 stagflation 171 street lighting 217

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INDEX technological development 166 television industry 68–9 see also specific countries evaluation, see performance evaluation executives: internal promotion 297 as representatives of employees 3, 38–45 of subsidiaries, nominated by parent companies 30–1 wages 41–2 experimental stations: cotton-spinning industry 66 weaving industry 79 Fallows, James 111 familism 234 family firms 17, 20 farmers’ movement relationship between landlords and tenants 268–76 support for left 237–51, 276 tenancy disputes 251–68 Federation of Japanese Labour Unions 248 Federation of Shipbuilders’ Unions 102 Federation of Steelworkers’ Unions 94, 95, 96, 97, 106, 132 economic adjustment thesis 100, 105 enterprise consciousness of 103–4 government cooperation 101 wage bargaining 102 festivals 205 finance: cotton-spinning industry 65–6 finance, Ministry of: World War II 287 finance capital 186 financial institutions: in profit ranking tables 56, 57–63, 83 shareholdings 23, 24, 26, 27–8 financial institutions’ associations: World War II 285–7 financial system: World War II 292–6, 299–302 firings, see dismissals firms, see enterprises flexible job demarcation 43–4 food: as indication of excessive affluence 174–5 Westernization of 227–8 foreign exchange control: World War II 278, 283, 283– 4 Foreign Ministry 143, 144, 155

foreign policy: immaturity of 142–4, 151 foreign technology, see technology France: excessive affluence 175 labour supply 167 neo-conservatism 173 Fukuda Takeo 100, 101 Fukuzawa Yukichi 215, 227, 228, 229 fund control plan 280, 285–7 games: children 231 gender equality 135, 160 General Federation of Japanese Farmers’ Unions 249, 250, 251 Germany: Cold War, end of 176–7 defence costs 178 division 164 excessive affluence 175 labour supply 167 neo-conservatism 173 Gerschenkron, Alexander: advantages of undeveloped countries 64, 74 ghosts 229 Ginza Brick Town 223 gold exports: USSR 177 goods, trade: growth in 5–6 goose flight pattern hypothesis 64 Gorbachev, Mikhail 178–9 government, see state government organizations: promotion of wage restraint 100–1 World War II economic system 287–8 Gramm–Rudman Act (US) 178 group resistance: to social order 234 Hachijuni Bank 36, 38 hairstyles 230 Hansen’s disease 214 harmonism 251 Hasegawa Shun 101 Hashimoto Juro 185 Hata Itsuzo 74 Hatoyama Ichiro 121 Hattori Seiichi 219 Hayashi Fusao 147–8, 151, 160 Hayashi Yuichi 239 health 209–10 lighting and 219 Health and Welfare, Ministry of 285 Hearn, Lafcadio 233

351

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352

INDEX

heavy industry 5 in profit ranking tables 56–7 unions 272 Hilferding, Rudolf 186 Hirano Rikizo 248 Hirao Hachisaburo 289 Hitachi Ltd 30, 70 holidays 205–6 household income: farm 273 workers 268–9, 273 Hyodo Tsutomu 2, 103 Hyogikai ( Japan Council of Labour Unions) 244, 246 Ichimada Hisato 68 ideology: Cold War 162–3, 187–8 Special Reform Council 154–5 state 144–8 Ikeda Hayato 126, 130 IMF system 167–8, 171 IMF-JC 95, 96, 106, 119 cooperation with employers 101 economic adjustment thesis 105 enterprise consciousness of 103–4 wage bargaining 102–3 Imperial Bank 301–2 Imperial Farmers’ Association 250 Imperial Farmers’ Union Association 250 imperial time 205–7 Imperial Way Association 250 import capacity: World War II 280, 290 import control: World War II 278, 283–4 incentives: in coordination of economic units 277 managers 295–6 income: farm 273 non-farm 273 workers 268–9, 273 see also wages income-doubling plan 126 indecency: dress 210–11, 229 independence: of leading enterprises 74–5 independence movements: Cold War 164 indigenization stage: modernization 3–4 indirect finance: World War II 293–6 individual shareholders 23–4, 25, 27 individually owned firms 16–19 Indochina 164, 176

industrial associations: World War II 284, 287, 289 Industrial Bank of Japan 294 Industrial Patriotic Association (Sampo) 11, 87, 88, 276 industrial unions, see enterprise unions; labour unions Industries Special Promotion Law 123–4 inflation 98, 168 global 170–4 information: in World War II economic system 277, 287, 289, 290, 292, 298, 302 innovative production processes 10, 11 institutional reform: World War II 277, 288–98 final stages 297–302 insurance companies: investment 47 International Labour Organization Treaty 131 International Metalworkers’ Federation-Japan Council, see IMF-JC International Monetary Fund system 167–8, 171 international system: Japanese wish to contribute to 154–5 and weakness of Japanese state 136–48; attempts to overcome 148–53 International Trade and Industry, Ministry of (MITI) 122–4, 144 investment: in developing countries 149–51 investment plan: World War II 280 Iran–Iraq War 150, 176 Iranian revolution 150 Iraq crisis 113, 160 Iron and Steel Control Association 290–2, 298 iron industry: World War II 298–9 Ishida Hirohide 130, 131, 133–4 isolation: diseases 214–15 mentally ill 229 Italy 167, 173, 175 Japan Council of Labour Unions, see Hyogikai Japan Development Bank 123 Japan Electric Generation & Transmission Company 61 Japan Farmers’ Union 247–9, 250 Japan Federation of Labour, see Sodomei Japan Inc., concept of 110, 180

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INDEX Japan Iron and Steel Sales Company 285 Japan Labour–Farmer Party 238, 240, 241, 242, 248 Japan Nitrogen Fertilizer 74 Japan Raw Cotton 74 Japan Rayon 66, 67 Japan Seamen’s Union 244–5, 246 Japan Socialist Party 92, 93 Japan Steel 68 Japan Steel Pipe 76 Japan Teachers’ Union 125, 126 ‘Japan threat’ 109 Japanese Private-Sector Trade Union Council (Zenmin Rokyo) 106 Japanese Private-Sector Trade Union Confederation (Rengo) 106, 107, 118, 237 ‘Japanism’ 246–7, 250 Johnson, Chalmers 110, 111, 113 Johnson, Lyndon 173, 176 joint-stock companies 16 just-in-time system 72–3, 82 Kagawa Prefecture Federation 249 Kaihara Osamu 140 kaishashugi (companyism) 55 Kamei Masao 155 Kanagaki Robun 227–8 Kanbara Farmers’ Union 249 Kanegafuchi Spinning 74 Kato Koichi 160–1 Kawasaki shipyards 252, 272 Kawasaki Steel 68, 74, 75, 76 Kayama Kenichi 157 Keidanren 120, 121 Keizai Doyukai 120 Keizai Kikakucho: White Paper on the Economy of 1955 1–2 Kennedy, John F. 169 Keynesian theory 167–8, 170–1 Khrushchev, Nikita 168–9 kigyoshudan: independence of leading enterprises from 74–5, 84 Kiro union 131 Kishi Shinsuke 299 knowledge: light and 219 Kobayashi Chu 134 Kobe Steel 68, 76 Koike Kazuo 42 Koizumi Yakumo 233 see also Hearn, Lafcadio

353

Kokumin Kyokai 122 Kono Ichiro 121 Korean peninsula 164 Korean War 138, 152, 164–5 Kosaka Masataka 147 Kosaku nempo 268 Kumura Seita 74 Kurashiki Silk Weavers 66, 67 Kyowa Bank 35–6 labour, manual; decline in need 174–5 Labour, Ministry of: labour policies 129–32, 158–60 Miike dispute 133–4 Labour Dispute Conciliation 270 Labour Dispute Conciliation Law 258–9, 260, 261 labour disputes 86, 89, 90, 91, 93 dismissals 269 duration 255–7 prewar 251–68, 252, 256, 264 small and medium enterprises 272–3 see also strikes labour laws 158–60 labour mobilization plan 280–1, 285 labour policy: Nikkeiren and 120–1 weakness of state 129–35, 158–60 labour relations 3, 6–9, 85–6, 106–8 history: during oil crisis 97–104; formation of enterprise unionism 87–9; high-growth era 89–97; low-growth era 104–6 reform in World War II 296–7, 302 Labour Standards Law 131–2, 158, 159–60 labour supply: global 167 Labour Union Law 258–9, 260–1 labour unions and unionism 3, 86, 87, 120–1, 275 cotton-spinning industry 66 decline of 104–6, 107, 117, 184, 272 industrial cooperation policy 5–7, 9, 101 labour policy and 129–32 Miike dispute 132–4 in oil crisis 97–104 opposing concepts of 88–9, 94–7 rayon industry 74 support for 85, 91–4, 99, 237–47, 250–1 Sanpo Associations 11 stagflation 172

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354

INDEX

labour unions and unionism (cont.): strike ban 134–5 transition to enterprise consciousness 103–6 weaving industry 79 Labour–Farmer Party 239–41, 242, 248, 249 land reclamation: tenancy disputes 253, 273–4 landlords: relationship with tenants 4, 273–6 language: standardization 233 large enterprises 17, 19–21 companyism 180 development patterns 64–5 growth of international competitiveness: case studies 65–73; conditions for 73–84 labour unions 272 profit ranking tables 55–63 promotions 117 rise of small and medium enterprises to 24–7 left, political: farmer support for 237–51, 276 leprosy 214 Lewis, Arthur 169 Liberal Democratic Party (LDP) funds from the zaikai 122 labour policies 130, 131 Miike dispute 134 military policies 113, 141, 142 one-party dominance of 119–20 political reform 160–1 support of enterprise unions 118 liberalism: US 163, 173 light industry 65 growth of 5, 7 in profit ranking tables 56 lighting: space and 217–19 limited responsibility companies 16 local notables: conciliation 261, 262, 266–8, 276 local society: effect of tenancy disputes 266–7, 268, 275, 276 loyalty, worker 87, 116–17, 174, 273 machinery industry: subcontracting system 79–81, 292–3 in World War II 284–5 Maeda Hajime 133, 134 Maekawa Report 111 main bank system 31–8, 294, 295, 296, 302

management: British and Japanese systems compared 7–11 enterprise unionism and 107 Japanese style 71, 74, 81–3, 84, 180–1 separation from owners 11, 22–3, 81, 184, 295–6, 299, 302 wages compared with workers 8 see also companyism; executives; middle management managerial capitalism 186 manufacturing industries: development patterns 64–5 internal promotion in 296 in profit ranking tables 56–7, 63, 83 manure: human waste as 212 marine transport capacity 289–90, 299 Maritime Officers’ Association 246 marketing strategies: semiconductor industry 71 television industry 69–70 marriage, retirement for women workers on 135 Marshall Plan 167 mass production 166 excessive affluence and 175 materialism: historical 187–9 US 163 see also consumption, excessive materials mobilization committee 281, 283 materials mobilization plan (MMP) first stage 278–87 revised 288–97, 298 Matsudaira Yasumoto 143 Matsumoto Electric Meter 7 Matsumoto Koshu 224 Matsushita Electric Industrial Company 32 Matsuura Masataka 11 Matsuzaki Tadashi 96 MCI 278, 283, 284, 288, 290, 297, 298 meat-eating: promotion of 227–8 mechanization: of the body 224–33 mediation, see conciliation Meiji 20s and 30s: social order 193–236 mental illness 229 isolation of 214–15 metric system 221–3 Middle East 153 Cold War, end of 176 Japanese diplomacy 143–4

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INDEX oil supply 167 threat of 151, 152 middle management: promotion 42–3 Miike dispute 132–4 Miike Labour Union 132–3 military: bodies and 224–5, 226, 227, 228, 230–1, 232 costs 149 discipline 4, 234–5 drill: depictions of 193–6 expansion and reform 151–3 familism 234 influence on social order 196–9 separation of services 139–40 space and 207–9, 215–16, 221 subordination to US 137–42 see also armaments; Self-Defence Forces mind and body dichotomy 228–9 Minebear Company 36–8 mining industries 65 development patterns 64–5 employment in World War II 285 internal promotion in 296 in profit ranking tables 56–7, 63, 83 Ministries, see under significant word, e.g. Education Minor Offences Law 200, 210, 229 Minseito party 239 miscellaneous category 235 MITI 122–4, 144 Mitsubishi Bank 36–8, 294, 302 Mitsubishi shipyards 252, 272 Mitsubishi Tokyo Steelworkers Union 87–8 Mitsubishi Trust and Banking Corporation 27–8 Mitsui Bank 294 Miwa Yoshiro 32 Miyajima Seijiro 121 Miyata Yoshiji 95, 96, 97, 100, 105 Miyazaki Yoshikazu 31 mobility, worker 136 mobilization, national 281 modernization 3–4 monopolies 186 morality 231–3, 235–6 Mori Arinori 197 Mori Rintaro (Ogai) 210, 228 Moroi Kanichi 134 Motorola 69–70

355

movements, body: restraints 215–16 standardization 230–3 Munitions Corporation Law (1943) 299–300 munitions industry 285, 299–302 Munzinger, Carl 236 Mutual Security Assistance (MSA) Agreement 93 Nagasaki steelworks 204 Nagayo Sensai 226 Nakasone Yasuhiro 112, 157, 184 Nakayama Ichiro 133 National Defence Fund Labour Association 246 National Farmers’ Union (Zenno) 249–51 National Finance Control Association 294, 295 National Labour–Farmer Masses’ Party 249 nationalism 111, 114, 144–5, 146, 147 in education 125, 156, 157–8 natural persons: as shareholders 23–4, 25, 27 nature 220, 235 Naval Labour League 244–5 neo-conservatism: switch from welfare state politics to 172–4, 188 neo-liberalism: Japanese-style 154–8 Netherlands 143 New International Economic Order (NIEO) 169, 170 newly industrialized countries (NICs) 170, 188 excessive affluence 175 Nichino ( Japan Farmers’ Union) 247–9, 250 Nihon Rodo Sodomei, see Sodomei Nikkeiren employers’ federation 93, 100, 102, 105 cooperation with unions 101 labour policy and 120–1, 158–9 Miike dispute 133 state intervention and 132 Nippon Denso 47 Nippon Kokan 95, 96 Nippon Life Insurance Company 27–8, 33 Nippon Steel Corporation 30, 32, 38, 51, 289, 297 Nishi Amane 224, 226, 235 Nishiyama Tadanori 23 Nishiyama Yanosuke 74 Nishiyama Yataro 68

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356

INDEX

Nixon, Richard 148–9, 176 non-family firms 17, 19–20 non-financial corporations: shareholdings 28–31 normal and abnormal dichotomy 228–9 North–South problem 169–70 nuclear weapons: Cold War 165 Japanese opposition to 145–6 nudity: regulations 210–11, 229 OECD 85 Ogura Masatsune 294 oil crisis 3, 85, 86, 106–7, 170, 176 decline of US power and 148–9 enterprise unions and 118 labour relations and 97–104, 117 Middle East diplomacy and 144 oil exports: USSR 177 oil supply: global 167, 171 Okochi Masatoshi 7–8 Okumura Hiroshi 23 Omi Textile 131–2 one-party dictatorship: USSR and China 163 one-shot offer (ippatsu kaito) 94, 95 Onoe Shinbei 225 OPEC 144, 167, 170, 171, 177, 188 open–closed structure: social order 215–17 order approval system 284 order, good (seiton) 207–9 Organization of Petroleum Exporting Countries (OPEC) 144, 167, 170, 171, 177, 188 Orii Hyuga 95–6 Osawa & Company 33–5 Oscar Kohorn Company 67, 74 Ota Kaoru 92, 130 owners: separation from management 11, 22–3, 81, 184, 295–6, 299–300, 302 weak control of 181 Ozawa Ichiro 113 pacifism 138, 145–6, 160–1 parks 220 part-time workers conditions 159 women 135 People’s Shunto 98–104 performance evaluation 43–4, 52–3, 117, 185 teachers 125, 128

Pickering, E. H.: British and Japanese management systems 8–11 Pilot Fountain Pen factory 6–7 Piore, M. J. 16 planning board: World War II 281, 289, 293 police officials: mediation 261–5, 266 policy consultation: unions 105 political activity: teachers banned from 125 political parties 12 cooperative union movement and 118 proletarian 238, 239–41, 275 political policies: enterprise union 118 political sector: links with the zaikai 121, 122 pollution: and purity 211–14, 228 poor: beggars 212–13 eviction of 210 preconditions stage: modernization 3–4 presidents: munitions corporations 300 price control: World War II 278–9, 288, 298, 299, 302 priests 228 mendicant 212 prisons: enclosed spaces 217 hairstyles 230 standardization of movements 231–2 private corporations: growth of 16 role in corporatist system 2–3 product-differentiation strategies: automobile industry 72 production areas: cotton-spinning industry 66 rayon industry 67 weaving industry 79 production capacity expansion committee 281, 283 production capacity expansion plans (PCEP): first stage 279–88 revised 288–97 production cooperation councils 296 production harmonyism 246–7, 272 production plans: World War II 278–88 final stages 297–302 revised 288–97 productivity: expansion 10–11 shunto and 93–4 union–management cooperation 7–8

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INDEX profit: World War II 288–9, 295–6, 297–8 profit ranking tables 55–63, 83 proletarian parties 275 prefectural elections (1927) 238, 239–41 promotion 8, 52–4, 184–5 executives 39–42 internal 296–7 middle management 42–3 probationary 53 slow-track system 42–3 system of 116–17 two-track system 49–51 public health 209–10, 226–7 Public-Sector Union Law 131 public-sector workers: labour disputes 130–1 Public System Deliberative Council 134–5 punishment: corporal 232–3 purity: and pollution 211–14, 228, 235 quality control 6–7, 117, 183 railroads 202–3, 204, 221 rayon industry 5, 65, 74 growth of international competitiveness 66–7 independence of 74–5 oligopolistic competition 75–6 Reagan, Ronald 173, 178–9 recession: global 170–4 refugees: Germany 167 relational contracts: long-term 185 religion: food taboos 228 religious calendar 205 Rengo 106, 107, 118, 237 rent levels: tenancy disputes 253, 255, 274–5 retirement: chief executive officers 44–5 for women, on marriage 135 right, political: labour’s shift to 237–51 Rodo 5–6 Rodo undo gaikyo 243 Rodo undo nempo 243, 249, 250, 255–8, 269 Sabel, C. F. 16 safety, worker 131–2, 135–6 Sahashi Shigeru 123 Saitama Bank 33 Sakamoto Jiro 145–7, 181 Sakurada Takeshi 134 Sanbetsu Labour Federation 88, 89, 129 Sankyo Precision Machinery 36–8

357

Sanpo (Industrial Patriotic Association) 11, 87, 88, 276 San’yutei Encho 229 Sato Kiichiro 133, 134 schools: boarding 216, 233–4 cleanliness 209 corporal punishment 232 dress 233–4 holidays 206 lighting in 219 mechanization of the body 225–6 military influence 197–9 organization of space 199–200 standardization of movements 231 SDF, see Self-Defence Forces sea lane defence 149, 151 Seiyukai party 239 Self-Defence Forces (SDF) 137 armaments 152–3 constitutional constraints 140–1, 150, 153 overseas dispatch 113, 161 sea lane defence 149 uncoordination of 139–40 US and 138–9, 151–2 semiconductor industry 65, 74, 75, 82 growth of international competitiveness 70–1 oligopolistic competition 77 seniority system 73 shareholders: as directors 296–7 revision of corporate governance structure 296–7 role in corporations 3, 23–31, 45–7 separation from management 11, 22–3, 81, 184 Shimizu Ikutaro 151 Shinsanbetsu national centre 106 Shiroyama Saburo 123 Shoheizaka Gakumonjo (Shoheiko) 200 Shoken, Empress 206 Showa Coal Company 285 Showa depression 276 employee dismissals 269–70 labour disputes 251–2 mediations 261 tenancy disputes 255 shunto 85, 92–4, 100–4 People’s 98–104

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small and medium enterprises (SMEs) 3 corporate control of workers 117 labour disputes 252, 272–3 labour union 272 restructuring in World War II 292 rise to large corporations 24–7 role in international competition 77–81, 84 state intervention 132 structure 16–19 wage bargaining 102 small government: in UK and US 154 Snow Brand Milk Products Company 53 social democracy: fragility of 119–20 leftist 244, 245–6, 247–8, 249 social democratic parties: stagflation 172, 173 Social Democratic Party 239–42 social order 233–6 bodies and 224–33 modernity and 193–201 space and 207–23 time and 201–7 socialism: in companyism 184–5 features of 181 labour movement 85, 91–2 national 246 Socialist Party 161 Sodomei ( Japan Federation of Labour) 87, 88, 92, 249 collective bargaining 260–1, 272 elections 275 industrial cooperation policy 5–7 movement to left 241–6 split 248 Sohyo 89, 97 Basic Principles 91–2 decline of 105 dissolution 106 labour unions 129–32 shunto 85, 92–4, 98–104 solid-state technology: television industry 69–70 South: Cold War 164–5; end of 176 economic growth 165–6, 169–70 excessive affluence 175 Soviet Union, see USSR space: social order and 207–23

Special Education Council: conflict of ideals 156–8 Special Reform Council: education and 156 ideology of 154–5 Special Treatment Law of Munitions Finance (1945) 301 speed 204–5 spheres of influence: Cold War 164 stable contentious structure 89–91 stagflation: global 170–4 Japan 174, 183–4 Stalin, Joseph 164, 169 Stalinism 163 standard time 202–3 standardization: body movements 230–3 standards: physical 225–6 state 2–3 in 1960s and 1970s: formation 115–48; as prototype of contemporary 113–15 cooperation with labour 101 corporate power and 120–36 effect of international framework 136–48 enterprise society and 115–20 public health and 209–10, 226 reorganization 148–61 restoration of 112–13, 160 social order and 200–1 strong state thesis 109, 110 theory of 155 weak state thesis 111 status differences: removal of 22–3, 116–17, 184–5 steel industry 65, 74, 75 growth of international competitiveness 67–8 labour relations 94–6, 102, 132 oligopolistic competition 76 prices 298 promotions 117 in World War II 285–7, 288, 290–2, 298 Steel Industry Contact Conference 96 steel production plan 280, 281, 283 streaming: in education 127–8 streets: regulations 210–11 strike-free negotiations: conditions for 95–6 strikes 93 (1921) 272, 273 (1974) 98, 99

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INDEX control of 94, 130–1, 134–5 prewar 251 strong state thesis 110 subcontracting system 19, 117, 135 machine industry 79–81 in World War II 292–3, 299, 302 subsidiaries: executives nominated by parent companies 30–1 owned by top 100 firms 20–1 Sugiyama Motojiro 247, 248 Sumitomo Bank 35–6, 294 Sumitomo Cement 135 Sumitomo Metals 68, 76 Survey of Farm Household Economics 273 Suzuki Shoten 74 Sweden 173 Taiwan 164 Taiyo Kobe Bank 33 Takahashi Kamekichi 1 Takano Line 92 Takano Minoru 92 Tanaka Kakuei 144 Tanizaki Jun’ichiro 219 Tanro union 132 teachers: evaluation 125, 128 technological development: in West 166 technological education 126–7 technological skills 183 technology: foreign: introduction of 64–5; in rayon industry 67; in steel industry 67–8; in television industry 68–9 solid-state: television industry 69–70 Teikoku Bank 295–6 Teikoku Rayon 74 Teikoku Synthetic Fibre 66 television industry 65, 74, 75, 82 growth of international competitiveness 68–70 oligopolistic competition 76–7 Temporary Funds Adjustment Law 278, 285, 293 temporary injunctions: tenancy disputes 258 Temporary Measures Law for Import and Export Goods 278 temporary workers 51, 135 Tenancy Conciliation Law 258, 259–60, 261–6, 267

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tenancy disputes 247, 253–68 Tenancy Law 258, 259–60, 265 tenants: relationship with landlords 4, 273–6 textile industry 5, 7–8, 10–11 see also cotton-spinning; rayon; weaving Thatcher, Margaret 171 time: lighting and 219 social order and 201–7 Tokai Automobiles 297 Tokai Bank 33 Tokyo Bank Association 294 Tokyo Cotton Mill 10–11 Tokyo Electric Power Company 32 Tokyo Seiko labour union 6, 7 Tomioka silk-mill 199 Toshiba 30–1 Toshiba Machinery 30–1 towns: time system 202 Toyo Rayon 66, 67, 76 Toyo Spinning 66, 67, 74 Toyota Motor Company 30, 32, 47, 75 Toyota system 72–3, 74, 81, 82–3 trade control plan 278, 280, 281–2 trade unions, see enterprise unions; labour unions traffic regulations: Meiji period 196 training, on-the-job 182 trustees (riji) 42 Tsuda Mamichi 229 Tsuji Kiyoaki 111 Ueda Mannen 233 Ujihara Shojiro 180 UK 5, 11 cotton-spinning industry 65, 75 defence costs 178 economic growth 168 excessive enrichment 175 labour supply 167 management system compared to Japanese 7–11 neo-conservatism 172 welfare state 154 UN, see United Nations unemployment: global 170–4 policies for 136 Showa depression 269–70 uniforms 230

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union movement: history 85–9; during oil crisis 97–104; high-growth era 89–97; low-growth era 104–6 see also craft-based; enterprise; labour United Nations: economic growth 165 Japanese peacekeeping troops 113, 143 Japanese voting patterns 142 social security 172 United Nations Conference on Trade and Development (UNCTAD) 169, 187, 188 United Nations Development Programme 169 United Nations Security Council 153 Japan’s desire to join 143 urban planning 223 urban proletariat: production harmonyism 247 voting patterns 239–42 US 11, 110, 112, 167 automobile industry 72 Cold War 162–5, 188; end of 176–9 defence costs 146 education 199 excessive affluence 175 IMF system 168 Japanese defence and 114, 137–42, 147, 148–9, 151–2 Japanese foreign policy and 142–3 neo-conservatism 173 in profit ranking tables 62, 63, 83 rayon industry 65 semiconductor industry 70 stagflation 171 steel industry 65 technological development 166 television industry 65, 68–9, 70 wage differentials 77–8 welfare state 154 USSR: Afghanistan invasion 164–5, 177, 178 Cold War 162–5; end of 176–9 economic growth 168–9 threat of 151, 152 Uzaki Ippo 225 van Wolferen, Karel 109, 111, 114 venture enterprises 53–4 Vietnam War 137, 148, 164–5, 176 Vietnamese War of Independence 164–5 villages: time system 201–2

virtue 235–6 Vogel, Ezra 4, 110, 111, 113 Volcker, Paul 171 wage bargaining: ineffectualness of state 134 steel industry 94–6 see also shunto wage differentials 8, 41–2, 43, 181 small and medium enterprises 77–8, 84 wage restraint: policy of 105 wages 6, 8, 73 during oil crisis 98–104 labour disputes 251–2 stagflation 173, 174 Watanabe Osamu 237 weak state thesis 111 weaving 66, 74, 79 week: adoption of 203 weights and measures 221–3 welfare: women workers 135 welfare state: building 154–5 companyism and 145–7 neo-conservatism and 188 UK and US 154 welfare state politics: switch to neo-conservatism 172–4 West: bodies 227 economic growth 165–6 technological development 166 see also specific countries Westernization: dress 219, 230 food 227–8 rejection of 5 Westernization stage: modernization 3–4 white (colour) 219–20 women workers: decline in employment of 104 part-time 135 protection 160 working conditions 135 work: time system 203–4 worker-controlled firms 21–2 workers: attitudes to work 9, 73 competition 49–52, 116–17, 184–5 control by corporations 116–17 dormitory system 216–17

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INDEX drafting in World War II 285, 287 equality 8–9, 42–5, 49–52 evaluation 185 executives as representatives of 3, 38–45 former: as owners of small and medium enterprises 18–19 household income 268–9, 273 loyalty 87, 116–17, 174, 273 maximization of interests of 22 mobility 136 multiple skills 73, 82, 183 part-time 135, 159 relationship with employers 268–73, 276 safety 131–2, 135–6 status 296 temporary 51 see also promotion; wages; women workers working hours: shortening 158–9 workplace level: World War II economic system 298 World War I: agriculture 274–5 World War II: economic system: final stage 297–302 first stage 278–88, 302 revised 288–97

Yamagata Aritomo 224, 235–6 Yanagita Kunio 217, 220 Yasuda Bank 294 Yawata Steel Corporation Union 94–5, 132 Yawata Steelworks 117 Yokose Yau 193 Yoshida Shigeru 121, 147 Yoshisada Mishima 283 Yugoslavia 164, 177 zaibatsu: independence of leading enterprises from 74–5, 84 zaikai (big business federations) 111 education and 126, 156 establishment of 120–2 labour policy 158 labour relations 131–2 Miike dispute 134 state intervention and 123–4, 132 Zenmin Rokyo 106 Zenno (National Farmers’ Union) 249–51 Zenro Kaigi 92, 93, 97 Zensen Domei 102 Zentei union 131

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