Organizer: W. Miles Fletcher III, University of North Carolina, Chapel Hill
Chair: Yasukichi Yasuba, Osaka Gakuin University
Discussant: Takeshi Abe, Osaka University
The role of the Japanese government in spurring industrialization during the late nineteenth century has long provoked controversy. The papers on this panel explore the character and significance of the Meiji government's economic policies from new perspectives.
Yasuba Yasukichi argues that the lack of governmental protection for industries or intervention in the economy aided rapid growth based on the rise of labor-intensive light industry. He views the state's major efforts to build infrastructure and to acquire and spread information from abroad as essential to the nation's economic success. Steve Ericson questions the common contention that the well-known selling of government enterprises by Matsukata Masayoshi during the 1880s signified the government's retreat from active intervention in the economy. He shows that the facilities retained by the government became important promoters of new technology and that the government set a pattern for later industrial policies. Miles Fletcher focuses on the role of the private sector in shaping national economic policies by examining the successful political campaign waged by the Japan Spinners Association from 1888 to 1896 to change national trade policies to promote exports of cotton yarn. Richard Smethurst shows how the ideas of the prominent Meiji industrial planner Maeda Masana about rural "self-help" affected the policies of Finance Minister Takahashi Korekiyo toward rural relief in the mid-1930s. While revising the common image of Takahashi as a total devotee of Keynesian fiscal policies, Smethurst suggests the complex ways in which Meiji economic planning wielded influence well into the twentieth century.
The Role of the Government in Meiji Japan
Yasukichi Yasuba, Osaka Gakuin University
Many have argued that strong leadership from above guided Meiji economic development. This paper argues, though, that during the Meiji era the industrial and agricultural sectors approximated a market economy while the government played a crucial indirect role in building infrastructure and in acquiring information abroad and spreading it domestically.
In the mid-Meiji era the government was relatively small. During the years 1889-92 prior to the Sino-Japanese War, the expenditure of the central government as a proportion of GNP was only 7.9%, much smaller than in most European countries. There were virtually no tariffs to protect domestic industry. The only industries that received subsidies throughout the period were shipping and ship-building, and officials extended this support for military rather than economic reasons. Still, even the military was small, with a budget that represented only 2.3% of GNP in 1888-92.
Yet, the state spent a large portion of its limited resources on constructing infrastructure, such as roads, railroads, harbors and telegraphs. Officials launched a huge effort-on a scale perhaps unprecedented in history-to acquire information abroad through sending missions and students overseas, hiring foreign experts, and participating in international expositions. The government spread this information through an expanded educational system and extension services. Consequently, unlike many follower economies in Europe, economic growth depended on labor-intensive light industries, appropriate for a low-income LDC. This type of development, thanks mainly to the lack of industrial protection, brought growth with equity, as the real wages of the masses increased from the early period.
The Matsukata Financial Reform and Industrial Policy in Meiji Japan
Steven J. Ericson, Dartmouth College
Scholars generally agree that the Matsukata financial reform of the 1880s marked a critical turning point in the evolution of state-business relations in modern Japan. In the standard view, the reform produced a dramatic shift away from direct state involvement in the economy towards a quasi-laissez-faire approach to industrialization. This paper argues, however, that the scale and scope of government economic activity during and after the Matsukata reform suggest the need to qualify the degree to which state industrial policy in fact became non-interventionist after 1880.
Indeed, the sale of government enterprises under Finance Minister Matsukata Masayoshi brought about a significant transfer of industry to the private sector. Yet the industries retained by the government represented a sizable proportion of the nascent modern sector of the economy. Moreover, state arsenals and railroad workshops continued long after the 1880s to be leading centers for the introduction and diffusion of advanced Western technology and management techniques. In addition, funding of these works, combined with subsidies for targeted private firms, kept state investment in industry at a high level even as Matsukata was carrying out his overall retrenchment.
Following the Matsukata reform, private initiative figured more prominently in Japan's industrialization, but government intervention was no less important. Through its remaining industrial enterprises and various forms of assistance to private concerns, the Meiji state continued to participate actively in the economy. In doing so, it established clear precedents for Japanese industrial policy and government-business relations well into the twentieth century.
The Meiji Government, the Rise of the Cotton Spinning Industry, and the Origins
of Industrial Policy in Japan
W. Miles Fletcher III, University of North Carolina, Chapel Hill
My paper examines the role of national policies in spurring the rise of Japan's first large-scale manufacturing industry, cotton spinning, in the late nineteenth century. Previously, scholars have argued either that the omniscient oligarchs created a "developmental state" that successfully nurtured industry or that private entrepreneurs prospered largely on their own, independent of any governmental aid. My case study, however, finds that national policies had a great impact on cotton spinning but that the spinners themselves shaped those policies.
After an initial failure to jump-start the cotton spinning industry through model mills and subsidies, the government retreated from an active role in the 1880s. This nascent sector, led by the Japan Spinners Association, then started to lobby the government for changes in trade policy-elimination of the tax on exports and of the tariff on imported cotton-to foster the industry's growth. Finally, after eight years of persistent campaigning to convince both officials and the Diet of the need for Japan to become an exporting power, the effort succeeded in 1896, and yarn exports boomed. The state and the cotton spinning sector settled into an effective relationship in which the former provided various types of indirect and relatively inexpensive aid and granted considerable autonomy to the latter in governing its own affairs. The persistent lobbying of the Spinners Association had thus led to the creation of a national industrial policy toward the cotton spinning industry.
Takahashi Korekiyo's Fiscal Retrenchment in the Mid-1930s and its Meiji Roots
Richard J. Smethurst, University of Pittsburgh
Takahashi Korekiyo, often called "Japan's Keynes," is best known for introducing expansionary fiscal and monetary policies as finance minister in the early 1930s. By both leaving the gold standard to devalue the yen and increasing government spending through deficit financing to stimulate demand, Takahashi helped bring about Japan's fast recovery from the Great Depression. But, as Japan's economy expanded in 1934, the danger of inflation arose. Therefore, Takahashi decided to reduce fiscal spending by making cuts in allocations to those areas which had expanded most rapidly, the military and rural relief. He managed to eliminate relief spending, but pressure from the military caused a slight rise in its budget.
A desire to return to fiscal probity was not the only reason for Takahashi to end rural relief spending. Takahashi, under the influence of one of his primary mid-Meiji mentors, the Agriculture and Commerce Ministry planner Maeda Masana, had long been committed to the idea of rural "self-help." Takahashi learned from Maeda and his 1884-85 proposal, Opinions on Promoting Industry, that the government could best stimulate regional economic growth not by reliance on central planning but by allowing local entrepreneurs and officials to make decisions about which crops to grow, which goods to produce, and how to allocate their resources, based on their own reading of local, national, and even international market conditions. Accordingly, after rural Japan began to recover from the worst of the depression, the independent-minded Takahashi returned to an advocacy of rural economic development through decentralized decision-making.