Japanese Economy A2012 Fall

　 Seinan Gakuin UniversityNoriaki EZOE

Professor Ph.D.Economics Department

Seinan Gakuin University 　 JapanMail address: ezoe@seinan-gu.ac.jp

Homepage address: https://w3.seinan-gu.ac.jp/~ezoe/

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Chapter 2　Economic History, Part1:

Edo Period and Meiji Era

What you will learn in this Chapter1 History in Japanese development :Overview.2 Edo period : Shogun system and seclusion. 3 Meiji Era : What Meiji revolution had achieved?

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1 History in Japanese development : Overview. Japanese histo ry can be divided into four major periods: (following chart).

1.1 the period 1: The rise and fall of the emperor - 300 BC Jomon : The early Japanese were gatherers, hunters and fishers. Continental Asian influence was a very important. Modern Japanese may well be the descendants of continental Asian tribes. These tribes came to Japan in waves, one after the other. 300 BC - 300 AD Yayoi : The rice agriculture begins. The development of a social hierarchy and small countries started to unify into larger countries. 300 – 710 Yamato : Japan is for the first time united. Large tombs (kofun) were built. 6th century Buddhism first came . The emperor family took the power (AD 645) 710 - 794 Nara : Nara becomes the first permanent capital. 752 The great Buddha created.

794 - 1185 Heian :The capital moves to Heian (Kyoto). "Japanization" of foreign culture. The Tale of Genji (11th century).

xxxx xxxx xxx

I. Emperor’s Rule II. Samurai’s Rule

XIII. Modern

-ization

WAR

IV. Postwar

Clan fights

× 645

NARACentraliz

ation

HEIANNobles,

Decentralization

Internal wars,

dynamic & fluid society

Peace, isolation, conservative class society

EDOTokugawa Shogunate

KAMAKURAMUROMACHI

SENGOKU

1867

MEIJIWesterniza

tion,industrializ

ation,militariliza

tion

Rapid recovery

and growth

Hunting & gathering

Taika Reform

Rice Chinese culture &political systemBuddhism

WEST: guns &Christianity

WEST!!! US occupation1945-52

1603

PP.16-17

× 671Jinshin War

1.2 the period 2: The age of Samurai (Feudal era )

• Power centralization declined.• Local landlord and temples became independent. To protect their land,

warrior class (samurai) emerged. • 1185, samurai leaders formed the government.• Kamakura Shogunate repelled Mongol invasion(1274, 1281). After

this, the shogunate fall, internal fights among daimyo(samurai leaders ) ensued.

• Sengoku era : century-long civil war.• 16th century, the European influences prevailed.• Finally, Tokugawa won the battle, established military government

of Edo.(1603 - 1867)• 18- 19th century , government power declined.

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1.3 the period 3: Meiji modernization

• After the resignation of the shogun, a centralized state established under the Emperor .

• Adopted Western political, judicial and military institutions.• The Meiji Restoration transformed the Empire of Japan into an

industrialized world power that pursued military conflict to expand its sphere of influence.

• "Taishō democracy“: early 20th century the political power shifted from the Meiji oligarchic clique to the parliament and the democratic parties.

• 1930s, world economy collapsed. The rise of fascism and militarism. • Long war 　 ( １９３７－ 1945 ）

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1.4 the period 4: Post war growth

• Japan was defeated in 1945.• US occupation(1945 － 1952).• Japan achieved rapid growth to become the second-

largest economy in the world. This ended in the mid-1990s when Japan suffered a major recession.

• In the beginning of the 21st century, positive growth has signaled a gradual economic recovery.

• On March 11, 2011, Japan suffered the strongest earthquake; this triggered the Fukushima I nuclear accidents, one of the worst disasters.

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2 Economic History: Edo Period2.1 Transition from Sengoku to Edo

• The sengoku period, 12c to 16cInternal fights for dominance continued.

• Religion for self-discipline, pragmatism and coping with life-or-death situation emerged (Zen Buddhism).

• Society was dynamic and fluid. Power, not family name, mattered.

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Tokugawa Ieyasu (1542 - 1616)

Daimyo’s direct rule of land and farmers was established (removal of middle powers such as influential temples, manors, landlords).Rigid separation of samurai and farmers--Kenchi 検地 (land survey and registration) creation of family farms.--Katanagari 刀狩 (confiscation of all arms from non-samurai classes)--All samurai required to live in castle town, receive rice salary--All farmers required to live in villages, till allotted land, and pay rice tax

2.2 Tokugawa Period (1603~1868) :The baku-han system

(1) Features of the Bakufu-Han SystemBakuhu(Government)controls Hans(Daimyo).- The daimyo were divided into distinct groups.

The shinpan, The fudai ,Tozama daimyo----The daimyo were not required to remit taxes to the bakufu but were occasionally called upon to assist in the building of public works and were also expected to supply guard contingents to imperial and bakufu facilities.

(2) Class society:The caste system (shi-no-ko-sho)All people were classified as four groups: samurai( 士 ), farmer( 農 ), artisan( 工 ), and merchant （商） - Assignment to a particular caste was according to birth. - The percentage of the population that comprised the samurai class was probably only about 7 percent. The great majority of people, 80 percent, were farmers, followed by 13 percent artisans and merchants.

9Japanese Economy

Bakuhan Taisei (Bakufu-Han System)幕藩体制

--“Feudalism”--Class societySeparation of rulers and ruled

How to keep daimyos obedient:--Seppuku & termination of family--Limits on military capability (e.g. one castle)--Relocation & downsizing of hans at will--Sankin kotai (bi-annual residence in Edo)--Assignment of charges and public works

Ohno PP.23-25

士農

工商

(3)Alternate attendance (sankin kotai)the daimyo spend half their time in Edo and that their families reside there year round. • The economic effects - Edo became a major consumption center- Osaka had become the city of merchants- development of roads and coastal waterways

(4)The seclusion policy (sakoku)　 -Only Dutch and Chinese 　　　　 were allowed to trade 　　　 through the southern 　　　　 port at Nagasaki. • Reasons : - to prevent military alliances

between the European countries and the daimyo.

- Suppression of Christianity.- to reserve for the Tokugawa

a quasi-monopoly of imports

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2.3 Pre-conditions for Industrial Take-off• Political unity and stability• Agricultural development and commercialization• Development of transportation and nationally unified markets• Rise of commerce, finance and wealthy merchant class• Rise of pre-modern manufacturing• Industrial promotion by local governments• High level of education

Ohno P.23

City girls Daimyo in his castle

Samurai police and merchants

0

5

10

15

20

1600 1650 1700 1750 1800 1850 18720

2

4

6

8Output/ land (left scale)

Farmland (right scale)

Koku/ cho Million cho (=ha)

Agriculture: Positive vs Negative Aspects• Village autonomy and family farming• Acreage rose then stabilized, productivity rose continuously• Technology and knowledge improved over time• As commercial crops increased, rich farmers emerged• Farmers were tied to land and had to pay heavy (?) tax• Famine, discontent with policy/officials led to ikki (farmers’

rebellion)

Source: Hayami & Miyamoto, 1988.

Ohno PP.25-28

Rich Merchants in Edo Period (Gosho)　 Ohno

Sumitomo Family-16c Adopt Western copper refining, copper trade (Kyoto)-17c Move to Osaka-Besshi Copper Mine (under Bakufu’s commission)<Transition to Meiji>Manager: Hirose Saihei-Avoiding gov’t confiscation-Introducing Western mining technology to renovate Besshi-Business diversification

Mitsui Family-17c From Matsuzaka-Kimono trade & money exchange in Edo, Kyoto, Osaka – huge success<Transition to Meiji>Manager: Minomura Rizaemon -Cope with bakufu policy to protect Mitsui business-Support and work with new government-Internal reform: from gosho to zaibatsu-1876 Establish Mitsui Bank & Mitsui Trading Company Konoike

-Sake making, trading, loans to daimyo-No serious internal reform in Meiji-Failed to form zaibatsu (Sanwa Bank)

Onogumi? Tennojiya? Hiranoya? Shimadagumi? Kashimaya?

High level of education Ohno PP.33-34

Official TeachingBakufu Schools and Han Schools The core curriculum was ancient Chinese philosophy, especially Confucianism (6-5c BC).-Confucianism emphasized social order, respect for superiors and elders, the role and duties of the ruler, and rituals and ceremonies (legitimacy for class society).-Study consisted of reading old Chinese literature in Japanese way, memorizing, and interpret the meaning.

Private teaching

Shokason Jukuby Yoshida Shoin (1830-59)Produced many political leaders• Ito Hirobumi (Prime Minister)

Yamagata Aritomo (Prime Minister) Kusaka Genzui (anti-bakufu fighter)

Kangi-en by Hirose Tanso (1782-1856)-Largest private school in Edo period, attracting over 4,000 students-Main courses: ancient Chinese literature and philosophy

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Terakoya (Private Primary Schools)

• Private teaching (3Rs:read, write, abacus) at teacher’s house, all over Japan (20,000+)—contributing greatly to literacy

• Any intelligent person can be a teacher, any child can study (ages about 7-13)

• Individual teaching, with flexible time and flexible fee

Ohno P.35

<Typical curriculum>8-12am Writing (brush & ink)12-1pm Lunch at home1-2pm Arithmetic, moral2pm Go home

<Exams and exhibitions>Monthly examsYear-end final examWriting exhibitions, Apr & Aug

<Holidays>3 days/month, plus others

2.3 Fall of Bakuhu

Decline of the feudal system (1) Rice-based system----chronic fiscal crisis• Economy shifted from rice to cash crop, agro-processing and commerce, but

revenue continued to be based on rice tax• Bakufu and han governments launched reforms and industrial promotion to

cope with budget crisis (only some succeeded)• Inflation accelerated in late Edo period due to (i) debasement of gold, (iii)

foreign trade, and (iii) famine (entire period)• Higher taxes and inflation led to farmer`s riots Output & Tax on Bakufu Land

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(2) The social hierarchy began to break down as the merchant class grew increasingly powerful while some samurai became financially dependent of them. (3) External pressure Commodore Perry in 1853 and 1854: --military threat to open up Japan.• Trade with West began under unequal treaties (1858: no tariff

right, no court right), which brought social and economic changes

• Fights over pro- and anti-foreigner forces, and pro- and anti-Bakufu forces began,eventually toppling Bakufu (1867)

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3 Economic History: Meiji Era (1868-1912) 3.1 Meiji Government: Radical Reformist

Initially, avoid colonization by the WestRapid modernization and WesternizationBecome “first-class” nation on a par with West

• Political goal - abolish feudalism and class society; introduce Western style constitution and parliament

• Economic goal - industrialization based on rapid adoption of Western technology

• External goals - (1) revise unequal treaties as soon as possible; (2) modernize army & navy, establish “sphere of influence” around Japan

Ohno P.43

Fukoku Kyohei ( 富国強兵 ) - Enrich the country, strengthen the militaryShokusan Kogyo （殖産興業） - Increase production, encourage industry

3.2 Early steps of the new government• Capital move to Tokyo.• Han abolished, replaced Prefecture • Land tax reform• Dispossession of the samurai• Iwakuma mission (Dec.1871-Sep.1873)Half the cabinet - Iwakura (leader), Okubo, Ito, Kido, Yamaguchi, and other high

officials (46); attendants (12), students (49); total 107 membersPurpose 1: Start renegotiating unequal treaties (failed)Purpose 2: Inspect Western systems and technology

Official report with illustrations by Kunitake Kume (scholar)<Results>(1) Valuable inputs for policy making(2) Conflicts with “home-keeping” gov’t (leaders who stayed home) ---- Civil war (1878): Seinan War

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• Open ports: Yokohama, Nagasaki, Hakodate, Hyogo, Niigata

• Unequal treaties with West vs. no travel rights for foreigners

• Rise of Yokohama merchants• Rapid westernization and technology

import begin• Inflation, relative price changes, rise and

fall of industries

Ohno PP.41-42

Fake color photos of early Yokohama

0% 20% 40% 60% 80% 100%

Export

Import

Silk Tea

Cottonyarn

Cottonfabrics

Woolengoods

3.3 Resumed International TradeTrade 1876-80

From UK

To US

Case Study; Early Meiji tradesAfter a opening the economy, Japanese tariff rate had been very low. ----Reason: 1865: by the unequal treaty with Western Powers Japan was forced to take a low tariff rate (5%). --Those figures show that the early Japanese economy faced with a free trade. Review (Economics)Gains from Trades:

1 Comparative advantage theory : trade between two countries makes both countries better off than they would be in autarky—that is, there are gains from trade.2 The main sources of comparative advantage are: International differences in climate Differences in technology Factor endowments

22Japanese Economy

23Japanese Economy

Japanese Economy 24

(1) The Effects of Exports (Raw silk, tea )The world price is higher than the autarky price trade leads to exports and

a rise in the domestic price compared to the world price.There are overall gains from trade because producer gains exceed the

consumer lossesFigure

Japanese Economy 25

(2) The Effects of Imports

• When a market is opened to trade, competition among importers or exporters drives the domestic price to equality with the world price.

• If the world price is lower than the autarky price, trade leads to imports and a fall in the domestic price compared to the world price.

• There are overall gains from trade because consumer gains exceed the producer losses.

Japanese Economy A Chapter 2 26

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The Effects of Imports (iron and nail )Figure

ReferencesDadid Flath [2005],The 　 Japanese 　 Economy, Oxford University Press. Takatoshi Ito[1992], The Japanese Economy, MIT Press. Morishima, M [1982], Why Has Japan Succeeded? Cambridge University Press. Kenichi Ohno[2006], The Economic Development of Japan, GRIPS Development Forum.Reischauer, E.[1988], The Japanese today, Harverd University Press.

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