Virginia Review of Asian StudiesVolume 16 (2014): 242-250Ellington: Liberal Education: Economic Literacy and the Tokugawa EraLIBERAL EDUCATION: ECONOMIC LITERACY AND THE TOKUGAWA ERA1

LUCIEN ELLINGTON UNIVERSITY OF TENNESSEE AT CHATTANOOGA

Four a priori assumptions undergird the essay that follows: a significant number of read-ers of this journal either teach general education courses or interact with general education in-structors; many VRAS readers understand that skillfully taught general education courses help achieve liberal education’s most cherished traditional goals-- increased knowledge and wisdom, and learning about Japan’s Tokugawa era (1600-1867). This period is an important topic in lib-eral education, but Tokugawa history is often widely misunderstood because economics is often ignored.

Economic literacy; the ability to analyze human action using basic economic reasoning, is indispensable for liberal education. In what follows, with English prose, not mathematical equations, three basic economic generalizations are offered as tools that can help students think more accurately, clearly, and wisely about the Tokugawa era. Hopefully, students will also better both understand Japan’s role in world history and learn economic generalizations that inform un-derstanding of human action.

What is the problem with many introductory treatments of the Tokugawa era? Recall what students learn in survey world, or even in some Japanese, history courses about the period. Years ago, the inconsistencies in standard textual treatments of the Tokugawa era puzzled me. In standard textbook treatments of the Tokugawa years, ruling shoguns allegedly closed Japan off from the outside world and supposedly presided over a feudal system not dissimilar in many ways to early medieval Europe. Yet, hints were present in conventional discourses that (unlike the early European middle ages), Edo and other Japanese cities boasted rich urban cultures, leisure industries, publishing companies, and large merchant concerns. Periods of serious re-gional famines not-with-standing, the life styles of most Japanese peasants seemed to me signifi-cantly better than their earlier European counterparts. Artisans produced ample amounts of a va-riety of goods, and merchant houses prospered; Mitsui employed over 1,000 people in Edo alone. High levels of basic education relative to most of the rest of the world existed in Japan by the lat-ter years of the Tokugawa period.

As someone with a background in economics as well as history, none of this made much sense to me; polities achieve the level of economic success of Tokugawa Japan through conquer-ing other societies and plundering massive amounts of their resources, by developing productive economies, or by some combination of the two. Shortly before the Tokugawa period in the Imjin war (1592-1598), the Japanese used temporary military victories in Korea to vastly improve pot-tery production through forcing leaders in the industry to move to Japan, and campaigns against the indigenous Ainu had gained territory and resources for the Japanese, but this limited level of plunder could not begin to create the wide-spread relative prosperity most Japanese enjoyed dur-

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Virginia Review of Asian StudiesVolume 16 (2014): 242-250Ellington: Liberal Education: Economic Literacy and the Tokugawa Eraing the Tokugawa period. If the Japanese did not become affluent through stealing vast amount of other peoples’ “stuff,” other forms of human action accounted for Tokugawa prosperity. I knew that my own and most people’s understanding of this prosperous society could benefit from using economic generalizations as a lens to understand human action during the so-called age of the shoguns.

Human economic behavior can be unpredictable, and all economic generalizations are subject to exceptions and qualifications, but the three economic “laws” that follow help explain a great deal about Tokugawa Japan.

Incentives matter: Think of incentives as expected pay offs, positive or negative, from ac-tions.

Secondary effects and long-term consequences of policy decisions are criti-cal: Careful attention to unseen and long-range consequences of an action results in deeper un-derstanding of economies and societies.

Trade promotes economic progress: Liberty for individuals, businesses, and nations to engage in exchange results in general prosperity.

Application of these three generalizations as tools for understanding Tokugawa institutions and economic activities can improve understanding of developments that profoundly shaped Toku-gawa society.

Government:

Tokugawa Ieyasu’s (1543-1616) unification of Japan and the establishment of the Tokugawa Shogunate in 1600 ended over a century of civil war, but Bakufu control over the country was far from absolute. The shogun’s military forces simply were not strong enough to give the central government absolute power. The Shogunate controlled only about 25 percent of Japan and the central government was forced to share power with over 260 daimyo, regional lords who directly controlled varying established areas of land or domains. The Shogunate had authority over all domains in some matters such as taxation and domestic national security, but the majority of Ja-panese lived in areas where power-sharing existed between daimyo and Shogunate. The central government promulgated an interminable number of nanny-state regulations and injunctions about appropriate clothing styles, the dangers of overeating and kindness to animals, but most of these were ignored as time passed. By the end of the 17th century central government control mechanisms such as regular domain inspection tours had by and large ceased. Power was di-vided which incentivized Daimyo to promote local and regional economic freedom. Despite the-oretically Neo-Confucian rigid class divisions, samurai, peasants, and merchants needed each other for mutual prosperity. Economic freedom that resulted in part from divided government al-lowed domains, urban areas, and even regions to specialize in the production of specific goods and services.

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Virginia Review of Asian StudiesVolume 16 (2014): 242-250Ellington: Liberal Education: Economic Literacy and the Tokugawa Era

Infrastructure, Bureaucracy, and Education

In order to politically control daimyo, particularly those who fought against Tokugawa forces in the struggle to unify Japan and who were therefore suspect, the Shogunate mandated the Sankin Kōtai or alternative attendance policy which required daimyo and retainers spend ev-ery other year in Edo. The policy had several unintended consequences. What eventually would be five national roadways were created for daimyo travel but also greatly facilitated trade and national markets. Trade and national markets in turn incentivized the central government both to continue to monetize the economy (with the notable exception of the in-kind rice tax) and create a national legal code which helped to systematize economic exchanges.

Edo, in part due to its increased prominence as a center of government that catered to daimyo and their entourages, grew to be arguably, the world’s largest city with an estimated pop-ulation of over one million by the early 18th century. Rising consumer demand from elites and their more humble servants incentivized large and small entrepreneurs to cater to for a large de-mand for a wide range of goods and services ranging from Noh and Kabuki Theater to apparel, lodging, and restaurants. The end of Japan’s civil war, and the Shogunate’s policy of ending con-tact with European powers with the exception of the Dutch, helped create the longest continual period of peace in Japan’s history. The unintended consequence of “The Great Peace” trans-formed many already well-educated samurai from warriors to bureaucrats although, because well-educated commoners vied for bureaucratic jobs too, there were more samurai than bureau-cratic positions available.

The Shogunate adopted Neo-Confuciansim, with its rigid class divisions; samurai at the top of the hierarchy were barred from commercial activities and placed on fixed retainers. Peas-ants, artisans, and merchants in descending order made up other major classes. Aspects of Neo-Confucianism mixed with policy developments incentivized all classes in ways that promoted economic prosperity. As inflation eroded samurai income, many became much more accomoda-tionist to merchants and entrepreneurs in an effort to acquire more wealth; in the latter years of the period, a growing number of samurai quietly invested in business ventures in partnership with merchants.

Despite Neo-Confucianism’s rigidity, its strong emphasis on self-cultivation and regard for the family had positive long-term effects on the economy. Although the Shogunate was not particularly concerned with education for the general population, popular affinity for education stimulated the growth of private schools; particularly Terakoya or temple schools which im-parted basic literacy, numeracy, and practical Confucian moral education to children who were not samurai. By the end of the Tokugawa period, approximately 10,000 Terakoya existed.2 Male children of well-to-do peasants and particularly merchants also had increasing opportunities for private education in various educational institutions that went beyond impartation of basic liter-acy and numeracy. In 1727, Osaka merchant initiatives resulted in the formal chartering by the Shogunate, of the Kaitokudo merchant academy.3 Ishida Baigan (1685-1744), the most famous Confucian/merchant educator of the Tokugawa period, developed and promulgated a merchant “Confucianism” epitomized by his assertion “To gain a [honest] profit from a sale is the Way of

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Virginia Review of Asian StudiesVolume 16 (2014): 242-250Ellington: Liberal Education: Economic Literacy and the Tokugawa Erathe merchant. I have never heard that selling at cost is the Way.”4 By the late Tokugawa period approximately 43 percent of boys and 10-15 percent of girls achieved basic literacy.5 Literacy rates comparable to the UK and the US, near universal education of the samurai, and a critical mass of educated merchants helped to make Japan prosperous by world standards.

A Successful Pre-Industrial Rural Economy

Tokugawa prosperity rested on more than government, infrastructure, and education. De-spite intermittent localized famines and one larger famine, the Tenmei period (1781-1789) that affected much of the country , peasants for the majority of the period consistently created food surpluses in cereal grains and other agricultural products. Between 1600 and 1721,Japan’s popu-lation approximately doubled from 15 to a bit less than 30 million, in part because of agricultural productivity, but only grew by 3.1 million between 1721-1872. Evidence indicates that rising ed-ucational levels were causing families to limit children.6 The peasant population included rela-tively affluent families who farmed significant land-holdings. The Shogunate and Daimyo were incentivized to collect taxes from the peasants but keep them low enough to encourage produc-tivity and the existence of a national transportation system meant that farmers could engage in commercial agriculture. For various reasons including the unintended consequences of govern-ment attempts to tax and regulate manufacturing in some urban areas, the scarcity of fertile land for rice cultivation within a number of domains, and samurai need for income, daimyo, mer-chants, and samurai invested in small manufacturing enterprises in rural areas. In the latter part of the Tokugawa period, a wide array of products including sake, soy sauce, silk, paper, and even iron and metal production took were manufactured in rural areas. Some peasant families were earning over half their income from non-commercial activities. In important respects some seeds of later Japanese industrial capitalism of the Meiji period (1868-1912) and beyond were already taking root in the Tokugawa period. By the end of the Tokugawa period, significant numbers of rural residents (as well as urban dwellers, particularly in Osaka, a manufacturing center during the Tokugawa period) had already learned time management skills that were not just based upon agricultural cycles.

Vibrant Urban economies

Although the majority of Japanese lived in rural areas, the combination of local lords building castle towns in the late 16th century that became towns and cities, Edo’s establishment as the national capital in the early 17th century, national land and sea transportation routes, and an increasingly robust and monetized economy fueled commerce and trade. Trade promoted eco-nomic progress throughout Tokugawa Japan, but especially in cities as populations grew, thereby increasing demand for a wider and wider array of goods and services. Urbanization dur-ing the Tokugawa era proceeded at a dizzying pace; especially in the first two centuries. Edo was a swampy village with only a few hundred residents in 1590, but by 1610 it had a popula-tion of about 150,000; by 1657 approximately 500,000, and by 1720 Edo’s population was well over 1 million making it one of the world’s largest cities (if not the largest), at that time. In less than a century (1610-1700) Osaka’s population mushroomed from 200,000 to 360,000 people and by the end of the 18thcentury half a million people lived in Japan’s second largest city. Be-tween 1580 and 1710 Kanazawa grew from 5,000 to 120,000 people.7 Kyoto had a population of at least 350,000 in the latter Tokugawa years and even higher numbers earlier in the Tokugawa

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Virginia Review of Asian StudiesVolume 16 (2014): 242-250Ellington: Liberal Education: Economic Literacy and the Tokugawa Eraera. By 1720, a higher percentage of Japanese (5-7 percent) lived in cities of over 100,000 resi-dents than did Europeans (2 percent).8

Government officials granted monopolies in certain industries such as lumber and tried to regulate craft production through approval of guilds. However, Shogunate bureaucrats under-stood how to effectively tax rural areas but their ignorance of business kept them from ever sys-tematically taxing merchants. This positive unintended consequence of Neo-Confucian officials’ agronomy-orientation in conceptualizing the economy created de facto economy liberty in towns and cities that served to incentivize entrepreneurship, work, and production; the adage the more one can keep of earnings the harder a person usually works is usually true. Local markets were transformed into national ones for clothing, furniture, metal objects, and swords. Industries such as raw silk, textiles, paper, and lanterns were not regulated and could be purchased throughout Japan. Large financial houses were incentivized to establish branches throughout Japan to facili-tate trade through providing bills of sales, promissory notes, and various credit instruments. Os-aka in western Japan was home to an array of products including processed foods, cotton textiles, metal products, pressed oils, pharmaceuticals, and other consumer goods. Osaka also boasted a rice futures exchange which helped determine national prices for the most important national food commodity. Osaka and Edo became national distribution points and because of low costs relative to land transport, shipping routes along the Sea of Japan and the Pacific coast brought bulk goods to each city.9

Strong economies with significant levels of education mean large numbers of people have disposable income for luxury and recreational goods and services. A flourishing book publishing industry existed in major urban areas. By the end of the 17th century there were an estimated 7,000 titles in print and during the latter part of the Tokugawa era five to six times that number.10

Books on law, political economy, and other professional and scientific/technical works helped commoners increase their human capital and rise to important positions in business, education, and other fields. Illustrated fiction and poetry was popular as well as primers, encyclopedias, maps, and travel guides. The latter two publications helped facilitate a tourist industry of “pil-grims” (think of the typical “pilgrim” in The Canterbury Tales) who had a socially acceptable reason to take a vacation to famous religious sites such as the Ise and Kamo Shrines; special shrine festivals conducted after intervals of multiple decades, attracted millions of visitors and by the 18th century, over a half million pilgrims were visiting Ise annually.11 Popular culture gener-ated mass consumption of performance and sports mediums as well ranging from kabuki and bunraku to sumo and, for those who could afford it, patronage of geisha.

Tokugawa Japan: Not Hermetically Sealed Off From the World

The mistaken stereotype that Japan was cut off from the rest of the world for almost all of the Tokugawa era is one that almost all scholars of the period, particularly economic historians, have understood for over two decades to be an impediment in learning about Japan’s role in re-gional and world history. However, in general treatments of Tokugawa Japan, the stereotype that shogunate-mandated seclusion(sakoku) policies of the 1630s cut the archipelago almost completely off from international trade persist in introductory survey courses and textbooks. The first step in a more nuanced understanding of the seclusion policies is an understanding that they applied much more to Europe than Asia. The Shogunate feared European domination and, with

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Virginia Review of Asian StudiesVolume 16 (2014): 242-250Ellington: Liberal Education: Economic Literacy and the Tokugawa Erathe exception of the Dutch, cut Japan off from contact with that part of the world, but allowed various trade with China, Korea, and Southeast Asia, particularly throughout almost all of the 17th century. From the 1500s until the latter part of the 17th Century, Japan was the world’s sec-ond largest supplier of silver and a major supplier of copper. China, Korea, Southeast Asia, and the Netherlands traded for these metals with Asian countries purchasing the great majority of gold and copper. International trade was promoting regional economic progress. In turn, in the early Tokugawa years, Japan imported a wide-range of Asian goods including wood, spices, cow hides, perfumes, medicines, silk, sugar, and dyes. The Japanese also exported tin, brass, sulfur, and artisan products such fans and swords.

Nagasaki was Japan’s major port. From 1647-1692, 1,549 Chinese and 755 Southeast Asian ships from various countries were documented as entering Nagasaki harbor.12 The word “documented” is of interest because the Tokugawa government was unable to completely prevent illicit regional trade that occurred throughout the entire period.

So much silver was pouring out of Japan, an estimated 30-45 percent of the world’s sup-ply in the first few decades of the 17th century, that beginning in the late 1680s the shogunate re-stricted silver exports. Later, the government also restricted copper exports, but by the mid-18th century precious metal exports returned to 16th century levels. Daimyo in Tsushima and Satsuma continued to ignore the Shogunate restrictions and supplied their trading partners, including China and Korea, with silver until the 1750s when the shogunate was apparently successful in stopping the outflow.13 Although foreign trade significantly declined in the latter 18th and first half of the 19th centuries, some officially-sanctioned trade with China, Korea, and the Nether-lands continued.

Even though international trade in the later Tokugawa years was significantly less than the much more robust 16th and early 17th century international exchange, it is important to under-stand that the decline incentivized artisans and producers throughout Japan to engage in a form of import substitution in the creation of their own versions of foreign products. In the case of sugar and silk, Japanese used imported technology procured from China when international trade was more common, to build viable national sugar and silk industries.14

Conclusion: Why does all this matter?

Why, in teaching about Tokugawa Japan, is an understanding and application of eco-nomic generalizations important? There are at least three critical reasons. Partial seclusion from parts of the world not-with-standing, Tokugawa was one of the most successful pre-industrial economies in world history. Economic historian Eric Jones ranks Tokugawa Japan, early mod-ern Western Europe, and Song China as the only documented cases in world history where na-tional populations realized significant growth in a long-term rise in average per capita real in-come. This growth phenomenon is normally associated with industrialization.15 To put it another way, Tokugawa became considerably more affluent on average as time progressed through cre-ativity and productivity and not plunder; an impressive social accomplishment. Currently, far too many students learn about the justifiably admirable visual and performing arts and rich liter-ary culture of the Tokugawa period and never critically examine the economic foundations of the era; this means they do not fully understand Tokugawa society. Finally, simply to examine the

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Virginia Review of Asian StudiesVolume 16 (2014): 242-250Ellington: Liberal Education: Economic Literacy and the Tokugawa EraTokugawa period utilizing three economic generalizations, or“rules” that profoundly influence human action and are enormously applicable to any society, is a significant step toward meaning-ful economic literacy.16

NOTES__________________________________________________________________________________1 Portions of the content in this article appeared in Lucien Ellington’s “Tokugawa Japan and Industrial Revolution Britain: Two Misunderstood Societies” Social Education (vol.77, no. 2) March/April 2013 and Lucien Ellington and M.A. McCoy’s “ Economics in World History: Two Success Stories” Social Studies Re-search and Practice ( vol.7, no.1) Spring 2012 www.soctrp.org online journal. However, significant por-tions of the article are original and the organization and intended audiences are different.

2 Marius Jansen, The Making of Modern Japan ( Belknap Press of Harvard University Press,2000), 190.

3 Tetsuo Najita in Wm. Theodore De Bary Ed., Volume Two: Sources of Asian Tradition (New York: Colum-bia University Press,2008), 220.

4 Janine Sawada in De Bary, 236.

5 Constantine Nomikos Vaporis, Voices of Early Modern Japan: Contemporary Accounts of Daily Life dur-ing the Age of the Shoguns (Santa Barbara CA:, Greenwood, 2012), xviii.

6 John W. Hall in Gen Itsaka Ed., Kodansha History of Japan Volume 3, (Tokyo and New York: Kodansha,1983), 189-190.

7 Marcia Yonemoto, “Tokugawa Japan: An Introductory Essay.” (Boulder: Program for Teaching East Asia, Center for Asian Studies, University of Colorado,2010).www.colorado.edu/tea/curriculum/imaging-japanese/history/tokugawa/es

8 Vaporis, xxv.

9 Ellington and McCoy, 2012, 89-90.

10 Jansen, 163-165.

11 Jansen, 140, 218-219.

12 David C. Kang, East Asia Before The West: Five Centuries of Trade and Tribute (New York: Columbia University Press, 2010), 127-130.

13 John Lee, “Trade and Economy in Preindustrial East Asia: 1500-1800. Journal of Asian Studies (vol.58, no. 1.) February 1999, 9.,and Kang, 121-130.

14 Lee, 9-10.

15 Ibid, 5.

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Virginia Review of Asian StudiesVolume 16 (2014): 242-250Ellington: Liberal Education: Economic Literacy and the Tokugawa Era16 Hopefully, some readers of this article who have been intimidated by economics because of a misper-ception that economic literacy can only be attained if one has ample mathematical skills will be incen-tivized to further explore the discipline. Common Sense Economics: What Everyone Should Know About Wealth and Prosperity (Revised Edition) by James Gwartney, Richard Stroup, Dwight Lee, and Tawni Fer-rarini, (New York: St. Martin’s Press: 2010) is an excellent place to start. The book is in highly accessible English prose and most of my students who read it assert they learned more in this single volume than in their introductory economics courses.

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