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Japan: Its Rise from Feudalism ...
From The Militant, Vol. V No. 40, 1 October 1932, p. 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
It was fortunate for Japan that the Civil War absorbed American energies and that the conquest of India took all of England’s attention after Perry’s demonstration. Japan was faced with the immediate task of providing for the national defense against the encroachment of the imperialists. Without a breathing-spell she could not have withstood further onslaughts. In her weakness the government was forced to sign a humiliating treaty (Towsend-Harris – 1857 with the Tokugawas) with America which granted extra-territoriality to American citizens and which restricted duties on imports to a maximum of 5% ad valorem, creating an open market as the high tariff American government knew. This same treaty had to be granted to the other powers after the demolition of the batteries of Shimonoseki Straits in 1864 by the combined fleets of England, Holland, France and America as punishment for the damaging of some vessels trying to pass through the forbidden straits. The shogun wrote at this time: “These foreigners are no longer to be despised. The art of navigation, steam vessels, and naval and military preparations have found full development in their hands. A war with them might result in temporary victories on our part but when our country would be beset by their combined armaments the whole land would be involved in consequences which we can divine from China’s experience.” The Japs were fearful, observing that the Philippine Islands had been in Spain’s hands for 300 years; Java had come under Dutch influence in 1705 and under her complete control in 1830; the dismemberment of China had begun in 1577 with the Portuguese at Macao; only recently in 1840 the British, had taken Hongkong as a result of the Opium War; the French were already in Indo-China.
Modern military defense was unthinkable without advanced industrial development modelled on Western lines. The feudal system with its low estimation of the merchant class, with its sumptuary laws defining narrowly the very food and clothing of the exploited, with its lack of accumulations from an economy at the bare subsistence level, with its complete lack of technological training for the use machinery – all this left the burden completely on the shoulders of the new bureaucracy. To begin a strenuous period of industrial development, only the government could provide the necessary funds. The government had to take the initiative in deciding, what industries to begin, how to encourage scientific and technical training.
Whatever similarities exist between the haphazard Japanese program and the planned Soviet program of industrialization (despite its serious errors) can be observed in the immediate inviting of foreign experts to construct and start new plants and to train workers. During the years 1854 to 1859 the lord of Mito had already invited 22 Dutch experts to establish shipyards and to teach the latest arts of shipbuilding. The new government took this enterprise over. It invited British engineers to build the first railroads; British workmen were invited to assist in the erection and operation of the early iron works; British teachers taught glass-making in Tokio; American and British engineers introduced modern mining methods and the use of explosives; French and Italian experts westernized the silk industry; Swiss taught the hemp-braid industry; Germans introduced brewing, the smelting of zinc, the making of steel and the chemical industries; French and Germans started dye making. By 1872 there were 300 foreigners in government departments acting as experts. The Americans contributed little due to their own “infancy” so that today Japanese industry is more European than American. Just as in Soviet Russia, the dependence on foreign experts was not completely successful. The Japs were often imposed upon, some experts were bluffers and other out-and-out frauds (as with the beginning of Stalingrad).
The government thus took the place of the entrepreneur in establishing the first arsenals, the first silk filature, the first glass factory, the first chemical works. It has operated porcelain works, silk and cotton spinning mills, linen factories, cement and brick plants, plants for soap making, type-founding, paint making, food factories, iron and steel plants. There are few industries that do not owe their existence to government initiative.
And yet by 1880 most of the government-owned plants were in private hands! For the government took the unique step of handing these finished plants over to individuals – without the slightest compensation in the vast majority of cases! The meaning and results of this transaction must be clearly stated. That there was nothing queer to Japs in this handing over of wealth to the few, is due to the left-over feudal psychology and to the fact of control by feudal lords. The “lord” could hand over a “fief” to anyone he chose, usually for personal loyalty, and almost always to previous samurai subordinates. That is exactly what occurred. Every member of the Genro, every premier selected by the Genro, has had his particular protegé whom he has enriched. Iwasaki (Working Forces in Japanese Politics) says: “The way to get rich was to become the friend of some high officers of the government.” Thus Marquis Inouye befriended the Matsuis, one of the “big five” capitalist families of modern Japan. Okuma helped the Iwasakis, the present steamship kings. Baron Goto, while Governor of Formosa, made the Suzukis the sugar kings, the same Suzukis who profited most during the world war by selling munitions. The alliance between the feudal lords and the new capitalists has been very firmly cemented indeed. This is of utmost significance for the future agrarian democratic revolution. It need hardly be said that in war the militarists experienced not the slightest resistance on the part of the capitalists to the complete mobilization of industry for military purposes.
The close and direct relationship between capitalist industry and the government is one of the peculiarities of Japanese economy. Up to 1899 the “unequal” treaties of the Powers with Japan remained in force, preventing the raising of tariff barriers to protect infant industries. But every other device to encourage industry and to enrich the capitalists was resorted to by the government. Thus, tax exemptions have been frequently granted, duty remissions are made practically on request, subsides were and still are common and since 1899 the tariff has been an important weapon of defense and offense. Apart from the world war period the shipping industry could not have existed for a single year without large subsidies amounting to enough to cover a substantial slice of the operating expenses plus a large profit to the shipping interests. The main line railways were nationalized at the time of the Russo-Jap war, but there are a number of private branch lines whose profit is guaranteed by the government. Loans are readily granted to new enterprises with very little hope of their return. Contributions from the national treasury to private industry in 1928–9 amounted to 21.9% of the total budget. Under the conditions of industrial growth the government itself has never been able to discontinue entirely its own operation of industrial enterprises, as is evident from the fact that in 1928 there were as many as 371 government factories employing 136,000 workers.
World economy stimulated the growth of industrial Japan, – but that same world economy now holds Japan as in a vise, tending to strangle her capitalism. And it can be said with utmost confidence that Japan will find no real solution to her life-and-death problems under the world hegemony of capitalism. Imperialism attempts to overcome these handicaps with a sword but is doomed to failure. Japan’s part in the international division of labor will be decided by her workers and peasants, not by domestic and foreign capitalists.
There are three great handicaps that condition Japanese industrial growth. These are: (1) money stringency; (2) poverty in raw materials; (3) need for stable markets.
The growth of industry demands larger and larger amounts of fluid capital. Quite poor in metallic and mineral resources, Japan has been forced continuously to import both gold and silver for the coining of money, as domestic production scarcely meets industrial and art purposes. It was possible for Japan to establish a more or less stable financial and banking system only with the aid of the 200,000,000 taels indemnity squeezed out of China after the Sino-Jap war. Throughout the modern era Japan has been an importer of raw materials and machinery resulting in an unfavorable net balance of trade (except during the world war). If not through spheres of influence, then economically the capitalist powers exploit Japan as a market. To pay for the imported materials Japan has had to make larger loans abroad. Although the total amount of the public debt is smaller than that of any of the powers, the absolute amount and percentage of foreign debt is greater, whereas the domestic debt is smaller than that of any other country.
The money stringency of Japanese capitalism is reflected in the high interest rates. Banks pay around 10% on deposits. The short-term discount rate is over 10% as compared with the 4–5% of Western countries. These rates impose a severe handicap on Japanese industry. Owing to their youth and to the failure to build up adequate surpluses, industrial concerns are under the necessity of borrowing a large part of their working capital. As the high rates are an important element in the cost of production, they are a handicap to Japanese enterprise in meeting foreign competition. Struggle as she may to overcome this difficulty, Japan falls more and more under the influence of American finance capital. The unparalleled dependence of Japanese production on foreign markets makes Japan extremely sensitive to world economic conditions. Since 1920 she has been in the throes of a profound crisis causing her foreign exchange to fall catastrophically. The inflation caused by the tripling of her bank-note emission during and following the war has been aggravated by the heavy demands made on Japanese economy through the Imperialist seizure of Manchuria.
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