The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor

by David S. Landes

  The second measure was even more painful in its symbolism: the ex-samurai were prohibited from walking about with their two swords. These weapons had made commoners tremble for their lives. Most commoners still trembled out of habit, but now even peasants might own a gun. Meanwhile statesmen and politicians vied in salutes to westernization. They went about in formal European dress more suitable to a Paris wedding than to everyday business in Tokyo; wore absurd top hats on cropped polls; brandished umbrellas in rain and shine; rode about in carriages; sat in chairs around tables; met in newly built stone structures that rebuked the paper-and-wood buildings of Japanese tradition.*

  Samurai resentment boiled over into political assassinations. The most spectacular was the killing in May 1878 of Okubo Toshimichi, home minister and a principal builder of the new Japan, on his way in foreign horse carriage and Western regalia to a meeting of the Council of State at the Akasaka Palace in Tokyo.† The six assassins, five of them ex-samurai, defended their action by denouncing the waste of precious funds on economic trivia while warriors suffered want. But the symbolism also mattered. Many years later, the wife of the Belgian minister, then resident in Okubo’s old house, wrote in her diary: “I am told that one of the reasons [for Okubo’s] unpopularity, and incidentally the cause of [his] political murder was…the construction of this very European house.”4

  These murders changed little. Nor did the rebellions. Old met new—and old lost.

  Meanwhile state and society went about the business of business: how to make things by machine; how to do more without machines; how to move goods; how to compete with foreign producers. Not easy. European industrial nations had taken a century. Japan was in a hurry.

  To begin with, the country built on those branches of industry already familiar and changing even before Meiji—silk and cotton manufacture in particular, but also the processing of food staples immune from foreign imitation: sake, miso, soy sauce. From 1877 to 1900—the first generation of industrialization—food accounted for 40 percent of growth, textiles 35 percent.5 In short, the Japanese pursued comparative advantage rather than the will-o’-the-wisp of heavy industry. Much of this was small scale: cotton mills of two thousand spindles (as against ten thousand and up in western Europe); wooden water wheels that were generations behind European technology;* coal mines whose tortuous seams and hand-drawn baskets made the infamous British pits of an earlier time look like a promenade.6

  The economist’s usual explanation for this inversion of the late-follower model (late is great and up-to-date) is want of capital: meager personal resources, no investment banks. In fact, some Japanese merchants had accumulated big fortunes, and the state was ready to build and subsidize industrial plant. As it did. But the long haul to parity needed, not so much money as people—people of imagination and initiative, people who understood economies of scale, who knew not only production methods and machinery but also organization and what we now call software. The capital would follow and grow.

  These early decades of groping experiment saw many failures. In the early 1880s, the government sold off its factories to private enterprises. This decision did it much credit: bureaucrats rarely admit mistakes or give up power. The state mills were ceded on easy terms, usually to friends and connections—not the best arrangement, but one that in effect subsidized businessmen and permitted a fresh start. Around the same time, cotton merchants turned from hand-spun yarn to machine spinning.† Between 1886 and 1894, thirty-three new mills were founded, over half of them in the Osaka area; and from 1886 to 1897, total value of yarn output increased fourteen times, from 12 million to 176 million yen. By 1899, Japanese mills were producing some 355 million pounds of yarn; by 1913, 672 million pounds. The effect was to close out imports and move over to exports. In 1886, some 62 percent of yarn consumed in Japan came from abroad; by 1902, just about nothing. In 1913, one fourth of the world’s cotton yarn exports came from Japan, and Japan—along with India but more so—had become a major threat to Britain in third markets.7

  It was one thing to spin and weave cotton; quite another to make the machines that did the work. Cotton spinning was a relatively easy gateway into modern industry, as shown by precocious performances in Catalonia, Egypt, and Brazil. One had only to buy the machines, normally from some British manufacturer, who would then send out the technicians to get them started and if necessary keep them running. Such mills could then supply domestic handloom weavers, and hocus-pocus, the deed was done: one had the simulacrum of an industrial revolution.

  Early on, the Japanese determined to go beyond consumer goods. If they were to have a modern economy, they had to master the heavy work: to build machines and engines, ships and locomotives, railroads and ports and shipyards. The government played a critical role here, financing reconnaissance abroad, bringing in foreign experts, building installations, and subsidizing commercial ventures. But more important were the talent and determination of Japanese patriots, ready to change careers in the national cause; and the quality of Japanese workers, especially artisans, with skills honed and attitudes shaped by close teamwork and supervision in craftshops.

  This legacy paid off in quick learning. Waterpower for industrial use did not come in until the last years of Tokugawa, when the Japanese adapted it to textiles particularly. Yet waterpower was never so important as in European or American industry, because the Japanese were already moving on. Steam technology was available, with electricity close behind. Electric power especially suited light industry and small, dispersed workshops; no other form of energy delivered such small amounts as needed. To be sure, electricity called for large-scale generation and distribution. This did not pose a problem in urban areas. In remoter country districts, beyond the grids, internal combustion engines did the job.

  Japan, then, moved into the second industrial revolution with an alacrity that belied its inexperience, generating and using electricity almost before it had gotten used to steam.* Arc lamps in Japan first lit up in 1878. Participating in this experiment was one Ichisuke Fujioka, a teacher at Kobu University, an engineering school founded in 1877 and later merged into Tokyo University. From his mix of study and practice, Fujioka saw the need for a central power station and sought private backing. When the first businessmen he approached declined, he went to a high government official from his home province. The official brought him together with a venture capitalist, and the two put together a syndicate of some sixty-four investors—former aristocrats, businessmen with official connections, and wealthy provincial merchants. So was born the Tokyo Electric Light Company (TELC). At first TELC built small private generating and lighting facilities for factories, business firms, and shipyards. It went on, beginning in 1887, to supply electricity to the general public. That same year similar companies started up in Kobe, Kyoto, and Osaka; two years later in Nagoya and Yokohama—thirty-three companies in all by 1896. By 1920, primary electric motors accounted for 52.3 percent of the power capacity in Japanese manufacturing. The comparable American figure was 31.6 percent in 1919, reaching 53 percent only in 1929. Great Britain was even slower, with 28.3 percent in 1924.8 In respect of energy and power, then, Japan confirms the catch-up model: It pays to be late.

  The traditional account of Japan’s successful and rapid industrialization rings with praise, somewhat mitigated by distaste for the somber and intense nationalist accompaniment—the ruthless drive that gave the development process meaning and urgency. This was the first non-Western country to industrialize, and it remains to this day an example to other late bloomers. Other countries sent young people abroad to learn the new ways and lost them; Japanese expats came back home. Other countries imported foreign technicians to teach their own people; the Japanese largely taught themselves. Other countries imported foreign equipment and did their best to use it. The Japanese modified it, made it better, made it themselves. Other countries may, for their own historical reasons, dislike the Japanese (how many Latin Americans like gringos?); but they do envy and admire them.<
br />
  It is a good, even edifying story. Yet one aspect of the Japanese achievement has not caught the attention of celebratory historians: the pain and labor that made it possible. The record of early industrialization is invariably one of hard work for low pay, to say nothing of exploitation. I use this last word, not in the Marxist sense of paying labor less than its product (how else would capital receive its reward?), but in the meaningful sense of compelling labor from people who cannot say no; so, from women and children, slaves and quasi-slaves (involuntary indentured labor).* The literature of the British Industrial Revolution, for example, is full of tales of abuse, especially of those so-called parish apprentices who were assigned to textile mills to relieve the taxpayers of welfare burdens. But not only the mills; the coal mines were a place of notorious travail; likewise many small metallurgical shops and even cottage workplaces. “When I was five, my mother took me to lace school [everything can be called a school] and gave the mistress a shilling. She learned me for half an hour, smacked my head six times, and rubbed my nose against the pins.” Taskmasters and parents connived at this precocious enslavement: “Six is the best age, you can beat it into them better then. If they come later, after they have been in the streets, they have the streets in their minds all the while.” And the more frightened the better, in the words of a lacemakers’ ditty:

  There’s three pins I done today,

  What do you think my mother will say?

  When she knows I done no more,

  She’ll take and turn me out of door,

  Never let me come in any more.9

  The most common ailment of these wretchedly unhappy children was a nervous stomach. Small wonder that many fell victim to sexual predators and went on to prostitution. It seemed a promotion.

  The high social costs of British industrialization reflect the shock of unpreparedness and the strange notion that wages and conditions of labor came from a voluntary agreement between free agents. Not until the British got over these illusions, in regard first to children, then to women, did they intervene in the workplace and introduce protective labor legislation. When they did, they wrote it all down, so that social historians have a library of reports and testimony to work with. Was England as bad as these records say? Or do we just have fuller records?

  The European countries that followed England on the path of modern industry had their own labor problems and scandals, though less serious, largely because they had had warning and were able to introduce protections by anticipation. By comparison, Japan rushed into a raw, unbridled capitalism. As in England, but more so, cottage industry was already the scene of shameful exploitation. Why do I say “more so”? Because the Japanese home worker was able and willing to put up with hours of grinding, monotonous labor that would have sent the most docile English spinner or pinmaker into spasms of rebellion. The Japanese, for example, had no day of rest, no sabbath. Why did they need one? Animals did not get a day of rest. Nor was the backward-bending labor supply curve—the preference for leisure over income—a serious problem in Japan.

  Why not? The answer lay partly in a more intense sense of group responsibility: the indolent, self-indulgent worker would be hurting not only himself but the rest of the family. And the nation—don’t forget the nation. Most Japanese peasants and workers did not feel this way to begin with; under Tokugawa, they had scarcely a notion of nation. That was a primary task of the new imperial state: to imbue its subjects with a sense of higher duty to emperor and country and link this patriotism to work. A large share of school time was devoted to the study of ethics; in a country without regular religious instruction and ceremonial, school was the temple of virtue and morality. As a 1930 textbook put it: “The easiest way to practice one’s patriotism [is to] discipline oneself in daily life, help keep good order in one’s family, and fully discharge one’s responsibility on the job.”10 Also to save and not waste.

  Here was a Japanese version of Weber’s Protestant ethic, the more effective because it jibed so well with atavistic peasant values. The classical peasant is a miser who saves everything, and plans and schemes and works accordingly. He lives for work and by work adds to his holding; that is his reason for being. (The precocious separation of British cottage workers from the soil and agriculture was an advantage to industry, but in some ways the attitudinal effects were negative. The landless industrial worker works to live. When he has enough, he stops to enjoy.)

  The Japanese pushed this peasant mentality to the limit. This was, in the old days, a very poor society, squeezing out a mean subsistence. One lived on rice or, in colder climes, on millet and buckwheat. The Keian edict of 1649 forbade peasants to eat the rice they grew, ordering them to make do with “millet, vegetables, and other coarse foods.” Little animal protein—some chicken maybe and seafood. Not so much fish (including head, skin, bones, and tail) as the scavengings of the ocean: seaweed, plankton, little tidal creatures. Even now, the Japanese show a catholicity of taste that testifies to the privation and improvisation of yesteryear.

  Everything counted. You had to relieve yourself? Rush home and empty your bowels on your own land. Division of labor? Mother’s time and work were too precious to waste on babies and self-indulgence—up after childbirth! Older children could care for younger; small children would learn early to perform light industrial tasks. The smallest threads, even lint, could be saved and sold to ragpickers for a few sen (100 sen = 1 yen). Old folks, too old to labor, represented mouths to feed; better to turn them into ancestors. Such households were miniature textile factories, a mine of profit to the energetic merchant putter-out.

  We have the personal story of one such workhorse, an orphan married to a clever peasant who wanted to avoid military service and needed a wife.* She brought nothing into the marriage except that military exemption, the strength to fetch water from a well eighty-six feet deep, uncommon manual dexterity, and the humility and patience of a saint before a mother-in-law from hell. Her father-in-law lived for nothing but work: “I have no wish to see anything. I have no hobby. Making the soil produce better crops is the only pleasure I have in life.”†

  The mother-in-law told her right off that she would have to earn her keep. “I don’t intend to work hard by myself and let you, the young wife, have an easy time of it. Now that you’ve joined our family, I want you to work hard and skimp and save with me.” They put her to work at the loom, making cloth for the merchant, and she and her three sisters-in-law would send the shuttles flying from early morning, before light, to midnight, day in, day out, in cold weather and hot. No sabbath; no day of rest. No time even for cleaning: “This isn’t the temple or a doctor’s house,” the harridan would scold. “If you have time to clean house, go out and work.” And they worked. Three bolts of plain striped cloth per day. No English weaver could have come close. Sometimes, when they did some weaving for another peasant family, they were able to stretch the cloth and eke out an ell for themselves—no doubt everybody did it. Mother-in-law made sure that such “perks” also ended up with the merchant: no indulgences for the young women. The neighbors called the young weavers the moneybags of the family. Mother-in-law took all the credit.

  The daughter-in-law was the best weaver of the household, the best in the village. Even her mother-in-law had to admit this, although she found reason to complain nevertheless. When the daughter-in-law gave birth, no one coddled her. No three days in bed. A piece of pickle to keep her going. And no one told her she’d done a fine job; that’s what mothers are for. So the young mother got one meal a day, and when she nursed her babe, the mother-in-law would mutter about time lost: “I sure hate to see a young wife wasting her time feeding the baby. She could be working the loom and making some money.”

  The harder and better she worked, the harder they squeezed and the more they begrudged her time. Naturally; her marginal value was rising. “Our young mother takes a lot of time in the toilet” or, “She sure takes a long time feeding the baby” or, “She’s so stupid, she’s doi
ng the washing again.” She had better use for her time, and what matter if she could not wash herself or her clothes. The Japanese are renowned for their passion for cleanliness, but greed brings money closer to godliness.* And what if her underwear was soiled? Her husband was now away, serving as a border guard in northern Korea to earn one of those niggardly pensions that were the dream of poor peasant families. No need to be fastidious. (He never told her when he left how long that might take. It took twenty-four years.)

  So the family saved the sen and the merchant-manufacturer made his yen and the Japanese textile industry flourished; and the day came when the family had put enough money aside to rebuild the house, with a tile roof this time. After all, what is more important than a house? “In this world what counts is the house. The house fixes the family’s standing in society. It fixes a person’s worth.” When you call a doctor, he looks over the house while he takes your pulse. When you hire a priest for a funeral, he looks over the house and fixes accordingly the place of the deceased in the netherworld. The in-laws could talk of nothing else. They’d always been looked down on; people were not even polite. Well, they’d show them. And the daughter-in-law wove away—alone now, because her sisters-in-law had been married off; and she got thinner and thinner because she had to work for four and eating took time. And her son grew up and was sweet consolation, because her husband off in Korea in his dark uniform with gold stripes had forgotten her.