Still another factor in Japan’s industrial recovery was the skillful government guidance MacArthur’s occupation had bequeathed Japan. Though dedicated to “economic deconcentration” in the private sector, the occupation itself was the most unchallengeable and effectively centralized government Japan had ever seen. Faced with the desperate economic conditions of the early postwar years, it encouraged centralized planning for the economy, which gave the Japanese government a greater capacity to guide industry than most other countries have ever had, including those that boast a fully planned economy. Through tax incentives, judicious credit allocations, control over the importation of technology, and the encouragement of mergers and cartel arrangements, the government helped steer Japanese industry into the most promising fields for growth and away from the dying ones. In the 1950s such basic fields as steel, electric power, shipbuilding, and the chemical industries were emphasized. These were all fields in which Japan had already gotten a good start during the twenties and thirties.
Close supervision of tradesmen during Tokugawa times and the encouragement of industry by the Meiji leaders had attuned Japanese businessmen to the concept of economic leadership by the government. Added to this long tradition was the efficient, highly professional bureaucracy, which was an elite corps drawn from the best universities and at the time was at the height of its prestige and power thanks to the legacy of the occupation. It was in a good position to exercise economic leadership. The bureaucrats, of course, came under the ultimate control of the politicians, but many politicians were of bureaucratic origin themselves and had been classmates of the bureaucrats and top business magnates at the same high schools and universities. Thus the three groups formed a cozy cluster of old friends well suited to cooperating with each other. The frequent description of leadership at the time as being a triumvirate of bureaucrats, politicians, and big businessmen was not far from the mark.
The key agency for steering the economy was the Ministry of International Trade and Industry, commonly known as “infamous” MITI in the West, where it acquired an almost magical reputation. MITI and the other organs of government developed a very efficient system in which leadership was exercised not so much by clearly articulated laws as by the control of available capital, incredibly complex red tape, and what was called “administrative guidance,” which amounted to veiled threats and promises. It was MITI’s task to see to it that the most advanced technology was acquired from abroad on the most favorable terms by those Japanese companies best able to exploit it, but at the same time to ensure that there would be two or more rival private firms in each field to provide the efficiency that competition bred. In this way Japan had the advantage of careful government planning for the overall economy—the macroeconomy—while maintaining efficiency through competing firms in the microeconomy. The result may have been the most successful blend anywhere in the world of the planned economy of the communist system and the free economy of classical capitalism. The system may have been necessary at the time to provide Japan’s war-ravaged industries sufficient protection to get back on their feet. Westerners found it hard to fathom and came to call it “Japan, Inc.” The term is still sometimes used, though the system of protectionist controls has been greatly relaxed in the meantime.
Another factor in Japan’s economic growth was the general consensus that economic recovery must come first. This was put into practical application through the ability of the Japanese to forego present consumption in favor of saving and reinvestment. A thoroughly destroyed Japan, of course, needed foreign capital, but it also was able to generate a surprising amount of investment from its own economy. For more than a century, the Japanese have proved to be the world’s most assiduous savers, regardless of the political or social system under which they were living. Even in the relative poverty of postwar Japan, they were able to set aside more of their income as savings than any other modern people and to reinvest it in growth.
The structure of postwar Japanese industry was also a help to growth. With the elimination of the zaibatsu families and most private wealth, the old corporations fell into the hands of their professional managers, who basically ran them on banking capital, which represented the nation’s financial credit and the savings of the people at large. In other words, the managers did not have to answer to stockholders concerned with quarterly profits and instead could plan their strategy in terms of long-range growth. In a sense Japan inadvertently entered into a postcapitalistic stage of nationalized industrial development. The unsettled times also opened the doors to a number of innovative entrepreneurs, and they, in typically Japanese style, were bent on rapid expansion of their industries rather than personal consumption.
Despite the political strife between labor and management, the internal organization of industry also aided industrial growth. Early in the twentieth century, businessmen had discovered that well-trained workers were a valuable asset and had started to work out a system of retaining them through guaranteed career-long employment, numerous fringe benefits, paternalistic interest in their general welfare, and perhaps most important, wages that rose with seniority. This system, which also applied to management, became prevalent among all the large industries after the war and greatly contributed to the development of a strongly loyal and efficient labor force. Certain of the system’s overtones were reminiscent of earlier Japanese interpersonal relations, especially those of the intensely loyal samurai members of the domains of Tokugawa times. But it was essentially an innovative Japanese response to the new problems of modern industrialized society.
Toyota Motor Corporation
Testing the brakes at a contemporary Toyota factory.
This internal organization of industry did not mean that labor unions were unimportant. They existed in large numbers and bargained determinedly with management for the wages and rights of workers. In a sense most of them were “company unions,” since all the workers in a single company belonged to its union, but the union itself was independent of management control and worked strenuously for the well-being of its members. At the same time, the last thing any union wanted to do was harm the financial competitiveness of the company on which it depended. Strikes, therefore, became essentially symbolic, demonstrating the potential power of labor but not hurting the company. Workers identified themselves with the company, taking great pride in its prestige and products. They felt themselves to be members of the team and required no outsiders to ensure quality control. Such attitudes accounted for the relatively conservative stance of the Domei unions in private industry as compared with the more intransigent posture of the Sohyo unions, which, composed mostly of government employees, had no worry about the competitive position of their employer. The loyalty of the workers in private industry to the firm and their concern for the firm’s future combined with the high educational standard of postwar Japan to give the country probably the most efficient and hardest working industrial force in the world.
As Japan’s industry recovered, it began to recapture its old markets and find new ones, but not without difficulty. Its Asian neighbors still nurtured deep resentments against Japan and fears of its economic dominance, while in Europe discriminatory limitations were placed on imports from Japan. Still, the reparation agreements helped open the doors in Asia, and the excellence and modest price of Japanese products gradually won them markets everywhere. The first great successes in foreign trade were in textiles and the other light industries that the Japanese had mastered long before the war, but then they entered more advanced and complex fields, such as cameras, motorcycles, shipbuilding, and electronics. These required a great deal of highly skilled labor, and the Japanese, with their combination of advanced industrial skills and relatively low wages, had an advantage over less skilled or more highly paid competitors. Bit by bit, Japan’s worldwide image changed from that of a producer of cheap and shoddy goods to that of a producer of quality manufactures. Trade names like Nikon, Canon, Se
iko, Sony, Panasonic (the brand name is “National” in Japan), Hitachi, Honda, Kawasaki, Yamaha, Toyota, and Datsun (now Nissan) became world famous.
Although Japanese industry showed the fastest rate of expansion, agriculture, too, grew rapidly in productivity. This was not the result of any increase of area, since this was impossible. Nor was it the result of land reform, because the prewar farmer, tenant and owner alike, had been as hardworking as was possible. What had happened was that a great new surge in technology and investment had taken place. There had been a decade of scientific advances in the world that the farmers of Japan had lost out on. There were new insecticides and improved chemical fertilizers, which the Japanese came to use lavishly, and new machinery, such as small motorized threshers. In time, miniature tractors, called by the Japanese “bean tractors,” which were well adapted to their tiny fields, came into common use. The Japanese farmer, moreover, being relatively well off in the postwar years, had the capital to invest in these improvements. The net result was that by the mid-fifties bumper crops had become the rule, and the Japanese suddenly realized that this was due not just to unusually favorable weather conditions year after year but to the entirely new level of agricultural production that had been achieved.
For the first time in some decades, Japan became self-sufficient in rice. In part, however, this was the result of a decline in per capita rice consumption, as the Japanese ate more wheat, meat, dairy products, and other protein foods. This was a clear sign of increased prosperity. The richer diet, combined with a greater tendency to sit on chairs rather than on the floor, produced an extraordinary side effect on the Japanese physique. Children became markedly taller and heavier. Almost ludicrous differences in size between young Japanese and their parents and grandparents were produced as a result. A fat boy or girl, once a rarity, became a common sight.
Not all the economic growth was healthy. At first much of it went into a rash of pinball establishments—known as pachinko parlors—and other tawdry amusements. There was also a disconcerting tendency for the economy to “overheat” by going too fast, thus threatening a dangerous return to inflation and large balance of payments deficits. This happened in 1953, 1957, and again in 1961. Each time it proved necessary for the government to tighten credits and take other measures to slow the economy down. The very success of industry also revived the old problem of the dual economic structure. The farmers had become more productive, but not at all to the same extent as workers in the newer industries. A 2.5-acre farm remained far too small for affluent living. The relative economic status of the farmers could be maintained only by a disproportionate allocation of tax revenues to rural areas and by high price supports for rice. These were an economic drain on the rest of the economy but were generously maintained by the Liberal Democratic politicians, who realized that much of their electoral strength lay in the rural areas. Service workers and those in the old handicraft or less mechanized industries, which were less well organized politically, lagged behind. All the large industrial enterprises came to be surrounded by clusters of small feeder plants, where workers received lower wages and lacked the benefits of job security.
The most serious problem produced by rapid industrial growth was the imbalance of the economy between fine new industrial plants and inadequate public facilities and services. Little was done in social security, which was left largely to the individual, the family, or the company to provide, and there was a great shortage of public facilities, such as public buildings and parks. A relatively short period of industrial modernization together with terrible wartime destruction had left Japan a capital-poor country not just in the financial sense, but also in terms of basic capital improvements. Schools, hospitals, and other public buildings were substandard for a country like Japan. Sewage systems and some other modern facilities were largely lacking. The road system was still almost primitive. Traditional wooden architecture, which was more sensible than stone in a forested, earthquake-prone country but was easily destroyed by fire in peacetime as well as in war, left Japan without a backlog of more permanent structures surviving from earlier centuries, such as exist in Europe and many other regions. Worst of all, there was a woeful lack of adequate housing in the war-ravaged cities.
Part of the problem, of course, was the absence of sufficient space in a terribly overcrowded land. The more Japanese industry forged ahead, the worse conditions grew. The cities of Japan became hopelessly overcrowded; water and air became seriously polluted; water supplies in Tokyo fell to dangerously low levels at times; inadequate roadways became the scene of the world’s worst traffic snarls; the death toll on streets and highways rose alarmingly; the superb rail network and vast urban commuting systems became absurdly overcrowded. Living space was incredibly restricted in tiny individual houses or in even smaller apartments in danchi, the clusters of four- to six-story walkup concrete apartment buildings that came to surround the large cities. Millions of workers were condemned to long hours of commuting every day by train, bus, and subway. An hour each way was considered short, and two hours was not at all unusual.
Naturally, the tremendous expansion of the Japanese economy in the fifties and sixties had a deep effect on society and people’s attitudes. If the population had kept pace with economic growth there might have been less change, but the economy was going much too fast for this, and in any case, once the postwar baby boom had run its course, population growth slackened off to only about 1 percent a year, one of the lowest rates in the world. This was the result of liberal abortion laws, loosely applied, and a great enthusiasm for birth control, against which there was little religious or social resistance. It was vigorously advocated by both government and industry, but the chief motive power was probably the desire of most parents to see that their children were well educated in order to have a chance to succeed in life. This seemed more possible with two or at the most three children than with the traditional large family. A 1 percent rate of population increase subtracted very little from a 10 percent rate of economic growth, leaving much room for a general increase in wealth.
The destruction of the war and the upheavals of the occupation had themselves been enough to set off vast social changes, but these were accelerated by the breakneck economic pace and the unaccustomed affluence it began to produce. The disaster of defeat had discredited all traditional authority and values. The dispersal of population caused by imperial expansion and the wartime air raids and grinding poverty of the early postwar years had further disrupted traditional patterns of life. And then, when recovery did come, it brought with it a vast urbanization of the population, the blighting of mining areas as imported oil replaced domestic coal, changing patterns of personal relationships, and an accelerating pace of life as prosperity introduced an intense, almost frenetic, new tempo of activity.
Rick Smolan/Contact Press Images
Danchi (developments) in the Tokyo suburbs.
In retrospect, it is surprising to see how firm the Japanese family remained and how many of the new social patterns were essentially continuations of those already well established in the twenties. The socially liberalizing trends of the period of “Taisho democracy,” now free of the reactionary pressures of the thirties and the war years, reappeared with increased vigor. The prewar breakup of the typical family into the nuclear unit of the conjugal pair and their preadult children and the independence of women and younger people from the authority of the paterfamilias were greatly strengthened by the occupation reforms and the new conditions. There was also a veritable explosion of education, as most children went beyond the compulsory nine years to senior high school and often to a university, and anxious parents, eager to provide their children with the best educational opportunities, sent them to special cram schools, known as juku, for supplementary training, or hired individual tutors. Eventually, well over 90 percent of the children continued on through senior high school and more than a third through some form of higher education. While
underfinancing and overcrowding left much to be desired of the universities, the twelve years of education up through high school were as academically demanding as anywhere in the world, and overall the Japanese probably became the most highly educated people in the world.
The decline of respect for governmental and familial authority made the sources of public information all the more important. The Japanese had long been a reading people, but with the new affluence there was a great increase in the publication of books and circulation of magazines. Monthly magazines had been important for decades, but now there was a flood of new weeklies, and newspapers became even bigger and more influential than ever. The three largest, Asahi, Mainichi, and Yomiuri, which were published and distributed throughout the nation, came to have morning circulations of 4 to 6 million and evening circulations only somewhat smaller. Middle-size national or regional papers exceeded the 1 million mark. Taken as a whole, the quality of the newspapers was excellent and their influence enormous, probably greater than in any other nation. During the fifties and sixties they were joined in importance by television, which became known not as TV or the “telly,” but as terebi in Japan. Japanese television was divided into two government networks, one of them purely educational, and some five private networks, and the competition between them produced a diversity and balance between amusement and education as good as that of any country.
Nothing was more strikingly evident in the fifties and sixties than the rapid rate of urbanization. While every prefecture with a predominantly rural makeup lost population, all the cities grew fast, and the larger they were, the more rapid was the pace. In the sixties Tokyo passed the 8 million mark in population, becoming the largest municipality in the world. Yokohama and the large number of other satellite cities and towns added several million more to the Tokyo population node. All the major cities witnessed a feverish building boom of steel-boned structures in their downtown areas. In the case of Tokyo, major rail interchanges created four or five subsidiary “downtowns,” each complete with its high-rise buildings, department stores, and amusement areas. Giant department stores, already well established before the war, developed into fabulous institutions, crowded with goods and people and offering such side attractions as art exhibits, a wide variety of restaurants, and children’s amusement parks on the roofs.
Japan Page 26