Japanese Economy A
2012 Fall
Seinan Gakuin University
Noriaki EZOE
Professor Ph.D.
Economics Department
Seinan Gakuin University Japan
Mail address: ezoe@seinan-gu.ac.jp
Homepage address: https://w3.seinan-gu.ac.jp/~ezoe/
1
Chapter 2 Economic History, Part1:
Edo Period and Meiji Era
What you will learn in this Chapter
1 History in Japanese development :Overview.
2 Edo period : Shogun system and seclusion.
3 Meiji Era : What Meiji revolution had
achieved?
2
1 History in Japanese development
: Overview.
Japanese history 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
300 – 710
Yayoi
: The rice agriculture begins. The development of a social hierarchy
and small countries started to unify into larger countries.
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).
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II. Samurai’s Rule
I. Emperor’s Rule
1603
X
III. Modern
-ization
PP.16-17
IV. Postwar
1867
Rapid
recovery
and
growth
NARA
Centraliz
ation
MEIJI
EDO
Jinshin War × 671
Taika Reform × 645
Clan
fights
HEIAN
Nobles,
Decentral
ization
KAMAKURA
MUROMACHI
SENGOKU
Hunting &
gathering
xxxx
Rice
Buddhism
Chinese culture &
political system
Internal
wars,
dynamic
& fluid
society
Tokugawa
Shogunate
Peace,
isolation,
conservat
ive class
society
Westerniza
tion,
industrializ
ation,
militarilizat
ion
xxxx
WEST: guns &
Christianity
WAR
xxx
WEST!!!
US occupation
1945-52
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.
5
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 Period
2.1 Transition from Sengoku to Edo
• The sengoku period,
12c to 16c
Internal fights for
dominance continued.
• Religion for selfdiscipline, pragmatism
and coping with lifeor-death situation
emerged (Zen
Buddhism).
• Society was dynamic
and fluid. Power, not
family name, mattered.
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
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2.2 Tokugawa Period (1603~1868)
:The baku-han system
(1) Features of the Bakufu-Han System
Bakuhu(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.
Japanese Economy
9
Ohno PP.23-25
Bakuhan Taisei
(Bakufu-Han System)
幕藩体制
--“Feudalism”
--Class society
Separation of rulers and
ruled
士
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
農
工
商
(3)Alternate attendance (4)The seclusion policy
(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
(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 quasimonopoly of imports
11
Ohno P.23
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
Samurai police and merchants
City girls
Daimyo in his castle
Ohno PP.25-28
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)
Koku/cho
Million cho (=ha)
20
15
8
Output/land (left scale)
6
10
4
5
0
1600
Farmland (right scale)
1650
1700
Source: Hayami & Miyamoto, 1988.
1750
1800
1850
2
0
1872
Rich Merchants in Edo Period (Gosho)
Ohno
Mitsui Family
Sumitomo Family
-17c From Matsuzaka
-Kimono trade & money exchange in
Edo, Kyoto, Osaka – huge success
-16c Adopt Western copper refining,
copper trade (Kyoto)
-17c Move to Osaka
-Besshi Copper Mine (under Bakufu’s
commission)
<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
Onogumi? Tennojiya? Hiranoya?
Shimadagumi? Kashimaya?
<Transition to Meiji>
Manager: Hirose Saihei
-Avoiding gov’t confiscation
-Introducing Western mining
technology to renovate Besshi
-Business diversification
Konoike
-Sake making, trading, loans to daimyo
-No serious internal reform in Meiji
-Failed to form zaibatsu (Sanwa Bank)
High level of education
Official Teaching
Bakufu Schools and Han
Schools
Ohno PP.33-34
Private teaching
Shokason Juku
by Yoshida Shoin (1830-59)
The core curriculum was ancient Produced many political leaders
Chinese philosophy, especially
•
Ito Hirobumi (Prime Minister)
Yamagata Aritomo (Prime Minister)
Confucianism (6-5c BC).
Kusaka Genzui (anti-bakufu fighter)
-Confucianism emphasized social order,
respect for superiors and elders, the
Kangi-en
role and duties of the ruler, and rituals by Hirose Tanso (1782-1856)
and ceremonies (legitimacy for class
society).
-Largest private school in Edo period,
-Study consisted of reading old Chinese attracting over 4,000 students
literature in Japanese way, memorizing, -Main courses: ancient Chinese
and interpret the meaning.
literature and philosophy
15
Terakoya (Private Primary Schools)
Ohno P.35
• 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
<Typical curriculum>
8-12am
12-1pm
1-2pm
2pm
Writing (brush & ink)
Lunch at home
Arithmetic, moral
Go home
<Exams and exhibitions>
Monthly exams
Year-end final exam
Writing 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
17
(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)
18
Ohno P.43
3 Economic History: Meiji Era (1868-1912)
3.1 Meiji Government: Radical Reformist
Initially, avoid colonization by the West
Rapid modernization and Westernization
Become “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
Fukoku Kyohei (富国強兵) - Enrich the country, strengthen the military
Shokusan 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
members
Purpose 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
20
Ohno
PP.41-42
Fake color
photos of early
Yokohama
3.3 Resumed International Trade
• Open ports: Yokohama, Nagasaki,
E xpo rt
Hakodate, Hyogo, Niigata
• Unequal treaties with West vs. no travel
rights for foreigners
Im po rt
• Rise of Yokohama merchants
• Rapid westernization and technology
import begin
• Inflation, relative price changes, rise and
fall of industries
Trade 1876-80
0%
20%
40%
60%
To US
Silk
Tea
C otton C otton
yarn
fabrics
W oolen
goods
From UK
80%
100%
Case Study; Early Meiji trades
After 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
Japanese Economy
22
3 International trade increases the demand for factors
that are abundant in the country compared with
other countries, and to decrease the demand for
factors that are scarce in the country compared with
other countries.
4 International trade leads to expansion in exporting
industries and contraction in import-competing
industries.
5 Compensation principle
Trades may result some groups worse off. Lump-sum
transfers from gainers to losers would necessary.
Japanese Economy
23
(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 losses
Figure
Japanese Economy
24
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
The Effects of Imports (iron and nail )
Figure
27 of 23
References
Dadid 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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