The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor
Page 43
In Japan, the same. The fiscal system ran on rice, in other words, on the principal food staple, and this arrangement (kokudaka-sei) was designed to take care of the ruling elite. The lord (daimy) took roughly 30 percent of the harvest, kept much of it for himself and his household, and distributed the rest to his stipendiary samurai retainers. Unlike European vassals, these samurai had no property in the land.
The system fed people according to rank. In principle, nothing more was needed. But since there is more to life than eating and the appetite for noncomestibles grows with status, the lord and his retainers needed to convert much of their rice income into money, the better to enjoy life’s finer things. For this they turned to the despised merchants, who played an ever more active role in what was supposed to be a quiet economy but instead bubbled with desire. Here human nature married the political arrangements, for the system of alternate residence and the social ambiance of Edo incited to profligacy.11
This in turn pushed the sword-wearers to extract more from the peasants. As one superintendent of finance put it, “Peasants are like sesame seeds: the more you squeeze them, the more you get.” Very witty; but squeeze too hard and you get peasant uprisings or flight, to towns or to other han. (As in Europe, the best protection against oppression was the possibility of exit.) Historians have counted almost three thousand peasant disturbances between 1590 and 1867, occurring more often and violently in the second half of the period and in the richer areas. Favored targets: the houses and warehouses of rich farmers, merchants, and moneylenders. Clearly economic change was shaking the social order and breaching the social contract.
It was easier to borrow than to wrest. Daimy and samurai knew their merchants, many of them already active in the grain trade and tied into politics. The merchants in turn knew their customers personally and felt unable to refuse their requests for loans.* To be sure, nothing was riskier for the lender: his debtors were stronger than he and could refuse to pay. Only too often, moreover, these deadbeats had the support of higher authorities, who had their own reasons to resent the power of money and decreed general reductions and cancellations of debt.†
But this kind of thing cuts both ways: habitual borrowers and bad payers always need more. (Which is why debtor nations today prefer to negotiate deals; they still need money.) Just because they can repudiate debt does not mean than they can afford to. The news of default gets around, and soon no one wants to lend. So daimy and samurai heaped scorn on merchants in their absence but wooed them in person. In Japan, where every detail of etiquette and language signaled superiority and inferiority, spendthrift warriors learned to bend their head, to speak softly, to give seasonal gifts, to grant merchants the right to wear a sword (but only one), and to confer commercial privileges (better than bows and smiles and gifts).
So merchants lent, and many grew rich. But others, hundreds of them, foundered on the rock of bad faith. The samurai were ready to die for their lord and master, yet their word was notoriously worthless, and not just to merchants. Often the merchant was caught in a no-win situation; he was damned if he did and damned if he didn’t. The case of Yodoya Tatsugoro became legendary. The family had made an enormous fortune by being useful, among other things by undertaking public works in Osaka; no house did more to make that city the commercial center of Japan. But Tatsugoro, fifth-generation head of the house, was too rich for the public good. So many daimy owed him money that state interest and Confucian morality required he be cut down to size. In 1705, the Bakufu confiscated his fortune and canceled his claims on the pretext that he was living beyond his social status.12 So much for gratitude.
(That is not so bad as what happened to Nicolas Fouquet, from 1653 superintendent of finance in the government of Louis XIV of France. Grown too big and rich too fast, Fouquet was already marked for doom when he invited Louis to visit him in his new chateau and put on a welcome so lavish, indeed royal, that the king became implacably jealous. No functionary could afford such display except by cheating his master. So after the pretense of a trial, accompanied by the usual painful questions, Fouquet was condemned in 1661 and sentenced to prison for life.)
In the long run, in spite of all manner of constraints and betrayals, Japan’s merchant class prospered, courted by the powerful and progressively exempted from restrictions. These businessmen developed their own ideology and sense of function and importance; also rules of prudence and tactic designed to shelter them from the men of the two swords. The key lay in single-mindedness, an ingrained suspicion of outsiders, fanatical thrift, and nerve. Above all, thrift and its reward, accumulation. “The samurai seeks fame and sacrifices profit, but the townsman dismisses fame and makes profit. He amasses gold and silver. That is what he calls his Way.”13
That was the Way, and nothing must be allowed to get in the way. Here is Mitsui Takafusa (1684-1748), third generation of the great house of that name, still, after three hundred years, a major mercantile power:
Never waste your attention on matters that have nothing to do with your work. Merchants who ape samurai or think that Shinto, Confucianism or Buddhism will preserve their inner heart will find that they will only ruin their houses if they become too deeply engrossed in them. How much more true is this of other arts and entertainments! Remember that it is the family business that must not be neglected for a moment.14
Again the parallel with Europe is striking. Japan did not have Calvinism, but its businessmen adopted a similar work ethic. The key lay in the commitment to work rather than to wealth. The Zen monk Suzuki Shosan (1579-1655) saw greed as a spiritual poison; but work was something else: “All occupations are Buddhist practice; through work we are able to attain Buddhahood [salvation].”15 One does not have to be a Weberian Protestant to behave like one.
(Japanese scholars have noted that this work ethic was not universal in time or space, but that the latter half of the Edo period was marked by intensified labor and the propagation of work habits that stood the economy in good stead once it moved on to modern industry. In their words, an “industrious revolution” prepared the way for the industrial revolution.)*
Meanwhile, in Japan as in western Europe, rulers had learned that mercantile prosperity meant revenue and that revenue was convertible into pleasure and power. Here the multinational model is relevant: Japan was in effect a competitive economic world of over two hundred fifty nations, all of them wanting more and many of them sorely wanting.
Nothing so concentrates the mind as lack of money. In the effort to generate income over and above the rice stipends, daimy began to make improvements (roads, canals, land reclamation, irrigation, new crops, and better strains of seed), or to promote specialization in tradables, including the products of rural industry.16 Support from above combined with private initiative to increase both area of cultivation and crops. Area cultivated doubled from 1598 to 1716-36; while crops increased some 65 percent from 1598 to 1834.17 Another estimate has land and labor productivity in agriculture rising 30-50 percent from 1600 to 1867.18 Such calculations focus on rice, but an important further source of gain lay in the development of side crops and specialties: sericulture, other cereal grains, new species such as sugar and sweet potatoes. Urbanization increased demand for specialties. Villages near cities turned to truck farming and gardening, just as happened around London in the sixteenth and seventeenth centuries.19 Some han also dug out minerals not claimed by the Bakufu—copper and later coal.*
The Achilles heel of this development was the temptation for authorities to create monopolies and distort prices in their favor. Normally, competition from other han restored market order. Unlike Europe, where the market was fragmented by politics, custom, and high costs of transport, Japan’s compactness and commercial unity tended to vitiate protection. Sometimes, however, as with Satsuma sugar, climatic advantages protected the han from most outside competition.20 Some fifty-three “domain monopolies” were still in effect at the end of the Edo (Tokugawa) period. These monopolies no doubt offered adva
ntages to the participants: the han, the merchants, the producers (farmers or manufacturers). The consumer paid.
An important innovation was the rise of a cottage cotton manufacture. As in Europe, cotton came late, not really spreading in Japan until the late sixteenth and early seventeenth centuries, but then quickly replacing hemp and winning a wide market for its cheapness, convenience, and comfort. Its manufacture in Japan took several forms: urban production by craft guilds; rural shops run by independent masters (peasants turned industrial entrepreneurs) and employing inside and outside spinners and weavers; rural putting-out, where merchants supplied the raw materials and even the tools and bought back the finished and semifinished product. In the long run, as in England, urban manufacture gave way to rural. Wages were lower in the countryside, and guild regulations in the towns were stifling. Numbers of agricultural villages turned into collective cotton fabriques. Farming was done in spare time or simply abandoned, sometimes to the distress of local rulers and notables.21
This precocious development of pre-factory industry (what some economic historians would call proto-industry) paid off in the mid-nineteenth century, when the opening of the country to foreign goods exposed Japanese manufacture to the machine-made products of the West. The spinning branch crumpled, but weaving, using imported yarn, held up against foreign cloth. And then, as in Britain, cotton spinning became the leading sector of Japan’s industrial revolution, building on a preexisting network of machine shops and skilled labor.22
Regional specialization, again as in England, depended on a unified national market—unified spatially and between town and country. Commercial agents scoured the villages for labor and commodities; successful rural entrepreneurs found their way to urban centers; businessmen took up residence in villages. Here we see the unintended effects of sankin kotai (alternate residence). The movement of several hundred daimy, plus retainers and their families, from provincial han to Edo and back made for constant stir, an exposure to strange places and new commodities, a rapid proliferation of travel accommodations, a large demand for liquid funds and remittance facilities, a multiplication of crafts and shops and services.
Edo, a fishing village at the end of the sixteenth century, was the largest city in the world in the eighteenth, with over 1 million people out of perhaps 26 million for the nation as a whole. Like London in England, Edo became the heart and lungs of the country, pumping and renewing the economic life blood, drawing people in and out, promoting division of labor and the diffusion of wants, knowledge, and know-how.23 Edo was the great marketplace, where samurai competed in conspicuous consumption and enriched a swarm of craftsmen and tradesmen. This was a shopkeeper’s heaven that boasted the world’s first department stores. But to say this is not to overlook the older business center: alongside Edo and much larger at first stood the Osaka-Kyoto duo, seat of the emperor and his court, hub of industry, banking, and trade.24
These two primary centers and their network of provincial connections fueled new techniques of buying (including futures trading), of distribution (much of it by coastal shipping in specialized vessels), and of remittance (bills of exchange, transferable warehouse receipts, clearing), much as in Europe’s commercial revolution of the Middle Ages and early modern period, only more so.25 And faster. This island economy was changing swiftly along Smithian lines of specialization, division of labor, and growing demand. But then it had some real advantages over Europe: (1) two hundred fifty years without war or revolution; (2) cheaper and more accessible water transport; (3) a single language and culture; (4) the abolition of old trade barriers and the prohibition of new; and (5) the development of a common merchant ethic.26
Division of labor and specialization fostered closer ties between country and town, a precocious “urbanization” of the countryside that was found in Europe only in England and, to a lesser degree, Holland. The remotest rural areas were crisscrossed by a network of peddlers, ready to sell for cash or on credit. The so-called Toyama drug sellers, for example, would leave a stock of their goods with farmers and return later on to be paid for whatever had been used. That says something about Japanese neatness (no small matter) and honesty (even more important).27 More densely settled areas warranted the establishment of fixed outlets. We have the inventory of a village “general store” in 1813. The variety of goods is astonishing, some of them distinctive markers of an economy in an advanced preindustrial stage: thus a large range of manufactures, including hardware and garments that farm households had once made for themselves; and writing implements and paper in a country where literacy was not easy to come by.28 One could not at that date have found such a store in the Continental European countryside, except perhaps in the watchmaking districts of Switzerland.
So busy, moving, and changing a society would not be caged intellectually. In spite of strenuous restrictions and controls, European knowledge seeped in, mostly by personal contact with the Dutch at Deshima. By the mid-eighteenth century the Japanese called this foreign knowledge rangaku; the ran is the lan of Holland (Japanese Oranda; Japanese has no letter “l”). This in itself signaled a new attitude: they had been calling it bangaku, “barbarian learning.”29
One consequence of this awakening was the beginning of discrimination between helpful and harmful, acceptable and unacceptable. Christianity and its writings were still seen as undesirable and taboo. But some Japanese caught on that Japan had much to gain from Western secular knowledge.
So, in 1720, the first breach was made: the Bakufu agreed that non-Christian books could be imported; and while this relaxation had its periods of constriction and reaction, the way was open now for some few Japanese to study the new learning and to publish on the subject. This development led to a clash between the new learning and the dominant Confucian school; that is the way of such challenges to orthodoxy. The rangakusha (experts in Dutch learning) tried at first not to provoke and diffidently defended their contributions; thus tsuki Gentaku, author of a Ladder to Dutch Studies (1783): “Dutch learning is not perfect, but if we choose the good points and follow them, what harm could come of that? What is more ridiculous than to refuse to discuss its merits and to cling to what one knows best without hope of changing?”30
Such soft words could not turn away Confucianist wrath. The new learning challenged the very premises of Japanese culture, which had always learned from China. (The Chinese were the only foreigners not called barbarians.)* Much depended on the accidents of politics. Toward the end of the eighteenth century, for example, the government decreed that only Confucian philosophy should be taught—and a particular variety at that. In subsequent decades restrictions on Western learning grew more severe, to the point of outright persecution. The appointment of a Chinese scholar as governor of Edo in the 1830s was the signal for a tenacious hunt and chase of leading Dutch scholars, to the point of imprisonment and forced suicide. For a while, Japan was consuming its best and brightest.31
Much of rangaku, moreover, by contradicting traditional knowledge, shamed the old believers; and shame, in Japanese culture, is unbearable. European medicine, for example, as verified by dissections—seeing is believing—made a mockery of Chinese doctrine.32 By the same token, in a world of East Asian isolation and complacency, geographical reality was intrinsically subversive. Here is tsuki again: “Hidebound Confucianists and run-of-the-mill doctors have no conception of the immensity of the world. They allow themselves to be dazzled by Chinese ideas, and in imitation of Chinese practice, laud the Middle Kingdom, or speak of the way of the Middle Flowery Land. This is an erroneous view; the world is a great sphere….”33 Unfortunately for the Chinese, they persisted in this nonsense. The Japanese, on the other hand, were facing up to a new truth: “The sun and moon shine on every place alike.”
A word of caution: to say that the Japanese had started to learn something of European science and technology does not mean they were near to catching up. They came into contact with European knowledge at a number of points, but these points wer
e scattered and all of them lay well behind the frontier. Under the circumstances, although the extraordinary commercial and industrial development of the Tokugawa era prepared the Japanese, as no other non-Western people, to receive the lessons and techniques of the European scientific and industrial revolutions, they were still far from conceiving and making such advances.
How far is impossible to say, because the Europeans came and broke open the carapace of isolation, preempting chance and history. The newer historiography rejects a Eurocentric view of world history. It stresses the autonomy and initiative of non-Western peoples and deprecates the older focus on reactions to the imperialist challenge. In the matter of Japan, I sympathize with that point of view, because I believe—no way of proving this—that even without a European industrial revolution, the Japanese would sooner or later have made their own.
Han, Inc.
The image of Japan as a collection of semi-independent units is confirmed by the enterprising han called Satsuma, southwesternmost province, far from Edo and Bakufu control. In 1825, Satsuma’s government was bankrupt. Salaries of retainers were over a year in arrears; grass and weeds grew rank in the han’s compounds in Edo; the big bankers in Osaka refused to lend another cent. In 1831, the han leaders summarily repudiated all debt to local businessmen and effectively nullified obligations to merchants in Osaka and Edo by rescheduling payments over a period of two hundred fifty years.34 Yet twenty years later, the han treasury was overflowing, and merchants were lining up to offer credit.