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Consider Japan

Chapter II

Not So Exceptional Case

Any transient foreign visitor writing about Japan is immediately faced by a major apparent difficulty. The psychological make-up of the ordinary Japanese, individually as well as en masse, is said to be very different from that of most westerners; all old Japan hands hasten to impress that on the visiting greenhorn, the older and wiser the hands the more forcibly they say it. And in at least one respect which impinges upon economics, the old hands seemed to this transient observer to be transparently and palpably right. Without paying any instinctive credence to Kipling’s hoary nonsense about east and west, it is worth devoting two paragraphs to discussing it.

For a variety of historical and sociological reasons there does seem to be a sort of inbred collectivism in the Japanese people, whose outward manifestations (this is a wild over-simplification) bear some caricature-like resemblance to the atmosphere in the heartier English public schools. This atmosphere, disconcertingly for the visiting analyst, can overlay the attitude of the Japanese worker (as well as the Japanese executive) in the more successful industries to his job: up the old firm; Mitshibushi Heavy Machinery Plant for ever; act as a fag in your first few years, expect to get greater privileges later; take your hands out of your pockets when passing the headmaster, and expect in return to be treated by him as one of “my people” to whom he has a special responsibility in times of trouble; feel a genuine personal involvement in the factory’s production record and other collective achievements; actively prefer to live together cheek by jowl and to spend a lot of your leisure time in group activities (often of a self-improving sort) sponsored by the firm. The song with which workers and executives of the giant and prosperous Matsushita Electrical plants willingly begin their day has already been widely publicised around a slightly incredulous world (see Time magazine, February 23rd, 1962):

For the building of a new Japan,
Let’s put our strength and mind together,
Doing our best to promote production,
Sending our goods to the people of the world,
Endlessly and continuously,
Like water gushing from a fountain.
Grow, industry, grow, grow, grow!
Harmony and sincerity!
Matsushita Electric!

One cannot quite see the Ford workers at Dagenham singing that.

On the other hand, one cannot see the workers of a declining industry in Japan singing it in willing unison either. On the contrary, Japanese coal miners – to cite the most obvious example of workers in a major but non-expanding industry – have fought some of the bitterest and most violent strikes against their employers in any country since the war; one postwar strike lasted through twenty-two months of the very reverse of peaceful picketing. The Japanese are not nowadays a people who are naturally servile to authority, or who are so silly as actively to enjoy hard work; they just enjoy the group aura arising from success. In consequence, many of them tend to go to extremes in both their group enthusiasms and their group apathies, in both their group likes and their group hates. So long as the policies of a business enterprise or of the government are breeding success, this collective enthusiasm helps to keep success rolling along; if the success story for some reason stuttered abruptly to a stop, nobody can easily tell what would happen, but conceivably the falterers might find that they were holding tigers by the tail.

But the main question to be probed in this survey is how and why Japan has achieved an almost consistent success story of economic expansion in the last decade. For that purpose the advantages and disadvantages (for there have been some real disadvantages) arising from Japan’s peculiar sociology and habits of group loyalty can justly be regarded as additional accelerators and brakes, rather than as the main motive power. The journalistic method used in this survey will therefore generally be to hive off discussion of these special Japanese sociological factors and employment customs into short and separate descriptive chapters – such as Chapters III and IV which follow – wherever such descriptions seem necessary. The main body of argumentative chapters such as this one will then be freer to push forward with analysis of what your correspondent believes are the lessons of Japan’s experience that are directly applicable for policy-makers in Britain; and, in reverse, of the lessons – all too often warning lessons – of Britain’s recent economic experience which could usefully be noted by today’s policy-makers in Japan. The only “exceptional” circumstances of Japan’s economy which will be noted in this chapter will be exceptional circumstances of what might be called a conventional economic sort. The main body of our text will be dressed in western clothes; only in those chapters that might be deliberately listed as descriptive (Chapters III, IV, VII and X) will we, so to speak, don Japanese factory uniforms and kimonos.

Sticking, therefore, strictly within these terms of reference, one had better admit straight away that Japan possesses one conventional economic “advantage” which explains why it should indeed be able to expect a faster rate of growth than would easily be possible in present-day Britain. This “advantage” is that Japan is still only part of the way forward to being a wealthy and fully developed industrial economy as yet. All statistics about social and industrial conditions in the Japanese economy must be treated nowadays as evanescent approximations, because the pace of progress is so great as to render them, with each half-year that passes, drastically out of date. But, making the best extrapolation one can from the last industrial censuses, the workers of Japan – whose per capita national income in 1961 still averaged only about two-fifths of Britain’s – can fairly reasonably be divided into three broad groups.

Perhaps more than a tenth of the total labour force of 45 million (about 27 million men, 18 million women) work in factories and other productive establishments that are as efficient as any of their kind in the world, and they are beginning to enjoy a standard of living which is therefore broadly (even if not yet quite) in line with that level of productivity, at any rate when the extensive fringe benefits offered by all the big Japanese firms are included. To this upper tenth will belong perhaps the upper one-fifth of Japan’s 21 million “regular workers” in non-agricultural industries.

Perhaps over another quarter of the 45 million work at jobs where their productivity and living standards, although below those in the most modern sector, are still definitely of western rather than Asian status. After all, we are talking here of a country where more than 45 per cent of households (over 60 per cent in the towns, over 25 per cent in the countryside) now possess a television set and where over 17 per cent of urban households possess a refrigerator.

But all this must still leave more than half of Japan’s 45 million workers in jobs where their level of productivity (and thus of earnings per hour) is less than half of that in the great modern combines. This depressed half must include the majority (though not nowadays all, see Chapter 1V below) of Japan’s huge army of 22 million small-scale self-employed men and “unpaid family workers.” Most of these “family workers” are the country’s 15 million farmers and fishermen, and its 1½ million small shopkeepers and petty traders; but other family workers still sweat their whole lives out in Japan’s 400,000 “very small” (under 10 workers each) industrial “workshops” which really consist of two or three lathes set up in some family’s living room. The depressed half of the labour force will also include Japan’s most miserable employed industrial class of a million or so ageing day labourers (average cash earnings in 1961, about 12s a day); and many even of the regular workers in Japan’s mass of small but genuine industrial establishments with between 10 and 100 workers each, in which labour productivity per worker – in sharp contradistinction to Britain (see the accompanying table and note) – is still generally less than half of that in the big factories with 1,000 workers or more.

WAGE AND PRODUCTIVITY INDICES BY SIZE OF PLANT

(Over 1,000 workers = 100.

Number of Workers

Japan (1958)

Britain (1949)

Added Value per Worker

Wage per Worker

Added Value per Worker

Wage per Worker

4-9

27.0

37.9

----

----

10-50

36.4

43.9

91.4

82.5

50-99

47.9

50.4

93.8

83.7

100-499

64.6

61.2

96.4

85.5

500-999

76.8

75.2

98. 1

89.3

Over 1,000

100.0

100.0

100.0

100.0

Note. - The figures for Britain are worked out from the manufacturing census of 1949, but relativities between big and small films are unlikely to have changed much in the meantime. Figures for Japan refer to 1958. In the last few years wages-and particularly starting wages for scarce teenage workers-have risen even more quickly in Japan's small firms than in its big ones, but the gap between total productivity of all workers in big and small firms has plainly remained.

The scope for expansion in an economy of this sort is therefore very large, merely by switching workers from the wildly unproductive sectors into the much more productive ones. The problem is notably different in degree from that in Britain. But it is not entirely different in kind. Even in Britain, as figures now published regularly by the Ministry of Labour make clear, average male workers’ earnings in new and modern British industries (ranging from motor-car manufacture through machine tools and most other forms of engineering to such things as detergents and synthetic resins) are regularly between 20 and 35 per cent higher than those in older-sounding industries like textiles (other than the new man-made fibres) or leather goods or footwear or brushes and brooms. These differences are by no means wholly due to differences in innate levels of skills. One of the advantages for a westerner of studying an economy like Japan’s is that it makes it abundantly clear how far modern economic progress depends on switching workers out of the second sort of job into the first.

It also suggests that the pace at which the advance can be effected depends mainly on the answers that can be given to three questions:

  1. Whether the modern sector of industry has an incentive and a mood, and is backed by the kind of government economic policy, that encourage it to play an ever bigger and more expansive part in the national economic life;
  2. Whether the purposeful expansion of marginal domestic demand – which is the only means by which these modern sectors of industry can be spurred on to grow – is then liable to run the country into intermittent balance of payments crises; and if so whether the government can find ways of countering those crises without cutting domestic demand back too grievously and for too long;
  3. Whether the social and economic mechanism for encouraging switches of labour and other resources out of the old-fashioned sector into the modern sector works smoothly and well.

The answers to these questions in Japan are that the Japanese government, either by good fortune or good management, has so far solved the first two problems that of providing incentives for efficient growth industries to grow, and that of riding past its successive balance of payments crises (in 1953-54, 1957 and 1961.) without losing its dynamic of growth – with more brilliant success than in any other country in the world.

The answer to the third question is that Japan’s social structure and habits could not have been more appallingly devised to make a switch of resources out of the least productive sectors of the economy into the big growth industries more difficult. This is because of the system of lifetime employment and “no new regular jobs for old men” (old meaning anybody over 35) described in the next chapter. This strange employment system explains why Japanese industrialists genuinely claim that they too have been operating in conditions of labour shortage and “over-the-brim-full employment.” It makes Japan’s achievements in securing an average of over 9 per cent of expansion each year all the more remarkable – and its method of running its economy to achieve this all the more worth studying in the West.

We will be returning to our argument about the positive lessons of Japan’s economic experiment in Chapter V. Meanwhile, the next two chapters will describe the strange employment system which Japan has inherited, and. briefly assess the standard of living which its people have by now attained.

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