Economic Growth in Tokugawa Japan

1. Economic Growth inTokugawa Japan Michael Smitka January 2004 Economics 272 Presentation

2. Mid-16th Century Han(“countries”)

3. Issues • was Japan poor? -- standard of living • was the economy static? -- growth process versus political process • institutional, other legacies • Curiosity: merely understanding Edo-era Japan (1600-1868)

4. Modelsnot covered in class • economic growth : • Solow one-sector model • Lewis-Fei-Ranis two-sector model • Solow model is simple production function Y = f (K, L, N, tech) [“N” is land] • technical change is core of Solow’s work • capital deepening is a key factor (incl human capital) • population growth can eat up gains • Highlights role of demographics in a traditional, low-investment economy

5. Other factors besides “hard” tech • organizational & institutional change are both underrated • “Smithian” growth via specialization and trade: “classical” growth in all senses of the word • government provision of infrastructure, other public goods • development of business networks and accepted practices in markets

6. Demographics • population growth can swamp positive factors. • indeed, for most of human history standards of living changed little • how about Japan? -- and if not, why?

7. Basic Historical Overview • breakdown of old Muromachi order • continual warfare during 1500s, • development of techniques: large, musket-using armies made samurai obsolete and were equal to anything the Spanish had • spread of irrigated rice, other new crops (cotton) • diffusion of civil engineering techniques from China enabling much more irrigation

8. Geopolitical context • 1540: arrival of Francis Xavier & diffusion of muskets • Legitimate fears of invasion • Colonization of Philippines • Weakening & Collapse of Ming China • End of endemic war / unification under Oda Nobunaga & Toyotomi Hideyoshi • Trade in silver for silk: no bulk goods

9. enduring pacification under Tokugawa Ieyasu (1600) • Tokugawa shogunate organized in 1603 • Tokugawa Ieyasu & allies won final battle in 1600 • Only controlled 25% of country directly • Large “tozama” han (countries) never conquered • How to maintain the peace? • Foreign affairs • Sankin kotai - hostages, alternate attendance in Edo • Separate samurai from farmers

10. Unification = ? • multiple “kuni” (country?!) • each headed by a semi-autonomous “daimyo” (lord) • variations in laws, economic structure • National cadastral survey was basis of land tax • roughly 250 political-economic units • Most extremely small • Samurai moved to cities: forestalls peasant revolts • Peasants disarmed

11. Growth stimulus? • Tokugawa control system had: • implications for macroeconomic resource flows in a two-sector context • implications for commercialization and monetization of the economy • Lewis two-sector model: forced flows? • Attendance in Edo (Tokyo) forced development of financial system and logistics

12. Government role • the Edo “bakufu” fostered navigation • port and lighthouse development • maps etc. all by around 1720 • formal financial markets promoted • rice futures market in Osaka by 1720 • transferring money in place of in-kind taxes • insurance markets (esp. casualty) • local (rural) finance by 1800s

13. Market-oriented economy • especially intense development in several regions • cash-crop farms around Osaka (farmers bought food!) • large urban consumer market • commercial elite for whom political advancement was foreclosed (cf. English Dissenters) • education spread. • ukiyoe were for mass-market (wedding presents…) • lots of agricultural handbooks - 200+ titles in print

14. Specialization by the “kuni”(export products) • Silk, cotton, salt, lumber, paper, fish • Some regions largely industrial • Seasonal “proto-industry” often accompanied by regional migration • Both men & women active in wage labor outside the home

15. Technical Change • hard to measure industrial level but • very rapid ability to reproduce industrial revolution technology • clear shifts in agriculture • diminishing returns? • demographic evidence mixed for whole country • but not true (??) for “advanced” regions

16. Standard of Living • transformation of consumption • various rough fibers replaced by cotton; silk worn by more than just elite • new (and better foods). peppers, sweet potatoes / taro, corn, etc. • new and better housing: tatami mats off the ground • vast increases in protein-laden soybean-related consumption (miso, soy sauce) • Education • Literate society, perhaps more so than England! • Vast outpouring of books, circulated through lending libraries • Even nascent “western” studies, esp. in 1800s

17. End of Tokugawa rule • 250 years of peace meant hard to forestall Western imperialists • Delicate political balance made it impossible to increase revenue • taxing goods & commerce would create big winners, politically out • Land tax meant fixed government revenues in a growing economy • US Adm. Perry (1854) and Russians in north forced opening of ports • Beefing up military crucial • Personalities ruled out restructuring Tokugawa domestic accord • Lack of national government, lack of standing army no longer tenable • Outside tozama han put together alliance and toppled the Tokugawa family in a nearly-bloodless coup • Only remaining national symbol - the Emperor - used by victors

18. Meiji - Taisho • New “Meiji Restoration” set up a national govt • Tax system • Military • Bureaucracy & education, modeled mainly after Continental rather than American systems • Samurai lost their legal status - but not a big deal, since most were relatively poor if well-educated • Rapid change, building upon base of Edo advances • Luck, too: silk and rice found foreign markets at the crucial initial juncture

19. Geopolitical concernslate Meiji [1868-1911] - Taisho eras [1912-1925] • Korea viewed as key focal point • 1895 war with China (Taiwan as colony) • 1905 war with Russia • Annexation in 1910 as colony • Boomed during WWI as non-combatant • Textile exports, using imported cotton • Subsequent foreign threats (Russia and US) • Naval buildup destabilizing • Control of Manchuria (forestalling Russia) went awry • Ultimately military coups (1934-36) displaced a cabinet system under elected officials

20. WWIIearly Showa (1925-1989) • By the start of full war in China in 1937 • Sophisticated financial system • Large manufacturing base • Universal primary education • Even Nobel award winner in physics • Railroads, other domestic infrastructure • Professional managers in large enterprises • Rapidly shrinking agricultural population • Retrogression through early 1950s: 15 years to return to prewar peak

21. Data • Following slides provide select data and pictures of technology for Edo ear • See library for the period from 1868-1945, e.g. • Economic growth in prewar Japan / Takafusa Nakamura ; translated by Robert A. Feldman,Yale University Press 1983  HC462.8 .N25513 1983   • Cambridge History of Japan, various entries,DS835 .C36 1988   • The interwar economy of Japan : colonialism, depression, and recovery, 1910-1940 / edited with introductions by Michael Smitka. Garland Pub., 1998  HC462.7 .I584 1998   • Japanese prewar growth : lessons for development theory? / edited with introductions by Michael Smitka Garland Pub., 1998  HC462.7 .J385 1998

22. Shipping Routes after 1720

23. Area of Indica(short-grain)Rice Cultivation–early 1700s–darker hatching indicates greater cultivation of indica rice–

25. Kawaguchi Ironware

26. Zaguri (silk weaving machine)

27. Loom (karabikibata) c. 1770

28. Spinning Silk

29. Whale Processing Factory

30. Population Growth Rates Region 1798 1804 1828 1834 1846‘98-’46 Kinki 93.5 93.5 0.0% Tokai 100.1 106.6 6.5% Kanto 85 86.6 1.9% Tohoku 86 88.7 3.1% Tozan 106.1 1798 110.1 3.8% Hokuriku 105.3 -1834117.6 11.7% San'in 118.8 120 129.9 132.7 11.7% 124.8 4.0% San'yo 106.8 109.9 119.8 121.8 14.0% 120.2 9.4% Shikoku 111.7 114.9 123.8 126.1 12.9% 126.8 10.4% Kyushu 105.3 107.3 111.3 112.2 6.6% 113.8 6.1% 1721 = 100 Kinki, Tokai, Kanto, Tohoku, Tozan all fell. 48 years Hokuriku slow growth selected regions, old data

31. Agriculture Outgrows Population

32. Tokugawa Population & Agriculture Area Yield Yield Pop Arable Farm per per per Year (mil) Land Output Pop Pop Area 1600 12.0 20.7 19.7 17.25 1.64 0.095 1650 17.2 23.5 23.1 13.66 1.34 0.098 1700 27.7 28.4 30.6 10.25 1.10 0.108 1720 31.3 29.3 32.0 9.36 1.02 0.109 1730 32.1 29.7 32.7 9.25 1.02 0.110 1750 31.1 29.9 34.1 9.61 1.10 0.114 1800 30.7 30.3 37.7 9.87 1.23 0.124 1850 32.3 31.7 41.2 9.81 1.28 0.130 1872 33.1 32.3 46.8 9.76 1.41 0.145

33. Specialization in AgricultureCotton Production Koga county, Harima han near modern Kobe Irrigated Year fields Dryland Reclaimed Total 1801 0.4% 13.7% 28.5% 8.2% 1807 0.6 15.1 25.2 8.2 1813 3.0 41.5 36.9 17.3 1822 4.3 38.6 36.8 17.4 1832 0.5 34.5 34.8 13.4 1842 2.2 38.6 36.9 16.2 1847 1.5 35.2 35.2 14.5 Note: I find it surprising that any irrigated fields were used for cotton instead of rice! In the 1880s imports led to a sharp drop in domestic output, and production ceased by 1900.

34. Shifts in Family Structure Average for Selected villages Suwa Region, modern Nagano Prefecture Avg. Household Size Avg Couples per Household Year Nishiko Yamaura Nishiko Yamaura 1671-1700 7.87 8.55 1.97 1.83 1701-1750 6.14 9.93 1.41 2.34 1751-1800 4.66 6.94 1.32 2.05 1801-1850 4.22 4.73 1.25 1.37 1851-1870 4.31 4.48 1.20 1.30

35. Osaka as an Entrepot (1714)Principal non-Rice Imports / Exports Imports Exports Marine products 20.2% Oil & beeswax 36.4% Agricultural items 19.5 Clothing & textiles 25.2 Clothing & textiles 15.4 Misc tools 7.5 Oilseed 12.9 Misc exports 7.3 Mining products 7.5 Processed food 6.1 Fertilizer 6.4 Accessories & decorations 5.8 Wood products 5.9 Lacquerware & pottery 4.6 Misc Imports 4.1 Seedcake (fertilizer) 3.4 Tea & tobacco 2.8 Furniture 0.5 Tatami 2.0 Weapons 0.5 Kyoto crafts 0.9 Arts & crafts 0.4% Total (Ag value) 286,561 kan Total 95,800 kan

36. Extent of Cotton CultivationJapan remained able to shift land out of food crops

37. Growth of a National MarketRice Price Movements Converged in the 17th Century

38. Structure of National Output– 1874 – • shortly after “opening” to the West • before significant structural change from • new technologies • convergence of domestic & international prices