5.0 out of 5 stars
From worst to first, March 28, 2010
During the Meiji period, the Japanese economist Yukichi Fukuzawa had a problem. He was translating a European text, but there was no Japanese word for "competition." Although just a footnote in Christopher Howe's "Origins of Japanese Trade Supremacy,' this anecdote raises all sorts of questions. Such as, is it true? Or, if so, what went through the minds of Japanese people when they were doing competitive things, like fighting wars?
Be that as it may, whether they could say it or not, the Japanese proved to be the most impressive economic competitors in history when they set to it. From a standing start, they methodically took over one sector after another: cotton textiles, steel, optical equipment, electronics and so on. According to Howe, Japan's two centuries-long seclusion from most of the world turned out to set the country up for breakout, even though it set the Japanese back two centuries in understanding of the physical world. It turned out, that could be made good more quickly than some other components of economic success, such as understanding markets.
During the Tokugawa period, at peace within and without, Japan built up its agriculture, its internal trade networks, its banking, its attitude toward making wealth. When the West broke in, the Japanese had "a vast accumulation of social, commercial and technical skills that found new outlets when conditions were ripe."
Although Howe does not unduly elevate them, two were probably more crucial than others, if we make a comparison (that Howe does not make) with Sweden, which went from poorest country in Europe to almost the richest in the world during the same period: literacy and a long heritage of metal-working industry.
It is also significant that the Japanese thought through what they wanted to do, instead of -- like laissez faire England -- rushing off madly in all directions at once. Laissez faire served England well for a while but when other countries caught up, or even surpassed, England in technique, laissez faire proved of little value.
The Japanese program of concentrated, planned, step by step conquest of one market after another proved superior in the long run. Howe notes some mistakes (especially in central banking), but overall, Japan's leaders proved to be good pickers.
They also determined not just to catch but to leapfrog past the advanced economies. Generations before Edwards Deming taught them statistical process control and the philosophy of continuous improvement, the Japanese were already doing it. "Almost from the beginning, Japanese adaptations of western technologies involved significant innovations in the overall system of factory operations."
And the Japanese were not content to stand pat. Significantly, in the `30s, when Japan completed the destruction of England's textile sector, it did it by importing English ring-spinning machinery and moving to almost 100 percent ring spinning. England, at the same time, was only 25 percent converted to ring spinning. Later, after the close of this volume, which takes the story only to 1937, the Japanese pulled the same trick on American steelmakers.
There was deferred gratification involved. The Japanese did not borrow to consume, and so they escaped the fate of, say, Egypt and did not fall into the hands of foreign bankers, even though Japan ran a steady trade and current account deficit all through the modernization period covered by Howe. At times it was touch and go.
The Japanese also simply worked harder. They segmented markets minutely and were willing to go after small jobs. This is still true. A few years ago, a large business in my county wanted a supplier of printed can lids. Although the few remaining American steelmakers were crying piteously to Congress for assistance to keep them going, not one even bothered to submit a bid. Although the contract was not very large, a giant Japanese steel company did not find it beneath itself to go after it.
Howe cites the efforts of the Japanese to develop the Manchurian soybean business. With no roads, the only way to get beans was for small commercial travelers -- who necessarily spoke the local language -- to toil from village to village, buying from peasants. "Finally, and perhaps most important of all, there is the paradigmatic image of the pre-war Japanese businessman -- the Mitsui soya bean buyer on the rutted Manchurian roads -- progressing slowly but never giving up."
No other country's businessmen thought it worth the effort.
However, leaving aside the field of economics, where the Japanese were supreme, the country also had to cope with politics, and there it met disaster. The first two sections of "The Origins of Japanese Trade Supremacy" deal with triumph after triumph. :The last third, about the empire, shows how non-economic leaders (the army) threw it all away. It is the true accolade of the Japanese businessman that even after that, he came back, no longer riding a pony, to slowly, patiently reconquer the world of international trade in the second half of the 20th century.
Howe summarizes a tremendous amount of primary data in hundreds of charts and figures -- the Japanese kept careful records of what they were doing -- but some of his passing remarks seem to me to explain more than the charts. His reading is extremely wide. He quotes a western art historian (Langdon Warner) writing of a period in Japan long before Howe's era about attitudes toward production of sculpture and comments: "Dedication to techniques for the perfect crafting of physical objects has deep roots in the Japanese psyche, going back to the eighth century."
The Japanese delivered quality, because they believe it to be possible. There were (and are) other premodern Asian cultures whose craftsmen are as deft as the Japanese. Afghans, for example. But they had (and have) a different attitude to quality. Afghan rug weavers deliberately put in small imperfections because, as they say, "only God is perfect."
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