Japanese Economies

Traditional Economies of Japan

Japan’s medieval era stretched from roughly 1185 to 1600 CE. During this period, its economy was largely agricultural and organized along feudal lines. Like medieval Europe, the peasant base of Japan worked land owned by the nobility. They gave up a portion of their crops to their lord, who in turn paid taxes and tributes to his superior. They typically paid in rice, a form of currency. Lords sometimes claimed up to half the rice yield for themselves.

The majority of people in Japan at this time were farmers, but trade and businesses did exist. In fact, some of the oldest businesses in the world can be found in Japan. Certain family-owned inns, construction companies, and sake brewers have survived over a thousand years of service. Like the noble clans, merchant families sometimes adopted more qualified heirs to inherit their business.

In this way, the wealth of the land trickled up to the courts of the shogun and emperor. The daimyo of the early feudal era were relatively independent. By the Edo Period, however, the Tokugawa Shogunate controlled vast territories and military resources. Most foreign trade was conducted with China. But in the 15th century, China’s Ming dynasty began enacting bans on sea trade. This policy caused widespread Japanese and Chinese piracy, known as the wakō. Contact with European merchants in the 16th century brought further complications to Japanese trade. Portuguese traders worked with the wakō to ferry luxury goods between Japan and China.

Sakoku and the Edo Period

The Tokugawa Shogunate implemented several major economic reforms in Japan. Like the Ming dynasty, it attempted to minimize foreign interference through a policy of isolation called sakoku. This was primarily a response to Christian missionary efforts in the country and their ensuing riots. Sakoku did not cut off all contact with the outside world. Trade with China and the Dutch continued from 1638 on the island of Dejima.

The daimyo valued their territories in terms of rice production, and they used units of rice to pay their samurai and other servants. Coins held little value in comparison. But as cities boomed around their castles and estates, the feudal economy struggled to keep up. Luxury items from China required the exchange of rice into Chinese coins. New economies developed in cities like Edo, Kyoto, and Osaka, which soon outpaced the rice-based incomes of the daimyo. Mines opened to extract metals like copper, silver, and gold. Lured by the promise of coins, peasants began growing more commercial crops like tea, mulberry leaves, hemp, lacquer, and indigo. While the merchants grew wealthy, the daimyo and their samurai lost status.

Trade in the Meiji and Taishō Eras

The Tokugawa Shogunate reversed sakoku in 1854 under military pressure from the United States. This opened Japan up to other trade agreements, which threatened to destabilize its economy. The rapid changes brought the end of Tokugawa dominance. The Meiji Restoration that followed ushered in industrialization on a massive scale and the gradual loosening of feudal social norms.

Instead of isolation, the reformers of the Meiji era sought to meet the rest of the world on an even footing. The Japanese sent students abroad, where they rapidly absorbed new ideas and technologies. These advances were incorporated into Japan’s existing economic structure. The Meiji government built new infrastructure, increased access to education, and funded a military presence that demanded respect. The empire expanded into the mainland, annexing Korea and parts of China as colonies.

Modern Economics of Japan

During this unprecedented growth, Japan remained vulnerable in a few key areas. Most important was its oil supply, which fueled its navy and commerce. Because Japan has little to no oil reserves, it relied on costly imports. The empire tried to relieve this problem by invading French Indochina, with an eye on the oil of the Dutch East Indies beyond. The United States responded to this aggression with an oil embargo, prompting the Japanese attack on Pearl Harbor in 1941.

World War II, or the Pacific War, ended much of Japan’s private commerce and led to high inflation within the country. The empire moved to conquer the East Indies early on, ensuring a stable supply of oil to wage war across the Pacific. The war ended with the destruction of Hiroshima and Nagasaki, two major manufacturing centers, with atomic bombs in 1945. Japan was left to unconditional surrender. It lost its colonial holdings and self-governance for several years after the war.

Within a decade, however, Japan’s economy began to rebound. The Korean War proved to be a valuable economic opportunity for the country, which hosted US military bases and their personnel. The quick boost to Japanese industry propelled it into decades of financial prosperity. Through an “economic miracle,” Japan grew to be the second-largest economy in the world between 1978 and 2010. It is now the third- or fourth-largest, competing with India, China, and the United States. Its major industries include automobiles, electronics, manufacturing, textiles, and processed foods.

References

Allen, G.C. A Short Economic History of Modern Japan. Routledge. 2013.

Brown, Delmer, Ed. The Cambridge History of Japan. 4 vols. Cambridge University Press. 1988.

Farris, William Wayne. Japan to 1600: A Social and Economic History. University of Hawaii Press. 2009.

Friday, Karl. Routledge Handbook of Premodern Japanese History. Taylor & Francis. 2007.

Henshall, Kenneth. Springer. A History of Japan: From Stone Age to Superpower. 2012.

Imamura, Keiji. Prehistoric Japan: New Perspectives on Insular East Asia. University of Hawaii Press. 1996.

Perez, Louis G. The History of Japan. Greenwood Publishing. 1998.

Tamkin, Emily. “Why Are So Many of the World's Oldest Companies in Japan?” Slate Magazine, Slate, 20 Oct. 2014, slate.com/business/2014/10/worlds-oldest-companies-why-are-so-many-of-them-in-japan.html.

“The World Factbook: Japan.” Central Intelligence Agency, Central Intelligence Agency, 17 Oct. 2018, www.cia.gov/library/publications/the-world-factbook/geos/ja.html.

Walker, Brett L. A Concise History of Japan. Cambridge University Press. 2015.

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