Political Economy of Japan - Essay Example

Japan Table of Contents Table of Contents 2 Q1. Economic downturn accounted for the erosion of Japanese democracy 3 After Taisho era, it was the economic downturn which helped in emergence of militarists 3 Economic downturn was not an influential factor behind the emergence of the militarists 4 MITI is the only foremost influential factor behind the economic miracle 5 A number of factors were there to make the Japanese economy grow faster 7 Reference 10 Bibliography 12 Q1. Economic downturn accounted for the erosion of Japanese democracy After Taisho era, it was the economic downturn which helped in emergence of militarists In the history of Japan, The Taisho era is mostly from the year of 1912 till the year 1926. Within this era, the political power shifted from the hands of the elder statesmen to the democratic parties and the Diet of Japan. Consequently, the era is known as the time for liberal movement in Japan. Politically, Japan moved towards larger emblematic government. The minimum tax qualification for the voters had been reduced to enfranchise more voters and consequently was eradicated in the year 1925 (Britannica, “Taisho Period”). The democratic environment flourished with the pass of the legislation which was in favor of labors. During this Taisho era, Japan has been able to enjoy the parliamentary government based on British model. The period started with the Hara cabinet and end with fall of Wakatsuki cabinet. During this short span of time Japanese statesmen had tried hard to eliminate war as the instrument to the national policy (Colegrove, “Militarism in Japan’s Foreign Policy”). Japan co-operated in the peace between nations. In the year 1921, the four power including United States, Japan, Britain and France agreed to recognize status quo in Pacific region. These nations had agreed not to interfere in China while it was trying to build a stable government within the country. Japan also made a noticeable contribution by withdrawing its troops from Shandong. This picture was supposed to continue until the economic downturn hit the Japan economy. That time only, militants accused the politicians for being failure to Meiji restoration and consequently called for the change in the country’s policy. As the economy in Japan worsened more, military advocacy gained its popularity. Eventually that resulted in Japan’s aggression in 1930. Economic downturn was not an influential factor behind the emergence of the militarists The Political environment in Japan during the Taisho era has seen the assassination of Hara. The incident had been followed by the non party prime ministers; but still the public were not happy with the economic activities the government was carrying on. Public grew disappointed with the increase in national debt as well as for the new election laws (Shamon, “Taisho Democracy”). Japanese statesman tried to co-operate with western countries and signed an agreement with them not to use war as an instrument of national policy. In the year 1924, America passed the Japanese exclusion Act to keep out Japanese immigrants. This actually led the Japanese have an idea that they are viewed as inferiors by the western countries. This view got much foothold at Versailles when it came out that Europe was not willing to leave its possessions in Asia. So people went very much against the western countries and could not accept Japan’s agreement with those countries. Moreover the militants were in the conception that the war was quite evitable and compromising with the same had been just the wastage of time. Another circumstance was that the military people were not happy and were in idea that the government has submitted itself to the west. They always thought that the Japanese government was wrong in going into an adverse agreement with the west about reducing the size of Japanese navy and military. Another reason was that whichever party was coming into power, there was no improvement in the domestic economic environment. So economic downturn was not an important factor behind the emergence of militarists, but all of the above collectively and consequently resulted in Japan’s aggression in 1930. In Taisho period, Japan’s emergence on the global environment and liberalism within the country is an important history. Still the economies did not get improved much than before. Situation went wrong and gave rise to the annoyance of the people over there. Consequently, militarists got the hold of Japan in 1930s. Q2.The reason behind the post war economic miracle of Japan MITI is the only foremost influential factor behind the economic miracle There happened an economic miracle in Japan following the World War II. During this period Japan had reported record economic growth. The Ministry of International Trade and Industry (MITI) was influential in the recovery of economic environment of Japan in the post war era (Yale University, “JAPAN 1968: A Reflection Point During the Era of the Economic Miracle”). Being established in the year 1949, the roles of MITI include establishing coordination between the industries. MITI formalized cooperation between Japan and the private industry. MITI even helped in increasing the steel production, suppliers of production machineries and enhancing other existing factors which are supposed to be available in-house. MITI also has coordinated most of the industries together towards the fulfillment of economic interest (Stiglitz, “From Miracle to Crisis to Recovery: Lessons from Four Decades of East Asian Experience”). This had also boosted industrial sector by letting the import of technology take the free flow, quite different from the import of other goods. The Foreign Capital Law of MITI had granted the Japanese ministry the authority to negotiate price and the conditions for the import of technology. This authoritative control had allowed Japan to promote promising industries (Johnson, “MITI and the Japanese Miracle: The Growth of Industrial Policy”). The lesser cost of technology, which had been imported from other countries, allowed the industries to increase their economies of scale. Hence, consequently, it contributed to the swift industrial growth. The quality of the products had been quite enhanced by using new improved equipments. Industries also had increased their standardization processes by using the enhanced imported technology. So these all, collectively, had contributed towards the economic growth of Japan. MITI gained the authority to regulate the imports of products or services with the abolishment of Foreign exchange Control Board and Economic Stabilization Board in the month of August, 1952. In such a course MITI got the full authority over all imports of Japan (Wade, “Governing the Market”). Even deciding upon the foreign exchange budget had been also provided to this ministry. The institutionalization of Japan Development Bank left the private sector with more capital which was available with a lesser cost of capital. This was very much important from the long term growth of the organizations in Japan. The bank introduced access to fiscal investment and made different loan plans available for different promising Japanese companies. The whole plan is known as Fiscal Invest and Loan Plan (FILP). This encouraged a substantial pooling of individual as well as national savings. At that time FILP used to control four times of the savings of the largest commercial bank of the world. Enabled with the financial power, FILP was providing service to much higher number of Construction firms in Japan. So these all evidences prove that MITI was the only important and influential factor behind the economic growth of Japan. A number of factors were there to make the Japanese economy grow faster A number of factors have contributed towards the economic growth of Japan. World war had ruined its economy and killed millions of Japanese. Around forty percent of its capitals stock had been destroyed by this world war. As so many capital stocks had been shattered, the rate of return went on high. This scenario has encouraged more people to invest in as they would get much more incentive as the higher rate of return. Companies got the opportunity to accumulate more capital. Lower echelon of privilege seeking had also helped Japanese economy to grow. Privilege seeking groups happened when the group tried to get privileges from the government. In such cases lower economic growth happened to take place. During World War II, the privilege seeking groups broke down in the countries which happened to get impacted badly by the world war like Japan. This improved the economic growth rate in Japan. Groups took much more time to reorganize and started to seek privileges. Meanwhile, the Japanese economy grew faster. Japan government had encouraged the people to save more by introducing less taxation on savings. Thus much more incentive was available to the Japanese to enhance their savings. In addition interest on first thirteen thousand dollars was tax free and thus people to have multiple savings accounts. Special tax treatment was surely a factor encouraging the higher level of savings and investment. The overall environment of less taxation and more economic freedom has provided more incentive to invest. The idea that MITI was an influential factor behind the economic growth in Japan did not bear closer inspection. Any industrial policy which has been prompted to promote any industry is supposed to be brought out a rule against the other one. Industrial policy rigged the market policies to enhance some industries at the cost of other industries. MITI was surely no exception (Henderson, “Japan and the Myth of MITI”). In the year 1950s, MITI tried to stop a small firm from attaining production rights from the company, Western Electric, to manufacture semiconductors. The firm carried on and eventually got the hold of that production technology. The firm, Sony, became one of the most successful organizations in consumer electronics. This ministry had also attempted to prevent companies into the automobile industry from moving into export market and tried to enforce ten of them to merge into two organizations, Toyota and Nissan. This attempt had been failed and the automobile industry had emerged as one of the most successful industries of Japan ( Powell,” State Development Planning: Did It Create an East Asian Miracle”). Many examples are there that MITI has discouraged many attempts of the companies; still some companies emerged as one of the successful companies in Japan. Although there would be a few number of companies which were encouraged by MITI and now emerged as successful names, but that alone did not show that MITI had been behind their profitability and success. These companies might have done well even without the subsidy. One can not be able to demonstrate that the favorable approach of MITI towards these particular industries had been proved good for the economy. The industries, avoided by the industrial policies would have been better representative of the country’s competitive advantage as they would have attained their resources through a proper competitive environment without blessed by the government influence (Powell, “Japan”). Debate can go on long and long. There were many factors which made Japan rise; but the main strength of those factors lied in the occurrence of those within the economy almost at the same time. All the factors collectively helped in the enhancement of the economic growth in Japan. Reference Britannica. No Date “Taisho Period”. 9 February, 2010. . Coligrove, K. 1941. “Militarism in Japan’s Foreign Policy”. 9 February, 2010. . Henderson, D. “Japan and the Myth of MITI.” New York: Warner Books, 1993. Johnson, C. MITI and the Japanese Miracle: The Growth of Industrial Policy, Stanford: Stanford University Press, 1982. Samon, K. Taisho Democracy. Tokyo: Yoshikawa Kobunkan, 1994. Powell, B. No Date. “Japan”. 9 February 2010. . Powell, B. “State Development Planning: Did It Create an East Asian Miracle.” Review of Austrian Economics 18, no. 3 (2005). Stiglitz, J. From Miracle to Crisis to Recovery: Lessons from Four Decades of East Asian Experience. New York: Oxford University Press, 2001. Wade, R. Governing the Market. Princeton: Princeton University Press, 1990. Yale University. 1996. “JAPAN 1968: A Reflection Point During the Era of the Economic Miracle”. 9 February, 2010. . . . Bibliography Hamori & Kitasaka.The business cycle in post-war Japan: an empirical approach. Newyork: Nova Science Publishers, 1996. Gordon, A. Post war Japan As History. London, University of California Press, 1993. The business cycle in post-war Japan: an empirical approach Herbener, J. “The Rise and Fall of the Japanese Miracle”. . Takashi, I. and Daniel I. The Political Economy of Japan. Stanford, CA: Stanford University Press, 1988. Olson, M. The Rise and Decline of Nations. New Haven: Yale University Press, 1982. Powell, B. “Explaining Japan’s Recession.” Quarterly Journal of Austrian Economics 5, no. 2 (2002): 35–50. Stiglitz, J. “Some Lessons from the East Asian Miracle.” World Bank Research Observer 11, no. 2 (1996): 151–177. Whitehill, A. Japanese management: tradition and transition. London: Routledge, 1991. World Bank. World Development Indicators Online. 2010. . Read More