On 27 July 1905, the United States Secretary of War met with the Prime Minister of Japan. Both men spoke for industrializing countries with recent military victories in Asia. The potential for conflict loomed, distant but real. Happily, the two statesmen found a solution. In the Taft-Katsura Memorandum, the US recognized Japan’s suzerainty over Korea while Japan promised the same for the US-occupied Philippines. Of course, neither man foresaw how Japan’s trajectory to the summit of realpolitik would culminate in the devastation of 1945. To understand that path, Hiroshi Kawaguchi and Sumiyo Ishii’s recently translated book A History of Economic Thought in Japan: 1600-1945 offers a valuable supplement to traditional military and political history.
Much of the book amounts to an excavation of hidden continuities in Japanese thought through recent centuries, Confucius foremost among them. The authors show how Confucian societies define human nature first in terms of relationships within a hierarchy, as opposed to the Western view more focused on individuals per se. This does not imply an inert consensus, but rather a common set of assumptions for competing schools of thought. The kogakuha school, for instance, emphasized the practical application of Confucian texts to daily life. Across centuries, Japanese thinkers reinvented Confucius time and again, from Tokugawa samurai justifying the rice tax to Meiji academics citing Rousseau and Marx. In 1923, Shibusawa Eiichi, “the father of Japanese capitalism” declared that “I decided to run my business on the principles of the Analects.” In 2021, the Japanese government announced a new ¥10,000 note bearing Shibusawa’s image.
Despite the obvious temptation to judge the past by the present, the authors never indulge in hindsight bias.
Rulers in Tokugawa Japan spoke of the government in moral terms, viewing commerce as a means, not an end. Samurai turned farmer Miyazaki Yasuada (1623-1697) expressed this pragmatically: “Proper behavior is possible only for those who have sufficient food and clothing.” The era encouraged thrift as an expression of virtue, not as fuel for investment. Tokugawa policy sought stability, at the expense of competition and even innovation. “Do not abandon your old business and shift to a new one out of envy for someone making a lot of profit” warned Tokiwa Sadanao (1677-1744). To Ogyu Sorai (1666-1728), inflation came not from currency debasement, but rather from challenges to the social order: “… nowadays, even the inferiors use high-quality goods. Because of this, prices rise due to the shortage of goods.” This conflation of the moral and economic spheres endures to this day in the modern Japanese term for economy, keizai, derived from the term keisei saimin, literally “administering the society and saving the people.”
Despite the obvious temptation to judge the past by the present, the authors never indulge in hindsight bias. Instead, they show that for over two hundred years the Tokugawa regime largely succeeded on its own terms. “Stationary” preindustrial societies made an understandable choice when they opted for stability over innovation. While Japan enforced rigid social hierarchies, the notion of “occupational duty” granted peasants a personal dignity unthinkable to their counterparts in countries based on caste or slavery. Moreover, Tokugawa Japan’s “isolation” is a relative term; the kogakuha school welcomed the benefits of Dutch scientific texts, albeit in Chinese translation.
But after China’s defeat in the First Opium War of 1842, the Japanese began to question the merits of a China-centered worldview, a long process punctuated by the Meiji Restoration of 1868. In Kawaguchi and Ishii’s telling, the Restoration was as much “reorientation” as “opening”. For example, whereas earlier arguments over free trade focused on the demesne, they now assumed that the relevant political unit was Japan as a whole. A modern nation entered the daily lives of its citizens in the form of a new national currency, the yen. While the new regime afforded greater social freedoms for individuals, older obligations remained. Tokyo served as a central hub for education, but many students remembered Confucian notions of filial piety, returning home after college to run family businesses. Those men industrialized Japan, but on their own terms. Muto Sanji (1867-1934), for example, leveraged the idea of occupational duty in creating “Japanese-style management” based on lifetime employment, seniority, and internal promotions. Throughout these tumultuous years, few Japanese forgot the original intent of the reforms: to prevent Japan’s colonization by Western powers. Meiji Japan, like the Tokugawa before it, saw economic policy in instrumental terms, as a tool to achieve larger ends. Japan’s annihilation of the Russian fleet in 1905 at Battle of Tsushima made this aim abundantly clear to foreigners.
From the Japanese point of view, this practical approach allowed them to stand alone as a beacon of independence in colonial Asia. But other ideas had evolved in dangerous directions: the national myth of a divine Emperor, kokutai, took on increasingly ethnocentric connotations. When actions were justified by appeal to the Emperor and not the law, elected governments could not set coherent policy. The early 1930s were the point of no return, as the Great Depression undermined the benefits of economic cooperation with the West, while terrorism and assassination poisoned the political atmosphere. After the Kwantung Army ignited a war with Nationalist China, every emergency justified the next escalation. Eventually, the demand for oil in the hands of Western powers set in motion events that could not be contained.
The authors make a compelling case that the same traits enabling Japan’s rise also led to conflict.
The authors make a compelling case that the same traits enabling Japan’s rise also led to conflict. From 1868 forward, a centralized state looked for any solution at hand to ensure its independence. Men conditioned to respect hierarchy and value loyalty above all else could work towards a common goal, but they could not offer principled opposition. Kogakuha trained leaders who could question means, but not ends.
At the time of Taft and Katsura’s meeting, it was all too easy to mistake accommodation for agreement. Western accouterments had served Japan well, but they concealed major differences in outlook, intention, and priority. Amid rising tension in the Asia-Pacific, these distinctions matter today more than ever.