In August 1945 an exhausted and war-exhausted Japan accepted the terms of the surrender imposed by the Allies and, by imperial edict, laid down its arms. For the first and only time, Japan was occupied by Allied troops under the control of the United States, until April 1952.
As a consequence of World War II, Japan lost 42% of national wealth and 44% of industrial capacity - energy, facilities, machinery, etc.
Demobilized military personnel and returning civilians, on the one hand, exacerbated ruin and hunger and, on the other hand, immediately joined the workforce, more than covering the labor needs for economic reconstruction during the first stage of the post-war period.
For a few years after the defeat, the Japanese economy was almost completely paralyzed with severe food shortages, rampant inflation, and the effects of a widespread black market. The country had lost all its overseas territories, while its population surpassed the figure of the 80 million, plus around 6 million returnees who came from abroad. Domestic demand declined with the interruption of military purchases and foreign trade was restricted by the Allied Occupation Forces.
The Japanese people undertook the task of rebuilding their war-torn economy, and the North American occupation was only concerned with demilitarizing and democratizing Japanese society. It did not bear either the cost of repairing the damage or the elaboration of a strategic policy for economic reconstruction.
In a relatively short historical period, Japan managed not only to rebuild its economy, but to become one of the most important industrialized nations in the world today. In this, state economic regulation and industrial policy designed for reconstruction played a fundamental role.
The Japanese bureaucracy issued the document "Basic Problems for the Reconstruction of the Post-War Japanese Economy", as early as 1946. Here it was argued that Japan should follow an intermediate model between socialist planning and capitalist institutions; the laissez faire period had passed. Now, in the period of state capitalism, Japan was on the border of two systems, it had to be a political and economic intermediary between blocks.
With the new constitution of Japan (1947), the emperor was stripped of his sovereign power and replaced by a parliamentary cabinet. The operating context of Japanese capitalism was designed by the political reform of the allied nations after the Second World War. This reform covered areas such as: land, education, union protection, demilitarization and the dissolution of the zaitbatsus (grouping between companies).
Such projected changes were put into practice with greater force and idealism by the Japanese than by the Americans themselves. The new program gave rise to two concepts that were to play an important role in the further development of Japanese capitalism: equality and competition.
The aforementioned reform applied to Japan in this period considered the following issues:
1. An agrarian reform that promoted greater equality: eliminated landowners who did not use their land and created the class of farmers who owned the land they cultivated.
During the immediate post-war period, a massive hunger was evident. The United States was considered to be the most democratic country in the world, having given land to those who did not have it, took wealth from the wealthiest and distributed it to the people. The North American occupation created favorable premises, especially with the agrarian reform, as a mechanism for transferring the economic surplus towards industrial reconstruction.
2. The establishment of a new civil code for equality between men and women.
3. An educational reform that also had an important impact. The new system, based on North American models, established nine years of free compulsory education and three more optional years of secondary education. Those who had the right skills and paid the modest educational fees could graduate from college.
4. The establishment of democratic reforms: including: freedom of assembly, association and expression, including the Communist Party; abolition of Shintoism, as an official religion; and freedom of worship.
5. The dissolution of the zaibatsus that fostered competition, since the business size of the Japanese industry decreased and small and medium-sized companies emerged, which had to fight fiercely among themselves to achieve a greater number of sales. The objective of the United States to eliminate the zaibatsus was to disintegrate the military power to prevent Japan from gaining strength and fighting against them.
In 1949, the Ministry of International Trade (MCI) and the Council of Commerce were extinguished and the Ministry of Industry and International Trade (MITI) emerged. The MITI Business Department was established with the objective of strategically developing the country's companies and creating a favorable environment for competition; In other words, the State directed its regulatory action as the maximum responsible for competition and the development of companies. The last MCI minister was the first from MITI: Inagaki Heitaro.
After the war there was little supply of capital and interest rates were consequently high. However, the Government made it possible for companies with more futures to obtain funds at extremely low interest rates. As a rule, these companies oriented their production towards the external market.
Banks channeled the accumulated capital to lend it to strategically important industries, supported by the Bank of Japan credit guarantees. In addition, the Government offered important tax concessions to export earnings, while establishing the acquisition of technology as a national priority.
Foreign currency was in short supply for many years after the war, but the authorities took advantage of these circumstances for exporters to obtain special allowances.
The MITI Enterprise Department prepared the new policy for industrial rationalization based on induced competition:
1. Full exchange control on technology imports - the power of selection of industries for development.
2. Preference financing.
3. Tax exemptions.
4. Protection against foreign competition.
5. Authority to order the creation of bank-based industrial conglomerates (new zaibatsus).
6. Institutional apparatus for rationalization policy and incentives.
In the first years after the war, due to the shortage of materials, the factories produced practically nothing and to sell what little they produced they had to compete on price and quality, that is, they had a very strong environment not only external, but also internal.
Companies that failed to cut costs found themselves without customers. This pressure caused a real revolution in business planning.
The MITI Business Department contributed greatly to making the company's paths to national and international competitiveness more flexible. Everyone could hope for victory if they worked hard enough to beat the competition.
The characteristics of the internal environment created by the Enterprise Department were the driving force that guided the nation's economic development in the postwar period. These were as follows:
1. A demanding protective state.
2. The conditions of the competition were not the result of laissez faire; the risk was reduced for the capital with greater concurrence.
3. A concentration in certain companies to: achieve an industrial restructuring; facilitate technology transfer; guarantee the long term, as a criterion; and address internal priorities and external threats.
The functions of the Business Department were:
1. Prepare the policy of business restructuring and rationalization on the basis of fiscal, credit and infrastructure development measures.
2. Promote business cooperation on issues such as: sharing technologies; achieve specialization in production lines; jointly use resources and warehouses; and consult investment plans.
3. Coordinate the joint actions of the sectoral businessmen's associations to protect against foreign competition.
The selective nature, as the MITI Business Department protected industrial development and covered the entire economic cycle.
The Industrial Rationalization Council, created in December 1949, promoted during the 1950s a common business culture with an emphasis on scientific administration. Business life focused on administrative practices and not on the arbitrary preferences of capital owners.
Induced competition meant that this competition always occurred in the context of rationalization, selectivity, with national productive conciliation. MITI promoted rational administrative practices, for example:
1. Models for salary and promotion systems.
2. Models for organizing workplaces based on increased work intensity.
3. Models for training employees and cadres.
MITI could block access to foreign currency - Foreign Capital Act, 1950 - of any firm it deemed to be wasting valuable resources. With the Foreign Capital Law, a Foreign Steering Committee was established, which determined that any foreign investor with licenses, patents, etc., must be authorized by this Committee. The MITI Business Department assumed this responsibility.
When MITI was accused of being monopolistic, it argued that it only asked for cooperative behavior, that is: to share technology; limit production lines; jointly use the warehouses for raw materials and finished products; and make inquiries about investment plans.
The selective nature of accelerated growth from 1955 to 1990 was manifested in the following basic policies:
1. Protectionist industrial policies of induced competition.
2. Tax policy to promote savings and investment.
3. Isolation of the internal market from foreign influence.
4. Financial structure policy (preferential credits, etc.).
The relevant role played by MITI and its Enterprise Department in creating a very competitive internal environment that “trains” the national company for international competition can be appreciated. Therefore, this form of state protection can be identified as induced competition.
Role of the State in creating the movement for productivity and quality control circles
The state created the productivity movement in the first half of the 1950s with the help of the United States Government.
The three principles of the movement were the following: cooperation between the people and the Government; cooperation between employers and workers; and distribution of benefits derived from increased productivity.
In August 1952, the Association for Industrial Education was created with the aim of strengthening ties between private capital and communities.
In June 1954 the Cooperative Council for Productivity was founded; private industry launched into that movement. The Japan Productivity Center (NIHONSEISANSIMONEU) was established in February 1955 and is still a key institution. A Productivity Council was created to serve as a link between the Center and the Government.
In September 1955 the Union of Private Companies (DOMEI) joined the movement for productivity. The following year, NIKKEIREN - Japan's most influential federation of business associations insisted on the need to improve technology education and published a lengthy document: About Technology Education to meet the needs of the new era.
In December 1957, MITI published The Bank Book on Industrial Rationalization, in which specific activities were promoted to increase productivity, closely linked to engineers in private companies. There was a strong relationship between business associations and the State to promote not only industrial reconstruction, but also induced competition.
In 1957 the Japanese Ministry of Education (MINEJ) implemented the plan to increase the number of science and technical students. Then begins the boom in science and engineering careers. In February 1959 the Science and Technology Commission (for strategic research) is founded.
From 1960 to 1970
Quality control circles, the mutual consultation system and the engineer system emerged in the 1960s. During this period there is a massive incorporation of engineers into companies in close collaboration with factory workers and with the flow of information. to the research and development office.
During these years reverse engineering was intensively promoted in Japan, with which substantial improvements were achieved over imported technology applied to production processes, as well as a rise in product quality.
As of the 1960s, research and development institutes began a search to apply these technological advances to new products and processes.
Role of the emergence of "the three jewels" of Japanese management
The struggle of the labor movement forced capital in alliance with the state to make changes in labor and human relations in companies, with which the salary with seniority, employment for life and the union for companies became general, called “the three jewels “of Japanese management.
Seniority salary: Workers' wages rise annually, according to the time they have been in the entity, if they satisfactorily comply with the plans and tasks assigned each year. This type of salary reaches its maximum when retirement occurs, which stimulates staying in the center and reinforces job stability.
Employment for life or long-term: The annual rate of transfer of workers is only 16% and workers in general are isolated from the foreign labor market.
This trend is closely linked to the seniority salary system in which employees with more time in the dam receive more wages. In this way, workers depend more on the company and place great importance on the company getting ahead.
In addition, lifetime employment means that a major company or government agency hires once a year, in the spring, when youth graduate from high school, high school, and college. A large firm employing only "newbies" hires a long list of new employees at once, even if they don't have jobs for all of them right away.
Promotions depend entirely on the internal policy of the company and a person who has spent one, five or twenty years of service in one company will not be employed or even considered by another. Once hired, the new employee retains his job until the mandatory retirement reaches the age of 55.
None will be dismissed unless they commit a serious crime.
A dismissal is a harsh sanction, as the individual who has been relieved of his job has no hope of finding employment in any company of the same category and must, therefore, resort to either a smaller company, which pay lower wages and offer little security, or choose to return to your hometown.
Union by companies: It is the basis of the strategy to increase the intensity and productivity of work and compete for the extraordinary profit that the company supposedly will share "fairly" with the workers.
The workers of the different positions and class of work participate in the same union in the company. Through union organizing by companies, a conciliatory tendency is fostered between unions and companies. The union leadership tends to accept business proposals without appealing to strikes, because it gives more importance to the good running of the company than to claims for salary increases.
Sometimes union leaders rise to the management of the companies, because their ties to the union can dominate it better, they do not strongly propose the worsening of working conditions, such as: rationalization of personnel due to dismissal, inadequate placement of workers in new jobs, the decrease in the number of workers caused by the introduction of more efficient equipment or machinery. Conciliatory unions make it easier for companies to exploit their employees as much as possible.
The labor movement had great strength after World War II with the powerful Sambetsu Kaigi union, linked to the Communist Party. In 1945 they occupied factories abandoned by their owners and started them up with the participation of engineers. In 1946 they set the goal of industrial reconstruction without layoffs and with stability, both for small industrialists and for merchants.
General Electric failed this policy; led to layoffs of workers and engineers at Toshiba and other companies and research institutes. This weakened the Sambetsu Kaigi Union.
The Sohyo Union (General Council of Trade Unions of Japan), supported by the Socialist Party, also organized major strikes in the main companies in the country, but in the mid-1950s the agreements between the unions and the employers became more and more majority. The companies began to accept the participation of the workers in their management and established regular consultation sessions with the unions. The scope of the talks between union leaders and employers was expanded: it ranged from issues of wages and labor problems, to management issues in general, such as investment planning.
The practical result was that all workers had broad access to company information and were able to "participate" in management planning and management. Over time, there were cases in which the unions were too "understanding" or "soft" regarding the employers' concerns; however, they also contributed significantly to business growth.
In industries such as steel, employers began the practice of appointing job supervisors to their staff. This system took the example of North American industry in which the control of the production plant is carried out by means of supervisory personnel, traditionally called “capable”.
In the United States, workers only have to go through one exam to become supervisors, and some succeed in just a couple of years of work. As soon as these supervisors are appointed, they change their overalls for the white shirt and tie, many begin to "look over their shoulders" at their coworkers. This has led to a greater difference in the class environment of American society.
In contrast, workers in Japan must have some twenty years of experience before they can enter the supervisory position and are taught that they must maintain good relations with their subordinates after being appointed.
Japanese supervisors are veterans at the company and spend much of their time in human relations: They play baseball with the younger workers on Sundays, attend their weddings, and are generally well informed about their family matters. Its popularity among younger operators has contributed to the operation of the system.
Final thoughts
Japan managed to recover after the Second World War in a relatively short period of time, with several factors influencing its recovery, including the reforms carried out in various spheres of the economy and society.
The Companies Department of the Ministry of Industry and International Trade (MITI) played a fundamental role in business reorganization and induced competition, actively intervening the State in the competitive environment it had created to stimulate economic growth.
The emergence of the three jewels of Japanese management is a very specific feature of Japanese management that has managed to subject the working class to high productivity at the cost of great efforts through not only relative but absolute surplus value.
It is necessary to highlight the great capacity of the Japanese State to counteract and reduce the bargaining capacity of labor unions in the labor market, as well as to contribute to raising the capacity to negotiate the costs of economic transformation of the country and arbitrate the interests of national capital. to foreign capital. The defense of "national interests" against the trend of world economic globalization of this period 1945-1985 was achieved by submitting to a national consensus interests that are irreconcilable from the class point of view; but in conditions of high international competition the nation sacrifices itself in pursuit of the development of the social system.While the Japanese economy was able to maintain the highest rates of economic growth, all the “jewels” of its development model made antagonistic class interests “compatible” at the national level. Hence the cooperation between the people and the Government; cooperation between employers and workers; and the so-called “distribution” of the benefits derived from increased productivity.
In summary, it can be affirmed that the structural changes in the postwar economy in Japan showed the great capacity of the Japanese state monopoly capitalism to guarantee the reproduction of its national capital in conditions of open economy.
In this sense, international technological competition was preferred to act on the cost of production and the quality of the product, thereby influencing the magnitude of the value within the technological branch selected as a key sector of penetration in the world market.
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