Japan: a newly emerging capitalist force

Between the middle of the 17th and the middle of the 19th century, Japan cut itself off from the rest of the world. No foreigner was allowed into the country, no Japanese was allowed to leave the country without permission, trade with other countries was limited to very few ports. Even if there was a very limited and weak dynamic of trade developing within the country, the real historical breakthrough occurred when the country after almost two centuries of self-imposed seclusion was forcefully opened up by capitalism. As Marx and Engels analysed in the Communist Manifesto in 1848: “In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations.... It compels all nations, on pain of extinction, to adopt the bourgeois mode of production..”(first chapter of the Communist Manifesto, Bourgeois and Proletarians).

In 1853, shortly after the first opium war had ravaged China, US navy vessels first appeared in Japanese waters and enforced mainly free trade. Following continuous Japanese resistance against the penetration of foreign traders, in June 1863 US, Dutch, French and British ships bombarded the Japanese coast. After this united military aggression, which showed that at that time the foreign capitalist nations could still work together in the opening up of Japan, the Japanese ruling class renounced from any resistance against the foreign capitalists and quickly started to introduce profound political and economic changes.

In Japan the worm eaten feudal-absolutist order of the Tokugawa-Shogunate (the ruling feudal family) was replaced by a strongly united state under the government of the Meiji emperor in 1868. “Capitalism did not come because a rising bourgeoisie vanquished the feudal class in a revolutionary struggle, but because a feudal class transformed itself into a bourgeoisie.”. Although there have been “forces for change from feudal absolutism in the direction of capitalism, they were too weak for a revolution”. (Anton Pannekoek, Workers Councils, "Japanese imperialism"). They had to rely on the opening up of capitalism from “outside”. The midwives helping to give birth to capitalism in Japan were the foreign capitalists, who gave a big boost to the rising Japanese bourgeoisie.

The transition from feudal to bourgeois society was not accompanied by a political revolution.

Unlike most Europeans countries, where private capital acted as the driving force in the economy and where liberalism propagated a laissez-faire policy, in Japan it was the Japanese State which was going to play a dominant role in the advancement of capitalism. In 1868 the emperor nominated the first planning commission. The Japanese ruling class started to study systematically the conditions of capitalist functioning in other countries with the aim of copying and applying them as efficiently as possible.1

Only a few ships were sufficient for the foreign capitalist nations to enforce their penetration in Japan. Unlike other countries of the far East, Japan was not occupied, no foreign armies settled on the islands.

At the same time, since Japan was a group of islands with almost no raw materials, it had to rely on the supply of raw materials from other countries. The country closest to Japan is Korea – behind which lie the Manchuria region of China and Russia. In the south there is another island Taiwan. While most of the European states quickly had to direct their zeal of conquest towards far distant areas (often in other continents as in Africa, Asia, South America) Japan found its zone of expansion in the immediate proximity. Only 10 years after being opened up by foreign capitalists, Japan fell upon Taiwan. In 1874 Japan occupied the southern tip of Formosa. But this first major attempt to expand alarmed Britain and China, which sent 11,000 troops to the southern part of Taiwan. At that time Japan did not yet have enough military power to engage in a larger combat and consequently withdrew from Taiwan.

Soon after that Japan started to turn its ambitions towards Korea. In 1885 Japan and China signed a treaty, according to which neither of the countries would send troops to Korea without the permission of the other country. Following this temporary 'stalemate', Japan decided to build a fleet which could control the Chinese Sea.

As we shall see, Japan embarked upon a first war with China in 1894 and 10 years later with Russia in 1904. Thus barely 3-4 decades after capitalism had started to establish in Japan, the country went to war with two of its rivals in the area.

Unhampered by any colonial power, Japan quickly became one itself, and even if it arrived late on the world market it quickly became the dominant force in the region, which had to expand forcefully and become the main challenger in the area.

As a consequence its military expenditure was constantly on the rise. At the end of the 19th century, Japan began to finance its army by credits which were fuelled by British and American funds. 50% of its foreign loans went into war and armaments. Government spending tripled between 1893–1903, and it doubled again during the course of the Russian-Japanese 1905 war. Its modern fleet was composed of battleships made in Great Britain, its canons were German Krupp-made guns. When Japan defeated China in the 1894 war, it allowed Japan to impose a tremendous financial burden on its neighbour, forcing it to pay 360 million yen, large parts of which only served to finance a war program of armament expansion. The national debt rose from 235 million yen in 1893 to 539 million in 1903, it then soared to 2,592 million yen in 1913 as a result of large war bond issues. 2

Thus Japan had become the biggest imperialist shark in the region already in the ascendant phase of capitalism. The country could not have gained this dominant position without the early central role of the State and its militarist orientation.

1 There was almost no private industry during the early phase of Japanese capitalism. The first Ministry of Industry was founded in 1870. At the beginning of the 1870s paper money was introduced. In 1872 the first railway way line was opened between Tokyo and Yokohama (i.e. 40 years after the first railways were operated in GB). The country roads, which were barricaded by the provincial potentates, had to open for general traffic. Road taxes were abolished. In 1869 the four classes, Samurai, peasants, traders and craftsmen were all declared equal, the difference of clothes amongst the classes were abolished, peasants were entitled to grow the crop they chose. For more information see: Anton Pannekoek: The Workers' Councils.

2 “Mainly as a result of the Sino-Japanese war, and of growing armament and colonial enterprise which followed in its wake, the expenditures of the national government tripled from 1893-1903. Again, they more than doubled in the course of the Russo-Japanese war (...) To finance this burden taxes were progressively boosted... The indemnity of 360 million yen secured from China in 1895 was also largely used to finance an interwar program of armament expansion. These resources proved inadequate, however, and resort was had to extensive borrowing. The national debt rose from 235 million yen in 1893 to 539 million in 1903. It then soared to 2592 million yen in 1913... Nearly 50% of the government‘s entire budget in 1913 was devoted to the Army and Navy, military pension and war debt service... In fact, the “extraordinary” military expenditures charged to the war with Russia were largely balanced by borrowings in London and Paris. Before the war (i.e. in 1903) the outstanding total of Japan’s national loans issued abroad amounted to only 98 million yen. By the end of 1913 it had climbed to 1525 million (...) foreign loans had an inflationary effect within the country.”

(William Lockwood, The Economic Development of Japan, p. 35, Princeton, 1954), see also: W.W. Lockwood, The State and Economic Entreprise in Japan, Princeton, 1969)