Lecture 37: Japan
Today we start the first of four country studies with Japan. Japan was the first great
success of the globalizing era, with the fastest rates of growth in the world through 1985; in the
ten years after that, Japan and the former Japanese colonies of Taiwan and Korea were the
economic engines that pulled the rest of East Asia behind them in the Wild Geese Flying period.
Japan achieved these things not by following the Washington Consensus model but another
model, which emphasized government intervention in the economy rather than deregulation and
privatization. But having achieved this great success through the 1980s, the Japanese economy
peaked in 1990, suffered a stock market meltdown and has not had a really successful year since.
So the question about Japan has evolved from what was so right about the way that the Japanese
economy was run to what was so wrong about it.
These questions are what we’ll be looking at today, in two parts. First, I want to review
the historical dimension of Japan’s emergence in the modern world, which as we’ll see will be a
story of continuity, and second, the ironies of Japanese development; how apparent virtues like
job security and high savings rates may actually undermine Japanese prosperity.
Around 1600, Japan emerged from a very bloody feudal anarchy by establishing a strong
central government. As in many traditional societies, the late-traditional Japanese government
united religion and state, rather than separating them as we do today. One key belief was that the
Emperor of Japan was divine, a descendant of the gods. At about this time, European sailors
began arriving in east Asia to trade and bringing Christianity with them. Several hundred
thousand Japanese were converted to Christianity in the early seventeenth century. But you can’t
simultaneously believe in Christianity and believe the Emperor was divine; the two ideas are
incompatible. To put it another way, being a Christian in Japan was lese-majeste and next door
to treason. In 1642, the Japanese converts were massacred and Japan cut itself off from the
outside world more or less completely in order to prevent a repetition of the Christian problem.
Japan was still isolated two hundred years later, when, in 1842, the Opium War between
Britain and China broke out. China had always been the oldest, biggest, greatest, most civilized
and most powerful country in Asia. The defeat of China meant that no other Asian country could
hope to stand up against the West. Eleven years later that, in 1853, the US sent a mission to