Postwar Japan’s great economic leap

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11991

Japan remains admired by the whole world, for such a small country, with 70% of its hilly territory and scarce natural resources has achieved super-giant economic development, positioning itself as the Second World Economic Power.

To know the antecedents it is necessary to bear in mind that in August 1945 a Japan exhausted by the war accepted the terms of the surrender imposed by the Allies and, by imperial edict, it laid down the weapons. For the first and only time, Japan was occupied by Allied troops under the control of the United States, until April 1952. 1

As a result of World War Ii, Japan lost 42% of national wealth and 44% of industrial capacity – energy, facilities, machinery, etc. Demobilized military personnel and civilians who returned, on the one hand, aggravated ruin and hunger and, on the other hand, immediately joined the workforce, covering the labour needs for economic reconstruction for The first stage of the post-war period. 2

For a few years after the defeat, Japan’s economy was almost totally paralyzed, with severe food shortages, rampant inflation, and under 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, in addition to receiving about 6 million of repatriates. Domestic demand fell with the disruption of military purchases and foreign trade was restricted by Allied Occupation Forces.

The Japanese people undertook the task of rebuilding their war-ravaged economy and the American occupation dealt only with demilitarize and democratizing Japanese society. It Did Not Assume the cost of repairing the damage or developing 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. It played a key role In state economic regulation and industrial policy designed for reconstruction.

The Japanese bureaucracy issued the document «Basic Problems for the reconstruction of the postwar Japanese economy» as early as 1946. It was suggested Here that Japan should follow an intermediate model between socialist planning and capitalist institutions; He had passed the laissez faire period. Now, in the period of State capitalism, Japan was located on the border of two systems, it must be a political and economic intermediary between blocs. 4

With the new Constitution of Japan (1947), the emperor was stripped of his sovereign power and replaced by a parliamentary cabinet. The context of the operation 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, protection of trade unions, demilitarization and dissolution of zaitbatsus (grouping between companies).

These projected changes were put into practice with greater force and idealism on the part of the Japanese than by the Americans themselves. The new program originated two concepts that were going to play an important role in the further development of Japanese capitalism: equality and competition.

The aforementioned reform applied to Japan during this period looked at the following issues:

1. An agrarian reform that fostered greater equality: it eliminated landowners who did not use their land and created the kind of farmers owning 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, since it had given land to those who did not Have it, they took away the wealth from the richest and distributed it to the people. The American occupation created favorable premises, especially with agrarian reform, as a mechanism for the transfer of the economic surplus to industrial reconstruction.

2. The establishment of a new Civil code for equality between men and women.

3. An educational reform that also had a major impact. The new system, based on American models, established nine years of free compulsory education and three more optional middle school years. Those Who met the right skills and paid the modest educational rates could graduate from college.

4. The establishment of democratic reforms: freedom of assembly, association and expression, including the Communist Party; Abolition of the Shintoism, as official religion; and freedom of religion.

5. The dissolution of the Zaibatsus, which fomented competition, because it diminished the business size of the Japanese industry and small companies and measures arose, which were to fight fiercely among them to obtain a greater number of sales. The United States ‘ goal in eliminating the zaibatsus was to disintegrate military power to prevent Japan from taking force and fighting against them.

In 1949, the Ministry of International Trade (MCI) and the Trade Council became extinct and the Ministry of Industry and International Trade (MITI) emerged. The Company Department of the MITI Was established with the objective of developing strategically the country’s companies and creating a favorable environment for the competition; That is, the State directed its regulatory action as the maximum responsible for the competition and the development of the companies. The last MCI minister was the first of the RALLY: Inagaki Heitaro.

After The war there was little supply of capital and interest rates were consistently high. However, the Government made it possible for companies with the most future to obtain funds at extremely low interest rates. As A rule, these companies orientated their production towards the external market.

Banks channeled the accumulated capital to lend it to strategically important industries, supported by Bank of Japan’s credit guarantees. The Government Also offered important tax concessions to export earnings, while establishing the acquisition of technology as a national priority. The foreign currency was scarce for many years after the war, but the authorities took advantage of these circumstances so that exporters could obtain special assignments. 5

The Department of Enterprise MITI prepared the new policy for industrial rationalization based on the induced competition:

1. Total Exchange Control to the imports of technology-power of selection of the industries for the development.

2. Preferential Financing.

3. Tax Exemptions.

4. Protection against foreign concurrence.

5. Authority to order the creation of bank-based industrial conglomerates (new Zaibatsus).

6. Institutional Apparatus for rationalization and incentive policy. 6

In The early years after the war, due to the scarcity of materials, the factories practically did not produce anything and to sell the little they made they had to compete in price and quality, that is, they had a very strong environment not only external, but also internal. Companies that were unable to cut costs were without customers. This pressure caused a real revolution in business planning. The MITI’s Business Department contributed greatly to the easing of roads towards national and international competitiveness. Everyone could hope for success if they worked long enough to win the competition. 7

The characteristics of the internal environment created by the Department of Enterprise constituted the driving force that guided the nation’s economic development in the postwar period. These were the following:

1. A demanding protective State.

2. The conditions of the concurrence were not the result of laissez faire; The risk was reduced for capital with greater concurrence.

3. A concentration in certain companies to: achieve industrial restructuring; facilitate technology transfer; Ensuring the long term, as a criterion; and address internal priorities and external threats.

The functions of the Department of Companies were:

1. To Elaborate the policy of restructuring and business rationalization on the basis of fiscal, credit and infrastructure development measures.

2. To Promote business cooperation in matters such as: sharing technologies; To achieve specialization in production lines; Use jointly resources and warehouses, and consult investment plans.

3. To Coordinate the joint actions of the associations of sectoral entrepreneurs for the protection against foreign concurrence.

The selective nature of the MITI’s Business Department protected industrial development and covered the entire economic cycle.

The Industrial Rationalization Council, created in December 1949, promoted during the decade of the 50 a common business culture with emphasis on scientific administration. Business life focused on administrative practices and not on the arbitrary preferences of capital owners.

The induced concurrence meant that this competition was always in the context of rationalization, selectivity, national productive reconciliation. The MITI promoted rational administrative practices, for example:

1. Models for wage and promotion systems.

2. Models for the organization of the work premises according to a greater intensity of the work.

3. Models for training employees and cadres.

The MITI could block foreign exchange access – foreign Capital Law, 1950 – of any signature that it considered was wasting valuable resources. Foreign Capital Law established a Foreign Management Committee, which determined that any foreign investor with licenses, patents, etcetera, should be authorized by this Committee. The Business Department MITI assumed this responsibility.

When The MITI was accused of monopoly, he argued that he only asked for cooperative behavior, namely: sharing technology; Limit production lines; Jointly use the deposits for raw materials and finished products; and carry out consultations on investment plans.

The selective nature for accelerated growth 1955 – 1990 was expressed in the following basic policies:

1. Protectionist industrial Policies of induced competition.

2. Tax Policy to promote savings and investment.

3. Internal market Isolation of foreign influence.

4. Financial structure Policy (preferential loans, etc.).

The relevant role of the MITI and its Department of Business in creating a very competitive internal environment that «trains» the National Company for International Competition Can Be appreciated. That is Why this form of State protection can be identified as an induced competition.

Role of the State in creating the movement for productivity and quality control circles

The State created in the first half of the years 50 the Movement for productivity with the help of the Government of the United states.

The three principles of the Movement were the following: cooperation between the people and the Government; Cooperation between employers and workers; and distribution of the benefits derived from the increase in productivity.

In August 1952, the Association for Industrial Education was created with the aim of strengthening the links between private capital and communities. In June 1954, the Cooperative Council for Productivity was founded; Private industry was launched in that movement. The Japan Productivity Centre Was established in February 1955, which is still a fundamental institution. A Productivity Council Was created that served as a liaison between the Centre and the Government.

In September 1955 the Union of Private Companies (DOMEi) joined the movement for productivity. The following year, NIKKEIREN – the most influential federation of employers ‘ associations in Japan insisted on the need to improve technology education and published an extensive document: About technology Education to meet the needs of the new Was.

In December 1957, the MITI published The white Paper on industrial rationalization, which promoted specific activities for productivity gains, closely linked to engineers in private companies. There Was A strong interrelation between employers ‘ associations and the State to promote not only industrial reconstruction but also induced competition.

In 1957 the Japan Ministry of Education (MINEJ) implemented the plan to increase the number of science and technology students. Then Begins the boom of science and engineering careers. In February 1959 the Commission on Science and Technology (for Strategic Research) was founded.

Quality control circles, the system of mutual consultation and the system of engineers emerged in the years 60. In This period, a massive incorporation of engineers into companies is produced in close collaboration with factory workers and with information flow to the research and Development office.

During These years, reverse engineering in Japan was intensely promoted, making substantial improvements to the imported technology applied to production processes, as well as an elevation in the quality of the products.

Since the years 60, the Research and development institutes began a search to apply these technological advances in new products and processes.

Role of the emergence of the «Three Jewels» of the Japanese management

The struggle of the workers ‘ movement forced capital, in alliance with the State to make changes in labour and human relations in companies, thus generalizing the salary for seniority, lifelong employment and the Union by companies, called «The Three Jewels «of the Japanese management.

Seniority Salary: Workers ‘ salaries rise annually, according to the time they carry in the entity, if they satisfactorily fulfill the plans and tasks assigned each year. This type of salary reaches the maximum when retirement occurs, which stimulates the permanence in the center and reinforces the stability of work.

Lifelong or long-term Employment: The annual transfer rate of workers is only 16% and workers in general are isolated from the foreign labor market. This trend is closely linked to the seniority wage system in which employees with the most time in the company receive more salaries. In this way, the workers depend more on the company and give a lot of importance to that it succeeds.

In Addition, life-time employment means that a major company or government agency hires once a year, in the spring, when young people graduate from high school, high school and college. A large firm that occupies only «newbies» hires at the same time a long list of new employees, even if they do not have work for all of them immediately.

Union by companies: It Is the basis of the strategy to increase the intensity and productivity of the work and compete for the extraordinary gain.

In Japan, workers must have some twenty years of experience before they can access the post of supervisor and are taught to maintain good relations with their subordinates after being appointed. Japanese supervisors are veterans in the company and devote much of their time to human relationships: they play baseball with the youngest workers on Sundays, attend their weddings and are generally well informed of their family affairs. Their popularity among younger workers has contributed to the functioning of the system. 8

The Japanese Business organization

Japan’s business organization is very different from that in the United States and Europe, as it is characterized by achieving higher levels of efficiency in business management and generating a set of stable practices, which, despite not To be theorized many of them, they allow to maintain that it has been structured an Economic Business School own of the Japanese experience.

This School or modality of organization of the business Competition and its state regulation is characterized by the different form in which the following traits are established in relation to the efficiency of the Western capitalism:

1. The degree of separation between ownership and management.

2. The entrepreneur and the Working Group; Their forms of stimulation.

3. The basic forms of efficient management: cost and quality.

4. The creation of the technological base of the business system.

5. The dual business structure and horizontal and vertical organization of monopoly agreements.

6. Globalization of the global economy and the «Immigrant» enterprise.

1. The degree of separation between ownership and management

In Japan The presidents and directors of large companies in general are not their main shareholders, but they constitute the so-called «employee directors». The main axis of the Japanese business organization lies in the high degree of separation that exists between function and property, that is, the individual capital does not work, but that of the juridical persons (firms that put their capital). The administrator does not put it the owner, as it happens in the western countries, he is going to be elected by the Collective (company) and is according to the characteristics that he has; Therefore, the competition will be greater among the workers, because the employer will be elected not by his number of shares, but by his capacity.

This structure of business management offers an illusion to the aspirations of the employees and sharpen the race to occupy the first positions in the ranks. Another curious factor is that 75% of the shares belong to legal persons, while 25% belong to individual shareholders, contrary to what happens in the United States and Europe. All This mechanism the State has been able to stimulate and it has handled it in a very intelligent way so that it satisfies its interests.

2. The entrepreneur and the Working Group: their forms of stimulation

Although It is often believed that in Japanese society, in general, and in the company, in particular, is given a lot of importance to harmony, there really is a strong competition between employees who aspire to occupy the first positions in the ranks and receive the VA Highest possible lor in the bonus system distributed twice a year: June and December.

The evaluation system takes into account the attitudes assumed by the workers, as members of the Agency, their initiative in the work, the discipline, the harmonic character, etc. In this way, a labor discipline is established in which subordinate employees blindly obey the higher level in order to achieve the best evaluation in order to obtain higher salaries and the best job position. In this way companies organize and force their employees to work.

Another way of stimulating the worker is to allow him to be part of the proposals of improvement in the company, stimulating and channeling his contribution by a social and personal recognition. This has its monetary reward, but the prizes do not usually exceed 5 or 6 dollars. More important than money is the personal recognition they provide.

3. The basic forms of efficient management: cost and quality

Quality is a set of qualities or properties of a product that conditions its usefulness to meet certain productive and personal needs. 9

One of the fundamental issues that is based on the control of Japanese quality is that there are no perfect standards, whether national, international or company, because they usually contain inherent flaws, as customers ‘ requirements change Continually and year after year a higher quality is demanded. The rules are appropriate at the time of fixing Them, but they become antiquated quickly; In practice it is necessary to revise and improve them constantly in order to meet the requirements of consumers satisfactorily.

Japanese quality control constitutes a revolution and a new concept in management thinking. The characteristics of the control of the Japanese quality that distinguish it from the control of the western quality are the following:

1. Quality Control throughout the company with the participation of all the members of the organization.

2. Quality control Education and training.

3. Quality control circles Activities.

4. Audit of quality control.

5. Use of statistical methods.

6. Activities to promote quality control at the national level.

In This conception it raises the need to educate in the control of the quality to all the employees: from the president to the workers of line, it is necessary to vary the reasoning of all and to repeat the education and the training inside and outside of the company so Inde Finished Thus the Japanese were carried out the control of the quality. To achieve these objectives the main interest of the company should be the happiness of the people and, as a first step, To receive an adequate income.

On the other hand, consumers should feel satisfied and happy when they buy and use the goods and services of the company, the workers in no case can think that the quality control mechanisms are to control their work. In Japan There are private entities to promote quality control activities: Research Group on quality control, the quality Month Committee, the headquarters of quality control circles.

The Japanese do not control the quality to project only exports, but for them the quality transcends the company, is a social relationship of production, a process, is a reserve for the reduction of the cost of production, as a more dynamic form of Be able to maintain their competitiveness. Quality control is a conceptual revolution of management, as managing on the basis of customer respect can increase the level of satisfaction of the needs of consumers, both in the media and in the media of Consumption. The Japs Introduce the scientific-technical advances to the production quickly, causing an unsurpassed compatible substitution. The Japanese industry is based on offering quality items at low prices due to hard work and massive production, effective and very competitive.

In 1962 began to constitute the circles of control of the quality. They are made up of small groups that develop quality control activities within the same workshop or workstation; They carry out continuously, as part of the activities of quality control throughout the company, the self-development and mutual development, the control and improvement within the workshop using quality control techniques with the participation of all the Members .

The basic ideas of quality control circles are:

1. Contribute to the improvement and development of the company.

2. Respect the man and create a pleasant workplace where it is worthwhile.

3. Fully Exercise human capacities and over time take advantage of their infinite capacities. 10

4. The creation of the technological base of the business system

One of the factors that has characterized the transformation of Japan’s economy and industry is the improvement of the technological level carried out by means of rapid innovation in technology and the various efforts of the industrial sector as a whole.

After World War Ii, Japan has been undertaking greater efforts to introduce new technologies to keep pace with the world’s technological innovation. A form used by them for technological advancement has been reverse engineering, which has integrated the technological approach with the social economic.

Reverse engineering, as an economic form for efficiency, involves the introduction of the advances of the physical, mathematical and genetic sciences to the industrial and agricultural production techniques which, by taking as a basis the results obtained in other Processes and different countries and decompose them into their constituent elements, manages to locate those that determine the attributes of their efficiency and, in addition, act on them in such a way that their modification leads to an elevation in the levels of efficiency.

For the Japanese, solving the contradiction in copying/technological creation has made it possible to reach a technological base in which the obtaining of avant-garde products rests in a technology of its own, with own techniques and raw materials and Highly exploited foreigners. Japan has distinguished itself by the very skillful purchase of licenses, patents and technological agreements, mainly with the United States. This Whole process has been addressed by the RALLY.

Reverse engineering presents advantages; These are:

1. Lower costs in research and development.

2. Reduced investment cost.

3. Reduced production cost.

4. Quality Increase.

5. Decrease of time, as a common variable (saving of years and months).

6. Increased compatible replacement.

7. Increased competitiveness.

8. Creation of the company’s technological base.

Japan, thanks to the foregoing, of technology importer is becoming a technology exporter, is exporting technology to developed countries. 11

5. The dual business structure and horizontal and vertical organization of monopoly agreements

The global trend to the fragmentation of the production process has caused that subcontracting is becoming increasingly important, and it is that a company (the main one) orders to other companies (subcontracted) the production of one more part or Less important of the components of their products.

There Are multiple economic impacts of subcontracting, which Are the most relevant: lowering costs, increasing flexibility and reducing the necessary resources.

By Subcontracting The principal company manages to reduce its costs, by decreasing the magnitude of certain resources (fixed assets) involving higher structure loads or fixed costs and, in most cases, when acquiring the subcontracted company the Products (components or factors) at prices lower than the costs they would have supposed to manufacture them themselves.

The reduction of the dimension of fixed assets and the greater adaptability to changes in the demand of their products, to change in the products themselves, in the technology, in the tastes, allows the subcontractor company greater flexibility, condition very Important Today. The same reduction of fixed assets, coupled with the decrease in the stocks of components that pass to subcontracted companies, makes the main company reduce the resources needed to develop its activity. 12

As mentioned before, in Japan there is a grouping between companies, interrelated horizontally, with the name of Zaitbatsus. These are groups of large firms operating in the Japanese economy. In the period of the war they were dedicated to the military industry and were dismantled by the United States at the end of the war, reemerging as monopolies. The Japs currently have six major zaitbatsus: The Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa and Ichican groups.

Each Zaitbatsu is conformed by several firms, a banking, commercial house, insurance house, shipyards and the domain of a certain industry. The relations between the zaitbatsus are made horizontally, because they are not subject to technological links or property or productive structure, but rather they are limited to monopoly agreements in terms of prices and leadership in markets and territories.

Linked to the Zaitbatsus, but observing a vertical structure, are the so-called Keiretsu. Its appearance is part of the decade of the 60, when developing corporate groups of small and medium-sized enterprises subordinated to the large industry whose relationship was given by subcontracting activities. Subcontractor companies were grouped under the large ones under conditions of subordination.

6. Globalization of the global economy and the «Immigrant» enterprise

Globalization presupposes the incorporation or integration of all countries into a dynamic functioning of the economy on a planetary scale and the fragmentation of spaces and processes. All the regions of the planet, with their respective economic structures, material and human resources, will be able to function in this global dynamic where the current competitive advantages are increasingly due to the ability to adapt to changes whose levels come Given by knowledge and qualified human resources.

The «Immigrant» Company represents a new type of business organization that will respond to the phenomenon of the globalization of the economy and will differentiate itself from the so-called «subsidiary company» and «subsidiary company». Its appearance is part of the decade of the 70 with operations in the manufacturing sector, but it reaches its levels of development in the years 80.

The formation of the company «immigrant» is the result of the interrelation of the macro and microeconomic levels expressed this in the economic policy of the country that through the business system transforms the foreign company in «immigrated» company, condition by The one who can realize his interests without opposing the country in an antagonistic way.

The Company «immigrated» guarantees the reproduction of the national capital under conditions of open economy and develops a complete business system on the basis of which it elaborates its corporative strategy; It gives equal importance to business, both abroad and nationals.

Its Great economic growth

Despite having scarce natural resources, Japan was able to develop its heavy and chemical industries thanks to the low price of oil that remained at the level of $2/barrel for twenty years after the Second World War. The fixed quote of 360 yen/dollar lasted until August 1971 enabled Japan to increase its exports without any revaluation of its national currency.

Before the years 70 the Japanese economy was surrounded by a favorable environment until the outbreak of the fourth War of the Middle East, in October of 1973, which caused the first oil crisis, as well as the introduction of the floating quotation of the coins Japanese, American and European.

The oil crisis forced Japan to undertake economic restructuring, to seek the least-consuming, more independent, way to find stable and close sources. This Country found an answer in the process of structural change in the national economy, which began in the last years of the 70.

During the period of the recession, after the second oil crisis until the early years of the 80, measures were implemented to increase exports and maintain economic growth. As a result of the two oil crises and the flow of currencies to oil-exporting countries, industrialized countries and their industries were facing serious problems. Japan’s fiscal situation worsened severely by declining tax revenues, making it impossible to increase public investment as a way to overcome recession. Under this circumstance, Japanese industry had no choice but to seek the way out of export growth. As a result, Japan’s trade surplus In front of the US rapidly increased.

Therefore, Japan’s economic structure began to experience major changes since the mid-80. The Japanese industry achieved and vigorously developed the structural adjustment policy composed of the following measures:

1. Investing in modern technologies that make the fuel economy possible and the emergence of new products of higher value, reducing the operations of structurally stagnant industries, by moving the axis of heavy industries and Chemistry for example, the automotive industry, appliances and shipping industry to electronics with products such as semiconductors and high-tech computers.

2. External demand-based economic growth shifts to domestic demand because of the emphasis on personal consumption, public investment, and increased imports from the yen rise and pressure from the United States and Europe.

3. The expansion of direct investment abroad, the transfer of production bases abroad to reduce production costs and, at the same time, to supply the plants from outside to obtain raw materials, parts or prefabricated parts; All this motivated by the accelerated appreciation of the yen. 13

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