THE BUREAUCRACY

Perhaps least affected by the years of stress and upheaval was the Japanese bureaucracy. It was like an iceberg buffeted by a storm. Some of the pinnacles were cracked or chipped, some even broke off and disappeared, but the vast submerged section drifted on unaffected and unscarred. Wartime ministers lost their posts and new ones took their places, but except in a few ministries which were regarded as particularly responsible for reprehensible war actions—the Home Ministry for example—the career officials continued to run their phase of the government, under new directives to be sure, and with a slightly new air of deference, but with authority largely undiminished. The Occupation tried to diminish the power of the central government, especially in the fields of education and police. Admirable though this effort was in the interest of furthering democracy in Japan, it did not survive long at the hands of the post-Occupation Japanese government. Indeed, the Occupation itself had seen the need to retain and rely upon the Japanese central goverment as the best means of exerting effective control over the country.

One leading Japanese authority writes:

Despite the enactment of many postwar laws, administrative officials have held fast to departmentalism in their respective ministries: their traditional influence is still alive. The occupation which adopted a formula of indirect rule rather than direct military government, fostered this tendency, for SCAP turned to the bureaucracy for execution of its policies. . . . whereas the zaibatsu and the military structure were dissolved, the bureaucratic machinery was preserved.²

There was therefore in Japan at the end of the war no total collapse of government, no ruthless elimination of the old form of authority, such as had occurred in other defeated countries. The façade was changed, the source of directives was different, but the vast body of career bureaucrats, who had loyally and dutifully carried out the orders of the Gumbatsu, now loyally and dutifully carried out the orders of Occupation authorities. The whole concept of making the bureaucracy responsible to the people through political elections was, of course, something the Japanese had been observing in form for some seventy years but largely ignoring in substance. As Professor Chitoshi Yanaga has observed:

While the Japanese governmental structure before World War II was as Western and modern as any in Europe or America, the concepts and attitudes which constituted the mainsprings of government and politics bore little, if any, resemblance to those of the West. Nor could the behavior and actions of the leaders or the people be judged in terms of Western patterns or standards of value. Needless to say, the inception of the modern Japanese political system was impelled more by external pressures than by internal needs to establish a Western type of constitution and a parliamentary government. In the carefully planned and executed modernization of the nation’s administrative machinery, the primary objective was the achievement of such over-all organization as would ensure a high degree of efficiency and a rapid development of industrial and military power. Inevitably emphasis fell on organizational modernization, which influenced only very slightly the traditional ideas of the people. It was natural that the Meiji constitution of 1889, which clothed the Japanese Government in Western garb, should have been not an instrument designed primarily to secure the inalienable rights of the individual, but rather a means of achieving national strength and international recognition. Western concepts of liberty and popular rights which were then espoused had been acquired largely out of context and without the benefit of the necessary environment which only working institutions and practices could render meaningful. Traditional ideas and attitudes continued to dominate political thought. . . .³

These traditional ideas and attitudes, such as status, acceptance of authority, loyalty, duty, discipline, etc., continued to prevail between the governed and the governors—the career ministry officials—throughout the postwar decade, and the remarkable stability and acquiescence in post-surrender Japan can be largely attributed to the continuing firm hand of the Kanbatsu acting under Occupation authority.

Of the Japanese bureaucracy, Professor Tsuji writes:

In the Meiji era, a strict hierarchy with the Emperor at its apex was dominant in government, and bureaucrats, who considered themselves the embodiment of the Emperor’s authority, assumed a privileged superior air towards the common people. The lamentable attitude of “reverence for the government and disdain for the people” penetrated into every nook and corner of Japanese society and bureaucratism was as dominant in this country as in Prussia in the seventeenth and eighteenth centuries.

An important cause of this feeling is easily understood when it is recalled that in the early days of the Meiji government, former samurai comprised 80 percent of the officials in all central administrative organs. . . . Indeed bureaucracy in Japan offered a minority a special “reserved seat” in society. . . .

Japanese bureaucracy, which grew up in this environment, has been democratized to some extent by the new Constitution. But its former privileges are now being sought again by those leaders who advocate curtailment of democratic institutions and revision of the Constitution. Even more dangerous to Japanese democracy is the fact that the bureaucracy peculiar to Japan is reviving along with the inevitable expansion of governmental administration that characterizes world society today.⁴

In the postwar decade the Japanese bureaucracy were much like caretakers getting and keeping the house in order pending the owner’s return. As a group that makes policy within the broad limits set by cabinet determination, as an influential element resistant to change and in favor of traditional ways of doing things, suspicious of and not very favorably disposed to democracy, which seemed to threaten its authority, the Japanese bureaucracy is today no less and perhaps more a force than before the war.

THE ZAIBATSU

The term “Zaibatsu” is hard to define, particularly since it has few or no counterparts in the West. Technically the word means “money clique.” A recent Japanese study declared:

Zaibatsu was a term used vaguely to denote a few groups of comprehensive business organizations, each controlled by a holding company, supported by a network of influential companies engaged in almost every field of staple industries. They had been gradually formed and built up by the investment of huge capital funds accumulated in the hands of a few big families.⁵

General MacArthur, in a New Year’s message to the Japanese people in 1948, described the Zaibatsu system in the following way:

Economically, allied policy has required the breaking up of that system which in the past has permitted the major part of the commerce and industry and natural resources of your country to be owned and controlled by a minority of feudal families and exploited for their exclusive benefit. The world has probably never seen a counterpart to so abnormal an economic system. It permitted exploitation of the many for the sole benefit of the few. The integration of these few with government was complete and their influence upon government policies inordinate, and set the course which ultimately led to war and destruction.⁶

In its official summary, the Occupation declared:

The Japanese economy before and during the war was dominated by the Zaibatsu—a few powerful families, wedded for mutual protection and advantage with influential elements of Japanese society—who controlled the major part of the industry, mining, finance, and commerce of Japan, and in large part, the livelihood of the people of Japan. Independent enterprises and free competition existed, but only in minor segments of the economy. Characteristically, Japan was a land of private internal economic empires featured by international and domestic cartel arrangements, pyramids of operating and holding companies, monopolies of basic resources, key services and strategic equipment, and control over major banking and insurance institutions.⁷

Perhaps the broadest description was that of the U. S. Mission on Japanese Combines. It found:

Something has been seriously wrong with the social system of Japan. Since the Meiji restoration monopolistic ventures have been the focus of Japanese foreign policy and during much of the time the army and navy have dominated Japanese politics. The industrial revolution has failed to produce the democratic, humanitarian, and cosmopolitan sentiments which were its counterpart in most countries, even in Germany before the first World War. In spite of the growth of industry and commerce, there has been neither an aggressively independent middle class nor a vigorous labor movement. Though the standard of living has risen, its increase has not been the phenomenal surge which appeared in England, in the United States, and Germany under the impetus of rapid industrial development.

Doubtless no single condition is responsible for these peculiarities. The excessive concentration of economic power in Japan is, however, one of the most important conditioning factors. Instead of the diffused business initiative which gives rise to a middle class, Japan’s industry has been largely under the control of a few great combines, the greatest of which began their rise to power in feudal times and all of which have enjoyed preferential treatment from the Japanese government. This type of industrial organization tends to hold down wages, to block the development of labor unions, to destroy the basis for democratic independence in politics, and thus to prevent the rise of interests which could be used as counterweights to the military designs of small groups of ambitious men.⁸

The four principal Zaibatsu groups were Mitsui, Mitsubishi, Sumitomo, and Yasuda. Lesser Zaibatsu included Asano, Shibusawa, Nomura, Okura, Furukawa, Nakajima, and Nissan.⁹ For five years, under the Occupation, a series of measures was instituted designed to break up such combines, to redistribute their corporate holdings, to reduce elements of monopoly in the Japanese economy, and to foster more extensive competition, a condition largely alien to the Japanese way of business life. In the process, the Japanese industrial and trading structure was torn asunder; companies were deprived of their most experienced executives, splintered into uneconomic units, severed from customary sources of financing, and cut off from sources of raw materials. In the five years following the end of the Occupation, the process was reversed. Restrictions and laws were eased, companies merged to form larger, more effective units, old financial relationships were reestablished, and the traditional Japanese tendency to integration, monopoly, cartels, quotas, allocations, administered prices, and restrictive business practices began to emerge once again.¹⁰

Early in the Occupation, 57 members of 11 families were designated as “Zaibatsu;” their securities were taken over for disposal and their participation in business activity was restricted. Of the holding companies which cemented the combines, 32 were dissolved while another 51 were permitted to retain their operating facilities, but required to dispose of their stock holdings in other companies. To accomplish these purposes a Holding Company Liquidation Commission was established,¹¹ and it sold the 166 million shares transferred from the Zaibatsu and from the holding companies to employees, investors, and the general public.¹² Special attention was given to the very large trading companies. In July 1947 the Mitsui Bussan and Mitsubishi Shoji, the two largest Zaibatsu trading companies, which accounted for 70 percent of Japan’s prewar foreign trade, were ordered dissolved. From them more than 200 new trading companies were formed, no one of which had the financial resources or facilities for extensive trade.

Apart from the holding companies, certain operating companies were found to be excessive concentrations of economic power. The Mitsubishi Economic Research Institute noted:

Control by monopolistic capital of the various branches of Japanese industries was extremely widespread. Enumerating only the principal ones; in coal mining it represented 51%, in paper and pulp manufacturing 50%, in steam engine manufacturing 88%, in the silk industry 55%, in chemical dyestuff manufacturing 47%, in the aluminum industry 69%, in rayon manufacturing 20%, in steam locomotive manufacturing 69%, and in gunpowder manufacturing 30%.¹³

To cope with the situation the Law for the Elimination of Excessive Concentrations of Economic Power was passed¹⁴ in 1947, and under it some 325 of the largest non-financial companies of Japan were designated as possible excessive concentrations of power. The Holding Company Liquidation Commission was authorized to break up any of these that were judged to be excessive concentrations. After scrutiny 295 companies were judged not to be excessive, 11 were ordered to divide into independent companies, and 7 were ordered to divest themselves of certain properties or to take other action. The nine electric distribution companies and the single generating company were ordered to dissolve and to establish nine new integrated regional generating and distributing companies. All control associations, both national and local, which had been responsible for a web of cartel-like arrangements, both before and during the war, were ordered dissolved.¹⁵

To insure permanent and continuing action against monopolistic practices and excessive economic concentrations, an Anti-Trust Law,¹⁶ modeled after U.S. anti-trust statutes, and a Trade Association Law were passed, and a Fair Trade Commission¹⁷ was set up to enforce the statutes on a continuing basis. The anti-trust act prohibits unreasonable restraints of trade, unfair methods of competition, etc. To carry out these provisions, the following activities, inter alia, were made illegal: price-fixing and restrictions on production, controls which provide for allocation of products or materials, participation in international cartels or holding companies, intercorporate ownership of shares, excessive mergers, etc. In 1950 the Japanese Commercial Code was amended to provide greater shareholders’ rights and fix the responsibilities of corporate management.¹⁸ A Securities and Exchange Commission, modeled after that of the United States, was established.

No sooner had the Occupation ended (April 1952) than steps were taken to relax the restrictions which it had imposed. In 1953 the Anti-Trust Law was amended to permit the formation of “depression cartels” and “rationalization cartels.” The agreement among cotton mills to curtail production is an example of the former. The cartel formed by five leading bearing manufacturers to limit production of certain types and to restrict output to fewer varieties is an example of the latter. And, as the Oriental Economist noted, “In addition to the forming of cartels in the ways described above, there have, in recent years, been moves toward cartelization in certain key industries through special legislation. This tendency is seen as an attempt to emasculate the Anti-Monopoly Law.”

Two examples must suffice, though there are many more. In August 1955, the Coal Mining Rationalization Emergency Measures Law was passed. The measure reads in part:

When, because of extreme imbalance of the supply-demand situation in coal, the selling price of coal tends to fall appreciably below the standard coal price as established by the Coal Mining Deliberation Council, and there is danger of the bulk of coal operators being forced into difficulties which may prevent them from continuing in business, the Minister of International Trade and Industry shall be empowered to direct the coal operators to take concerted action for restriction of production and regulation of the selling price of coal.

The Export-Import Transactions Law now permits the formation of cooperative associations to promote exports and condones production limitations and price-fixing for this purpose. For example, the Cement Export Cooperation Association fixes export quotas for each producer, sets a standard export price, and pools all funds in excess of this price. Ammonium sulphate exports are also subject to the same type of cartel arrangement, by a specific legislative exception to the anti-trust act. The anti-monopoly law was also amended to permit corporations to hold shares in competitive companies, to legalize interlocking directorates, and to raise the upper limit of shareholding by financial institutions from 5 to 10 percent.¹⁹

Table XI-1 shows the areas of high concentration in Japanese industry, while Table XI-2 indicates the areas of low concentration.

But perhaps the most important development has been the regrouping of the former Zaibatsu firms. The Oriental Economist noted:

Rehabilitation of the Japanese economy continues to show progress despite the buffetings received from the cycles of boom and slump; but in the process there have occurred such phenomena as the regrouping of the trading firms, the massing into industrial and business complexes of the former “zaibatsu” concerns, the various arrangements among groups of businesses, and the formation of cartels by specific classifications of business. And in the face of such moves toward concerted action, the Anti-Monopoly Law has tended in one way or another, to be considered a nuisance.²⁰

TABLE XI-1. JAPAN: INDUSTRIES WITH HIGH CONCENTRATION OF PRODUCTION

a Two companies.b Eight companies.c Seven companies.d Nine companies.

Source: The Oriental Economist, Tokyo, September 1957, p. 459.

TABLE XI-2. JAPAN: INDUSTRIES WITH LOW CONCENTRATION OF PRODUCTION

a Almost totally small business.

b A mixture of large and small.

Source: The Oriental Economist, Tokyo, September 1957, p. 460.

The Mitsubishi Economic Research Institute observed:

It was not until the coming into force of the San Francisco Peace Treaty in April 1952 that the various restrictions on the activities of these former Zaibatsu affiliates were gradually removed or moderated. There has since then been a natural desire among them either to revert to former titles and trade marks, in view of their inherent value, or to undertake a joint investment of capital, or even to merge with related concerns with a view to strengthening their foundation.²¹

The regrouping of the Zaibatsu enterprises is not being undertaken through family auspices or holding companies, as before the war, but rather by three means: (a) purchase of stock by one company in another, (b) interlocking directorates for veteran Zaibatsu managers, and especially (c) Zaibatsu bank leadership in pulling together, financing, and organizing the scattered companies. In the case of Mitsubishi the trend toward closer stockholding interrelationships was particularly noticeable in the case of the Mitsubishi Bank, Mitsubishi Trust and Banking, Mitsubishi Warehouse, Mitsubishi Shipping, Mitsubishi Shoji (the trading company), Tokyo Marine and Fire, Mitsubishi Chemical Industries, Mitsubishi Shipbuilding, Mitsubishi Mining, Mitsubishi Heavy Industries Reorganized, Mitsubishi Steel, and Mitsubishi Rayon. Some 30 percent of the Mitsubishi Bank’s investments (excluding its investment in Mitsubishi Trading) are in shares of various Mitsubishi companies. Mitsubishi corporations depend heavily on credits from the Mitsubishi Bank, from which the 23 leading Mitsubishi companies have obtained more than 25 percent of their total loans.²²

In July 1954 the new Mitsubishi Trading Company resulted from a merger of four offshoot trading firms. After its recapitalization in December 1954, 33.5 percent of its stock was held by other Mitsubishi companies.²³ Lateral connections between Mitsubishi companies are strengthened by interlocking directorates on the part of such Mitsubishi veterans as Messrs. Ishiguro, Makino, Tanaka, and Takagaki.

Of the big four Zaibatsu, the Sumitomo group was the first to start to recombine and is now regarded as the best integrated of all the Zaibatsu. Again interlocking directorates, intercompany stock investments, and financial activities of the Sumitomo Bank were the main means used. The Oriental Economist stated:

In the area of financing, a glance at Table 9, showing the companies receiving loans from the Sumitomo Bank, clearly reveals the preference given to enterprises of the Sumitomo Group and their affiliates. The borrowings of these companies aggregate some 30 percent or more of all loans extended to corporate entities. In every case, except Sumitomo Coal Mining and Sumitomo Chemical Industry, the Sumitomo Bank is high up above other banks on the list of sources of credit.²⁴

The group-directed lending policy of the Sumitomo Bank has established it as the center and focal point of Sumitomo group operations. There are, however, two other interesting features of the Sumitomo revival. One is the club, the Hakusuikai, which was formed by the presidents of 14 former Sumitomo subsidiaries, soon after the Occupation ended. “Although this club started out as a purely social gathering,” the Oriental Economist said, “meeting twice each year, the meetings have become more frequent in recent times on a monthly or bi-monthly schedule, and advances have been made in coordination of action among the companies headed by the members.”²⁵

One consequence of this coordination of action has been an increase in inter-company sales. Sumitomo Metal Mining sells about 60 percent of its copper output to Sumitomo Electric Industry and to Sumitomo Metal Industry, while it supplies Sumitomo Chemical Industry with pyrites and sulphuric acid. Sumitomo Chemical Industry sells the bulk of its aluminum to Sumitomo Electric Industry and to Sumitomo Metal Industry. Examples could be multiplied. Sumitomo Kyodo Electric Power, for example, sells its power to Sumitomo Metal Mining, Sumitomo Chemical Industry, and Sumitomo Machinery. Sumitomo Shoji, the trading company, does the bulk of the selling of Sumitomo companies’ products and the procurement of raw materials.

The Mitsui were somewhat slower in regrouping, in part, it would appear, because of the inadequate resources of the Mitsui Bank. In the prewar Zaibatsu structure, the Mitsui Bank occupied a clearly secondary position to the Honsha (family holding company) which directed the Bank’s operations. When the Honsha was dissolved after the war, the bank had to assume the leadership of the group, which had expanded greatly in size and numbers during the war. Its financial resources, however, were not equal to the task because it was forced to separate from the Dai-Ichi Bank, which it had absorbed during the war (to form the Teikoku Bank). This meant a reduction of 50 percent in both capital and deposits.²⁶ Nevertheless, the Bank attempted to give preferential treatment to members of the Mitsui group, but some companies, unable to secure adequate financing, turned to other banks, such as the Hypothec and Industrial Banks, for funds. The Mitsui Bank, however, as the principal creditor of Dai-Ichi Bussan, one of the main trading firms resulting from the splintering of Mitsui Bussan, was probably the principal agent in engineering the reconsolidation of the Mitsui trading companies, culminating in April 1956 in the merger of the two main companies, Dai-Ichi Bussan and the new (postwar) Mitsui Bussan, to form a super-Mitsui Bussan. Thus, of the 180 companies into which the old Mitsui Bussan was split, most have been brought back into the fold by repeated amalgamations and mergers.

Other growing interrelationships can be traced, indicating reformation of the group. For example, three Mitsui chemical companies, Mitsui Chemical, Toyo Koatsu, and Miike Synthetic Industry, are closely integrated around Mitsui Mining. Miike Synthetic Industry buys coal from Mitsui Mining, has it washed by Mitsui Chemical, and then produces coke and gases from it. All of the gas and 60 percent of the coke go straight to Toyo Koatsu for the production of ammonium sulphate. Another illustration of developing relationships between Mitsui companies is that between Mitsui Chemical and Toyo Rayon. Mitsui Chemical is the largest domestic producer of carbolic acid, accounting for 80 percent of national output. Virtually all of Mitsui’s production is taken by Toyo Rayon for the manufacture of nylon and vinyl.²⁷

From the three cases described, the pattern of Zaibatsu re-emergence seems clear. On the one hand, each group’s bank is apparently to take the leading role formerly held by Honshas and holding companies, since there is no evidence of the revival of these latter forms. The growth in the role of the bank is a logical development. It does not run afoul of remaining laws and restrictions. Furthermore, the much greater dependence of Japanese industry on borrowed funds in the postwar era greatly increased reliance on the banks and thus made the bank’s role more vital and essential than ever before.²⁸

As the accompanying table shows, industrial companies have depended much more heavily upon external sources of funds in the postwar period than in earlier years. Naturally, the ability of Zaibatsu banks to give preferential treatment to companies of their own group was a valuable tie and source of authority. As the Mitsubishi Economic Research Institute has said: “In Japan, the sources of industrial funds are overwhelmingly external, consisting in particular in borrowings from financial institutions. The dependence on the issue of shares and debentures is very low.”²⁹

SOURCES OF INDUSTRIAL FUNDS IN JAPAN

Source: Mitsubishi Economic Research Institute.

The second phase of Zaibatsu re-emergence which is taking form appears to be mergers and consolidations, especially in the field of trade. The movement seems to have made greater headway in commerce than elsewhere because of encouragement by the government, which apparently feels that it is an essential step in the restoration of Japan’s foreign trade. Also the fragmentation of trading firms was greater than in other fields, resulting in a very large number of weak firms, inadequately capitalized and staffed. The president of Mitsubishi Shoji asserted:

The evil of excessive competition is apparent, too, in the field of various trade commodities. For example, some 15 trade concerns vied to get an import contract for 30,000 tons of coal for a certain Japanese customer. The result was that this exaggerated into a deal for the import of some 450,000 tons of coal on the U.S. market and boosted the freight rate within a single day. The writer considers that this system of preposterous waste of energy and inefficient bidding should and can well be rectified.³⁰

It should be noted that the regrouping of the Zaibatsu firms is taking a form very different from the prewar pattern. The families which formed the nucleus of the Zaibatsu in the past lost their financial preeminence after the war. The capital stock of their former companies is now many times greater than before the war and more widely held by the general public. But as one survey noted: “In fact the zaibatsu mechanisms have been destroyed, but the spirit of cooperation in management in which they acted hand in hand to attain a common object, regardless of individual interests, has been kept alive, and they still maintain close relations in production and transactions, in techniques and management. . . .”³¹ Or, to put it more succinctly: “Thus, the companies formerly associated with the former Zaibatsu have succeeded in regaining leading positions in the principal industrial branches despite the various restrictions.”³²

THE LABOR MOVEMENT

Possibly on the theory that no one would oppose an organization known as the Friendly Love Society (Yuaikai), Japanese labor set up in 1912 an organization which is generally held to mark the beginning of the modern labor movement in Japan. The government, however, was not deceived. The Friendly Love Society ran afoul of the Peace Preservation Law (designed to preserve industry’s peace from labor’s friendly love) and the police made short shrift of it. Nor was labor organization, under different guises, very much more successful in later years until General MacArthur and Theodore Cohen came along. (Theodore Cohen, earlier of OSS, was General MacArthur’s first Labor Division chief. He is generally credited with encouraging the development of the postwar Japanese union movement.)

The peak of the prewar union movement was reached in 1936. The organized membership totaled only 420,589, or 6.9 percent of the non-agricultural labor force. The Mobilization Act of 1938 establishing government control of wages and hours, and labor conscription, together with the establishment of the Industrial Patriotic Society (Sampo), the government-controlled labor front, ended the existence of the comparatively small number of free unions that had developed up to that time.³³

According to an Occupation report:

Sampo was under the jurisdiction of the Welfare Ministry and maintained rigid control of labor. It became purely a tool to expedite the war effort and free labor organization was crushed. The Public Peace Police Act had already severely restricted labor activities in time of strike. Thus at the time of the Surrender the Occupation found practically no labor organization extant.

The response of the workers of Japan to the policies of the Occupation encouraging the organization of labor and collective bargaining with employers was almost instantaneous. On October 11, 1945 the Supreme Commander issued instructions to the Japanese Prime Minister that the unionization of labor should be encouraged. The organization of unions following the Supreme Commander’s instructions to the Prime Minister was remarkable. At the time of those instructions, there were five unions in Japan with a total membership of 5,300. By January 1946 the number had grown to 1,179 unions with almost 900,000 members; by the end of 1946, the number stood at 17,000 unions and 4,800,000 members.³⁴

The peak of union membership came in 1948-49. The decline after 1949 was due in part to the deflationary policies imposed in that year and the subsequent failure of a number of small and medium-sized firms. Official discouragements also took their toll. Professor Levine^* states:

SCAP’s initial encouragement for unionism was blunted as early as 1947 with the prohibition of the February 1 general strike. A cautious attitude toward labor led eventually to further GHQ-approved restraints; denial of union rights to government workers (1948), revision of the postwar Trade Union Law (1949), and removal of trade union leaders from positions of influence under the Dodge plan retrenchment (1949) and the “Red purge” (1950). These measures were thought by many the end of labor’s opportunity to assume an important role in the new Japan. They took their toll. From the high point of seven million reached early in 1949, total membership dropped to about 5.5 million during the next two years. Of the 35,000 union organizations that had sprung up, almost one fourth had disappeared by 1951.³⁵

Since the low point in 1951, however, the Japanese labor movement has exhibited a surprising degree of stability and resiliency, despite continued official attempts at restraint, such as the emergency strike law of 1952 and the Coal and Electric Strike Control Act of 1953. With 36 percent of all paid employees organized (1957), the Japanese ratio is comparable with that in Western countries (United States 35 percent, United Kingdom 45 percent), although, as Professor Nakayama points out, one must take into consideration the smaller number of paid employees in Japan in proportion to the total number of persons gainfully occupied—46 percent in Japan against 90 percent for Britain and 80 percent for the United States.³⁶ The lower percentage for Japan is due to the presence in the labor force of a large number of family workers (30 percent) and self-employed (24 percent), engaged in agriculture and small business.³⁷ This may be seen in the following tabulation:

UNION MEMBERSHIP IN JAPAN, 1946-1957

a End of June each year.

Source: Ministry of Labor, Tokyo.

Agriculture and small enterprise in Japan are hardly touched by unionism. The bulk of the unionists are found in larger enterprises, especially in mining, transportation, and communications, and in government service. Surprisingly, as Table XI-3 reveals, government workers are more highly unionized than are those in manufacturing. A high degree of organization is found in such fields as iron and steel, electrical products, chemicals, coal and metal mining, banking, teaching, government-operated railroads, etc., whereas the rate of unionization is low in agriculture, fishing, textiles, ceramics, retail and wholesale trade, and construction.

There is a queer dichotomy in the Japanese labor structure between the large national labor federations, which are mainly concerned with political action, and the unions themselves, mainly “enterprise” unions, each largely absorbed in wresting economic benefits from its own management. Levine estimates that 90 percent of all Japanese unions are organized on an “enterprise” basis. He declares:

Operationally this means that, for economic purposes, the unions have attempted to match their span of control against that of the managerial entity. In Japan, each modern industrial enterprise, whether privately or publicly owned, has played a distinct and specific role within the economy. . . . This legacy of discreteness carried over into the postwar years despite the zaibatsu “dissolution” and attempts to prevent the reemergence of cartels. Even among the government operations, where there is a single employer unmotivated by profit, sharp distinctions between agencies are readily apparent. As a result unionists have displayed an “enterprise” consciousness, as opposed to a craft, industrial, or even working class ideology. This instrument of enterprise organization has provided unions with effective means to match the power of managements. . . . All these internal organizational features tend to fortify the preoccupation of the enterprise union with its status in the enterprise rather than with the development of a unified, horizontal trade union movement. This inward orientation, paradoxically, has served to give durability to widespread unionism while remaining a major obstacle to labor unity.³⁸

TABLE XI-3. UNION MEMBERSHIP IN JAPAN BY MAJOR GROUPS, JUNE 1957

a Total for all industries includes industries not listed in table.

b Calculated from the number of union members according to the Ministry of Labor and the number of employees according to the Survey of the Labor Force, Statistical Bureau, Prime Minister’s Office.

Sources: Statistical Bureau of the Prime Minister’s Office, and Ministry of Labor, Tokyo.

Union activity of this variety has produced some significant economic gains for Japanese workers. Real wages, for example, in 1956 were 13.5 percent higher than the 1934-36 level and 33 percent above 1951. Cost of living bonuses, fringe benefits of various types, family allowances, etc., make the Japanese wage system a strange affair to Western eyes.³⁹ For example, the new wage system in the Japanese electric power industry looked somewhat as follows as of March 1955:

Source: Japan Electric Industry Workers Union.

The establishment of a Labor Ministry and a series of favorable laws enabled the unions to press their advantage. The four basic statutes were (1) the Trade Union Law, promulgated in December 1945, which sets forth the basic right of workers in private industry to organize and bargain collectively and to strike; (2) the Employment Security Law of November 1947, which authorizes the government to operate a system of free public employment exchanges, provides for public support of vocational guidance and vocational training, outlaws labor bosses and other undemocratic forms of labor recruitment, etc.; (3) the Labor Standards Law of April 1947, which prohibits all forms of involuntary servitude, establishes standards relating to wages, hours of work, rest days, overtime, vacations, safety and sanitation, employment of women and minors, apprenticeship, workmen’s compensation, dormitories, etc.; and (4) the Labor Relations Adjustment Law, setting up machinery for settlement of labor disputes, passed in September 1946.⁴⁰

These acts, as well as others such as the Unemployment Insurance Law and the Workmen’s Accident Compensation Act, gave the unions the legal basis for their purely economic activity, which, on the whole, from their point of view, has been largely successful. The economic gains of Japanese unions in the postwar era have been substantial. This is not surprising as they were supported by favorable legislation and were contending against weakened managements.

The national labor federations, in their political activities, have, on the other hand, been relatively unsuccessful. With the local unions working day in and day out for economic gains, the loose superstructure erected above them has tended to concentrate on ideological and political controversy. As might be expected under the circumstances, there have been numerous shifts, splits, reorganizations, and new formations, too numerous to trace in detail here,⁴¹ but sufficiently disruptive to limit severely the effectiveness of national labor organizations in Japan.

No sooner was the postwar unionization drive under way than two rival national organizations sprang up in mid-1946. One was Sodomei (Nihon Rodo Kumiai Sodomei, or General Federation of Japanese Trade Unions); the other was Sanbetsu (Zen Nihon Sang-yobetsu Rodo Kumiai Kaigi, or National Congress of Industrial Unions). Sodomei was a revival of a prewar organization of that name; it consisted of right-wing labor elements and supported the newly established Social Democratic Party. A confederation of 24 prefectural federations and four industrial unions, it had approximately 850,000 members and drew its support mainly from light industry (textiles) and smaller enterprises. Sanbetsu, on the other hand, which represented the leftist elements, was largely under control of the Japanese Communist Party,⁴² and was organized on a national industrial union basis. It claimed 1.6 million members and drew its support from government workers, miners, electric power, transportation, and other heavy industry groups. At their peak, the two organizations together represented only half of organized labor; the remaining 50 percent preferred to stay unaffiliated with either “center.”⁴³

Communist leadership in Sanbetsu was attacked within the unions by the Mindo, or Democratization Leagues, which originated in 1947 in the large, Communist-dominated National Railway Union. In 1948 and 1949 the Occupation and the government imposed new restrictions on labor activity; government employees were forbidden to strike and changes were made in the Trade Union Law and the Labor Relations Adjustment Law. These developments led to a sharp decline in Sanbetsu membership. By the end of 1949 it had lost half its members. The Red purge in 1950, when known Communists were removed from both government and private employment, completed Sanbetsu’s demise. This cleared the way for the formation of a larger federation of right-wing unionists, and in mid-1950 Sohyo (Nihon Rodo Kumiai Sohyogikai, or General Council of Japanese Trade Unions) was organized by a combination including the Mindo groups, Sodomei, Shinsanbetsu (a group of 200,000 which had withdrawn from Sanbetsu in 1949), and various unaffiliated national unions, all anti-Communist or non-Communist.

No sooner was Sohyo under way than dissension, disagreements on ideologies and tactics, and splintering began. In July 1951 Shinsanbetsu voted to withdraw from Sohyo with half its original membership. The same year, the right wing of Sodomei, which controlled about a third of the membership, voted to leave Sohyo and reconstitute Sodomei as an independent federation. During 1952 dissensions within Sohyo grew as Communist influence among Sohyo unions increased and Sohyo turned more to political action. As a result, in 1953 the electrical workers, textile workers, maritime workers, teachers, auto workers, and railway workers withdrew. Soon afterward, in April 1954, the right-wing unions, including Sodomei, formed a new rival federation, Zenro (Zenkoku Rodo Kumiai Kaigi, or Congress of Japanese Trade Unions). Its membership favored the right-wing Socialists and sought membership in the International Confederation of Free Trade Unions (ICFTU). Only a third of the Sohyo unions joined the ICFTU.

Although it continues to be the leading labor federation in Japan, with 3 million members (see Table XI-4), Sohyo has been torn by internal dissension. In 1955 a “third-force, neutralist” group, the Ota faction, succeeded in ousting the anti-Western, pro-Soviet Ta-kano faction from control of Sohyo. At its 1956 national convention, however, Sohyo rescinded its policy of non-cooperation with the Japanese Communist Party and declared that it had opened the way for the Communist Party to aid it in “joint struggles.” In line with this change of attitude, Sohyo has become increasingly active in establishing ties with the Communist world. In mid-1957 the Oriental Economist noted that “the Sohyo ‘spring offensive’ this year was nothing more than a Communist Party offensive ‘by proxy.’ ”⁴⁴ By late 1957 Communist domination of Sohyo was too apparent to leave any doubt.

TABLE XI-4. MAJOR TRADE UNION FEDERATIONS IN JAPAN, MARCH 1957

Note: Unions which are members of two or more national organizations are counted in each organization; hence the total number of union members does not agree with the aggregate of separate organizations.

Source: Ministry of Labor, Tokyo.

The national federations, then, at first Sanbetsu and Sodomei, more recently Sohyo and Zenro, are but loose groupings of unions, reflecting ideological and tactical differences. The dominant national organization, at present Sohyo, has been anti-American and pro-Communist in outlook, and in Japanese national elections has concentrated on trying to defeat the conservatives and bring the Socialists to power. It has not succeeded in most of its undertakings, and, like its predecessors, it has given rise to a rival, Zenro, which opposes its political emphasis and many of its policies.

COUNTERVAILING FORCES AT WORK

Recent years have seen a polarization in Japanese political and economic life. There is now a right and a left in Japanese politics, but no center. The merger of the Liberal and Democratic parties in November 1955 produced a single conservative organization, the Liberal Democratic Party (Jiyu Minshuto). This was paralleled by the merger in October 1955 of the right and left-wing Socialists into the Social Democratic Party of Japan (Nihon Shakaito). While both the conservative and the Socialist coalition are uneasy alliances which could break apart at any time, there appears to be more lasting consolidation and less ideological difference among the conservatives than between the right and left-wing Socialists.

On the economic front, the first half of the past decade saw the business group weakened and buffeted about, while labor was rapidly organized and unionism encouraged and strengthened. The last half decade has seen the process reversed. The authority of business management has been restored. Business combinations and alliances are growing. Capital investment is mounting, profits have risen, and output has expanded greatly. The relative position of labor has been weakened, though real wages have continued to rise and fringe benefits are numerous. On a local level, unions have about held their own but on a national level their federations have achieved nothing beyond what was given to them by the Occupation. They have been fighting defensive actions while their energies have been sapped by ideological differences and tactical bickerings.

The businessmen, of course, back the conservative party, chiefly with funds. Labor, on the whole, backs the Socialist party. Since labor is more numerous than business, why does the conservative party carry elections most of the time? The answer seems to be that in addition to business managers, former landlords, and wealthy persons, the conservatives have managed to gain wide support among farmers and in the ranks of small business. It is apparently the votes of the agricultural and small business communities which keep them in power. On the whole, the Socialists have made little headway with either of these two key groups. Should either or both, at some point, transfer their political allegiance, the balance of power in Japan would shift from right to left. Thus the drive of the national labor organizations for political power, a drive which did not succeed even when business was weakest, does not seem likely to meet with success so long as industrial output, foreign trade, prices, and profits remain high in Japan. A setback in world business and trade, on the other hand, with a resultant recession in Japan, might by its economic impact on farmers and small businessmen in Japan cause them to transfer their allegiance to the left. There is thus an important link between the level of world production and trade and the balance of political and economic forces in Japan.

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* I am much indebted to Professor Solomon B. Levine of the University of Illinois for lending me the completed manuscript of his “Industrial Relations in Postwar Japan,” an excellent study upon which I leaned heavily for background and orientation in this field.