Japanese Manufacturing
A history of nationalization, privatization, and regulation of Japanese manufacturing.
Contents
History
The Meiji Restoration initiated a period of technology adoption and investment in manufacturing. However, manufacturing was almost exclusively controlled by four vertically-integrated zaibatsu (財閥): Sumitomo (住友), Mitsui (三井), Mitsubishi (三菱), and Yasuda (安田).
As military interests gained power, the Empire of Japan placed priority on munitions. Significant portions of zaibatsu were nationalized. Exploitative state-run companies were established in colonies to further augment the military's productive opportunities.
After World War 2, GHQ pushed a series of reforms to corporate law that largely broke up the zaibatsu. Many were dissolved, while others reformed into keiretsu (系列). The Korean War saw further investment by the U.S. armed forces, as well as increased commercial activity by military personnel. Military bases became economics centers.
Until 1973, Japan benefited from rapid technological advancement and growth in commercial and manufacturing sectors. Factories and foundries quickly pivoted from war economy into consumer goods. The so-called 3 sacred items (refrigerators, washing machines, and televisions) were seen as key export products. The MOF and MITI were active interventionists. With the primary goal being full employment, rather than efficient labor, those ministries organized supply chains to have the maximum number of small-to-medium businesses as middlemen.
The bureaucratic and regulatory processes came to be dominated by an 'iron triangle' between the LDP, the MOF, and keiretsu.
Japanese manufacturing continued to develop technologically, and by the 1960s the new 3 sacred items were cars, color televisions, and coolers (A/C).
In the 1970s, the Japanese economy began a sharp decline. Oil shocks, and more generally the unrest in the Middle East, led to disruptions of international supply chains. Many of the largest manufacturers, especially of cars, reincorporated as MNCs and relocated overseas. There are numerous motivations: more favorable tax rates, more reliable supply chains, and cheaper labor forces to name a few.