Modern Japanese History

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  • Topic: Japan, Economy of Japan, Keiretsu
  • Pages : 6 (2017 words )
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  • Published : November 7, 2011
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Leo Miyazawa
HIS 242: Modern Japan

Post-War Japan: The Fall of the Zaibatsu and Restructuring
Post-War Japan: The Fall of the Zaibatsu and Restructuring

As the news of the end of World War II spread around Japan and Emperor Hirohito's official announcement confirmed Japan's defeat, the idea of occupation became more than just a shadow in the back of the people's minds; this was real. The arrival of General MacArthur in early September of 1945 marked the beginning of a new chapter in the history of Japan. Although changes were made to the Japanese culture and government, perhaps the most important changes were the ones made to Japan's economy. Up until then, the zaibatsu ("financial clique" ) had been largely responsible for mobilizing labor and capital in the country and were the country's largest and richest oligopolies. These financial giants were the foundation of modern Japanese economy since they played a great part on its stabilization and recovery, eventually leading to a period of unprecedented growth. To understand why this oligopoly was so important and how these giants came to be one must look back at the late 1800's and early 1900's. It was in those years where the zaibatsu started to obtain notoriety, the most famous ones being Mitsui, Mitsubishi, Yasuda and Sumitomo. They began by investing in businesses that dealt with transportation, manufacturing, shipping and later on, banking. The four most famous zaibatsu held assets that were equal to just about the entirety of Japan's economy. In the end, the process of restructuring Japan after the war was an undertaking of herculean proportions that propelled Japan into the top economies of the world.

The reason why the Japanese monopolies were unique was that they were not limited to a single industry or line of work: "rather than specialise, as foreign firms by then mostly did, they gained scale through agglomeration, with a family-run holding company typically controlling financial, manufacturing, mining, shipping and trading units" In other words, they could function independently from one another. These investing families were among the elite, and can be classified into two distinct groups: old families that persisted through trading in the 17th century who seized various trading opportunities as they opened up during the Meiji era, and the new mercantile families which surfaced after the Meiji Restoration, although this is only a distinction based on age since the zaibatsu operated in a similar manner compared to each other. The problem with the zaibatsu was that it didn't quite agree with American business standards, which caused occupation forces led by General MacArthur to seek ways to end the zaibatsu's widespread control over the economy (and what they thought were the fuel of Japan's militarism). During 1945 an on, occupation reformers took away ownership and control from companies dominated by the zaibatsu families (Mitsui, Sumitomo, Yasuda, Iwasaki, Asano and others) and decreased their size by dividing larger firms under their control. Such moves were not supported by the bureaucrats who were tasked with overseeing the economy since they were firm believers that the key to a strong and healthy economy was cooperation between large firms and the state: "They viewed American policies to dissolve the zaibatsu as utterly naive". It turns out that the bureaucrats were actually right about the issue. The zaibatsu banks were already considered to be nationally important due to the magnitude of their transaction capacity and its essential function in the economy. However, the dissolution of the zaibatsu had already begun in 1945 with the Potsdam Declaration, slowed only by the Cold War around 1947; "of the 300 companies picked for break-up on antitrust grounds, just 20 went under the mallet". Even so, the influence of the zaibatsu would continue to exist for a long time still.

When Japan's American occupation forces left in 1952, the...
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