Britain and Japan: A Comparative Economic and Social History Since 1900

Published by EH.NET (September 1999)

Kenneth D. Brown. Britain and Japan: A Comparative Economic and Social

History Since 1900. New York and Manchester, UK: Manchester University

Press, 1998. xii + 259 pp. $79.95 (cloth), ISBN: 0-7190-5290-4; $27.95

(paper), ISBN: 0-5190-5291-2.

Reviewed for EH.NET by Michael Smitka, Department of Economics, Washington and

Lee University.

Kenneth Brown, Professor of Economic and Social History at the Queen’s

University of Belfast, provides us with an interesting and generally lucid

study, based on a close and thoughtful reading of the English-language

literature on Japan and his knowledge of the UK from his own work on British

labor history. Both, he finds, were island-nations offshore from major

continental powers. Neither had the size or the resources sufficient to

sustain development without trade. Both became imperial and naval powers, in

tension with neighbors and, oddly enough, with the U.S., on the far side of

their respective oceans. Both ended up in wars on their neighboring

continent. And both ended up successful in providing their citizens with a

high standard of living. Extending these comparisons, then,

is one of the book’s goals.

To that end Brown employs a four-fold framework of production,

reproduction, power and authority, and ritual. Useful insights result,

particularly in the political realm. While Japan is noted for the long-lived

rule of the conservative Liberal Democratic Party, the British political scene

was also dominated by conservative governments. In both

cases, this was due as much to disarray on the Left as to electoral success by

conservative parties. Nor is Japan unusual for the role of money and

corruption. Indeed, in the 1980s British Conservative MPs averaged four

corporate directorships and two corporate chairmanships, while facing no

requirement for financial disclosure.

The analysis of earlier eras likewise helps dispel the image of Japan as

backward politically. Parties there did not assert political power until 1918,

with Hara Kei’s formation

of a cabinet based on the Seiyukai’s strength in the lower house of the Diet,

followed by expansions of the franchise in 1919 and 1925. But the late onset of

“democracy” was not all that unusual. Even in the UK the franchise was limited

for men until 191 8,

and universal suffrage came only in 1928; mass-based political parties likewise

dated from the World War I era. However, Brown’s focus on a Left-Right split in

Britain does not extend to Japanese politics of that era, where the points of

departure between the two main parties were less ideological. The parallel is

thus less strong than is implicit in the author’s framework. Unfortunately the

book does not delve into the policy tensions between the “positive” economic

policies of the Seiyukai and the fiscally orthodox Kenseikai (later Minseito),

with its commitment to returning to the Gold Standard. (See Takafusa Nakamura,

A History of Showa Japan, 1926-1989, University of Tokyo Press, 1998.)

I, for one, would be curious to know if there was a similar

tension in the British political scene.

Most of the book, however, reflects the theme of learning from Japan. Brown

cites a 1990 essay by Michael Heseltine in the Independent. “The lessons

of Japan’s business success are no secret. They are there to be learned and

the UK has more to learn than most” (p. 5). He includes Britain in a

comparative historical framework to circumvent the “danger of confusing what

has been distinctive with what has been causally significant” (p. 5,

citing a work by Marsh and

Mannari). Ironically, Brown continues, “Finally,

there is no reason to assume that Japan’s success is permanent.” Given our

current perspective of a Japan mired in recession for the decade of the 1990s

–clearly not the author’s perspective at the time the book was written –this

is apropos. Indeed, we are cautioned that “in the U.S., where the

multidivisional structure was most fully developed, economic growth was not

particularly impressive by international standards …

Larger corporate size was not often matched by larger plant size [and mergers

reflected] corporate conspicuous consumption.” The book does go on about

problems with British education and corporate management, but in fact such

arguments are not pushed very far. Brown’s examination of Britain in the light

of Japan’s experience fails to provide a compelling explanation for British

exceptionalism on the corporate front.

Perhaps Britain was not exceptional. As noted, Brown wrote before the full

extent of Japan’s recent decline became apparent, and in apparent ignorance

that by 1980 there was public hand-wringing inside Japan of “hollowing out,”

the worry over the loss of manufacturing jobs — deindustrialization

— that the author shares with Heseltine. In one sense hollowing out is good,

in that it is the natural consequence of the secular increase in demand for

services that is found throughout the high-income countries, the provision of

which perforce requires a decline in manufacturing’s share of employment. But a

second source of comparative performance in manufacturing surely lies in

short-run macroeconomic conditions. The author’s analysis of such issues,

however, is impressionistic, even where data could readily be brought to bear.

One example is his criticism of Britain’s stop-and

-go macroeconomic policy, which in turn reflected the chronic balance of

payments problems that was tied to five recessions during the course of the

1950s and 1960s (p. 154). But Brown down-plays Japan’s similar experience with

balance of payments-induced

problems, which included a trip to the IMF in 1961. Indeed, quick calculations

show the variance of both nominal and real British GDP growth was much lower

than Japan’s, though in Japan’s case average growth was sufficiently high that

growth rates remain0ed positive even in such cyclical downturns. (See the note

below.) If one takes the perspective of a businessmen trying to plan for the

future, then neither country was a paragon of stability. I am thus skeptical

that “Japanese industry proved far more responsive than Britain’s to such

policies.”

The analysis is similarly weak with exchange rate issues, which surely affect

comparative manufacturing performance. Was the fixing of the yen at

$1 = Y360 in April 1949 really good, when Britain devalued the pound just

months later? After all, as just noted, Japan suffered chronic

balance-of-payments problems for most of the next two decades, and saw large

swings of the value of the yen in the 1980s and 1990s. Might not a stubborn

defense of the sterling prior

to the 1967 devaluation have been part of Britain’s problem? He also downplays

the role of exchange rates in his comparison of the interwar experience (pp.

50-52). Surely one source of Japan’s slow growth during the 1920s was a

stubborn attempt to return

to the gold standard, finally implemented in January 1930. Likewise, Japan’s

strong growth from 1933 was due in large part to the devaluation that followed

Japan’s departure from the gold standard in December 1932.

Elsewhere, Brown claims (p. 185) that “the best hope [of the UK] of escaping

the problems [of the 1970s] lay in exporting.” He undermines his own case,

however, by pointing out in the same section of the book that the main engine

of growth in Japan during the 1950s and 1960s was domestic demand

(p. 183) and that manufacturing in the UK was not the dominant source of

employment (Table 6-2, p. 182).

At the start of the volume, Brown tempers reader’s expectations for easy

lessons from “juxtaposing two societies at very different stages of

development.” The focus on institutional lessons, and the general lack of

careful

statistical comparisons accentuates these difficulties. In places his four-fold

framework makes it difficult to keep chronologies straight,

and the attention given to the various elements varies from era to era. The

book does nevertheless provide a ready overview of key political and economic

trends, and many thoughtful cautions for those seeking to make facile

comparisons. Despite his agenda of searching for lessons from Japan to

help Britain with its decline, the book is weakest when the author discusses

“deindustrialization,” and strongest when he compares industrial democracy.

Those sections — chapters 4 and 7 in particular — are fun, but the more

narrowly economic history portions are at best useful for the general

background they provide.

* My calculations. For Japan, the standard deviation was 2.4% (real growth)

and 4.4% (nominal), using annual data for 1955-1973. For the UK these were 1.7%

and 3.1%, respectively, using data for 1951-1973 (UK). (Official national

accounts data for Japan only begin in 1955.)

Michael Smitka is Associate Professor of Economics at Washington and Lee

University. He edited a 7-volume series of reprints, Japanese Economic

History, 1600-1960

(Garland Press, 1998). With the new semester starting he is mainly teaching,

but in his spare time he will continue work on the automobile industries in the

US and Japan during the past two decades.