´´ Eiichi Shibusawa - The Father of Modern Capitalism in Japan

Friday, March 11, 2016

Eiichi Shibusawa - The Father of Modern Capitalism in Japan

Very few people outside Japan have ever heard about the Japanese businessman Eiichi Shibusawa (1840-1931). Within Japan though he is known as one of the principle architects of the modern Japanese economy, and often dubbed the "father of Japanese capitalism", because of his founding and association of hundreds of business ventures

Eiichi Shibusawa: The Early Years

Shibusawa was born on March 16, 1840 on a farm of the Saitama prefecture near Tokyo. But he was not brought up by a family of peasants but rather by very wealthy farmers, who were also engaged in the business of processing and trading indigo products, needed to dye textiles, and silk raising.

Early education Shibusawa was given by his father, who taught him how to read and write. Shibusawa himself, on the other hand,  was already at early age engaged in the family business. He was responsible for negotiating business terms with indigo growers and weavers. Later on he studied the Confucian classics and the history of Japan under Odaka Junchu, a scholar who was also his cousin.

Kanson Minpi: Revering Officials And Despising The People

Because of his business activities for his father, every now and than Shibusawa would come into contact with Tokugawa Officials (Samurais), whom he despised because of their arrogance and their attitude of “revering officials and despising the people” (jap: kanson minpi)

During Shibusawa's childhood and youth Japan was still a strictly hierarchical and regulated society in which civil society had to show obeisance to their social superiors.
“For officials and the people to become of one accord to enrich the nation, the custom of revering officials and despising the people must be destroyed. This must be done to bring about a new era.” (Eichi Shibusawa)
Throughout Shibusawa's life he bemoaned that the "kanson minpi" attitude of Tokugawa officials conferred unearned status to them, promoted government abuse of power and was the main culprit of stifled private initiative. To him it was a serious hindrance to the development of Japan’s national wealth and power and had to be overcome.

When Commodore Matthew Perry forced an unpopular treaty on the Tokugawa shogun's government to open its ports for foreign trade, self-proclaimed “men of high purpose” (shishi) started to attack foreign settlements and Japanese government officials responsible for allowing foreigners to reside in Japan. Shibusawa left home at age 23 with the intention to joining a plot to attack foreigners in the treaty port at Yokohama. But soon he changed his mind and moved to Kyoto, by than a centre of revolutionary discontent.

Shibusawa's Years With The Tokugawa Hitotsubashi Family

His ambition and his thorough business knowledge must have impressed the right people. Because shortly after his arrival in Kyoto he started to work for Tokugawa Hitotsubashi Yoshinobu, who was in line for the position of shogun.

At the beginning Shibusawa dedicated his time strengthening the household finances of the Hitotsubashi family, a job he accomplished fabulously well. So well that Shibuswawa himself would become a member of the central government when Yoshinobu assumed the office of the shogun.

It is quite of an irony that Shibusawa's career started as an Tokugawa official, a position  he despised so much in his youth. But at least it was his ability, and not an unearned status, what would make him a member of the staff of Tokugawa Yoshinobu, who also granted him samurai status later on.

In 1867 Shibusawa accompanied the shogun's younger brother, Tokugawa Akitake, to the Paris Exposition. He stayed in Europe for nearly a year in order to study modern economics. He was impressed by the high status that  merchants and industrial leaders enjoyed in European societies, because it stood in sharp contrast to the disdain that Tokugawa officials had for merchants and business people.
"It occurred to me that the Tokugawa system of government was not good. In my view, it was only right that a person have full possession of his property and be judged on the basis of his intelligence and ability in dealing with his fellowmen" (Eichi Shibusawa)
His conviction of earlier years once again became vindicated and he became even more convinced that Japan had to change its attitude toward commerce if the country want to become wealthy and strong.

Shibusawa And The Meji Restauration

The new era was closer than Shibusawa had imagined. On his return home to Japan in 1868, he discovered that the shogunate had been overthrown. It was replaced by an imperial government under the emperor Meiji (Meji Restoration). Shibusawa immediately joined the newly established Ministry of Finance and helped reform the land tax and banking systems.

But already in 1873, he left government for good in a factional dispute, in order to take a position that suited him much better. Instead of being a government official he would become the first president of the First national Bank, (Dai Ichi Kokuritsu Ginkō now Mizuho), which he helped to establish when he worked for the Ministry of Finance.


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