Too often in historiography is capitalist development referred to as some sort of ‘qualitative miracle’; a process that comes about via the ‘awakening’ or ‘enlightenment’ of the people and/or economy. The idea that the economy, or for that matter the mass of people within, can experience a collective awakening is inappropriate to the study of both the humanities and the social sciences. Thus, quantifiable analysis should be employed to study the process of capitalist development, as proposed by the theory of historical materialism. This article uses the example of Imperial Japan, focusing on the period leading up to, and encompassed by, the reign of the Taisho Emperor (1912-1926).
Capital as the Dominant Social Relation
Historical materialism, as discussed by Anwar Shaikh, proposes that humans are conditioned by the production process in which they exist. Therefore, humans are shaped by the social relations of such a production process. In the capitalist mode of production, the dominant social relation is capital itself, emerging from the antagonistic and exploitative relationship between the bourgeoisie and the proletariat. It is the journey of an economy to promote capital to the most dominant social relation that is the process of capitalist development. In Japan, this process occurred in the years after the Meiji Restoration of 1868, culminating in the emergence of fully-formed capitalism by the end of World War One.
The Process of Capitalist Development
In the following formulae, (P = production), (M = initial money-capital), (M’ = profit in money-capital), (C = commodity), and (C’ = value added commodity). The theoretical path to the development of capitalism is fundamentally based around the method of profit accumulation; i.e. the process of turning M into M’. In each method, capital increases its influence as a social relation, and it is when the three methods fuse together that capital becomes the dominant social relation, and hence when capitalism appears fully-developed.
Stage I – This method is most commonly observed in the Industrial Revolution in Great Britain around the turn of the 19th century. It involves the qualitative transformation of a commodity and its sale in the following process:
(M – C … P … C’ – M’)
Here, the capitalist takes commodity C and adds value through the production process P to create C’. He can then sell C’ for a profit, to the value of M’ minus M. This process occurred in Japan soon after the Meiji Restoration, mostly due to the availability of international capital (i.e. M) accumulated by Japanese capitalists, who then spurred the Japanese ‘industrial revolution’. These capitalists mainly took the form of heavy industrialists and technological mechanics, including arms producers.
Stage II – The increase in available capital, i.e. the presence of M’ after Stage I, led to the appearance of the second profit method. Stage II involves acquiring a commodity and simply reselling it for a profit, as proposed in the following process:
(M – C – C – M’)
Here, the dual appearance of C is explained by the idea that the merchant does not actually alter the value of C, but generates M’ by the unquantifiable value of his service. This method of capital accumulation, to historical materialists, is considered somewhat parasitic, as there is no productive labour involved. In Japan, this method was mostly performed by merchants and white-collar workers, who began to fill the major Japanese cities in the early Taisho period. The development of this stage of capitalism is apparent in the changing material demand of the Japanese people: increases in urbanisation, cultural Westernisation, etc. It also suggests the increasing availability of surplus capital to the working class – as in, Marx’s working class – who began to be able to afford to sacrifice capital for convenience and service.
Stage III – This increasing availability of capital influences the third method of profit-hunting. Stage III involves advancing a loan in return for profit in the following process:
(M – M’)
Here, the capitalist simply lends money-capital and effectively generates profit in proportion to either the time it takes to transform M into M’, or the difference in value between M and M’. This is the most parasitic of all the methods of capital accumulation, as there is no productive labour nor added value involved in the generation of profit – i.e. the capitalist relies entirely on the labour-value of others to generate M’. In Japan, this stage was apparent in physical form in Tokyo, which in the early 1920s, became a hub of banks, multinationals, and the Japanese home-grown Zaibatsu – a set of monopolistic corporations, known for swallowing businesses and markets, creating effective domestic, economic empires. It is upon the appearance of this final form of profit generation, and its subsequence maintenance of the first two methods, that the capitalist mode of production is fully developed.
Japanese Capitalism After WWI
There is much evidence in favour of the idea that by the early 1920s and prior to the post-WWI recession, the Japanese economy had developed into a fully-functioning capitalist system. In fact, the occurrence of such a recession could in fact be proof of the capitalist nature of the economy, as the recession only occurred because the economy was developed. Not only, as mentioned, had the nature of demand changed between 1868 and 1920, but increasing urbanisation had revealed the dangerously wide disparity between not only city and country, but worker and capitalist. The decline of agriculture vis-à-vis the financial and service industries is another prominent example of the effects of Japanese capitalist development.
Hence, one can discern that by the combination of the three methods of profit generation, and their subsequent self-maintenance, over the period 1868-1920, Japan succeeded in launching itself into full capitalism. It is interesting to compare analysis of the domestic economy to Japan’s imperialist tendencies, which increased in accordance with the availability of capital and development of industry:
◾The 1874 ‘Taiwan Expedition’ was perhaps the first example of the deployment of the Imperial Army
◾The 1894-5 First Sino-Japanese War signified the transfer of political autonomy in East Asia from China to Japan
◾The 1905 Russo-Japanese War was the first true, significant defeat of a Western imperial power by a non-Western one
◾The 1932 establishment of the puppet-state of Manchukuo in Chinese Manchuria secured Japanese influence in China and set the stage for the 1937 invasion of China-proper
This continuously expansive foreign policy fits Lenin’s theories of imperialism as the highest form of capitalism, and adds emphasis to the effectiveness of quantitative analysis of economic development for explaining historical processes, such as Japanese economic development in the Meiji and Taisho periods.
Eatwell, John, Milgate, Murray, and Newman, Peter (eds.), 1987. Marxian Economics. New York: Palgrave Macmillan
Gordon, Andrew, 2003. A History of Modern Japan. Oxford: Oxford University Press
Lenin, Vladimir, 1916. ‘Imperialism, the Highest Form of Capitalism’. Collected Works, vol. XXII, 1964. Moscow: Progress Publishers
Article originally published at http://jpewinfield.wordpress.com/2013/05/14/quantifying-capitalist-development-in-imperial-japan/