The secret to East Asian modernisation

ESSA Writers
InternationalEconomic Development
March 21, 2014

Throughout history the idea of central planning as a means to achieving social, political and economic reform has been widely debated. In the late 1950s, China and the Soviet Union utilised communist principles to further the process of industrialisation. Market-based economies such as Japan and other western European countries like Germany also employed an authoritarian government in their pursuit to move from agriculture to modernise and become more focused on industry and large scale production.

Both China and the Soviet Union utilised what was beyond the natural course of industrialisation. Mao Zedong threw China into a frenzy during the Great Leap Forward with his big push to industrialise the economy. During the Maoist era, widespread death occurred as a result of “half baked and poorly executed economic programs.” Millions of people died under radical collectivisation, which included coercion, terror and systematic violence. Central planning also inflicted unprecedented damage to agriculture, trade, industry and transport. Because of the hard-line approach Mao took in implementing his visionary though poorly executed political and economic reforms, people were forced to cut corners in their relentless pursuit of higher output, with factories spewing out inferior goods that accumulated and went abandoned, resulting in the greatest demolition of property in human history. Peasant resistance during the collectivisation campaign was largely ignored, and people were left to resort to desperate measures to survive. Mao’s focus on heavy industry saw high levels of investment, leading to strong growth in industrial output between 1952 and 1978. Even though the command system of collectivisation was effective in record time, it was done with the expense of tremendous waste and human loss.

In contrast, the Japanese government was motivated by different factors in its pursuit of modernisation. Japan wanted to find ways to become self-fulfilling. The process of industrialisation in Japan was paired with external aggression and the acquisition of colonies to compensate for a lack of resources. What resulted from the Japanese government’s top down initiative was the transformation of a society that was predominantly feudal to a modern industrial powerhouse. What distinctly differentiates the Japanese experience from the Chinese one is the fact that Japan did not completely abandon agriculture in favour of industry. Structural change took place gradually – with a shift from agriculture to manufacturing, to capital-intensive large scale industry, without destroying the small scale and traditional sector. Agriculture remained a fairly important source of economic growth and employment. The industrialisation process was not accompanied by huge upheavals in social structure as the Japanese government recognised the importance of traditional elements of agriculture, which even to this day coexist with modern industries.

Another part of Japan’s success that differentiates itself from the industrial policy of China is the fact that it did not put an overwhelming emphasis on quantity of industrial output at the expense of quality. Its industrialisation policy was not as heavily focussed on achievement of targets, rather the Japanese also made improvements to efficiency to aid the achievement of its goals. For example, the Japanese sought to improve agricultural concepts in the irrigation of rice crops as well as developing modernised ways to reel silk off the cocoons. Rice was one of Japan’s staple crops, yielding many benefits for the economy overall in terms of improved efficiency. By combining industrial work with farming, Japan was able to upgrade a workforce that was predominantly involved with agriculture with all-important industrial experience.

The use of central planning to initiate the process of moving from agriculture to industry was both necessary and inevitable. From history we learn the importance of creating an adequate incentive structure to encourage collaboration. The Japanese government devised an effective system which respected people’s livelihoods without destroying them. Central planners of China made decisions in pursuit of ill-understood objectives, which led to enormous social, political and ecological repercussions.

Dikotter, Frank, “Mao’s Great Famine,” Bloomsbury Books, (2011): xi-xviii Naughton, Barry, “Growing Out of the Plan,” Cambridge University Press, (1995): 3-24 Pomeranze, Kenneth, “Political economy and ecology on the eve of industrialisation: Europe, China and the global conjecture,” American Historical Review, (2002): 107, 425-46.