Yasuba 1975 PDF

The Society for Japanese Studies
Anatomy of the Debate on Japanese Capitalism

Author(s): Yasukichi Yasuba
Source: The Journal of Japanese Studies, Vol. 2, No. 1 (Autumn, 1975), pp. 63-82
Published by: The Society for Japanese Studies
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YASUKICHI YASUBA
Anatomy of the Debate on Japanese Capitalism
Almost half a century ago, a bitter debate was started between two
factions of Marxists on the nature of prewar capitalism in Japan. The
debate, which has come to be known as the Nihon shihonshugi ronsa
(the debate on Japanese Capitalism) swelled into the largest, if not
the most significant, controversy in Marxist economics and economic
history in Japan. It affected virtually all Japanese intellectuals, Marx-
ist and otherwise, and has continued into the postwar period. Hun-
dreds of articles and books have been written in the course of the
debate, and at least half a dozen histories' of the debate have been
published.
The two opposing schools in the debate are called kozaha and
r6n5ha. The kozaha, so named because people who first represen
the school published their main views in Nihon shihonshugi hattatsu-
shi k5za (Lectures on the History of the Development of Japanese
Capitalism)2 contended that the basic nature of Japanese capitalism
was determined, around the turn of the century, by a feudal or semi-
feudal agrarian landownership which had been inherited almost in-
tact from the feudal period. Hence, they called for an agrarian
revolution as the first step toward the "true" revolution. Their main
opponents, the ronoha, so called because some of the earlier writers
were associated with the journal Rono, appeared mainly as critics of
the kozaha and insisted that the Meiji Restoration, despite its incom-
A preliminary version of this article was published as "Keizai hattenron ni

okeru 'nijfl-koz6' no riron to 'Nihon shihonshugi ronsa'," Shakai Keizal
Shigaku, Vol. 34, No. 1 (1968).
1. To mention only the more important, Uchida Jokichi and Nakano
Jiro, Nihon shihonshugi rdnsd, 2 vols. (Shink6 Shuppansha, 1949), Toyoda
Shir6, Nihon shihonshugi ronso5 hihan, 3 vols. (Taya Keizai Shinposha, 1958-
59) and Tsushima Tadayuki, Nihon shihonshugi ronsd shiron (Odosha, 1947).
2. 7 vols. (Iwanami Shoten, 1932-33).
63
64 Journal of Japanese Studies
pleteness as a bourgeois revolution, had basically g

ism. To them, high agricultural rent, the low stan
peasants, and low industrial wages were things that would have to be
explained by non-feudal elements such as competition among tenants
and the insufficient expansion of industrial employment.
Since the kozaha position represented the strategy of the oppressed
Communist Party, the debate inevitably acquired strong political over-
tones, with the k5zaha characterizing its critics as betrayers and sep-
aratists and the ronnha ridiculing the slavish-sometimes pathological
mentality of its opponents. Moreover, as with all Marxist contro-
versy, both schools unfortunately but inevitably tried to prove their
legitimacy by relating their positions to certain portions of Das Kapi-
tal. These characteristics have helped make the debate all but incom-
prehensible to outsiders.
In this paper, I shall try to summarize some economic arguments
involved in the debate, particularly in that portion of the debate
called the "feudalist controversy" (h5ken ronso), and pose-and
answer when possible-a few questions from a marginalist viewpoint,
i.e., from that of modern non-Marxist economic theory. I shall do
this partly because of the importance of the debate in the intellectual
and political history of Japan and partly because of my interest in
the intriguing similarity between the kozaha model and the modern
theory of dualistic development.8
The Kdzaha Model of Japanese Capitalism
Few economic historians would deny that industrial wages and

the living standard of workers and peasants in prewar Japan were
quite low by modern standards.4 According to the statistics cited by
3. Nihon shihonshugi hattatsushi k6za was planned and edited by Otsuka

Kinnosuke, Noro Eitar6, Hirano Yoshitaro, and Yamada Moritaro. Noro,
who could not write for the koza due to poor health, has an earlier book on
Nihon shihonshugi hattatsushi (Tett6 Shoin, 1930) and two other main con-
tributors, Hirano and Yamada, soon published the revised versions of their
writings in book form; Hirano Yoshitar6, Nihon shihonshugi shakai no kik5
(Iwanami Shoten, 1934) and Yamada Moritar6, Nihon shihonshugi bunseki
(Iwanami Shoten, 1934). Hence, I shall be referring mainly to these books in
reconstructing the ko5zaha model. For simplicity they will be referred to re-
spectively as Hattatsushi, Kike, and Bunseki. Hattatsushi will be quoted from
Noro Eitar6 Zenshil, Vol. 1 (Shin Nippon Shuppansha, 1965).
4. Yamada unfortunately characterized the low wages of female operatives
in spinning factories as "sub-Indian," Bunseki, pp. 24-25. As Sakisaka
quickly pointed out, Yamada's evidence for 1891 concerned not wages but
Yasuba: Capitalism 65
Sakisaka Itsur6,5 weekly wages in c

were 5.8 yen and less than one-half o
and less than one-fifth of wages in the U.S. Yamada described these
low wages as "semi-servile" (han-reidoteki) and found workers
characterized by such wages in cocoon raising where secondary in-
come helped prevent the upper middle-class owner-farmers from
being destroyed, in weaving where poor peasants could get supple-
mentary income from domestic industry, in silk reeling where "semi-
servile" wage labor was organized into special manufactories, and,
most importantly, in spinning where "semi-servile" labor worked in
large factories under "sub-Indian" wages and life-obliterating work-
ing conditions.6 Hirano mentioned, in addition to these, mine workers
employed under a "semi-servile" system, as exemplified at the Taka-
shima coal mine, workers in casual trades in urban areas, and workers
under the sweatshop conditions typified by the match industry.7
What made the kIzaha model unique is the way these low wages
were explained. Writers in this school contended that a high feudal
or semi-feudal rent in agriculture took all the surplus value8 from
peasants with the result that their standard of living was barely suffi-
cient to maintain a subsistence living standard. This low standard of
living was supposed to determine the price at which rural labor was
supplied to the industrial sector.
There is little doubt that the rent on agricultural land was very
high. Yamada presented two sets of figures which indicate the rela-
tive levels of agricultural rent. Table I gives estimates of the changes
in feudal dues and rents for medium-grade paddy over a period of
centuries. According to his estimate, the level of the post-Restoration
rent was higher than that of the feudal dues. Even the ratio of the rent
to the harvest was not significantly lower than it was for the feudal
the wage cost per unit of output. The wage rate per unit of time for a
comparable mix of labor was probably higher in Japan even at that time.
Sakisaka Itsur6, Nihon shihonshugi no shomondai (Shiseid6, 1958), pp. 9-12,
originally published in Kaiz6, October 1935.
5. Sakisaka, p. 58. Statistics were taken from a secondary source. How-
ever, a comparison of official statistics by Ouchi Tsutomu for 1913-14 con-
firms the result. Ouchi Tsutomu, Nihon shihonshugi no nogy6 mondai (Tokyo
Daigaku Shuppankai, 1952), p. 173.
6. Yamada, Bunseki, p. 61.
7. Hirano, Kik5, pp. 97-100.
8. Most of the Marxist writers say that more than the entire surplus value
was taken as rent. In the Marxist context this qualification is essential, but
for simplicity it will be disregarded here.
TABLE 1
RENT OR FEUDAL DUE
(Medium-grade paddy field)
Dues or Rent
Koku Per Cent

Per Tan of Harvest
Kamakura soh6, 1186 0.439 44

Bunroku soh6, 1594 0.684 67
Teiky6 soh6, 1686 0.645 50
At land tax reform, 1873 1.088 68
1908-1912, average 0.898 53
1916-1920, average 0.972 51
Note: The first three represent feudal dues and the last three, rent.
Source: Yamada, Bunseki, p. 186. Yamada draws his estimates from a
variety of original sources.
dues. Table 2, which compares rent (per tan) in different countries,

reveals that rent was far higher in Japan than in any of the countries
shown.
Now, while these figures may be subject to modifications9 it was
not the figures but the explanations for the high rent in modern Japan
that drew criticism from the ronoha. According to the classical formu-
lation by Noro, "the relationship according to which Japanese land-
owners [took] the entire surplus value . . .-mainly in the form of
surplus crops-from tenants [was] based on feudal and traditional
'non-economic coercion,' (keizaigai kyosei) even though it [mig
be disguised in some free contracts."10 Explanations by Yamada and
Hirano were similar, except that, instead of feudal relations, "semi-
feudal landownership" was assumed by Yamada"' and "semi-servile
relations of dependence" by Hirano.12
How these feudal or semi-feudal relations survived into the post-
Restoration period is not entirely clear from the writings of the k6-
zaha, except that the rent continued to be as high as the feudal dues
had been and it was still paid in kind as in feudal days. Probably it
9. According to Nrinsh6, Nochi mondai ni kansuru tokei shiryo, the

average for the nation except Hokkaido and Okinawa was 68% in 1873, 54%
in 1908-12 and 51% in 1916-20. Ouchi, p. 10. The percentages are for
medium-grade paddy field and are likely to be overestimates, particularly the
one for 1873. See James I. Nakamura, Agricultural Production and the Eco-
nomic Development of Japan, 1873-1922 (Princeton University Press, 1966),
pp. 164-66.
10. Noro, Hattatsushi, p. 233.
11. Yamada, Bunseki, pp. 183, 184.
12. Hirano, Kiko5, p. 34.
TABLE 2
RENT TiN DIFFERENT COUNTRIES OF THE WORLD
ABOUT THE TIME OF WORLD WAR I
Yen
Per Tan
Japan, 1921
Paddy field (one crop) 31.746
(two crops) 39.597
Dry field 9.710-10.941
Mulberry field 23.275
England, before World War I 2.50
Scotland, 1912-20 2.00
Ireland, 1881-1920 1.80
Germany, 1913 1.92
Austria, before World War 1 2.46
France, before World War I 1.20-1.60
U.S., before World War I 1.00-15.00
Note: Japanese data represent daikinnd, o

and are taken from Honp35 kosaku kank3
Yasushi, "Nihon no nogy0 oyobi nt~gyO mo
Gendai Nihon keizai no kenkyai, Vol. 2 (K
Source: Yamada, Bunseki, pp. 188-189.
was Hirano who came closest to prese

historical account. According to the
ancy Practices (Kosaku kank6 cju5sa, 1921): "The rent was not
particularly affected at the time of the land tax reform. Except in
cases in which [measuredi acreage changed significantly, the tradi-
tional rent continued to be applied." Even in regions where the rent
was adjusted, it "was adjusted in such a way that the total amount of
rent would not changye, with the result that, even though rent was
increased or decreased depending upon the plot, the rent in general
... was not significantly different from the amount of the traditional
rent."'13 What happened in subsequent years was characterized by
Hirano as the failure of tenants to get reductions through protests
and law suits. Rent which had kept tenants below subsistence level
was sometimes raised to a subsistence level but only as a result of
reluctant concessions on the part of landowners.'4
Given a level of rent which left tenants only at a subsistence
level, the industrial sector could expand rapidly, receiving an unlim-
ited supply of labor from agriculture. Thus, despite the huge tech-
nological gap which separated Japan from the West, Japan's light
industry could successfully compete with that of the West. For
13. Ibid., p. 33.

14. Ibid., pp. 35-6.
Yamada, this "excessive labor service offered under inferior working

conditions" was "the basic foundation for the phenomenal rise of
Japan's cotton spinning industry."''5
What about the military-related heavy industry where workers
were trained and received wages above subsistence? According to
Yamada, military power was needed by the Meiji Government for
two reasons. First, it was needed domestically "to suppress the re-
sistance of such classes of workers as semi-servile small peasants and
semi-slavish wage-earners." Secondly, it was needed internationally,
"to protect [the country] from aggression by the advanced capitalist
countries and also to acquire markets and iron in China and Korea."'6
Given the mechanism of the feudal exploitation of peasants under
tenancy, the logic of the k~zaha was more or less complete. Thus,
Yamada could characterize Japanese capitalism as a typical example
of "military and semi-servile" capitalism.'7 Only by grasping these
characteristics which were acquired during the initial stage of indus-
trial capitalism, Yamada insisted, could the later development of
Japanese capitalism be fully understood.'8
Rdnodha Critique and the KOzaha Position Reconstructed
Under feudalism each peasant presumably was bound to a plot

of land by non-economic coercion and forced to pay in kind whatever
his landlord ordered him to pay. Under this system, it would be wise
for feudal lords to follow Ieyasu's suggestion of "extracting as much
in dues to make peasants neither die nor live."
Institutional changes at the time of the Meiji Restoration, provid-
ing for the freedom of occupation, of residence, of the sale and par-
titioning of land, and of cultivation, should have legally abolished
non-economic coercion in the sense discussed above. Therefore, it
was only natural for critics in the ronoha to wonder what the kozaha
meant by non-economic coercion under feudal relations after the
Meiji Restoration. If, as Kushida Tamizo noted, "no case [was]
known in which a landowner ... prohibited a change of occupation
by a tenant for fear of the loss of rent,"'9 it must be taken as an
15. Yamada, Bunseki, p. 24.

16. Ibid.
17. Ibid., p. 3.
18. Preface to Bunseki.
19. Kushida Tamizo, NMgyO mondai, Kushida Tamiz6 zenshui, Vol. 3
(Kaizosha, 1935), p. 333. Published at first as "wagakuni kosakury6 no
indication that the non-economic c

above was no longer operative.
Nevertheless, kIzaha writers continued to refer to non-economic
coercion, simply changing the setting from feudal to semi-feudal land-
ownership. Hirano mentioned "the prohibition against harvesting and
the expropriation of tenancy rights" for the tenants who failed to pay
rent in early Meiji as examples of non-economic coercion; and Ogura
Takekazu, examining tenancy practices in the mid-Meiji Period,
found many examples of communal coercion to force peasants to
pay rent.20
These examples of communal coercion hardly satisfied the ronnha
critics. To them, coercion that bound the peasants to the land was
non-economic in nature, but all forms of coercion to get the peasants
off land was economic. As its critics charged, the kozaha could not
come up with any convincing piece of evidence to prove the existence
of such non-economic coercion.21 Hence, ronoha writers decided that,
whatever the origins of high rent at the time of the land tax reform
may have been, rent was subsequently kept at a high level not because
of any feudalistic non-economic coercion but because of keen com-
petition among excessively small peasants.22
It was quite true that much of the kozaha contention was dis-
torted and ludicrous. Yet, it is difficult to accept wholeheartedly the
ron6ha position stated above. For almost everybody except the most
extreme of the kozaha writers must have been aware of the freedom
of peasants to leave the farm to become industrial workers. If so,
the demand of the rDnoha for the k}zaha to produce evidence of
feudal non-economic coercion was asking the impossible. After all,
the ron6ha acknowledged that the rent at the time of the land tax
reform was feudally determined and feudally high. For example,
Kushida conceded: "The method of the determination of rent at the
time of the land tax reform . . . in 1875 clearly followed from that
prevailing in the Tokugawa Period."23 He also admitted: "Now,
more than half a century later in the ninth year of Taisho (1920)
tokushitsu ni tsuite" Ohara Shakaimondai Kenkyusho Zasshi, Vol. 8, No. 1
(June 1931).
20. Hirano, Kike, p. 27; Ogura Takekazu, Tochiripp6 no shiteki kosatsu
(Nogyo Hyoronsha, 1951).
21. Sakisaka asked: "But have they demonstrated at all that the non-
economic coercion I discussed above is being exercised through custom' in
the villages of today?", p. 112.
22. Kushida, pp. 348, 354; Sakisaka, p. 137.
23. Kushida, p. 340.
rent at this ratio is still the one prevalently adopted. . . . Hence,

formally the remnants of the feudal system continue to exist even
today."24
It was only natural that the kozaha were not satisfied with the
kind of statements the ron5ha presented, such as the following one
by Sakisaka: "Even though high rent in this country in the early
years of Meiji inherited intact the feudal practices, the principle of
rent determination has been changed, as feudalism was formally and
substantially abolished with the development of capitalism, or in
other words, as commerce invaded the villages."125 The k5zaha
would then ask: Why did not the high rent come down later as com-
merce invaded the villages? Was it not kept at the high level because
of some "feudalistic" or communal institutions still remaining in the
villages?
Probably it would have been better if the khzaha had used a more
clear-cut concept such as monopsony of the village labor market by
landowners. This they did not do for an obvious reason, namely be-
cause such a concept could not be found either in Marx or in Lenin.
Yet, it seems to have been in the minds of many kozaha writers who
tried to show the existence of stifling feudalistic or communal insti-
tutions in the Meiji villages. Given a monopsonistic (single employer)
labor market, rents could be set to make income after rent equal to
subsistence or to maximize the total amount of rent receivable. In
the latter case, the income of the tenant could be higher or lower
than subsistence depending upon the available amount of employ-
ment opportunities in cities (and also depending on the shape of the
agricultural production function), but in any case it would have
been lower than income under competition.26 So the first question to
be asked is whether communal institutions in villages made monop-
sony by landowners possible.27
24. Ibid., p. 341.

25. Sakisaka, pp. 113-14.
26. Diagrammatic proof of this point and some ensuing results are pre-
sented in the Appendix.
27. It would have been still better if two problems-the abolition of
feudal bondage of peasants to land and the existence or non-existence of mo-
nopsony in the villages-had been discussed separately. (See the Appendix for
the meaning of the distinction.)
Theoretically, rent is expected to have declined as a result of the exodus
of peasants to cities after the abolition of feudal restrictions. It is not clear
whether such changes took place. Kushida (p. 346) mentions a decline in
rent as a result of the exodus using as evidence the 1921 Honpa kosaku
kank. -However, the exodus in Kushida's examples seems to have taken place
The second question concerns the nature of the monopsony.

Monopsony rent higher than a competitive rent would mean that
the rent was higher than the contribution of marginal land to pro-
duction, or the marginal productivity of land. Under these circum-
stances, tenants would be in a position to increase their net income
by giving up a marginal plot of land. Hence, if monopsonistic land-
lords wanted to achieve their original objective, the communal in-
stitutions would have to be strong enough to prevent tenants from
giving up cultivating a part of the land. Thus, the second question to
be asked is whether or not the monopsonist was a "discriminating
monopsonist" who could demand of a tenant the choice between "all
or nothing."
If communal restrictions were not so tight as to allow the exis-
tence of a discriminating monopsony, some marginal land must have
been deserted because of high monopsony rent (per unit of land). So,
the third question is whether there was any deserted marginal land
after feudal coercion was replaced by a looser communal restriction.
As we have seen, the ron5ha insisted that any kind of coercion to
force peasants off the land would be economic rather than non-
economic. But, if the rent was unilaterally determined by monop-
sonist landowners and if the tenant was chased from the land for
refusing to pay the rent, is it right to call the entire process economic?
Particularly if coercion was exercised under a discriminating monop-
sony, forcing peasants either to cultivate all the land allotted or to
leave villages, is it possible summarily to reject the argument of
non-economic coercion through semi-feudal relations?
Throughout the Nihon shihonshugi rons5, these questions have
never been formally posed. Yet efforts to resolve other issues have
given some clues to the answers to these questions. What is relevant
here is another characteristic of feudalism which has not been dis-
cussed so far, that is, personal servitude, or the relationship of a serf
to the feudal lord to whom he belongs. A number of efforts have been
made to see whether similar relationships existed after the Meiji
Restoration. Inomata Tsunao's finding of the lack of large land-
not because of the abolition of feudal restriction but because of the autonomous
increase in employment opportunities.
It is possible, as Tsuchiya has partly shown (Tsuchiya Takao, Nihon
shihonshugishi ronshri [Ikuseisha, 1937], Ch. 1), that feudal restrictions had
already been pretty much undermined even during the Tokugawa Period with
the result that there were, at the time of the Restoration, not too many
peasants who were kept in the countryside against their will. See also Thomas
C. Smith, The Agrarian Origins of Modern Japan (Stanford University Press,
1959).
lordism28 is one of these efforts. The examination

presumably servile nago (service rent) system was another.29 The
third was Koike's study of the practice of rent reduction at the time
of a poor harvest.30 In addition, there have been numerous studies
on the presumably feudal or semi-feudal institutions such as oral con-
tracts, kariwake (sharecropping) and various types of community
work,3' on the erosion of farm households by the money economy,32
and on the changing size-distribution of land owned and of the unit
farmed.33
Some elements of communalism were found almost everywhere,
but except for the practice of rent reductions, oral contracts, and the
size-distribution of the farm, the tendency was generally to move
away from communal to capitalist institutions. Particularly revealing
are the small amount of land owned by the average landowner, the
small units of land rented, and the multi-lateral landowner-tenant
relations.34 Given these conditions, a discriminating monopsony
would seem to be unrealistic. And yet, deserted land has yet to be
found. This suggests that, generally speaking, even the modified
(monopsonist) version of the kozaha thesis is likely to have been
untenable, though the question of the substance of what many people
called the feudalistic nature of village communities still remained.
According to the ronoha, rent in agriculture continued to be high
because employment opportunities were not created rapidly enough
to moderate the competition among small peasants. Ouchi Tsutomu
mentioned the latecomer characteristics of Japanese capitalism at the
time of the imperialistic domination of world markets as one of the
factors responsible for the sluggish increase of employment oppor-
tunities in industry. In explaining the small decrease in the agricul-
tural population between 1872 and 1930, Ouchi mentioned two fac-
tors which presumably caused the weak labor-absorption power of
industry. "First, Japanese capitalism as a follower, unable to control
monopolistically overseas markets, could not expand industrial pro-
28. Inomata Tsunao, N6son mondai nyamon (Chuio Koronsha, 1937).

29. Tsuchiya, Chapters 3 and 4.
30. Koike Motoyuki, Nihon n5gy6 k5zdron, rev. ed. (Jichosha, 1948),
pp. 46-63.
31. Particularly ibid., Chapter 1, Section 2 and Chapter 2, Section 2.
32. Particularly Kushida, Chapter 18.
33. Particularly, Kurihara Hakuju, Nihon nogy3 no kiso kCzz (Chufo
Koronsha, 1943).
34. On these points see in particular Ariga Kizaemon, Nihon kazoka
seido to kosaku seido. Originally published under that title in 1943 and re-
printed in Ariga Kizaemon chosakushu, Vols. 1 and 2 (Miraisha, 1966).
duction rapidly. And secondly, since the deepening of capital pro-

ceeded even from the beginning of capitalism, the speed of increase
of the stock of the variable portion of capital (industrial labor) was
relatively slow."85
While this explanation is rather different from the non-Marxist
vision of Japanese capitalism, the logic involved seems close to that
of the neoclassical general equilibrium model. Yet, as -rnnoha writers
have repeatedly declared, their model, coming as it did from Das
Kapital, Vol. 3, Ch. 47, Section 5, was different from the neoclas
one. According to them, Japanese agriculture is supposed to have
been under the nmmin-teki bunkatsuchi shoyci (das biuerliche
zelleneigentum)36 which created a very high rent because of severe
competition among tenants who had to cling to a small plot of land
to make a living.37
It would have been easier for an outsider to understand if the
ranoha had said that what they really meant by keen competition wa
that tenants, placing a premium on security of income and proximity
of place of work, were willing to pay high rents for cultivation rights.
Instead, some of the ronoha writers talked about the relatively weak
competitive position of tenants compared to that of landowners,
thereby blurring the distinction between themselves and the k5zaha.
Kond6 Yasuo, who is normally considered to be a part of the
ktIzaha, emphasized that another factor causing high rent was weak
tenancy rights in the sense that the landowner-tenant relation might
be terminated any time the landowner wanted it. This may have been
a very important factor for irrigated paddy field, since such land was
not just another piece of real estate but rather represented improved
land through application of a large capital expenditure.
35. Ouchi, pp. 171-72.

36. Ibid., p. 42.
37. Of course, the basic difficulty with the rdndha was its inevitable
failure to abandon Marxist dogma. The flaw showed itself most clearly when
writers in this school nonchalantly rejected the possibility of an improvement
in the standard of living of peasants after the postwar land reform, based on
the Marxist iron law of wages. It is truly surprising that they could get away
with a statement such as the following one: "Even if all peasants became
'independent owner farmers' with the burden of rent completely eliminated,
it is clear that the low income of the peasants will remain. For, so long as
numerous excessively small peasants are engaged in agricultural production,
. . .the prices of agricultural commodities will necessarily be reduced to a
level just high enough to realize this wage portion with the result that the
portion representing average profit and rent will be 'donated to society with-
out compensation,' as we have explained in Chapter 1 relying on Marx"
(Ouchi, p. 288).
Kond6 took notice of the institutional change which, at the time

of the Meiji Restoration, abolished perpetually secure tenancy
(eidai kosaku). Of course, perpetually secure tenancy is inconsistent
with the logic of capitalism, but it should have been possible to
separate the original land value from the value of improvements,
with the latter belonging to a tenant. As it was, this portion was
confiscated by landowners, making rent unusually high and making
further improvement extremely difficult.38
The Modern Theory of Dualistic Development and the Dekasegi

System
One of the reasons why the kozaha thesis attracted such a strong
following seems to have been the existence of feudalistic or com-
munal human relations in the countryside. The modern theory of
dualistic development is capable of incorporating this feature with-
out inviting the difficulties the kozaha had to face. In many ways, the
modern theory, developed mainly by W. Arthur Lewis, Gustav Ranis
and John C. H. Fei,39 appears similar to the kizaha model. As in the
kozaha model, the pre-turning-point phase of the modern theory is
characterized by a pre-modern or communal agriculture contrasted
with capitalistic industry. Also, just as in the kozaha model, agricul-
ture is supposed to provide for industry an unlimited supply of labor
at exogenously determined "institutional wages." The similarity, how-
ever, is skin-deep, since institutionally determined wages in the two
models are very different in nature: whereas they are supposed to be
lower than competitive wages according to the kozaha, they are pre-
sumably higher than competitive wages according to the modern
theory, reflecting the existence of disguised unemployment in agri-
culture.40 It is interesting that Ranis and Fei claimed that the un-
38. Kondo Yasuo, Nihon nmgy6 keizairon (1932) in Konde Yasuo chosa-
kushu, Vol. 4 (Nosangyoson Bunka Kyokai, 1974), particularly pp. 228, 231.
39. Arthur W. Lewis, "Economic Development with Unlimited Supplies
of Labour," The Manchester School of Economic and Social Studies, Vol. 22,
No. 2 (May 1954); Gustav Ranis and John C. H. Fei, "A Theory of Eco-
nomic Development," American Economic Review, Vol. 51, No. 4 (September
1961); John C. H. Fei and Gustav Ranis, "Capital Accumulation and Eco-
nomic Development," American Economic Review, Vol. 53, No. 3 (June
1963); and Fei and Ranis, Development of the Labor Surplus Economy:
Theory and Policy (Homewood, Ill., R. Irwin, 1964).
40. Another difference is the assumption about landownership; whereas
in the kozaha model landowner-tenant relations are supposed to be dominant,
subsistence agriculture presumably with a predominance of owner-cultivators
limited supply phase of their model applied to Japan before World

War 1,41 exactly the same period as the formative period of "peculiarly
Japanese" industrial capitalism according to Yamada.42
The difference over institutional wages comes directly from the
difference in the nature of the premodern village community. Namely,
landowners in the Ranis-Fei model are benevolent, while landowners
in the k6zaha model as exploitative. As seen in the previous section,
exploitative relations can be sustained only through monopsony,
ideally, discriminating monopsony. No such stringent condition is
required for the Ranis-Fei model. It is sufficient if landowners or
landowning peasants are benevolent enough to allow the disguisedly
unemployed to live on the farm.
Then, none of the evidence against the k.zaha model, such as the
lack of large landowners, the decline of the nago (service rent) sys-
tem, the smallness of the unit of rented land, or the multilateral
landowner-tenant relations, can be used to discredit the Ranis-Fei
model. In fact, these may be taken as evidence favorable to the
model. Moreover, two of the factors which puzzled the ronnha
critics, the persistence of the practice of rent reductions at the time
of a poor harvest and the general lack of written contracts, suit the
Ranis-Fei model quite well, since these practices, while making
tenants more dependent on and servile to landowners, showed that
a kind of let-them-live attitude was prevalent among landowners.
Ariga's testimony to the effect that "where there were relations main-
taining feudalistic forms, rent was in general lower rather than
higher,"43 was also consistent with the assumptions of the model.
One assumption, implicit in the model, which may prove to be
untenable, is that of passiveness on the part of landowners or heads
of farm households with respect to the exodus of family members.
The system of dekasegi or the practice of seeking more or less tempo-
rary industrial employment away from agriculture which is supposed
to have existed in prewar Japan, may be inconsistent with this implicit
is assumed by the modern dualistic theory. Actually, about half of the land
was under tenancy before World War II and considerably less in the early
years of Meiji. This fact has been considered to be evidence against the k5zaha.
The existence of tenancy is consistent with the modern dualistic theory, so long
as rent is flexible enough. This is particularly likely when owner-tenant
relations are connected with family ties, as was often the case in Japanese
agriculture.
41. Fei and Ranis, pp. 304-05.
42. Yamada, Preface to Bunseki.
43. Ariga, "Nihon noson ni okeru hokensei" (1947) in Ariga Kizaemon
chosakushfi, Vol. 4 (Miraisha, 1967), p. 105.
assumption. This idea was involved in the original presentation of

Yamada and was later developed by Okochi Kazuo to explain low
wages in prewar Japan. Much of the industrial labor force in Japan,
particularly before World War I, consisted of females who worked
either temporarily or part time, operating from the base of the agri-
cultural households. Later, as heavy industry expanded, more and
more male workers were employed. Yet, the agrarian base presum-
ably remained. At first, these workers represented the second and
third sons from farm households who would have remained in the
village if employment opportunities were unavailable in cities. At a
still later stage, when factories were built in the countryside, not only
the second and third sons but also the eldest sons and even the heads
of the agricultural household were absorbed into industry in the form
of commuting workers (tsikinko).
Okochi's main interest seems to have been in explaining low in-
dustrial wages and the premodern mentality of workers.44 To quote
from him directly, these "circumstances, of course, helped worsen
working conditions below those which should have been obtained
normally. Such Japanese working conditions that are typically ex-
pressed as 'low wages' mean not only that Japanese wages are lower
than those in foreign countries but also that- working conditions in
general do not have rational form and content in the modern sense
of the term."45
What is the difference which gives higher-than-competitive wages
for Ranis and Fei and lower-than-"normal" wages for Okochi? As
suggested before, the difference lies in whether landowners or the
heads of the household behaved passively or actively with respect to
the exodus of family members. In a dualistic equilibrium with dis-
guised unemployment in agriculture, the contribution of a marginal
family member to agricultural output (marginal productivity of
labor) is below institutional wages. Hence, there exists the possi-
bility for farm households to increase total income- and conse-
quently agricultural surplus-by persuading famliy members to ac-
cept more industrial employment. If persuasion is done coercively,
the dualistic model, of course, degenerates into a neoclassical one.
But even if persuasion is done in a more paternalistic fashion through
the offer of a subsidy or through the pooling of income, labor will
flow out of agriculture until industrial wages are equal to the mar-
44. Okochi Kazuo, Reimeiki no Nihon rod5 undo (Iwanami Shoten, 1952),
pp. 6, 10-11; Rod3 mondai (KobundW, 1955), pp. 39, 42.
45. Okochi, Reimeiki no Nihon rod6 undo, pp. 10-11.
ginal productivity of labor in agriculture, or in other words, until

there is no more disguised unemployment.46
Only when such subsidizing or pooling of income was imprac-
ticable, or when landowners or the heads of the farm household were
indifferent to such a scheme, can the Ranis-Fei model stand up. It
may be wondered whether landowners or the heads of farm house-
holds could remain indifferent when the gap between wages and
marginal productivity was large. Whether Okochi's vision of those
workers only supplementing the income of agricultural households
was right or not is an empirical question, but to the extent that it is
true, the Ranis-Fei model loses its relevance even when there was a
paternalistic attitude in agricultural households assuring a subsis-
tence living standard for all family members.47
Development economists seem to have accepted the relevance of
the disguised-unemployment equilibrium too readily, considering the
relatively stagnant real wages that existed, for example, for the period
prior to World War I. This is absurd because the agricultural labor
force did not decrease significantly in this period. If changes in wages
are to be examined, it will have to be done in relation to changes in
the agricultural labor force. However, the fact that until World War
I the agricultural labor force did not decline significantly makes a
meaningful examination difficult.
Probably a direct comparison of marginal productivity of labor
with some type of wages would be more promising, even though here
too difficulties are numerous. For example, it may not be legitimate
to use agricultural wages since wage labor in agriculture only mar-
ginally existed in Japan. Estimating the marginal productivity of
labor is not an easy task either. So far, all sorts of apparently con-
flicting estimates have been presented,48 and it is impossible to rely
on one above all others. The only conscious attempt to deal with
the problem of disguised unemployment, done by Minami Ryoshin,
does not seem to have succeeded.49 A further and much more care-
46. Consult Appendix for a diagrammatic proof.

47. Okochi's "normal" really meant utopian, something which could be found
in a very advanced country then such as Britain. If Japan had to get rid of
feudalism in industrial labor, the only solution would have been erecting a
barrier between agriculture and industry, or going back to the pure feudalism.
(See solution LI' in Appendix Diagram 2.)
48. See Yujiro Hayami, A Century of Agricultural Growth in Japan
(University of Tokyo Press, 1975), pp. 96-102 for a survey of some es
49. Minami's finding of a disguised unemployment equilibrium for the
prewar period is -based on a very low output elasticity of labor, less than one-
half of that for postwar years. He will have to say, based on his calculation,
ful effort is needed to discover a disguised unem

for the prewar period.
Concluding Remarks
Too much theorizing has been done without checking the rele-
vance of underlying assumptions and without specifying alternative
hypotheses. Examining the relationship between alternative models
and posing empirical questions to check the relevance of these alter-
native models are the major tasks to which this paper has addressed
itself.
Some efforts have been made to give tentative answers to these
empirical questions but they should not be taken as anything defini-
tive. Even the k5zaha thesis, at least its reconstructed version, may
be found to have applied in some places, though it will have to be
shown how the system worked, based on empirical studies rather
than by reference to Marx or Lenin. There seems to be a better
chance for the disguised unemployment version of the Ranis-Fei
model to stand up, at least with application to the 1950's. When it
comes to prewar years, however, it will have to compete not only
with an ordinary neoclassical model but also with the subsidized
dekasegi version of the dualistic model.
This paper did not dwell on the intertemporal development of a
number of variables. Unlike in the prewar period of the Nihon
shihonshugi rons5, however, one knows by now at least the general
outline of the tremendous growth of macro-variables over time. It
should be noted, in this connection, that only the relative stagnation
in agriculture, particularly the relative stability of the agricultural
labor force over a long period, makes it worthwhile to examine the
relevance of institutional models, such as the kozaha or disguised un-
employment models. However, one had better be well aware of the
limitations of these models and of the powerfulness of the competitive
model. For whenever the solutions of institutional models are widely
different from that of the competitive model, forces will start work-
ing to bridge the gap. The comparative examination of the kizaha
model with the ranmha model or of the Ranis-Fei model with the
subsidized dekasegi model in this paper should have made this point
clear.
KYOTO UNIVERSITY
that even in 1952, in which agricultural population was much (more than 5
million) larger than the prewar peak, there was no disguised unemployment
in agriculture. Minami Ryoshin, Nihon keizai no tenkanten (Sobunsha, 1970),
Ch. 8, particularly p. 136.
APPENDIX: DIAGRAMMATIC EXPOSITION
In what follows, I shall present alternative models diagrammatically to

demonstrate some of the points made in the text. For simplicity, the total
labor force, measured in efficiency units, is supposed to be constant in all
cases. The economy is assumed to consist of agriculture, which uses labor
and land, and industry, which uses labor and capital. The terms of trade
between agriculture and industry is assumed to be given.
Diagram 1 shows a competitive solution as a point of departure. The
horizontal axis shows the total labor force with agricultural labor mea-
sured from A to the right and industrial labor from B to the left. Curves
mpa and mpi show respectively the marginal productivity of labor in
agriculture and in industry. If capitalists, landowners, and workers all
try to maximize income under competition, the labor force will be di-
vided at Lo (where the two curves intersect) between agriculture and
industry and the wage rate will settle at w0A, with a shaded triangle
representing total rent and a doubly-shaded one total profit.
If we are to explain low wages and high rent in Japan by this diagram,
another marginal productivity curve (mpi'), higher than mpi, is needed
to represent industry for a more developed country, say, England. It
should be easy to see that wages are lower and rent higher in Japan than
in England. Alternatively, mpi' may be viewed as showing the future of
A///,mp 1.
W?
0
Copeitv Mode
A L L B
0 0
DIAGRAM 1
Competitive Model
Japanese industry. Then, the strategy for increasing wages and reducing
rent will be to accelerate industrial development. Land reform will raise
the standard of living of the peasants but will not affect industrial wages
unless a greater incentive pulls up mpa.
In the present kozaha model (Diagram 2), it is assumed that tradition-
bound monopsonistic landowners try to set the rent at a level to leave
only subsistence (w#A) to the peasants. (This does not necessarily maxi-
mize rent.) But before going to this "semi-feudal" kozaha model, let us
show a purely feudal model which is indicated by L1'. A sufficient amount
of labor (AL1') is bound to the land to maximize rent (entire shaded
area), giving peasants just enough (wA) so that "they will neither die
nor live." Of course, rent is higher and the agricultural standard of living
lower than in the competitive solution. It was not indicated in the text, but
it should be clear that industrial, or rather urban, wages (w0'B) are
higher than under competition.
Now, as the feudal bondage is abolished, agricultural labor will move
to industry hoping to improve their economic status. However, if the
agricultural standard of living is pegged by monopsonistic and tradition-
bound landowners at the subsistence level, their efforts will be frustrated.
W0
ca~ ~ ~ ~ ~ ~ ~ ~~~~~P
A L L L'
1 0 1
DIAGRAM 2
Kozaha Model
For industrial employment will expand until industrial marginal pro-

ductivity and industrial wages are pulled down to the subsistence level
(w8,A). After migration, L1 divides the labor force between agriculture
and industry. Wages are, of course, lower than competitive wages. The
total amount of rent (double-shaded area) is smaller than under feudal-
ism, but larger than under competition (area C w. D). It should be easy
to see that industrial profits are larger than under competition.
As is indicated in the text, this equilibrium cannot be sustained un-
less landowners represent a discriminating monopsony, forcing tenants
to choose between cultivating all the land allotted or leaving the village.
Otherwise, tenants, facing a unit rent higher than the marginal produc-
tivity of land, will give up the cultivation of the marginal land causing
the downward shift of mpa.
Coming back to the world of a discriminating monopsony, as indus-
try develops, mpi shifts upward and the equilibrium point moves hori-
zontally to the left with industry receiving an unlimited supply of labor
from agriculture. There is no turning point in this model so long as
monopsonistic landowners can maintain the policy of suppressing the
standard of living of peasants to a subsistence minimum. Hence, the
only strategy for improving wages and the standard of living of peasants
is a land reform in which the monopsonistic power of landowners is
destroyed.
However, it is doubtful that landowners can continue to suppress the
standard of living of peasants even when the gap between competitive
rent and monopsonistic rent becomes extremely large as industrialization
is pushed ahead. Competition between landowners is likely to start, pull-
ing up the standard of living of the peasants. This is the reason why it
is suggested in the text that the kozaha model is worth looking into only
because of the near constancy of agricultural labor.
Diagram 3 shows the static solution of the modern theory of dualistic
development with disguised unemployment in agriculture. Family mem-
bers and relatives remaining in villages are assured an income (or con-
sumption) of w1A, or institutional wages, at which "unlimited" labor is
supplied to industry. As a result, at the equilibrium, L1 divides the labor
force between agriculture and industry. Wages are higher than competi-
tive wages (w0B) and rent (shaded area minus double-shaded area) is
less than competitive rent.
Under the circumstances, it is possible to increase the total income
of those who are rooted in agriculture, since industrial wages (wIA) at
LI are larger than the contribution of a marginal family member to
agricultural output (CLi). Thus, provided that his (or her) income is
somehow assured to reach w1A in the long run, he (or she) may go to
industry for subsidized dekasegi. The exodus continues until the labor
force is divided by a competitive equilibrium point Lo and industrial
wages go down to the same level as the competitive wages (w0B). Only
W.~ ~ ~ ~ ~ ~~~~~~~~~p
I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I
Wi
A L L. B
0 3.
DIAGRAM 3
Disguised Unemployment Model
when landowners or heads of agricultural households are either unaware

of, incapable of, or uninterested in exploiting this possibility, will the
disguised unemployment equilibrium be stable.> As suggested in the text,
this is unlikely when the gap between institutional wages and the mar-
ginal productivity of labor in agriculture is very large.

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The Society for Japanese Studies

Anatomy of the Debate on Japanese Capitalism

Anatomy of the Debate on Japanese Capitalism

A preliminary version of this article was published as "Keizai hattenron ni

pleteness as a bourgeois revolution, had basically g

The Kdzaha Model of Japanese Capitalism

Few economic historians would deny that industrial wages and

3. Nihon shihonshugi hattatsushi k6za was planned and edited by Otsuka

Sakisaka Itsur6,5 weekly wages in c

Koku Per Cent

Kamakura soh6, 1186 0.439 44

dues. Table 2, which compares rent (per tan) in different countries,

9. According to Nrinsh6, Nochi mondai ni kansuru tokei shiryo, the

Note: Japanese data represent daikinnd, o

was Hirano who came closest to prese

13. Ibid., p. 33.

Yamada, this "excessive labor service offered under inferior working

Rdnodha Critique and the KOzaha Position Reconstructed

Under feudalism each peasant presumably was bound to a plot

15. Yamada, Bunseki, p. 24.

indication that the non-economic c

rent at this ratio is still the one prevalently adopted. . . . Hence,

24. Ibid., p. 341.

The second question concerns the nature of the monopsony.

lordism28 is one of these efforts. The examination

28. Inomata Tsunao, N6son mondai nyamon (Chuio Koronsha, 1937).

duction rapidly. And secondly, since the deepening of capital pro-

35. Ouchi, pp. 171-72.

Kond6 took notice of the institutional change which, at the time

The Modern Theory of Dualistic Development and the Dekasegi

limited supply phase of their model applied to Japan before World

assumption. This idea was involved in the original presentation of

ginal productivity of labor in agriculture, or in other words, until

46. Consult Appendix for a diagrammatic proof.

ful effort is needed to discover a disguised unem

APPENDIX: DIAGRAMMATIC EXPOSITION

In what follows, I shall present alternative models diagrammatically to

For industrial employment will expand until industrial marginal pro-

when landowners or heads of agricultural households are either unaware

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