Shibusawa & Iwasaki: Making Modern Industry

Episode Narrative

In the year 1868, Japan stood unveiled on the brink of monumental transformation. The echoes of feudalism were beginning to fade, replaced by the promise of an industrial age that would redefine the nation's identity. Amidst this sweeping change, one man emerged as a pivotal figure: Shibusawa Eiichi. Born in 1840, he would go on to found over 500 companies, a journey that would not only progress Japan's economy but also reshape its ethical landscape. His vision of ethical capitalism balanced profit with social responsibility, laying the groundwork for a national ethos that would guide future generations.

As Japan transitioned from the Tokugawa shogunate to the Meiji Restoration, it faced both challenges and opportunities. This was a time when the world was rapidly industrializing, and nations were competing not only in commerce but also for prestige. In the 1870s, another ambitious entrepreneur named Iwasaki Yataro founded Mitsubishi. Initially established as a shipping company, Mitsubishi soon blossomed into a conglomerate that spanned mining, shipbuilding, and banking. These zaibatsu, or large family-controlled industrial empires, were supported by the Meiji government’s policies, embodying the essence of a new Japan that sought to take its place among the great powers of the world.

In 1873, a notable shift occurred when the Meiji government lifted the ban on Christianity. This decision reflected broader efforts toward modernization, allowing Western influences to permeate Japanese society. Simultaneously, Shinto was institutionalized as a state religion, fostering a sense of national unity under the emperor. Mere slogans could not capture the essence of this transformation; it was a rebirth of a nation, knitting together industrial prowess and cultural identity.

During the 1870s and 1880s, Shibusawa was instrumental in establishing a modern banking system in Japan. The First National Bank, founded in 1873, was pivotal in facilitating capital accumulation. This was not merely about numbers in ledgers; it was the lifeblood for industrial ventures and infrastructure projects like railways and telegraphs, which would soon crisscross the archipelago. With each new railway connecting city to city, lives were transformed. The density of urban life increased, and the pace of progress quickened.

As the 1880s unfolded, Mitsubishi was expanding, acquiring coal mines and establishing shipyards. This strategic vertical integration was about more than just business; it was about national survival and strength. Japan’s military modernization relied heavily upon these industries, as the nation sought to protect itself and assert its identity. The zaibatsu were not merely economic entities; they were the very backbone of Japan's emergence as an industrial power.

As industrialization marched on, the cultural landscape shifted dramatically. The 1880 to 1910 period marked a significant transition in Japanese society, as the zaibatsu, including Mitsubishi and Mitsui, became the linchpins of a newly interconnected economy. The export of silk surged to prominence, with these conglomerates controlling much of the production and trade. Silk became Japan's leading export commodity, threading through the fabric of international markets and signaling Japan’s arrival on the global stage.

But it wasn't just wealth that these new industrial leaders aspired to create. Shibusawa championed the introduction of Western-style corporate governance and ethical business practices. He understood that true success could not be measured by profits alone. The balance of profit with public good would resonate through Japan's capitalist culture in the years to come.

By 1890, the Meiji Constitution was enacted, establishing a constitutional monarchy that provided a stable political environment. This encouraged investment, an essential component for industrial growth. Men like Shibusawa and Iwasaki were not only business leaders; they were architects of a new political and economic framework that would govern the country. They recognized the urgent need for progress, and they embraced it with fervor.

The rapid industrialization also led to dramatic urbanization. Cities like Tokyo and Osaka underwent transformative changes, and new social classes emerged — the bourgeoisie and an industrial workforce began to inhabit the sprawling urban landscapes. During the 1890s, the Ryōunkaku was constructed, symbolizing Japan's embrace of Western architectural styles. This skyscraper was both an architectural marvel and a reflection of the cultural shifts that had accompanied industrialization. These physical manifestations of progress were more than buildings; they were monuments to unity, ambition, and the indomitable spirit of a nation in bloom.

Alongside this economic upheaval, Shibusawa sought to foster educational initiatives and cooperative movements, inspired by Western models. Influenced by thinkers like Robert Owen, he promoted the ideals of cooperation adapted to Japanese society. This vision was not rooted in mere profit but in social welfare — an attempt to cultivate a more equitable society as the nation surged toward modernity.

The dawn of a new century saw Mitsubishi diversifying into electrical power and heavy industries. These moves were strategic, aligning with Japan's ambition of becoming self-sufficient and competitive against Western powers. By 1900, these entities were not merely following the winds of change; they were creating the currents themselves.

Between 1903 and 1914, the Meiji government produced moral education textbooks to instill loyalty to the emperor and national unity. This initiative intertwined with the narrative of industrial and political modernization, a unifying ideology urging citizens to become committed subjects of the state. Yet, while great strides were made, it is essential to remember the underlying struggles. The drive toward modernization cast long shadows, and the very fabric of society was transforming under considerable pressure.

By 1910, the zaibatsu system had reached a peak of influence, controlling significant portions of Japan’s industrial output and trade. Mitsubishi and Mitsui were among the behemoths that effectively shaped the economic landscape. With swift advancements, they enabled rapid modernization, but at what cost? While wealth amassed, a moment of reflection on the lives behind the factories and labs is necessary. For every factory built and every bank opened, individuals sacrificed much — time, families, traditions — all woven into the relentless loom of progress.

The ethos of “ethical capitalism,” as advocated by Shibusawa, resonated deeply within Japan’s business culture. He envisioned companies not merely as profit-driven machines but as vital organs of society. They would contribute to the betterment of the community and the individual. In a world that often pits profit against morality, Shibusawa's approach remains a testament to the potential of business to uplift and unite.

Between 1800 and 1914, both Shibusawa and Iwasaki thrived under the auspices of Meiji state policies. These policies actively supported industrialization through infrastructure development and protective tariffs while fostering public-private partnerships. The spirit of cooperation became a hallmark of Japan’s economic transformation, enabling a nation to rise from the ashes of its past.

As the 19th century drew to a close, silk exports surged, becoming a primary source of foreign exchange that funded the further industrial expansion and the technological adoption vital for economic growth. Railways and telegraph networks connected the islands of Japan, stitching together a nation increasingly focused on progress.

Shibusawa Eiichi, often hailed as the “father of Japanese capitalism,” uniquely blended Confucian ethics with Western business practices. His moral approach to capitalism was not just innovative; it was rare on a global scale. In an era characterized by unbridled capitalism, he championed a vision that called on businesses to act responsibly, to reflect the human condition, and to elevate society through commerce.

In reflecting on this remarkable era, we recognize that the journey of Shibusawa and Iwasaki was not just about building businesses or factories. It was a quest for identity and belonging for a nation emerging from centuries of isolation. They posed questions that still resonate today: What role does industry play in shaping society? Can profit and ethics coexist in harmony? As we look upon the skylines of modern Japan, shadowed by the giants of its past, we might consider not just the steel and glass but the human spirit that fueled their rise.

This narrative of industrial endeavor is a mirror reflecting a country that, through resilience, innovation, and moral consideration, charted a path toward modernity. It urges us to think not just about economic metrics but about the social fabric that binds us all. In the end, we must ask ourselves: What legacy do we aim to leave as we continue the journey of progress?