A History of Wealth and Poverty: Why a Few Nations are Rich and Many Poor, by John P. Powelson.


Japan: The Power-Diffusion Process


The Japanese have saved much, and they have organized their corporations along modern lines. Despite business families (keiretsus) and government planning, they are mainly liberal: free enterprise and free trading. Corruption scandals in the 1990s have come out in the open and have caused a government to fall. But the real question is why they did all that, while Africans, other Asians, and Latin Americans mostly did not.

To find out, we move back into history. We discover that the Japanese were not nearly so poor in the nineteenth century as Western historians have alleged them to be. To discover why they were not, and how they advanced, we go back to the era in which Japanese economic organization first seemed different from the rest of the world. We arrive at the ninth century.


Pluralism in Early Agriculture

At that time, almost all cultivated land in Japan was organized into sho-en, which looked like large, feudal estates. But instead of being ruled by a feudal lord as in Europe, the Japanese had two people at the top: honke, or "noble patron" and ryoke, or "proprietor." Two centuries later there were other claimants as well: jishu, whom Western scholars have dubbed "owner," ryoshu, or "non-noble lord;" azukari dokoro, or "middle-level manager;" and zuryo, or "tax-collecting governor." [1] There were also tenants, free laborers, half-free laborers, and slaves.

The Japanese land system had one point in common with the European manor: almost all who worked the land, other than hired laborers and slaves, had clearly defined legal rights. In Japan the legal right to land was called a shiki. There was an owner-shiki, a proprietor-shiki, a manager-shiki at different levels, a tenant-shiki, and so on. In Europe also, the rights were enforceable contracts between lords and tenants. Elsewhere in Asia, as in most of the rest of the world, tenants on conquered land usually could be dispossessed at the whim of the master.

Unlike rights on the European manor, shiki could be bought and sold. In principle they could not be confiscated. Thus every person's rights and obligations were defined with respect to those of every other person: to hold land, to produce crops, to sell them, to pay taxes, and to serve in the military. These relationships may have been violated, but if so the culture was violated too.

We can only speculate on how definable rights to land, which the sovereign could not take away, came about for all classes except slaves in Japan and northwestern Europe, but nowhere else. Let us adopt the axiom that no one gives away rights unless one has to. In our own day, one might assume that workers acquire rights either by law or by alternative opportunity: they must be bid away from other potential employers. If these assumptions were translated into ninth-century Japan, we might suppose that unless peasants received favorable treatment on the sho-en, they would clear and farm their own land instead. But solitary farmers risked capture and enslavement on someone else's property. While this must have happened, it was not the major way in which labor was sought.

Lacking evidence to the contrary, I assume that tenants possessed enough clout — perhaps as organized food growers, military bands, or rebels — so that owners or proprietors could not force them to work as slaves but had to make some agreements with them. Another possibility is that when overlords fought each other peasants would band with one or the other side, demanding rights in exchange for support. We cannot be certain how they obtained their shiki, but we do know that they employed this leverage in later centuries.


The Diffusion of Power

The Emperor, by agreeing to convert his personal political powers — then declining — into public powers, in order to maintain his titular authority, acknowledged a new balance of power. [2]

This quotation might have referred to Taisho democracy in the 1910s. But Jacobs was writing about the Taika reform of 645. From the beginning of Japanese history, authority has been parceled among many claimants.

"Alternative power" has been a feature of all Japanese administrations. Not only did powerholders compromise with each other, but if a lower class could not obtain satisfaction from one source it might go to another. Early emperors shared power with or were dominated by families, such as the Soga and later the Fujiwara. In 1185, the strong Minamoto family, headed by Yoritomo, defeated the ruling Taira family in the Gempei war. In 1192, Yoritomo had himself appointed the first shogun ("barbarian-suppressing general") while respecting the dignity of the emperor. His successor shoguns were assisted by a commoner family, the Hojo. Thereafter until 1868, the emperor and shogun existed side by side, with the shogun as the main power. But lords of the land would frequently defy the shogun or vice versa. This was especially so during the Tokugawa era (1603-1868).

A similar pluralism affected social relationships. In the thirteenth century, new officials appeared on the sho-en. They quarreled with each other and with the military. Since no group emerged as the dominant power, they were forced to compromise on both authority over land and the division of its produce.

During the fourteenth and fifteenth centuries the more powerful warriors became lords known as daimyo, who captured fiefs and demanded fealty from the peasants. In exchange, the peasants sought secure tenure and rights to agricultural products. From this, a contract feudalism similar to that of Europe replaced the sho-en system.

Ordinary farmers became divided into warriors (bushi, later samurai) and cultivators. Bushi clustered in castles while cultivators lived closer to their fields, much as was happening in Europe. These peasants formed villages, in which they elected their own officials, managed their own affairs, and collectively negotiated with the daimyo. Mostly they had no obligations other than taxes.

In these ways power became diffused. Laws of the central government were increasingly ignored. In the Onin War (1467-77) the shogunate fell apart, and Japan was divided into hundreds of small states. Even when they were militarily reunited in the sixteenth century, under Nobunaga, Hideyoshi, and then Tokugawa, none of these rulers held absolute control. Each was linchpin presiding over a balance among surviving daimyo, whose legitimacy in turn depended on recognizing the village assemblies.



Leverage was the primary force in this diffusion of power. As early as the ninth and tenth centuries, peasants took advantage of the rivalry between governors and powerful families to ally themselves with one or another in exchange for improved work conditions. [3]

In the twelfth century, they capitalized on rivalry among nobles:

The key positions at court were objects of fierce competition among the eligible nobles, who sought allies in the imperial house and the provincial aristocracy below. Warrior groups could ally themselves with noble factions, which, if successful, could reward their members with official titles and immunities. [4]

Wanting firm contracts in place of erratic work, peasants also "could ally with higher authority in an effort to resist a jito [estate steward], or they could attempt to negotiate directly with the jito concerning rates and times." [5]

In the fourteenth century both estate stewards and peasants improved their positions by shifting their vertical alliances in a civil war between the emperor and the shogun. Village autonomy resulted in part from alliances between peasant groups and estate stewards to gain concessions from proprietors. [6] From the fourteenth to sixteenth centuries, organizations known as ikki, composed of warriors and farmers, became prominent. [7] While some writers have translated ikki as "rebellion," Davis points out that it literally means "of one goal" or "in agreement," and that it applies more to an organization than to an action. Bix reports its meaning as "identity, identical, or the same, as in `This and that are identical' . . . The solitary band — with corporate bargaining power — was formed expressly to make a decision that was just and unswayed by special interests because it was based on the will of heaven." [8]

Ikki levered their power by vertical alliances with court nobility or military governors. For example, in a rebellion over debt cancellation in the fourteenth century ikki — peasants themselves — would not accept the shogun's offer to forgive peasant debts unless he also forgave those of the court nobility and the greater military houses, with whom they were presumably allied. [9] From the fifteenth century on, the military support of the ikki was increasingly sought by the daimyo. As a result, "on the political stage the power gradually fell into the hands of a lower class of people that had never been recognized in such a circle." [10]

As the daimyo were consolidating their power or losing it during the period of the warring country at the end of sixteenth century, the local gentry (kokujin), who had previously dominated the villages, stood in their way. To overcome them, the daimyo joined forces with the villagers, granting them virtual autonomy in exchange for support. [11]

Peasants became "'negotiators' who played fiefs and bakufu [shogunate] against each other to their own advantage." [12] The shogun was particularly concerned to maintain peace on the fief, for even violence that did not affect him directly nevertheless threatened his stability. He often would order the easiest solution to a domainal problem, which sometimes favored the peasant. Especially when violence had already broken out or was imminent, the shogunal court might dictate a decision. [13] In at least one case, a daimyo was ordered by the shogun "to commit suicide for having allowed a peasant uprising to occur in his territory."14 This precedent would supply a sobering incentive for any daimyo to negotiate with peasants. Occasionally peasants might call on merchants for help in their rebellions. In one revolt rice and iron merchants "gave strong support to the peasants upon whom their trade depended." [15]

In the early nineteenth century, reformers on the fief Mito "recognized the political and economic importance of the lower strata of society and spent a good deal of time and effort cultivating their support." [16] In that same century "the participation of rural commoners in political actions . . . marked a significant departure from the exclusively samurai involvement in the Tempo reforms." [17] When the shogunate modernized its army in response to American pressure in the 1860s, it encountered resistance from the daimyo but recruited peasants, whose standard of living was thereby improved. [18]

All the aforementioned cases are instances of leverage by peasants. But merchants employed leverage as well. As far back as the seventh century, the emperor was taxing merchants heavily. To escape, the merchants joined monasteries, which provided them with "adequate facilities for business, storage, financial assistance and cooperative credit. In return for these benefits traders lent money to the priests who also provided military protection." [19] Each group — merchants and monasteries — enhanced its power vis-à-vis the emperor. Merchants also allied themselves with nobles who granted them court rank and privilege in exchange. Independent trading companies were sponsored by the nobility. [20]

Other groups exercised leverage as well. In the thirteenth century, housemen of the shogun transferred their loyalty to provincial governors or estate stewards to obtain better terms of service. [21] Once towns had become prominent as commercial centers, they shifted their vertical alliances, formally or informally, among daimyo and shogun. "The ports or cities gradually came to overshadow their feudal protectors in economic power. They then entered into political-economic alliances with other feudal lords on their own initiative." [22]

Merchants and peasants advanced not only relative to the shogun but also to the daimyo. For example, the tax and monetary reforms of the early nineteenth century, which were necessary for the survival of almost-bankrupt fiefs, required the daimyo to cooperate with peasants and merchants. The peasants and merchants, of course, exacted their price. "[E]very successful political defense [the daimyo] made of their own position was matched by a corresponding social advance by the top stratum of the peasant and merchant classes." [23]

Rivalry between the fief and growing cities provided leverage for merchants during the Tokugawa period. "[I]t was probably the dire necessity of improving han [fief] finances and the possibility of doing so by playing the han regional economies against the great city markets of Osaka and Edo that drove han authorities into the arms of merchant houses and gave rise to the numerous han monopolies after the middle of the eighteenth century." [24]

In the democracy forged by Japan after the Meiji Restoration, leverage mutated to the form familiar to democracies: parties jockeying for position, making and re-making alliances, and horse-trading. Once a polity and economy become complex, with multilateral issues that can no longer be negotiated among two or three groups face to face, a parliament may become the honest broker among them all. Parliament is, therefore, an organization by which multilateral applications of leverage are institutionalized.

In the first decade of the twentieth century, local bosses would swing blocs of votes to gain party patronage. [25] Toward the end of the second decade, liberal party politicians, academics, a leftist political movement, and journalists joined to promote new strength for the labor movement. [26] All this is leverage in its modern cast. Eclipsed by World War II, these movements are now coming alive again.


The Origins of Compromise

Over their history the Japanese have compromised rather than confronted; negotiated rather than stonewalled; and cooperated rather than going-it-alone, relative to other societies. In absolute terms the Japanese many times confronted, stonewalled, and went-it-alone, just as other societies did.

Fairbank, Reischauer and Craig note that the system of taxation and law codes initiated in 670 "were made piecemeal, with pragmatic compromises with existing institutions and the power of the various uji [clans]." [27] Jacobs cites "constant coercion, coordination, and compromise . . . a process repeated many times in Japanese history, first by the estates against the Taikwa imperialists in the court [seventh century], then by the markets, farmers, and soldiers in the structure established by the estates [sho-en], and later by the merchants in the true feudal structure." [28]

Asakawa writes of compromises in private farms (sho) arising in the eighth century: "The native genius of the race for adaptability found its expression here in a free division of the various interests and rights relative to land, in their investment in different lands, and in their almost infinite redivision and conveyance . . . the same piece of land cultivated by one person soon giving titles and yielding profits to many." [29]

Social immobility sometimes promoted negotiation and compromise. "The typical azukari dokoro [custodian] of sho-en land was a locally based aristocrat, completely ineligible for the noble status enjoyed by a capital ryoke. . . . The lord and the custodian functioned cooperatively because neither could fundamentally challenge the other's prerogatives. . . . Consociation between persons of disparate status was a cardinal feature of the political system." [30]

A famous compromise occurred in the fourteenth century, after the opposing military forces of the shogun and one of two rival emperors had occupied land to sustain themselves during the civil war. On conclusion of hostilities, the soldiers refused to leave. Peace was established by permanent division of the yearly produce between the absent proprietors and the soldiers. [31]

In an earlier writing [32] I have described the main contestants for land in this period and the juggling of forces and manner of compromise among them. Out of these forces arose the term wayo, often translated as "compromise." "Wayo was not a mode of settlement adhering to any specific pattern but merely an expression of detente on any issue of long-standing dispute between jito [estate steward] and shugo [provincial governor]." [33] Sometimes compromise took the form of ignoring obstacles that other cultures might have found humiliating. For example, in the fourteenth century the Chinese insisted that imports from Japan were "gifts" and payment of "tribute" to the Chinese celestial emperor by the "inferior" Japanese. He made "gifts" in return. Japanese traders played the game. When the Ming emperor appointed shogun Yoshimitsu "King of Japan" under Chinese tutelage in 1401, he accepted the title, which in no way affected his prerogatives at home.

The nature of the Japanese as compromisers has been challenged. Najita argues that "the characterization of Japan as a consensual society proceeding along an evolutionary course or, at times, deviating from it, was misleading." [34] Challengers who point to myriad conflicts and much violence throughout Japanese history are correct, but they miss the point: that conflict and violence were mingled with negotiation and compromise more than in most societies; that concessions by victors to vanquished abounded; and that ways were discovered for former adversaries to trust each other and do business once the conflict was resolved.


Negotiation and Compromise in the Tokugawa Era (1603-1868)

When Tokugawa Ieyasu had defeated the other daimyo in 1600 and been appointed shogun in 1603, he divided his foes into categories and granted them privileges. This treatment contrasts, for example, with the total annihilation meted out by Mongols when they overran cities. Ieyasu's leniency occurred not because of his generosity, but because his victory was not overwhelming; his position west of Osaka was precarious, and compromises with defeated daimyo were the pragmatic solution.

Tokugawa villages combined negotiated with imposed institutions. On the imposed side, every individual belonged to a class stipulated by the shogunate: noble (a member of the imperial court), warrior, priest, peasant, or town resident. Class mobility was impossible. On the negotiated side, villagers formed their own associations, resolved their disputes locally when they could, and bargained with the daimyo over taxes. Although technically not allowed to do so, the peasants sometimes took their quarrels with the daimyo to the court of the shogun. Occasionally, they even won their cases — another instance of leverage.

Village government was by elected committee. While the head man was approved by the daimyo, he was elected by the villagers and deemed to represent them, to forward their requests to daimyo or shogun. Asakawa suggests that this arrangement was the genius of Tokugawa Ieyasu. [35] If so, his genius lay only in yielding to existing custom and power, not in discovering a system.

Harootunian finds that the Japanese of the Tokugawa era were resourceful in concealing conflict and claims to power, and that power itself was concealed. [36] But any concealment of power, such as in the shogun-emperor relationship, or any means to prevent an eruption constitutes de facto compromise.

Many have believed that the great peace of 1600-1868 was held together by the power of the Tokugawa shogun. [37] From the mid-seventeenth century on, however, the shogunate was being weakened relative to daimyo, merchants, and financiers. As a sign of weakening, both shogun and daimyo became indebted to merchants. Also, time and again the shogun could not enforce his decrees, such as those controlling prices. His foreign-exclusion command was repeatedly flouted by "outer daimyo" of the west. His attempts to establish monetary standards failed. Peasant rebellions were settled on terms he would not have favored. He continued to exist only by compromising with lower-level officials. For further references to the weakening of the shogunate during the Tokugawa era, see Appendix 2.1.


Peasant Rebellions

Yet Japan's history has been studded with peasant rebellions, caused by excessive taxes, forced loans, and demands for bribes;38 by daimyo and shogun monopolies and controls over prices and trade; by disputes over rights to land; and attempts by the lords to control peasant movement and behavior. Both daimyo and shogun lived in fear of peasants, suspicious of their goings and comings, wondering what harm they would do next, or whether they would defect to other daimyo or threaten the shogunate.

Mostly, rebellions were not motivated by demands to change the system. [39] Peasants protested not the levy of taxes, but the amount; not the system of tenancy, but the terms; not the idea of private business, but its monopolies; not the fact of daimyo or shogun control over the monetary system, but their monetary policies. Peasants did not usually try to change an institution, only the parameters within it.

Ikki led many of the protests. They formed their own governing bodies to negotiate with overlords, either nonviolently or in open rebellion. In alliance with "robber gangs, dissatisfied roaming noble warriors and armed monks of the new Buddhist sects, plundering, destroying or burning down store houses of the wealthy or pawn shops, temples or shrines," they forced "the government to issue moratoriums on loans, mortgages, or pawned articles." [40]

Withdrawal was a mode of passive resistance. Peasants would lay down their tools and depart until their demands were met. [41] They would swear oaths to cooperate and defend each other through their village organizations.

Throughout the Tokugawa period, peasants combined negotiation with violence of varying degrees, from riots to military operations. In one example among many compiled by Bix, a revolt at Ueda in 1761 over taxes and servitudes took place in five stages: (1) "mobilization and invasion of the castle town;" (2) "stalemate and confusion;" (3) "recommencement;" (4)"`vertical' discussions, conciliation, reintegration, and repression;" and (5) "public execution of [two peasant leaders], followed by more group discussions throughout the fief." [42] The revolt was settled with a number of concessions by the daimyo, including reduced tribute and less onerous conditions of servitude.

I am indebted to Bix for his meticulous documentation of peasant rebellions throughout the Tokugawa period. Using the same information, however — his own, plus that of other writers such as T.C. Smith and Borton — I come to interpretations different from his. Bix emphasizes the class struggle. To him, concessions were palliative; the village was part of the apparatus of oppression; peasants are eulogized in their struggles, but their lot was not substantially improved in these crucial centuries. [43]

My own interpretation is less marxist: that the Tokugawa village was far from a total instrument of the state; that while it reflected fears that the violence of preceding centuries would recur or that the precarious power balance in outside society might not hold, nevertheless it also reflected a willingness to negotiate and compromise in ways not easily found in many other societies.

Change occurred because each peasant victory, so small in itself, contributed cumulatively to the manner in which Tokugawa society fluidly shifted into modern Japan. But I go beyond the mainstream by suggesting that this characteristic is a major explanation of the remarkable economic growth in Japan today.


Applicable to Chapters 2 and 3

azukari dokoro, middle-level manager on a sho-en

bakufu, shogunate

daimyo, feudal lord or lords

han, feudal fief

honjo, landed proprietor

honke, noble patron of a sho-en

ikki, peasant solidarity group, leaders of rebellions

jishu, owner of a sho-en

jito, estate steward on a sho-en

kabu, a kind of guild

kaisha, business corporation

kokujin, village gentry

kabunakama, a kind of guild

kumiai, a kind of guild

nakama, a kind of guild

ritsu, penal law code

ryo, administrative law code

ryoke, proprietor of a sho-en

ryoshu, non-noble lord (lower on the scale than ryoke)

shiki, transferable right (to land, office, employment, etc.)

shikimoku, a legal code, or a compilation of legal questions

sho, medieval farm

sho-en, medieval landholding structure, precursor to feudal fiefs

shogun, military ruler of Japan ("barbarian-suppressing general")

shugo, provincial governor

tonya, a kind of guild

tozama daimyo, an "outer" daimyo, who lived far from Edo, during the Toku- gawa perio

wayo, a compromise way of life

za, a kind of guild

zuryo, tax-collecting governor

Many of the above terms have no exact English equivalent; these meanings are therefore approximations.


  1. The translations are inventions of English-speaking scholars and do not correspond exactly. For example, sometimes "owners" were not allowed to live on their own properties.
  2. Jacobs 1958:80.
  3. Takekoshi 1930:1:40.
  4. Kiley 1974:111.
  5. Mass 1974:187.
  6. Davis 1974:224,
  7. Davis 1974:221-247.
  8. Bix 1986:142.
  9. Davis 1974:229.
  10. Takekoshi 1930:2:280.
  11. Davis 1974:234.
  12. Bix 1986:xxx.
  13. Bix 1986:163.
  14. Bix 1986:7.
  15. Bix 1986:23.
  16. Koschmann 1982:89.
  17. Koschmann 1982: 94
  18. Totman 1982:74.
  19. Jacobs 1958:32.
  20. Jacobs 1958:120.
  21. Hall 1970:103.
  22. Jacobs 1958:33.
  23. Bix 1986:152.
  24. Hall 1970:213.
  25. Fairbank, Reischauer and Craig 1978:686.
  26. Fairbank, Reischauer and Craig 696.
  27. Fairbank, Reischauer and Craig 1978:337
  28. Jacobs 1958:129
  29. Asakawa 1916:314
  30. Kiley 1974:110.
  31. Asakawa 1914:109; Duus 1969:63; Grossberg 1981:9; Hall 1970:193; Wintersteen 1974b:211- 20.
  32. Powelson 1988:179-80.
  33. Mass 1974c:165-66.
  34. Najita 1982:9.
  35. Asakawa 1916:327.
  36. Harootunian 1982:25.
  37. For example, Max Weber (1964:377) writes of the great power of the shogun.
  38. Borton 1968:26ff.
  39. Bix 1986:147.
  40. Borton 1968:16.
  41. In similar fashion, plebeians of Rome are said to have retreated to the Sacred Mount in 793- 792 BCE to force the Senate to create magistrates to defend them (Grant 1978:73-74). Some claim this story to be myth.
  42. Bix 1986:75ff.
  43. Bix pp. xxv-xxxiii.

Copyright © 1994 by the University of Michigan. First published in the USA by the University of Michigan Press, 1994.

Published on the World Wide Web by The Quaker Economist with permission from the University of Michigan Press, 2005.
