Li Fu-jen

Japan Faces The Abyss I

The Distinguishing Features of Japan’s Economic Life

(February 1944)

From Fourth International, Vol.5 No.2, February 1944, pp.48-54.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

EDITOR’S NOTE: The author of this thorough study of Japan’s economic and social life spent many years in the Far East and visited Japan several times, the last occasion being in 1940. The study – the publication of which begins in this issue-is based on his own knowledge and observations, though for much of his statistical and other factual material he is of course indebted to other sources. The next installment will appear in the March have of Fourth International.

For those who intend to pursue further the study of Japan, the author recommends Freda Utley’s very excellent analytical work, Japan’s Feet of Clay – (New York, 1937). Other sources recommended to Marxist students are Japan’s Emergence as a Modern State, by E.H. Norman; Le Japon. Historie et Civilization by La Mazaliere; Japan – the Hungry Guest, by G.C. Allen; Japan in Recent Times, by A. Morgan Young; Japan’s Economic Position, by A.J. Orchard; Foundations of Japan, by Robertson Scott.


What is happening inside Japan and in the colonies, both new and old, to Japanese imperialism? Of all the imperialist powers in the present war, Japan has been the most successful in concealing from the rest of the world the real state of her internal affairs. The Tokyo censorship appears to be almost ironclad and complete. In the American press there appear frequent and well authenticated reports of internal conditions in Nazi Germany and the Nazi-dominated countries, reports of worsening social conditions and of growing war-weariness on the part of the masses. Similar reports leak out from behind the British censorship. But from inside Japan we hear practically nothing. There are frequent press dispatches describing conditions in the colonies of the “democratic” imperialists: uprisings in Lebanon, famine and revolt in India, etc. But the colonies of Japan – Manchuria, Korea, Formosa – occupied China, Malaya, Burma, the Netherlands East Indies and the Philippines are shrouded in the silence of censorship.

The absence of news from inside Japan lends strength to the myth of Japanese national unity which, created by Japan’s rulers, is now sustained by her antagonists in order to prepare the people of the United States and Britain for that serious and costly struggle with Japan which is still only in its preparatory stage. The Japanese are depicted as a completely unified nation, bound solidly together in zeal for conquest and , fanatical devotion to the Emperor. This myth, which flatly contradicts the reality of Japanese life as known until the moment of the attack on Pearl Harbor, is buttressed by the superficial observations of returning repatriates, who, from the well-guarded internment camps of Dai Nippon, were some. bow miraculously able to discern evidence of Japan’s “national unity.”

While news from inside Japan has been negligible in both volume and value, there have been a few reports of the highest significance for estimating the real situation within the country. Thus toward the end of 1942, after Japan had been at war with America and Britain for a year and had won spectacular victories we were able to learn that Premier Hideki Tojo had decreed the death penalty, without trial or other legal procedure, for any person attempting “to change the government’s policy or plans during wartime.” A little later at a conference of prefectural governors in Tokyo, in a speech broadcast to the entire nation, he declared that Japan faced a “very serious current situation,” adding this very revealing admonition:

“If one of you should detect any dissatisfaction or unsettled feeling within your (the governors’) jurisdiction, you should take immediate and concrete steps for the complete removal of these elements ... Now the people of our nation must endure their inconveniences and overcome painful hardships in order to win this war.”

Here, certainly, is no picture of 70-million Japanese fervently united in loyalty to the Emperor, and through the Emperor to the Japanese ruling class and its imperialist aims. All the imperialists – whether “democratic” as in America and Britain, or openly dictatorial as in the fascist countries and Japan – take exceptional steps to control public thinking and to curb manifestations of mass discontent in time of war: they understand well enough that the masses will continue to fight, sacrifice and die only so long as they can be kept believing that they are doing so in the general interest of the nation. But Japan’s rulers, like the Nazis have deemed it necessary to hold over the people a threat of the ultimate penalty–death – for any display of opposition. This is indicative of a public state of mind, in turn reflecting a condition of social relationships, just the opposite of that picture of monolithic national unity currently being purveyed in this country in order to prepare the American working-class for the bloody trials to come.

The Bolshevik revolution established, a posterior, the fact that Czarist Russia constituted the weakest link in the capitalist chain in the period of World War I. Long before that event, however, Lenin had disclosed the grave weaknesses of Russian capitalism through concrete economic and sociological analysis. Precisely the “hard facts” of economics and sociology, brought to light and interpreted politically by the method of Marxist science, were the source of Lenin’s revolutionary optimism. The great leader of the Bolsheviks was no wishful thinker. Neither was he a prophet. He did not know for certain, and could not know, that Russia definitely would be the scene of the first successful revolution in history. But in the light of his analysis he believed this most probable. While the imperialist allies of Czarism were marveling at the power of the “Russian steamroller” following the early victories of the Czar’s armies on the secondary Austro-Hungarian front, Lenin anticipated the catastrophic breakdown that was to come and prepared for the revolution.

We can apply the method of Lenin, i.e., the method of Marxism, to an analysis of imperialist Japan. This analysis will reveal that Japan’s position in World War II is comparable to that of Czarist Russia in World War I. Beyond all doubt Japan is today the weakest link in the imperialist chain. Since we are Marxists, not prophets, we do not assert that Japan will be the first country in this war to experience the throes of social revolution for under conditions of change a still weaker link could develop. But we can and do assert that of all the imperialist belligerents Japan, objectively, is the most ripe for fundamental social change.

In the literature of the Trotskyist movement, as of Marxism in general, there is an unfortunate dearth of material regarding Japan. As regards the Fourth International, this is not accidental. All the happenings of great revolutionary moment during this decade and a half have occurred in Europe. The great Orient, following the collapse of the Chinese revolution in 1927, has remained politically dormant. But today, with the war in the Pacific gathering momentum, there is to be expected a quickening of developments in that part of the world. Imperialist Japan is at the center of the Pacific stage, on the one hand trying to draw into peaceful vassalage the peoples of surrounding and adjacent Oriental territories, and on the other locked in mortal combat with the world’s mightiest imperialist powers. It is essential that Marxists understand the nature and the actual strength of Japan’s economy and the character of the social relationships erected upon it. Despite the paucity of material referred to above, Japan has by no means been ignored in the literature of the Fourth International. The theses War and the Fourth International, adopted in 1934, contained the following appraisal:

Trotskyist Prognoses

Belated Japanese capitalism, feeding on the juices of backwardness, poverty and barbarism, is being driven by unbearable internal ulcers and abscesses on the road of unceasing piratical plunder. The absence of an industrial base of its own and the extreme precariousness of the whole social system makes Japanese capitalism the most aggressive and unbridled. However, the future will show that behind this greedy aggressiveness there are but few real forces. Japan may be the first to give the signal to war; but from semi-feudal Japan, torn by all the contradictions that beset Czarist Russia sooner than from other countries, the call to revolution may sound.

This basic estimate of Japanese imperialism was repeated some four years later, in 1938, in one of the documents adopted by the Founding Conference of the Fourth International, the thesis entitled The War in the Far East and the Revolutionary Perspectives:

Insular Japan, in the era of the twilight of capitalism, proceeding from a weak economic base, is debarred historically from achieving the imperial destiny of which her ruling classes dream. Underlying the imposing facade of Japanese imperialism are fatal organic weaknesses which have already been aggravated by the military conquest of Manchuria. The resources of Japanese capitalism have been proved inadequate for the task of empire building. The economic fabric of the country is being strained to breaking point by the new military campaigns. Japanese capitalism survives by means of the intensest exploitation of the Japanese proletariat, while the peasants, forming the major part of Japan’s population, are victims of growing impoverishment and distress. The burdens of the workers and peasants are being increased unbearably by the war. More than 30,000,000 Chinese in Manchuria await the opportunity to liberate themselves from the Japanese yoke. Another 21,000,000 Koreans and 5,000,000 Formosans strive for their independence from Japan. All these factors constitute the Achilles heel of Japanese imperialism and foredoom it to destruction. Such military victories as the Japanese army is able to win in China have only an episodic importance. The first serious reverses ... will become the starting point of social and political explosions in Japan and in the territories of Manchuria, Korea and Formosa. Regardless of the immediate outcome of the war in China, Japanese imperialism is doomed. The military machine of the Japanese imperialists has never yet .been flung against a first-class power. Weakened by what will turn out to be Pyrrhic victories in China, Japanese imperialism will go down to defeat in the coming world war if its career is not brought to a speedier end by the proletarian revolution.

As far back as 1932 and 1933, Trotsky devoted two articles to the subject of Japan in which the main weaknesses of Nipponese imperialism were set forth with a clarity that left nothing to be desired. Asserting that Japan’s invasion of Manchuria (1931) had “arisen directly out of the putting down of the Chinese Revolution and out of an impending revolution in Japan,” Trotsky wrote:

Japan’s military intervention in Manchuria is ... by no means an expression of the strength of the present Japanese state. On the contrary, the act was dictated by its increasing weakness. It is very instructive to consider the analogy between the Manchurian adventure of Czarism which led to the war of 1904-5, and this adventure of the Mikado’s government. (Liberty magazine, February 27, 1932.)

Leon Trotsky on Japan

Trotsky was impressed by the numerous close resemblances between Czarist Russia and Japan. Nearly two years after the above article appeared, he returned to the subject of Japan with a critical appraisal in which, anticipating the second imperialist world war, he delineated all the main weaknesses of the Mikado’s empire and concluded that it was “headed toward the abyss.” The following excerpts indicate the main lines of Trotsky’s thought:

So far, Japan has never measured her strength with the advanced nations. Her victories have been those of a backward nation over nations of even greater backwardness ... The Russian army won minor successes only so long as it was engaged with the Austro-Hungarian side show; as soon as it entered the main theater of military operation against Germany it once more revealed its complete insufficiency.

... The comparative elements in the strength of armies spring from no mysterious properties of “race.” They spring from combinations of vital social and political factors: The condition of a country’s natural resources, the level of its business development, the relations between its social classes; the internal quality of its army; its soldier material, its corps of officers, its equipment, and its General Staff.

... The real armament of a nation is determined, not by the weapons on parade, not even by the weapons stored in arsenals, but by the weapons implied by the productive power of the nation’s industries ... the facts indicate that Japan would be crushingly defeated ... (Liberty magazine, November 18, 1933.)

Discussing the Meiji Restoration, which laid the foundations of present-day Japan, Trotsky wrote:

It was not a middle-class revolution: it was a bureaucratic attempt to buy off such a revolution ... today the mighty remains of Japanese feudalism have become a terrible brake on the development of the country ... as a result of historical conditions and forces, the Japanese middle classes have adopted aggressive foreign policies before cutting the knot of medieval serfdom. In this lies Japan’s greatest danger; her structure of military power is erected over a social volcano. Furthermore her empire has been erected over a political volcano. In the collapse of Czardom – and the Mikado’s counselors had better study how this happened – the oppressed nationalities, which composed 53 percent of the population of pre-war Russia, played an enormous part. The political unity of the Japanese islands would be Japan’s greatest advantage if her business system and her army were not entirely dependent on Formosa, Korea and Manchuria. Counting Manchuria, there are today almost fifty million oppressed Koreans and Chinese to the sixty-five million Japanese. This mighty reservoir of political revolution will become especially dangerous to Japan in time of war. (Idem.)

Trotsky concluded his article with the following categorical assertions:

Imperial Japan is headed toward the abyss: Japan is economically weaker than either Russia or America ... Japanese industry is incapable of assuring an army of several millions of arms and military supplies for war of several years. The Japanese financial system cannot support the burden of military armaments even in time of peace. The Japanese soldier, on the whole, isn’t good enough for the new technology and the new tactics of modern war. The Japanese people are strongly hostile to the government. The disunited nation could not be united by the aims of conquest. Hundreds of thousands of real or possible revolutionists would flow into the army with mobilization. Korea, Manchuria and China would reveal in action their bitter hatred of the Japanese yoke. War would pave the way for revolution. (Idem.)

While there is a scarcity of Marxist literature dealing with Japan, there is a fair abundance of bourgeois writing on the subject which includes a wealth of data upon which to base a Marxist analysis of Japan’s history, economy and social relationships. Trotsky was conversant with this data and his estimate of Japan’s strength (more correctly, her weaknesses) was based upon it. It is the main purpose of this study to lay bare the core of these data in order to refute the current myths of imperialist propaganda and to furnish a guide in the “Japanese problem” to revolutionary internationalists throughout the world. In the course of this work we shall present overwhelming evidence to confirm the! estimates of Japan made by Trotsky and the Fourth Internationalists; showing, too, that these estimates have retained their validity to the present day.

Japan is no enigma. Nor are her 70 million people wily, savage Orientals [1] with mysterious minds and racial traits so queer as to be beyond the comprehension of Western mortals. As a matter of fact, many journalistic scribblers emphasize racial characteristics of the Japanese people when in reality they mean social characteristics. Racial attributes are innate; social attributes derive from a specific social system that can be changed. The eminent anthropologist Professor John F. Embree, in his pamphlet The Japanese (Smithsonian Institution), points out that Japanese “basic mental and psychological abilities and processes are similar at birth to those of Americans or Germans or Chinese.” Social influences, with roots in Japan’s historic past, are the source of Japanese “peculiarities.” What imperialist propagandists would have us believe are the innate and therefore eternal characteristics of this people, .are simply the products of a given society. As we examine Japan’s economic and social systems, and their historic origins, the things, which we are told are so incomprehensible take their place in a lawful order of things and at the same time display, not their eternal but their evanescent character.

The principal characteristic of Japan’s industrial economy is its extreme dispersal and atomization. In the foreground of the picture are modern, highly organized, powerful trusts and combines controlling whole industries equipped with the most modern machinery, while the background consists of small-scale industry – the tiny workshops of artisans working for a local market, and a widespread domestic industry. The entire structure rests on the narrow foundation of a primitive, small-scale agriculture too weak to bear the great burdens placed upon it and which may crack at any moment to bring the whole vast superstructure crashing to the ground.

The Principal Characteristic

Nowhere in the world are there greater concentrations of capital than in Japan, where the twin giants Mitsui and Mitsubishi dominate the entire economic life of the country. Nevertheless, the characteristic of industry as a whole is not power-driven machinery and corporate finance, but primitive tools, handicraft or semi-handicraft production, and minute investments of capital by traders or small masters. In spite of the occasional use of a small motor, most industries catering to the home market still depend mainly on human muscles and the dexterity of human fingers. In establishments classified as factories (those having 5 or more workers) 20% have no prime movers. Every nail driven in Japan is still produced by hand. And as late as 1937 only 34% of the machinery produced in Japan came from factories employing 500 or more workers, as against 45% from medium-size plants (between 50 and 500 workers) and 17% from those employing 5-9 workers. The majority of master craftsmen producing goods mainly by hand in small workshops by their own labor and that of a few journeymen and apprentices, are no longer independent producers for a purely local market (although such artisans also survive as a feudal feature of Japan’s economic organization); they are small capitalists exploiting their few workers mainly for the benefit of the big financial and merchant houses which give credit on usurious terms to the small industrialists and shopkeepers, and which market the produce of the farmer. The master craftsman who produces goods of purely Japanese consumption for the local market is little more independent than the others, since there is no longer any regulation of production by a guild and he is subject to all the hazards of competition with other small producers. Rarely is he able to avoid becoming indebted to banks or usurers, or to the suppliers of raw material, even if no electric power is used in his workshop and there is consequently very little capital invested in means of production.

At this lower end of the industrial ladder the organization of production is similar to that which prevailed in Western Europe in the 17th and 18th centuries and which was already characteristic of the woolen trade in England and Holland as early as the 16th century. It is a system in which a so-called manufacturer – in reality a middleman or merchant – gives out raw material to a home worker, or to a master artisan employing a few workers and apprentices, and takes from him the finished product to sell to the wholesaler, thus financing and controlling the whole process of production. In the case of enterprises producing strictly for a local market, the master craftsman or tiny capitalist can still dispose of his own product, but the small producers of goods which must find an outlet in the national market or abroad are completely dependent on a merchant jobber not only for raw materials but also for disposal of the product. Except for the fact that the ultimate control of all production in Japan is in the hands of a very small group of monopoly capitalists, this penetration of capitalism into the tiny enterprises – still so close to the feudal age in their productive relationships and technique – shows that Japan is at a stage of economic development, in respect to organization of production in the greater part of her industries, which corresponds to the very infancy of capitalism in Europe.

What Statistics Show

The relative weight of this small industry in the economy as a whole can be illustrated statistically. Japan’s population, according to the census of 1930, was 64,067,000; and less than half (namely 29,320,000, not including some 3,000,000 juvenile workers) were listed as having an occupation. The occupational divisions were approximately as follows:


Factory workers


Small independent producers in industry and transport


Casual workers (who are engaged and paid by the day,
though they frequently work long periods for the same master)


Total of I



Transport workers




Total of I and II



Working peasantry, including agricultural laborers




Employers in agriculture (usually also landowners, but may be
large tenant farmers)


Total of III



Commercial employees


Employees of government and private offices and professions


Small independent commercial agents and professionals


Employers in industry, transport and commerce (whether
factory or handicraft)


Total of IV





Domestic service


The above figures, which in their proportions had changed but slightly up to the outbreak of the Pacific war, tell their own story of the condition of Japanese economy. They show that only 7% of the occupied population work in factory industry. Still more revealing is the fact that the number of day laborers (qualified handicraft workers employed by a master artisan but paid by the day and working together with young apprentices who are not included in the above figures) is almost equal to the number of factory workers. Their number, incidentally, includes workers in enterprises employing fewer than five persons and accordingly not classed as factories, also workers temporarily taken on in factory industry. If the master artisans are also considered, the total of non-factory industrial workers comes to over 3,000,000 as against some 2,000,000 in factories. The bourgeois economist Kamekichi Takahashi,writing in the 1936 issue of Japanese Trade and Industry, publication of the Mitsubishi Economic Research Bureau, gave a somewhat more conservative estimate of the extent of non-factory industrial labor when he stated that 46.1% of the total number of industrial workers were employed in establishments with five or fewer workers. At all events, here is a picture of extreme dispersal and atomization of a very large part of Japan’s industry. The picture is sharpened when it is borne in mind that many of the enterprises classified as factories, i.e., those with more than five workers, use little or no power-driven machinery and in the general organization of production are at the stage of capitalist development known as “manufacture.”

Nor are the tiny establishments of master craftsmen and apprentices found only in the small cities and villages. In Osaka, Japan’s foremost industrial city, out of 19,000 industrial establishments in existence in 1924, some 13,000 or 68%, employed fewer than five workers. A comparison of the 1930 with the 1920 census figures shows that the number of persons in industry remained practically unchanged. Insofar as there was any change at all, it was reflected in a reduction of 9,688. Japan was not even able during those ten years to absorb as many workers into industry as during the boom which followed the first World War. For the annual population increase of some 900,000, industry affords no opening. Yet between 1920 and 1930 the occupied population increased from 27,378,000 to 29,320,000.Wheredid the increase of 1,942,000 go? It did not remain in agriculture, for according to the census the number of persons engaged in agriculture remained at 14,000,000. The only categories where the numbers showed large increase were commerce, the civil service and the liberal professions. The number engaged in commerce increased by nearly1,500,000 in the decade, and those in the public service and liberal professions by nearly 400,000.

Important to note in the 1930 census figures is the unusually large proportion of the population engaged in commerce and the tremendous increase between 1920 and 1930 – a period when industry with respect to employment remained practically static. Actually those engaged in commerce merge with those engaged in manufacture, since the master craftsman usually sells his own products in a store which consists of his workroom. Nevertheless, such artisans are included under the heading of industry, not commerce. But even if this fact is left out of consideration, the primitive nature of Japan’s industrial organization, with all the wastefulness that it entails, is clearly revealed in the indication that there are nearly as many persons engaged in commerce, government service and the professions as there are in industry, namely 4.4 millions in the former against 5.2 millions in the latter. This means that 15% of the occupied population are engaged in the former group of categories as against 18% in industry. And if we add to that group the 1,500,000 small independent commercial agents and professionals, we get a total of 5,500,000 in commerce, government service and the professions as against only 5,200,000 in industry. Many of those engaged in commerce are agents or jobbers who form the large class of middlemen between the merchant houses, or the larger manufacturers, and the multitude of tiny commodity producers. They travel around giving out raw materials and collecting the finished products from the artisans, from the small “factories,” and from the homes of the peasants and other households. Industry has not been able since 1920 to absorb the surplus population of the village. Insofar as this surplus population has found an occupation at all, it has been in petty trading, speculation and usury. It is of value to compare the percentage of Japan’s population engaged in industry and commerce, respectively, with figures for other countries. The following table from the 1926 Statistical Year Book of the League of Nations tells the story of Japan’s backwardness:



Percentage of population
in industry

in commerce






















Where extremely small-scale enterprise occupies such a large place in the national economy, the store and factory are often one. The large number of small stores, in which the employees work anything from 15 to 19 hours a day, seven days a week, is one of the most striking visible signs of the huge wastage of energy and time in Japan. In Tokyo in 1929, according to official statistics, there was one retail store to every 9.5 houses and every 43 inhabitants. These figures are typical of Japan as a whole. A vast number of these stores can never hope to serve more than a bare half dozen customers in the course of a day.

Types of Industrial Plant

This brief survey of the structure of Japanese industry would not be at all complete without an examination of the types of industrial plant in which the country’s 2,000,000 odd factory workers are employed. More than half of the total of 50,000 factories employ between five and nine workers, and the number of establishments employing more than 100 workers constitutes only 55 of the total. Large-scale plants – if we thus designate places employing 500 workers or more – employ only 35% of Japan’s total force of industrial workers. As against this the smallest factories employing five to nine workers, employ 10% of the total and accounted for 56% of the total number of factories in 1936.

In the years during and after World War I, when Japan experienced her greatest industrial expansion, there was no tendency toward diminution, either absolutely or relatively, of the number of small industrial enterprises. On the contrary, this sector of the country’s economy underwent a tremendous growth. The percentage of factories employing five to nine workers rose from 46.2 in 1914 to 56 in 1936, but the percentage of total factory workers employed therein was roughly the same at both dates, indicating a tendency toward further atomization and dispersal of industry.

The number of industries to which large-scale production methods and modern technique have been extensively applied is very small and consists mainly of those which have worked largely for export (like the cotton and rayon industries); the flour, sugar, brewing and canning industries; metallurgical enterprises mainly engaged in armament manufacture and shipbuilding, and the heavy chemical industry. These did not exist in the pre-modern era and are necessarily large undertakings involving huge capital expenditures and large labor forces. In the industries which supply the consumption needs of the Japanese population there is hardly any large-scale production in modern factories. Here one encounters the familiar figure of the master craftsman with his apprentices and one or two journeymen. It is easy to distinguish the production of goods for export from those intended for home consumption, because the latter are peculiar Japanese goods designed to a standard and a mode of life which have hardly changed since feudal times. Just as the apprentices “live in” and receive payment only in kind as in the feudal period, so do the customers sleep on the same tatami (rush matting), wear the same clothing and the same wooden footgear, eat the same food, shiver in winter in the same flimsy wood and paper houses inadequately heated by stone charcoal braziers, and in general live much the same spartan life as in the bygone days of the Samurai (feudal warrior caste).

As regards numbers employed, the very small factory and handicraft production far outweigh modern large-scale industry. But as regards capital invested, the big enterprises account for a tremendously disproportionate share and there is extreme centralization of capital. More than 65% of Japanese capital is invested in 1.5% of the total number of companies, while only 2.1% is invested in 60% of all the industrial and commercial companies of Japan. Moreover, some 83% of invested capital is under the control of companies with a capital of a million yen or more, while less than 4% is held by those working on a capital of less than 100,000 yen.

And, in line with the statistical evidence given above, showing the important place occupied by merchandising in the national economy, we naturally expect to find a corresponding situation in the field of capital investment. In 1929, out of a total capital of 13,790,758,000 yen invested, 42.7% was found in commerce and banking as against 44.7% in manufacturing industry and mining. Transport accounted for a little more than 10% and the insignificant remainder was in agriculture and fishing. The extreme concentration of capital in industry is of course most striking in heavy industry. In engineering, for instance, out of a total paid-up capital of 87,000,000 yen in large enterprises, four trusts – Mitsui, Mitsubishi, Okura and Furukawa – control the whole.

Tell-tale Income Tax Figures

Income tax statistics tell their own story of the concentration of capital in a few hands. Although all incomes above 1,200 yen [2] a year are taxable, there were only 804,419 income tax payers in 1926; 690,000 in 1927 and 569,046 in 1931. In the capital city of Tokyo with its 2,000,000 inhabitants, there were only 76,668 income tax payers in 1927. The average income of income tax payers was then only 1,630 yen. Of the 569,046 income tax payers in 1931, only 20,524 had incomes of 10,000 yen or more. At the same time, the figures show the existence of some very large and a few colossal fortunes. According to calculations based on the income tax returns made by Prof. Shiomi of the Kyoto Imperial University, there were in 1931 a hundred men with incomes of 200,000 yen to 500,000 yen, and twenty with over 500,000 yen a year. Of these latter twenty, nine had between 1,000,000 and 2,000,000 yen a year and one 3,000,000 yen. In 1935-36, Baron Hisaya Iwasaki of the Mitsubishi combine, paid income tax on an income of 2,300,000 yen, another member of the Iwasaki family had an income only slightly smaller, while Baron Mitsui had an income of about 1,500,000 yen. A year previously, however, his income had been nearly 4,000,000 yen. Such fortunes as these would be remarkable in any country, but in Japan, where the per capita national income is only 165 yen, they show an almost unparalleled centralization of capital. A breakdown of business tax statistics reveals a similar contrast of tremendous wealth and poverty.

There are quite a few millionaires in Japan and almost all move in the orbit of Mitsui and Mitsubishi who dominate the entire economic life of the country. The one is an old house dating from feudal times when the Mitsui were first silk drapers and armorers and then general merchants, rice speculators and bankers to the Shogun (ruling feudal chieftain), whilst the other is a new house founded after the Meiji Restoration by the chief steward or business agent of the Tosa clan. The latter, Iwasaki Yataro by name, was able to lay the foundations of his house’s wealth by making a corner in steamships and holding up the new Imperial Government when troops had to be transported to Formosa in 1873. This he was able to do because the ex-Lord of Tosa was one of the few possessors of steamships at the time, having as many as eight of them. Subsequently he got a monopoly of coastwise shipping and branched out into ocean shipping, shipbuilding, insurance, discounting bills of lading, banking and warehousing. At a later date, the house of Mitsubishi took up mining, iron and steel and machinery production, power supply, fertilizer and chemical manufacture, deep sea fishing and canning. It may be noted that Mitsubishi owed their original wealth to quite modern and Western methods of defrauding the state and to this day they retain a relatively more Western, “democratic” and industrial coloring than the more feudal and aristocratic Mitsui.

Mitsubishi and Mitsui

Mitsubishi is more involved in large-scale industrial production and somewhat less in the financing of domestic industry and the sale of its products than Mitsui, although Mitsui has greatly increased its interests in heavy industry since 1931. Mitsui derived a large part of their profits from silk and from other domestic industries and from the importation of raw materials, in particular cotton. They sold most of Japan’s silk in the USA and imported most of the cotton bought there by Japan. They are big speculators in rice, silk and foreign exchange. As merchants and bankers through their subsidiaries, and through the agents of those subsidiaries, they finance, organize and control the greater part of Japan’s domestic industry and small-scale factory industry. Accordingly, a large part of their profits is derived from financing the small commodity producers of town and village. It is for the house of Mitsui that the small silk filature owner works his girls 14 hours a day in the busy season, for Mitsui that the peasant women work night and day feeding the silkworms at the breeding season; it is for the ultimate profit of Mitsui that the local bank provides the silk reelers with working capital at excessively high rates of interest.

The tentacles of the big trusts reach out in all directions to suck in the profit from the small industrial and agricultural producers by their control of raw materials and of the banks, and even of the producers’ associations or “guilds.” The government forces all the small producers and traders to unite in guilds and associations under government supervision and a very large number of them have Mitsui or Mitsubishi nominees at their head. Out of 212 guilds of small manufacturers, 114 are connected with Mitsui and 68 with Mitsubishi. These “guilds” force their members to have their goods inspected, to buy raw materials jointly, and to adopt standard specifications, thus facilitating marketing, especially export, for the big merchant firms, in particular Mitsui. By reason of their political power, formerly exercised through both the political parties (though these no longer exist) and through their financial and family connections with the high bureaucrats and court circles, the giant business houses can and do arrange the country’s financial policy to suit their needs and juggle with its currency. By causing extreme fluctuations in price, and uncertainty, they are able periodically to skim the cream from the nation’s industrial activity. After small businesses have sprung up like mushrooms under the rain of inflation, rising prices and relative prosperity, there ensues a slump, whether natural or engineered by a change of financial policy, and Mitsui and Mitsubishi gather into their control the enterprises created by the small men.

There are actually four great family trusts in Japan of the very largest size: Mitsui, Mitsubishi, Sumitomo and Yasuda. Kuhara, Fujita and Furukawa giants of the second rank – are all financially controlled by Mitsui, and Sumitomo is allied by marriage with Mitsui. The Mitsui holding company (Mitsui Gomel Kaisha) has its capital of 300,000,000 yen subscribed by the members of the eleven Mitsui families, and the family council controls and directs the policies of all the subsidiary companies in the “Mitsui Kingdom.” The main subsidiaries are the Mitsui Bank, the Mitsui Trust, the Mitsui Life Insurance, the Mitsui Bussan Kaisha (a tremendous general trading concern), and the Toyo Menka, largest cotton importing company. Then there are the Mitsui coal mines in Kyushu and elsewhere, which produce 50% of the coal mined in Japan; its warehouse business and its iron and steel works, its dyeworks and chemical fertilizer factories and flour mills; its paper and celluloid factories. Mitsui also controls the famous Kanagafuchi model cotton mills and some others, rayon factories and a huge department store, not to speak of two of Japan’s few large electric power companies. There is hardly an industrial or trading activity in which the Mitsui are not interested either as merchants, or factory owners or bankers. As bankers or export merchants, or suppliers of machinery or power or raw materials they suck profits from the small and the great – from the peasant, the artisan, the individual manufacturer and the small corporation. Their commercial transactions alone in 1930 (when then yen was at par) were valued at the huge total of 1,700,000,000 yen, a sum larger than Japan’s state revenue. They own practically all the sugar plantations in Formosa, and until the present war had concessions in Abyssinia and Mexico. Finally, together with the Japanese government, and in partnership with Mitsubishi, Sumitomo, Yasuda and Okura, they control all the railways, mines and industrial enterprises in Manchuria, including, the South Manchuria Railway, largest enterprise of all. Mitsubishi, second only to Mitsui in wealth and power, is freer of feudal entanglements, i.e., of connection with domestic and artisan industry. It is more interested in heavy industry and somewhat less in usury, speculation and the export trade. Its central organ, Mitsubishi Gomei Kaisha, holds an absolute majority of shares in all the other main Mitsubishi enterprises; the Mitsubishi bank, trust and insurance companies, shipbuilding and shipping (including the famous Nippon Yusen Kaisha line), warehousing, coal mining, iron works, automobile manufacture, electrical equipment, chemical fertilizers, glass factories, sugar refineries, canneries and fisheries. It also has a heavy interest in airplane building, has a monopoly of the marine insurance business, and indirectly controls many other companies engaged in insurance, harbor work, sugar refining, lumbering, etc., etc. Its commercial transactions exceeded a billion yen in 1930.

Though rivals at times, Mitsui and Mitsubishi are nevertheless connected and linked up with one another in various ways. Mitsui’s iron works were amalgamated in 1934 with the State works at Yawata and with the four Mitsubishi iron and steel companies to form the Japan Iron Company. And Sumitomo is allied by marriage or adoption with Mitsubishi as well as with Mitsui. These two great family houses, whose capital resources equal those of big American trusts and whose activities and interests are far more diverse, are very much interlocked. There are some lesser houses of magnitude, but the only ones recognized as being in the same “class” with Mitsui and Mitsubishi are Sumitomo (bankers, copper mine owners, electric wire manufacturers, insurance, trading, etc.) and Yasuda (almost exclusively banking capital). Okura, one of the second rank giants (army contractors, owners of large chemical plants and of metallurgical enterprises in China) is financed by Yasuda. Additionally there are Kuhara, Asano and a few others, which in times of relative prosperity may achieve some independence of the “Big Four,” but which at all other times are subservient to the latter’s control.

Japan is in the grip of an oligarchy just as much as in the days of Meiji, which was the beginning of modern Japan. But today’s oligarchy is offspring of the marriage of feudal and capitalist elements, of the clan oligarchs with the oligarchs of finance and industry – to which subject we shall return later.




1. The “wiliness” of the Japanese is nothing more than a strong tendency toward secretiveness induced by Japan’s pervasive police system which pries into even the most intimate personal affairs of the people. As for the charge that the Japanese soldiers are “naturally” barbarians who commit unspeakable atrocities, this needs to be remembered: Apart from the fact that atrocities are inseparable from war, the point is never brought out that a very large part of Japan’s armed forces are peasants drawn from a backward agrarian environment removed only in point of time from the most primitive, that is, the most barbarian, system of social relationships. Trotsky, in his History of the Russian Revolution, explained that the barbarities perpetrated by the mouzhiks in the great upheaval were in large part excrescences of that village barbarism which, among other things, the revolution set out to destroy. Bourgeois writers alternated between describing them as manifestations of a Russian, that is, a fundamental racial quality, and efforts to depict them as an essential attribute of Bolshevism. Trotsky marked them down as a social debit against Czarism and Russian capitalism to be liquidated by the revolution. After the sack of Nanking by Japanese troops in 1937, the Japanese commander, Gen. Iwane Matsui, was questioned on the subject by a New York Times correspondent. “Yes,” he said quite laconically, “my soldiers are savages.” In thus slandering his own army, Gen. Matsui was indicting the social system of Japan. – L.F.J.

2. The yen equals about 50 cents at par.


Last updated on 20.3.2005