The Japanese Economy, Past And Present

The Japanese economy embodies the seeds of its past. During the two-and-a-half centuries of the Tokugawa regime (1603-1868), the Japanese people had become relatively urbanized and literate, and had indigenously evolved sophisticated economic institutions, but had been isolated from the world and were constrained by oppressive controls on their daily lives. The result was a country technologically deprived, but not economically backward. The political changes following the Meiji Restoration in 1868 led to the removal of the very heavy Tokugawa government controls on private exchange and production, fomenting a revolution of markets. Japan’s economic status today is a culmination of steady growth since then, interrupted by the devastations of the Second World War, but resumed afterward. Japan’s rapid economic growth after the Second World War was not directed by government nor the result of industrial targeting or other such government interventions; it was the result of unfettered market forces. Japan’s economy today remains largely free of government direction. Its various peculiar practices and institutions such as the lifetime employment system of its big companies, its myriad of small stores and complex wholesaling channels, and its bank-centered financial system all reflect the same market forces that have made the country prosperous