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Fascism and Big Business by Daniel Guerin

Tuesday, December 9, 2014

Japan: a Marxist view

Japan: Its Rise from Feudalism to Capitalist Imperialism
and the Development of the Proletariat

(THE MILITANT September 1932)

by Jack Weber

When Marx and Engels issued the Communist Manifesto in 1848, Japan was still in its dark ages of feudalism, shut in as a hermit nation to hold back the threatening inundation by the rising tide of world economy. Today we must amplify the first sentence of the Manifesto. Less than a century after its issuance, a scant sixty-four years after the beginning of the modern era in Japan, the spectre of Communism haunts Asia as well as Europe. And in fact the spectre has materialized and taken on flesh and stands with a foot in either continent, so that even as Japan reaches maturity as a world capitalist power, world economy already includes within itself at least the framework of a more advanced stage of society.

Under the direct influence of the "independent reality of world economy". Japan, the last of the powers to abolish feudalism, has itself become one of the capitalist powers. The unprecedented speed with which this process occurred has been the admiration of those bourgeois writers who attribute the "successes" of Japanese capitalism to the planful foresight of its ruling class. An examination of this planned economy will throw light on the present relation of forces in Japan and will serve to contrast Japanese with Soviet Russian planned economy. A picture of feudal and post-feudal Japan will not come amiss as a starting point.

The Feudal Period

When in 1853 Commodore Perry knocked at the gates of Japan with his cannon balls in the Bay of Uraga, ordering them opened in the name of the rapidly expanding American capitalism, he found Japan in the rotten-ripeness of a stagnant feudalism. More than two centuries earlier a new shogun (the Emperor's chamberlain) had brought to a close the period of perennial warfare between rival military lords struggling for supremacy. His family, the Tokugawas, succeeded in maintaining the "great peace" among the "weltering mass of feudal atoms" until the Emperor's Restoration in 1868. Simultaneously with the establishment of the Tokugawa shogunate the entire Japanese feudal structure was threatened by the inroads of Portuguese traders and missionaries. The introduction of the cannon and the musket was not the only consequence of the impact with European civilization that aroused the fears of the ruling class for its preservation. One result of the trade with the buccaneer-merchants was the rapid draining of gold from Japan in exchange for silver, the ratio between the two being one to four as against one to sixteen in Europe. Shortly too the silver was in danger of exhaustion as Japan had little to offer in trade except copper. The spread of Christianity disturbed the entire ideational basis of feudalism and when a Portuguese sea captain frankly boasted that the missionaries were merely the advance guard whose function it was to undermine the existing authority so that the Portuguese could step in and rule, the shogun promptly closed the country to all but a limited number of Dutch and Chinese merchants, at the same time decreeing a death penalty for any Jap who tried to leave the country.

The Tokugawa Shogunate (1603 to 1868)

The feudal system is essentially a form of military dictatorship over peasants. Its economy is a barter economy and, in the case of Japan, its wealth was reckoned in bushels of rice. Takimoto states in the Economic History of Japan that in the latter part of the Tokugawa era the annual production of rice was 143,322,000 bushels. Of this amount 102,308,000 went to the feudal lords. The Tokugawas assessed a 50% tax on the remainder, leaving 20,476,000 bushels for the peasant producers. The great feudal lords, the heads of great clans, called daimyos numbered 437 at the end of the era. There were 420,000 samurais or military retainers whose families and servants brought the number of non-producers entirely dependent on the lords to well over one million. The entire population numbered 27,000,000, the vast majority peasants.

Despite the intense exploitation of the peasantry, the daimyos, with few exceptions, could not maintain their establishments without deficits met by borrowing from the rising merchant class. Frequently enough the debts were wiped out by the simple expedient of confiscation of the entire wealth of the rich merchant. The samurais were so deeply in debt that general repudiations of debts were common. Thus the shogun declared all debts of samurais null and void in 1716.

Evidently money economy was growing up side by side with the barter economy. The money economy whose beginnings traced back many centuries in Japan, secured a firm hold through foreign trade, although barter continued to exist side by side with it up to 1875 when the system of expressing wealth in terms of bushels of rice was abandoned. In fact trade had not ceased with the decreeing of seclusion. Down to 1700 the Dutch exported from Japan a total of 100,000,000 lbs. of copper. At the end of the 18th century they were still exporting 800,000 lbs. a year and the Chinese were then sending to China from Japan 1½ million lbs. a year. Several "progressive" feudal lords were enriched by engaging in this trade.

The Peasants

Terrible as had been the lot of the peasants before the Tokugawa era their sufferings became indescribable during this period. "Even in normal times, the peasants did not have enough to live on. They ate the cheaper grains and potatoes, and very seldom tasted the rice they produced, for it was taken away as tax, and what little was left them had to be sold to get necessary money." Under feudal economy crop shortages were the most frightful calamity (just as overabundance for the market is the contradictory capitalist calamity). From 1690 to 1840 there were 22 famines, – very destructive of human life. The famines were caused by floods, droughts, frosts, typhoons, volcanoes, insects, – but the suffering was due to the low stage of social organization, a stage in which ease of communication is not desired and roads are made impassable to prevent invasion by neighboring enemies. Desperation often drove the peasants to riot for rice. Fifty such riots are recorded. Five riots of national scope occurred between 1830 and 1846.

Such poverty and misery kept the population stationary throughout this period. It is recorded indeed that during the first decade of the 19th century the peasant population decreased by 1,400,000 due primarily to deaths by starvation, altho a small part of this decrease was due to the fleeing of peasants to the towns. Under such conditions infanticide was so common that in many districts only boys were raised and in others it was the custom to kill 2 out of every 5 babies. Near Nagano the large rock still stands where old women past the age of usefulness were exposed to die.

The Restoration

The most powerful rivals of the Tokugawas were the wealthy Choshu and Satsuma clans, both near the seacoast and both of whom had learned more of the arts of the West than any other groups in Japan. Just before the abolition of the feudal system the Satsumas had imported the latest cotton spinning machinery with 6,000 spindles from England, thereby starting the first great industry in Japan. These clans headed a revolt for the overthrow of the decadent Tokugawas and for the restoration of the Emperor, nominal overlord for many centuries, around whom had grown the usual numerous myths of divinity. Unwittingly, Com. Perry, by his "visit" helped these clans end the shogunate.

The New Militarist Bureaucracy

Lengthy as this historical outline may appear, it is essential to an intelligent understanding of modern Japan. In the Tokugawa regime, control was exercised by a feudal bureaucracy with the Emperor as a figurehead. With the much-heralded Restoration of the Emperor in change in form but remained exactly the same in essence, as it had to since the ruling class had not changed. The Emperor still remained a figurehead for state religious purposes, the actual power passing over to the new militarists of the successful clans, the Choshu and the Satsuma in particular. The daimyos and the samurais of these clans formed the new bureaucracy that ushered in capitalism under the leadership of feudal lords. Feudalism was abolished but the lords, now peers of the realm, retained most of their land and were compensated by a bond issue for the small part relinquished, and the samurais were granted a state pension as well as a sum of money outright. Feudalism was abolished but military dictatorship remains to this day. To the victors belong the spoils and so from 1868 to 1912 the samurais of the Choshu clan had complete control of the modern conscript army which they organized. Almost invariably the generals have been Choshus. Similarly the Satsumas, who had to play second fiddle because of a premature attempt to invade and annex Korea, [line of text missing] -ern navy. Almost every admiral has been a Satsuma. With minor exceptions these clans contributed between them the membership of that extra-constitutional body, the Genro or Elder Statesmen, who do not give counsel but dictate his policy to the Emperor. True, elements of democracy exist today in Japan but it need only be recalled that the male workers (over 25) were granted the vote only in 1926, exercising this right for the first time in 1928, to realize the role played by the military bureaucracy at the present time. The shadow government hardly conceals the mailed fist. Under the Constitution the Minister of War practically controls the cabinet. By resigning he forces the resignation of the entire cabinet (or parliamentary administrative body) since no cabinet is permitted to function without a Minister of War who must be either a general or an admiral. No general or admiral will consent to become Minister without the consent of his confrères. Per contra the Minister of War need not resign with the rest of the cabinet. In short the military clique form a class apart, "responsible" only to the Emperor, that is, to themselves. These glaring contradictions in Japanese "democracy" became the focus of attention in the invasion of Manchuria and China.

(Continued from last issue)

It was fortunate for Japan that the Civil War absorbed American energies and that the conquest of India took all of England's attention after Perry's demonstration. Japan was faced with the immediate task of providing for the national defense against the encroachment of the imperialists. Without a breathing-spell she could not have withstood further onslaughts. In her weakness the government was forced to sign a humiliating treaty (Towsend-Harris – 1857 with the Tokugawas) with America which granted extra-territoriality to American citizens and which restricted duties on imports to a maximum of 5% ad valorem, creating an open market as the high tariff American government knew. This same treaty had to be granted to the other powers after the demolition of the batteries of Shimonoseki Straits in 1864 by the combined fleets of England, Holland, France and America as punishment for the damaging of some vessels trying to pass through the forbidden straits. The shogun wrote at this time: "These foreigners are no longer to be despised. The art of navigation, steam vessels, and naval and military preparations have found full development in their hands. A war with them might result in temporary victories on our part but when our country would be beset by their combined armaments the whole land would be involved in consequences which we can divine from China's experience." The Japs were fearful, observing that the Philippine Islands had been in Spain's hands for 300 years; Java had come under Dutch influence in 1705 and under her complete control in 1830; the dismemberment of China had begun in 1577 with the Portuguese at Macao; only recently in 1840 the British, had taken Hongkong as a result of the Opium War; the French were already in Indo-China.

Modern military defense was unthinkable without advanced industrial development modelled on Western lines. The feudal system with its low estimation of the merchant class, with its sumptuary laws defining narrowly the very food and clothing of the exploited, with its lack of accumulations from an economy at the bare subsistence level, with its complete lack of technological training for the use machinery – all this left the burden completely on the shoulders of the new bureaucracy. To begin a strenuous period of industrial development, only the government could provide the necessary funds. The government had to take the initiative in deciding, what industries to begin, how to encourage scientific and technical training.

Foreign Aid

Whatever similarities exist between the haphazard Japanese program and the planned Soviet program of industrialization (despite its serious errors) can be observed in the immediate inviting of foreign experts to construct and start new plants and to train workers. During the years 1854 to 1859 the lord of Mito had already invited 22 Dutch experts to establish shipyards and to teach the latest arts of shipbuilding. The new government took this enterprise over. It invited British engineers to build the first railroads; British workmen were invited to assist in the erection and operation of the early iron works; British teachers taught glass-making in Tokio; American and British engineers introduced modern mining methods and the use of explosives; French and Italian experts westernized the silk industry; Swiss taught the hemp-braid industry; Germans introduced brewing, the smelting of zinc, the making of steel and the chemical industries; French and Germans started dye making. By 1872 there were 300 foreigners in government departments acting as experts. The Americans contributed little due to their own "infancy" so that today Japanese industry is more European than American. Just as in Soviet Russia, the dependence on foreign experts was not completely successful. The Japs were often imposed upon, some experts were bluffers and other out-and-out frauds (as with the beginning of Stalingrad).

The government thus took the place of the entrepreneur in establishing the first arsenals, the first silk filature, the first glass factory, the first chemical works. It has operated porcelain works, silk and cotton spinning mills, linen factories, cement and brick plants, plants for soap making, type-founding, paint making, food factories, iron and steel plants. There are few industries that do not owe their existence to government initiative.

The Feudo-Capitalist Alliance

And yet by 1880 most of the government-owned plants were in private hands! For the government took the unique step of handing these finished plants over to individuals – without the slightest compensation in the vast majority of cases! The meaning and results of this transaction must be clearly stated. That there was nothing queer to Japs in this handing over of wealth to the few, is due to the left-over feudal psychology and to the fact of control by feudal lords. The "lord" could hand over a "fief" to anyone he chose, usually for personal loyalty, and almost always to previous samurai subordinates. That is exactly what occurred. Every member of the Genro, every premier selected by the Genro, has had his particular protegé whom he has enriched. Iwasaki (Working Forces in Japanese Politics) says: "The way to get rich was to become the friend of some high officers of the government." Thus Marquis Inouye befriended the Matsuis, one of the "big five" capitalist families of modern Japan. Okuma helped the Iwasakis, the present steamship kings. Baron Goto, while Governor of Formosa, made the Suzukis the sugar kings, the same Suzukis who profited most during the world war by selling munitions. The alliance between the feudal lords and the new capitalists has been very firmly cemented indeed. This is of utmost significance for the future agrarian democratic revolution. It need hardly be said that in war the militarists experienced not the slightest resistance on the part of the capitalists to the complete mobilization of industry for military purposes.

The close and direct relationship between capitalist industry and the government is one of the peculiarities of Japanese economy. Up to 1899 the "unequal" treaties of the Powers with Japan remained in force, preventing the raising of tariff barriers to protect infant industries. But every other device to encourage industry and to enrich the capitalists was resorted to by the government. Thus, tax exemptions have been frequently granted, duty remissions are made practically on request, subsides were and still are common and since 1899 the tariff has been an important weapon of defense and offense. Apart from the world war period the shipping industry could not have existed for a single year without large subsidies amounting to enough to cover a substantial slice of the operating expenses plus a large profit to the shipping interests. The main line railways were nationalized at the time of the Russo-Jap war, but there are a number of private branch lines whose profit is guaranteed by the government. Loans are readily granted to new enterprises with very little hope of their return. Contributions from the national treasury to private industry in 1928–9 amounted to 21.9% of the total budget. Under the conditions of industrial growth the government itself has never been able to discontinue entirely its own operation of industrial enterprises, as is evident from the fact that in 1928 there were as many as 371 government factories employing 136,000 workers.

Industrial Handicaps and Japanese Imperialism
World economy stimulated the growth of industrial Japan, – but that same world economy now holds Japan as in a vise, tending to strangle her capitalism. And it can be said with utmost confidence that Japan will find no real solution to her life-and-death problems under the world hegemony of capitalism. Imperialism attempts to overcome these handicaps with a sword but is doomed to failure. Japan's part in the international division of labor will be decided by her workers and peasants, not by domestic and foreign capitalists.

There are three great handicaps that condition Japanese industrial growth. These are: (1) money stringency; (2) poverty in raw materials; (3) need for stable markets.

(1) Money stringency and the financing of industry.

The growth of industry demands larger and larger amounts of fluid capital. Quite poor in metallic and mineral resources, Japan has been forced continuously to import both gold and silver for the coining of money, as domestic production scarcely meets industrial and art purposes. It was possible for Japan to establish a more or less stable financial and banking system only with the aid of the 200,000,000 taels indemnity squeezed out of China after the Sino-Jap war. Throughout the modern era Japan has been an importer of raw materials and machinery resulting in an unfavorable net balance of trade (except during the world war). If not through spheres of influence, then economically the capitalist powers exploit Japan as a market. To pay for the imported materials Japan has had to make larger loans abroad. Although the total amount of the public debt is smaller than that of any of the powers, the absolute amount and percentage of foreign debt is greater, whereas the domestic debt is smaller than that of any other country.

The money stringency of Japanese capitalism is reflected in the high interest rates. Banks pay around 10% on deposits. The short-term discount rate is over 10% as compared with the 4–5% of Western countries. These rates impose a severe handicap on Japanese industry. Owing to their youth and to the failure to build up adequate surpluses, industrial concerns are under the necessity of borrowing a large part of their working capital. As the high rates are an important element in the cost of production, they are a handicap to Japanese enterprise in meeting foreign competition. Struggle as she may to overcome this difficulty, Japan falls more and more under the influence of American finance capital. The unparalleled dependence of Japanese production on foreign markets makes Japan extremely sensitive to world economic conditions. Since 1920 she has been in the throes of a profound crisis causing her foreign exchange to fall catastrophically. The inflation caused by the tripling of her bank-note emission during and following the war has been aggravated by the heavy demands made on Japanese economy through the Imperialist seizure of Manchuria.

(Continued from last issue)

I. The Dearth of Raw Materials
Without ample coal and iron reserves no country can aspire to a place of first rank among modern industrial powers. Lacking in adequate home reserves of these essentials, Japanese capitalism is under the imperative necessity of importing them from abroad. In this respect and more generally, Japan ranks with Italy.

Influence of Iron Ores

In 1928 Japan produced 8% of the total iron ores she consumed. Of the 92% she imported 11% came from Japanese colonies and the remainder mainly from China and Straits Settlement. The known iron ores of the Far East, including Japan, Korea, Manchuria and China, are so small in quantity that if Japan were to consume these ores at the per capita rate of the U.S. the entire body of ores would be exhausted in 15 year's. Manchuria has reserves whose metallic content is equal to that of Germany or of Great Britain, but these ores are of such low grade that they are hardly reckoned as ores in the U.S. Large outlays are necessary for the extra operation of preparing them for use since they must first be chemically treated to obtain a higher concentration of metal. Thus no solid metallurgical basis exists for a steel industry of enduring importance. Nevertheless, despite the cost handicap, Japan maintains her steel industry through tax exemptions, high subsidies and protective tariffs, obviously for armament purposes. The government arsenal founded at Yawata in 1900 produces ½ the steel used by industry but operates at a serious loss each year in spite of the high rates charged for the steel products; for example, round steel bars costing $43 to $51 per ton are sold in Germany for $25 to $30. Japanese capitalists submit quite willingly to this handicap to strengthen imperialist militarism which aims first of all to seize those parts of Asia which can supply basic raw materials and food.

The Problem of Coal

Measured in terms of coal production, Japanese industry is far from an advanced stage. The output is ½ ton per capita as compared with over 4½ tons for the U. S. and over 5 for the United Kingdom. Even if we include hydro-electric power (converted to tons of coal) Japan's position is not improved. The coal reserves of all Japan are only 118 tons per capita, less even than those of British India, and far below the 4,070 tons for Great Britain and the 27,500 tons for the U.S. To make matters worse the coal that Japan does possess, while good as bunker coal on ships, is unfit for coking and therefore unfit for steel production. The high cost of coke is a major problem for the Japanese steel industry and renders her competition in this field utterly impossible under present technology. The cost of coke per ton of pig iron in 1927 was $3.25 in the U.S. and $7.50 in Japan. Only in China (with its 2,200 tons per capita reserves) is there coking coal in the Far East and even there not in large amounts.

Coal mining is far more difficult in Japan than in the other capitalist countries as the seams lie much deeper and are thinner. Less machinery being used, the output per miner is less. Thus each miner produced ½ ton per day in 1925 as against 4½ tons for the U.S. Nor is this cost made up by cheaper labor – the output being 1/9 as great but the wages being 1/5 those in the U.S.


Barred from rapid progress in the heavy industries by her lack of the necessary raw materials, Japanese capitalism has been forced – for other reasons as well – to turn to the lighter textile industries. Yet even here Japan is forced to import cotton, the raw material of greatest importance to her manufacturing. Supplied with an abundance of raw silk, Japan is nevertheless not a great manufacturer of silk but rather a source of raw material for the U.S. silk industry.

It is above all this poverty in raw materials that makes Japan a debtor nation, hyper-sensitive to world market conditions, unstable financially owing to difficulties of international payments.

III. The Imperialist Struggle for Markets

Japanese feudal-capitalism entered the world arena even later than German imperialism and her struggle for markets commenced at the very birth of her capitalism, particularly in competition with the powers in China. China and India, with half the world's population, form a fabulous market. But India is pre-empted by England. More than any other power Japan depends on foreign markets, for no other country exports so large a percentage of the total production of goods. The desperate effort of Japanese imperialism to subjugate China as a colony to function as market and as source of raw material, is the reflection of the stifling action of capitalist world economy on the further growth of Japanese productive forces. But China is also essential to U.S. capitalism and Chinese capitalists desire to exploit the home market themselves. Young as is Japanese capitalism, it has already passed through many crises and has had to limit its productive capacities again and again due to the competition for markets. Japanese capitalism is faced with the task of carving out its own markets by seizing China or by wresting colonies from the established powers. This external struggle manifests the desperate effort of the feudal-capitalist combination to maintain the inner exploitation of the workers and peasants.

(Continued from last issue)

Present Status of Japanese Manufacturing

In the Western sense of the term, Japan, with all her speed of development, far from being advanced industrially, is still in the handicraft stage. Not more than 10% of her population (workers and their families) depend for their livelihood on the factory system. Small scale industry is still the rule with higher factories the exception. In 1928 the largest number of factories (29,116) employed only from 5 to 9 workers; 2,283 factories employed from 100 to 500 whereas only 537 factories employed 500 workers and over. Three industries have passed entirely beyond the domestic stage and are concentrated in factories or establishments employing more than 500 workers. These are cotton spinning (95%), shipbuilding (91%) and the primary metal industries (73%), the percentages representing the number of workers in the large establishments.

The Textile Industries

The textiles industries form the line of least resistance in Japanese development. They require relatively inexpensive plants and light machinery, using little power. Above all they represent an intensive exploitation of cheap labor.

Textiles engage 50% of the factory workers; they represent some 45% of the total value of all manufactures; they absorb 26% of the total capital investment in partnerships and stock companies ; they use 24% of the total power consumed by industry; and finally they form 68.7% of the value of all exports. These figures do not include household production which is extremely important. Thus, silk reeling, the most important industry, employs 395,000 workers in 3,500 filatures (20% of all factory workers) but there are, in addition, 62,000 peasant households engaged in reeling raw silk.

The Contract System

Just as in England before the industrial revolution, contracting is resorted to on a vast scale by wholesaler and jobber. Almost every farm household does some weaving as a necessary adjunct to the farm labor. The women, the very old and the very young are used for this work at sweatshop piece rates. Women earn about 30¢ per day – 50¢ if 12 hours). This home-sweatshop system applies to a large number of industries they work steadily all day (more than besides weaving of cotton or silk. Where the articles are complicated they go into a number of separate homes, the final asembling or finishing being done by the entrepreneur in a "factory". Thus lanterns are made by 6 different families, each one specializing in some part of the work.

Nothing illustrates better the poverty of Japanese agriculture than the willingness of labor to keep alive so parasitic an industry as the production of cocoons for the manufacture of raw silk. 81% of the cost of producing raw silk is due to the cost of the cocoons, produced almost entirely in peasant households. The exacting labor for their production goes almost totally uncharged, the peasant relying on the small sum of money paid him for this "extra" commodity to make up for the losses sustained in farming.

Raw Silk in Foreign Trade

Japan does not use her raw silk for manufacturing but exports 88% of it, by value, to the world's richest market, the U.S. The reason for this lies in the protective tariff set up by the U.S. (amounting in 1930 to about 70% ad valorem) which acts to strangle Japan's attempts to establish a silk industry. Raw silk forms 40% of the value of all exports so that when "prosperity" gave way to the world economic crisis, Japan was placed in an extremely precarious position, the burden falling most heavily on workers and peasants.

The Cotton Industry

At the present time the competition for the cotton piece goods markets among the exporting countries is at the very forefront of the imperialist struggles on the economic field. Cotton cloth is a staple in great demand in densely populated lands with little industrial development. Design and quality are of little importance in the largest markets (China, India) which buy the cheapest goods obtainable. The cost of labor is a vital part (more than ½) of the cost of the finished product, so that Japan, with its lower paid worker's, has a great advantage over England and the U.S. in competitive markets. Thus England is in danger of being ousted from the Indian market, particularly with the Hindus boycotting British goods. Each year from 1923 to 1929 Japan exported considerably more cotton tissues and yarns to British India than did Great Britain. Similarly, in these years Japan practically controlled the Chinese market. This has had far-reaching results of such tremendous significance for world economy that it is worth digressing into a short history of the cotton industry in general.

Cotton and Opium – A Study in Historic Materialism
Although known in ancient times, cotton was virtually discovered for Western Europe by the East India Company in its trade with the Orient. In the latter half of the 16th century the company bought Indian cotton piece goods for England where a large market was created. Soon the enterprising merchants decided to do their own manufacturing and they began to import raw cotton. Expert Hindu weavers were engaged to teach the English workers their art. At the same time cotton seed were carried to the new colony in Virginia (1650) and shortly this colony became a more important source of supply than India.

Mercantilism and Money

The early stages of capitalism were marked by a shortage of the money medium which was in great demand. This shortage gave rise to the mercantilist theory of a favorable balance of trade, the exports to be greater than the imports so that money would flow into a country rather than out. In its trade with the East, the India Company was under the constant necessity of shipping large sums of money out of England to pay for its purchases of spices, cotton goods, etc. This raised so loud an outcry from other English merchants that the company's charter was twice withdrawn and the export of silver coins was forbidden. The India merchants were thus forced to cast about for some means of securing gold and silver elsewhere with which to finance their trade, particularly in cotton. China appeared to be a fabulous source of wealth, with its accumulations of ages.

(Continued from last issue)

China at that period was completely self-sustaining. The Chinese were skilled handicraftsmen whose labor was so cheap that it was impossible to undersell her goods in her own market. China practised both silk and cotton weaving so that no cotton goods could be sold in the Far East by Europeans. The English tried to sell their most important manufacture, woolen goods, but this was a drug on the market.

The Smuggling of Opium

There was only one commodity that the English found they could sell in China – opium! Opium was grown extensively in India where it was used as a drink, but was little known in China. The English mixed the opium with tobacco brought from America and planted in Formosa. The Chinese learned to smoke this mixture, and then opium alone. As soon as its effects became known in China, its importation was strictly prohibited under penalty of death. But the Europeans, particularly the British, started, to smuggle it in using even the British Navy for this purpose. The traffic assumed such tremendous proportions that it literally drained the gold and silver out of China, gold and silver that the British traders used to pay for Indian cotton of which they imported one million lbs. a year by 1700 and 50 million by 1800.

So appallingly great became the illicit opium traffic – in time – that in sheer desperation the corrupt Chinese officials were driven to action. Around 1840 they seized a large number of chests of opium brought in by the English, and destroyed them. This was quickly seized upon by imperialist England as a good pretext for declaring war on China (the Opium Wars of the 1840s). China was forced to permit opium in and at the same time England was given a foothold in the Yangtse Valley at Hongkong.

Queerly enough, however, the British need for opium in China had ceased at the very time China was being coerced into its acceptance. The reason for this change must be sought in the industrial revolution. The cotton industry had given a great impetus to factory development and this in turn stimulated English mechanical inventions. In 1785 for the first time steam engines were used in factories. The spinning-mule and the power loom had come into existence. England was transformed from a country that imported cotton goods in 1700 to one that exported to the extent of over one million pounds sterling by 1800. Her exports went mostly to her colonies, – but now she could even undersell cheap Chinese labor due to the superior productivity of the machines. Hence opium was no longer needed to finance the purchase of raw materials.

Under the driving-force of profits, however, the opium traffic could not be stopped. It had now invaded China in the form of poppy-growing, the mercenary Chinese officials encouraging this under the pretext that it would help keep Chinese money at home.

Japan and Opium

History has repeated itself after a fashion. Today Japan seeks to finance her purchases of raw cotton from abroad. One of the means used to accomplish this, is the sale of opium and of manufactured narcotics to China. Manchuria has always been a base for this traffic. The Japanese, in ousting Chang-Hsiao-liang, have taken over his control of opium. But it is no longer merely raw opium but the cheaper manufactured narcotics, morphine and heroin. These are supplied by the "advanced" capitalist countries, the U.S., England, Germany, Switzerland to China via Japan. The privileged consular pouches and parcels post system of Japan in Manchuria, are freely used for this purpose.

The League of Nations in typical fashion, has convened bodies of "experts" to help "solve" the opium problem. Soviet Russia, invited to these fake conferences, replied: "The government of the U.S.S.R. has come to the conclusion that in connection with the task of fighting the spread of opium and other drugs, the various states are striving to satisfy their own commercial interests and gain material benefits. Under such circumstances, Soviet Russia considers that its participation would be useless." Making a market for opium means "repeats" and how lucrative the business is, may be judged from the estimate that it amounts to some $600,000,000 per year in China! What chance is there that so vast a business will be abolished under capitalism? In 1917 Japan's imports of morphine from England – intended for China – amounted to 600,000 ounces. The exact revenue derived from opium in India is unknown, a dark secret in the archives of a special revenue department. But it is known to supply 45% of the revenue in Straits Settlement, 21% in French Indo-China, 11% in the Dutch East Indies, 23% in Siam, 12 to 50% in Persia. The British government grants loans to farmers without interest to raise poppy, the government buying the entire crop. The price of poppy is regulated to spread the poppy acreage as against the competing crop – wheat! It is a foregone conclusion that capitalism will not solve this problem which will be liquidated only after the proletarian revolution and the elimination of the profit motive.

Cotton and the Swadeshi Movement

The industrial revolution not only permitted the English to undersell the Chinese but also the Hindus whose handicraft industry practically disappeared as a result. Gandhi, put forth by the Swadeshi movement to win over and mislead the Hindu masses, interprets the modern Swadeshi movement in terms of reestablishing this vanished art. Only the most gullible individual could swallow this pretense. The Swadeshi movement is the bid of the Indian national bourgeoisie for an alliance with the British imperialists in the exploitation of the Hindu workers – particularly in the newly rising cotton mills. All that the Indian bourgeoisie desire is a protective tariff to keep out competition until their "infant" industry is strong enough to stand on its own lusty feet (on the backs of the Hindu workers, of course). Back in 1907 Dr. R.B. Gosh, president of the first National Indian Congress, stated: "What reasonable man can doubt that the real strength of the Swadeshi movement is to be found in our national desire to nurse our own industries, which the Government of India, with their free trade principles, are unable to protect by building up a tariff wall?" On the British side at this same time Sir R. Lethbridge (India and Imperial Preference) advocated such a tariff for India – provided it was made to fit into a scheme of Imperial Preference. Under the stress of Japanese and U.S. competition, England has been forced to adopt exactly this policy advocated for 25 years. The Indian trade is the mainstay of the British cotton industry. To hold this trade and shut the door to all others has been the consistent policy of British capitalism. In their present desperation, Lancashire capitalists are trying to reduce costs by lowering the standards of living of English textile workers, so as to compete with Japan and America. Great Britain's monopoly of the piece goods trade in India is under threat. Both U.S. and English capitalism are suffering from Japanese competition. The latter's cotton textile industry has grown faster than any other country's during the past 15 years. Measured by the amount of raw cotton consumed the industry grew slowly in Great Britain till 1913, then declined. The industry has grown steadily in the U.S. since 1870. In Japan it began during the war and has risen rapidly since.

(Continued from last issue)

Rise of Japan, Decline of England

The rise of English capitalism caused the ruin of the handicraft cotton industries of India, China and Japan. But not forever could England guard and keep secret the machines that gave her power. To-day nemesis stalks the British Empire and the East ousts England from her greatest markets for cotton manufactures. Naturally England will use every weapon of resistance to fend off the inevitable, the British Empire will not vanish without gigantic struggles, death-throes one might well call them. The tariff, imperial preference, the capitalist onslaught on wages, particularly in the Lancashire mills, – these are symbols of the decline of British capitalism, of the precarious position she occupies in world markets, of the depletion of her natural resources (coal), of the rising costs of manufacturing. The rise of Japan as a manufacturing nation is an added force tending towards accelerating the decline of English capitalism.

The Rhythm of Cotton Technology

The more advanced the technology, the finer the yarns and piece-goods it can produce. The Lancashire mills, the oldest in the world, are still pre-eminent in the making of fine goods, the kind used in the more advanced countries. But the East – India, China, Japan – with its teeming millions, uses coarse yarn and goods, the type first developed by a new technology. The mastery of cotton manufacturing has followed the same rhythm in every country, Japan being quite typical. At first Japan was a market for coarse piece-goods and the heavier, coarser yarns of English make. Gradually the yarns of coarse size were produced at home until they ceased to be imports and became exports. In this stage Japan ousted England from India and China for this type of yarn. Still later the coarse yarn was used in domestic weaving to produce coarse piece-goods which thus became the export. At this stage Japan captured the Asian market outside of India almost completely away from England. Japan encroached rapidly even on the Indian market with the results already outlined, the closing of India to Japan by England. In this process not only has Japan imported greater and greater amounts of raw cotton but latterly she has been importing additional yarn (made in China) for her factories.

Limited Possibility for Japanese Growth

The entire development of Japanese capitalism is conditioned by the epoch in which it arose, the era of imperialism. Forced to follow in the wake of the imperialist powers, Japan's normal growth was stunted. Imperialism signifies the decay of democracy and the militarizing of the imperialist power in its desperate struggle for larger and larger markets. This fact helps to account for the omission of the bourgeois revolution with its democratic phase in Japan's development and for the ease with which the feudal lords were able to direct Japan's course. If today, before the achievement of any "real" democracy in Japanese government, we witness movements calling themselves Fascist, the reason is that developments are foreshortened in Japan so that the so-called Fascism, the outgrowth of the military oligarchy, tends to strangle democracy in its very birth.

On the economic field imperialism gives occasion to the peculiar phenomenon of the export of finance capital by Japan to China for the setting-up of cotton mills there even before Japan has saturated her own home market. Practically 40% of all Chinese cotton spindles are owned by Japanese capitalists. In the developments of Chinese and Indian cotton manufacturing, we see however the same fate meted out to Japan that she meted out to England, – the loss of markets. Already China has ousted Japan from her market for the sale of yarns and India already has more spindles than Japan. Japanese capitalism rests on cheaper labor than that of England but both India and China rely on labor still cheaper than that of Japan. A girl spinner in Japan gets 50 to 60 cents for 10 hours of work. A male spinner in India gets from 34 to 43 cents for 10 hours.

Japan's development in the last 70 years, looked at closely, has been slow rather than fast, much slower than that of England even during its experimental stage. Her home market is not a strong one; for example, in the cotton industry, on the basis of yarn consumed Japan does not produce nearly as much goods as England, the U.S. or even India, and yet Japan exports more cotton cloth than any other country except England, – because she sells less at home due to the lower per capita consumption of her poverty-stricken population. It is a foregone conclusion that Japan will never attain the height of development reached by England in the cotton industry which, nevertheless, is Japan's greatest industry.

"The Big Five"

A striking phenomenon illustrating Japan's uneven capitalist development under the imperialist forces shaping her institutions, is the growth of tremendous empires of monopoly capitalism side-by-side with her backward industrial forms. The Japanese government has consistently encouraged combinations of capital. During periods of crisis when capitalists find themselves on the verge of bankruptcy, the government intervenes directly to bring about amalgamations and greater monopolistic concentrations of industry, banking, etc. The "Big Five" of Japan are the very heart of Japanese imperialism. They are. banks in the same sense as the National City Bank in the U.S. and the Midland Bank of England; that is to say, they are the sources of finance capital. No big undertaking can be started in Japan without the aid of one or more of these banks. To enumerate the companies controlled by the Mitsui, Mitsubishi, Dai-Ichi, Sumiton and Yasuda banks would be to catalog every great Japanese enterprise. The Mitsui Co. alone controls 25% of the entire export trade of Japan and handles coal, copper, sulphur, lumber, cotton, silk, sugar, etc. It imports ships, locomotives, steel bridges, opium, machine tools, paper pulp. It is the largest owner of coal mines in the East. It handles the millions of tons of the soya bean crop of Manchuria and practically owns the forests of Hokkaido besides having the monopoly of camphor in Formosa. The Mitsubishi Bank controls the shipping industry and all the large shipping companies of Japan. It has vast interests in the engineering industries. It is vitally concerned in the South Manchuria Railroad. These banks, the "Big Five", are gigantic combines, vertically and horizontally, with tremendous and cynically recognized power in government. Japanese papers refer to a Mitsui cabinet or a Mitsubishi ministry since the Mitsui's "own" the Seiyuaki Party and the Mitsubishis subsidize the Minseito Party.

Effects of the War on Japan

The World War gave Japanese capitalism so tremendous an impetus that it can be said to have reached maturity with this period. The war freed Japan temporarily from the strangling fetters of competition. After a year of painful readjustment, Japanese capitalism seized its opportunity to invade all the markets of the East as well as Africa, the South Sea Islands and Australia. No better measure can be given of the extent of its new trade than the relation of exports to imports. From the Sino-Jap war up to the World War, imports exceeded exports each year, leaving a total excess of imports of 928,803,000 yen at the beginning of the War. The first three years of the War canceled this deficit so that by 1918 there was an actual surplus of exports amounting to 467,000,000 yen.

Before the War England controlled 53% of the imports of cotton piece-goods to China, Japan sending only 20%. By 1925 Japan had 51% of this business, England only 38%. The present Japanese steel industry is the product of the War. The number of factory workers increased almost half a million from the outbreak of War to Oct. 1917.

Of far greater importance however, are not these figures, but the changed social conditions, the enriching of the few and the utter pauperizing of the masses. The same process of inflation occurred in Japan as elsewhere. Prices doubled, then tripled and went skyrocketing. Wages remained stationary or lagged far behind the rising cost of living. Food became scarce. The profits made by the capitalists were simply enormous. Certain mushroom steel companies, sugar manufacturers, shipping concerns, showed profits ranging from 38 to 120%. While the Narikin, the newly rich, lived riotously, the workers and peasants felt the pangs of hunger gnawing ever more fiercely. A period of growing strikes and tenant outbursts culminated finally in the nation-wide rice riots of 1918.

The post-war period brought an even more severe crisis in Japan than in the other capitalist countries. Once more Japan's imports exceeded her exports so that the first five post-war years showed a greater deficit than the enormous surplus of the four War years. Unemployment became general and took on unprecedented proportions for the first time in Japan's history. The mushroom companies of the war period, the over-expanded industries, experienced widespread failures. In 1923 the Great Earthquake added its ghastly burden to the suffering of the masses. On the land the War accelerated the process of concentration of ownership. The number of peasants owning their own land had fallen by 38,000 during the six years before the War but in the five years following the War this class decreased by 450,000.

(Continued from last issue)

The absolute and continuous control of governmental power by the military oligarchy, and the geographic position occupied by Japan in the backward East, have permitted unhampered sway to the policy of Japanese imperialism. This policy presents an intense singleness of purpose throughout the era of capitalist economy. The latent conflict between capitalists and feudal landed aristocracy (that might have "disturbed" Japan) for ultimate supremacy, long since liquidated in the more advanced capitalist countries in favor of industrialism, has not yet reached the point of open conflict, although the economic bases for this conflict are already present (high land rent and dear food as against the capitalist need of cheap labor). Hence the ruling classes act in complete harmony in foreign policy; government, banks, industrialists, business men give their fullest cooperation in the process of expansion and penetration, "peaceful" or militant.

The Tanaka Document

The ultimate aims and the methods of the expansionist policy are given singularly candid if not laudable expression in the notorious Tanaka document. These aims, like those of the other imperialist powers, are based on the need for markets, for sources of raw material, and on military considerations of defense and offense. For military purposes Japan is completely dependent on keeping the road to China open as she depends on China for foodstuffs, oil, coal, iron and steel. Modern warfare is fought in the factories at home, a fact emphasized by the statistics of the last years of the campaign on the Western Front when one ton of ammunition was spent for every German destroyed or permanently disabled. Japanese militarism feels lost without a firm base in China. Furthermore Japan exports 30 p.c. of her entire production of manufactured goods, six times the percentage exported by the U.S. Says Tanaka:

"When we remember that the Chinese are our only purchasers, we must fear that day when China unites and her industry begins to flourish – We must from now onwards pursue our own military ends and seize the heart of Manchuria and Mongolia by divers ways, in order to be able on the one hand to destroy the military, political and economical development of China ——–."

The Formula of Conquest

The Japanese rulers learned more quickly than anything else from the West the cunning methods of imperialism. A generation after the forcing of extraterritoriality on Japan by the Powers, she in turn, even while protesting against this same extra-territoriality at home, forced Korea to grant extra-territoriality to the Jap. The Japs protest violently against the closing of the door to Jap immigration by the U.S. in 1924, but Japan has consistently shut out the Chinese from free entry to Japan for exactly the same reason avowed by U.S. capitalism, protection of the standard of living. But above all Japan learned the formula of imperialist expansion in backward regions. In 1875 France "recognized'' the independence of Annam from China. Following this in the same year Japan granted Korea "recognition". In both cases China refused to grant such recognition but she was coerced into acceptance of the faits accomplis in 1885 when Annam became a "protectorate" and Korea became "neutral" due to Russian opposition to Japan. In 1903 Baron Komura, Minister for Foreign Affairs, warned Czarist Russia in a secret note: "The unconditional and permanent occupation of Manchuria by Russia would create a state of things prejudicial to the security and interests of Japan ... if Russia were established on the flank of Korea, it would be a constant menace to the separate existence of that empire, or at least would make Russia the dominant power in Korea. Korea is an important outpost in Japan's line of defense." In the Russo-Japanese War that followed this warning, Japan established complete hegemony over the Sea of Japan, making it an inland sea, impregnable from attack by sea.

The military oligarchy has learned at home how to control government through a puppet emperor and this same method has become the formula of Japanese imperialism. In Korea the Crown Prince of Korea became the puppet with actual powers in the hands of an "adviser", or governor-general. Complete control of finance, foreign affairs, concessions and foreign commerce was taken over by the Japs. Diplomatic matters were transferred completely to Tokyo, pressure being successfully applied to cause the withdrawal from Seoul of the various ministers, the first to go being that of the U.S. In 1910 Korea was finally annexed formally to Japan. Precisely the same formula is now being applied to Manchuria.

Japan and China

Japan's aggressions in China followed a plan based on recognition that China cannot be subdued and forced into colonial status simply by military conquest. The plan had the twofold aim of securing control of China's trade outlets and of gradually seizing the strategic cities and the railroads for final military conquest. Japan everywhere placed herself between the ports seized by the Europeans and the ocean, so as to "starve" these ports ... In 1915 Japan presented the infamous 21 demands to China, great emphasis being placed in these demands on control of railroads. Among the secret clauses of the 21 demands, meant to place China in the early position of Korea, were that the Chinese government should employ "influential Jap advisers" in political, financial and military affairs; that Japanese hospitals, temples and schools in China should be granted the right to own land (no foreigner is allowed to own land in Japan except through a Japanese corporation); that the police departments of various cities be "jointly" administered with Japs; that China must purchase 50 p.c. of her munitions from a Japanese arsenal to be established in China; that Japan be given first right to make all loans. In 1918 Premier Terauchi proposed that China issue gold notes on the strength of gold held in Japan. The Japanese aim in all her relations with China is clear: to make China her colony, to hinder Chinese development until she does fall into the hands of Japanese militarism.

Meantime Japan encroaches on the material resources she requires in China, particularly the coal and iron mines. By a loan made in 1899 to the Hanyang Iron Works, Japan obtained payment in ore from Tayeh on the Yangtze and coal from Pinghsiang. This arrangement, involving practically the entire output of these mines, has been a constant source of conflict due to Japan's use of it to hinder the growth of the Hanyeh Ping Co. In January 1928 the Japs prevented the Nationalists from seizing this company. Again in 1929 Hupeh Province was forced to relinquish this company, one of the largest iron and steel companies in China.

Japan has over one and one quarter billion dollars invested in Chinese railroads, warehouses, banks, spinning and weaving plants, mining companies. This investment is used for imperialist purposes, but it is at the same time the effort of Japanese capitalists to utilize the cheaper Chinese labor, the nearness to raw materials, the closeness to the market, and the avoidance of Chinese tariffs.

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