The late idustrialier Japan was enjoying its economic growth dramatically from 1930 to 1990 while the early industrializer Britain was suffering its economic decline in 1985. Although Japan could not escape from the 1970’s oil crisis, it had a great average rate per annum growth 10.4 compared to America 4.1 and Britain 2.3 in the period of 1960 to 1973. (Abe & Fitzgeerald 1985: 2-3) Facing this fact, many economists were very interested in finding out the reasons that cause a nation’s economic success. Culture was the most common hypothesis in the last two decades, particularly in the Japanese case, because some economists claimed that the culture factor was the precondition of economic development. Whereas the other argued that economic progress was the fundamental factor of economic success. Therefore, whether culture was the precondition of a nation’s economic success or the consequence will be discussed in this essay. Moreover, the real relation between culture and economic success will be analyzed by illustrating Japan as a main model and comparing to Britain and America. Firstly, the culture perspective will underline Japanese economic success was based on Confucianism. Secondly, institution will explain Britains economic decline and further overthrow that culture is the precondition of a nation’s economic success. Thirdly, institutions and organization capabilities will show the reason of America economic desolate and also prove culture is a consequence of economic development. Finally, a brief conclusion will be drawn.
The culture perspective
‘National cultures are attitudes and patterns of behaviour that are learned within different societies, and the results of socialization are understood, communicated and reinforced by shared symbols, language, and expectations.’ (Abe & Fitzgerald 1985: 10) Indeed, many groups share different cultures in different circumstances. For example, most Western countries believe Protestant ethic whereas most East Asian countries believe in Confucianism.
It is believed that Protestant and Confucianism have significant influences on economic development in those countries, especially in Japan. Japan as a late industrializer, which experienced the damage of World War II and the influence of the 1970’s oil crisis, nevertheless it still had a marvelous trade balance by 1992, which was greater than $120. (Abe & Fitzgerald 1985: 10) The ripe of capital accumulation and the total productivity could be two main reasons to explain the Japanese case. In cultural perspective, Confucianism is an important factor that determines Japanese post-war economic growth and modernization. Many commentators like Rostow believed that ‘economic modernization required certain cultural preconditions’ (Lewis, et al, 1996: 36). Indeed Japanese Confucianism has significantly influenced Japanese behaviour and attitudes for long time. It was originated by Confucius whose maxim as ‘guidance by morality, control by ceremony’ (Morishima, 1982: 5). In Confucianism ethic, learning and saving are two virtuous activities. Firstly, learning increased people’s knowledge and ability so that people could achieve a better outcome at work. This benefited Japanese Industrial development and thereby facilitating Japanese economic development. This was the reason Japanese emphasized on education in the early years. According to Dore (1965: 1-3),
‘Japan’s educational achievements in the early 1860s-before the Meji restoration of
1868 consciously before the process of Japanese modernization.’ (Lewis, 1996: 63)
Secondly, saving was a crucial activity that led to Japanese economic growth, because saving could accumulate funds for future investment. The more funds invested in Japanese industries the more efficiently they developed and the more national competitive advantages Japan had.
Moreover, Confucianism encouraged people to have senses of ‘duty’ and ‘collective’, ‘cohesion’ and ‘discipline’. Therefore, the Confucian tended to follow the morality, which benefited the whole society. For instance, ‘seniority’, ‘hard working’ and ‘loyalty’ were represented in many Japanese corporations. ‘ Royalty is common to Japan.’(Morishima, 1982:6) In the Confucian society firstly, employees followed companies’ regulations, responded to the jobs and worked hard to create product efficiency and thereby to increase the total productivity, as it is shown in the following table. Japan had become the industrial leader in the developed countries, with the comparative rates of growth 10.4% between 1960 and 1973.
Comparative rates of Growth in Real Terms 1900-1983 (Average Rates Per Annum)
Year Japan U.S.A U.K W. Germany
1900-13 4.0 1.5 2.9
1920-29 3.7 (b) 1.7 4.0
1929-38 6.2 (a) 0.1 (c) 1.9 2.7
1950-60 8.8 3.3 2.7 7.8
1960-73 10.4 4.1 2.3 4.4
1973-83 3.7 2.0 2.2 1.6
Notes: (a) 1930-1938 (b) 1920-1928 (c) 1929-1939 (d) 1925-1929
Source: Economist, Economic Statistics, 1900-1983 (London, 1985).
Secondly, in Confucian society, young employees respected elder employees and learnt from them. This regulated within society the hierarchic relationships. (Morishima, 1982:7) They had a sense of groupnism so that people were more corporate to each other. Therefore, to large extent, industrial conflicts were unlikely to happen. Thus, hierarchical control and life-time employment were carried out very smoothly in the Japanese corporations. This was not only considered to be an asset to Japanese economy growth but also a national competitive advantage that could not be easily copied by the other countries such as America, Britain and Germany. In this case, Japanese cultural values and attitudes toward accumulation and work influenced Japanese economic performance and thereby determine Japanese competitive advantage. Therefore, to this extent, cultural values are conductive to business as a cause of economic development.
Despite cultural values had largely contributing to Japanese economic growth, many economists were unlikely to admit culture was a precondition of economic development. The reasons were firstly, they believed that Japan’s success was not mainly because of the Confucian tradition ruled in the Japanese society but state and banks’ support. The Japanese industrial development was largely supported by governmental funding and financed by banks. For example, Zabatsu was first supported by Meiji governmental funds and policies. Meiji government advocated education, training and technology. These enlarged employees’ knowledge and improved their ability to work. Therefore, they could create product efficiency and result in total cost reduction. Thereby, it increased Japanese economic development. Compared to Japan, America’s steel industry was reluctant to expand its production capability in the immediate post-war period, because US government feared overcapacity and did not support it. (D’Costa, reading package). To an extent, government and bank seemed to play an important role influencing a nation’s economic development rather than culture.
Secondly, some economists believed that culture determined a nation’s economic success. For example, Weber stated that ‘ the rationality of European religious ethnics for these ethnics were what made modernization socially possible’. (Lewis et al, 1996:39) However, Weber’s statement and his Protestant ethics seemed to fail to explain some facts like Britain’s post-war economic decline, because West rational cultural values did not seem directly conducive to Britain’s industries development. Moreover, Britain post-war economic decline was likely to be explained by institution rather than culture. Indeed, to some extent, Britain economic decline was because of institution change. Britain was the pioneer country of industrialization and its industrial development had become mature. Therefore, bankers of the City’s leading institutions invested large funds in the finance sector rather than manufacturing sector. This resulted in the industrial sector lacked financal support and thereby it could not meet its long-term development needs and finally led to Britains economic decline. Indeed, according to Lewis et al (1996: 138), ‘Britain’s financiers have played a significant part in the decline of Britain as an industrial nation.’ Therefore, institutional and bank policy affected a nation’s economic development than culture. According to the case of America and Britain, culture was hardly conductive to business a cause to a nation’s economic development.
Moreover, for some economic commentators, culture is the consequence of economic development rather than a cause. Indeed, America as a leader of the economic world, its economic development dramatically, which resulted in restructuring large-scale industries. Chandler emphasizes ‘the multidivisional (M-form) structure in mass-production industries. (Singleton, 1990:120) Have been multi-divided, the American industries tend to apply Taylor’ scientific management. The principles of Taylor’s scientific management are (Huczynski & Buchanan, 2001: 416)
divide of tasks
the best way of doing job
division of labour
hierarchies of authority and close supervision.
Division of tasks and labour require work to be done corporately, because if one job was broken down, the other jobs could be affected, therefore, corporate culture seemed to be fostered in corporate capitalistic society. To this extent, culture values that are a consequence of economic development.
To sum up, whether culture is a precondition or a consequence of economic development has been discussed and analyzed by using many economists’ views. From the culture perspective, culture determined a nation’s economic success, whereas the economic and social view prove that the culture perspective is too simplistic, because other factors like the role of government and bank and institution play important roles in a country’s economic development and to large extent they determined a nation’s economic success. Moreover, from size of organization point of view, culture could be the outcome of economic development, for example scientific management resulted in corporate culture.
Therefore, bearing those in mine; personally, I would think it depends on situation to decide culture is a cause or an outcome of economic development. For instance, culture could be a cause of Japanese economic success, because Confucian attitudes to work are diligence, royalty and groupnism, etc. These applied trust, seniority and life-time employment in Japanese corporations. However, Confucian has not seen to fit in American corporate capitalistic society. Moreover, American corporate culture seems to be resulted from its great economic development. In short, the role of culture determines a nation’s economic competitive advantage seems to be unrealistic. In other words, it is too overstated.
D’Costa, A, (2001) The Global Restructuring Of the Steel Industry 1st ed, London and New York Press
Huczynski, A, Buchanan, D.,(2001) Organizational Behaviour 4th ed, Prentice Hall International Ltd, UK.
Lewis, L, et al, (1996) The Growth Of Nations Culture, competitiveness and the problem of Globalization, Bristd Academic Press
Morishima, M, (1982) Why has Japan ‘ successed’ ? 1st ed Cambridge University Press
Singleton, J, (1990) The World Textile Industry 1st ed, London and New York Press