Nakamura J. I. (1981) “Human Capital Accumulation in Premodern Rural Japan”, The Journal of Economic History, 41/2, 263-281.
Human capital has not always been recognized as a crucial source of historical change. Capital accumulation and technology have often been seen as more important. The development of post-WWII Japan has reminded to all that physical factors were not the only source of growth. A rather similar story happened under Meiji. The impressive and unexpected economic development of the post-1868 period was rooted in the accumulation of human resources under the Tokugawas (264). The market economy introduced by Meiji was to be the base of Japan’s economic strength, but it could not have developed so fast without the structural and cultural foundations set up under the Tokugawa and earlier. “Human capital may be broadly identified as labour skills, managerial skills, and entrepreneurial and innovative abilities – plus such physical attributes as health and strength”.
Unlike modern times, during the pre-modern period, human capital was not achieved by schooling but through learning by doing (265). Which made sense due to the relative crudeness of most material production. A more formal training was available for quality production under the form of apprenticeship. Schooling only becomes crucial when communications start requiring written accounts. The development of terakoyas (schools for commoners) during the 18th century shows that the Tokugawa economy was developed enough to require a large formally-educated workforce.
Farmers’ market consciousness
Earlier, less formal and more rural types of human capital formation processes had also taken place and the author argue that their impact was at least as important as the one of the rise of literacy (266). The feudal-like Sengoku period (1477-1558) (267), witnessed the rise of agricultural productivity. As a result, daimyos (lords) were able to the build large castle-towns necessary to adapt to new military tactics (firearms, organised armies) and to require their vassal to remain on their domain. This concentration of rich costumers and food resources attracted artisans and merchants. These newly created large urban markets allowed the rise of advanced specialized farming (268).
For the farmer, a good understanding of his own productive condition as well as the perception of the market’s requirements were crucial for his success. The exposure to market also affected his own consumption. The family’s income could be maximized by the involvement of some of its members in the urban labour market. All in all, the rural market consciousness was greatly increased by urbanization.
During the second half of the Tokugawa period many agricultural processing industries (oil pressing, weaving, brewing) moved out of the major cities to rural areas due to the rising costs of doing business in urban centres (guilds fees, rent, local taxes). High wages in town were caused by labour shortages due to the fact that farmers’ incomes having grown urban wages were less attractive. The result of these migration was the spreading of urban know-how to the countryside (269). A rural industrial workforce came into being, free of guilds’ and urban authorities’ influences. To maintain their livelihood and for the productivity losses due to the rural environment, the new class worked longer hours (i.e. labour intensiveness).
Sankin kotai seido
The alternate attendance system (sankin kotai seido) was designed to avoid rebellion and required the daimyos to be present at the Shogun’s court every other year (the lords’ families remaining constantly in Edo as hostages). Residence in the capital was enormously expensive (270). To sustain these necessary costs, the domains had to export large quantities of goods and commodities to Edo and Osaka. As a result, high agricultural production was crucial for the daimyos. Innovation was constant to increase the output of the rice paddies (commercial fertilizers, irrigation, improved seeds).
As the demand for rice was gradually met, farmers shifted to commercial crops (cotton, silkworms, tangerines, sugar, indigo, etc.). The rise of Edo was instrumental for the modernisation of the Japanese countryside (271). The enormous city (the world biggest in the 18th century) created an unmatched level of specialization in the countryside. The sankin kotai kept the provincial nobility in touch with Edo’s institutional innovations and these were more or less quickly imitated by the daimoyos in their domains (272).
Rural modernisation went along with population control. The ie system originated from the Ashikaga period (1333-1558) and stipulated that the household’s (ie) assets would be only inherited by one heir. It was the only way for the lord’s domain not to be divided and thus weakened. The samurais – who had a much higher mortality rate – did not need that system until peace was restored by the Tokugawas. The samurai class was already plentiful (5 to 8% of the population) and could not expend, the excess sons were to become impoverished masterless ronins. For them too population control became essential (273).
In rural areas, two measures – the Denchi Eibai Baibai Kinshi Rei of 1643 and the Bunchi Sigen Rei of 1673 – respectively bounded the farmer to his land by forbidding its alienation and prohibited the division of land into plots too small to feed a family and pay taxes. This introduces the ie system in the lower classes of the population (274). As farmers’ income rose and available reclaimable land disappeared, the ie system survived as farmers traded larger families for social status and consumption in a way very similar to 20th-century Japan. The result was almost no demographic growth from 1721 to 1846 (275).
The rise of rural income triggered a demand for goods and services destined to enrich one’s life. People got used to market practices and commercial thinking. Many terakoyas were created, literacy fuelled the use of books for practical purposes and leisure (276). An estimated 40% of the population could read. Which had a tremendous effect on growth.
As the samurais were withdrawn from the villages to remain in the cities and castles (277), the communities had to take care of their own affairs (tax-collection, discipline, assistance) (278). Slowly, social status gave room to election as the key element to access the village’s ruling positions. In some cases, even farmers with low social status could rise to a village’s leadership; in general, important decisions required the emergence of a consensus in the community. This quasi democratic system did a lot for the recognition of the value of human capital (279).