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PALGRAVE STUDIES IN ECONOMIC HISTORY

CONFUCIAN CAPITALISM
Shibusawa Eiichi, Business Ethics,
and Economic Development in
Meiji Japan
John H. Sagers


Palgrave Studies in Economic History

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Kent Deng
London School of Economics
London, UK


Palgrave Studies in Economic History is designed to illuminate and
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John H. Sagers

Confucian Capitalism
Shibusawa Eiichi, Business Ethics, and
Economic Development in Meiji Japan




John H. Sagers
Linfield College
McMinnville, OR, USA

Palgrave Studies in Economic History
ISBN 978-3-319-76371-2    ISBN 978-3-319-76372-9 (eBook)
https://doi.org/10.1007/978-3-319-76372-9
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For Wendy



Preface

In the 150th year since the Meiji Restoration, it seems especially appropriate to revisit the ideas of Shibusawa Eiichi, whom many have called
the “father of Japanese capitalism.” His life story and his call for a “unity
of morality and economy,” which I have called Confucian capitalism,
encompassed many of the ideals and contradictions of the Meiji
Restoration itself.
My own perspective on the Meiji Restoration has evolved significantly
in the last 30 years. When I first started to study Japanese history in the
mid-1980s, the Bubble Economy was cresting and accounts of Japan’s
rise as an economic superpower were classic success stories. Through hard
work, institutional innovation, and some measure of good fortune with
favorable economic conditions in the Cold War, Japan had emerged from
its catastrophic defeat in the Second World War to become the world’s
second largest economy. As an undergraduate, I became fascinated with
the Meiji Restoration and the story of Japan’s first industrial revolution,
in which, as was often said, the Japanese people turned their country
from an isolated agricultural society into an industrial power in less than
a generation.
With the bursting bubble in the 1990s and deeper study in graduate
school, many of the Meiji Restoration’s contradictions and problems
became apparent. My doctoral dissertation, which became the Origins of
Japanese Wealth and Power: Reconciling Confucianism and Capitalism,
vii


viii  Preface


1830–1885, explored the evolving economic thought of several leaders in
the Meiji government. This book argued that these leaders essentially
accepted market capitalism as the means to achieve national objectives
defined primarily in terms of military security. Accepting the market
meant overcoming the Confucian moral bias that the samurai class had
against the merchant class and commercial profits.
To explore this theme from the perspective of the private sector, I have
focused in this book on the financier and industrialist Shibusawa Eiichi.
I was drawn to Shibusawa because he was among the most prolific and
successful entrepreneurs in modern industry during the Meiji era who
championed the Analects of Confucius as his moral guide. When many
leaders in modern intellectual and business world were looking to the
West for inspiration, Shibusawa continued to insist on Confucianism as
a foundation for business ethics.
The topic of business ethics is often a cause for skepticism for good
reason. Competitive pressures can drive out of business those leaders who
incur additional costs when trying to move beyond legal compliance in
providing benefits to employees and the wider community. It is hard to
believe that people will engage in one set of behaviors when the capitalist
system rewards another set. In Shibusawa’s case, I think the answer lies in
the nature of his business. As a capitalist promoter who assembled investors for a large number of new ventures, his business success depended
upon trust. His Confucian capitalism provided a vision that united a
network of investors who worked with Shibusawa in a long series of
transactions. By creating and maintaining this network on the basis of
shared ethical commitments, Shibusawa contributed greatly to Japan’s
Meiji economic development in the late nineteenth and early twentieth
centuries.
Presently, after decades of slow growth and a series of government and
corporate scandals, there are renewed calls for political and economic
reform. The close government-business ties that characterize the “developmental state” or “Japan, Inc.” and that were effective when Japan was

importing and adapting technology from other parts of the world now
stand in the way of innovation and growth. Shibusawa Eiichi today can
be seen as a contradictory symbol. On one hand, he was the “father of
Japanese capitalism” and Japan’s first “salaryman” professional manager


 Preface 
  

ix

who helped build a system that now needs to be dismantled. On the
other, he was a Confucian capitalist for whom economic success was simply the means to ethical and humanistic ends.
Note that Japanese, Chinese, and Korean names have generally been
given in the customary order of family name first. Macrons on long
Japanese vowels have not been used in the main text, but keywords have
been given with macrons and kanji characters in the glossary.
McMinnville, OR, USA

John H. Sagers


Acknowledgments

I would like to thank the Japan Foundation for the Short-Term Research
Grant that launched this project. I am also grateful to Rikkyo University
in Tokyo and to Professors Igarashi Akio and Mark Caprio for their warm
hospitality and gracious assistance on several research trips to Japan.
The Shibusawa Eiichi Memorial Foundation and Museum has been
most supportive and has welcomed me into their network of scholars.

Their kind invitations to participate in international conference panels
allowed me to gain a much broader perspective on Shibusawa Eiichi’s life
and work. The Shibusawa Museum also graciously provided most of the
photographs that appear in this book. Thanks especially to Shibusawa
Masahide, Komatsu Jun’etsu, Kimura Masato, Inoue Jun, Koide Izumi,
Kato Ruri, and Kuwabara Koichi for their kind assistance and encouragement at various stages of this project.
Discussions  and conference panels with fellow scholars of Japanese
economic and business history have been most helpful. Thanks to Steven
Bryan, Simon Bytheway, Martha Chaiklin, Jeffer Daykin, Steven Ericson,
Kaitlin Ferber, Janet Hunter, Kikkawa Takeo, Kim Myungsoo, Mark
Metzler, Kenneth Pyle, Shimada Masakazu, Richard Smethurst, Tanaka
Kazuhiro, Tao Demin, Peter Von Staden, David Wittner, and Yu Chen
for helping to shape my thinking.

xi


xii  Acknowledgments

At Linfield College, funding from the Dean’s Office and International
Programs Office helped with conference travel and research in Japan. The
Student-Faculty Collaborative Research Grant allowed Sydney Owen to
provide valuable research assistance. The Marvin and Laurie Henberg
Award for International Studies also provided generous financial support.
Special thanks to Nobuko Okura for Japanese language and translation
assistance and to Wendy Sagers for reading multiple drafts of the manuscript. Thanks also to History Department and Japan Studies colleagues
Peter Buckingham, Sharon Bailey Glasco, Jeff Glasco, Masayuki Itomitsu,
Chris Keaveney, Tom Mertes, Steven Rutledge, Scott Smith, and Lissa
Wadewitz for their kind encouragement.
At Palgrave Macmillan, thanks to Kent Deng, editor of this series, and

two anonymous reviewers for their helpful comments and suggestions.
Thanks also to Laura Pacey,  Clara Heathcock, and Mahalakshmi
Mariappan for their kind and patient editorial assistance.
I am especially grateful to my spouse Wendy and sons Robert and
Thomas for their love and support. Without them, none of this would
have been possible.


Contents

1Introduction: Shibusawa Eiichi and the Idea of Confucian
Capitalism   1
2Economic Change and Intellectual Innovation
in Tokugawa Japan  19
3Government Bureaucrats and Capitalist Institutions
in 1870s Japan  51
4The Ethical Entrepreneur as a Servant of Japan’s National
Interest  85
5Competing Priorities of Infrastructure Investment
and Military Expansion in Late Meiji Japan 119
6Business Leaders as Civilian Diplomats in Early TwentiethCentury Japan 151

xiii


xiv  Contents

7Confucian Capitalism and the Search for Economic
Prosperity and Social Harmony in Early TwentiethCentury Japan 181
8Purposeful Preservation of Shibusawa Eiichi’s Legacy 217

Glossary 235
Index 239


List of Figures

Fig. 1.1 Shibusawa Eiichi
3
Fig. 2.1 House in Chiaraijima where Shibusawa Eiichi was born. (Photo
Courtesy of the Shibusawa Eiichi Memorial Foundation)
21
Fig. 2.2 Tokugawa Akitake and mission to Paris International Exposition.
Shibusawa is first on the left in the back row. (Photo courtesy of
the Shibusawa Eiichi Memorial Foundation)
44
Fig. 3.1 Shibusawa’s “Rules for Establishing Organizations (Rikkai
Ryakusoku)” recommendation to the Finance Ministry. (Photo
courtesy of the Shibusawa Eiichi Memorial Museum)
59
Fig. 3.2 Dai-Ichi Bank building. (Photo courtesy of the Shibusawa
Eiichi Memorial Museum)
70
Fig. 3.3 Tokyo Stock Exchange. (Photo courtesy of the Shibusawa
Eiichi Memorial Museum)
73
Fig. 4.1 Shibusawa’s first wife Chiyo. (Photo courtesy of the Shibusawa
Eiichi Memorial Museum)
91
Fig. 4.2 Dragon Gate Society (Ryumonsha) meeting 1891. (Photo courtesy of the Shibusawa Eiichi Memorial Museum)
111

Fig. 5.1 Shibusawa’s mansion in Kabuto-cho financial district of Tokyo.
(Photo courtesy of the Shibusawa Eiichi Memorial Museum) 124
Fig. 5.2 Osaka Spinning Company. (Photo courtesy of the Shibusawa
Eiichi Memorial Museum)
139

xv


xvi 

List of Figures

Fig. 6.1 Commercial mission to the United States in 1909. (Photo
courtesy of the Shibusawa Eiichi Memorial Museum)
172
Fig. 7.1 Koyama Shotaro’s painting the Analects and the Abacus. (Photo
courtesy of the Shibusawa Eiichi Memorial Museum)
188
Fig. 7.2 Shibusawa Eiichi and Kaneko in front of Seien Library at their
Asukayama estate 1926. (Photo courtesy of the Shibusawa
Eiichi Memorial Museum)
195
Fig. 7.3 Shibusawa visits a hospital room at the Yoikuin orphanage and
hospital. (Photo courtesy of the Shibusawa Eiichi Memorial
Museum)207
Fig. 8.1 Four generations: Shibusawa Eiichi, son Tokuji, grandson
Keizo, and great-grandson Masahide. (Photo courtesy of the
Shibusawa Eiichi Memorial Museum)
224



1
Introduction: Shibusawa Eiichi
and the Idea of Confucian Capitalism

With the life story of Japan’s most prominent business leader as a narrative focal point, this book explores the challenges of importing, from
Europe and America, modern business enterprises to Japan, where the
pursuit of profit was considered beneath the dignity of samurai gentlemen. Financier Shibusawa Eiichi (1840–1931) worked strenuously to
enhance the prestige of commerce and industry by establishing many
joint-stock companies and contributing to educational and philanthropic
organizations. He also gave countless speeches emphasizing that business
careers, which promoted the welfare of the nation, were indeed consistent with older Confucian values of loyalty and public service. Throughout
his career, Shibusawa promoted a vision of capitalism where shareholders
and managers were legitimate in their pursuit of private profit in the
marketplace only to the extent that their enterprises benefited the nation.
Living ninety-one years, Shibusawa was first an activist against
the Tokugawa shogun’s government. When the futility of attacking foreign
settlements and the shogun’s forces became apparent, Shibusawa switched
sides and became an official hoping to reform the government from within.
He then became an adviser to the shogun’s brother on his journey to Europe
for the 1867 Paris International Exposition. In Europe, Shibusawa became
© The Author(s) 2018
J. H. Sagers, Confucian Capitalism, Palgrave Studies in Economic History,
https://doi.org/10.1007/978-3-319-76372-9_1

1


2 


J. H. Sagers

convinced of the importance of entrepreneurship and the ability to pool
capital through joint-stock companies in stimulating a nation’s economic
development. With this in mind, Shibusawa returned to Japan on a personal mission to elevate the formerly low status of merchants in Japanese
society and encourage talented young people to consider careers in business. Serving in the new Meiji government’s Ministry of Finance,
Shibusawa worked on land tax reform and presented a proposal for organizing joint-stock companies. Leaving government, he became the head
of the First National or Dai-Ichi Bank, a post he held until the early
twentieth century. Active in the Tokyo Chamber of Commerce and a
number of philanthropic institutions, he helped establish the publicminded civilian business leader as a new archetype in Japanese society. An
analysis of his life and work highlights many of the challenges and conflicting objectives that business and government leaders faced in importing capitalist institutions to Japan.
Shibusawa has long been held up as a model of both highly successful
entrepreneurship and ethical business management. As a capitalist organizer credited with helping to establish nearly 500 new enterprises, he has
few rivals in Japanese business history. He was particularly adept in
assembling teams of talented managers and lining up investors to found
corporations that he believed necessary to Japan’s developing economy.
He was also relentless in arguing that his businesses must profit not only
shareholders but also the nation as a whole. Citing the Analects of
Confucius as his moral guide, Shibusawa maintained a reputation for
ethical leadership that inspired trust and encouraged investment in his
enterprises. Although Shibusawa would argue that one should behave
ethically no matter what the consequences in the marketplace, it is clear
that his promotion of what he called the “unity of morality and economy” did not hurt his business success (Fig. 1.1).
The relationship between ethics and business has been long debated
and the legitimacy of the profit motive has been questioned in many
religious and philosophical traditions. With corporate scandals and cases
of political influence-peddling perennial features in the daily news, people worldwide are demanding that business and government leaders be
held more accountable and that ethical education be strengthened to
give the next generation of leaders a greater sense of their duty and



  Introduction: Shibusawa Eiichi and the Idea of Confucian… 

  3

Fig. 1.1  Shibusawa Eiichi

responsibility to the public. Yet, few can agree on what exactly constitutes a ­business’s “corporate social responsibility” or CSR. Some argue
that a firm’s main responsibility is to use resources efficiently to earn
profits for shareholders while operating within legally defined limits.
Others suggest that businesses have a responsibility to go beyond simple
legal compliance, and should contribute resources and be proactive in
improving working conditions for employees, reducing  the impact of
business activities on the natural environment, and considering  the
wider social implications of business decisions.
The project, therefore, is not only of importance to the scholarly field
of Japanese history. It also seeks to contribute to today’s international
debate on the extent to which capitalist enterprises have a responsibility
to serve and benefit the societies in which they do business. The book
argues that attention to ethical issues in the education and training of
future business leaders is essential in establishing appropriate limits on


4 

J. H. Sagers

the pursuit of profit, but recognizes that education and moral suasion
require additional support. Self-regulating business associations and government institutions are also necessary to establish and enforce rules,

which further encourage business leaders to make decisions consistent
with the public interest. Shibusawa’s story demonstrates that business,
government, trade associations, and educational institutions all have
valuable roles to play in establishing a political economy that is both productive and humane.

 lobal Concern for Business Ethics
G
and Corporate Social Responsibility
Capitalism has had a turbulent history and following the worldwide
financial crisis of 2008, there have been renewed calls for greater attention to business ethics and CSR. Put simply, movements for business ethics and CSR argue that business should have some priorities other than
maximizing short-term profits for shareholders. These priorities may
include providing services to improve the surrounding communities,
investing in technologies that reduce resource use or pollution or contributing to social welfare organizations. They may also include adhering to
ethical norms of an industry that go beyond compliance with legal
requirements. Arguments in favor of business ethics and social responsibility usually fall into two categories.
Most commonly, proponents of CSR argue that ethical behavior is
good for business and contributes to the long-term sustainability and
viability of an enterprise by generating goodwill among various stakeholders. For example, Carly Fiorina, CEO of Hewlett-Packard said, in
November 2003,
I honestly believe that the winning companies of
this century will be those who prove with their
actions that they can be profitable and increase
social value – companies that both do well and do
good…Increasingly, shareowners, customers, partners, and employees are going to vote with their


  Introduction: Shibusawa Eiichi and the Idea of Confucian… 

  5


feet – rewarding those companies that fuel social
change through business. This is simply the new
reality of business – one that we should and must
embrace. (Kotler and Lee 2005, 6–7)

This perspective is relatively easy to deploy in an organization because
initial costs of more ethical or sustainable practices can be justified in
terms of future benefits.
Another line of argument calls for ethical behavior because it is simply
the right thing to do, based on religious and moral beliefs. Even if there
is no future benefit to the organization’s bottom line, ethical and sustainable practices should still be followed because they are good in their own
right. Religious organizations generally advocate ethical principles based
on a deity’s moral law as revealed in sacred texts. This moral law encourages justice in economic activity and prohibits deceit and exploitation of
weaker parties. Property in many religious traditions is considered a gift
from God and human beings are required to act as good stewards of the
goods with which they have been entrusted.
Secular arguments can also be made in terms of serving the general
needs of society. Stanley Bergmann, CEO of Henry Schein Inc., argues,
Our task, in concert with government, academia,
NGOs and civic society, is to work together to
underpin the capitalist model with a strong ethical base. We must infuse the public dialogue
with the understanding that self-interest and
the interest of society are integrally intertwined. It is as simple as this: The success of
businesses depends on a healthy, thriving society. (Bergman 2014)

In this formulation, there are benefits to the firm for ethical behavior,
but there are more indirect benefits that come from upholding ethical
principles and sustaining the community and environment in which one
does business.
Whether justified in terms of long-run sustainability or religious and

moral principles, following ethical business practices can be difficult in


6 

J. H. Sagers

competitive markets. Business ethics, therefore, runs into the serious
problem of how to encourage practices that may benefit employees, the
environment, and wider society when the marketplace rewards producing goods and services at minimum cost. Managers in competitive environments sometimes have extreme incentives to cut costs and even falsify
reports to maximize profits for shareholders. How to overcome the pressure for short-run profits and motivate managers to work for not only the
good of their firms and their own careers but also the benefit of wider
society is the principal challenge for leaders who would like to develop a
more ethical form of capitalism.
Although Japanese corporations have long had their own set of management principles, Western-style CSR is a relatively new topic of debate.
With globalization, there has been a backlash against the costs to natural
environments and human societies. Faced with political opposition and
threats of increased regulation, many multi-national companies have
worked on reforming their business practices to be a more beneficial presence in the communities where they do business. Since 2003, Japanese
companies have been developing CSR initiatives and seeking to comply
with international norms on environmental impact and socially responsible investments. David Vogel has outlined several approaches that
Japanese firms can use to manage their CSR programs. First, there are
firms that see CSR as a defensive mechanism of insuring against risks to
the company’s reputation by addressing issues for which similar firms
have been criticized in the past. Furthermore, firms have examined their
environmental impact and have made changes in suppliers and production processes accordingly. Finally, firms can also look for ways to contribute to solving basic problems in the societies in which they operate.
Vogel concludes that there are positive benefits for CSR programs in
enhanced reputation, happier employees, and customer loyalty. However,
he also notes that companies actively pursuing CSR do not perform dramatically better in the marketplace than companies that do not have CSR
agendas. The modest effect of CSR on business results can be a limiting

factor and initiatives that are most likely to succeed are those that have
both moral and economic rationales (Vogel 2014). Faced with competitive pressure, firms cannot afford to invest much in CSR initiatives if there
is not also an economic benefit. Shibusawa long ago believed that moral


  Introduction: Shibusawa Eiichi and the Idea of Confucian… 

  7

considerations were top priority, but he also recognized that business
leaders were not religious ascetics and that new enterprises needed to
become economically viable to survive.
With the growth of interest in CSR as a way of negotiating between
the sometimes-competing demands between profit maximization and
wider ethical concerns, scholars in Japan and abroad have taken a renewed
interest in Shibusawa Eiichi’s life and thought as a historical example of
combining moral leadership and successful economic entrepreneurship.
In the initial stages of Japan’s economic development in the late-­
nineteenth century, before there were adequate institutions to enforce
contracts and property rights, business leaders like Shibusawa formed
networks of managers, sponsors in government, technicians, and investors to reduce the risk and costs associated with economic transactions. In
economies with more mature institutional enforcement, these personal
ties have become less essential, as contracts facilitate transactions between
parties who do not know each other. Nevertheless, a reputation for ethical behavior remains important as companies face increased regulation
and public backlash whenever fraud or mismanagement is exposed.
Shibusawa’s career is of interest as a historical example of pioneering
efforts in establishing a reputation for ethical leadership.

 irtue Versus Compliance in the East Asian
V

Tradition
Shibusawa Eiichi regularly cited the Analects of Confucius as the primary
inspiration for his moral vision. As we will see, his focus on the Analects
was his way of distilling a long and complex philosophical tradition into
a few key principles. One of the most important of these principles was
that cultivating virtue among the people through education was more
effective than extensive legal regulation in creating a humane society. Like
advocates of business ethics and CSR today, Shibusawa believed that
leaders had an ethical responsibility to care for more than just pursuing
their own interests within formally defined legal limits.
This line of reasoning had a long history in the East Asian tradition
beginning with Chinese philosophers who thought deeply about human


8 

J. H. Sagers

nature and how to best organize and regulate society. During the Spring
and Autumn and Warring States periods (from the sixth century to
221 BCE) in ancient China, Confucian and Legalist scholars debated the
question of how to recruit and motivate honorable officials. Insights from
these debates can be illuminating for us today, especially on whether to
rely on the moral compasses of individual managers or to enact a more
stringent system of legal regulations to foster business behavior more in
line with positive social outcomes.
As the name “Warring States” implies, territorial states of increasing
size battled with one another for supremacy during centuries of civil war
in China from 479 to 221 BCE. Philosophers offered advice to the kings
of these territories on how to best strengthen their states, govern their

people, and mobilize resources for war.
Confucius believed that rulers could instill virtue in the people by following the moral principles of the legendary ancient sage kings and
enacting rituals to teach these principles in daily life. As he said, “Lead
them by means of government policies and regulate them through punishments, and the people will be evasive and have no sense of shame.
Lead them by means of virtue and regulate them through ritual and they
will have a sense of shame and moreover have standards” (Ebrey 1993,
21). This was a form of virtue ethics in which the cultivation of moral
character through education and practice was the most important avenue
to moral and just leadership.
It is important to note here that while Confucius believed in Heaven
as a moral force, he was concerned more with how human beings could
work out the moral principles themselves rather than relying on divine
assistance. In his study of Chinese philosophy, Wing-tsit Chan found
humanism to be the most important fundamental characteristic of
Chinese thought. This was “not the humanism that denies or slights a
Supreme Power, but one that professes the unity of man and Heaven”
(Chan 1963, 3). Having overthrown the Shang in the eleventh century
BCE, the Zhou dynasty justified itself in terms of Heaven’s Mandate,
which the Shang had lost by neglecting their duty to rule properly. The
Zhou, by contrast, deserved to receive Heaven’s blessing because of their
virtue. Where the Shang had worshiped the deity Di, the Zhou revered a
less personal Heaven which acted not as a capricious god, but rather as an


  Introduction: Shibusawa Eiichi and the Idea of Confucian… 

  9

impartial moral force (Chan 1963, 4). Confucius took this a step further
by refraining from discussing spiritual beings and focusing on how to

promote virtuous human action. Heaven had a will, but it left the regulation of human affairs to moral example (Chan 1963, 14–15).
However, other philosophers were skeptical of the notion that cultivating virtue alone was sufficient to get leaders to act in the public interest.
Legalist thinkers in the fourth and third centuries BCE like Lord Shang
and Han Feizi, who focused more on institutional incentives did not share
the Confucian belief in leading by moral example and argued that officials
were self-serving and needed legal regulation through rewards and strict
punishments to align their interests with the ruler’s. As Han Feizi wrote:
The sage’s method of governing is as follows. He scrutinizes the laws and
prohibitions, and once they are made clear, his officials are orderly. He
defines the rewards and punishments, and when they are fair, the people
can be employed by the officials. When the officials are orderly and the
people are employed, the state will get rich and from that, the army will be
strong. Then it will be possible to succeed in establishing hegemony over
other states. (Ebrey 1993, 35)

The state of Qin followed Legalist prescriptions and developed a war
machine capable of conquering the other states and unifying China in
221 BCE, but at a terrible cost. So harsh were the Qin policies that the
dynasty did not survive long after its founder’s death. The Han dynasty,
founded in 206 BCE, maintained many of the bureaucratic structures of
the Qin, but patronized Confucian scholarship to put a more humane
face on the regime and gained sufficient cooperation from elites to survive several centuries. With the Han dynasty, strong institutions were
blended with a Confucian concern about ethical training through studying the wisdom contained in classical literature.
Among Confucian scholars, the role of commerce in a virtuous society
had long been problematic. Confucius said that the person of noble character understands integrity where the petty person knows about profit.
Confucian philosopher, Mencius later added that when a ruler discusses
benefits of a policy rather than its moral rightness, it will not be long
before all of his officials will begin seeking their own benefit rather than



10 

J. H. Sagers

what is right. When the Han dynasty officials levied taxes and profited
from official monopolies on salt, iron, and other commodities to pay for
frontier fortifications in the north, Confucian scholars protested. They
argued that for the government to engage in commerce, it set a bad example for the people who should focus on agriculture rather than how they
can make money through trade (Ebrey 1993, 18, 22, 61).
While there was likely a significant gap between the ideals expressed by
officials and how people in China, Korea, and Japan conducted economic
activity and organized their lives, Confucian tradition did shape how
states both made and legitimated economic policy. In cases like the Han
debate on official monopolies, policies to develop commerce and industry had to be put in terms of contributing to strengthening the state and
protecting the people. The profit motive alone was an insufficient rationale in official discourse.

 he Contested Relationship
T
Between Confucianism and Capitalism
Whether Confucianism has helped or hindered economic development
in East Asia has been the topic of much debate. In developing his thesis
on Protestantism and the spirit of capitalism, Max Weber compared the
trajectories of economic and social development in Europe and China
and argued that Confucianism and bureaucratic officials had hindered
the development of capitalism in China while Protestantism had encouraged it in Europe. Although Weber saw Confucianism as a rationalizing
force and noted other conditions that were positive for capitalism’s development, competing for government positions was the primary focus of
the Chinese elite and took away from entrepreneurial initiative (Molloy
1980, 383).
Indeed, for intellectuals in modernization movements in China and
Japan during the late nineteenth and early twentieth centuries,

Confucianism was a symbol of old traditions that needed to be eliminated if the countries of East Asia were to avoid colonial domination and
become respected powers in the world. The 1868 Meiji Charter Oath in
Japan discussed abandoning the evil customs of the past and seeking


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