In the commercial activities of British gentlemen, private land ownership and business administration went hand in hand, while the local administrative activities of the modern samurai were not and, precisely speaking, could not be oriented towards land ownership. The reason for this was that, since the land and resources of each domain were limited, modern samurai had no choice but to recycle resources and eliminate waste rather than struggle for land.
The owner of the means of production including capital and land is a _capitalist,_ while someone who utilizes physical capital is an _entrepreneur_ or _manager._ Japan s economic development was supported not by capitalists as in Britain, but by entrepreneurs.
Shibusawa and Godai were not Large Landowners
The word _capital_ originally denotes physical capital or means of production (land, machinery, factories, etc.). In Japan, it is commonly called_human capital._ This is a characteristic Japanese usage and it is unlikely that there are any Japanese people who would question it. The importance of human resources for a business manager is so axiomatic that it hardly needs to be reiterated, underlining the fact that human resources has always been the driving force behind economic development in Japan. Rather than ownership of capital and the means of production, the Japanese have always understood the importance of the management that makes use of them.
Where economic growth has been achieved, the importance of business management must have been known from experience. But it was only from the beginning of this century that a theoretical distinction was made between ownership and management in Western society. The first Westerner to directly confront this difference was a maverick economist of genius named Joseph A. Schumpeter (1883_1950). At the age of only twenty-four, Schumpeter made his name in economic circles with the publication of his first book Das Wesen und der Hauptinhalt der theoretischen National_nomie (The Essentials of Theoretical Economic), and at the age twenty-nine published his Theorie der wirtschaftlichen Entwicklung (Theory of Economic Development). This was the first work in the history of economic theory to make a distinction between capitalists and entrepreneurs. Distinguishing between those who have capital and those who have talent for business management, Schumpeter argued that it was not capitalists but entrepreneurs and managers who brought about the development of capitalism. The first edition of this book came out in 1912, which means that until the 20th century it had been assumed in Western society that capitalists who owned land and capital were managers. Capitalists appear in both Adam Smith_s seminal analysis of the British economy, Inquiry into the Nature and Causes of the Wealth of Nations (1776) and in Marx_s Das Kapital, but there is no mention of managers or entrepreneurs in either of them. In Britain, the capitalists who owned the land, capital and means of production constituted the driving force behind the economy. In short, there was no separation between ownership and management.
1912 was the 45th year of the Meiji era. Japan had already won wars against China and Russia and had become one of the world_s five great powers and the first capitalist country in Asia. If one had to identify two leading figures who built the foundations of Japanese capitalism in the Meiji era, they would undoubtedly be Shibusawa Eiichi (1840_1931) in the Kanto district (eastern Japan) and Godai Tomoatsu (1835_85) in the Kansai district (western Japan).
Born in Musashi Province (now Saitama Prefecture), Shibusawa Eiichi came from a farming family. In 1864, during the final years of the Tokugawa shogunate, he was enlisted as a retainer of the Hitotsubashi family. Becoming a masterless samurai after the Meiji Restoration, Shibusawa gained appointment to the Ministry of Finance in the Meiji government. He resigned from this post in 1873 and worked in private enterprise until his death, establishing modern businesses in areas such as banking, spinning, and rail transport. During his lifetime, Shibusawa was involved in setting up more than 500 companies. Nevertheless, he held less than 3% of the stock of Dai-Ichi Bank, which was his own direct affiliate.