Japan vs. China: What makes societies succeed?

by Gregory Clark

A namesake — a U.S. economics professor also called Gregory Clark — has caused waves with a theory that says the 18th century U.K. Industrial Revolution was due to heredity creating superior genes.

In those days, he says, disease and poverty kept lower-class families small. But the upper classes had big families that survived. This allowed population quality to improve, to the point where factories could be created and staffed with efficient workers. Unlike say India or China, Britain was not overwhelmed by the Malthusian pressures of uneducated masses.

As a theory it is at least an improvement on the Protestant ethic theory, which confuses results for causes. Protestantism did not create the ethic that led to the progress of the north European societies. The north European people created Protestantism because it matched the progress-creating ethic they already had.

In any case neither theory explains the second Industrial Revolution — non-Protestant Japan’s amazing industrial progress. Japan may have relied initially on production technology imported from the West. But it soon moved beyond that. And how are we to explain the economic miracles we are about to see in China, and to some extent India, not to mention Taiwan, Singapore and South Korea in between?

With both Britain and Japan history, not heredity, was the key. Both were isolated enough from the main centers of civilization to be able to create strongly feudalistic societies. These societies in turn created the values needed for early industrial and social progress.

Feudalism is usually seen as harmful to progress. But that is like arguing that adolescence is harmful to adulthood. Left to themselves, feudalistic, village-based societies develop naturally such important values as frugality, practical inventiveness, a cooperative work ethic, workplace attachment, a liking for making things (monozukuri) and instinctive cohesion. From there they can move easily to creating a national economy based on factory production. Ideas, ideologies and technologies borrowed from more advanced civilizations nearby helped this progress. But they were never dominant.

The many and oft-noted similarities between the Japanese today and the British as they were are one result — the emphasis on politeness, orderliness, cleanliness, punctiliousness (yes, British trains also once ran on time), basic trust and honesty, instinctive rules of behavior, and democracy. The fact that both were island nations is sometimes given as a reason. But that does not explain the very similar values found in continental Germany and much of the rest of north Europe. Here too we find the same history of feudalistic progress, with ideas and ideologies imported. Germany left feudalism much later than Britain, which explains its continuing manufacturing superiority. Similarly with Japan.

Which brings me to China and India. Few would argue they have an addiction to orderliness, perfectionism and so on. But their progress today is real. One reason is that the byproducts of Western and Japanese industrial progress — manufacturing technologies especially — can now be borrowed or bought. And progress today also requires what I would call intellectual skills such as economic planning, information and financial management, intelligent investment decisions and so on.

The problem with these older societies is that in the past they were too “intellectual.” They left true feudalism millenniums ago to create advanced civilizations that emphasized bureaucracy and scholarship and looked down on manual labor. If you had to make money you did so through cerebral activities such as trading and speculation. The elite had little interest in manufacturing or farming. Hence their subsequent decline.

But as they declined, labor became cheap. The elite classes may have disliked working with their hands. But they were smart enough to realize they could make a lot of money employing people to make things, initially for export. Foreign investors showed them the way. And the more factories they opened the cheaper it became to produce even more things thanks to external economies. Profits snowballed.

Meanwhile, back in Britain and to some extent Japan, the inherited feudal ethic has been unraveling, to be replaced by an unstable populism and half-baked intellectualism. If it was genes that created the Industrial Revolution, they have certainly disappeared now. Britain today is a manufacturing wasteland. The other Anglo-Saxon societies have not fared much better; their efforts to replace manufacturing with financial industries have been a disaster, as we saw in the recent financial crises and half-baked efforts to recover.

Meanwhile, China is becoming a model for all of us in the skill of its banking policies and economic planning.

The other Gregory Clark is right in a sense: As societies mature, the best and the brightest do tend to come to the top. But that was always much more likely to happen in societies older and more mature than Britain or Japan. Spend some time debating politics, diplomacy or business with the elites of these older societies and you will discover that we Anglos still have some way to go.

Our Japanese friends have even further to go. Their efforts at diplomatic and economic planning can be painful at times. Nor is it just the Chinese and Indians that shine.

From south Europe and Latin America, across the Middle East and on to Korea (a product largely of Chinese civilization), we find sophisticated leaders often able to run rings around our best and brightest. Or to put it another way, Tony Blair and George W. Bush would not shine in comparison.

True, some of these older societies may still be struggling industrially. Yet they can provide managers for top international companies. Their diplomats are astute and technicians skillful; India and South Korea are now information industry leaders. One-third of the Silicon Valley population is said to be Chinese, Indian and Korean. Top U.S. graduate and business schools are heading the same way. Meanwhile, Japanese numbers are falling.

The Japanese still have little interest in serious postgraduate study. Like the British a century earlier, they prefer practical to intellectual skills. One good result is they retain some manufacturing superiority in areas requiring perfectionism and attention to detail.

Recent emphasis on monozukuri as a source of national pride is also relevant. Strength in the applied sciences also makes up for a weakness in the basic sciences. But on the world stage today, it is China’s and India’s breakneck progress that draws attention. Skills in anime and manga seem weak in comparison.

Gregory Clark is the former president of Tama University and vice president of Akita International University. Trained originally in Chinese and Russian, he lives in Japan and travels frequently to China and Latin America. A Japanese translation of this article will appear at www.gregoryclark.net