37Book Reviews
Review of John H. Sagers, Confucian Capitalism: Shibusawa Eiichi,
Business Ethics, and Economic Development in Meiji Japan(Palgrave Studies in Economic History, Palgrave Macmillan, 2018)
Janet HUNTER*
Keywords: Japan, business, Shibusawa Eiichi, capitalism, Confucianism

Shibusawa Eiichi, whose life spanned
ninety years from 1840 through to his deathin 1931, is often referred to as ‘the father ofJapanese capitalism’. He played a crucialrole in the emergence of modern business inJapan during the late nineteenth – earlytwentieth centuries, and his contribution will
be formally acknowledged by his image on
Japan’s new ¥10,000 bank note, due out in2024. He was associated with the establishment and management of hundreds of newbusinesses as Japan introduced Westernforms of corporate organisation and transformed many aspects of its economy before
the First World War. But Shibusawa was notjust a businessman. In later life he also devoted a great deal of thought to theissues of business practice, the nature of capitalism, and business ethics,
seeking to inculcate in Japan’s business community a set of values that werein accordance with the ethics of Confucius. Indeed, he articulated a new formof ‘ethical’ capitalism that he believed would allow the community as awhole to benefit from the development of capitalist enterprises. As the title ofthis book indicates, it is this aspect of Shibusawa’s career that is the main
focus of the John Sagers’ book.
The literature on the business career and values of Shibusawa Eiichi has
expanded considerably over the last two decades, and John Sagers has taken* Emeritus Professor, London School of Economics

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advantage of that literature while also finding an approach that enables him tomake an original contribution, particularly in the context of the English
language scholarship. The book consists of eight substantive chapters. The
introduction seeks to locate Shibusawa’s ideas within debates over the valueof Confucianism in East Asia’s late nineteenth century modernization, thegestation of contemporary approaches to corporate social responsibility(CSR), and concepts of ‘Confucian capitalism’, a phrase that, the author
acknowledges, is both contested and ambiguous. Essentially the objective ofthe study is to make a contribution to broader debates on the social responsibilities of business and the role that can be played by the various stakeholders, including business associations, government and educational institutions. Chapters 2 and 3 provide an outline of the late Tokugawa period environment that framed the first 28 years of Shibusawa’s life and the first decadefollowing the Meiji Restoration of 1868, during which the new governmenttransformed the framework for economic development. Sagers argues that thetensions of the late Tokugawa period were crucial in shaping many of
Shibusawa’s subsequent ideas, while his later views on the union of morality
and economy were rooted in the Tokugawa peasant economy. The process of‘rural industrialisation’ in Japan from the late eighteenth century had led tothe justification of commercial ambitions (traditionally the prerogative of theformally low-status merchant class) in terms of the dominant samurai ethic.
By the late 1860s Shibusawa was in the service of the ruling Tokugawa
house, which took him to Paris in 1867, and then after the Restoration heentered the service of the new government, remaining there until 1873, whenhe resigned to promote business activities in the private sector. The 1870s
witnessed his first attempts to promote the joint stock company form oforganisation, and in particular the founding of the Daiichi Bank, which
spearheaded the development of modern banking institutions and with which
Shibusawa retained a lifelong connection. Through this and numerous othernew business ventures, Shibusawa put into practice his principles of bringing
together and using resources to build enterprises that would serve the interests of the nation, and at the same time prioritising long term over short term
investment.
Chapter 4 explores further the issue of the ethical entrepreneur focussing
on the national interest. The overall theme of the chapter is the emergence ofthe new jitsugyōka businessman, who had a distinct identity compared withJapan’s traditional merchant families, and who was able to build up a
network of trusted associates through the use of the joint stock company andother institutions, and, as Shibusawa believed, a shared Confucian capitalist
ideology. These jitsugyōka differed from the founders of the big zaibatsu(business groupings) that emerged, acting more along the lines of ‘commu-Book Reviews

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nity-centred’ entrepreneurs.1 Bringing together the traditional samurai spirit
and the expertise traditionally associated with the merchant class, they would
consider carefully the ethical implications of their business decisions andachieve a compromise between the traditional emphasis on duty and the more
modern emphasis on individual rights and liberty. Their Confucian emphasis
also allowed a more pan-Asian perspective.
Chapters 5-7 explore how these broad ideas worked out in practice bylooking more explicitly at the dilemmas of civilian versus military expenditure, the involvement of Shibusawa (and others) in international civilian
diplomacy, and the social context and implications of Japan’s rapid economicgrowth. Notwithstanding Shibusawa’s overriding dedication to the national
interest, Sagers argues, he was a consistent advocate of the private sector
rather than the state, and in many cases opposed to the more militarist policies pursued by the state. While acknowledging the need for some military
expenditure, he was often critical of government financial policies and military investment, arguing that civilian investment would yield more benefit
than investment in the military. This tension became particularly problematicin the wake of the Russo-Japanese War of 1904-5, as Japan engaged inincreased foreign borrowing. A firm supporter of financial orthodoxy,
Shibusawa was opposed to Japan’s going on the gold standard in 1898
(although he later acknowledged it was not as detrimental as he had feared),and expressed concern that consumption might outstrip production andinvestment, leaving the government with mounting debts (p.149). Shibusawa
also participated extensively in the international networking of business
communities. By the 1890s he already had strong connections with Korea
through the Daiichi Bank, and he extended his engagement in civilian diplomacy between Japan and other countries, particularly as he gradually retired
from direct management responsibilities from 1909 onwards. His own image
as an ethical entrepreneur that helped to strengthen this role, however, did notalways go unquestioned. He was heavily criticised for his involvement in theJapan Sugar scandal in 1909, for example, when the Japan Sugar Company,
which Shibusawa had helped found and of which he subsequently became anadvisor, was found to have paid substantial bribes to a number of members ofthe Diet. Despite this, however, he persisted in his emphasis on the importance of some kind of spiritual or religious dimension in the achievement ofa stronger state and the development of an international context with a viewto the maintenance of peace.
1 The term ‘community-centred entrepreneur’ was coined in Gustav Ranis, ‘The
Community-Centered Entrepreneur in Japanese Development’, Explorations in
Entrepreneurial History X111, 1955.

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At home, Shibusawa sought to refine and publicise his ideas through aseries of lectures that were eventually published as Rongo to Soroban (TheAnalects and the Abacus), which became the best known foundation stone of
his idea of the identity of morality and economy. Confucius, suggested
Shibusawa, did not argue against profit per se, as long as any profits wereearned in a moral way. Pursuing this kind of ethical business strategy allowed
for the active pursuit of the public interest, and in business led to anemphasis on reciprocal obligations within and between companies. What ofthose, however, who worked for the modern companies that were helping theJapanese economy to grow and who by the time of the First World War werebeginning to articulate their dissatisfaction with the terms and conditions of
their employment? Or those excluded from the benefits offered by the transformation that was taking place? Shibusawa believed strongly that it was forthe private sector to sort out labour-management problems without intervention from the government, but he also argued strongly that mutual aid wasneeded to assist the poor and the excluded.
The final chapter of the book offers a brief but informative overview on
how Shibusawa’s legacy has been perceived and sustained. There is a useful
discussion of the scholarship on Shibusawa, although some of this might havebeen more valuable to the reader nearer the start of the book. The author thenemphasizes the complexity of the overall Shibusawa narrative, considering its
longer term trajectory, its adoption by the employers’ organisation, theKeidanren, in the postwar period, and the influence of Shibusawa’s descendants in sustaining interest in his career and ideas and providing richresources for its study. Sagers concludes the book by drawing attention to thepotential value of Shibusawa’s ideas in the context of more contemporary
economic turmoil, which may have generated a receptive audience for them.
Confucian Capitalism is a work that embodies a significant depth ofscholarship, and will become a key reference source for all those with aninterest not just in Shibusawa Eiichi, but in the development of business andbusiness ethics in Japan and elsewhere. The author has made extensive use ofkey Japanese language primary sources relating to Shibusawa, and demonstrates a substantial knowledge of the relevant secondary literature. While theorganisation of the text is broadly chronological, this is not a purely chronological account of Shibusawa and his achievements. Rather it seeks to embed
him in the wider context of his life and times, and to consider the broader
relevance of his ideas beyond the time period of his life. There is always arisk when writing about leading historical figures, particularly those deemed‘successful’ or to have had a beneficial influence on society, that a biographical approach can appear dangerously laudatory, but this book is far fromhagiography. Sagers is willing to question the motives of his subject. Some ofBook Reviews

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Shibusawa’s criticisms of the government, he suggests, were lacking inspecificity, while some of his statements regarding government policy can beseen as potentially self-serving (p.133). His attitudes towards women were inmany respects ambiguous. He was far from immune to personal failings, andwas genuinely shocked by the criticism of his role, especially the criticisms
levied at his ethical stance, in the wake of the Japan Sugar scandal, when thecompany’s president, Sako Tsuneaki, committed suicide. And Sagers’comment that Shibusawa was in some ways not so different from social
conservatives elsewhere lamenting the past and worrying about how to copewith change (p.208) helps to remind us that, whatever his strengths andcontribution, Shibusawa shared a great deal with his human contemporaries.
What this book also does is provide a more fleshed out picture of
Shibusawa’s views on what the objectives of capitalism were, what it should
stand for, and how it should operate. Through his writings and his lectures,
Shibusawa left a corpus of work informed by his study of Confucian beliefs
that indicated how business could put into practice what he called gappon
principles, the concept of a system of capitalism that considered not just theinterests of owners and shareholders, but the interests of all stakeholders in abusiness, including those who worked within it and those who consumed its
products, as well as the purpose to which it put its profits. At the heart of his
thinking was consideration of the appropriate relationship between thegovernment and the private sector, and the associated intention to go beyond
the traditional Chinese Confucian view that public service was the highest
calling to confirm the validity of business and economic development as anational and personal objective. States were always going to be necessary, ofcourse, and, as Sagers makes clear, for Shibusawa the nation provided thehigher ‘person’ necessary to legitimate the pursuit of profit. Shibusawa’sideals did not, however, preclude a strong degree of pragmatism in responseto the circumstances of the time. He was, for example, a strong proponent of
free trade, but accepted that under certain circumstances a degree of protectionism might be necessary or desirable, particularly for a developing
economy seeking to establish new industries in the difficult international
environment of the early twentieth century. Shibusawa, as the author shows,was very much part of his time, but one of his major contributions was amore transcendent one, namely ‘the ability to translate new ideas into terms
that established elites could accept’ (p.227). It is this ability to reconcile thevirtues of the new with the strengths of tradition that is surely one of the keys
to Japan’s industrialisation and economic growth up to the Pacific War. But
even so, as Sagers concludes, it remains on occasions difficult to pin down
the exact practical implementation of Shibusawa’s ideas: ‘Confucian capitalism as Shibusawa practiced it was not so much a specific code of conduct

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as it was an extended meditation on the ethical and economic implications ofa business decision.’ (p.215)
The book offers some tantalising glimpses of the possibilities ofcomparative analysis in exploring concepts of business organisation andbusiness ethics. The Confucian emphasis naturally raises the comparison with
China and Korea, and the sociological literature on Confucian models ofdevelopment in Asia. In Chapter 6 Shibusawa’s views are compared withthose in US business circles, particularly with Andrew Carnegie’s understanding of the role of entrepreneurs in society. This reader would have liked
more such analysis, allowing us to consider Shibusawa’s ideas and Japan’sbusiness modernisation in a comparative framework that sheds new light on
the Japanese case and allows it to inform our understanding of other countries’ development. This, though, is perhaps the next step. Sadly, the booksuffers from poor copy editing and proofreading, which means that thepresentation does not match up to the academic content of the volume, and it
is to be hoped that this can be addressed by the publisher, at least in theonline version of the text. Despite this, John Sagers’ book will be a ‘go to’read for all those with an interest in this area.