The Paradoxical Justification of Japanese Financial Reform in the Late Tokugawa Era

Social Sciences in China (Chinese Edition)

No.1, 2018


The Paradoxical Justification of Japanese Financial Reform in the Late Tokugawa Era



Han Dongyu


Market easing and fiscal austerity accounted for the alternating booms and busts of the shogunate economy from the seventeenth century on. Market easing was driven by the expansion of consumption, while fiscal austerity aimed at increasing revenue and decreasing expenditure. In the agrarian shogunate system, both strategies were justified in terms of the maintenance of social stability. However, when the balance between the two was threatened by the excessive development of one, their competing rationales emerged as a paradox of facts versus values. The classic manifestation of this paradox was the Tempo Reforms, a series of measures that attempted to remedy ills such as the breakdown of the feudal hierarchy, merchant wealth and government penury, and extravagance and corruption that had arisen from excessive economic opening and commercial monopolies. Initially these measures had a rationale within the shogunate context; however, as reckless policies for increasing revenue and reducing expenditure suppressed the growth of aggregate social demand, the impasse thus created saw the second of the rationales inherent in the shogunate order begin an understandable rally. Since it was impossible to change the institutional framework, the two rationales had no way of breaking through the vicious circle of mutual negation in which the growth of one was detrimental to the other. Together with the arduous attempts in the last years of the shogunate to bring the new era into being, the timely arrival of the Meiji Restoration functioned to resolve the contradiction involved in emphasizing agriculture and thwarting commerce; the paradox was thus largely resolved within the new framework once the old system had been replaced.