INTRODUCTION

For their civil bureaucracy and courts, the Imperial Japanese oligarchs built an institutional framework that let cabinet ministers monitor and control the men they hired (Chapters 5 and 6). Bureaucrats and judges thus answered to the cabinet. During the first Meiji decades, the oligarchs jockeyed to control that cabinet. During the 1920s, the professional politicians did the same.

For their military, the oligarchs built a radically different framework. They – but primarily Yamagata Aritomo – instead built an institutional framework that gave power to those (1) who retained access to the Emperor, and (2) who cultivated particularistic ties of loyalty within the military. Consider the detail. First, the Emperor maintained formal control over the military. As a result, to shape basic military contours, one needed to be able to manipulate the Emperor. This favored Yamagata and most of his fellow oligarchs over the politicians; it did not favor Yamagata over many of his oligarchic competitors.

Second, military leaders could bypass the cabinet in drafting regulations, in making operational command decisions, and in picking their ministers. Effectively this meant that a place in the cabinet did not give a man control over the military. Instead, to control it he needed personal ties within it. This favored Yamagata over most of his fellow oligarchs, for Yamagata had purged his opponents from the Army and stacked it with loyal men. As long as he lived, the Army was independent in theory, but not in fact.

INTRODUCTION

Consider why the oligarchs established a representative assembly. In many ways, the choice they faced resembled decisions made by any autocratic government in any era. But crucial to their choice, we argue, were their numbers. Modern cartel theory suggests that an oligarchy should act fundamentally differently from a dictatorship.

We consider four reasons for the oligarchs' acquiescense to a legislature. First, perhaps the oligarchs hoped to maximize their personal income, and decided that constructing an efficient economy would be the best way to do so. Establishing a legislative check on their power would send a credible signal to investors that they would not use their power to confiscate private property. In the process they would encourage economic growth, and growth in turn would generate more cream for them to skim off.

Second, perhaps the oligarchs were so insulated in the upper stratum of Japanese society that they lacked information about the source of discontent in other social tiers. Recognizing the danger of this predicament, they may have decided to hold regular elections. Through the elections, citizens would choose from among candidates who offered a variety of reformist policy portfolios. In the process the oligarchs would learn what concessions would most effectively and cheaply forestall revolution.

Third, perhaps the oligarchs thought it necessary to share power with entrepreneurs from the political parties before those entrepreneurs launched a full-scale revolution. If so, they may have been acting more urgently and more defensively than either the wealth-maximization or information-maximization hypotheses would suggest.

The Cambridge series on the Political Economy of Institutions and Decisions is built around attempts to answer two central questions: How do institutions evolve in response to individual incentives, strategies, and choices, and how do institutions affect the performance of political and economic systems? The scope of the series is comparative and historical rather than international or specifically American, and the focus is positive rather than normative.

This book challenges conventional preconceptions and historical interpretations about institutional design in Meiji Japan. For some scholars, the oligarchs creating the Meiji Constitution were selfless state-builders, designing an independent bureaucracy and judiciary to maximize the economic growth of the country as a whole. Ramseyer and Rosenbluth carefully delineate the private interests of the Meiji oligarchs as well, and trace out the many ways in which competition among these oligarchs and their repeated failure to cooperate with each other led instead to the creation of institutions facilitating lobbying as a byproduct of factional conflict. Studying the actual institutions in great detail, the authors show how the electoral system created incentives for politicians to provide private goods rather than productive investment, and the ways in which bureaucrats did not act as independent principals. Their careful historical examination of the strategies of leaders embedded in a straightforward rational choice model of institutional development, and the principal results that followed, are reinforced by an examination of the development of three economic sectors – banks, railroads, and textiles.

INTRODUCTION

Scholars of pre-war Japan routinely trumpet the bureaucrats' developmental, nation-building prowess. A close examination of pre-war policy, however, reveals a different picture. In Chapters 9 and 10 we examine government policy in the railroad and cotton textile industries. In this chapter, we consider financial policy. We find that at least in the 1920s when the political parties controlled the cabinets, financial policy took on a distinctively partisan quality. Financial regulation was more a weapon in the electoral battle for a legislative majority than a means to achieve any economic supremacy.

That the two main parties had distinct constituencies, as we discussed in Chapter 4, shaped their financial policy choices. The Kenseikai and Minseito favored big banks and international firms, whereas the Seiyukai cultivated ties to farmers, small firms and small banks, and domestically oriented manufacturers. This chapter recounts the financial policy shifts that accompanied changes in cabinet control.

Section 2 provides a broad historical sketch of pre-war financial regulation, noting that the Meiji oligarchs never achieved bank consolidation. Section 3 focuses on the Banking Act of 1927. Once in control of the cabinet, the Kenseikai drafted banking regulations that favored the largest banks, undermining the Seiyūkai's support base among the small banks.

In banking regulation, as with any area of policy governed by statute, control of the cabinet alone was not enough. However loyal and clever the bureaucrats, an obstreperous Diet could thwart legislative plans.

INTRODUCTION

Power-seeking entrepreneurs cooperated with one another long enough to overthrow the Tokugawa regime and to install themselves in its place. But as they jockeyed for position in the new government, they eventually forfeited power to party politicians. All too soon, however, events turned as sour for Japan's budding democracy as they had for oligarchy. The military took over; not, we argue, because politicians were inept or because the Japanese public was unready for democracy. Instead, we blame the oligarchs for establishing an institutional structure – including, in particular, the independence of the military – that was designed to protect at least some of the oligarchs themselves. While it may have done that, it ultimately destroyed Japan's first experiment with electoral government.

In the course of this book, we make two principal claims. First, we argue that institutions in pre-war Japan became dysfunctional to all but the military, even though the military was not the group the institutions were designed ultimately to protect. The oligarchs fashioned the institutions as tools for their own purposes. Once established, however, they constrained the behavior of the oligarchs themselves, as well as the choices of successive groups of political party leaders. Institutions may be, as they were in pre-war Japan, costly to change. In Japan's case, the Meiji Constitution and its attending process of decision-making launched a chain of events that was nothing short of catastrophic for the Japanese public.

BACKGROUND

During the last three decades of the nineteenth century and the first four of the twentieth, basic political control in Japan shifted twice. In the 1910s it shifted from a handful of oligarchs to a larger group of professional politicians. In the 1930s it shifted again, this time to a set of independent military leaders.

In this book we explore those shifts. We ask why the oligarchs failed to design institutions that protected their power, why the elected politicians did no better, and what political and economic consequences the various institutions had. More generally, we ask whether the shifts may explain some of the dynamics of oligarchic government and clarify some of the theoretical aspects of the relationship between institutional structure and regime change.

The puzzle

In explaining political control in Imperial Japan, most scholars implicitly posit three hypotheses. In their concern for authenticity and precision, they seldom state them as baldly as we do here. We admit that we strip their accounts of much of the richness and nuance that they give them. Although we do this reluctantly, we do it intentionally – for what we lose in subtlety we capture in clarity. Richness and sophistication can confuse as well as contextualize, and we simplify the discussion here because we think the simplicity clarifies the essential logic at stake.

First, most scholars argue that the oligarchs who controlled the government in the late nineteenth century largely (not exclusively) tried to promote the national interest.

INTRODUCTION

“Revere the emperor, throw out the barbarians” and “Rich country, strong army” were their refrains. But a more fundamental concern of the Meiji oligarchs – and a more self-serving one than they cared to advertise in their rhetoric – was to avoid the fate they had visited upon the Tokugawa family in 1868. As with all political leaders, the oligarchs had first to remain in office before they could achieve any other goals they might have had – whether those were increasing their own wealth or that of their countrymen or anything else.

The Meiji oligarchs ultimately failed to retain the monopoly grip on power they had collectively won; but their loss was not for lack of trying. This chapter recounts the rounds of internal bargaining and institutional adjustments among the oligarchs between 1868 and 1881. There was a palpable tension throughout the period: On the one hand, the oligarchs knew they had to cooperate to protect their regime. On the other hand, each oligarch struggled to rise above his fellow oligarchs. The result was a continuing pattern of alliance-shifting and coalition-building. Some oligarchs – Okuma Shigenobu, Itagaki Taisuke, and later Itō Hirobumi – eventually threw in their lots with the political parties to boost their relative power within the oligarchy. It was this jockeying for power among themselves and bringing in support from outside the circle that destroyed the oligarchy's exclusive control of Japan's political system.

INTRODUCTION

Scholars make much of “bureaucratic control” in Japan, particularly in the pre-war era. We find their discussions misleading, and in this chapter explain why. Simply stated, bureaucratic governance describes pre-war Japan only if one considers the Meiji oligarchs – those entrepreneurs who overthrew a shogunate and launched their own experiment – to be bureaucrats.

Even were the oligarchs bureaucrats, the pre-war Japanese government was not consistently under oligarchical control. Within twenty years of their reign, the oligarchs began to lose their monopoly on power. Never able to quell their internecine rivalries, they struggled to maintain what amounted to a classic failed cartel. Some of them enlisted the aid of “new entrants” in their struggles against each other. For a brief period in the 1920s the political parties founded by these renegade oligarchs were on center stage.

Some oligarchs, particularly Yamagata, gave the military a high degree of independence precisely because they were afraid of the encroachment of representative government. This too, in our view, was an outgrowth of intra-oligarchy rivalry. An independent military, Yamagata reasoned, would preserve his power from hostile political forces for at least as long as he was alive.

To the Japanese people, granting the military political independence was the oligarchs' greatest disservice. But the criticism may be beside the point. Whatever the rhetoric, the oligarchs were in the business of protecting themselves. Promoting the larger interests of Japan (an issue at the heart of this book) seems to have been at most a secondary goal.

INTRODUCTION

It stands in the middle of the Kenyan desert, hundreds of miles from the sea. As befits a minor Kenyan military outpost, it is a modest cement brick affair. Inside, it contains a warped pool table. Outside is a swimming pool, empty of everything except a decade's worth of accumulated sand. There is little to distinguish it from any other Kenyan outpost. Indeed, there is little else to it at all, except the plaque on the side of the building. But it is a plaque with a difference: “The Wajir Royal Yacht Club.”

It seems Prince Edward (later Edward VIII) is to blame. The building had once been a British army outpost, and the prince, in a pique of imperial zeal, had once promised to visit it. When the palace thought better of his royal enthusiasm, he prudently canceled the trip. The troops, however, missed neither the snub nor the chance for some cheap Edwardian revenge. If his majesty could not visit them, they asked, could he at least designate his scheduled stop a “royal yacht club”? The embarrassed palace only too eagerly obliged.

Some royal favors come dear, others come cheap. Some redistribute massive wealth to the favored few. In Chapter 8 we explored how the Imperial Japanese government may have transferred funds to the large banks from the small banks and the depositing public. In Chapter 9 we explored how it transferred funds to its patrons' railroads from the public treasury.

INTRODUCTION

Trains are different from other investments. Basic to our enterprise here, they differ in the significance historians attach to them. For decades, scholars routinely thought them the revolutionary technological change of the nineteenth century.

Trains also differ in their externalities. For decades, scholars routinely argued that they created a wide variety of beneficial spillovers. They generated larger labor markets, smoother national defense strategies, and broader trade patterns. Because railroad shareholders could not capture all these spillovers, scholars argued, left alone they invested suboptimally. Hence a role for government: Perhaps, if it subsidized the industry, it could induce more efficient investment patterns.

Trains differ too in the coordination problems they generate. Not only must firms match their competitors' track gauges and negotiate ways to handle shippers who send freight across more than one railroad. They must overcome special problems in buying the land they will use. Because they need contiguous parcels, sellers (if they know a railroad's plans) can hold up a firm for enormous prices. Hence the other role for government: Perhaps, by easing these hold-up problems, it could alleviate transactions costs too.

These claims are not specific to a particular country. Scholars do not just make them of the United States and Europe. They routinely make them of Japan as well. In his survey of the Japanese economy, Takatoshi Ito (1992: 20, 29) lists railroads prominently among Japan's infrastiructural investments. He then finds in the way the government promoted them a “key to Japan's fast economic growth.”

INTRODUCTION

The Meiji Constitution left a crucial element in the political process unspecified: the selection of Diet representatives. In the last chapter we outlined the logic behind the devolution of power from the oligarchs. In this chapter we explore how the shifting configuration of power influenced the choice of electoral rules. The choice of those rules – and the rules were adjusted several times – involved protracted negotiations among the oligarchs and the Peers, the political parties, the voters and indirectly the disenfranchised. Because electoral rules are at the very heart of political accountability, their evolving shape tells us something about who had power in the system, how much they had, and how they obtained it.

Although the oligarchs gave the Diet only limited powers in the Constitution, they remained concerned that the party politicians would gain popular support. Lest the politicians then demand more concessions, they established electoral rules that encouraged intra-party competition and thereby kept the parties weak. The party leaders mitigated this fratricidal competition by providing voters private goods, but the consequence was widespread corruption and in time voter disenchantment.

In this chapter we first describe the oligarchs' experiments with various electoral rules. We consider the consequences those rules had for the politicians and for their relationship with the oligarchs and the voters. In Section 2 we explore the initial choice of one- and two-member districts in 1889, and the switch to multi-member districts in 1900.

Studies of urbanization processes in the Caribbean in the past two decades tend either (1) to consider urbanization processes in the Caribbean outside of a global context (e.g. Hope 1986), or (2) to consider the local urban dynamics of urbanization apart from the Caribbean city system (e.g. Cross 1979; Portes and Lungo 1992; Potter 1989). The limitations of the studies that examine Caribbean urbanization are also to be seen in the literature on Miami. This literature tends to analyse Miami in relation to the Caribbean and Latin America in terms of the Cuban presence, but does not consider it as a world city (e.g. Allman 1987; Didion 1987; Garreau 1981; Grenier and Stepick 1992; Mohl 1983; Porter and Dunn 1984; Portes and Stepick 1993).

The Caribbean city system refers to a regional division of labour that produces transnational linkages between the most important Caribbean cities; this regional division of labour is based on the movement of commodities, capital, and people across cities. A movement which challenges traditional boundaries. This movement produces a hierarchical division of labour among the region's cities in terms of three distinctive roles: core, semi-periphery, and periphery.

The purpose of this chapter is to analyse the historical—structural developments that explain the emergence of Miami as a world city within the Caribbean city system during the 1970s and 1980s.

Global space is a space of flows. The global cities literature differs in its analysis of the financial, informational, migratory, and cultural circuits that are necessary and sufficient to constitute a ‘world city’. The various representations of ‘world cities’ none the less share a common strategy for conceptualizing global cities as relocalized points of intersection of these global networks, circuits, and flows within the jurisdictional boundaries of cities like New York, London, Paris, Tokyo, or Los Angeles, operating within the clearly demarcated borders of single nation-states. This relocalizing strategy, recentres highly decentred and differentially mediated global processes of capital investment, manufacturing, commodity circulation, labour migration, refugee generation, and cultural production by sharply demarcating between an ‘inside’ and an ‘outside’, and then refocusing political—economic and socio-cultural analysis on what goes on ‘inside’ world cities and their respective states and societies.

This chapter seeks to question the relocalizing move implicit in the world cities problematic by examining some of the ways that the networks and circuits in which transnational migrants and refugees are implicated constitute fluidly bounded transnational or globalized social spaces, in which new, transnational forms of political organization, mobilization, and practice are coming into being. These new forms of what I will term ‘transnational grassroots politics’, have thus far been given scant attention in discussions of political life in world cities, because they transcend both the ‘urban’ level of analysis and the nation-state bounded discursive practices in which citizenship, civil society, political representation, national and urban politics are ordinarily cast.

Introduction

From the moment the term was initially coined, world cities have been associated with the concentration of power and wealth within a global context (Geddes 1968; Hall 1966). Such centres; ‘cities with international destinies’, have always been at the core of the world economy (Braudel 1984). During the tumultuous decades following 1960, changes in the organization of international economic activity and in the nature of advanced corporate and financial services have prompted scholars to identify a system of world cities that appear to operate as global nodes for international business decision-making and corporate strategy formulation (Cohen 1981). This international urban system has been recognized in the world city hypothesis as a hierarchy of urban places ranked on the basis of their integration with the world economy. At the apex of the hierarchy are the global cities: sites of rapidly increasing concentrations of corporate power, international finance, and higher-order producer services (Friedmann 1986).

Although its principal exponents have always insisted that the world city concept was not a theory but a hypothesis in need of empirical verification, the world city idea, and its associated assumptions about the nature of urban development, has been absorbed rapidly into the lexicon of urban studies. This in itself should occasion little surprise; the concept has provided a useful heuristic for those struggling to conceptualize the complex linkages of the new global economy.