The Importance of Entrepreneurship in Japan's Late Nineteenth-Century Meiji Industrial Transformation

Japan’s rapid transformation in the late nineteenth century, from an agricultural society governed by the feudal samurai warrior class into an industrial power, is an unusual story in world history. When samurai leaders from Satsuma, Chōshū, and other domains joined forces to overthrow the Tokugawa Shogunate and rule in the name of Emperor Meiji in 1868, they might have been expected to establish a similar form of government that maintained the existing class structure and protected the samurai class’s privileges. Instead, the Meiji government initiated a series of reforms that resulted in the abolition of the old class structure, elimination of samurai entitlements to hereditary stipends, deregulation of markets formerly controlled by officially chartered merchant guilds, and removal of restrictions on social mobility. Although many scholars have emphasized the importance of government planning and initiative in Japan’s Industrial Revolution, private entrepreneurship in response to economic and social liberalization was of central importance. As we will see, political entrepreneurs within the government were much more successful in stimulating economic development through institutional support of private property rights and infrastructure investment than in central planning and management of state-owned enterprises. Entrepreneurs in the private sector then responded to new opportunities in the marketplace and invested their energy and resources in enterprises that contributed to Japan’s economic development.