The Father of the Japanese Guided Capitalism: Shibusawa Eiichi
In 2024, Japan will issue new banknotes. The 10,000 Japanese yen note, the country’s biggest note, will feature a portrait of Shibusawa Eiichi. Surely, banknotes often feature a portrait of someone important for the country, just like the Australian banknotes feature such portraits as Queen Elizabeth II, Dame Mary Gilmore and Reverend John Flynn. So, who is Shibusawa Eiichi and what is his significance to Japan? The answer is, he is the father of the Japanese “guided capitalism” in the 19th century.
Guided Capitalism: the 19th Century Ideology Still Alive in Today’s Japan
Shibusawa (1840 – 1931) was an entrepreneur and a business leader. He established over 500 banks and commercial enterprises during his lifetime. He is well known for spreading the Western capitalism to Japan after the Meiji Restoration. However, his significance was that he was a strong advocator of the connection of morality and economic activity. He believed in state-guided capitalism where firms assume social responsibilities and take into account both ethical and financial considerations in decision making. The goal of his ideology was not to simply make a profit. Rather, it aims to pursue private interests through realization of public interests and to adopt sustainable business models for long-term value creation. With this in mind, he contributed to founding some 600 social welfare organizations.
Positive Legacy: Low Unemployment and High Wealth Equality
Japan preserves his contribution well in a museum as well as in the cooperate culture. His ideology of prioritizing public interest has definitely brought about some benefits to the Japanese society. For example, life-time employment is very common in Japan, which takes job-related worries off of people’s shoulders. In fact, even during the COVID-19 pandemic, the World Bank data show Japan maintained its low unemployment rate. Additionally, Japan has one of the highest wealth equalities among developed countries according to the Gini Index of the World Bank.
Negative Legacy: Reluctance to be Innovative
However, as is often the case, his philosophy has also left negative legacies along with positive ones. For instance, Japan is one of the least innovative countries among the developed countries according to Global Innovation Index 2020. In addition, Japan has the smallest number of unicorn start-up companies. The lack of innovation can be a result of Shibusawa ideology where individuals enjoy the comfort of having a life-time job security. This worriless lifestyle could reduce the passion to innovate. It is absolutely understandable to think, “Why should we be innovative when things are so stable?” At the same time, the bureaucracy guiding the country’s development often raises barriers for innovation. This often obstructs innovation efforts of individuals.
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