Two Inquirers on the Divide: Tokuzo Fukuda and Hajime Kawakami

Takutoshi Inoue

Kiichiro Yagi

 

Introduction

 

Tokuzo Fukuda was born on December 2, 1874 in Tokyo. He was baptised a Protestant at the age of twelve and maintained a strong interest in religion throughout his life.1 He was one of the most brilliant students who had ever enrolled in the Tokyo Higher Commercial School, which had been and now still is called Hitotsubashi after its location up to 1927. After one year's teaching experience at the Kobe Commercial School, he returned to Hitotsubashi to enter her newly created graduate course. As soon as he finished this course as the first bachelor of commercial science in Japan, he received an appointment as a lecturer in economics at his alma mater. Following the government's policy for the training of young professors, he was sent to Germany from 1898 till 1901 and studied under K. Buecher in Leipzig and under L. Brentano in Munich. He received a doctorate from Munich University with his thesis, Die gesellschaftliche und wirtschaftliche Entwicklung in Japan (Fukuda, 1900) . This was published in Stuttgart in 1900 and read widely in the German speaking world as an excellent introduction to the economic history of Japan. As he was impressed by the founding of commercial colleges (Handelshochschule) in Germany, he became one of the enthusiastic advocates for the reform of as well as promotion of advanced commercial colleges in Japan to the equal academic rank with Imperial Universities.2 However due to a dispute with the principal soon after his return to Hitotsubashi, he had to leave his alma mater from 1905 till 1919.

Hajime Kawakami3 was born on October 20, 1879 in Iwakuni, Yamaguchi Prefecture. He entered the College of Law at the Tokyo Imperial University and studied further at its graduate school. He taught economics and agricultural economics as a part-time lecturer at several colleges in Tokyo and published two books in 1905. One dealt with basic concepts in the economics, Keizaigaku jo no Konpon-Kannen (Fundamental Concepts of Economics), another advocated the significant place of agriculture in economy as a whole, Nihon Sonno-ron (Japanese Arguments for Agriculture). However, he had to wait for a while before he was called to the Kyoto Imperial University in 1908. During this period Kawakami devoted himself to journalism, beginning with the serial Shakaishugi-Hyoron (A Critique of Socialism) in the Yomiuri Shimbun under a pseudo name (1905) and ending with the editorship of the Nihon Keizai Shin-shi (New Journal for Japanese Economy).

The reason that Fukuda, five years senior to Kawakami, became interested in Kawakami may be because Fukuda found a similar vein in Kawakami. First, both shared a deep interest in the ethical problems raised by Christianity. Though Kawakami was not baptised, he was greatly influenced by Christians such as Kanzo Uchimura (1861-1930) and Naoe Kinoshita (1869-1937) and deeply attracted by the altruistic teaching in the Bible. Kawakami even pushed himself to join an altruistic religious collective by the name of Mugaen, namely the Garden without Self, although disappointed Kawakami soon left it. Fukuda might feel some sympathy in Kawakami's frank disposition, as he himself experienced quarrel and conversion several times. Secondly, in contrast to senior professors who were satisfied to imitate their foreign mentors, both intended to establish their own systems in economics and energetically explored various directions of economics. A common interest in economic policies as well as in economic history might be further added.

While both Fukuda and Kawakami began their research under the heavy influence of the German Historical School, they widened their perspectives by assimilating various new trends in economics. Probably under the guide of L. Brentano's sympathetic introduction to the German edition of A. Marshall's Principles of Economics, Fukuda was interested in the Cambridgeans and found his favourite at last in the welfare economics along the line of A. Marshall and A. C. Pigou. Kawakami, on the other hand, was attracted by E. R. A. Seligman's economic interpretation of the history as well as by the marginalist economic theories of F. A. Fetter, J. B. Clark and I. Fisher. However in his forties Kawakami's interest in Socialism and Marxism overcame his theoretical inquiry into marginalist economics in his thirties. Since then most discussions between the two became a rather barren dispute between a Marxist and an anti-Marxist.

In the transition from the authoritarian Meiji state to the age of parliamentary politics of the Taisho era, both economists participated in democratic movements in their own way. In 1918, Fukuda, along with Sakuzo Yoshino (1878-1933), professor of politics at the Tokyo Imperial University, established the Reimei-kai which aimed to abolish evil and anti-democratic thought of despotism, conservatism and militarism and to promote and consolidate the life of the nation in accord with new trends of thought after the World War which are guided by liberal, progressive and democratic principles. As an avowed leader of the Taisho Democracy, Fukuda endeavoured to establish a new economics which was to serve for the consolidation of the wellbeing of the nation. However, Kawakami was critical of the limitations that the leaders of the Taisho Democracy realistically set to the extension of democracy in Japan. After awakening the interest of the public to the social problems of industrialized nations by the best-seller, Bimbo Monogatari (A Tale of Poverty) in 1917, Kawakami started to publish a private journal Shakai-Mondai-Kenkyu (Studies on Social Problems) in 1919 to propagate ideas of Marxism.5 At this point, Kawakami's influence on Japanese intellectuals surpassed that of Fukuda's. As Toshihiko Sakai put it, the tide is changed from the Fukuda era to the Kawakami era.6

Both Fukuda and Kawakami did not hesitate to become involved in social movements. Fukuda supported the moderate trade unionism of the Yuaikai (namely Friendly Society), later the Sodomei. However Kawakami influenced the radical wing of Sodomei, which caused its organizational split. Fukuda and Kawakami once crossed swords on the topic of social democracy. In Fukuda's view the social democracy contradicts the ideal of democracy due to its subjection to the interest of a peculiar class. To Kawakami, however, it was the inevitable course of historical change that progress is made under the special interest of some particular class. Criticised on his insufficient understanding of Marxism by a younger generation, Kawakami made every effort to transform himself into a consistent Marxist scholar. As a result, he was forced to resign from Kyoto Imperial University due to several subversive phrases in his publications and of the support of groups of communist students. It was at the age of fifty-three (1932), when he became a member of the illegal Communist Party, that he felt that his lifelong quest was finally completed.7

 

Debates between Fukuda and Kawakami

 

Fukuda and Kawakami engaged in more than ten disputes, which were not just over economic theories but also over social issues. From 1905 to 1907, the two economists exchanged their views on the taxation of rice imports and on the decrease of independent farmers. They next debated on many topics in the methodology of economics. After 1917 the focus of discussions moved to the problems of Marxian economics and the cleavage between the two became apparent one by one.8

To confirm the basic difference of the two economists, we first explain their views shown in the first series of debates on the rice problem.9 The main issue was whether the special rice import tax, which had been introduced to cover the expenses of the Russo-Japanese War, should be maintained or not. At that time, Japan was in a favourable position concerning choice in the basic policy in trade and development, since the long-wished revision of the unequal custom treaty had been accomplished. Many free traders as well as protectionists joined the debate. On the other hand, this debate was related to another issue: the future prospect of Japanese agriculture based on small peasant farmers. Many were alarmed at the impoverishment of small farmers and the menacing spread of landowner-tenant disputes. Generally the protectionists associated themselves with the camp of Agrariers like Tokiyoshi Yokoi (1860-1927), while free traders such as Tameyuki Amano (1861-1938) and Kotaro Noritake (1860-1909) combined their arguments with their vision of mercantile and industrial development. Policy advisers, such as Noburu Kanai (1865-1933) and Kumazo Kuwata (1868-1932), occupied a mixed position of parallel development of commerce, industry and agriculture on the base of protectionism.

Fukuda supported the abolition of the rice tax and opposed to the protection of small peasant farming. He maintained that the proper distribution of agricultural products would be realized only through the market and protectionist policies would only benefit landowners at the cost of the well-being of consumers. At the same time, he argued that traditional farming was the main cause of the declining tendency of Japanese agriculture and that introduction of competition on a commercial base into agriculture would contribute to the growth in the scale of cultivation run by independent farmers or by some joint production unit. Fukuda's arguments came from his conviction that Japan should be a nation of commerce and industry based on agriculture driven by the rational spirit of capitalism.

Kawakami began his argument for agriculture with his conviction that agriculture is the foundation, while commerce is periphery.10 He supported maintenance of the rice tax and the protection of independent farmers. However he distinguished himself from the extreme position of protectionism, since he opposed to the artificial high price on which traditional inefficient cultivation could be preserved. In principle, Kawakami trusted in the high quality of the work ethics of Japanese farmers and expected that they could improve cultivation in the most appropriate way to Japan. Compared with the agrarian argument of Tokitaka Yokoi, Kawakami stressed the independence of farmers (not the obedience of tenants to landowners) and further a harmonized development of commerce and industry on the base of agriculture. According to Kawakami, the increase of independent farmers would provide the country with food and industrial materials as well as a broad domestic market for industrial products, thus helping the prosperity of commerce and industry.

Despite the difference in their attitude to the rice-import tax, Fukuda and Kawakami shared an optimistic view of the possibilities of the future development of Japanese agriculture. Unlike most other economists then, who thought at the time that the declining tendency was destined for Japanese agriculture due to the scarcity of cultivatable land and the decline in the price of agricultural products in the world market, the two argued for the development of national economy as a whole through the inter-sectoral relationship between the agricultural sector and other sectors. However as regards the content of the ethical base of agricultural development, the two economists showed a marked contrast. According to Fukuda, the lack of a profit motive was the basic problem for the sound development of agriculture based on the self-interest of farmers. On the other hand, Kawakami believed that the industrious work ethics of Japanese farmers lay in their unselfish way of life by which they could be considered as representative of the national interest as a whole.

This difference also appeared in their ideas about how the nation should deal with its economy. Fukuda stood for liberalism in social policies. He believed that the self-motivated activities of individuals were the basic elements that made society move forward, and that government interference in private affairs should be kept to a minimum. However rejecting selfish profit-seeking motives of merchants, Kawakami quested for a non-capitalistic ethical basis for Japan as a nation.11

 

Fukuda's Liberalism in Social Policies

 

After returning from Germany, Fukuda advocated factory legislation so as to secure labourers from disease and accidents and to improve their capability and independence. Fukuda's position in the field of social policy is best defined by the term 'liberalism in social policies'. He borrowed this term from L. Brentano's 'sozial-liberale Ideenrichtung' (social liberal direction) to indicate the reformist position in which initiatives of individuals and voluntary associations should be guaranteed. Unlike authoritarian senior economists in the camp of Japanese Association for Social Policy, Fukuda argued that 'the state, society, and other organizations should refrain from intervention into people's social and economic affairs unless they have difficulty helping themselves'.12

Since writing his dissertation in Munich, the backwardness of Japanese society was one of the lingering themes in Fukuda's thought. He noted that the individual, the nation, and society in the West supported each other in their movement forward and that the progress of the economy and politics rested on the base of a solid individualism. However 'in the economic society of contemporary Japan, the necessary conditions for the modern economic life in the age of global economy are not fully equipped'. Fukuda further argued: 'In the age when the concept of an individual as a fundamental unit of society and economy is an indispensable condition for a society to advance, we cannot be a mighty and wealthy nation by suppressing ideas of individualism at the same time'.13 His faith in individualism was strengthened by his conviction in the historical development, 'as for people's advancement, the difference is just that they are a bit way ahead of us'.14

In fact, Fukuda expected the emergence of economic actors who would follow the rational principle of 'gaining the maximum return from the minimum effort'. Such actors, he believed, had never previously existed in Japan. 'After the fundamental change in the economic organizations of societies due to the affiliation to a world economy', he explained, 'all economic conduct should be based on contracts by the free will, division of labour among equally free individuals, and exchange through free competition'. This is the modern economic man that Fukuda expected for the development of Japanese society.

In the first edition (1890) of his Principles of Economics, A. Marshall defined economics as 'a study of man's actions in the ordinary business of life; it inquires how he gets his income and how he uses it'. He later revised this to 'a study of mankind in the ordinary and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing' (4th edition). Noburu Kanai criticized the former definition, as 'it gives consideration only to the individual and neglects the nation and society as a whole organic entity'. Fukuda not only rejected this criticism, but also expressed his doubt about the revision made by Marshall. According to Fukuda, the revised definition obscured the clear message of the principle of individualism.5

 

Fukuda's Interest in Cambridge Economics and Marxism

 

Together with Brentano, Marshall was one of the major sources from whom Fukuda absorbed his ideas. Fukuda used Marshall's Principles of Economics (1905) as the textbook for his course at the Keio Gijuku from 1905 to 1918. His lectures were published in 1909 as Keizaigaku Kogi (Lectures on Economics). He continued revising this book until his late years.

Fukuda maintained a keen interest in mathematical economics and advised his students to study it and translate classic literature in this direction. The Japanese translation of A. A. Cournot's Recherches sur les principes mathematiques de la theorie des richesses (1838), W. S. Jevons's, The Theory of Political Economy (1871), L. Walras's Elements d'economie politique pure (1874), and H. H .Gossen's Entwicklung der Gesetz des menschliches Verkehrs (1854) were produced thus by Fukuda's encouragement. As for Marshall's Principles Fukuda encouraged Kinnosuke Otsuka to attempt a translation; Otsuka published a partly abridged translation in 1919 and then a complete translation in 1928.

Fukuda, on the other hand, began his study of Marxism around 1906. In Japan, the first stage of the study on Marxism was based mainly on American literature, as was the case with Toshihiko Sakai (1871-1933), Hitoshi Yamakawa (1880-1958) and Shusui Kotoku (1871-1911). Fukuda was one of the first Japanese scholars who studied Marx using the original German texts. In his article 'Marx-Kenkyu' (A Study of Marx) compiled in Zoku Keizaigaku Kogi (A Sequel to Lectures on Economics)(Fukuda, 1911), Fukuda dealt with the distinction of 'constant capital' and 'variable capital', and presented his criticism at the inconsistencies between the labour value theory in the first volume of Marx's Capital and that of production price in its third volume. He also denounced Marx's concept of 'surplus value', and made use of E. von Boehm-Bawerk's theory of capital and interest.

Though Fukuda remained critical of Marx and Marxism throughout his life, he also encouraged earnest theoretical research into this area. In those years when Kawakami was interpreting the Marxian concept of surplus value with the term of price theory, Fukuda's understanding of Marxian economics was surely outstanding. Fukuda supported Motoyuki Takabatake's project of translating of Marx's Capital up to its completion (1925). On the other hand, Kawakami launched the publication of his own translation in serial form in 1927. However Kawakami's engagement in politics after his dismissal from Kyoto Imperial University hindered him from continuing this project. When he was in prison after his arrest in 1932 and declared his resignation from any political activity, Kawakami wished to resume this project as his last task as a scholar. This, of course, was not allowed even in his secluded life after his release in 1937.6

In accordance with his growing interest in modern marginalist economics, Fukuda, who had once regarded himself as 'the last economist of the Historical School in Japan',7 gradually became sceptical about the future of the Historical School. In particular, he opposed to authoritarian advocates of the etatist conception of social policy a la A. Wagner were his enemies. On the other hand, Fukuda attacked Marxism and expressed his sympathy for E. Bernstein's criticism of Marxian orthodoxy. Taking over the social-liberal tradition and creating his own system of welfare economics was the task adopted by Fukuda, who wished to provide an alternative to Marxism.

 

Kawakami's Sway after the Bimbo Monogatari

 

Kawakami's Bimbo Monogatari was the book that taught modern Japanese of the new social problems in the industrialized nations. This originally appeared first as a series in the Osaka Asahi Shimbun (1916) when Japan was enjoying the economic boom caused by the First World War. Kawakami warned Japanese against their euphoria from the very opening sentence, 'it is the poverty of the mass in present civilized nations that surprises us',8 and its truth was effectively shown also in Japan by the Rice Riot in 1918. In book form, the Bimbo Monogatari was printed thirty times in a short period from 1917 to 1919, until Kawakami ordered an end to the printing. As Hyoe Ouchi (1888-1980) put it, 'Every intellectual who is proud of the sense of social problems is willing to confess their indebtedness to this book'.9

However, the conclusion of this book is a very strange one for a famous Marxian economist in prewar period Japan to reach. As the measure to solve the poverty problem, this book recommended a voluntary abolition of the luxurious consumption by the rich prior to other two remedies for poverty, namely the correction of the inequality in distribution and the transformation of the production from private to public hands. In other words, the author regarded a moral revolution as being of paramount importance.20 In reality, Kawakami was not at all a Marxist at this stage.

The theory used in Bimbo Monogatari was far from Marxian theory. The reasoning that a voluntary abolition of the luxury consumption would result in an increase of the provision of necessaries for the masses presupposed a full employment of capital despite of the elimination of the demand of the rich as well as a full conversion of the unconsumed income (savings) to capital accumulation. Kawakami conceived this reasoning from Henry Whithers' similar argument in Poverty and Waste (1914). However, this kind of optimistic view of the smooth adaptation of the market economy was just the sort that Marx would have opposed.21

Neither would Marxists agree with Kawakami's reasoning that luxury is the cause of poverty, because they believe that the income of the rich derives from the exploitation of the surplus value from the poor. In Marxian terms, the relation between the rich and the poor is a class relation between capitalists and wage labourers. This was the point that Tamizo Kushida (1885-1934), Kawakami's first disciple, used in criticising his mentor. But Kushida himself was not well versed in Marxian economics at that time. Kushida argued that social problems were 'problems of distribution' not 'problems of production', from his understanding that the class struggle in wage determination could be regarded as a sort of 'bargaining' between two parties. Kawakami rejected Kushida's criticism promptly by repeating his idea that the problem of poverty was a 'problem of production' where production of necessaries was reduced by some reason (luxury consumption of the rich).22

However after one year Kawakami confessed his disturbance as an economist in an essay with titled 'Miketsu-kan' (House of Detention) which appeared on the Osaka Asahi in the beginning of 1918. He compared the situation of contemporary economists who had no definite criterion to judge the priority between increase in production and fair distribution with that of unconvicted prisoners in detention. Kawakami made an analogy between the unbelievable effort of a prisoner who escaped from the skylight and the Adam Smith's ten years devotion for the completion of his Wealth of Nations and called for the emergence of a second Adam Smith who could solve the theoretical indetermination by unbending endeavour.23

Raising fairness in distribution as an independent criterion besides an increase in production was by itself a correction of the position developed in the Bimbo Monogatari. Pushed by his inner uneasiness, Kawakami started to examine the views of eminent economists about the priority between these two criteria. Kawakami first took up Jeremy Bentham and James Mill with the supposition that utilitarianism would be the philosophical base for orthodox economics. There he found that utilitarian thinkers never leave their individualistic position and prefer the safety of possessions to any kind of equalization of income. The utilitarian principle of maximum happiness, which rejects redistribution, was nothing but a principle of maximum production. Thus Kawakami established a series of equations: individualism (egoism) = holiness of private property = productive policy.24 In contrast, Kawakami argued, the true social policy should be a distributive policy which did not serve any series of productive policy equations but prevailed over them.

The term 'social policy as distributive policy' had been originally the position of an elder generation of scholars including Kawakami's mentor Kuranosuke Matsuzaki ( - ). It seems as if Kawakami returned to his starting position as an ethical nationalist, but Kawakami's intention was that he would bridge social policy and socialism by the principle of 'distributive policy'.

However this also failed, when Kawakami examined Marx's view on production and distribution.25 In the text of Marx's Capital, Kawakami found that Marx did not separate distribution from production and rejected any ethical criterion of fairness or equality in distribution in his criticism of capitalism. His view of socialism as a liberation of new productive powers from the constraint of capitalist economies surely fell into the 'productive policy'. Kawakami realized finally that he had to abandon his position of integrating social policy and socialism on an ethical foundation, if he wanted to follow Marx.

 

Egoism and Altruism in Kawakami

 

In the first number of the Shakai-Mondai-Kenkyu, Kawakami declared that 'I review every social policy from the final criterion of the ultimate solution of the social problem'.6 He distanced himself from those who supported social policy without questioning the existing economic system as a whole. However this does not mean that he adopted the materialist view of revolutionary Marxism fully. Because he retained still 'the ultimate of the ultimate criteria' in the coincidence with 'the goal of human life', namely 'the moral perfection as a man'. As Kawakami wrote, 'it is not allowed to ruin the soul for the sake of the flesh' was his ultimate criterion to judge the means of the solution of the social problem.7

As the existence of this criterion suggests, the 'unsettled question' in economics was but a representation of a deeper moralistic question in Kawakami's mind. The dichotomy of 'productive policy' and 'distributive policy' was a translation of the question of the individual choice between 'egoism' and 'altruism' in the ethical dimension. Even after his denial of phrases such as an 'integration of the economy and the morality' in Bimbo Monogatari and 'social policy as a distributive policy', Kawakami appealed for the emergence of a 'second Adam Smith' who could establish an alternative economics which would replace traditional economics based on selfish 'economic man'.

Though he finally decided to follow Marx, Kawakami felt uneasy about whether he could find a final solution of the ethical problem which had troubled him since his youth in Marx's materialism. After filling the first numbers of the Shakai-Mondai-Kenkyu with studies of Marx and Marxism, Kawakami allowed himself to reveal his sentiment as his 'confession' in a different dimension to his social science. Recollecting the days when he had left his family to join a religious collective, he wrote that he had reached a religious awakening of the identity of egoism and altruism. 'An utmost consistent altruism is perfectly harmonized with egoism' was the 'confession' Kawakami acquired from his religious experience. The young Kawakami thought that he could not live in this world if he followed the teachings of altruism totally. But 'if we consider ourselves standing on the belief of an absolute altruism', as our soul and flesh are thus donated to God, 'we have to pay utmost attention to keep this donation, that is the true egoism'.28 This was the recognition with which Kawakami left that religious collective to return to academic research.

In the development of Western economic thought, Kawakami discovered a similarity to his mental history of swaying between egoism and altruism. In particular, the justification of self-interest by B. Mandeville and A. Smith in its early stage and the opposite development after J. S. Mill, T. Carlyle and J. Ruskin attracted him. In Shihonshugi Keizaigaku no Shiteki-Hatten (Historical Development of the Capitalist Economics) (1923) he described 'the historical transformation of the thought for the approval of selfish activities - its emergence, development, death, and replacement by the opposite'.29 This interpretation of the history of the 'bourgeois economics' survived in his Keizaigaku-Taiko (Outlines of Political Economy) as its former half combined with a loyal interpretation of Marx's Capital as its latter half. In this book, published in the very year when Kawakami was expelled from academic life, Kawakami called Marxian economics an alternative 'proletarian economics' and anticipated a parallel development to the 'bourgeois economics' in that it began with a bold approval of the selfish interest of the working class. In Kawakami's view, Mandeville's claim 'private vices', leads to 'public benefits' applied also in the case of the 'proletarian class' who bore the historical mission of the liberation of mankind as a whole through their struggle. Then Kawakami as an individual should seek for his interest as the unselfish devotee to God. Thus by replacing the ethical question of individuals by a historical mission of a class, Kawakami adapted himself to the requisite of Marxism.

Fukuda's Welfare Economics

 

In 1930 Fukuda wrote in the preface to Kosei Keizai Kenkyu (Welfare Economics): 'I expect much from the mathematical direction of economics advanced by L. Walras, F. Y. Edgeworth, V. Pareto, and I. Fisher. However due to my weakness in mathematics, I cannot think that I am qualified to do any research in that field by myself, nor do I have the courage to do so. I can only hope to learn what others have made clear. Fortunately, I know some economists in Japan who are quite active in this field, and I am sure that we can see the harvest of their research before long.... Therefore only one choice is left to me, and that is to focus on welfare economics whose trail was set by such scholars as J. A. Hobson, A. C. Pigou, and E. Cannan'.30

Fukuda distinguished between two kinds of economics, 'price economics' and 'welfare economics'. According to him, the former is the conventional economics that has its origin in A. Smith and now exists in various theories of modern economics, including Marxist economics. The latter, on the other hand, does not exist in a perfect form, though some elements are to be seen in conventional price economics and some efforts to systematize it have been made by German economists of the ethical school as well as by Alfred Marshall. After Marshall, Pigou was the next to convert to welfare economics with his Wealth and Welfare (1912) and Economics of Welfare(1920), followed by Hobson and Cannan in Britain, R. Liefman in Germany, S. N. Patten in America, W. Mitscherlich in Austria and others.

Glancing at the direction taken by contemporary economists in the world, Fukuda interpreted the reason why welfare economics had yet to be completed as follows: 'As long as welfare economics remains economics, it has to measure welfare in economic terms, that is, by monetary units. In many cases, economic welfare, what is to be measured, overlaps with the price. Therefore it is not at all easy to draw the line between welfare economics and price economics'.31 Fukuda maintained that welfare economics made to deal with the 'degree of satisfaction' while price economics was concerned with the degree of 'desiredness'. Because most economists had no clear distinction between these two kinds of economics, they treated two concepts with the same word, 'utility'. In his view, this vagueness hindered most economists from advancing in the direction of welfare economics.

Fukuda suggested that if 'utility' was to mean 'degree of satisfaction', then another word should be used to represent the 'degree of desirability'. He stuck to this conceptual distinction on three grounds: 'firstly, money could measure the degree of desirability only; secondly, the degree of desirability would hardly correspond to the degree of satisfaction; thirdly, the fundamental difference between price economics and welfare economics was the clearest where the distinction between the degree of desirability and that of satisfaction was made'. Fukuda highly evaluated the theory of marginal utility because it paved the way for welfare economics by making economists realize the subtle differences between the two concepts.

In Kosei Keizai Kenkyu, published just before his abrupt death in 1930, Fukuda tried to give a philosophical base to welfare economics and explored the details of its structure. First he based the validity of welfare economics on Aristotle's concept of commutative justice.32. Then he criticized Marx because Marx's economic theory remained still in the domain of price economics due to his neglect of the theory of commutative justice.

The next step Fukuda took at the outset of the second article, 'Joyo no Seisan, Kokan, Bunpai' (Production, Exchange and Distribution of Surplus), was a survey of the history of economics from his viewpoint of welfare economics. He believed that economics had originated from ancient Greek thought, including ideas set forth by Aristotle. He pointed out that the original Greek theory of utility was revised by Thomas Aquinas from the viewpoint of Christianity and transformed into the theory of cost. In his view, this was the foundation for the labour theory of value presented by A. Smith and completed by K. Marx.33 

According to Fukuda, orthodox economics considered the following three principles: the principle of distribution according to invested services, the principle of cost, and the principle of exchange, as characteristics of capitalist societies. Since it gave the priority to the market equilibrium attained by free competition, economic policy in capitalist societies aimed to perfect free competition and maintain the equilibrium of supply and demand.4 Based on this argument of orthodox economics, Marx established his theory of exploitation by means of the production of surplus value. In Fukuda's view, Marx focused too much on production and neglected the significance of distribution. Fukuda considered a capitalist society as a 'society in which production, exchange and distribution of the surplus are performed'. Since a capitalist society is an 'acquisitive society of income' which is based on the distribution of surplus value and the source of surplus value lay not only in production itself but also in the original distribution of various productive conditions preceding to production, Fukuda concluded, the priority should be given to the theory of distribution.

Fukuda placed 'income' at the centre of his distribution theory. 'We live by income. Its distribution keeps our capitalist society going and advancing. Price, and money as well, therefore, are nothing but a mean for the determination of income. Nothing is more significant for our economic existence and our physiological survival than income'.35 Because he tried to establish welfare economics based on the concept of income, it was logical for him to be critical of Marshall, who replaced 'income' with the 'material requisites of wellbeing' in the fourth edition of Principles of Economics.

As Fukuda put it, the distribution of income became crucial in a society experiencing a population increase, a rise in consumption, and advancement and change in technology for production.36 He asserted that the distribution of income had to be carried out through optimizing conduct called 'earning activities'. That was because only through such rational conduct the welfare in the next period could be attained.

Fukuda mentioned the process in which an increase in distribution, or consumption and saving (or investment), would promote an increase in income when he referred to Liefman and others.37: 'In such a distributive society as ours, consumption means directly purchasing of consumption goods with income. Saving means purchasing of productive goods with income. Consumption promotes the production of consumption goods, while saving promotes the production of capital goods'.

Commenting on this process Fukuda argued that too much saving and too much consumption would 'diminish the productivity of society'. 'In order to avoid such a predicament, we should keep a certain proportion in terms of distribution between saving and consumption. Saving is necessary for society to maintain and to improve productivity, while consumption is necessary for a society to keep up with the increase in productivity. A genuine equilibrium is needed'.38 To maintain this equilibrium, Fukuda argued further, a sort of 'welfare struggle' between 'productive people and unproductive people', between capitalists and labourers, and between 'those who have income and those who levy on the income, that is, the state and municipalities'39 should be fought. Here he found the basis for his view of social policies.

After this analysis, he gave a 'tentative conclusion' about what he thought of the principle of distribution in capitalist society: 'Of the two distributive principles of community, according to the ability of individuals and according to the needs of individuals, only the latter deserves to be a principle of communism. In the stage of proletarian dictatorship, this is applied only on the base of the performed productive service'.40 'This principle is supposed to be applied in a higher form of communist society. In fact, however, it can be applied in capitalist societies after a modification such as according to the effective demand of individuals'.41 This is probably what Fukuda meant by earning activities in distribution.

He next gave several examples for such struggles for distribution. One was the movement for the industrial rationalization in the United States and Germany; another was the policy taken in Britain to fight against unemployment. He regarded those who were engaged in such movements or those who were executing such policies as those engaged in the 'struggles for surplus value' by means of 'labour agreements', 'minimum or subsistent wages', labour insurance, and unemployment insurance. Class struggle, taxation by capitalist nations, public organization, public services, and various public companies and buildings were also the way of distributive struggles. He asserted also that these struggles should be regarded not merely as 'price struggles' but also as 'humanity struggles' as well as 'welfare struggles'. Fukuda added that 'wage struggles of workers could be economically significant'.42 Fukuda interpreted the significance of class struggle as a beneficial means to 'improving public welfare and giving the direction of social advancement',43 while he refused to see such struggles as a means of realizing a socialist society. Thus Fukuda integrated class struggles into his system of social policy guided by welfare economics.

Conclusion: Japanese Economists face the Social Problem

Fukuda and Kawakami belonged to the generation of Japanese economists who were aware of their mission to establish an unique system and tradition in Japanese economics. Starting commonly under the heavy influence of the German Historical School, both strove to explore economic theories widely and finally followed separate paths, one as a Marxist, the other as a critic of Marxism. From the viewpoint of the intellectual history, their quests can be interpreted as an impressive representation of the ethical problems of individuals in an industrializing nation which reached the stage of the emergence of social problems as well as struggles among classes. Fukuda made an effort to refine his evaluation of economic rationality of individuals so as to integrate class struggle into his welfare economics. In clear contrast, Kawakami was annoyed by the moral dimension of the 'egoism' of modern economic man and finally devoted himself to an altruistic service to the 'proletarian class'. Though they shared a common interest in the foundation of social policies in an age of grave social problems, both could not accomplish their task due to the severe intellectual tensions of the day. A more fruitful debate between the two could have produced a common base to mitigate the cleavage of Marxian economists and non-Marxian economists in later years. Despite all their failures, their sincere inquiry into the social and ethical aspect of economic theory teaches us much that we cannot expect from most modern academic economists.

 

 

NOTES

 

1 For example, Fukuda at the age of 31 practised Zen.

2 Concerning the development of the Tokyo Higher Commercial School, see Sugiyama and Nishizawa (1988), and Nishizawa (1987).

3 For an overview of Kawakami's life, see Bernstein (1976). Kawakami's Selected Works (Chosaku-shu) was published first by Chikuma-Shobou in 12 volumes from

1964 to 1965 and after a decade a new full-scale Collected Works (Zenshu) by

Iwanami (Kawakami 1984-86) was completed. Hereafter, sources of the citation

from Kawakami are shown in parentheses signifying volumes and pages of this

Collected Works.

4 Nobuo(1968) pp. 493-494.

5 Kawakami (1947), Zenshu, seq. V, p. 236.

6 This was the title of the review by Toshihiko Sakai on the well-read journal, Kaizo (1920). From his Marxist position, Sakai expected more from Kawakamis

progress towards socialism than Fukudas critical stance to socialism.

7 See his impressive description in the Autobiography (Zenshu, seq. V. p.452-

454).

8 For instance, they discussed on the original edition of Marx's Wage Labour

and Capital in 1919, on the logic of the proliferation of capital from 1920 to 1921, and on Marx's Capital, though other economists of the times involved in the debates.

9 On this issue we owe much to Miyazimas study on Fukuda (Miyajima 1984 and

agriculture.

10 Kawakami (1905), Zenshu, II, p. 262.

11 This is rooted in Kawakamis conviction as a man of letter: Watch this pen! A pen never exists by its own force. It never quests for its own gain. As a

being who owes its whole existence to the force of others, it loves others

with its full capacity. (Originally in the Yomiuri, Dec. 1905, Zenshu II,

p.449)

12 Shakai Seisaku Gakkai(1909), p.101.

13 Fukuda (1925-26), V, pp. 589-590.

14 Fukuda (1925-26), V, p. 584.

15 Fukuda (1925-26), I, p. 20.

16 Kawakami (1947), Zenshu, seq. VI, p. 121-124.

17 From Tatsunosuke Uedas comment on Fukuda in Ueda et. Al. (1950), pp. 122

and 129.

18 Kawakami (1917),Zenshu, IX, p. 9.

19 Ouchi (1947), p. 182.

20 Sugihara (1995, 1996) offers another hidden aspect of this book. According

to him Kawakami regarded a real step to the socialism in German wartime

economy along with Lloyde-George's social reforms in Britain.

21 Ouchi (1965) and Kobayashi (1992) regard Kawakamis economics in this period as a very simple bourgeois economics (Ouchi) and equilibrium theory

(Kobayashi). See, Sugihara (1977) also in this respect.

22 Kushida (1935), I, pp. 268-275. Kawakamis answer is in Zenshu IX, p. 207-

209.

23 Kawakami (1918a), Zenshu, IX, p. 219.

24 Kawakami (1918b), Zenshu, X, p. 233.

25 Kawakami (1919a), Zenshu, X, p. 205-218.

26 Kawakami (1984-86), Zenshu, X, p. 227.

27 Kawakami (1984-86), Zenshu, X, p. 228.

28 Kawakami (1919b), Zenshu, X, p. 386. In later years Kawakami considered

himself as a peculiar Marxist who approved the truth in the religious

experience. Deguchi (1965) tries to examine this duality of Kawakamis

thought.

29 Kawakami (1928), Zenshu, XIII, p. 143.

30 Fukuda (1930), pp. 5-6.

31 Fukuda (1925-26) V, pp. 276-277.

32 Chap. 1 of Fukuda (1930), pp.1-140, Aristotle no Ryutsu no Kosei (On

Aristotle's Commutative Justice).

33 Fukuda (1930), p. 142.

34 Fukuda (1930), pp. 149-150.

35 Fukuda (1930), pp. 166-167.

36 Fukuda (1930), p. 164.

37 Fukuda (1930), pp. 172-73.

38 Fukuda (1930), p. 174.

39 Fukuda (1930), pp. 174-75.

40 Fukuda (1930), p. 178.

41 Fukuda (1930), p. 179.

42 See Ikeda (1982), p.165.

43 Fukuda (1930), p. 421.

 

 

 

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