For Part One go here
For Part Two go here
The ’50s, due to both the end of US meddling in the Japanese economy and improved general conditions in Japan, saw the broken remains of the zaibatsu morph into the keiretsu, the modern day “conglomerates” which have defined Japanese economic life ever since.
The keiretsu is a different institution that the US corporation or the European multinational. It can be defined as a group of firms (ranging from the gigantic to middle-sized family owned enterprises) tied among themselves by cross-shareholding, informal ties and, much more critically, the use of a common main bank and sogo shosha (often translated as trading house) which constitute the true beating heart of the keiretsu. Very much like an onion, a keiretsu is made up of “layers” of companies: however being close to the core does not mean being a huge company. Toyota, for example, belongs to the most external layer of companies of the Mitsui keiretsu despite being one of the world’s largest manufacturing companies. The same can be said for Matsushita Electronics and Sumitomo.
It’s very hard to explain the concept of layers. For a Japanese “it’s just the way it is”. Positioning is affected by a huge number of factors, such as the entity of loans taken from the core bank, cross-shareholding patterns and tradition. In some keiretsu, companies which can directly trace their lineage to the original zaibatsu are held to be “closer to the core” despite not having being major players for decades.
For Part One go here.
1914 saw the outbreak of the Great War. Japan, though part of the Entente, contributed very little to the military side of things, but this doesn’t mean it was a major player in the war.
Japanese weapon factories manufactured millions and millions of artillery shells for the Allies, Japanese rifles were supplied to the Russian and British armies in large quantities and, most importantly, the zaibatsu-owned shipyards churned out freighters at breakneck speed: in just four years Japan doubled its already large mercantile fleet, without taking into account the ships sold to the Allies. Exports rose by 266% in three years and Japan started turning a large trade surplus, helped by the power vacuum left by British and French companies’ commitment to the war effort (Continental Asia was largely unaffected by the war and still needed industrial goods).
In late 1916, after the Battle of Verdun, Mitsui Bussan analysts concluded (correctly as it turned out) that in three years at most the war would be over with an Allied victory. They concluded a recession would hit Japan hard as demand for munitions would drastically drop and French and British competitors would be back in business. Hence Mitsui started to steadily reduce its transaction volumes almost immediately. Other zaibatsu, thinking Mitsui had some serious internal issue, stepped in to seize what they thought was a golden opportunity. Recession hit immediately after the Armistice in November 1918, as France, Italy and Britain cancelled large munitions orders overnight. Many zaibatsu were ruined or barely survived the hit while Mitsui’s dominating position was strengthened.
Watching the video of Robert Wenzel’s recent Soviet Union-themed lecture I did not think what I was listening to was an unusual talk on the subject. In fact I felt it was fairly standard fare. And that, for me, was the surprising thing. Having come to expect piercing insight and unconventional wisdom from libertarians, it felt unusual to sit through a presentation on the USSR, 90 percent of which could have seemingly been given by a Buckleyite Cold Warrior.
The part of the talk that could not have come from a cheerleader for the Cold War is the introductory part where Wenzel dismisses the American nationalists’ idea that Reagan’s arms buildup spent the USSR into bankruptcy. It also turns out to be the only major point of Wenzel’s speech he can substantiate, albeit you could easily miss this in the disorganized introduction. After making the initial claim it takes him fully four minutes to finally come around to providing information on the size of the Soviet military spending in the 1980s to counter the Reaganite assumptions. In the mean time he gets bogged down on talking about the likes of corruption of capitalism in America which is perhaps a topic he is more familiar with.
The name of Wenzel’s talk is ‘An Examination of Key Factors in the Collapse the USSR’, but what he actually gives is a gallop through the entire Soviet period, from beginning to end. He justifies this with the claim the tale of the USSR is one of a 70-year long collapse. Since he devotes his hour to talking about the entire Soviet history this means, he can not go into depth on any aspect of it just on the account of the time constraints, however, it may also mask the objective inability to speak on anything in depth due to a lack of knowledge as such.
It is safe to say that 70 years is a long time for an entity to be collapsing. A story of such a “collapse” therefore is by necessity a though sell, which Wenzel fails to do. It is one thing to claim the Soviet economic system prevented Russia and most of the other constituent Soviet republics from developing, in the pertinent timeframe, to the level they could have attained otherwise. It is quite another to instead paint a caricature of “no good time all bad” from “start to finish” like Wenzel does. Surely in a country of 200 million with a 70 years long existence a few million people managed to experience a few relatively good years? In fact are there not in the former Soviet space, tens of millions of pensioners who insist they had not just a few good years in the USSR, but whole decades?
It is important to maintain perspective and to grasp that while the USSR was, in economic terms, quite the failure it was only such compared to the West. The country which may have looked shoddy to Western eyes, nonetheless appeared to visitors from the third world as advanced and as capable of offering comfortable lives. At the relative Soviet heyday in the 1970s RSFSR citizens could enjoy the purchasing power of up to 40% of that of Americans. Albeit far bellow the true potential of Russia, such a standard of living was nonetheless unattainable for the greater part of the world population.
In July 1853 a four ship US Navy squadron commanded by Commodore Matthew Perry entered Edo Bay. Perry put on a terrifying show to prove the devastating power of Western technology by razing a number of buildings in Edo harbor. As a result Japan, an “isolationist” country, opened up to the world. Or so it’s what school textbooks say.
Starting in 1633 the shogun, Tokugawa Iemitsu , issued a number of edicts collectively called sakoku (chained islands) to reduce to the minimum contact between Japan and outside world. Trade was heavily regulated: for example the only Western traders allowed to operate in Japan were Portuguese, replaced in 1641 by the Dutch, and they could only deal with Japanese on the artificial island of Dejima in Nagasaki Bay, Chinese traders could only operate in a specially designated area inside Nagasaki proper, and so on.
EDIT: Our own z1235 has posted a couple of months ago a reconciliation theory of Bitcoin and the Regression Theorem which is very similar to the one exposed below. Unfortunately I managed to miss that post in due time and was reminded of it only after publishing this.
The main idea: Bitcoin’s current rise to prominence will both mark the end of the use of Regression Theorem to discourage any alternative to the Gold Standard, and serve as the testbed of Hayek’s monetary insights.
Let yours truly add his own two cents to the substantial analyses recently published on the great performance of Bitcoin (see here, here, here or here for a few Austrian perspectives), or specifically on what the its undeniable, if perhaps temporary, success may yet show to followers of the Austrian tradition.
1. Bitcoin for Misesians
Bring it on!
Once upon a time, there was a naughty little boy named Timmy. Timmy was Webster’s own definition of a brat – spoiled without a trace of gratefulness in his demeanor, and a hateful bully to his parents at that. Finally, little Timmy pulled the last ma ‘n’ pa hamstring, and hit his father over the head with a plastic doll, bruising him. That was it – violent little Timmy was going to juvy, after countless beatings and bruises liberally administered by him. Or was he? Perhaps not, for you can imagine little Timmy’s parents’ confusion when the friendly neighborhood police handcuffed not the rugrat, but the plastic doll instead.
For Part One go here
For Part Two go here
For Part Three go here
For Part Four go here
Finally, what conclusions may we gather about Byzantine economy and society?
Byzantium originally started out as a continuation of the Late Roman Empire of Constantine I the Great (r. 306-337), so much her own citizens, despite shunning Latin and practicing forms of Christianity which diverged more and more from Western European Catholicism, called themselves Romaioi, Romans. The Late Roman Empire had nothing of the prosperous realm of Trajan described by Pliny the Younger. It was much poorer, much less secure and much less free. The State was everywhere, meddling in trade, pricing and religion. There was of course an exception to this rule, namely the Middle East: Syria, Palestine, Egypt etc. While Europe descended deeper and deeper into the interminable cycle of civil wars, the Middle East was an area of relative stability.
While the Galliae and Hiberia were ravaged from end to end by marauding armies and robbed of their accumulated wealth by ravenous tax collectors, Syria, Egypt and the other Middle Eastern lands remained relatively peaceful and stable.
The Arabs to the South were usually well disposed towards Rome (mostly thanks to generous “subsidies”) and on this frontier only one power faced the Empire: Sassanid Persia, heir to the ancient and highly advanced Iranic civilization.