The Japanese Cooperative Sector

By Klinedinst, Mark; Sato, Hitomi | Journal of Economic Issues, June 1994 | Go to article overview

The Japanese Cooperative Sector

Klinedinst, Mark, Sato, Hitomi, Journal of Economic Issues

The modern history of Japanese cooperatives began in the Meiji Era of the nineteenth century. Today in Japan, more than 30 million people are members in cooperatives.(1) The cooperative sector is especially strong in agriculture and related industries, and cooperatives are also found in the retail distribution of food, medical care, insurance, housing, universities, and in the financial industry as investors and with credit unions. While the range of industries where cooperatives are found is similar in some ways to that of the United States and other industrialized countries, the extensive penetration of one sector-agriculture-is neither paralleled in the United States nor in other industrialized countries. The strength of involvement in one sector of the economy in Japan is both a strength, and in light of recent trade pressure to lift agricultural tariffs, a potentially dangerous strategy.

History of Japanese Cooperatives

The history of cooperative associations in Japan goes back many years. During the Edo period (1603-1867), mutual assistance groups were started among less economically powerful individuals [Chikuji 1992, 375]. Ninomiya Sontoku (1787-1856) helped farmers sot up rural credit associations in the mid-1800s. Also at this time, the beginning of Meiji Era, many types of industry cooperatives were developed. The most active cooperatives were the silk and tea retail cooperatives. Their main purpose was to improve product quality and increase exports. In addition to these cooperatives, there were rural purchasing cooperatives.

In 1900, the Industry Cooperative Law was passed in parliament in an attempt to adapt some of the strengths of the German guild system as perceived by observers sent to the West by the Meiji government. Until the Japan-Russian War (1906), industry cooperatives did not develop as expected. However, after the war, the government put substantial effort into the development of agricultural cooperatives. These cooperatives, following in the guild framework, were to serve four main functions: credit, marketing, purchasing, and management. This broad mandate can still be seen in the extensive range of services offered by Japanese agricultural cooperatives.

In 1921, the industry cooperative law was improved, and the Central Industry Cooperative Bank (Norinchukin) was established by the government in 1923. The industrial cooperatives joined the International Cooperative Association (ICA) in 1922. In 1930, the Showa agricultural recession caused farmers serious problems. To improve the situation, the government sot up the five-year Industry Cooperative Development Plan and encouraged every farmer to join a cooperative. On the other hand, because cooperatives focused on only agriculture, small crafts people fought against the establishment of cooperatives.

In spite of the recession and anti-cooperative campaigns, agricultural cooperatives were extensively developed. The best-known leader, Kotaro Sengoku, insisted that the development of cooperatives would eliminate the contradictions of capitalism and contribute to its development.

In 1938, cooperatives faced a turning point. The government tried to take advantage of the cooperatives as tools to organize citizens during the hard times caused by the war between Japan and China and then during World War II. Cooperatives, as well as other cooperative-like organizations (e.g., Agricultural Association, Stockbreeder Association, Tea Industry Cooperative, and so on), were brought into an organization called the Agricultural Association in 1943. The Agricultural Association was not democratic; the government took advantage of the agricultural cooperatives to organize people and to ensure a resource base for the war. Members did not have the right to join or leave the agricultural cooperative.

After World War II, the Agricultural Association became more democratic. However, it still failed to achieve the degree of democracy to which General Douglas MacArthur, Supreme Commander, Allied Powers (SCAP), directed. …

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