Financial Stabilization in Meiji Japan: The Impact of the Matsukata Reform (Cornell Studies in Money)

With a new look at the 1880s financial reforms in Japan, Steven J. Ericson's Financial Stabilization in Meiji Japan overturns widely held views of the program carried out by Finance Minister Matsukata Masayoshi. As Ericson shows, rather than constituting an orthodox financial-stabilization program―a sort of precursor of the "neoliberal" reforms promoted by the IMF in the 1980s and 1990s―Matsukata's policies differed in significant ways from both classical economic liberalism and neoliberal orthodoxy. The Matsukata financial reform has become famous largely for the wrong reasons, and Ericson sets the record straight. He shows that Matsukata intended to pursue fiscal retrenchment and budget-balancing when he became finance minister in late 1881. Various exigencies, including foreign military crises and a worsening domestic depression, compelled him instead to increase spending by running deficits and floating public bonds. Though he drastically reduced the money supply, he combined the positive and contractionary policies of his immediate predecessors to pull off a program of "expansionary austerity" paralleling state responses to financial crisis elsewhere in the world both then and now. Through a new and much-needed recalibration of this pivotal financial reform, Financial Stabilization in Meiji Japan demonstrates that, in several ways, ranging from state-led export promotion to the creation of a government-controlled central bank, Matsukata advanced policies that were more in line with a nationalist, developmentalist approach than with a liberal economic one. Ericson shows that Matsukata Masayoshi was far from a rigid adherent of classical economic liberalism. With a new look at the 1880s financial reforms in Japan, this book overturns widely held views of the program carried out by Finance Minister Matsukata Masayoshi. The book shows, rather than constituting an orthodox financial-stabilization program—a sort of precursor of the “neoliberal” reforms promoted by the IMF in the 1980s and 1990s—Matsukata's policies differed in significant ways from both classical economic liberalism and neoliberal orthodoxy. The Matsukata financial reform has become famous largely for the wrong reasons, and the book sets the record straight. It shows that Matsukata intended to pursue fiscal retrenchment and budget-balancing when he became finance minister in late 1881. Various exigencies, including foreign military crises and a worsening domestic depression, compelled him instead to increase spending by running deficits and floating public bonds. Though he drastically reduced the money supply, he combined the positive and contractionary policies of his immediate predecessors to pull off a program of “expansionary austerity” paralleling state responses to financial crisis elsewhere in the world both then and now. Through a new and much-needed recalibration of this pivotal financial reform, the book demonstrates that, in several ways, ranging from state-led export promotion to the creation of a government-controlled central bank, Matsukata advanced policies that were more in line with a nationalist, developmentalist approach than with a liberal economic one. It shows that Matsukata Masayoshi was far from a rigid adherent of classical economic liberalism. Cover Half-Title Page, Title Page, Copyright, Dedication Table of Contents Acknowledgments Introduction: Departures from Orthodoxy 1. From “Ōkuma Finance” to “Matsukata Finance,” 1873–1881 2. Orthodox Finance and “The Dictates of Practical Expediency”: Influences on Matsukata 3. Austerity and Expansion: The Matsukata Reform, 1881–1885 4. Spending in a Time of “Retrenchment”: Industrial Policy and the Military 5. Founding a Central Bank 6. “Poor Peasant, Poor Country”?: The Matsukata Deflation Conclusion: The Matsukata Reform as “Expansionary Austerity" Notes Works Cited Index "Discusses how Japan's finance minister Matsukata Masayoshi carried out his program of financial stabilization in the early to mid-1880s by pursuing policies that were more in line with a nationalist, developmentalist approach than with a liberal economic one"-- Provided by publisher "Discusses how Japan's finance minister Matsukata Masayoshi carried out his program of financial stabilization in the early to mid-1880s by pursuing policies that were more in line with a nationalist, developmentalist approach than with a liberal economic one"-- Résumé de l'éditeur