Masahiro Nei: Gradualism Toward Civilization

Image: Provided by Keio University Fukuzawa Memorial Center for Modern Japanese Studies

My specialization is the history of Western economic thought, so I do not usually teach the great figures in the fields of Japanese political or economic thought in my classes. However, I happened to know that 2025 marks the 150th anniversary of the publication of "An Outline of a Theory of Civilization."

Of course, as I am merely a historian of economic thought, I would like to leave the multifaceted evaluation of Fukuzawa Yukichi's thought to the great scholars. However, even for someone like me who has read the classics of Western economics such as Keynes and Schumpeter and has written in that field, "An Outline of a Theory of Civilization" is extremely enlightening, and I would like to write about that.

When I was a student, the history of Japanese economic thought was not as popular a subject as it is now, and there were not many researchers in the field. However, I was interested in Fukuzawa's economic thought, so when I looked into evaluations by great scholars, I found one book that described it as a "mercantilist theory of a trade-based nation" (Shiro Sugihara, "Economic Thought of the Meiji Enlightenment: Focusing on Fukuzawa Yukichi," Hosei University Press, 1986). The narrative of adopting a certain type of protectionism necessary for the Meiji era's policy of "increasing production and promoting industry" and eventually achieving "independence and self-respect" is easy to understand. However, as someone who had already studied Keynes, I felt uneasy that labeling a thinker with a multifaceted perspective like Fukuzawa might be largely misleading. This is because Keynes himself has been labeled with "(deficit) fiscalism" as a way to escape depression, and even today, the fact that he was an excellent monetary theorist is not accurately understood.

In 1875, when "An Outline of a Theory of Civilization" was published, a new movement called the "Marginal Revolution" (usually explained as beginning with the discovery of "marginal utility," meaning the increment in utility when consumption is increased by one unit) was emerging in the world of economics (for example, Jevons's "The Theory of Political Economy" was published in 1871). However, the Marginal Revolution was a theoretical innovation that progressed gradually over more than a quarter of a century, rather than overwriting the power map of the academic world all at once like the Keynesian Revolution. Furthermore, ideas such as the Historical School and Comte's general sociology were flowing in from the European continent, and the academic world was deepening in confusion. However, classical economics, which began with Adam Smith, by no means disappeared immediately. It can be said that in 1875, the "Principles of Political Economy" by the last great classical figure, John Stuart Mill (the first edition was 1848, but the 7th edition was released in 1871), was still fully viable as a textbook.

When discussing Fukuzawa and economics, an anecdote is often brought up that Fukuzawa continued to lecture on Francis Wayland's economic books without being perturbed even by the Battle of Ueno between the New Government forces and the Shogitai. While that is a historical fact, it does not convey how Fukuzawa evaluated classical economics.

However, upon reading "An Outline of a Theory of Civilization," one notices that Fukuzawa lists two major principles of economy (Volume 5, Chapter 9), which coincide surprisingly well with classical economics since Smith.

Namely, the first is that "wealth is accumulated and then dispersed. These two types of relationships, accumulating and dispersing, are most intimate and must never be separated," and he says, "The purpose of the economist is to always make this income greater than the loss, gradually accumulating and then spending to bring about the wealth of the entire nation." This is similar to Smith's emphasis in Book 4 of "The Wealth of Nations" that the exchange value of annual products becomes greater than annual consumption.

The second is that "to accumulate and disperse wealth, one must have the intellectual power corresponding to that wealth and the habit of handling such matters." The reason for the lack of economic "intellectual power" and corresponding "habits" was that Japan in the feudal era was divided into the rulers of the samurai class and above and the ruled of the farmers, artisans, and merchants and below, with power concentrated in the former. Fukuzawa believed that in the future Japan, the "middle class" should lead civilization. Unfortunately, from the end of the Edo period to the Meiji era, civil society and the rules that ordinary people living in that society should follow (which is the basis of "moral philosophy"), such as those in Smith's birthplace of Britain, had not taken root. "Moral" could not be translated at the time, so it was translated as "shushin" (moral training), but it is originally a word linked to the birth of civil society. Keynes also said that economics is one of the "moral sciences."

However, since one cannot reach "civilization" in a single bound from the current situation, Fukuzawa adopted "gradualism," and this position is strongly reflected in the current affairs commentaries he wrote from time to time. In any case, Fukuzawa must have learned a great deal from Britain, where the classical tradition starting with Smith was firmly rooted, and from the political and economic thought of Mill, who was active in that country. This is because Mill's thought is precisely gradualism in the sense of evolving capitalism through the accumulation of reforms. This was inherited through Marshall to Keynes, and I believe that Fukuzawa, who cited Mill many times, must have gained inspiration from such an attitude.