Contested Capitalism: The Political Origins of Financial Institutions by Richard W Carney

Author:Richard W Carney [Carney, Richard W]
Language: eng
Format: epub
Tags: Public Policy, Political Science, General, Economic Policy
ISBN: 9781135245368
Google: hQuPAgAAQBAJ
Goodreads: 17512536
Publisher: Routledge
Published: 2009-10-16T00:00:00+00:00

FARMERS

In addition to land reform and political institutional changes (the electoral system, malapportionment, and a legislative bias), farmers’ political power also received a boost from reform of the Nokyo in 1947, which enabled them to organize locally, and to be highly influential in electing representatives to government. Consequently, farmers received favorable deposit policies from the postal savings bank, subsidized lending via the Norinchukin Bank, and were beneficiaries of numerous government-funded projects. I briefly discuss these here.

Immediately after the war, land reform measures were introduced by SCAP officials, who feared that the revival of the tenancy system could lead to a relapse of authoritarianism or a communist insurgency among landless farmers. SCAP also viewed land reforms as critical to the democratization effort.3 A dramatic restructuring of landholdings in rural Japan ensued. At the end of the war, tenants cultivated 45 percent of arable land; by 1950, tenants cultivated only 10 percent. Likewise, the number of farm families that owned 90 percent or more of their land increased from 1.7 million to 3.8 million.4 Added to this was the reform of the cooperatives, which enabled farmers to organize and become highly influential in electing representatives to government. During the war, cooperatives were part of the Imperial Agricultural Association (IAA). As an instrument of government control over agriculture during the war, the IAA was tainted by authoritarianism in the eyes of SCAP officials, and in 1947 Occupation authorities ordered its dissolution. Under the Agricultural Cooperative Association Law (or Nokyo Law) passed in December 1947, local cooperatives were reconstituted as a private, voluntary organization – the Nokyo. As a result of their new legal status, the number of local Nokyo proliferated rapidly – from 4,256 in April 1948 to 27,819 by December 1948.5

The Nokyo Law allowed agricultural cooperatives to take deposits and to lend funds via the Norinchukin Bank –Nokyo’s banking arm. Nokyo was also permitted to supply credit to local public organizations, banks, or other banking institutions.6 Consequently, Nokyo garnered tremendous political and economic power at the local level. In addition, the cooperative banks collected government payments destined for producers. These government transfers, in turn, fueled the expansion of cooperative activities in other areas. According to a 1951 SCAP publication, “In most villages, general-purpose cooperatives now provide the primary credit, marketing, purchasing, processing, and other essential services used by farmers.”7 The framework for offering agricultural subsidies through cooperatives was established under the Land Improvement Law of 1949 and through the Law for the Reconstruction of Agricultural Finances in 1951. During the 1949 to 1953 period, subsidies more than tripled, bolstering the reliance on agricultural cooperatives as politically useful intermediaries.8

The political instability of the 1945 to 1950 period offered the agricultural cooperatives a golden opportunity to establish themselves as a potent political force at the “rice”-roots level. With 90 percent of all farm households represented by at least one cooperative member, Nokyo became the most important organization in rural Japan.9

There were frequent instances in which the position taken by Nokyo determined the success or failure of a given candidate.

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