"The zaibatsus, chaebols and taipans did the job more quickly and with greater efficiency in the use of resources."
There are several similarities between Japan, South Korea and Taiwan that are apparent to most people. One similarity is that they are located in Northeast Asia and belong to the western half of the Pacific Ocean. Another similarity is that they are democratic nations that at one time or another were sealed by the military. A third similarity is that by the definition of the World Bank they are developed—i.e, high-income—countries.
There is another similarity between Japan, South Korea and Taiwan—one that is apparent only to economic historians and attendants of development economics. This similarity has to do with the manner in which these three nations attained the economic status that they enjoy today; more especially, it relates to the undertaking of the huge investments that were needed to transform their economies into the economic powerhouse that they are today.
At the end of World War II, the economies of Japan, South Korea and Taiwan needed massive amounts of investments. Japan and South Korea needed the investments to restore the physical infrastructure that was destroyed by the Allied armies during the final phase of that war. Taiwan needed the investment in order to enable the incoming Chiang Kai-shek force to rapidly transform the island—known before World War II as Formosa—from an agriculture-based territory to an industrial center. Korea—today’s South Korea and North Korea—and Taiwan were colonies of Japan until 1945.
There was a common source for the massive amounts of capital needed for the reconstruction of the economies of Japan and South Korea and transformation of the economy of Taiwan: those countries’ oligarchs. The oligarchs went by different names—zaibatsus in Japan, chaebols in South Korea and taipans in Taiwan—but they accounted for of the large investments needed to rehabilitate Japan and South Korea and industrialize Taiwan. Encouraged by the newly installed authorities and motivated by the prospect of profitable operations in an economic-resurgence environment, the Mitsuhisas, Masashitas, and their fellow-zaibatsus, the Chungs and Lees and their fellow chaebols and the transplanted Mainland Chinese taipans rose to the occasion and quickly began to undertake big projects in the sectors that matter most to an economy—utilities, manufactory, and transportation. Working hand in hand with the authorities, the Japanese, South Korean and Taiwanese oligarchs helped to make possible the rapid reconstruction of the Japanese and South Korean economies and the transformation of Taiwan’s economy.
If itwere left to their MSME sectors, the job of reconstructing the economies of Japan and South Korea and industrializing Taiwan would have taken longer and would have been less officially executed. The zaibatsus, chaebols and taipans did the job more quickly and with greater efficiency in the use of resources. By 1960, the Japanese economy had fully recovered from World War II and by the early 1970s, South Korea and Taiwan had joined the ranks of the developed countries.
This column is not primarily intended to be a tribute to corporate humans or to say the praises of zaibatsus, chaebols and taipans. Rather, it is primarily intended to convey the message that a country’s largest business enterprises are not automatically classifiable as oligarchs and that oligarchs—if such they be—have a major role to play in the drama of nation-building.
The largest business establishments in this country need not be praised for the success that they have achieved. But they do not deserve to be denounced as oligarchs.