"Pioneering Privatization: The Rise and Fall of State-Owned Enterprises in Meiji Japan"

The policy of large-scale privatization in Meiji Japan has largely gone unnoticed in the public-private debate in the fields of public economics and public policy. However, it has received much more attention in both analyses of economic history by Japanese scholars, and those of industrial development by international scholars. Existing analyses of the Meiji privatizations have generally focused on their effects on Japan's industrial development. While there is a consensus that privatization was a factor driving the country's rapid industrialization, opinions are more divided about whether the privatization of SOEs in the 1880s reflected state failure. A quite frequent view was that it reflected poor management and therefore failure. However, more recent analyses do not share this pessimistic view, because there was in practice no private alternative to direct government investment in capital and technology immediately after the Meiji Restoration.
Fiscal motivations for the sale of state-owned enterprises within the deflationary program promoted by Matsukata Masayoshi (1881-1885) are widely accepted, although almost all sales were actually implemented only after fiscal stabilization had been achieved. As for the objectives of privatization policy, the only broader analysis in the literature is that of Yasuzō Horie in 1939, who considers political aspects alongside economic issues. Little else has been systematically investigated on the ideology and political economy of the privatization process. Our research contributes to the literature by conducting a systematic analysis of the drivers of the Meiji privatization, paying attention to ideological and political factors, along with economic motivations. We benefit from recent theoretical contributions on the study of privatization drivers, along with recent studies of other experiences. We use this background knowledge to enhance our understanding of the unique mass privatization that took place in Japan in the 19th century, and discuss how relevant were ideology, political interests, and economic issues.