Why Nations Fail: The Origins of Power, Prosperity, and Poverty

abolish the Tokugawa domain and confiscate their lands. On January 27 the former shogun Yoshinobu attacked Satsuma and Chōshū forces, and civil war broke out; it raged until the summer, when finally the Tokugawas were vanquished.
    Following the Meiji Restoration there was a process of transformative institutional reforms in Japan. In 1869 feudalism was abolished, and the three hundred fiefs were surrendered to the government and turned into prefectures, under the control of an appointed governor. Taxation was centralized, and a modern bureaucratic state replaced the old feudal one. In 1869 the equality of all social classes before the law was introduced, and restrictions on internal migration and tradewere abolished. The samurai class was abolished, though not without having to put down some rebellions. Individual property rights on land were introduced, and people were allowed freedom to enter and practice any trade. The state became heavily involved in the construction of infrastructure. In contrast to the attitudes of absolutist regimes to railways, in 1869 the Japanese regime formed a steamship line between Tokyo and Osaka and built the first railway between Tokyo and Yokohama. It also began to develop a manufacturing industry, and (Ōkubo Toshimichi, as minister of finance, oversaw the beginning of a concerted effort of industrialization. The lord of Satsuma domain had been a leader in this, building factories for pottery, cannon, and cotton yarn and importing English textile machinery to create the first modern cotton spinning mill in Japan in 1861. He also built two modern shipyards. By 1890 Japan was the first Asian country to adopt a written constitution, and it created a constitutional monarchy with an elected parliament, the Diet, and an independent judiciary. These changes were decisive factors in enabling Japan to be the primary beneficiary from the Industrial Revolution in Asia.
    I N THE MID-NINETEENTH CENTURY both China and Japan were poor nations, languishing under absolutist regimes. The absolutist regime in China had been suspicious of change for centuries. Though there were many similarities between China and Japan—the Tokugawa shogunate had also banned overseas trade in the seventeenth century, as Chinese emperors had done earlier, and were opposed to economic and political change—there were also notable political differences. China was a centralized bureaucratic empire ruled by an absolute emperor. The emperor certainly faced constraints on his power, the most important of which was the threat of rebellion. During the period 1850 to 1864, the whole of southern China was ravaged by the Taiping Rebellion, in which millions died either in conflict or through mass starvation. But opposition to the emperor was not institutionalized.
    The structure of Japanese political institutions was different. The shogunate had sidelined the emperor, but as we have seen, theTokugawa power was not absolute, and domains such as that of the Satsumas maintained independence, even the ability to conduct foreign trade on their own behalf.
    As with France, an important consequence of the British Industrial Revolution for China and Japan was military vulnerability. China was humbled by British sea power during the First Opium War, between 1839 and 1842, and the same threat became all too real for the Japanese as U.S. warships, led by Commodore Matthew Perry, pulled into Edo Bay in 1853. The reality that economic backwardness created military backwardness was part of the impetus behind Shimazu Nariakira’s plan to overthrow the shogunate and put in motion the changes that eventually led to the Meiji Restoration. The leaders of the Satsuma domain realized that economic growth—perhaps even Japanese survival—could be achieved only by institutional reforms, but the shogun opposed this because his power was tied to the existing set of institutions. To exact reforms, the shogun had to be overthrown, and he was. The situation was similar in China, but the different initial political institutions made it much harder to overthrow the emperor, something that happened only in 1911. Instead of reforming institutions, the Chinese tried to match the British militarily by importing modern weapons. The Japanese built their own armaments industry.
    As a consequence of these initial differences, each country responded differently to the challenges of the nineteenth century, and Japan and China diverged dramatically in the face of