Production control in Japan

First published in Far Eastern Survey, Vol. 15, No. 22 (Nov. 6, 1946), pp. 344-347 Beatrice G. Reubens

libcom editorial note: Beatrice Reubens had worked on Far Eastern affairs in the Department of State. She also served as a member of the Secretariat of the eleven-nation Far Eastern Commission, and during the war was an economic analyst with the Office of Strategic Services. The article was written contemporarily to the industrial action and we can assume it was intended for consumption by US strategists. However, there is a dearth of online material about Japan's workers movement, especially during the first years of the US occupation, so we reproduce the article without endorsing the analysis. While the article is clearly concerned with mechanisms to prevent production control from threatening property relations, the admission that it does shows how seriously the US occupation and Japanese government took the issue.

The current wave of strikes in Japan, aimed in part to effect the resignation of the Yoshida cabinet, is a major political move on the part of the newly organized Japanese labor movement. The strength of the present strike action indicates the remarkable progress made by labor in the first year of the Allied occupation and the extent to which unionism has spread after years of suppression by the Japanese government.

The Allied directive of last year which established the right to organize and bargain collectively resulted in the rapid growth of the infant labor movement in Japan, and novel tactics were utilized by the new unions. The technique of "production control," al though not the most typical method of bargaining, is significant because it challenges the traditional concepts of industrial relations and the institution of private property. It has caused difficult legal problems for the Japanese government and has placed further strain on the relations between General MacArthur and the Soviet representative on the Allied Council for Japan.

Shortly after the occupation began, there occurred a series of labor disputes in which the workers, instead
of striking and holding up production, locked out their employers and took over the operation of the
establishment. While the owners were considering the union demands or carrying on negotiations for a set tlement, the workers continued to produce, buy and sell, without permitting company officials either voice in the enterprise or access to the premises. After settlement, usually with a full victory for the workers, the plant was turned back to the management.

This new approach to employer-employee relations, called "production control," is far from the most common form of labor dispute in postwar Japan. Only ten percent of the labor disputes in the first year
following the end of the war involved production control: there were 133 disputes in which production control was used and slightly more than 100,000 workers were affected. Disputes resulting in work stoppage have also been relatively rare. The most typical labor dispute is one which lasts a very short
time, entails no interruption of production, and is settled amicably by negotiation.

The conditions which have encouraged the adoption of production control as a bargaining instrument arise out of the defeat and the occupation. So revolutionary is the freedom labor enjoys and so drastic are its demands for wage increases to meet skyrocketing prices that adoption of a flamboyant method in pursuing these aims is scarcely surprising. With the Japanese economy severely disorganized and many employers closing factories because they are uncertain of their ability to continue production, union leaders have hesitated to incur the ill-will of the goods hungry public by conducting strikes. In many cases workers have resorted to production control as a means of maintaining employment when employers were about to cease operations. Since employers were accused of closing up because they preferred speculative dealing in raw materials to current production, the workers could keep their jobs only by taking over the operation of the plant.

Through fear of the consequences to plant and equipment, employers frequently have changed their minds about closing up. Since SCAP (Supreme Commander for the Allied Powers) is directly opposed to work stoppages which are inimical to the objectives of the occupation, strikes in certain
industries are virtually forbidden. The workers, therefore, have welcomed a substitute weapon like production control.

Political Significance of New Technique

The very inexperience of Japanese unions makes production control seem more legitimate and effective than a strike. Strikes, so long forbidden in Japan,appear more dangerous to the new labor movement than production control, which had never been tried before. To a large extent, too, the new technique represents as much of a revolutionary upsurge as Japan could experience with Allied forces present. Labor's
opposition to Japan's old leadership is strong. Just as the war crimes trials and the purge directives have
singled out individuals for punishment, so organized labor, with its marked political bent, has attempted to dispossess industrialists on the ground that they aided in or profited from the war. The firstcase of production control, that of the Yomiuri Hochi, a Tokyo newspaper, was designed to change the editorial direction and policy of the paper rather than to avoid an interruption of production.

The program of democratization which SCAP introduced has been interpreted as justification for production control. According to some Japanese theorists, the new freedom implies the end of every institution of the old order, including the rights of private property. As one Japanese lawyer put it, "Though a bad law is still a law in normal times, a bad law is, in my opinion, not a law in such a revolutionary age. . . ,"The recent passage of the Trade Union Law which established the legal right to strike also seems to establish the automatic legality of production control, as many Japanese consider the latter less harmful to their devastated society than a strike.

To a small group, production control represents the firststep toward a proletarian revolution. A letter to
the editor of the Asahi Shimbun stated bluntly: "Production can no longer be restored under the capitalist
regime operating under the profit motive. . . . The democratic revolution for the reconstruction of Japan
can be accomplished only by passing through such stages as labor control of production. . . ." This attitude has not been general, however, and no reports appeared that labor is reluctant to surrender a plant to management once a dispute is settled.

A wide variety of industries has been affected by production control, including newspapers and shoe manufacturing concerns, Red Cross hospitals and coal mines, municipal government offices and steel works.
The technique has been particularly popular in the Tokyo area and in the coal mines of Hokkaido and Kyushu.

Production control has been most successful where the company's product or service was distributed directly to the public and where the dispute was settled fairly rapidly. Prolonged periods of produc? tion control or drastic reactions from employers raised insoluble problems of obtaining raw materials, markets and credit. For example, as soon as production control began in one manufacturing company which produced truck parts, the management withdrew all materials and gave them to a sub-contractor to finish.
The parent factory was under production control but, as there was nothing to produce, the workers* action failed.

Initially, the rate of output often rose phenomenally under production control. But after a week or two of
long hours and strenuous effort, the employees grew weary and their productivity frequently fell below the pre-dispute level. A survey by the Coal Control Corporation indicated that the most sensational increases of output were achieved when unskilled workers were in charge without the guidance of technicians and staff members. When the latter were also involved in production control, productivity did not rise so sharply because the technicians would not permit production increases at the expense of damage to the equipment
or coal pits.(3)

Workers have been somewhat cavalier in their treatment of the person and property of their employers. One employer who refused to surrender the keys to his plant was locked up in his office for four days. Such acts as forcing employers to hold interviews, trespassing or seizing residences, and making unau- thorized searches for commodity hoards have been regarded as "minor offenses" which the police condoned until recently. One of the few cases regarded as extreme involved striking coal miners in Hokkaido who not only took over the Mitsubishi mines but con- stituted themselves a "People's Court" to try their employers and top company officials as war criminals. While production control is in effect, wages are set at the greatly increased rates demanded by the workers and are paid out of the business receipts whether from streetcar fares, the sale of finished products, or the disposition of raw materials.

Production Control in Coal Mining

A celebrated case which illustrates many of the characteristics and complications of production control occurred in March 1946 at the Takahagi coal mines near Tokyo. When a dispute in the mines threatened
to result in production control, the Nippon Coal Company, designated by the government as the coal allo-
cating and distributing agency for all coal mines in Japan, was uncertain whether it should do business
with the Takahagi mines if seized by the workers. The Nippon Coal Company asked the Coal Board of the Ministry of Commerce for its view. As a result of the conference, the president of the Nippon Coal Company wired the eleven branches of the company on March 25 that "control of production by workers is illegal.". The director of the Coal Board, hastening to repudiate this statement, claimed he had only indicated that, if workers controlled production, the proceeds from the sale of coal delivered by workers should be paid to the company. The Board also said that mineowners need not pay more than ordinary wages and allowances to the workers when production control was undertaken.

In spite of the unsatisfactory preliminary negotiations which had already made the dispute technique more important than the settlement of the dispute, the miners actually took over control of production on April 6. The Coal Board stated on April 9 that the company would receive payments for coal and
that wages as well as the expenses of management would be paid by the company during the dispute.(7) The union opposed this statement bitterly as it felt that it could not carry out production control unless it had jurisdiction over the company finances. In sympathy with the Takahagi union, the nationwide Federation of Miners' unions threatened a sympathy strike in which all mines would be taken over by the workers.

Six thousand representatives of over thirty unions held a protest meeting on April 12 before the ministries of Commerce and Transportation. According to a report in the Yomiuri Hochi, a newspaper entirely sympathetic to the workers, the demonstrators, with sticks in hand, forced the police cordon to withdraw and then waited for the return of the Minister of Commerce. The determined union men succeeded in seeing the Minister of Commerce a few hours later and he made a major concession. He removed the government from the picture by stating that, until the legality of production control was formally decided, the question of who was to receive the money from the sale of coal might be freely determined by the two parties concerned. On April 15, the allocating agency and the union reached an agreement which provided that a union which had mines under its control would receive full payment for coal it turned in. The union then settled back to the real business of negotiating with the company for the acceptance of the union's original demands.

The substantial victory achieved by the Takahagi miners in their efforts to establish the right to take over control of production reflected the weakness of employers and the uncertainty of the government rather than general acceptance of the new labor tactic. The Shidehara Cabinet had struggled with the problem of the legality of production control since January 1946 when the technique firstgained promi- nence. Aroused by reports of violence and intimida tion attending production control cases, four ministers of the Shidehara cabinet issued a statement on February 1 which reaffirmed the government's belief in the free development of trade unions but warned against illegal acts, such as threats, violence, and infringement of property rights.

A storm of protest greeted the joint ministerial announcement. General MacArthur's headquarters
admitted that it had approved the publication but not the content of the statement. Taking no position on the issue, SCAP indicated that the legality of produc? tion control would have to be settled by legislation or the Japanese courts and not by executive pronounce- ment. When an actual test of the meaning of the ministers' statement occurred, the Home Ministry retreated declaring that the government was interested
only in curbing illegal acts connected with production control and not in deciding the legality of production control itself.

The first democratically elected government in Japan took office in May. At his firstpress conference,
Premier Yoshida firmly indicated his opposition to production control. The uncertainty among Japanese government officials over SCAP's attitude toward limitation on labor activity was relieved when SCAP ini-
tiated a restriction on mass demonstrations.

The first unkind word to labor from General MacArthur came after nine months of occupation when he warned that demonstrations, such as the boisterous food protests, would not be permitted. This move gave the government assurance that SCAP would not necessarily support all actions by labor and might approve a limitation on production control. In transmitting SCAP's views on public disorder to the people, the
Japanese government took the occasion to speak out against production control as well.

The formal statement of opposition to production control came on June 10. No one was surprised: the unions continued vociferous opposition and employers cheered lustily. It is significant of the deep-rooted
Japanese respect for pronouncements of the premier or cabinet that most people considered the issue settled. The weakness of the legislative and judicial branches of the Japanese government had always in effect established the executive's actions as law. Only a few realized that the Diet would have to pass a law which SCAP must approve and that the question could be taken to the courts after a law was enacted.

C.I.U. Protests Statement

The government's pronouncement on production control was not interpreted to mean that all cases would be outlawed but rather that the limits of police tolerance would be narrowed. The newly organized Congress of Industrial Unions immediately defied a ban on production control and urged its members not
to strike when production was so badly needed inJapan. Arguing that the government was concerned with the maintenance of public order as well as the production level, the cabinet considered a plan to delegate to a third party the management of factories whose owners refused to produce. Increasing emphasis was placed on the settlement of disputes through arbitration machinery. Nevertheless, the number of
cases of production control continued to increase.

The Yoshida Cabinet's statement clearly had not settled the problem of production control, but before any further policy decisions could be made, the matter was taken out of Japanese hands and made a matter of occupation policy as well as an international issue, At the ninth session of the four-power Allied Council
The first democratically elected government in in Tokyo, the Soviet delegate, General Derevyanko, Japan took office in May. At his firstpress conference, submitted a list of twenty-two recommendations on labor legislation to General MacArthur. Among the Russian proposals was one which would permit workers to take over any enterprise that closed without paying dismissal allowances to its employees. George Atcheson, representing General MacArthur, attacked the Soviet proposals.

In particular, the Soviet sugges? tion regarding production control was sharply criticized by SCAP which, heretofore, in keeping with its labor policy, had been strictly neutral on the issue. The SCAP statement said: "This measure of pre- emption and practical confiscation of property without due recompense violates the law of property rights providing for due compensation for seizure of property. So far as is known, no such provision exists inany nation of the world. Even in the Soviet Union it is believed most doubtful that such measures are provided for or permitted."

Results of SCAP Repudiation

The SCAP statement left no doubt that if production control faces a legal test, SCAP will support a
decision which rejects it. At present the proponents of production control still maintain that it is lawful,
although government officials tend to treat it as an illegal weapon. No longer a novelty, production control does not receive the publicity of its early days but the number of cases in July, when the SCAP repudiation occurred, was larger than in June. The immediate problems created by the present strikes are so much more serious than those raised by production control that an ultimate test on the latter will probably be delayed.

If production control is outlawed, the unions, in protest, will turn to strikes to enforce their demands, but the spirit that gives rise to production control will continue. Pressure for labor participation in industry, an outgrowth as well as an assumption of production control, will not slacken. As a result of the successful
use of production control, many union contracts have given labor a voice in the direction of enterprises,
ranging from advisory powers in matters of personnel to an equal voice with management on questions of
Profit-sharing has gained favor as a means of giving labor more interest and responsibility in industry. In the long run, these indirect results of production control are likely to be more important than the unorthodox technique of enforcing demands.