One of the charactersistics of the zaibatsu was Oligopoly, the zaibatsu concentrated almost completely on the newer and more rapidly growing sectors of the economy. They operated in the fashion of oligopoly, controlling market in some product by a relatively small group of sellers. They also engage in ‘conbine’ business enterprises, the zaibatsu did not concentrate on one type of venture, but spread over a variety of fields. The zaibatsu were a group of business enterprises rather than a single great company. The combine could be a horizontal one and a vertical one. Horizontally, it spread through a variety of manufacturing or mining industries. Vertically, it spread through the different stages of activity concerned with a product.
The rise of the zaibatsu was mainly due to their abundant financial resources. They provided capital and they were able to hire skilled labour and acquire technical knowledge. Moreover, they also got the government selling enterprises to them at a very low price. The government’s willingness to give financial aid and extraordinary privileges, e.g subsidies and contracts also helped them a lot.
The zaibatsu dominated economic development after 1881. As the new Meiji governments turned to these families for financial help and commercial operations, the zaibatsu became agents for the execution of the government’s economic policy. The zaibatsu played an important part in financing the foreign wars in which Japan was engaged and in the development of the colonies. They helped to capitalize enterprises of strategic importance, at home and in the colonies and Manchuria, and most of the new large-scale industries were developed by them.
The zaibatsu served as economic spearheads in the process of economic modernization. It is difficult to see how much of the technological progress made by Japan could have occurred if there had not been organizations with great economic strength and powerful government backing. The very size and breadth of interests of the zaibatsu combines permitted them to venture into new and costly fields to develo[p large-scale enterprises, which might otherwise have gone undeveloped or been left to less efficient government management. In short, the profits from established enterprises could be effectively used by the combines as risk capital to pioneer new fields. Their great size and many-sided interests permitted an unusually high degree of economic integration.
The concentration of a large proportion of Japan’s wealth in the hands of the zaibatsu families was also probably a net economic gain. If ownership of the zaibatsu firms had been spread among a wide segment of the population, their profits might have been largely absorbed in modest rises in living standards for a large number of families. Therefore the bulk of the profit was reinvested in the expansion of the combines and could be used as risk capital to pioneer new fields.
On the other hand, the zaibatsu system offers career open to talent. The zaibatsu were marked by hierarchy, authority and unquestioning personal loyalties. However, within their business framework, ability, efficiency and education counted for a great deal. Therefore they probably offered a career more open to talent than any other part of the Japanese society. As the zaibatsu promoted rapid economic growth, his growth in turn strengthened the middle class.
As a whole, the zaibatsu actually played an important role in economic modernization. The flourishing strategic and light industry showed the success of zaibatsu in further developing in these areas. The whole economic history of Japan down to World War two proves that the zaibatsu system must have worked with considerable economic efficiency.
