Dissolution of Japanese Zaibatsu and Its Implication in Korean Chaebol Policy

Abstract

The Japanese economy before and during the second world war was dominated by the Zaibatsu - a few powerful families, wedded for mutual protection and advantage with influential elements of Japanese society - who controlled the major part of the industry, mining, finance and commerce of Japan, and in large part, livelihood of the people of Japan. Independent enterprises and free competition existed, but only in minor segments of the economy. Characteristically, Japan was a land of private internal economic empires featured by international and domestic cartel arrangements; pyramids of operating and holding companies reaching their apexes in top family holding companies; monopolies of basic resources, key services and strategic equipment; and control over major banking and insurance institutions. In order to reorganize Japan on a peaceful basis, it was essential to depose the Zaibatsu, break their stranglehold on economic enterprise, and give the ordinary businessman a stake in a democratic nation. Dissolution of the Zaibatsu was undertaken by the Allied Command. The objective was to build a competitive, private enterprise economy, established on the base of a widely distributed ownership. Application of the dissolution program would occur in two stages. The first was thought of as a surgical operation that would break up the combines and establish their various company units as independent competitive enterprises. Zaibatsu owners would be compensated for transferred securities, which would be sold widely to the public. If the surgical operation was to be effective, it would also have to reckon with the close-knit personnel relations of the combine's managerial staffs. For the..