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The compression affect:

“That which doesn’t kill you, makes you stronger.”*  – (attributed to) Nietzsche

Physics tells us that heat is generated from the friction caused by particles colliding with each other when trapped in an enclosed chamber.  If the chamber is made smaller or the number of particles increases the amount of heat generated will increase due to higher rates of collision and the friction such collision causes.

One could argue that all change occurs in a state of compression, be it animal, mineral or human.

An outstanding easy example are diamonds.  They are made of coal that has been subject to intense pressure over time. The resulting pressure causes the change from coal to diamond.

Another example could be schools. Schools are compression zones that transform uneducated people into literate, educated people. (For this reason, I suspect distance education to be of limited efficacy. Certain kinds of education can work in this format – teaching someone who loves or values a subject or using a new kind of format such as the Khan Academy. But teaching algebra to someone who hates math is less likely to succeed in an uncompressed environment. Without any external pressure to force them to concentrate and worth through the explanations and the calculations, they will simply click on to something more enjoyable for them.  Students are notorious for counting down the seconds for the final bell to ring at the end of the day so that they can exit from the discomfort of the compression that is school.)

In history the compression effect occurs in Europe at a macro-continental scale. After the fall of the (Western) Roman Empire Europe was politically fragmented. These fragmented states are  the equivalent of particles in physics, while the continent functions as an ersatz chamber.

For the next 1000 years, tiny Europe – a mere peninsula off of the Eurasian land mass, was compressed upon from almost all directions:  Turkish, Hunic and Mongol Tribes from on Europe’s eastern beam, Ottoman Turkish assault on Europe’s southeastern and southern beam, and Arabic and Moorish Muslims from in the southwest. And for a time mainland continental Europe was attacked from the west and the north by Vikings traveling across the seas. Many times Europe was nearly consumed by some of these invaders. The Moors were defeated at Pointers in 732 in a battle that some say saved an independent Europe. In the 13th century Europe was spared an invasion by the Mongols, not by victory in battle but by the death of the Great Khan in Mongolia, forcing the Mongols to withdraw to points east. Finally Europe was nearly consumed by the Ottoman Empire – twice being turned back by the lifting of Ottoman sieges to Vienna. Beginning around 1450 however, the thousand year history of compression – from without, upon particles within, –  lead Europe to eventually transform itself from being too weak, too disorganized, too fragmented, too small, to being increasingly at a competitive edge over the outside world.

Truly one of the more amazing events in history: Somehow small, tiny European states were suddenly able to carve up large empires outside of Europe. Tiny European countries were often able to carve up colonial provinces that had continental proportions.

Most of Europe’s advantage came from widespread literacy, a widespread availability of books,  a value for education, all of which contributed to Europe technological and organizational advantages. The competition between the fragmented states of Europe impelled those capacities to their highest level of refinement possible. When Europeans came in contact with non-Europeans, increasingly after 1500, the edge fell to the Europeans. Sometimes rather dramatically.

This wasn’t even the first time this occurred in Europe. Prior to the ascendency of Rome, Greece was made up of many, tiny city states. Prolonged persistent pressure was imposed by the gigantic Persian Empire. The Persians made three overt attempts at invading Greece. It managed to fail every time. Afterwords the infighting between the Greeks intensified. One example of this was the Peloponnesian war, but the Greek city states were constantly forming into various coalitions against each other beyond that war. The Persians, unable to defeat the Greeks, often then subsidized a weaker coalition to stand up to the stronger coalition, perhaps in hopes that the Greeks would weaken themselves. But then the situation boomeranged upon the Persians as the tiny Greeks managed to conquer the entire Persian empire under the leadership of Alexander the Great of Macedon (some would argue that Macedon was not technically Greek, but Alexander, who was tutored by Aristotle was most definitely Greek [at least culturally]). The constant state of competition between the Greek city states, plus the pressure from outside, impelled them to a higher state of competitiveness that, when directed out word, found no match.

Achieving a Compression Effect in Japanese Industrial Policy after World War II.

The compression effect takes place at a micro level in Japan through their use of industrial policy.

After the Meiji restoration, an oligopoly (the “oligarchs”) that favored rapid modernization to make Japan competitive with European powers, in anticipation of European invasion, came to rule Japan. This new government quickly centralized power, including the power to tax. This new power to tax was used to fund modernization schemes. Initially then, the Meiji government spent massive amounts of money in direct investment into the economy for the construction of European modeled enterprises and factories. However the mismanagement of these enterprises quickly pulled the government towards bankruptcy.  This resulted in two shifts in policy.

The first policy shift was for the Meiji government to sell off the factories and enterprises to Zaibatsu (Trading and Banking houses) that had been favorable towards the new government at cut rate prices. This provided these enterprises with professional management on the one hand, and provided the state with badly needed funds on the other hand. From that time forward the Japanese policy for promoting modernization would effectively be indirect as apposed to direct.

The second policy shift was to open up the recruitment of government policy administration to young professionals that tested high on blind civil service exams (creating a meritocracy based upon the old Chinese model for mandarins, creating a neo-manderinate government bureaucracy – insuring that government bureaucracy was run by the best talent the nation had to offer based upon the requirements of the examination system). This second shift in policy was done to stymie the build up of criticism against the oligarch regime. As the old oligarchs died out, instead of being replaced by descendants, they were increasingly replaced by professionally trained and educated bureaucrats.

After 1868, The ziabatsu (Japanese trading conglomerates based around a bank/financial center) rose and throve through association and collaboration with the government,  but they competed vigorously with each other.  This vigorous competition helped Japan avoid some of the problems and inefficiencies that are often associated with state sponsored industrialization (favoritism of a state founded monopoly; the reason Japan avoided this was that the Ziabatsu/Trading Houses existed before the establishment of the government of the Meiji oligopoly in 1868, so once they privatized government enterprises by selling them off to the Ziabatsu Japan was spared the inefficiencies of monopolies). With more than six ziabatsu emergent after 1868, even in the earliest of stages of modern Japan, a level of rigorous domestic competition was guaranteed, facilitating efficiencies even in industries that had received strong state sponsorship.  This benefit was a byproduct of the government taking an indirect, as opposed to direct, role in economic development. Had government maintained more particular control of industries, it is reasonable to assume that competition would have been discouraged and inefficiency more prevalent.

Post World War II Japanese industrial policy followed a similar though much more refined pattern.  The government might target a sector of industry, then erect barriers to imports and foreign investment (both formal and informal).  The government would then guarantee all loans made by a bank to the targeted industrial sector.  For the banks this meant risk free loans so they would scramble to add a new enterprise in the targeted sector to its keiretsu that specialized in that specific sector in which the government was encouraging the development thereof. (Keiretsus were a kind of constellation of companies arrayed around a bank, which replaced the Zaibatsu after they were broken up by the American occupation authorities after World War II, but as before, were still centered around a bank through a cross shareholding arrangement – essentially these semi-subsidiary client companies represented the investment portfolio for the bank – so a large and healthy bank would have at least one member company in its keiretsu for every major sector of the economy) .

This created a compression effect within the targeted sector:  An artificially large number of firms (the ‘particles’) would enter the (new) sector (the ‘chamber’) with an artificially high level of investment capital (at artificially low rates of interest) causing an exaggerated level of competitiveness in the targeted sector.  The net result was that Japanese firms, though new to an industry, quickly set the pace for global competitiveness in that specific industrial sector.  By way of this method Japan attained and maintained global prominence, and in some cases dominance, in a host of industries including electronics, motorcycles and automobiles for a very long time.  Of course if the government bet on the wrong industry, as it often did, it could be expensive, but the successes more than made up for the failures.  As a developing state, new industries could be somewhat predictable. Once mature, this policy is perhaps less beneficial.  (It is also worth noting that institutions and structures in “uncompressed” sectors of Japan – such as retail and distribution – were, and some might argue still are, notoriously and often extremely inefficient).

Like Europe in a macro sense, Japan’s industrial policy created in a ‘micro’ sense a compression effect that resulted it transformation to a level of competitiveness that was order of magnitudes above that which  the rest of the world was accustomed.

* The quote used here is attributed to Nietzsche’s “Twilight of the Idols.”

In regard to the opening quote, please don’t assume that I am an advocate of Nietzsche or even the postulate that this quote represents: quite the contrary, I find Nietzsche to by nihilistic and psychopathic though my knowledge of him is limited.  However the quote does work to foreshadow the effect of the mechanism that’s being demonstrated here.  The best use of an opening quote is a pregnant foreshadowing of the concepts yet to come in a given essay, and towards that, this quote suffices nicely.

If you read through the “Jurisprudence of the Carrot and the Stick” and by extension the commentaries and explanation on Common Law,  I am not an advocate for any ideology as it is nihilistic. Yet Niezsche’s work spawned or reinforced an excessive amount of roque ideological movements that have mostly proved to be nihilistic, from National-Socialism (Naziism), to Ayn Rand’s “Objectivism”, to Leo Strauss and American “Neoconservativism” and perhaps, probably, a few more.   All of this making for a pretty lamentable track record for Nietzsche.  When I meet students or recent graduates with Philosophy degrees, I like to ask them what philosophy or philosophers they liked the best and about half of them say Nietzsche.  So, maybe, there’s more and better there regarding Nietzsche than I am aware (in contrast to his name which requires 6 consonants to construct the sound of two consonants in two syllables – five consonants are used to construct the second consonant sound, so when it comes to Nietzsche’s last name there is less there phonetically then the number of letters used to construct it, at least in my humble opinion).