During the transition from balanced to unbalanced growth, the social landscape of Japan was transformed. It was transformed because, under dualistic growth, innovating sectors grew rapidly and noninnovating sectors hardly advanced at all. It was transformed because segmentation in factor markets developed. Innovating industries had access to labor and capital services that were unavailable to laggard sectors. And it was transformed because of the growing concentration of assets: zaibatsu and landlords possessed land, equipment, and structures. Tenant farmers and blue-collar workers did not. In short, the distribution of opportunities and the distribution of rewards--in the form of income flows and wealth--was becoming increasingly unequal as balanced growth gave way to unbalanced growth. This disrupted society. 1
Most of the social tension unleashed in Japan after the upswing of the second long swing was due to the domestically driven economic evolution of the country, and the accompanying switch from balanced to unbalanced growth. International factors played a role as well. Importing foodstuffs from Korea and Taiwan undercut domestic agriculture. The breakdown in trade and the drift toward autarky hurt exporters of raw silk and textiles alike. The United States, increasingly protectionist after the collapse of the stock market in 1929, forced voluntary export restraints upon Japan's cotton textile industry. Exports of raw silk to the United States plummeted after 1930. Commonwealth Preference was implemented in the British Commonwealth after the Ottawa Conference of 1932. As a result, Japan lost markets in Canada, the United Kingdom, Africa, and Asia.