Wednesday, July 26, 2017

Honda Motor's Founder Behaved and Spoke Like an Ayn Rand Hero

Stuart K. Hayashi

 A Honda Motor logo; image courtesy of Pixabay.

Much of this blog post, especially the section on Soichiro Honda, is adapted from a Facebook Note I originally published on November 27, 2009.

Back in January of 2003, Thor Halvorssen -- who would later go on to found the Oslo Freedom Forum -- asked the question, "Is John Galt Venezuelan?" He was referring to how, at the start of the year -- back when The Guardian (1, 2, 3, 4, 5, 6, 7), Bernie Sanders, Michael Moore (1, 2, 3, 4, 5), Jeremy Corbyn (1, 2, 3, 4), Noam Chomsky, Salon magazine, Anita Sarkeesian sidekick Jonathan McIntosh, and Nobel Prize-winning former World Bank economist Joseph Stiglitz were still singing Hugo Chavez's praises -- there was already a noble rebellion underway against the Marxist dictatorship. The nation's largest labor union teamed up with the Chamber of Commerce to effect a nationwide strike to force a referendum on Hugo Chavez's power.

Amy Chua, who would eventually become an overrated darling to the USA's social conservatives and its political Right, inaccurately proclaimed at the time that the strike "was instigated by Venezuela's wealthy business elite," specifically Venezuela's middleman minority that is wealthier than the majority ethnic population, comparable to Jews in the West, "Chinese in Indonesia, whites in Zimbabwe and Indians in Kenya..." Hence Amy Chua sneered that the strike's leitmotif amounted to "Power to the Privileged." We know the unfortunate outcome:  Chavez and his Marxist regime remained in control, and now we see the final results of that, results so terrible that not even The Guardian and Salon can cover them up.  As what is going on in Venezuela very much mirrors the events described in Atlas Shrugged, Thor Halvorssen's question was prescient.  And it inspires me to ask a similar question:  Is Hank Rearden Japanese?

While Japan is famous for its commercial success, it is not a culture that immediately comes to mind when one inquires as to which countries other than the United States does one most expect Ayn Rand's philosophy to gain popularity.  Since the Middle Ages, Japan has been known for its social collectivism, and that has not changed even as Japan emerged as a liberalized commercial republic subsequent to the second World War.  Throughout the 1980s, many politically collectivist American commentators even proclaimed that for the United States to reclaim its competitiveness, American companies should learn to embrace Japan's cultural collectivism.  Yes, Japan is commercially successful, they said, but one should not credit laissez-faire individualism for this.  Rather, Japanese business succeeds exactly because Japanese are taught that the individual must be subordinated to the social collective -- that the individual must sacrifice for the well-being of the corporation and, far better, sacrifice for the society and the wilderness ecosystem at large.  These same American collectivists also added that much of Japan's success should be attributed to government interventions on the part of MITI (the Ministry of International Trade and Technology); we shall revisit this claim about MITI by the end of this post.

Japanese Business Succeeded Because of Collectivism and Conformity? 
Representative of the collectivist mindset for which Japan is known are these remarks from Mitsubishi managing director Tachi Kiuchi,

The economic bottom line only exists to feed the social bottom line. 
My philosophy is this: We don't run our companies to earn profits. We earn profits to run our companies. . . .

That suggests the final lesson I learned -- so far -- from the rainforest: 
The mission of business -- the mission of civilization -- is to develop the human ecosystem sustainably. . . . What I learned from the rainforest is easy to understand.. . . Consume less, and be more. It is the only way. . . . They are the Japanese omote and ura, the Chinese yin and yang, Christianity and Islam, product and process, economy and ecology, mind and spirit -- two halves. 
Only together can we make the world whole [emphases Kiuchi's]. 

The website that published those remarks describes Kiuchi rather disingenuously as "one of Japan's most iconoclastic corporate executives." Iconoclasm is not demonstrated in the remarks the site published -- those are platitudes spoken by almost every Asian businessman, probably by almost every Asian-American businessman.  That very collectivist mindset is described very negatively by an actual Japanese iconoclast, Masao Miyamoto, in his worthwhile book Straitjacket Society:  An Insider's Irreverent View of Bureaucratic Japan.  He warns,

The [government] bureaucracy is the biggest trade barrier to entry into the Japanese market, since the bureaucracy controls the entire market through a system of regulations and permits. If the market were truly open, it would enrich the lives of consumers in both Japan and the West. But this would mean downsizing and restructuring, to which the bureaucrats would never agree. . . .  
To expand Japan Inc., the [government] bureaucracy introduced the philosophy of messhi hoko, or self-sacrifice for the sake of the group. This philosophy requires the subordination of individual lives to the good of the whole. Since all Japanese invariably belong to some sort of group, through this philosophy they end up sacrificing their personal lives, voluntarily or otherwise [New York: Kodansha International, 1994), 20].

Contrary to the American left-wingers who boosted Japan in the 1980s, it was not because of that general collectivist mentality, but in spite of it, that Japan ascended to prosperity in the postwar period.  Japan indeed has had its share of independent-minded freethinkers who are comparable in stature to Thomas Edison, Steve Jobs, and Polaroid founder Edwin Land.  In this post I will provide case studies of two Japanese individualists in particular who behaved very much like Ayn Rand heroes -- the latter of whom even talked like an Ayn Rand hero.

"It Seems Like Serious Inventors...Get Persecuted"
Toyota Motor Corporation was started in 1937 by Kiichiro Toyoda, but the family fortune behind this company was built much earlier by Kiichiro's father, Sakichi Toyoda.  Growing up during the Meiji Restoration, as the old shogunate's power waned and gave way to openness to Western technologies and imports, Sakichi was enamored with industrialization.  Tinkering with his grandmother's hand loom, Sakichi directed his efforts and attention toward devising methods to improve upon its design.  As I wrote earlier, innovative entrepreneurs seldom start out by saying "First I'm an entrepreneur; now that that's settled, I have to figure out what to sell..."  Rather, the innovator simply started out as some weirdo who was really obsessed with something and then later developed a strategy for monetizing that obsession.

At the start, Sakichi was almost entirely alone in having confidence in this project.  His father was a carpenter and, as was customary, the father expected Sakichi to follow in his footsteps and become a carpenter as well.  Sakichi instead pursuing this foolhardy mission broke Toyoda Senior's heart, the only consolation being that Sakichi applied what he had learned of carpentry to the fashioning of wood for his looms.  As everyone knew everyone else in this small village, the other villagers did not take kindly to this young inventor showing such impertinence to their patriarchal neighbor, to the man who provided the seed that brought Sakichi into existence in the first place. Sakichi's breach with tradition caused his neighbors to view him as strange at best and selfish at worst.

As elaborated by a book officially approved by the company, "Despite opposition from his father and many of the villagers, who largely regarded him as an eccentric, Sakichi's enthusiasm for inventing only grew" (Toyota: A History of the First 50 Years, [Tokyo, Japan: Toyota Motor Corporation, 1988], 25).  Sakichi's nephew Eiji, who would go on to become Toyota Motor's CEO, confirmed in his own autobiography that Sakichi was "regarded as an eccentric all his life..."

Such social disapproval and ridicule did not daunt Sakichi; he forged ahead.  His improvements on hand looms led to his development of various automated looms.  Although Japan still had a reputation back then for producing low-quality items, Sakichi's looms were coveted even in the West.

Reminiscing of his early entrepreneurship, Sakichi said, "I was like a man possessed. People around me probably thought I was some kind of a madman" (ibid.). It appears that Sakichi would have appreciated the first several paragraphs of Howard Roark's courtroom speech, as Sakichi concurs with the general thrust of them:

It seems like serious inventors always end up being poor and being cut off from others; sometimes they even get persecuted. It’s as if an inventor has to have his fill of hardship before he can fulfill his ambitions [ibid, 26].

Sakichi gained success as an inventor of power looms but his ambitions were not sated.  Upon a visit to the United States, he caught his first sight of an automobile.  Marveling at it, he understood that this new machine would be the future of civilization.  His son, Kiichiro, decided to become an engineer and inventor as well.  However, in his final years, Sakichi told Kiichiro that the next great industry in Japan would be the production of automobiles, and that it would ultimately be more lucrative than the loom business.  Taking such wisdom to heart and mind, Kiichiro took the money his father left him and founded the Toyota Motor Corporation.

Toyoda is Japanese for "rice field," and Kiichiro thought that Japanese consumers would not be able to associate rice fields mentally with automobiles, and that is why, for the sake of convenient branding, he gave the company the name Toyota with a T instead of Toyoda with a D.

Kiichiro's shifting of investment capital from the loom business to a new auto plant was not something that his father's business associates immediately commended; they had their doubts.  As Toyota's official history notes (p. 47),
...Kiichiro [Toyoda] asked Risaburo Toyoda [his father's old company] to convene an emergency board of directors meeting. At the meeting, Kiichiro submitted his plan to move into auto production and asked the board to call a general stockholder meeting to obtain approval. ... Aware that even Mitsui and Mitsubishi had abandoned their efforts to enter the industry, some directors opposed the idea, but Kiichiro argued his case convincingly.

At the motor company, the trend of innovation continued.  Kiichiro found assistance there from his cousin -- and Sakichi's nephew -- Eiji Toyoda, also an engineer.  In 1950, Eiji got to tour a Ford Motor Company factory in Detroit.  At the time, Toyoda Motor could only turn out 32 auto units a day, whereas Ford produced 8,000 units a day.  For a period of six weeks Eiji pestered the engineers and assembly workers with questions.

Through his research, Eiji ascertained that the secret to maximizing high-quality output had to do with the system of inventory-taking.  Eiji and Kiichiro thus pioneered in using Just-In-Time (JIT) Inventory.  By timing every step of process so that new auto parts arrived at the plant at precisely the right moment where they would be added to production, Toyota managers could efficiently move the highest number of quality-controlled units within the very limited factory space that they had.  Eiji and Kiichiro were able to have this process commence speedily, for they had the assembly line workers signal to one another using special cards with special labels, the special labels indicating which step of the assembly process they were presently in, and indicating which auto parts immediately needed to be resupplied.

By 1980, the roles were reversed -- Ford Motor Company sent 8,000 engineers to a Toyota plant to take notes on Toyota's inventory system.  As I said above, Eiji Toyoda would succeed his cousin as CEO (Mark Weston, Giants of Japan: Lives of Japan's Great Men and Women, [New York: Kodansha International, 1999], 58).  To this day, Just-In-Time Inventory is employed with the production of a variety of products, including personal computers.

Although the Toyodas exhibited independence in their business decisions,  they were not so independent in their ethical philosophies.  When Kiichiro laid out the corporate philosophy of Toyota Motor, it sounded much the same as Mitsubishi's Tachi Kiuchi, mouthing the same platitudes about the company's growth being justified by nothing more than the collective benefit of society as a whole.  The Toyodas were very much like Howard Roark in their professional choices, but not so much in their personal philosophies of what constitutes ethical living.  However, Japan has had at least one inventor-engineer-entrepreneur who was not only like an Ayn Rand hero in his professional choices, but even talked like an Ayn Rand hero when explaining the philosophy behind his overall approach.  That was Soichiro Honda, who founded Honda Motor Co., Ltd., decades after Toyota's head start.

"To Hell With the Specified Industry Promotion Law!"
Twelve years Kiichiro Toyoda's junior, Soichiro Honda started off as a boy who was monomanical about machines, particularly motorcycles and automobiles.  On days when he was particularly inspired in his tinkering, he lost track of time, spending endless hours in the garage and, in the words of one journalist, seeming "a hermit" (Tesuo Sakiya, Honda Motor:  The Men, the Management, the Machines, trans. Kiyoshi Ikemi, [New York:  Kodansha International, updated 1987 mass market paperback edition {1982}], 54).  Soichiro eventually decided he wanted to start his own business making vehicles of his own design; he had to decide between motorcycles and automobiles. He chose the former. His reasoning was that in the 1950s, very few Japanese households could afford a whole automobile, but a motorcycle was within their price range.

 After having settled upon that, Soichiro encountered other problems.  There was still a great social stigma against motorcycles, especially in Japan. First, they were commonly associated with criminals, specifically motorcycle gangs.  Secondly, the engines were considered too loud; no self-respecting Japanese person wanted to ride around on a vehicle that disrupted other people's peace and quiet.  With his engineering skills, Soichiro devised a very benign-looking motor bike with a silent engine.  (If you come across a motorcycle today with a roaring engine, be aware that the noisiness is not an inexorable consequence of something that motorcycle engines must do to function; the owner might have gone out of his way to supe it up to call attention to himself.)  Thanks to the marketing genius of his investor and partner Takeo Fujisawa -- himself known as "a loner" -- Soichiro was able to convince middle-class households that motorcycles were respectable enough for them to purchase.   To demonstrate the safety of his own models, Soichiro entered his motorcycles in official industry-sponsored races . . . and drove the motorcycle himself in many of those races!

For his part, Takeo Fujisawa cautioned against trusting in someone just because he seems to be in a position of social authority:
"President"...isn't a rank expressing greatness in a person. When some people become president, however, they start strutting about like they're field marshal. President is the most hazardous occupation known to man.
Honda motorcycles sold well, but this was not enough for Soichiro.  In 1963 he announced that at last he could take his profits and re-invest them as capital for the production of what he wanted most of all:  automobiles. "I am not satisfied with being number one only in the motorcycle world," he explained. "Progress is when you go forward, when you keep graduating from one stage to another" (qtd. by Mark Weston, Giants of Japan, 46).

Yet Soichiro's dream of producing automobiles faced another obstacle -- the government.  Doing the bidding of the regulatory agency known as MITI (the Ministry of International Trade and Industry), the Japanese legislature -- called "the Diet" -- sought to pass a regulation restricting competition.  MITI decided that Japan should only have three auto manufacturers -- Toyota, Nissan, and a third one that would result from the State-forced merging of all the smaller auto companies.  As one website tells the story,
MITI and the Department of Transportation tried to discourage Honda from adding to the number of companies, but he persisted. He won MITI's permission by coming out with a low-priced small sportscar, the S 500, which was different from anything produced by the other companies [that is, Soichiro initially tried to exploit a loophole; the S 500 was so much smaller than conventional automobiles that he hoped he could get away with having it classified as a type of vehicle not subjected to the regulation over whom could manufacture conventional automobiles]. He followed it up with other sports models. His company was still very small, producing only three thousand cars in 1966 -- half of what Toyota was turning out in a week.

This is from Soichiro's own recounting of these events:
I deluged him [the MITI bureaucrat] with complaints, because I couldn't understand it at all. To hell with the Specified Industry Promotion Law! I had the right to manufacture automobiles, and they couldn't enforce a law that would allow only the existing manufacturers to build them while preventing us from doing the same. We were free to do exactly what we wanted. Besides, no one could say for certain that those in power would remain there forever. Look at history. Eventually, a new power would always arise. I shouted at him angrily, saying that if MITI wanted us to merge (form a joint venture with another company), then they should buy our shares and propose it at our shareholders' meeting. After all, we were a public company [he means a privately owned company that is publicly traded on the stock market]. The government couldn't tell me what to do.

The government couldn't tell him what to do? If only! As always, the government most certainly did tell him what to do.  Fortunately, Soichiro won:

The basic MITI policy regarding Japan's car industry was compiled into the Temporary Measures Bill for the Promotion of Specified Industries in March 1963, and was submitted to the 43rd Session of the National Diet. However, the session was adjourned in July without a resolution. The bill was resubmitted to the 46th session starting in January 1964, but did not pass. The bill was eventually abandoned without anyone really knowing its ultimate destiny.

Justice prevailed, which is why the economy did as well. Can you imagine how much worse off Japan, the USA, the planet, and common decency would have been had that regulation been enacted?

"The Most Important Thing for Me . . . Is Me! 😃"
On January 12, 1987, the New York Times published an inspiring article about the man.  Susan Chira interviewed him first-hand, and the Times published the English translations of his replies to Ms. Chira's inquiries.  These are among the tidbits from Soichiro published:

  • "Generally speaking, people work harder and are more innovative if working voluntarily..."
  • "'I think it's very important to be sensitive to seemingly trivial psychological matters."
  • "I have some ideas. But I always find out that younger people have done them already. Young people are wonderful -- I just can't beat them. They've learned from our experience, and then they add their own ideas. Many older people talk [disparagingly] about 'kids these days.' I have never used that expression."

Still smarting over the MITI's initiative to constrain him, Soichiro protested that government regulators too often "become an obstacle when you try to do something new." I know many left-wing people who assume that all businessmen say that. Ah, if all businessmen said that, the world would be a wiser place. Soichiro's opinion is the minority opinion among businessmen throughout Japan, the United States, and the world -- it is especially the minority opinion among American businesspeople of Japanese ancestry. Most businesspeople, at least publicly, repeat the favored platitudes of Mitsubishi's Tachi Kiuchi: "Conventional wisdom is that the highest mission of a corporation is to maximize profits [lie --S.H.], maximize return to shareholders [lie; that was never the conventional wisdom, not even in the nineteenth century --S.H.]. That is a myth. It has never been true. ...profits are not an end" (emphasis Kiuchi's).

And in complete contrast to what the Japan-boosting American left-wingers were saying in the 1980s, Soichiro added that Japan's greatness could never be based on any notion of the individual sacrificing him- or herself to a corporation or a nation.  As the Times quotes Soichiro,
First, each individual should work for himself -- that's important. People will not sacrifice themselves for the company [nor should they --S.H.]. They come to work at the company to enjoy themselves. That feeling would lead to innovation. The most important thing for me, is me [boldface added].

Although the quotation is traced originally to Soichiro's interview with Susan Chira for the Times, I first heard of it from Edwin A. Locke's excellent book The Prime Movers:  Traits of the Great Wealth Creators.

Following this quotation of Soichiro's, Susan Chira adds, "This attitude has not endeared him to bureaucrats." It is also why the sub-headline of the article correctly noted that, at 80 years of age in 1987, Soichiro remained "a fiery maverick."

I showed those quotations to an Objectivist who lived in Japan and who is much more fluent in Japanese than I am.  I asked him what he thought of Soichiro's words.  That Objectivist replied that it is indeed unusual for a Japanese national to make such statements, even in old age (when it comes to moral judgment, senior citizens in Japan are given more latitude in what they say).

That Objectivist mentioned that it would have been interesting for him if what Soichiro said in the original Japanese was recorded, as he could compare the English translation and see how close the transliteration was.  After all, many of the nuances and connotations of words can change in the translation.  I agree with that Objectivist and find it unfortunate that the original Japanese recordings of Soichiro's interview with Susan Chira have been lost to posterity.  Based on the English translations that we have, though, it is legitimate to judge that Soichiro spoke like an Ayn Rand hero, at least much more so that what one would expect of almost any Japanese national (or even almost any Japanese-American other than myself).

I admire that man a lot.  Even the initials of his name are good.😉

Is Hank Rearden Japanese?
It is true that Japan has too much social conformity and cultural collectivism (actually, the most individualistic countries still have too much collectivism). However, it is entirely inconceivable that post-World-War-II Japan could have become such an innovative economic powerhouse if its private sector didn't tolerate a certain level of Roarkian originality and innovation in business. Masaru Ibuka and Akio Morita of Sony are similar to the Toyodas in that, while they did not live their private lives with the same independence as Roark, they nevertheless showed comparable independence in their professional lives. They found a technology invented in the United States called "video-tape recording" (partially invented by Ray Dolby of Dolby Stereo fame), and noticed that no one in the USA utilized it because it was too expensive. Ibuka -- an engineer and inventor himself -- put his best engineers on the project and developed a new cost-feasible model of this invention. The Masao Miyamoto I quoted earlier -- the one who wrote Straitjacket Society -- is right to praise Soichiro Honda and the Sony founders for their "Western-style leadership" (page 156).

Even from the time of the Meiji Restoration to its pinnacle of power during World War Two, Japan existed in what we would consider "Third World subsistence poverty." Were it not for some exercises in Roarkian independence from 1945 onward in the scientific, engineering, and industrial sectors, Japan would not be the wealthy powerhouse that it is today. This is why, as Yaron Brook has documented, Ayn Rand has a fan base even in Japan. Ayn Rand once told a Japanese architect, who wrote to her of his appreciation for the Fountainhead movie, that

philosophical ideas hold true for all people everywhere and...there will always be men who will respond to a philosophical truth in every country on earth. . . .  
Thank you very much for the pictures of your building which you sent me.  I was very impressed with your work and I think that it is an excellent example of modern architecture [letter to Y. Ashihari, February 26, 1951, in Letters of Ayn Rand, ed. Michael S. Berliner, (New York: Plume, 1997), 493].

A common criticism leveled at Ayn Rand goes, "Yeah, it might be a neat story, but in real life there are no people like Howard Roark, Dagny Taggart, or Hank Rearden."  Now you know better.  There was indeed a man in real life who behaved and -- judging by the English translations -- even spoke like those characters, and he succeeded in the sort of culture where one would least expect such a staunch individualist to emerge.

You can find qualities like Hank Rearden's in real people. If you have yet to find such qualities, you might want to consider searching with greater concentration and scrutiny. And it wouldn't hurt to practice such virtues oneself.😊