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From its beginning Japanese industry was marked by a scattering of large and heavily capitalized enterprises which, as their size and number increased between 1890 and 1920, became the scene of labor unrest. In historical accounts of this early period of labor relations, workers are strangely shadowy figures, considering their centrality. They come into focus mainly at moments of crisis when they are seen to be overcoming their past, increasing their consciousness both of rights and of the need for organization and class solidarity. This developing consciousness issued at last in a sudden growth of unions between 1918 and the mid-1920s.Even before this time, however, because of fear of unions and government intervention and the need to reduce the amount of labor turnover, management had begun efforts to bring workers under greater psychological control. These efforts were now intensified, and the measures adopted—welfare services, greater security of employment, semiannual bonuses, separation pay, regular raises, factory committees—aided by a stagnant economy and unemployment throughout the 1920s, were spectacularly successful. By the early 1930s the unions were everywhere in retreat from large enterprises. The victory over worker consciousness seemed won and in fact held until 1945, when, in the aftermath of national defeat, the struggle was renewed.

By-Employments, one may suppose, tend to ready preindustrial people for modern economic roles since they represent an incipient shift from agriculture to other occupations, spread skills useful to industrialization among the most backward and numerous part of the population, and stimulate ambition and geographical mobility. Although widespread in Western preindustrial societies, by-employments have been mainly treated there from the standpoint of the history of industry to the neglect of their effect on the habits, aptitudes, and outlook of fanners and their wives and children. This is partly due to the scattered and widely varied and changing forms of by-employments, which make it all but impossible to know what proportion of farmers practiced them and what part of their income they earned in this way.

There is impressive evidence that wealthy peasants contributed significantly to the success of the Meiji Restoration, the political revolution that launched Japan on her career of modernization. These rural capitalists, for such they were, helped to give the revolution direction as well as power. How otherwise is one to account for a government dominated by samurai, the elite carriers of tradition, following policies that did great violence to Japan's past and destroyed the privileged status of the warrior class? But if the influence of the representatives of rural wealth was so strong, why did they consent to a clique of warriors holding political power almost as a private prerogative for a generation after the Restoration? Despite the demand for a share in power in the eighties, they did consent and weakly accepted the Meiji constitution which sanctified authoritarian government.

As in the Middle Ages in the West, so in Tokugawa Japan (1600–1868) men were fond of explaining the hierarchical society in which they lived by comparing it to an organism. Social classes, Confucian scholars said, were like parts of the body: each had a vital function to perform, but their functions were essentially different and unequal in value. In this scheme the peasants were second in importance only to the ruling military class. Just as the samurai officials were the brains that guided other organs, so the peasants were the feet that held the social body erect. They were the "basis of the country," the valued producers whose labor sustained all else. But, as a class, they tended innately to backsliding and extravagance. Left alone they would consume more than their share of the social income, ape the manners and tastes of their betters, and even encroach upon the functions of other classes to the perilous neglect of their own. Only the lash of necessity and the sharp eye of the official could hold them to their disagreeable role. They had to be bound to the land; social distinctions had to be thrown up around them like so many physical barriers; and, to remove all temptation to indolence and luxury, they had to be left only enough of what they produced to let them continue producing.