Chalmers Johnson - MITI and the Japanese miracle

The high-growth system, like the basic priorities of the state, was not so much a matter of choice for Japan as of necessity; it grew out of a series of economic crises that assailed the nation throughout the Showa * era. The most obvious of these, in addition to the financial panic of 1927 and the oil shock, include the invasion of Manchuria in 1931, the fascist attacks on capitalism during the 1930's, the war with China from 1937 to 1941, the Pacific War, the collapse of the economy in 1946, the Dodge Line of 1949, the postKorean War recession of 1954, the trade liberalization of the early 1960's, the recession of 1965, the capital liberalization of 196776, and the health and safety crises of the early 1970's. It is of course gratifying that Japan ultimately gained a powerful conception of how to achieve its priorities and then applied this conception with rigor and thoroughness. But it would be to reason in an ahistorical and ill-informed manner to fail to note that

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Japan's high-growth system was the product of one of the most painful passages to modernity any nation has ever had to endure.

It may be possible for another state to adopt Japan's priorities and its high-growth system without duplicating Japan's history, but the dangers of institutional abstraction are as great as the potential advantages. For one thing, it was the history of poverty and war in Japan that established and legitimized Japan's priorities among the people in the first place. The famous Japanese consensus, that is, the broad popular support and a willingness to work hard for economic development that have characterized the Japanese during the 1950's and 1960's, is not so much a cultural trait as a matter of hard experience and of the mobilization of a large majority of the population to support economic goals. The willingness of the Japanese to subordinate the desires of the individual to those of the group is markedly weakening as generations come on the scene who have no experience of poverty, war, and occupation. To date Japan has not faced the egalitarian problems of other states for the simple reason that all Japanese were made equally poor by the war and postwar inflation and because, for all practical purposes, it bans immigration into its social system.

The priorities of the Japanese state derive first and foremost from an assessment of Japan's situational imperatives, and are in this sense a product not of culture or social organization or insularity but of rationality. These situational imperatives include late development, a lack of natural resources, a large population, the need to trade, and the constraints of the international balance of payments. It may be possible to borrow Japan's priorities and institutions, but the situational nationalism of its people during the 1950's and 1960's is something another people would have to develop, not borrow. During the 1920's and 1930's Japan tried to solve the economic problems it faced by handing over to the state the responsibility for economic development. It goes without saying that what the state did during the 1930's made the situation worse, not better, but the fact that there may have been preferable alternatives to the ones adopted does not detract from the rationality of the priorities. The same situational imperatives still exist in Japan today, even though they have been mitigated by overseas investment, trade surpluses, diversification of markets, and so forth. Nurturing the economy has been a major priority of the Japanese state because any other course of action implied dependency, poverty, and the possible breakdown of the social system. Regardless of the drastic changes of political regime that have occurred during

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the course of the Showa * era, economic priorities have always been at or near the top of the state's agenda, and this is a constant that is unlikely to change.

Perhaps surprisingly, in light of the determined efforts of the American occupiers to change Japanese economic institutions, a considerable degree of continuity also exists throughout the Showa era in the means adopted by the state to achieve economic development. The great discontinuity is of course in the discredited reliance on military force to achieve economic security via imperialism. This failed so disastrously that after 1945 it was totally repudiated. But this does not mean that the strictly economic development policies attempted during the militarist era were or should have been repudiated. Instead of being rejected, they came to form a repertoire of policy tools that could be used again after peace and independence had been attained. There is actually nothing surprising about this: just as the activism of the postwar American state had its roots in the New Deal and just as the totalism of the postwar Soviet state had its roots in the Stalinism of the First Five Year Plan, so the developmentalism of the postwar Japanese state had its roots in the economic initiatives of the 1930's. In this sense the experience of the 1930's and the 1940's was not by any means totally negative for postwar Japan; these were the years in which the managerial tools of the developmental state were first tested, some being rejected and others proving useful. Overcoming the depression required economic development, war preparation and war fighting required economic development, postwar reconstruction required economic development, and independence from U.S. aid required economic development. The means to achieve development for one cause ultimately proved to be equally good for the other causes.

There are striking continuities among the state's various policy tools over the prewar and postwar years. Yoshino and Kishi discovered industrial rationalization during the late 1920's as a means to overcome the recession; their protégés Yamamoto, Tamaki, Hirai, Ishihara, Ueno, Tokunaga, Matsuo, Imai, and Sahashi applied it again during the 1950's and 1960's to achieve modern, competitive enterprises. During both periods the state attempted to replace competition with cooperation, while not totally losing the benefits of competition. Governmental control over the convertibility of currency lasted uninterruptedly from 1933 to 1964, and persisted even after that time in attenuated forms. The Petroleum Industry Law of 1934 is the precise model for the Petroleum Industry Law of 1962. The plans and planning style of the Cabinet Planning Board were carried over to the

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Economic Stabilization Board and the Economic Planning Agency, particularly in their use of foreign exchange budgets to implement their plans. MITI's unique structural featuresits vertical bureaus for each strategic industry, its Enterprises Bureau, and its Secretariat (derived from the old General Affairs Bureau of MCI and the General Mobilization Bureau of MM)date from 1939, 1942, and 1943, respectively. They continued to exist in MITI down to 1973 unchanged in function and even, in some cases, in name. Administrative guidance has its roots in the Important Industries Control Law of 1931. Industrial policy itself was, of course, as much a part of the Japanese governmental lexicon in 1935 as it was in 1955.

Perhaps the greatest continuity is in terms of the people who executed the state's industrial policy. Yoshino, Kishi, Shiina, Uemura, and virtually all other leaders of politics, banking, industry, and economic administration were prominent in public life before, during, and after the war. The continuities between MCI and MITI are not only historical and organizational but also biographical. The late 1970's marked the end of an era, but the change above all was a change of generations: the top leaders of the bureaucracy were no longer men who had experienced service during wartime and the postwar occupation. The new officers of MITI during the 1980's will be young Japanese born during the 1960's, and their easy familiarity with peace and prosperity makes them different from all other Japanese born during the preceding years of the twentieth century.