Chalmers Johnson - MITI and the Japanese miracle

The second element of the model is a political system in which the bureaucracy is given sufficient scope to take initiative and operate effectively. This means, concretely, that the legislative and judicial branches of government must be restricted to "safety valve" functions. These two branches of government must stand ready to intervene in the work of the bureaucracy and to restrain it when it has gone too far (which it undoubtedly will do on various occasions), but their more important overall function is to fend off the numerous interest groups in the society, which if catered to would distort the priorities of the developmental state. In the case of interests that cannot

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be ignored, deflected, or satisfied in symbolic waysor upon which the perpetuation of the political system dependsthe political leaders must compel the bureaucracy to serve and manipulate them.

A non-Japanese example of the kind of relationship we are looking for would be something like the American legislative branch's relationship to the wartime Manhattan Project or to the postwar nuclear submarine development program. The political system of the developmental state covertly separates reigning and ruling: the politicians reign and the bureaucrats rule. But it must be understood that the bureaucrats cannot rule effectively if the reigning politicians fail to perform their positive tasks, above all, to create space for bureaucratic initiative unconstrained by political power.

There are several consequences of this type of political system. One is that groups without access to the system will on occasion take to the streets to call attention to their disaffection (this occurred in Japan in 1960 in the antisecurity treaty riots, in the student revolts of the late 1960's, in the demonstrations against the new Tokyo airport and the government's nuclear ship project, and in the campaign against industrial pollution). These demonstrations may arise out of important interests that cannot be indefinitely ignored by the state, or they may simply reflect demands for political participation. Whatever the case, when they occur the political leaders are called upon to exercise "safety valve" functions, forcing the bureaucracy to alter priorities just enough to calm the protesters but taking most of the "heat" of the demonstrations themselves. Clever politicians will anticipate eruptions of this sort (Sato * Eisaku's strategy for the renewal of the security treaty in 1970). As long as the developmental projects are succeeding and their benefits are being equitably distributed, the political leaders should be able to deal with these problems symptomatically. Projects to call attention to the development effort and to instill pride in its successes may also be recommended (the Japanese Olympics of 1964, EXPO 70).

A major political difference between the capitalist developmental state and the communist dictatorship of development is that the capitalist state simply ignores the nonstrategic sectors of the society, whereas the communist state attempts directly and forcibly to demobilize them. The first is preferable because it avoids the unintended consequences of the presence of large numbers of police and the full apparatus of repression, which is not only wasteful of resources but is also incompatible with effective international commerce. This is certainly one lesson the Japanese learned from the 1940's.

The Japanese political system should also be distinguished from the

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bureaucratic-authoritarian regimes of Argentina, Brazil, Chile, and Uruguay. In these states the ruling elites seek to promote industrialization by excluding from power the previously mobilized economic groups and by developing collaborative relationships with multinational corporations. They do this through a technocratic political arrangement that relies heavily on coercion to enforce the rules of the game.

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Japan differs in that it is a democracy in which the politicians are chosen by the votes of the majority; its stability has rested on the ability of the ruling political party to forge a coalition of voters committed to economic growth and effective management. During high-speed growth this coalition reflected the widespread recognition of Japan's situational imperatives; during the early 1970's the coalition began to weaken markedly, but it appears to have been reinvigorated by the energy crisis and the acceptance of the need for a new shift of industrial structure. Until very recent times the Japanese also have not been hospitable to collaboration with foreign capital. The Korean developmental state, by contrast, seems to share some of the bureaucratic-authoritarian characteristics and should to that extent be distinguished from the postwar Japanese case.

Postwar Japan also differs from the market-socialist states (chiefly Yugoslavia and Hungary), where various experiments have been undertaken to try to synthesize market economics with political control. The contradictory tensions inherent in these systems are more like those of Japan during the period of attempted state control (the late 1930's and 1940's) than they are like Japan after it had regained its independence and launched high-speed growth based on public-private cooperation.

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In addition to occasional protest demonstrations, a probable further consequence of the capitalist developmental system will be the periodic occurrence of "corruption" scandals. These arise because of the separation between reigning and ruling and because of the opportunities this condition gives some insiders to exploit the development programs. As long as these scandals occur primarily among politicians and not among bureaucrats, and as long as the development effort is proceeding to the benefit of the society as a whole, these scandals will be tolerated as unfortunate but not too serious imperfections in the overall system. However, if they occur among the bureaucracy, they signal the need for quick surgery and reconstitution of the system.

The third element of the model is the perfection of market-conforming methods of state intervention in the economy. In implementing its industrial policy, the state must take care to preserve competi-

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tion to as high a degree as is compatible with its priorities. This is necessary to avoid the deadening hand of state control and the inevitable inefficiency, loss of incentives, corruption, and bureaucratism that it generates. It is probable that the market-conforming methods that actually work cannot be discovered a priori but will have to emerge from conflict between the managers of the state and the managers of the privately owned strategic industries. A cooperative relationship between the state and private enterprise is not a natural one: the state inevitably will go too far, and private enterprise inevitably will resent state interference in its decisions. When either the state or private enterprise becomes clearly dominant over the other, as occurred in Japan during the late 1940's (state dominance) and during the early 1970's (private-enterprise dominance), development will falter. One clear lesson from the Japanese case is that the state needs the market and private enterprise needs the state; once both sides recognized this, cooperation was possible and high-speed growth occurred.

Japan offers a panoply of market-conforming methods of state intervention, including the creation of governmental financial institutions, whose influence is as much indicative as it is monetary; the extensive use, narrow targeting, and timely revision of tax incentives; the use of indicative plans to set goals and guidelines for the entire economy; the creation of numerous, formal, and continuously operating forums for exchanging views, reviewing policies, obtaining feedback, and resolving differences; the assignment of some governmental functions to various private and semiprivate associations (JETRO, Keidanren); an extensive reliance on public corporations, particularly of the mixed public-private variety, to implement policy in high-risk or otherwise refractory areas; the creation and use by the government of an unconsolidated "investment budget" separate from and not funded by the general account budget; the orientation of antitrust policy to developmental and international competitive goals rather than strictly to the maintenance of domestic competition; government-conducted or government-sponsored research and development (the computer industry); and the use of the government's licensing and approval authority to achieve developmental goals.