MITI and the Japanese miracle Page 7

  68

  If a prima facie case exists that MITI's role in the economic miracle

  Page 32

  was significant and is in need of detailed study, then the question still remains why this book adopts the particular time frame of 192575. Why look at the prewar and wartime eras when the miracle occurred only in postwar Japan? There are several reasons. First, although industrial policy and MITI's "national system" for administering it are the subjects of primary interest in this study, the leaders of MITI and other Japanese realized only very late in the game that what they were doing added up to an implicit theory of the developmental state. That is to say, MITI produced no theory or model of industrial policy until the 1960's at the earliest, and not until the creation of the Industrial Structure Council (Sangyo * Kozo* Shingikai) in 1964 was analytical work on industrial policy begun on a sustained basis. All participants are agreed on this. Amaya quotes Hegel about the owl of Minerva spreading her wings at dusk. He also thinks that maybe it would have been just as well if the owl had never awakened at all, for he concludes with hindsight that the fatal flaw of MITI's prized but doomed Special Measures Law for the Promotion of Designated Industries of 196263 (a major topic of Chapter 7) was that it made explicit what had long been accepted as implicit in MITI's industrial policy.

  69

  As late as 1973 MITI was writing that Japan's industrial policy just grew, and that only during the 1970's did the government finally try to rationalize and systematize it.

  70

  Therefore, an individual interested in the Japanese system has no set of theoretical works, no locus classicus such as Adam Smith or V. I. Lenin, with which to start. This lack of theorizing has meant that historical research is necessary in order to understand how MITI and industrial policy "just grew." Certain things about MITI are indisputable: no one ever planned the ministry's course from its creation as the Ministry of Commerce and Industry (MCI) in 1925, to its transformation into the Ministry of Munitions (MM) in 1943, to its reemergence as the MCI in 1945, down to its reorganization as MITI in 1949. Many of MITI's most vital powers, including their concentration in one ministry and the ministry's broad jurisdiction, are all unintended consequences of fierce intergovernmental bureaucratic struggles in which MITI sometimes "won" by losing. This history is well known to ministerial insidersit constitutes part of their tradition and is a source of their high esprit de corps but it is not well known to the Japanese public and is virtually unknown to foreigners.

  Another reason for going back into history is that all the insiders cite the prewar and wartime eras as the time when they learned

  how

  industrial policy worked. As will become clear in subsequent chap-

  Page 33

  ters, there is direct continuity between prewar and postwar officials in this particular branch of the Japanese state bureaucracy; the postwar purge touched it hardly at all. The last vice-minister during the period of this study, Komatsu Yugoro *, who held the office from November 1974 to July 1976, entered the ministry in the class of 1944. All postwar vice-ministers previous to him came from earlier classes, going back to the first postwar vice-minister, Shiina Etsusaburo* of the class of 1923. Wada Toshinobu, who became vice-minister in 1976, was the first without any experience of the Ministry of Munitions era.

  Nakamura Takafusa locates the "roots" of both industrial policy and administrative guidance in the controlled economy of the 1930's, and he calls MITI the "reincarnation" of the wartime MCI and MM.

  71

  Arisawa Hiromi says that the prosperity of the 1970's was a product of the "control era," and no less a figure than Shiina Etsusaburo, former vice-minister, twice MITI minister, and vice-president of the Liberal Democratic Party, credits the experiences of old trade-and-industry bureaucrats in Manchuria in the 1930's, his own and Kishi Nobusuke's included.

  72

  Tanaka Shin'ichiwho was one of the leading officials of the Cabinet Planning Board (Kikaku-in) before it was merged with MCI to form the MM, and who became a postwar MITI officialargues that wartime planning was the basis for the work of the postwar Economic Stabilization Board (Keizai Antei Honbu) and MCI.

  73

  And Maeda Yasuyuki, one of Japan's leading scholars of MITI, writes that "the heritage of the wartime economy is that it was the first attempt at heavy and chemical industrialization; more important, the war provided the 'how' for the 'what' in the sense of innumerable 'policy tools' and accumulated 'know-how.'"

  74

  Even more arresting than these comments from participants and analysts is the fact that the Japanese economy began to change in quite decisive ways around 1930. It is true that industrial policy in one form or another goes back to the Meiji era, but it is also true that after the turn of the century the government moved progressively away from its former policies of interference in the domestic economy (if not in those of the colonies or dependencies), and that for about thirty years an approximation of laissez faire was in vogue. Rodney Clark's observation is startling but true: "The organization of Japanese and Western industry was probably more similar in 1910 than in 1970."

  75

  MITI and modern Japanese industrial policy are genuine children of the Showa* era (1926-), and the present study is for that reason virtually coterminous with the reign of Emperor Hirohito. To carry the

  Page 34

  story back any further is to lose focus on the postwar economic miracle, but to fail to incorporate the history of the prewar MCI is to ignore MITI's traditions and collective consciousness. MITI men learned their trade in MCI, MM, and the Economic Stabilization Board. These were once such fearsome agencies that it was said the mere mention of their names would stop a child from crying. Admirers of the Japanese miracle such as I have a duty to show how the disastrous national experiences of the 1940's gave birth to the achievements of the 1950's and 1960's.

  Page 35

  Two

  The Economic Bureaucracy

  When the analyst discovers in the course of political research a persistent discrepancy between the stated principles and actual practices of a society, he has a strong impulse to ring the critical alarm bells to warn of a lack of legitimacy, of the operation of covert powers, or of simple hypocrisy. The end product is usually a muckraking or critical book, and the subject of Japanese politics has produced a plethora of them, by both Japanese and foreigners. I myself shall add a few items to the list of anomalies in Japanese bureaucratic life, but my purpose is not criticism. Instead, I am concerned to explain why the discrepancy between the formal authority of either the Emperor (prewar) or the Diet (postwar) and the actual powers of the state bureaucracy exists and persists, and why this discrepancy contributes to the success of the developmental state.

  Japan has long displayed a marked separation in its political system between reigning and ruling, between the powers of the legislative branch and the executive branch, between the majority party and the mandarinateand, in the last analysis, between authority and power. As a result, a discrepancy exists between the constitutional and the actual locus of sovereignty that is so marked the Japanese themselves have invented terms to discuss it

  omote

  (outer, in plain view) and

  ura

  (inner, hidden from sight), or

  tatemae

  (principle; Edward Seidensticker once proposed the word should be translated "pretense") and

  honne

  (actual practice).

  1

  Japanese and foreign observers are aware that the discrepancy generates a degree of hypocrisy or euphemism, and they often enjoy criticizing this hypocrisy. Kakuma Takashi, for example, argues that in the postwar world the business community likes to pretend that it is

  Page 36

  "yielding under protest" to the powers of MITI when it is actually doing nothing more than pursuing its traditional relationship with the bureaucracy.

  2

  Goshi* Kohei* is irritated b
y the senior business leaders who refer their decisions for approval to government section chiefs often not much older than their own grandchildren and then speak ill of them back at the Industrial Club.

  3

  Obayashi Kenji believes that the numerous "deliberation councils" (what Berger calls "policy councils," or

  shingikai

  ), in which officials and entrepreneurs coordinate policies, are really covers for MITI's "remote control" of the industrial world; and he speaks somewhat cynically of ''Japanese-style free competition."

  4

  And a foreign analyst, John Campbell, shrewdly draws attention to the fact that "nearly everyone involved with Japanese budgeting finds it in his interest to magnify the role played by the majority party."

  5

  The origins of this separation between power and authority are to be found in Japan's feudal past and in the emergence of the developmental state during the Meiji era. For reasons that will be made clear in a moment, Japan in the late nineteenth century adopted for its new political system a version of what Weber called "monarchic constitutionalism," the form of government that Bismarck gave to imperial Germany. The Bismarckian system is described by Weber's editors as follows: "The prime minister remained responsible to the king, not to parliament, and the army also remained under the king's control. In practice, this arrangement gave extraordinary power first to Bismarck, then to the Prussian and Imperial bureaucracy, both vis-à-vis the monarch and the parliament."

  6

  Japan had some reasons of its own, in addition to Bismarck's personal influence on a few key Meiji leaders, for finding this arrangement preferable to the other models it looked at in the course of its "modernization." One of the most serious consequences for Japan of adopting this system was its decision in 1941 to go to war with the United States and Great Britaina decision in which neither the monarch nor the parliament participated. But what is perhaps most important more than a generation after the Pacific War is that the system persisted and became even stronger, even though it was formally abolished by the Constitution of 1947.

  The ancestors of the modern Japanese bureaucrats are the samurai of the feudal era. During the two-and-a-half centuries of peace that the Tokugawa shogunate enforced, the feudal warriors slowly evolved into what one group of scholars has called a "governmentalized class" or a "service nobility."

  7

  Constituting some 6 to 7 percent of the population, these samurai did not yet form a modern bureaucracy, if by this one means what Weber has called the most rational and imper-

  Page 37

  sonal form of state administration. For Weber true bureaucratic power is vested in an "office," and bureaucratic power in this sense "does not establish a relationship to a

  person

  , like the vassal's or disciple's faith under feudal or patrimonial authority, but rather is devoted to

  impersonal

  and

  functional

  purposes."

  8

  During the Tokugawa period the samurai became administrative officials rather than warriors, but they still occupied a status for which they received a stipend, rather than offering a particular competence for which they were paid a salary.

  9

  This emphasis on status rather than on the performance of an occupation was passed on under the Meiji Constitution to the bureaucrats, who enjoyed such a position legally until the Constitution of 1947 ended it, and to

  their

  successors, who still enjoy it informally more than thirty years later because of the persistence of tradition and bureaucratic dominance in postwar Japan.

  The Meiji leaders did not plan to perpetuate samurai government under a new guise, nor for that matter were they much interested in creating a modern state officialdom. Their reasons for creating a "nonpolitical" civil bureaucracy were, in fact, highly political. They were trying to respond to strident public criticism of the monopoly of power by the two feudal domains (Satsuma and Choshu*) that had led the successful movement against the Tokugawa shogunate, and the corruption that this domination was generating. They also hoped to demonstrate their "modernity" to the West in order to hasten revision of the unequal treaties that had been forced on Japan. And, most important, they wanted to retain authoritarian control after 1890, when the new parliament (National Diet) opened and political parties began public campaigning for a share of power.

  10

  The state bureaucracy and the cabinet both preceded the Meiji Constitution, the Diet, and the formation of political parties in Japan by some five to twenty years. The results were predictable. In seeking to forestall competitive claims to their own power by the leaders of the political parties, the Meiji oligarchs created a weak parliament and also sought to counterbalance it with a bureaucracy they believed they could staff with their own supporters, or at least keep under their personal control. But over time, with the bureaucracy installed at the center of government and with the passing of the oligarchs, it was the bureaucratsboth military and civilianwho arrogated more and more power to themselves.

  11

  The bureaucrats of prewar Japan were not liked, but they were respected. Many Japanese had resented the persistence of Satsuma and Choshu privilege after Japan became a unified nation, and the new bureaucracy, expertly trained and open to all men who had demon-

  Page 38

  strated their talent in impartial examinations, was clearly an improvement over Satsuma and Choshu * dominance. The political parties were an alternative to state officialdom, but they always suffered from the weakness of having arrived second on the political scene. The bureaucracy claimed to speak for the national interest and characterized the parties as speaking only for local or particular interests. As Japan industrialized, the parties slowly gained clout as representatives of zaibatsu and other propertied interests, but they never developed a mass base. One reason was the careful control exercised over the enlargement of the franchise (see Table 2). Another reason was that one house of the Diet, the House of Peers, was dominated by the bureaucracy, which arranged for the direct Imperial appointment of its senior retired members to the Peers, where they easily outclassed the titled members in political skill.

  12

  In short, whether the military and civilian bureaucrats of the post-Meiji era were really the most capable leaders of the nation became a moot question: they had effectively preempted most of the centers of power from which they might be challenged. There were many fights, and the final outcome was not a foregone conclusion, but ultimately a bureaucratic career became the most important route to political power. For example, not a single minister of the Tojo* cabinet, installed in October 1941, had served in the Diet as an elected member.

  Prewar bureaucrats were not "civil servants" but rather "officials of the Emperor" (

  tenno

  *

  no kanri

  ) appointed by him and answerable only to him. Imperial appointment bestowed on them the status of

  kan

  , the primitive meaning of which in its Chinese original is the residence of a mandarin who presides over a city, and which still retains some of this early meaning in its contemporary usage to refer to judges (according to one legal authority, kan connotes officials with power who are not highly constrained by law).

  13

  This high social status linked them back in time to the samurai and forward to the postwar bureaucrats in their possession of intrinsic authority rather than extrinsic, or legal-rational, office. It meant that they were largely free of external constraints. "The present-day bureaucrat," writes Henderson, "is not, of course, identical with the warrior bureaucrat of the Tokugawa regime or even the new university-trained Imperial bureaucrat of prewar Japan. But they have all, until recently, been largely above the law in the sense of independent judicial review." Rather than a rule of law, Henderson finds that "a rule of bureaucrats prevails.''

  14

  Isomura and
Kuronuma concur. Even in the postwar world, they argue, Japan has had an administration "for the sake of the citizenry" and not an administration carried out with the "participation of the citizenry." In

  Page 39

  TABLE

  2

  Changes in the Size of the Japanese Electorate, 18901969

  Election

  Date

  Qualified voters (millions)

  Population (millions)

  Percent

  Voting requirements

  1

  July 1, 1890

  .45

  39.9

  1.3%

  Males, over 25, who pay more than ¥15 in direct, national taxes

  a

  7

  August 10, 1902

  .98

  45.0

  2.18

  Same, except ¥10 in direct taxes

  14

  May 10, 1920

  3.1

  55.5

  5.50

  Same, except ¥3 in direct taxes

  16

  February 20, 1928

  12.4

  62.1

  19.98