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and how tax incentives for exports function to enlarge external markets at the point of domestic sales saturation. Kodama Fumio has calculated mathematically the gaps between the real trajectory and the policy-off trajectory of the Japanese automobile industry during its infant, growing, and stable phases (the data are of course not yet available for a future declining phase).
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His measures are also tools for analyzing the appropriateness and effectiveness of the various governmental policies for the automobile industry during these phases.
The controversy over industrial policy will not soon end, nor is it my intention to resolve it here. The important point is that virtually all Japanese analysts, including those deeply hostile to MITI, believe that the government was the inspiration and the cause of the movement to heavy and chemical industries that took place during the 1950's, regardless of how one measures the costs and benefits of this movement. A measurement of what MITI believes and others consider to be its main achievement is provided by Ohkawa and Rosovsky: ''In the first half of the 1950s, approximately 30 percent of exports still consisted of fibres and textiles, and another 20 percent was classified as sundries. Only 14 percent was in the category of machinery. By the first half of the 1960s, after the great investment spurt, major changes in composition had taken place. Fibres and textiles were down to 8 percent and sundries to 14 percent, and machinery with 39 percent had assumed its position of leading component, followed by metals and metal products (26 percent)."
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This shift of "industrial structure" was the operative mechanism of the economic miracle. Did the government in general, or MITI in particular, cause it to occur? Or, to put it more carefully, did they accelerate it and give it the direction it took? Perhaps the best answer currently available is Boltho's comparative appraisaclass="underline" "Three of the countries with which Japan can most profitably be compared (France, Germany, and Italy) shared some or all of Japan's initial advantagese.g., flexible labor supplies, a very favorable (in fact even more favorable) international environment, the possibility of rebuilding an industrial structure using the most advanced techniques. Yet other conditions were very dissimilar. The most crucial difference was perhaps in the field of economic policies. Japan's government exercised a much greater degree of both intervention and protection than did any of its Western European counterparts; and this brings Japan closer to the experience of another set of countriesthe centrally planned economies."
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If a prima facie case exists that MITI's role in the economic miracle
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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.
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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.
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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-
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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.
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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.
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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.