MITI and the Japanese miracle

Page 103

gyo

*

gorika

*). Since 1927 the concept has been in almost daily use by the economic bureaucracy. At first no one knew precisely what it meant, but it seemed admirably to sum up what the MCI bureaucrats thought was needed for Japan. Yoshino has written, "All we did with 'rationalization' was to hang out a signboard as a name for our activities, but having hung out the sign, we then had to find out what it meant."

³⁶

The first government reference to the term seems to have been in one of Kishi's reports of 1926. He had been sent to Philadelphia as the Japanese representative to the 150th anniversary celebration of the United States, and he returned home via Europe. He reported on the Taylor and Ford movements in the United States for "scientific management" and "production lines," and on the promotion of trusts and cartels in Germany to improve industrial efficiency. No one paid much attention to Kishi's initial report, but with the onset of the depression "industrial rationalization" became a popular catch phrase in Japan for efforts to pull the country out of the slump. Within the ministry it became a rallying cry for the integration of industrial policy.

On July 2, 1929, the Minseito* returned to power, and Prime Minister Hamaguchi appointed Inoue Junnosuke minister of finance. Inoue proceeded to carry out his plan to lift the gold embargo, but he and other members of the government now linked the step to the industrial rationalization movement. The gold standard would tie Japan's prices to world prices, they said, and industrial rationalization would strengthen the nation's international competitive ability. Prime Minister Hamaguchi himself argued to the Commerce and Industry Deliberation Council during 1929 that "industrial rationalization is not just a matter of timely policy but must be a movement of all the people."

³⁷

On January 11, 1930, Inoue lifted the gold embargo. Whatever the theoretical merits of this policy, its timing was terrible. To pursue a deeply deflationary policy during the early months of the deepest depression the modern world has ever known could only make conditions worse. On December 13, 1931, the gold embargo was reimposed, and Japan turned to a homegrown version of Keynesian economics, pulling itself through the depression by means of governmental deficit spending on armaments. During 1930 and 1931, however, the depression was at its worst in Japan, and the other half of the Hamaguchi cabinet's economic policy, industrial rationalization, began to take on new meaning.

The Commerce and Industry Deliberation Council lasted from 1927 to July 5, 1930. On November 19, 1929, it set up as a kind of subcommittee an Industrial Rationalization Deliberation Council (Sangyo* Gorika* Shingikai) within MCI. A month later this body produced a