MITI and the Japanese miracle

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ing the occupation, and in the "foreign currency budgets" of 1950 to 1964, which were MITI's main instruments of control during the high-speed growth era. The plans also reflected the strong influence during the 1930's in Japan of Stalinist economicsparticularly economic analysis in terms of the direct supply of commodities to industry rather than the attempt to reconcile supply and demand through prices and other market forcesand of the Soviet five-year plans as a means of rapid industrialization, regardless of their effects on consumption and welfare.

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The initial materials mobilization plan, not yet so named, took the form of a report dated November 9, 1937, from the president of the CPB to the prime minister estimating that there was a total of ¥470 million in currency reserves to pay for emergency military imports during the last quarter of 1937. The report also offered a budget for spending this amount. With the China Incident continuing to expand, Uemura's Industrial Plans Department set up a General Affairs Unit for Materials Mobilization Plans (Butsudo* Somuhan*) and charged it with designing a similar budget for the calendar year 1938. This was the first true materials mobilization plan. Prepared in two months, the plan took as its basic assumption that there would be an import capability of ¥3 billion for the year. It then calculated the military and civilian needs that this amount had to cover and specified the exact quantities of some 96 commodities that it authorized for import. The plan also calculated the supplies of each commodity that would be available from domestic production, from Manchuria and China, and from stockpiles. After approval by the cabinet on January 16, 1938, the plan was transmitted to MCI for implementation, using as a legal basis Yoshino's foreign trade law of September 1937. The CPB itself had no operational authority or capability.

By midyear the planners discovered that they had overestimated foreign exchange by about ¥600 million, and on June 23, 1938, they therefore issued a revised plan. Both the first and second plans of 1938 necessitated structural changes within MCI and also incorporated the first steps in the program to convert some industries, forcibly if necessary, to munitions production. This program affected primarily textile industries and medium and small enterprises (discussed in Chapter 5). The plan also led to the so-called link system (a system revived again for the same purposes during the mid-1950's) in which raw materials imports were authorized only for those civilian industries that manufactured goods for export and that earned more foreign exchange than they spent. The link system also caused a reor-