MITI and the Japanese miracle

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ment from textiles to machinery and finished metal products, a movement the Japanese call heavy and chemical industrialization (

jukagaku

*

kogyoka

*).

If we use a slightly different base linefor example, if we take 195153 to be 100then the index of gross national product for 193436 is 90; for 196163, 248; and for 197173, 664; and the index of manufacturing production for 193436 is 87; for 196163, 400; and for 197173, 1,350. Over the whole postwar era, 1946 to 1976, the Japanese economy increased 55-fold.

²

By the end of our period Japan accounted for about 10 percent of the world's economic activity though occupying only 0.3 percent of the world's surface and supporting about 3 percent of the world's population. Regardless of whether or not one wants to call this achievement a "miracle," it is certainly a development worth exploring.

Many voyagers have navigated these waters before me, and a survey of their soundings is a necessary introduction to this study and to my particular point of view. The task of explaining Japanese economic growthand its repeated renewals after one or another set of temporary advantages had been exhausted or removedis not easy, as the frequent use of the term "miracle" suggests; and the term cannot be isolated and applied only to the high-speed growth that began in 1955. As early as 1937 a much younger Prof. Arisawa Hiromi (b. 1896), one of the people who must be included on any list of the two or three dozen leading formulators of postwar industrial policy, used the phrase "Japanese miracle" to describe the increase of 81.5 percent in Japanese industrial output from 1931 to 1934.

³

Today we know why that particular miracle occurred: it resulted from the reflationary deficit financing of Finance Minister Takahashi Korekiyo, who at 81 was assassinated by young military officers on the morning of February 26, 1936, for trying to apply the brakes to the process he had started.

This earlier miracle is nonetheless problematic for scholars because of what Charles Kindleberger refers to as "the riddle" of how Japan "produced Keynesian policies as early as 1932 without a Keynes."

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Some Japanese have not been overly exercised by this riddle; they have simply settled for calling Takahashi the "Keynes of Japan."

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As I hope to make clear in this book, this kind of sleight of hand will not do; there was more to state intervention in the thirties than Keynesianism, and Arisawa and his colleagues in the government learned lessons in their formative years that are quite different from those that make up what has come to be known in the West as mainstream governmental fiscal policy.

Kindleberger's "riddle" does serve to draw attention to the projec-