MITI and the Japanese miracle

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many forms and places. Yoshida was beginning to lose his grip on the Liberal Party, and the man he chose to succeed Okano, Aichi Kiichi, was both an old associate of Ikeda's in the Ministry of Finance (he was Banking Bureau director during the period of zaibatsu dissolution) and a much more influential politician than Okano had been.

On September 6, 1954, Aichi and others in the government led the cabinet into adopting a "Comprehensive Policy for Economic Expansion" (Keizai Kakudai Sogo * Seisaku Yogo*), and this in turn provided MITI, later the same month, with the authority to issue its own fundamental statement of strategy, entitled "Outline of the New International Trade and Industry Policy" (Shin Tsusho* Sangyo* Seisaku Taiko*).

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Both of these documents were upgraded versions of the Okano Plan. Finally, in December the Yoshida government fell from power, and Yoshida's rival, Hatoyama Ichiro*, became prime minister. He in turn brought Ishibashi Tanzan back into the government as minister of MITI. The ministry's days of political oblivion were over; from now on the minister of MITI would be one of the most powerful men in the governmenthis position one of the three indispensable stepping stones to the prime ministership itself (the other two are Finance and Foreign Affairs).

Hirai has testified that Ishibashi contributed the final theoretical formulation that all other planners had been missing. Ishibashi pointed out that the key to exports was, of course, the lowering of costs, and the key to that was enlarging production to effect economies of scale. But to enlarge production, Japanese manufacturers needed more customers. And where were they to be found? In the huge potential market of Japan itself. The Japanese people had suffered from economic stringency for at least two decades; they were ready to buy anything offered to them at prices they could afford. Ishibashi's idea was that MITI should promote

both

exports and domestic sales. When problems in the international balance of payments arose, the government could curtail domestic demand and promote exports; when the problems of paying for imported raw materials eased, the focus should be on enlarging sales at home. If this could be achieved, Japan's factories could keep operating throughout all phases of the business cycle. In Hirai's words, Ishibashi "combined export promotion and high-speed growth into a coherent theory."

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These ideas were very congenial to Ikeda Hayato. As a protégé of Yoshida's, he did not receive a post in the Hatoyama cabinets, which were transitional between the old Yoshida order and the new Liberal Democratic Party regime; the LDP was created on November 15, 1955. But in the succeeding cabinets of Ishibashi and Kishi, Ikeda served as