MITI and the Japanese miracle

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hashi gained prominence. After the creation of MITI Imai worked primarily in international trade administration, and he served in the Japanese Embassy in Washington for the first year after it reopened. He and Sahashi served in the Secretariat at the same time, but in different sections, and Imai received his first assignment as a bureau chief two years before Sahashi got his. It was as chief of the Textiles Bureau from August 1958 to February 1961 that Imai had to confront the liberalization problem.

There is no question that MITI, as a bureaucracy, feared that liberalization might eliminate its raison d'etre, and for this reason, if no other, it sought to obtain new control powers. However, MITI officials, as economic administrators, were also deeply worried about structural flaws in the system they had createdwhat they sometimes called its

hizumi

, or "distortions"and about the likelihood that liberalization would heighten these "distortions." Nationalism played a part in their concernsthe possibility that a fully "opened" Japanese economy would be swamped by larger, much better capitalized foreign enterprisesbut even without the pressures to liberalize, they knew that they would have to do something about the superficially risk-free overinvestment the system was generating. The rise of "excess competition,'' as it was called, coincided with the appearance of liberalization as a policy problem, and the issues involved in dealing with the one greatly influenced the response to the other. The textile industry provided one of the worst examples of overinvestment and excess competition.

Imai's term as chief textiles administrator was one of deepening crisis. The system of foreign exchange budgets was still in full operation, but Imai recognized that he needed still more controls in order to prevent recurring overproduction in the unruly cotton textile industry. "The abuses that accompanied the allocation system for raw cotton," he has recalled, "were simply extraordinary. I advocated replacing the system with a Raw Cotton Import Public Corporation [Menka Yu'nyu * Kodan*], but the industry violently opposed this idea. The fundamental problem of the allocation system was that it encouraged excess investment in production facilities and led to overcapacity. We needed allocation authority over investment, not just over raw materials."

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The big spinnersTeijin, Toray, Kanebo*, and Unitikawere hard enough to control, since they often fell back on the old Osaka tradition of resisting governmental intervention in their affairs; but the smaller manufacturers were even worse. They had borrowed from their banks and invested in their equipment with the full expec-