MITI and the Japanese miracle

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MITI's invention of the concept of "industrial structure" and the creation on April 1, 1961, of the Industrial Structure Investigation Council (Sangyo * Kozo* Chosa* Kai). The concept was simply a shorthand term for comparisons of Japanese industries with those of North America and Western Europe in terms of their capitalization, export ratios, concentration, economies of scale, and other indicators of international competitive ability. Once such comparisons had been made, the concept was further used to assert that Japanese industries were fully capable of competing in the international commercial arenabut not as they were presently structured. The number of enterprises competing in each industry had to be reduced, the few that were to remain had to be enlarged, and the preemptive investment and excess productive capacity that the keiretsu system had generated had to be brought under control. Industrial structure became the key intellectual defense for the devices Sahashi later promoted as vice-ministermergers and investment-coordination cartels in important industries.

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The Investigation Council perfected and legitimized the concept. Led by Ojima Arakazu, former MCI vice-minister and president of Yawata Steel, the council brought together all the top leaders of Japanese industry; and it produced one of the most searching analyses of any economy ever undertaken by a government.

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When the council's charter expired in 1964, it was merged with the old Industrial Rationalization Council of 1949; and it continues to the present as MITI's main official channel for administrative guidance of industry, the Industrial Structure Council (Sangyo Kozo Shingikai).

The original Industrial Structure Investigation Council was an outstanding example of MITI's employment of an ostensibly civilian commission to popularize and provide authority for its policies. The actual work of the council was done by MITI; the Enterprises Bureau was charged with writing reports and recommendations on such topics as industrial finance, labor, technology, and international economics, while the new Industrial Structure Investigation Office, which was attached to the Secretariat, investigated individual industries. The head of the office was Ojimi* Yoshihisa, the author of Ikeda's 1960 liberalization plan and himself a future MITI vice-minister.

The 50 members of the council strongly reflected MITI's "old boy" networks. In addition to its chairman, Ojima Arakazu, the membership included Ishihara Takeo, executive director of the Tokyo Electric Power Company; Ueno Koshichi*, executive director of the Kansai Electric Power Company; and Tokunaga Hisatsugu, executive director of Fuji Steelall of them recently retired MITI vice-ministersplus