MITI and the Japanese miracle

Page 256

the Japanese economy, possibly see a good part of it pass into foreign ownership, and very likely leave MITI without any continuing function.

²⁰

For Sahashi the essence of the problem was to find some way to bring the financial and investment decisions of enterprises into the framework of control and nurturing (ikusei) that MITI had developed. The Ministry of Finance (which controlled the banks) and the Fair Trade Commission (which administered the Antimonopoly Law) were sure to object to any encroachment on their territory. And the intervening decades notwithstanding, the answer to these structural problems seemed, mutatis mutandis, to be the same one Yoshino and Kishi had discovered during the 1930'scartels, enforced mergers, pressure on medium and smaller enterprises, converting some businesses to other lines of activity, something like the old "enterprise readjustment" movement but under a different name. Sahashi's new terms for these old activities were public-private cooperation (

kanmin

kyocho

*); consolidation of the industrial order (

sangyo

*

taisei seibi

); and structural finance (

taisei

kin'yu

*), meaning government loans and tax breaks to encourage mergers.

A much more difficult problem was how to do it. The old debates between state control and laissez faire were still quite familiar to the seniors of the industrial world, and they were agreed that they did not like state control. In order to try to deal with such objections, Takashima Setsuo, Sahashi's deputy director of the Enterprises Bureau (June 1962 to October 1963), published a skillfully argued article in the May 1963 issue of the journal

Keizai

hyoron

* (Economic review). He patiently dissected the weaknesses of "bureaucratic control"he did not find many, but he acknowledged that people did not like it. And he discussed "self-coordination""It does not achieve the results desired by the people." And then he introduced MITI's proposed resolution of the dichotomy, "administration by inducement.'' In Takashima's view, although this leaves to the government the determination of the direction industry is to take, it avoids the worst problems of policy implementation.

²¹

As a practical matter, administration by inducement came to mean committees of cooperating bureaucrats, industrialists, and financiers that would set investment rates, promote mergers, discourage new firms from entering given industries, and in general try to build an industrial structure on a par with those of the United States and West Germany, the two prime external reference economies.

To draft a law encompassing these goals and methods, Sahashi brought together in the Enterprises Bureau an extremely talented