MITI and the Japanese miracle

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of very useful and candid books. In 1972 he finally took a position as chairman of the Leisure Development Center, a MITI-sponsored association to promote the tourist and recreation industries. When I met him in 1974, he appeared the very model of an international tourist executive: ensconced in an office surrounded with tropical fish in tanks, recently returned from a visit to the South Pacific, and dressed in a white safari suit, he answered my questions frankly, and passionately defended his beloved MITI. He was not known to the press as "Mr. MITI" (

Misuta

*

Tsusan-sho

*) for nothing.

The demobilization of the Japanese economy really only began during the early 1960's with trade and exchange liberalization; the statement in the 1956

Economic White Paper

, "We are no longer living in the days of postwar reconstruction," was about five years premature. Until trade liberalization was forced on it, Japan had operated a totally closed economy in which all of its contacts with the rest of the world were mediated and brokered in government offices. Trade liberalization beganit did not enda complicated process of opening the Japanese economy to the full range of commercial and competitive pressures that affect all of the world's market economies. Not until 1980, when the Foreign Capital Law of 1950 was finally abolished, could it be said that Japanese economic demobilization was more or less complete. Although the Japanese economy prospered enormously from the global trends toward trade and capital liberalization, the actual process of removing Japan's controls was a harrowing one for both Japan and its trading partners. The period from approximately 1960 to 1980 left scars, as we shall see in the next chapter, that twenty years later were still affecting the Japanese-American alliance.

In January 1981 the special commission of distinguished Japanese and American leadersthe "wisemen"who had been appointed in May 1979 by Prime Minister Ohira* and President Carter to examine factors affecting the long-term economic relationship between the two countries, issued its report. Under the general subject "Japan's Market: Open or Closed?" the wisemen discussed administrative guidance:

One of the most difficult aspects of the Japanese economic system for non-Japanese to understand is the nature of the government-business relationship. The more embracing set of consultations between the private and public sectors and less of an adversary relationship than in the United States lend substance in some American eyes to the concept of a "Japan, Inc." This image presents a very false and misleading impression of the Japanese economy. It is also very harmful to United StatesJapan economic relations because it cre-