MITI and the Japanese miracle

Page 110

trial profits, and that therefore the law was in the public's interest and not simply a way of making life easier for the zaibatsu.

⁴⁷

Whatever he may have had in mind, however, the zaibatsu profited most from "control" and "industrial order."

The Important Industries Control Law was a relatively short statute of only ten articles. According to its terms, when two-thirds of the enterprises in a particular industry agreed to a cartel, MCI would examine its contents and, if it approved, then authorize (

ninka

) the cartel. The government could also change the terms or nullify the agreement. And it could force nonparticipants in the cartel agreement to abide by its terms if they did not do so voluntarily. As a result of an MCI-sponsored amendment to the law (introduced in the Diet during September 1932 and passed during 1933), the ministry obtained the powers to approve investments that would expand facilities by cartel members and to approve members' decisions to curtail production. Needless to say, all members of an industry were required to submit frequent reports on their investment plans and activities to the government. It is in this law that we find the origins of the government's licensing and approval authority and of the practice of "administrative guidance," which together became the heart of postwar industrial policy. To assuage skeptics in the Diet, the law had a five-year limitation written into it; on August 15, 1936, it was extended for another five years but it was superseded by the National General Mobilization Law before the second time period expired.

As a result of the law cartels were organized in some 26 designated "important industries," including silk thread, rayon, paper, cement, wheat flour, iron and steel, and coal. In industries suffering from excess capacity, such as cotton spinning, shipbuilding, and electrical machinery, it helped curtail competition and restore profitability. But Yoshino believes that the law did not actually work as he had intended it to. This was partly because only a month after it came into effect, the army seized all of Manchuria and the entire economy shifted to a war-preparatory footing. Even without this unforeseen development, however, the cartels seemed to work less in favor of "order" than in favor of strengthening and expanding the scope of zaibatsu operations (the

keiretsuka

of the economy, as the Japanese put it, or the structuring of the economy into conglomerates). In three industries, for examplepetroleum, newsprint, and cementMCI cartels promoted the interests of gasoline refiners over those of taxi companies, of the paper trusts over the newspapers, and of the cement industry over the lumber industry. All of the favored industries were areas of expanding zaibatsu strength.

⁴⁸