MITI and the Japanese miracle

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time called it forth. Through the direct and terrorist actions of the military and the ultranationalists, men in uniform took over the government. They co-opted the legitimacy of the Imperial institution and largely neutralized the influence of its managers, and they also weakened and nearly discredited the elected politicians of the Diet. But they could not destroy the interests the politicians representedprimarily those of the zaibatsuand the zaibatsu undertook, in self-defense, to enter the government and represent themselves: they stopped working through politicians. Moreover, the military had neither the capacity nor the leadership ability to formulate and administer the "second-stage industrialization" (that is, capital-intensive industrialization, in contrast to the labor-intensive industrialization of the Meiji period) that its aggressive empire-building plans necessitated.

It was in this context that MCI transformed itself from a lowly commercial bureaucracy whose primary task was to represent the interests of capital in the government into a task-oriented planning, allocating, and managing agency for heavy and chemical industrialization. Its officials learned how to introduce new, advanced-technology industries, first in Manchuria and then in Japan itself, and they also learned that they could not accomplish much of anything unless they worked in conjunction with the zaibatsu. Throughout the 1930's MCI was torn by its political alliances. On the one hand, it rose in power vis-à-vis its better established rivals such as the Finance and Foreign Affairs ministries by cooperating with the military and the reform bureaucrats. On the other hand, it also fought against military arrogance and interference in its development plans and kept its ties to the zaibatsu, which were the only sources of capital and managerial ability for second-stage industrialization. The economic bureaucrats never resolved these problems in the politics of the government-business relationship until the true capitalist developmental state came into being after the war.

The main contributions of the 1930's to the postwar economic "miracle" were to create and install in the government an economic general staff, and to demonstrate to the satisfaction of all parties concerned that such an agency could not be effective until the political problems of determining who was to reign were resolved. Once installed, the economic general staff never relinquished its new powers or retreated from its mission; Japan would never again return to the laissez faire policies of the first thirty years of the twentieth century. But, equally important, the economic general staff could not really unleash the developmental forces of the society until the defeat of 1945 had broken the hold of the military completely and had tipped the balance of