MITI and the Japanese miracle

Page 198

Six

The Institutions of High-Speed Growth

No one observing the Japanese economy from the vantage point of Dodge's "stabilization panic" of 194950 could have imagined either the high-speed growth that was to occur between 1955 and 1961 or the "golden sixties" that lay beyond. The years of the Dodge Line and the Korean War were characterized by constant confusion, high hopes alternating with deep despair, political and bureaucratic contention among numerous power centers, and governmental expediency in the face of one crisis after another. The Japanese had to adjust successively to the virtual strangulation of their economy under Dodge's draconian antiinflation measures, to the Korean War boom, to fundamental changes in United States foreign policy, to the deep postKorean War recession, and to the discovery of their own balance-of-payments business cycle. They also had to come to terms with the institutions the occupation had left behind and with the attitudes of their own bureaucrats and industrialists toward these institutions.

During the period 1949 to 1954 the Japanese forged the institutions of their high-growth system. In 1954, with the passing of the Yoshida government and other political developments, MITI put the system into effect. To understand the Japanese economic performance of the late 1950's, it is necessary to appreciate that when all the various institutions of the Korean War era were put together and operated by an "economic general staff," they constituted a systemalthough no single institution was ever created with the emerging system in mind. As Nakamura Takafusa has argued, the agencies of 195561 for forcing investment from a poor, capital-starved society resulted from the combination of two complicated sets of circumstancesthe persis-