MITI and the Japanese miracle

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Japanese employment system derives from traditional practices), the Council's Labor Subcommittee met some 22 times during 1951 alone to produce standards for the wage system and promotion system, for the organization of work sites and measures to avoid strikes, and for employee training programs; these were subsequently recommended to all Japanese firms. The Industrial Rationalization Council had no legal authority to force its proposals on a particular enterprise, but it should be recalled that the council's sponsor, MITI, could and did cut off the access to foreign exchange of any firm that it felt was wasting valuable resources. Not surprisingly, the Council's educational programs were well attended and their suggestions widely adopted.

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After setting up the Council, the Enterprises Bureau's next big initiative was the enactment of the Foreign Capital Law (Gaishi Ho*, number 163 of May 10, 1950). The Foreign Exchange and Foreign Trade Control Law of 1949 had already given the government the power to concentrate all foreign exchange earned from exports (by law such foreign exchange had to be sold to a foreign exchange bank within ten days of its acquisition), and this power made possible the control of imports through the use of a foreign exchange budget. MITI made every effort to suppress imports of finished goods, particularly those that competed with domestic products, but it urgently sought imports of modern technology and machinery. The problem was to keep the price down and to "untie the package" in which such foreign technology normally came wrappedto separate the foreign technology from its foreign ownership, patent rights, know-how agreements, proposals for joint ventures, capital participation, voting rights, and foreign managers on boards of directors.

The Foreign Capital Law dealt with this problem. It established a Foreign Investment Committee and stipulated that foreign investors wanting to license technology, acquire stock, share patents, or enter into any kind of contract that provided them with assets in Japan had first to be licensed (kyoka) by the committee. (At the end of the occupation, the powers of this committee were transferred to the Enterprises Bureau). SCAP approved the law in order to guarantee the availability of foreign exchange for license payments, but the Japanese were more interested in restricting the import of foreign technology to those cases deemed necessary for the development of Japanese industries. As SCAP wrote, "Restrictive provisions of the law were to be relaxed and eliminated as the need for them subsided."

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But restrictions did not even begin to be relaxed until 1968, long after Japan's balance of payments constraints had been overcome.

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The next big accomplishment of the Enterprises Bureau was the En-