MITI and the Japanese miracle

Page 225

locations for their next month's supply of raw cotton might not be available. This was the first postwar instance of a famous Japanese institution, the MITI

kankoku

sotan

* (advice to limit production), and of the inevitable government-organized cartel that followed in its wake. Similar kankoku sotan* were issued in March and May for rubber and steel. The FTC said that MITI's actions were illegal, but the ministry replied that the Antimonopoly Law did not cover informal advice from the government, and it persisted in its policies.

Thus was the issue joined. As soon as the occupation ended in April, MITI introduced in the Diet two lawsthe Special Measures Law for the Stabilization of Designated Medium and Smaller Enterprises (number 294 of August 1, 1952) and the Exports Transactions Law (number 299 of August 5, 1952)both of which authorized MITI to create cartels among small businesses as exceptions to the Antimonopoly Law. They were the precedent for many such laws to comeand for the revision of the AML itself in 1953, the first such revision by an independent Japanese government.

Throughout 1953 both the Steel Federation and the Federation of Economic Organizations petitioned the Diet (some say they also bribed Diet members) to permit cartels for businesses in recession or businesses trying to implement rationalization plans. MITI's position, according to its annual reports, was that it respected the intent of the original AML but had found that in practice it led to the excessive fragmentation of industries and stood in the way of capital accumulation in order to enhance international competitiveness. In its proposed amendment to the AML, MITI asked for the power to approve "cooperative behavior" (

kyodo

*

koi

*, the new euphemism for cartel) to limit production and sales for depressed industries and to lower costs and promote exports for industries undergoing rationalization. Such "cooperative behavior" was to include the sharing of technologies, the limiting of product lines, the joint use of warehouses for raw materials and finished products, and joint consultations on investment plans. On September 1, 1953, the Diet amended the AML (law number 259) to permit so-called depression and rationalization cartels, and it also abolished SCAP's Trade Associations Law. The Tokyo correspondent for the

New York Times

wrote that ''hardly a vestige now remains of the anti-trust measures forced upon the Japanese during the occupation of General of the Army Douglas MacArthur."

⁵⁶

In the years that followed MITI kept up the pressure on the FTC and the AML, although neither ever did disappear completely. In 1955 MITI amended the Exports Transactions Law (now called the Export-Import Transactions Law, number 121 of August 2) to make the