MITI and the Japanese miracle

Page 288

"Dodge Colt." As a result Mitsubishi promptly moved ahead of Toyo * Kogyo* to become Japan's number three automaker (and, as it turned out a decade later, when the U.S. number three auto manufacturer had to seek governmental assistance to stay in business, the most profitable division of Chrysler).

MITI was humiliated. Vice-Minister Kumagai was forced to call on business leaders and say that if private enterprise wanted to enter into tie-ins with foreigners, MITI would offer no objections. MITI had thought that it had a merger between Mitsubishi and Isuzu all wrapped up as a result of an agreement initialed on June 19, 1968. That naturally fell through given the new developments, and Isuzu promptly accepted another 65:35 joint venture with General Motors. MITI had more leverage over Isuzu than it did over the financially and politically powerful Mitsubishi, and it therefore rewrote the Isuzu-GM agreement in order to ensure that GM did not obtain control of the company. But MITI's plans for reorganizing the automobile industry were clearly in a shambles.

²³

From a broader perspective MITI was probably lucky that these developments took place when they did. Toyota and Nissan, MITI's chosen leaders of the industry, were never in any danger of losing their positions; the joint ventures eased some of the American pressure on Japan to liberalize; and the capital that flowed to Mitsubishi and Isuzu energized them both, providing more jobs for auto workers, suppliers, and trading companies alike (C. Itoh is Isuzu's trading company, while Mitsubishi Shoji* serves Mitsubishi Motors). But regardless of how one judges the outcome of this famous incident, credit for liberalizing the automobile industry in Japan must go to Mitsubishi and not to MITI or any other element of the Japanese government.

The Mitsubishi coup led to a period of genuine confusion and turmoil within the ministry. On May 26, 1969, in an interview with the

Nihon keizai

newspaper, MITI Minister Ohira* Masayoshi said that the ministry would not interfere with what it perceived to be a new "private-sector industrial guidance model" (

minkan

shudo-kata

*), as distinct from the old "governmental industrial guidance model" (

seifu shudo-kata

).

²⁴

This comment set off a debate within MITI and the industrial world that lasted until the oil shock in the autumn of 1973. Officials within MITI were divided on the proposed new formula for industrial policy; retired "seniors'' expressed their dismay; business leaders said that it was high time; and commentators of every hue and description contributed their opinions. Some argued that MITI had been "bitten in the hand by its pet dog," that "the grown son [industry] tends to