MITI and the Japanese miracle

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of American business is geared to individual performance as revealed by quick profits. The result is not simply a lack of long-term planning in the United States but also exorbitant executive salaries, private corporate aircraft, palatial homes, and other major discrepancies between the rewards of labor and management. In postwar Japan the living standards of top executives and ordinary factory workers have differed only slightly (Morita observes that the American president of Sony's U.S. subsidiary makes more in corporate salary than Morita himself receives from Sony). On the other hand, it might be noted that managers in Japan have access to corporate entertainment funds of a size unparalleled in any other economy. The National Tax Agency calculated that during 1979 corporate social expenses amounted to some ¥2.9 trillion, or $13.8 billion, which meant that corporate executives were spending $38 million per day on drink, meals, golf fees, and gifts for their colleagues and customers.

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The point is that Japan's more flexible means of evaluating managers contributes to smoother labor-management relations than in some other countries and also avoids disincentives to cooperate with other enterprises and with the government. These Japanese practices came into being as a result of postwar conditions. According to Morita, "There is nothing in Japanese history to suggest that smooth labor-management relations came naturally"; prewar Japanese capitalism was "stark in its exploitation of labor." The postwar leveling of all Japanese incomes because of inflation and national adversity made possible the relative equality of rewards that existed during high-speed growth, as well as the emphasis on measures other than profitability for managerial performance. These social conditions are of considerable advantage to Japan in competing with countries such as the United States, but obviously they would be very difficult to transplant: although the salaries of American managers might be reduced, the institution of some other measure of performance than short-term profitability would require a revolution in the American system of allocating savings to industry through stock markets.

The priorities and social supports for cooperation among the Japanese might not be replicable in other societies, but it is easy to imagine that they might be matchedthat is, a different society might be able to manipulate its own social arrangements in ways comparable to those of postwar Japan in order to give top priority to economic development and to provide incentives for public-private cooperation. If this were the case, then such a society would need an abstract model of the Japanese high-growth system to use as a guide for its own concrete application. Specialists on modern Japan will differ as to the pre-