MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975
The Eastasia Edge
As Japan inundates America with video cassette recorders, facsimile copies, microwave ovens, minicomputers, semiconductors, fiber-optic cables, robots, numerically controlled machine tools, automobiles, farm machinery, stereo components, musical instruments, specialty steel, and countless other goods, the American business community is taking oddly contradictory views of the “Japanese challenge.”
On the one hand, American business leaders are paying increasing lip service to the virtues of Japanese management. The business press daily praises such innovations as “quality circles” and “lifetime employment,” which are said to result in greater worker commitment, fewer strikes, better quality of products. American management consultants repeatedly advise long-term investments in new products and processes seen as critical to the success of Japanese firms. American business schools are returning to the “basics” of production management and engineering, which are thought to underlie the ability of Japanese firms to respond quickly to new business opportunities. And American businessmen talk of new Japanese-style “understandings” between labor and management as well as profit-sharing schemes, joint research ventures, divestment programs, “theory Z.” Meanwhile, with each passing month, American business loses more ground. Bankruptcies soar, inventories expand, the percentage of industrial capacity being used declines. The American economy is grinding to a slow, painful halt.
With its own man in the White House, on the other hand, the American business community has found it awkward to place blame for its present troubles on the administration in Washington. Not even poor Paul Volcker, trying desperately to keep a rein on the money supply, fits the part of a national villain. The frantic search for scapegoats therefore has come to focus, as it so often does in times of national crisis, on a foreign villain, in this case Japan. American business is outraged by Japan’s tariff and nontariff barriers, which allegedly keep out American-made goods; by its “dumping” of products in the American market allegedly at prices far lower than those at which they are sold in Japan; and by Japan’s refusal to spend a larger percentage of its national income on defense. The “Japanese challenge,” which had been the extraordinary cleverness and ability of Japanese managers, is transformed into the devious, high-handed, and inscrutable policies of the Japanese government.
Both caricatures reveal far more about the American business community, and about American economic ideology, than they do about the Japanese. This is made evident in two new books that examine the relationship between Japanese business strategies and industrial policies. Taken together, these studies are valuable for understanding what is unique about the relations between business and government in Japan and the implications for America.
MITI and the Japanese Miracle, by Chalmers Johnson, presents an illuminating history of Japanese industrial policy, beginning with the creation of the Ministry of Commerce and Industry in 1925 and continuing through the postwar period when the Ministry of International Trade and Industry became central to Japan’s remarkable growth. Johnson shows that what appears to many Americans as the “art of Japanese management” is in fact a particular set …