MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975 (review)

192 SAIS REVIEW MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925—1975. By Chalmers Johnson. Stanford University Press, 1982. 303 pp. $28.50. Reviewed by Eleanor M. Hadley, adjunct professor ofeconomics, The George Washington University. Professor Hadley's works include Antitrust in Japan (1970) and Japan's Export Competitiveness in Third World Markets (1981), published by the Centerfor Strategic and International Studies, Georgetown University. In his book, MITI and the Japanese Miracle, Chalmers Johnson purports to provide the economic bureaucracy's contribution to Japan's high postwar growth, but in fact tells the story, as the title suggests, in terms of MITI. Although in this reviewer's judgment gravely exaggerating the role of MITI within the economic bureaucracy and virtually ignoring the private sector, Johnson provides extraordinary insight into the operations of Japan's bureaucracy and the never-ending turf battles that are an integral part of it. His thesis is that a "miracle" occurred and that it can be explained only by the role of the economic bureaucracy. He sees the economic bureaucracy growing in knowledge and maturity out of the experiences of the 1930s when (under the Important Industries Control Law of 1931) the private sector undertook to control itself, and out of the World War II and occupation experiences when the government dictated to the private sector. In Professor Johnson's judgment, what is new about the role of government in Japan's economy is that a cooperative, shared relationship has developed with the government supplementing, not supplanting (my language), market forces. He writes: The fundamental political problem of the state-guided high growth system is that of the relationship between the state bureaucracy and privately owned business. If this relationship is overbalanced in favor of one side or the other, it will result in either the loss of benefits of competition or the dilution of the state's priorities, (p. 195) In undertaking to provide the part of the story that economists have failed to tell, Professor Johnson slips into a posture for which he rightfully faults economists, that is, telling only one side of the story. He ascribes the Japanese miracle to the government's role and accords no real part to the private sector! Although Professor Johnson promises an analysis of the state's role in the economy (pp. vii-viii), the book is basically descriptive of MITI. Even in the chapter entitled "The Economic Bureaucracy," he writes of the bureaucracy generally and never clearly introduces the other actors (although in an earlier work he does so most ably). Professor Johnson provides fascinating vignettes of MITI's leading personalities and a fairly sound history of the institutional changes. His provision of the Japanese terminology for the institutional structure as well as for legal citations is also very helpful. However, the author's analysis of the role of the state in this 324-page study consists of one quotation and one paragraph. He quotes Robert Gilpin, who notes a rigidity in the Japanese private sector when left on its own: BOOK REVIEWS 193 a propensity to invest in particular sectors or product lines even though these areas may be declining. ... As a result, there may be no powerful interests in the economy favoring a major shift of energy and resources into new industries and activities, (p. 28) Professor Johnson then describes, in his own words, what he believes to be "the differences between the course of development of a particular industry without governmental policies (its imaginary, or "policy-off," trajectory), and its course of development with the aid of governmental policies (its real, or "policy-on," trajectory). He concludes his analysis by listing examples of economic policies that have a qualitatively calculable impact on Japan's economic performance. This is the entirety of the analysis. The author begins his history ofJapan's government-guided economy with the 1931 Important Industries Control Law because, in Johnson's view, Japan's economy was essentially laissez-faire from 1900 to 1930. This was, however, hardly the situation. Perhaps few writers—Japanese or otherwise—can adequately describe government-za¿¿>a£sw (family-controlled conglomerate business groupings) relations. We know enough, however, to recognize that the Japanese...