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

by Chalmers Johnson

The focus of this book is on the Japanese economic bureaucracy, particularly on the famous Ministry of International Trade and Industry (MITI), as the leading state actor in the economy. Although MITI was not the only important agent affecting the economy, nor was the state as a whole always predominant, I do not want to be overly modest about the importance of this subject. The particular speed, form, and consequences of Japanese economic growth are not intelligible without reference to the contributions of MITI. Collaboration between the state and big business has long been acknowledged as the defining characteristic of the Japanese economic system, but for too long the state's role in this collaboration has been either condemned as overweening or dismissed as merely supportive, without anyone's ever analyzing the matter. The history of MITI is central to the economic and political history of modern Japan. Equally important, however, the methods and achievements of the Japanese economic bureaucracy are central to the continuing debate between advocates of the communist-type command economies and advocates of the Western-type mixed market economies. The fully bureaucratized command economies misallocate resources and stifle initiative; in order to function at all, they must lock up their populations behind iron curtains or other more or less impermeable barriers. The mixed market economies struggle to find ways to intrude politically determined priorities into their market systems without catching a bad case of the "English disease" or being frustrated by the American-type legal sprawl. The Japanese, of course, do not have all the answers. But given the fact that virtually all solutions to any of the critical problems of the late twentieth century―energy supply, environmental protection, technological innovation, and so forth―involve an expansion of official bureaucracy, the particular Japanese priorities and procedures are instructive. At the very least they should forewarn a foreign observer that the Japanese achievements were not won without a price being paid.

Genres: Japan, Economics, History, Nonfiction, Politics, Asia, Economic Development

393 pages, Paperback

First published January 1, 1982

About the author

Chalmers Ashby Johnson was an American author and professor emeritus of the University of California, San Diego. He fought in the Korean war, from 1967-1973 was a consultant for the CIA, and ran the Center for Chinese Studies at the University of California, Berkeley for years. He was also president and co-founder of the Japan Policy Research Institute, an organization promoting public education about Japan and Asia.

Reviews

[Hadrian · Rating 4 out of 5]

Published in 1982 and still (semi-)frequently cited to this day, MITI and the Japanese Miracle was one of those attempts to explain the development of the Japanese economy from the interwar years to the middle of the 20th century.

Johnson describes many governments as "regulatory", staying aloof and apart from most market happenings, and mid-century Japan was "developmental", having a more direct hand in economic expansion, where policy was implemented by a small cadre of elite bureaucrats in central agencies.

That is not to say Johnson's argument was not without contention - one could argue over whether other governments had a greater or lesser role in the economy; and how this model adapted or failed to adapt to the growth of new sectors - electronics more broadly, not just chemicals, steel, and textiles. But the bulk of the historical data he works with is fascinating, and his ability to enumerate the parts and history of a vast bureaucracy still make this a well-crafted book.

[Oliver Kim · Rating 3 out of 5]

A book in dire need of an update -- only 18 tables in 320-odd pages, and not a graph to be seen.

Still, it's clear why this became The Book on Japanese postwar growth. Johnson makes a convincing case for the centrality of the bureaucracy in Japan's economy, and explains the intricacies of that institution in painstaking detail, down to the biography of every last mid-level bureaucrat. It can make for hard reading, but there's a reason this book has remained the go-to reference about MITI for nigh on forty years.

What I wished for was a little more analysis of the economic context. There's almost no treatment of economic agents outside of MITI and little discussion of how Japan's economy might have evolved in a counterfactual MITIless world. At the very least, a simple chart of Japanese GDP, with various MITI policy changes on top, would have worked wonders for comprehension.

For economists, I would recommend skipping chapters 2-4, which cover MITI's pre-war roots. It's interesting historical context, but not vital to Johnson's argument. MITI doesn't even pop up until page 191!

When I read economics, I usually find myself demanding more context, more institutional detail, more real-world earthiness to ground the abstract modeling. With this book, I found myself craving precisely the opposite.

[Chris S · Rating 5 out of 5]

Very interesting study of Japan's postwar "economic miracle" from a bureaucratic perspective; mostly concerned with explaining the emergence and development of the institutions (organisations, laws and practices) that have formed the "high-growth system" of the 1950s onward. Johnson does go into a ton of detail regarding the actual bureaucrats involved (the text is chock-full of bureaucrats' names, their periods of appointment in various bureaus, their personal affiliations with each other etc). This could very easily make the text slightly difficult to read - but I do believe these additions make a valuable point: that Japan's economic institutions were highly contingent on historical events and the personalities that have reacted to them. This thus supports Johnson's observations in the final chapter that it would be difficult for any other state to replicate Japan's institutions unless it undergoes Japan's recent history - a history of much war and privation indeed.

[Chelsea Szendi · Rating 4 out of 5]

You probably won't be too pleased to have to read all those names of bureaucrats - they really do break up the prose - but I think we are all glad that they are there just in case we need to look for them someday. An earnest and thorough work that was immune to the frenzy of the "Japan as Number One" moment in which it was written.

How's this for restraint, though: Johnson deems it "deeply impudent" that MITI refers to 1935-1955 as its “Golden Era"

[Stevenglinert · Rating 5 out of 5]

Was just thinking about this book today.

This was such a lifechangingly good book.

Important for anyone interested in economic development, even it talks about the 70s.

[Rakesh · Rating 4 out of 5]

Must read book on development economics which explains how Japanese state directed capitalism led to what became famous as 'The Japanese Miracle". Japanese state interventionist policy came into existence after failed outcome of state controlled economy as well as Laissez faire. As the title suggests, book narrates the Japanese development process through evolution of its economic bureaucracy MITI which according to author played central role in Japanese development.

State directed economy ensured that national economic interests takes precedence over individual's profit maximizing tendencies.

Model was simple : MITI will identify strategic sectors , ensure maximum capital allocation, technology absorption and provide protection from foreign capital and foreign firms. Domestic consumption free from foreign competition allows firms to achieve economy of scale which makes them cost competitive. Govt. limited competition to 2-3 major players to prevent unhealthy misadventures of free market - over capacity and price wars. Once firms become internationally competitive , open those sectors to take benefits of international trade and access to foreign markets. There is nothing new in Japanese model - mostly derived from Alexander Hamilton's protectionism, Friedrich List's nationalist economy and German cartel system.

What made Japanese experience unique is successful implementation of model across large number of industries through co-operative relationships with private sector who were quite willing for government assistance.

Johnson categorically rejects popular theory of attributing growth story to Japanese culture of co-operation. He argues co-operation developed as public consensus from historical experiences of poverty and frequent wars. Thus, development took precedence over everything else.

Secondly, MITI as an institution, manned by best talent, showed tremendous flexibility to adopt to changing external economic situations. Success of MITI also highlights importance of developing next generation of leaders which provide continuity of policies over decades (There are plethora of names mentioned in the book which sometimes become confusing ). Yoshino and Kishi discovered the policy in 1920s which was carried over to 1960s by their proteges Yamamoto, Tamaki, Hirai, Ishihara, Sahashi and others.

However, book remains totally silent on contribution of agriculture in initial phase of industrialization which is a let down because of important role Japanese agriculture had played in laying the foundation of industrialization.

[Ted Tyler · Rating 5 out of 5]

I love a story where the heroes are pencil-pushers, bureaucrats, and economic policy wonks. This book was incredibly insightful into the world of Japanese bureaucracy. I'm convinced that the Ministry of International Trade and Industry (MITI) is one of the most unique bureaucracies to ever exist. Chalmers Johnson compares them to the United States Department of Defense and spends an entire chapter talking about the rise of this "Economic General Staff." What makes Japanese politics different from US politics or even Chinese politics is the focal point of power. It is Japanese bureaucrats (rather than US Congressmen/Senators or CCP Central Committee members) that truly have power. Japanese bureaucracies have their own unique cultures, norms, legacies, and histories.

MITI shaped the Japanese economy by rationally using tools of industrial policy. This meant oscillating between varying degrees of state control and "self-control" before ending up in a more consistent form of cooperation/collaboration between the public and private sectors. MITI's strategic control of trade and industrial policy allowed it to become a pipeline towards positions of power in both the private sector and the prime minister's office. Several of Japan's prime ministers made their careers developing Japan's economy, both domestically and internationally vis a vis MITI.

[Germán González · Rating 5 out of 5]

Este clásico de Chalmers Johnson relata la trayectoria del Ministerio de Comercio Internacional e Industria (MITI en inglés) en Japón. El país asiático, de la misma manera que otros países de la región, es un ejemplo de una economía que recurrió a la política industrial para desarrollarse y no dejó todo en manos del libre mercado. Se puede definir a su sistema económico como una economía planificada de mercado, dónde el Estado dirige el rumbo del sector privado. Para esto recurrió a diferentes herramientas, como los controles directos durante la posguerra y a mecanismos más sutiles luego. Uno de los aspectos más interesantes de la experiencia nipona es la formación de una burocracia altamente especializada que tiene continuidad a través de los gobiernos garantizando políticas de Estado persistentes en el tiempo. También es notable el perfil orientado a la exportación que tuvo desde un principio la política económica teniendo en claro que Japón no contaba con muchos recursos naturales y necesitaba dólares para importarlos.

[Ray Hatta · Rating 3 out of 5]

Though dated, the book is essential in understanding not only the modern economy of Japan, but also its politics such as the infamous 'Iron Triangle' system amongst others. Johnson attributes Japan's economic miracle almost solely on the developmental state, which in light of the 1991 collapse of Japan's asset price bubble and ensuing 'Lost Decade,' is a highly contentious view at best.

Despite this, I would definitely recommend the book not only for those wishing to understand Japan's economy, but also the dynamics of the developmentalist state.

After reading this book I would suggest Richard Katz's "Japan, the System that Soured" which, in contrast, argued the developmental state was instead an obstacle to Japan's continued economic success.

[Ricardo · Rating 5 out of 5]

This book is a must-read for all those passionate about development. The author analyzes the post-war Japanese economic miracle in detail. He explains clearly the central role played by the bureaucracy in the management of the economy.

[Hinako · Rating 5 out of 5]

Finished the book with a high regard for Japanese government officials post war, who helped create the base for Japan’s economic growth and development of heavy industries. A good example of how policies can shape the economy.

[Phil Eaton · Rating 4 out of 5]

An excellent, if not disputed and a little dated, introduction to the foundations of the modern Japanese economy.

[JimV · Rating 5 out of 5]

Want to understand what made Japan’s “economic miracle?” Read this book!

[Thomas Cavan Gui · Rating 4 out of 5]

中特左壬工業黨野喜歡用通產省來為家己背書，但實際上公權力干涉國民經濟運行往擺毋擺單獨成為經濟奇跡兮法寶。通產省是自然演變兮產物，即个日本經濟兮導航機構兮權力邊界一直保持兮動態調整，當伊調整遘政企力量相對平衡兮時陣，日本兮高速發展遮解出現。當日本政府兮力量完全壓過市場時，日本經濟則是停滯佮蕭條。（PS：另外制定日本產業政策兮主體是文科生而非工程師）

[Ольга Манойлова · Rating 4 out of 5]

Я не була готова до такої кількості цифр, статистичних даних, імен і оцінок діяльності міністрів, аналізу історії розвитку японської промисловості, системи освіти і політичних реформ упродовж кількох десятиліть. Книжка дуже базована. Але читається цікаво і, мабуть, буде корисною для економістів, істориків, соціологів тощо.

[Benemint · Rating 4 out of 5]

This is a classic work in Japanese economic history and political economy in general. The details probably exhaust you, but it's an important work.

[Jee Jay]

I read this as part of studies for my undergraduate degree in Japanese. Difficult to understand but a fascinating subject of study. I would like to read it again but have long gotten rid of it.

[Tobi トビ · Rating 4 out of 5]

one of the best and reliable books i could find on this topic. recommend for relevant sighting and study etc ! can’t go wrong