What were the operating principles of Japan's MITI during the 1950s and 60s?

Question

Japan's Ministry of International Trade and Industry (MITI) guided Japan's economy through two decades of unprecedented economic growth. MITI was the primary instrument of Japan's industrial policy, which did not run the entire economy as a centrally planned communist system might, but "provided industries with administrative guidance and other direction, both formal and informal, on modernization, technology, investments in new plants and equipment, and domestic and foreign competition" (source: wikipedia). How was MITI set up? How did it attract competent and well-intentioned bureaucrats? How did it prevent conflicts of interest between entrenched industries and consumers?

References to a long-form description of how they achieved this feat (in English) would also be appreciated.

Answer 1

MITI was formed by the merging of the Trade Agency and the Ministry of Commerce and Industry. Its purpose was to help curb inflation and to provide government leadership in different types of industries. MITI helped these industries by establishing policies on exports and imports as well as domestic inductries. In fact, the foreign trade policy that they developed was designed to strengthen domestic manufacturing. They were also responsible for establishing guidelines pertaining to pollution control, energy and power, and customer complaints.

The key to their success from bureaucratic perspective was that they did not have a group of bureaucrats who randomly made decisions that they felt would be successful. Instead, they relied on bring the top figures in each field of industry together to obtain a consensus on policies before enacting them. They also encouraged industry leaders to share their best practices to ensure that everyone had an opportunity for success.

In regards to your request for a long-form description of how they did this, I found a research paper from Harvard that focuses specifically on MITI's role in Information technology advancements. However, the principles applied in this particular field are equally relvant in other forms of industry as well. Here is an example of the primary point that brings all this together:

MITI by itself is not responsible for Japan's economic success. Rather, its forte appears to be its ability to bring divergent points of view together in creating national policies that are generally acceptable to the various sectors of the society. Consensus-building remains one of the striking features of the Japanese scene. Japan's and MITI's success in the post-war era have been due in large part to the political stability that has been enjoyed. This stability has enabled MITI to perform its role of guidance and coordination in an effective manner.

Answer 2

There is a very thorough explanation on Japanese economic growth in the work by Asian scholar, Chalmers Johnson in his work Blowback: The Costs and Consequences of American Empire. In addition to a very well researched explanation on American actions and the intelligence community derived concept of "blowback", he provides a very detailed explanation on Japanese economic success (you would probably be interested in his work with a more direct explanation of the role of the MITI specifcally, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975). His argument in Blowback is that in addition to the Japanese skill in industry promoted by the likes of MITI, much of their incredible growth was due to their ability to use their geopolitical surroundings to their benefit.

"From approximately 1950 to 1970, the United States treated Japan as a beloved ward, indulging its every economic need and proudly patronizing it as a star capitalist pupil. The United States sponsored Japan's entry into many international institutions... transferred crucial technologies to the Japanese on virtually concessionary terms and opened its markets to Japanese products while tolerating Japan's production of its own domestic market."

-Chalmers Johnson, Blowback: The Costs and Consequences of American Empire, p.177

One of the interesting points Johsnon makes is on his claim that "East Asian export regimes thrived on foreign demand artificially generated by an imperialist power...the strategy only worked so long as Japan and perhaps one or two smaller countries pursued this strategy." While the beneficial policies initially benefited both Japan and the US, the former as described above and the latter by providing cheap consumer goods and an example of the benefits of capitalism to be used in the ideologically driven conflicts ragging in East Asia. However, by about the end of the 1980's, the Japanese developed an overcapacity to produce goods aimed at the American market at the same time that American policies in Japan (and elsewhere) had hollowed out vital American industries, lowering employment opportunities and wages in the US and thus correspondingly lowering the ability for the US consumer to absorb Japanese products.

His argument is elaborated more in chapter 9 of Blowback, and I would really recommend that you check it out from your local library or buy it, if you want to know more.