Strategic Economy In Japan

Thomas M Huber

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000313222
• Edition: 1
• Topic: Politica e relazioni internazionali
• Subtopic: Politica asiatica

This innovative work demystifies the Japanese economy by considering it as a strategic system. Showing how the Japanese "miracle†is actively planned, directed, and implemented by a constellation of institutions, government policymakers, and big business, Huber argues that Japan, Inc., can best be compared to a modern military system rather than exclusively to a free-market economy. The author highlights particularly the similarity between Japan's strategic economy and some of the structures and policy dynamics of the U.S. military and shows how Japans economic strategies have the capability of adversely affecting its trading partners.

Part One
Domestic Strategy

1
MITI: Prospero’s World

THE TECHNO-INDUSTRIAL sectors of the Japanese economy appear to operate on principles of national well-being and security, somewhat in the manner of a modern strategic military or foreign policy system. Let us consider in brief how strategic-economic policy decisions are made, the methods by which such policies are implemented, and the objectives usually sought and achieved by these systems.

Making Policy: The Ministry of International Trade and Industry

Economic policy in Japan appears to be formulated initially by the elite bureaucracy, not by the elected National Diet. Policies relating to strategic industries are both fashioned and implemented by the Ministry of International Trade and Industry (MITI). MITI is possibly the most powerful institution politically, economically, and socially in Japanese society. Its several hundred senior operatives chart the future of Japan, Incorporated.¹

MITI officials do not shape policies in a void. They consult a senior advisory board called the Industrial Structure Council (ISC). The ISC consists of some 130 members—serving two-year terms—drawn from industry, finance, academia, and government. The council’s chairman is the current chief of the powerful industrial umbrella association the Keidanren. The ISC is subdivided into industry-specific councils that issue a steady stream of white papers for their industries, appropriately called “visions.” In fact, however, ISC staff support is provided entirely by MITI, and the ISC is evidently cued by MITI as to the directions in which industry should move. It is likely that part of the ISC’s function is to serve as a microcosm of the interested public constituencies so that MITI can gauge the response, and cull the insights, of these constituencies in a manageable way. A cabinet-level structure called the Economic Planning Agency (EPA) also generates long-term advisory perspectives for the economy.²

MITI drafts five-year plans for economic growth based on ISC and EPA perspectives, as well as on estimates of the general tenor of public opinion. The typical objective of the five-year plans is to achieve rapid doubling or quadrupling of selected industrial categories such as metals, shipbuilding, electronics, automotives, or the like. To succeed, the plans must precisely synchronize the increased availability of every production factor: capital, skilled technicians, raw materials, construction assets, product and process technology, producers’ durables, transport for materials and products, and markets for the product. In most cases this planning involves global as well as domestic coordination. The most famous of the postwar economic plans is the National Income Doubling Plan of i960, which aimed to, and did, double Japan’s gross domestic product (GDP) in seven years. Other plans adopted by MITI during the period of rapid growth, 1952 to 1973, included the Five Year Plan for Economic Development (initiated 1955), the New Long Term Economic Plan (1957), the Middle Term Economic Plan (1965), and the Economic and Social Development Plan (1967).³

In practice the five-year plans are in the nature of an overarching policy framework and are constantly scrutinized, sometimes undergoing major revisions before their term. Thus a given plan may not last for five years. Moreover, in accordance with the economic plans’ prescriptions, each bureau in MITI generates specific medium-term plans, called “elevation plans.” This is done in close consultation with several constituencies, including officials of the corporations that will ultimately have to implement them. These plans indicate amounts to be spent for research and development, proportion of production to be exported, and much more. They provide for a two- or three-year interval rather than the five or so years of the typical ministrywide plan. In other words, the bureau plans narrow the focus of the ministrywide plan in terms of both the time interval and the industrial area covered. They give a more specific reality to the ministry’s (and society’s) more abstract objectives.⁴

MITI’s authority to make and implement economic plans derives from legislation passed by the Japanese National Diet. MITI bureau staffs draft enabling legislation for MITI’s programs. The MITI career deputy minister takes these drafts to a meeting of deputy ministers that is convened prior to legislation being submitted to the Diet. To go forward, MITI must persuade the other ministries’ representatives that the legislation is desirable. If the deputy ministers approve the proposals, they then go to the Diet, which usually votes them into law. It is probably fair to say that 90 percent of legislation that is passed is generated by the elite ministries. The Diet has very little staff with which to generate or evaluate legislation. Only the elite bureaus have this capacity in abundance. Let us explore this pattern a bit further.

Bureaucratic Legislation: Parliamentary Review

Recent Western observers have called Japan’s system of government an enigma, perhaps with good reason.⁵ Japanese legislative patterns, at least where economic matters are concerned, are rather different from those in the United States. In Japan a meritocratic body of legal experts, the elite ministries, generates the legislation with its staffs, and the elective National Diet is then free to pass the legislation or not.⁶ In other words, the Diet receives and reviews the legislation drafted by the bureaucracy and ordinarily passes it. Having little staff support, the Diet may not be able to do much more. Japanese democratic practice, at least in economic matters, might be described as bureaucratic legislation with parliamentary review, a pattern somewhat different from what Anglo-Americans might usually expect.⁷

Moreover, laws that the National Diet passes, in economic as in other fields, represent a broad mandate, not specific prescriptions, thus giving the ministries an additional quasi-legislative power. The same elite bureaus that enforce the laws (and draft them) also interpret and give specificity to them in the form of numerous ordinances that the bureaus issue on their own authority and that they may alter or elaborate at will. Implementing the 1984 Telecommunications Business Law required 67 ministerial ordinances, for example. If the bureaus do not exercise their ordinance authority appropriately, the Diet is free to revoke it. The Diet does not ordinarily presume to meddle with the ordinances, however. Diet representatives apparently believe that fine adjustments in the regulations are best made by the officials closest to implementation and that having to seek Diet approval for every small change would lead to a needless and imprudent rigidity. Economic legislation is also coordinated by industry-specific committees of the influential Liberal Democratic Party (LDP), which correspond to MITľs industry-specific bureaus.⁸

Beyond that, economic policy is scrutinized by the press corps, which does introduce a robust democratic element into the process. The press is expected to air the publics views on economic policy and to participate in a substantial way in policy formation and is entirely free to do this. Once a policy is fixed, however, the press is expected to support its implementation and is subjected to some constraints in that regard akin to Western constraints on press reporting of military operations. The government provides information only to members of the Press Club, which is divided by ministry. That is, each major newspaper has several reporters that specialize in MITI-related news. MITI routinely gives the newspapers the information they want but also expects them to refrain from printing certain information that is sensitive. In other words, Japan’s economic officials expect, and tacitly require, the Japanese press to cooperate where policy implementation is concerned. Reporters mainly do so, partly because they do share MITľs goals of national enrichment and partly because they could lose their all-important Press Club credentials.⁹ The consequence, in any case, is that there is vigorous debate over policy formation but relatively little independent reporting of policy implementation by these reporters. In fact, both press and Diet seem to be dependent on MITI staffs for their information about actual policy operation.

Strategic Policy and Democracy

What all of this means is that MITI makes economic policy, but while doing so it is intensely scrutinized by the public, the press, and the Diet. The elite bureau drafts the legislation but beyond that there are several democratic dynamics in play. Opposition parties in the Diet especially are likely often to publicly challenge MITI proposals. Policies are bureaucratically made, but at the same time any major changes in policy must constantly confront public opinion. In practice MITI must act not only in the public interest but also in ways the public perceives as being in its interest. MITI shapes policy, but other ministries, political parties, and the press have de jure or de facto power to veto or weaken MITľs policies.

Are all these doings completely strange and incomprehensible to Americans? Not necessarily. Japanese economic policies are bureaucratically made but are nonetheless exposed to public opinion. In short, Japanese economic policy is formulated much as defense policy or foreign policy is usually formulated in the United States: by career professionals for the public. U.S. career officers in the military or State Department devise plans, both general and specific, that congressional committees then scrutinize, and if the plans are in accord with prevailing public opinion, they are usually accepted. All this is done in a constant flurry of journalistic commentary and public debate. In Japan, strategic plans for the economy are generated by high-ranking economic officials amidst a flurry of journalistic debate and are usually approved by the people’s representatives if they are in accord with public opinion.¹⁰

The Japanese pattern of bureaus draft, Diet reviews, bureaus implement is different from the usual U.S. practice of Congress drafts, Court reviews, bureaus implement. The instructive U.S. exception, of course, is in areas of strategic importance that “provide for the common defense.” In a social consensus older than the republic, the U.S. tradition is to place responsibility for operational decisions in the hands of its highest military officers. When Washington became commander in chief of the Continental armies in the summer of 1775, the society viewed this as a normal and appropriate way to proceed. Legislators advised their commanders of the basic objectives to be achieved, gave them the resources, and left the matter to them. The reason was that if Washington had to get Congress’s approval for every move he made, his campaign would be brought to a halt. In an active strategic environment, it was not normally in the interest of the Congress or people to intervene in the efforts of their best commanders.

In strategic areas, namely military areas, U.S. constitutional practice, from Washingtons day to ours, has been to place exceptional authority—one might fairly say quasi-legislative authority—in its officer corps. This authority includes forming and reforming force structure and creating the regulations that govern the force, a quasi-legislative authority over which Congress exercises what amounts to a power of review. The officer corps that enforces the regulations also drafts them and adjudicates them. Where vital security interests are at stake, Congress has entrusted vast wealth and human resources to this body of professional officers. Moreover, citizens and enlistees are expected to support military activities out of shared patriotic concerns.

The U.S. military is constrained by a sophisticated system of checks and compromises calculated to allow it to be effective yet not jeopardize the democratic spirit of the society in general. Military authority is great, but delimited. It does not extend into the society; it is subordinated to civilian command authority, dependent on legislated budgeting, scrutinized by the press, and the like. The U.S. press is free to debate military policies, but when covering war, like the Japanese economic press covering implementation, is held to a more stringent standard. Although free, it is expected to report in ways compatible with the operational and public interest; for example, it must not divulge surprise attacks or report names of combat victims before the families are informed.

Over time the remarkable role of the officer corps has become steadily more pronounced as military affairs have grown in scale and technical complexity. Once Congress indi...