The Unresolved Miracle

One Reaction: MITI

Rising from its ruins of the Second World War, Japan became the second largest economy in the world within a span of fifty years. To date one of the most debated topics in Japanese economic history is the cause of this "Miracle".

The miracle theory was given much exposure by Chalmers Johnson the former CIA analyst in his 1982 book, "MITI and the Japanese Miracle” . Johnson holds the Ministry of International Trade and Industry (MITI) as responsible for achieving the Japanese economic success. The MITI has its origins in the Ministry of Munitions (MM) which had accumulated numerous powerful functions during the war. The MM during the war had permission to order any enterprise to convert to munitions production. It is said that MITI was bestow with similar powers to conduct and execute the industrial policy and dominated almost all the economic decisions that were to be made in modern Japan.

Johnson while acknowledging the contribution to the miracle made by institutions such as the “lifetime" employment system, the seniority wage system, enterprise unionism, amakudari and the keiretsu, places superiority on the role of rational and selective policies adopted by the Japanese bureaucracy. Among these were “policies concerning protection of domestic industries, development of strategic industries, and adjustment of the economic structure in response to or in anticipation of internal and external changes’. Evidently market guidance was practiced through planed rational policies and were pursued by the MITI in the “cause of the national interest”.(Johnson 1982).

Johnson’s faith in developmental states revolves upon his conviction of MITI's contribution to the Miracle. In his opinion, ‘the developmental, or plan-rational, state, by contrast, has as its dominant feature precisely the setting of such substantive social and economic goals’. Hence, ‘holding to absolute freedom will not rescue the industrial world from its present disturbances. Industry needs a plan of comprehensive development and a measure of control.’(Johnson 1982).

The Counter Augment: The Myth of MITI

In the 1950’s a small consumer-electronics company in Japan asked the Japanese government for permission to buy transistor-manufacturing rights. MITI refused, arguing that the technology wasn't imposing enough to rationalize the expenditure. Two years later, the company influenced MITI to reverse its decision and went on to be the worlds leading manufacturer in transistor radios. The company's name was Sony. (D.R.Henderson 1983) In another case, MITI tried limiting the auto industry by forcing firms to merge, but with firms rebuffing, the plans were later dropped. Had the MITI had its own way, Japan may not have had the success in both the industries it enjoys today.

Many free market theorists believe that MITI’s powers and control were greatly exaggerated. Authors such as Henderson, brings forth evidence to support this claim. “Between December 1955 and February 1973, crucial years in Japan's growth, the government had six different National Economic Plans for economic growth. But without exception, actual growth rates exceeded those required to fulfill the plan's targets. This is evidence that the plans themselves were not responsible”. (D.R.Henderson 1983)

Have Your Say

Another as always counters one argument. However, had it not been for some level of control and guidance to market forces(to which nobody denies the MITI of not doing) it probably would have been much interesting to see as to how or if Japan would have emerge out of its WWII tatters.

The Stranger

The ‘stranger’ had nothing to do with what was happening.
Calm and thoughtful of it she stood.
Speechless …………………
Yet accustomed to the unfolding events.

.

one day I see the ‘stranger’ once more
Overwhelmed with a mystifying joy
Feeling anxious
And not knowing why
I stood still.

Resolving to solve the ‘strangeness’,
I embarked on a far-off passage.

Reaching the shores of understanding
I found what I was looking for
A feeling without lust, greed or anger
Fills me in…..

And gone was the strangeness.

mind overcoming its cankers

There are cankers to be overcome by
insight, self-control, judicious use, endurance,
avoidance, elimination and development.

If cankers are not overcome,
what should be done is left undone,
but what should not be done is done;
the self important and the heedless,
For them the cankers only increase

For those who earnestly practice
the meditation on the nature of the body,
they do not do what should be not done,
They steadfastly pursue what should be done,
Hence for those mindful and clearly comprehending ones,
the cankers do come to an end.

Having rid of cankers,
like birds in the air -untraceable leaving no marks,
birth,death and rebirth ceases,
so like the bird free be!

(Dhp.292-3 and Buddharakkhita:2004)

A good offence is the best defence

Peace is the alternative to war. Yet as long as the socio-economic returns of defending a nation’s interest and its territorial integrity exceed the dividends of peace , states will choose war over peace even if they become protracted by nature.

There are three common ways to fund an economy in war times; increasing taxes, decreasing investments , and by incurring public and external debt. Whilst external spending on war shrinks national income, internal government spending can create effects similar to that of military Keynesianism. Wars can provoke shared poverty with governments tending to tax and borrow from the richer (as a means of financing the war) while increasing the income to the poor through military payrolls and subsidies. Such types of income distribution will deepen existing levels of poverty and increase its incidence.

One alternative to this dilemma is wealth creation through military industrialization (the European experience). Reverse engineering and tactical technology transfers can make room for such industrialization. Yet the majority of less developed countries (apart from,India,China and Parkistan and a few former soviet block countries) have so far not found this kind of prosperity through war.

The second alternative, the most probable, is to have sound war strategies accompanied by good economic management. Planners must find way to increase production and growth with what ever resources they could spare for non-war related activities. Cutting wastage, creating efficiency and productivity plus implementing development state mechanisms that provide fundamental infrastructure and guidance for low cost production with higher yields can be seen as primary policies adoptable by an economy in war.

As a stronger economy bares the brunt of war it can also give that little extra edge needed in winning a difficult one . Which makes one good offence in the economic frontier the best defence of all times.