The Enigma of Japanese Power (49 page)

The post-war economic bureaucrats designed and implemented an industrial policy that vitalised the private sector, steering it to an unprecedented degree in directions of their own choice, and fostered the growth of domestic manufacturers through a strong protectionism. This quickly became Japan’s dominating – indeed, sole – major policy. This policy would have been seriously hampered without more effective means than they had during the war of co-ordinating plans with the business world. And the demise of the
zaibatsu
was of significance not least because it made room for the four large industrial federations that were to become post-war control centres. Pervaded by bureaucrats, each of them played a major role in the development of the System and its industrial policy: Keidanren as overall co-ordinator and fund-raiser for what later became the LDP; Nikkeiren as co-ordinator of the anti-labour campaign; the Chamber of Commerce as the ostensible guardian, but also the controller, of smaller industries; and Keizai Doyukai as propagandist and formulator of justifications for the general course that developments were taking.

The first ‘prime minister of business’, as the chief of Keidanren is popularly known, was also known, prior to the end of the war, as ‘the god of the control associations’. This was Ishikawa Ichiro, a leader in the chemical industry control association, one of the government-inspired cartels described above. In the later war years, he rose to high position in the Important Industries Control Association (the umbrella organisation co-ordinating the industrial control associations), took the initiative in dissolving that body before SCAP had a chance to do so and formed a short-lived association that became the main element in Keidanren.
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Shortly after the war, Ishikawa brought together young economists who had worked on the CPB in order to make a theoretical study of Japan’s economic reconstruction. The result was what amounted to a long-term governmental economic programme. One member of the group was Okita Saburo, later to become successively an important official of the Economic Planning Agency, foreign minister, minister in charge of international economic relations and a major international ‘buffer’ absorbing and deflecting foreign criticism.

The economic-control bureaucrats and the industrial control association officials had, in the year between Japan’s surrender and the birth of Keidanren, formed a variety of committees and subcommittees to map out a course for industry in what was initially a very uncertain future. The most prominent among them had also been among the most prominent of the wartime economic officials. Three of the five industrial subcommittees were led by former control association heads. Matsumoto Kenjiro, the first chairman of the coal industry control group and former chairman of the Important Industries Control Association, headed the main committee.

The vice-chairman of the main committee, later to become the strongest figure in Keidanren, was Uemura Kogoro, a prominent reform bureaucrat who early on had helped establish the important link between the military and the Ministry of Commerce and Industry. He was deputy chief of the CPB before heading the coal control association. Like other leaders in the large business federations, he was known after the war as one of the major voices of the business world, which gave most foreigners (and not a few Japanese) the misleading impression that he was an entrepreneur. It can hardly be reiterated too often that the business federations do not represent true entrepreneurs. The wartime businessmen of the
zaibatsu
, who tended to be more entrepreneurial than their post-war successors, were extremely wary of the ‘new economic order’ that people like Uemura and Kishi were trying to establish, and showed concern over the great admiration that Uemura, after a study trip to Nazi Germany, expressed for Hitler’s economic management.
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The second Keidanren chief, Ishizaka Taizo, had a reputation for disliking three things: the bureaucracy, the business support for politicians and the interference with the free market. He could afford to be against those things in his speeches and talks with journalists, since it was during his Keidanren tenure that the close relations among the three main classes of administrators were quietly being consolidated.
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Ishizaka had also been a bureaucrat, at the Ministry of Communications, before moving to Daiichi Life Insurance, a firm closely tied to the government (he served as its president during the war years). Purged by the occupation, he supervised the reconstruction of what is now Toshiba Corporation before becoming, in 1956, Keidanren chairman. A dozen years later he turned the post over to Uemura. Keidanren vice-chairman from 1968, and chairman between 1980 and 1986, was Inayama Yoshihiro, who had served in the pre-war predecessor of MITI before nationalising and again privatising and merging Japan’s largest steel companies. In 1970 he created the world’s largest steel firm through a merger that established him as Japan’s best-known opponent of anti-trust legislation. Nagano Shigeo, who reinvigorated the Japan Chamber of Commerce and Industry (he was chairman from 1969 to 1984), closely co-operating with Inayama, also played a leading role in the national steel industry. He worked for the wartime government, and served as vice-director of the post-war Economic Stabilisation Board.

SCAP went along with plans for the formation of Keidanren on condition that it would not try to engage in economic control and would stay clear of labour relations. Two years later a way was found around the more easily enforceable second prohibition, when several of the people who had established Keidanren, including Uemura, formed or helped form Nikkeiren, the headquarters of union-busting and, later, control organisation in charge of keeping wage rises significantly below productivity increases.

Most of the prominent Nikkeiren organisers were also at the core of Keizai Doyukai, a club that on the face of it seemed to take a much more moderate stand towards socialists and unions.
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Goshi Kohei, the key figure in its formation, had been chief secretary of the wartime Important Industries Control Association. He was later closely associated with the Japan Productivity Centre, becoming its chairman in 1972. The original purpose of this institute, established with United States assistance, was to acquaint Japanese businessmen with advanced US production methods, but it has since been used to sponsor methods of increasing ‘company loyalty’, and to teach the virtues of co-operation to not yet tamed enterprise unions.

Another key figure in the establishment of Keizai Doyukai was Hoashi Kei, who had been secretary-general of the umbrella organisation of the control associations, and had in 1941 written a tract about the ‘proper relationship’ between government and business in the ‘new economic order’. In this revealing document he emphasised the need for the voluntary co-operation of business with the authorities: business should be independent, but there should be no return to a ‘free economy based on the principle of private profit-making’. The national goal must have priority.
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He mentioned economic mobilisation in Germany, Britain and the USA during the First World War as good examples of true cooperation between the government and the private sector.
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But for him the finest example, and the best model for Japan, was ‘economic guidance’ in Nazi Germany, which he was at pains to distinguish clearly from mere ‘economic planning’.
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Hoashi never doubted that businessmen should be restrained by rules, prompted by the world-wide economic crisis of 1929, which assumed that national goals must take priority; only when those who profited privately also pursued the ‘public interest’ would the economic system be healthy.
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The need for businessmen to heed ‘the public interest’ echoed through most of the official statements that Keizai Doyukai made during the first couple of decades after the war. The public interest as Hoashi and Keizai Doyukai conceived of it was of course equivalent to the goals of the administrators. It launched a well-publicised theory aimed at seducing potentially intractable forces in the economy, and formulated a list of priorities that amounted, in the words of one of its founders, Otsuka Banjo, to a proposal for ‘reformed capitalism’.
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In 1956 the Doyukai leadership had further refined its programme into a formal declaration which became known as the ideological pointer for post-war management. It saw the Japanese corporation as a public institution in which suppliers and customers as well as workers and management participated. A major task for management, therefore, was to create a harmony of interest among all these parties. The declaration went on to emphasise the collective responsibility of managements of individual firms for the overall welfare of the national economy. It warned, furthermore, that if individual companies each went its own way and failed to make this conscious communal effort, the government would gradually take over to ensure the viability of the economy. This sounded like a rehash of the ideals of Hoashi and the Manchurian bureaucrats. And it is surely as unequivocal an appeal for sacrifice of the prerogatives of private enterprise as was ever made by any large group of businessmen.
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In the late 1950s the Keizai Doyukai began to appoint former career bureaucrats to executive positions.
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Most of its other top members had risen through the hierarchies of the highly bureaucratised businesses that had been gradually intertwining with government bureaucracy ever since the early 1930s. In 1966 leaders of the Keizai Doyukai established the Sangyo Mondai Kenkyukai (Study Group on Industrial Problems), popularly known as Sanken, in an additional effort at the co-ordination of industry believed to be necessary in the face of impending ‘liberalisation’.
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In 1970 Sanken was joined by Keidanren’s Uemura Kogoro and a prominent Nikkeiren figure, after which it exercised direct influence over a variety of industrial associations, and by controlling the business membership of governmental
shingikai
(deliberation councils) played an important role in advising the bureaucracy. All twenty-four members of Sanken personally served on one or more
shingikai
.
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It gradually ceased to function in the early 1980s.

Among the formal aims of these federations, set forth in many public pronouncements in the early stages of their existence, was the promotion of a vigorous democracy. This is reminiscent of the advocacy of greater ‘individualism’ by the Ad Hoc Council on Educational Reforms, whose reports, it will be remembered, implied that such an aim is best achieved by greater discipline in the schools and better instruction in what it means to be Japanese. The democracy espoused by the
zaikai
left no room for any movement representing the workers, or for socialism (not to mention communism), or indeed for any kind of political principles that might conflict with stable ‘conservative’ government.

The federation leaders played a crucial role in keeping this ‘stability’. They had their doubts about Kishi Nobusuke, who took political risks that they thought endangered the political situation, and were even less enthusiastic about Hatoyama Ichiro, whose resignation they helped bring about in the autumn of 1956. This latter achievement was part of their greatest feat: the bringing together of all ‘conservative’ cliques under a stable LDP umbrella.
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In October 1952, three days after an election in which the ruling Liberal Party did badly while the socialists did well, fifty representatives of the four federations held an emergency meeting and adopted a resolution requesting ‘stabilisation’ of the political situation. This was followed by many similar ‘requests’ prompted by ceaseless bickering among the future LDP
habatsu
, whose leaders were as yet more concerned with their own political fortunes than with a stable System. Finally, as we saw in Chapter 5, a new political funding system sponsored by Keidanren resulted in 1955 in the realisation of the federations’ wishes. The major role in bringing the segments of the LDP together was played by the same Uemura who, in the 1930s, had brought the civilian and military economic planners together.

It was only when Ikeda Hayato succeeded Kishi as prime minister, however, that the federation leaders really allowed themselves to rejoice. They had influenced the selection of previous prime ministers, but in the case of Ikeda they had more or less chosen and groomed him themselves. The same was true of the next prime minister, Sato Eisaku.

While very kind to the economic-control bureaucrats, the occupation authorities placed bureaucrats steeped in pre-war and wartime
social
-control methods in a frightful predicament. ‘Democratised’ education meant teachers organising under Marxist-inspired leadership, and the loss of a whole arsenal of indoctrination methods. Justice Ministry officials had to cope with idealists who actually believed that the law was situated above everyone, including officials; it took at least a decade and a half before they regained control through the secretariat of the Supreme Court. The Naimusho was broken up, and the police were reorganised. While the devastated economy and dire living conditions warranted much economic planning and thus control, the new start with ‘democracy’ hardly warranted a ‘thought police’.

But, by bestowing a constitution upon Japan, General MacArthur, without realising it, did the social-control bureaucrats at least one great favour. The constitution was not wrested from the power-holders by the people. The latter, therefore, were not encouraged to believe that they had the
right
to wrest anything from the ruling élite; and the theory of ultimate benevolence could be maintained. Also as the occupation period reached its mid-point it was gradually becoming clear that the ‘damage’ the US reformers were inflicting could be contained. By 1949 a popular movement towards genuine reform of the civil service and its selection methods, originating among lower-echelon bureaucrats, engineering bureaucrats and more liberal elements in the higher bureaucracy, had petered out for lack of SCAP support.
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The main hazard to the administrators was the new democratic legislature, which could easily undermine social-control mechanisms. The threat was averted thanks to a massive influx into the Diet of veterans of the disbanded Naimusho – the major social-control ministry – that in 1960 was represented by fifty-four of its former officials.
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The majority of these had been ‘purged’. This ‘descent’ of retired bureaucrats into the pre-LDP conservative parties had begun shortly after the war,
⁴⁹
aided by the room made for them by the occupation purge of wartime politicians. Some thirty élite bureaucrats joined the Liberal Party ranks for the 1949 elections, and in subsequent elections their number grew to roughly a quarter of the Diet membership, providing Japan with the crucial Yoshida, Kishi, Ikeda and Sato cabinets – during whose tenure the post-war System was consolidated – as well as a majority of the prime ministers following them.

The administrators concerned with public order also made allies among the occupiers, who never understood the depth of the anti-liberalism of their ‘subcontractors’. Among these allies was the chief of the Counter-Intelligence Corps (one of the three major sub-units of SCAP), General Charles Willoughby. As the American in charge of labour questions remembered almost forty years later:

In a country where Marxist terminology was the common coin of intellectual exchange and whose trade unions all professed to be socialist at the very least, Willoughby was out of his depth. To him, socialism was just a station on the way to communism. Democratic socialists were not allies in the fight against the communists hut subverters of the established order. . . . Only Japanese conservatives could be trusted. . . . For him, there was no middle ground between the conservatives and the communists.
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