Page 314
of American business is geared to individual performance as revealed by quick profits. The result is not simply a lack of long-term planning in the United States but also exorbitant executive salaries, private corporate aircraft, palatial homes, and other major discrepancies between the rewards of labor and management. In postwar Japan the living standards of top executives and ordinary factory workers have differed only slightly (Morita observes that the American president of Sony's U.S. subsidiary makes more in corporate salary than Morita himself receives from Sony). On the other hand, it might be noted that managers in Japan have access to corporate entertainment funds of a size unparalleled in any other economy. The National Tax Agency calculated that during 1979 corporate social expenses amounted to some ?2.9 trillion, or $13.8 billion, which meant that corporate executives were spending $38 million per day on drink, meals, golf fees, and gifts for their colleagues and customers.
2
The point is that Japan's more flexible means of evaluating managers contributes to smoother labor-management relations than in some other countries and also avoids disincentives to cooperate with other enterprises and with the government. These Japanese practices came into being as a result of postwar conditions. According to Morita, 'There is nothing in Japanese history to suggest that smooth labor- management relations came naturally'; prewar Japanese capitalism was 'stark in its exploitation of labor.' The postwar leveling of all Japanese incomes because of inflation and national adversity made possible the relative equality of rewards that existed during high-speed growth, as well as the emphasis on measures other than profitability for managerial performance. These social conditions are of considerable advantage to Japan in competing with countries such as the United States, but obviously they would be very difficult to transplant: although the salaries of American managers might be reduced, the institution of some other measure of performance than short-term profitability would require a revolution in the American system of allocating savings to industry through stock markets.
The priorities and social supports for cooperation among the Japanese might not be replicable in other societies, but it is easy to imagine that they might be matchedthat is, a different society might be able to manipulate its own social arrangements in ways comparable to those of postwar Japan in order to give top priority to economic development and to provide incentives for public-private cooperation. If this were the case, then such a society would need an abstract model of the Japanese high-growth system to use as a guide for its own concrete application. Specialists on modern Japan will differ as to the pre-
Page 315
cise elements and the weight to be attached to each element in such a model, but the following, based on the history of MITI, is my own estimation of the essential features of the Japanese developmental state. For purposes of this discussion, I stipulate that Japan's particular history would not have to be reexperienced, and that the social inputs of popular mobilization and the incentives to cooperate already exist in the society trying to emulate Japan (assumptions that are not necessarily realistic, as this study has sought to demonstrate).
The first element of the model is the existence of a small, inexpensive, but elite bureaucracy staffed by the best managerial talent available in the system. The quality of this bureaucracy should be measured not so much by the salaries it can command as by its excellence as demonstrated academically and competitively, preferably in the best schools of public policy and management. Part of the bureaucracy should be recruited from among engineers and technicians because of the nature of the tasks it is to perform, but the majority should be generalists in the formulation and implementation of public policy. They should be educated in law and economics, but it would be preferable if they were not professional lawyers or economists, since as a general rule professionals make poor organization men. The term that best describes what we are looking for here is not professionals, civil servants, or experts, but managers. They should be rotated frequently throughout the economic service and retire early, no later than age 55.
The duties of this bureaucracy would be, first, to identify and choose the industries to be developed (industrial structure policy); second, to identify and choose the best means of rapidly developing the chosen industries (industrial rationalization policy); and third, to supervise competition in the designated strategic sectors in order to guarantee their economic health and effectiveness. These duties would be performed using market-conforming methods of state intervention (see below).
The second element of the model is a political system in which the bureaucracy is given sufficient scope to take initiative and operate effectively. This means, concretely, that the legislative and judicial branches of government must be restricted to 'safety valve' functions. These two branches of government must stand ready to intervene in the work of the bureaucracy and to restrain it when it has gone too far (which it undoubtedly will do on various occasions), but their more important overall function is to fend off the numerous interest groups in the society, which if catered to would distort the priorities of the developmental state. In the case of interests that cannot
Page 316
be ignored, deflected, or satisfied in symbolic waysor upon which the perpetuation of the political system dependsthe political leaders must compel the bureaucracy to serve and manipulate them.
A non-Japanese example of the kind of relationship we are looking for would be something like the American legislative branch's relationship to the wartime Manhattan Project or to the postwar nuclear submarine development program. The political system of the developmental state covertly separates reigning and ruling: the politicians reign and the bureaucrats rule. But it must be understood that the bureaucrats cannot rule effectively if the reigning politicians fail to perform their positive tasks, above all, to create space for bureaucratic initiative unconstrained by political power.
There are several consequences of this type of political system. One is that groups without access to the system will on occasion take to the streets to call attention to their disaffection (this occurred in Japan in 1960 in the antisecurity treaty riots, in the student revolts of the late 1960's, in the demonstrations against the new Tokyo airport and the government's nuclear ship project, and in the campaign against industrial pollution). These demonstrations may arise out of important interests that cannot be indefinitely ignored by the state, or they may simply reflect demands for political participation. Whatever the case, when they occur the political leaders are called upon to exercise 'safety valve' functions, forcing the bureaucracy to alter priorities just enough to calm the protesters but taking most of the 'heat' of the demonstrations themselves. Clever politicians will anticipate eruptions of this sort (Sato * Eisaku's strategy for the renewal of the security treaty in 1970). As long as the developmental projects are succeeding and their benefits are being equitably distributed, the political leaders should be able to deal with these problems symptomatically. Projects to call attention to the development effort and to instill pride in its successes may also be recommended (the Japanese Olympics of 1964, EXPO 70).
A major political difference between the capitalist developmental state and the communist dictatorship of development is that the capitalist state simply ignores the nonstrategic sectors of the society, whereas the communist state attempts directly and forcibly to demobilize them. The first is preferable because it avoids the unintended consequences of the presence of large numbers of police and the full apparatus of repression, which is not only wasteful of resources but is also incompatible with effective international commerce. This is certainly one lesson the Japanese learned from the 1940's.
The Japanese political system should also be distinguished from the
Page 317
bureaucratic-authoritarian regimes of Argentina, Brazil, Chile, and Uruguay. In these states the ruling elites seek to promote industrialization by excluding from power the previously mobilized economic groups and by developing collaborative relationships with multinational corporations. They do this through a technocratic political arrangement that relies heavily on coercion to enforce the rules of the game.
