policy, just as the need for economic recovery from World War II, capped by the deflation panic of 1949, led to the creation of MITI and to the renewal of industrial policy. All of the political and bureaucratic problems of the developmental stateincluding conflict between the bureaucracy and the central political authorities, and conflict among elements of the bureaucracy itselfappeared in this early period, just as they would reappear during the 1960's and 1970's. That the Japanese solved (or suppressed) these problems more effectively during the postwar period than during the 1930's is greater testimony to their ability to profit from experience than to any fundamental change in the situation they faced.
During the late 1920's the Japanese began to build new forms of state intervention in the economy, forms that differ in critical ways from those of either the command economy or the regulatory state. These initial efforts were soon overwhelmed by recurring crisesand contained unforeseen consequences that dismayed their inventors. As a result, the leaders of industrial policy were led to attempt a different approach, direct state control of the economy, that carried them to disaster. The bitterness of the era of the Yoshino-Kishi line was more than enough to warn those who managed both the state and private enterprise after the war that catastrophes could occur if they did not transcend both self-control and state control in favor of gen-
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uine public-private cooperation. Nonetheless, it should not be thought that these painful early experiences were wholly negative. The prototype of industrial policy did not fly well, and the improved model crashed, but the suitably modified production version of the 1950's amazed the world by its performance. From this perspective the early years of industrial policy were a period of indispensable gestation in the evolution and perfection of a genuine Japanese institutional invention, the industrial policy of the developmental state.
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Four
Economic General Staff
During the period that Yoshino and his colleagues were discovering rationalization and inching their way toward industrial policy, a different group of Japanese officials was taking up parallel questions. They were military officers and civilian bureaucrats working in military or cabinet-level agencies. Their concerns centered on Japan's preparedness for war, particularly since Japan had not experienced the total mobilization during 191418 that had so deeply influenced the general staffs of the Europeans. They were also concerned about the severe economic constraints that had appeared during Japan's last major war (with Russia during 19045), the economic mobilization and growing industrial strength of the country's potential enemies (particularly Soviet Russia), and the emergence of problems in their planning for national security as it concerned primary resources (particularly petroleum, but including other materials necessary for modern armaments).
These men were coming to believe that Japan needed an industrial policy in order to ensure its military survival, not just to overcome the depression. At an absolute minimum they wanted an 'economic general staff' (
*
) that would provide guidance for the economy from the point of view of Japan's military needs and industrial and resource deficiencies. During the 1930's this stream of inspiration for industrial policy flowed into and merged with the civilian MCI stream, and both were transformed in the process.
The Japanese military's first thoughts about mobilizing the whole private economy for war came during World War I. On April 17, 1918, based on its understanding of Germany's mobilization effort and on the actions of the United States after entering the war, the govern-
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ment of Prime Minister (General) Terauchi enacted the Munitions Industries Mobilization Law (Gunju Kogyo * Doin* Ho*). It was Japan's first basic law relating to industrial control during wartime. It defined military supplies broadly and authorized the government after a declaration of war to supervise, use, or expropriate the industries producing them. Most of its provisions were never enforced during World War I, but it was still on the books in 1937, and it was implemented during the early stages of the 'China Incident' (the Diet asked for a distinction between a 'state of war' and a 'state of incident') before the National General Mobilization Law of 1938 replaced it.
1
The 1918 law was virtually an afterthought of Japan's participation in World War I. But in order to prepare for the possible need to implement the law, the government on May 31, 1918, set up a Munitions Bureau (Gunju Kyoku) as a semidetached unit of the cabinet to prepare economic mobilization plans and to gather statistics on munitions industries. Its first chief, Hara Shoichiro* of the navy, worked hard at these tasks, but he found it almost impossible to get cooperation from the established ministries. On May 15, 1920, the government sought to lower the visibility of the bureau by merging it with the cabinet's Statistical Bureau to create a new agency called the Census Board (Kokusei-in). This idea did not work any better than the first onethe military officers and statisticians squabbled over turfand on November 30, 1922, with the military somewhat in disgrace because of the Siberian expedition and with the government trying to cut costs, the Census Board was abolished. The government transferred all the mobilization plans and accumulated statistics to MAC and from it to MCI, where they greatly enhanced the resources of the Secretariat's Statistical Section. Murase Naokai, the vice- minister of MCI from 1936 to 1939 and a very important figure in our later discussions in this chapter, was working in the cabinet at the time the Census Board was abolished. He says that he recognized that these mobilization materials would be useful to his ministry in administering industrial policy, and he implies that he had a hand in having them transferred there.
2
During the mid-1920'sthe period of 'Taisho* democracy'the military was forced to drop its efforts to plan for economic mobilization, but by 1927 interest had revived. Many military officers had had a chance to study and absorb the lessons of World War I, and they were concerned about the growing economic might of Russia after the consolidation of the Bolshevik revolution. During 1927 General (then Major) Ishiwara Kanji, the chief economic architect of Manchukuo, wrote, 'If national mobilization was taken to mean that the Japa-
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nese home islands should attempt to mobilize vast quantities of men and munitions on the scale expended from 1914 to 1918 by France, for example, then the effort would certainly bankrupt Japan, no matter what the outcome.'
3
The financial panic of April 1927 and the coming to power of a Seiyukai* government headed by a military
