Kishi Nobusuke and a Dualistic Japan

Prime minister Kishi Nobusuke, Abe's grand-father, with president Eisenhower, signing the Treaty of Mutual Security between Japan and the US in 1960

BY PAUL HORAK

“It is much harder to nullify the results of an economic conquest than those of a military conquest.”

-Takashi Korekiyo (Johnson 1982: 156)

There are few figures in Japan’s modern history who generate as much controversy and as little understanding as Kishi Nobusuke (1896-1987). It is not hard to understand why. At one time or another Kishi was the Japanese leader of Manchuria; the head of Japan’s Ministry of Munitions; a suspected Class A war criminal; one of the leading architects of Japan’s “economic miracle;” and the Prime Minister of Japan (Kurzman 1960). Kishi is also perhaps the most startling example of the continuity of leadership that followed Japan’s defeat in World War II: the same men who led the war effort also led Japan’s recovery from it. Although he was by no means the single most important figure either during or after the war, his thoughts and activities have had a long-lasting impact on the Japanese economy, most especially his development of industrial policy. As we will see, Kishi’s wartime experiences explain a lot of his—and by extension Japan’s—post-war success. This paper will seek to answer how Kishi’s experiences during the Second World War affect Japan’s post-war economic experience. In answering the above question we will come closer to understanding the complicated legacy of one of Japan’s most controversial 20th century leaders, and in so doing, also come closer to understanding Japan’s complicated World War II legacy, for the two can’t be understood without each other.

There was much more than biographical continuity among many of the wartime and post-war leaders of Japan—there was also a remarkable degree of institutional continuity as well (Gordon 2003). The most important post-war ministry was the Ministry of International Trade and Industry, also known as MITI which was established in 1949. Its predecessors, the Ministry of Commerce and Industry (MCI) and the Ministry of Munitions (MM), grew in importance during the war effort despite barely existing before it. The MCI was brought into being in 1924 after the split of the Ministry of Agriculture and Commerce, and it is where Kishi Nobusuke got his start in the bureaucracy (Johnson 1982). Its recent origins made the MCI a marginal player in the Japanese bureaucracy, but its influence would grow in step with Kishi’s ambitions. By the time 1930 rolled around it was in charge of running Japan’s economy, a testament to the severe economic crises of the late 1920’s and the ability of its leaders to address them. By the time, Kishi was still a junior-ranking bureaucrat. However, Yoshino Shinji, his senior mentor, was most responsible for the economic policy that came out of MCI at the time. Yoshino was the Vice Minister of MCI from 1931 to 1936, and his and Kishi’s dominance of economic policymaking in the 1930’s has often been called the “Yoshino-Kishi Line” (Johnson 1982: 66). The two men are the inventers of industrial policy, whereby the state intervenes in markets to allocate resources to certain strategic industries and to see to it that they develop in line with larger national interests (Gao 1997).

The development of industrial policy may be the most important legacy of Japan’s tragic war effort. In 1930, it was a consequence of Japan’s own economic crisis and a much larger crisis of capitalism that had resulted in a global economic depression. That year, at Yoshino’s recommendation, Kishi left Japan for Germany, where he would spend seven months studying the experiments in state control of the economy that were already underway there (Johnson 1982). In July, he wrote to Yoshino of the German devotion to “technological innovation in industries, to the installation of the most up-to-date machines and equipment and to generally increasing efficiency” (Johnson 1982: 108). He noted how the German government had set up trusts and cartels to promote production and employment, both of which had suffered huge setbacks in the hyperinflationary 1920’s. When Kishi and Yoshino reunited in late 1930 they charged themselves with creating an economic policy that would serve as an antidote to Japan’s economic ills, which were not all that different from Germany’s.

In 1931, with the conflict in Manchuria escalating and the Depression lingering, Yoshino and Kishi collaborated to pass the Important Industries Law, which gave Japanese companies the power to cartelize, using temporary treaties, in order to boost their production. That it was a slight modification on Kishi’s 1930 statements reflects the influence of Yoshino’s personal philosophy, which differed slightly from that of his protégé. Yoshino believed that companies could control their own cartelization and that relaxing competition—coupled with state subsidies—would allow them to boost production in the national interest. Kishi was in favor of something closer to the German model where the state had control over cartelization and oversight of production (Johnson 1982). He would later employ this strategy as the head of MCI in the early 1940’s. At the time, both Yoshino and Kishi thought that the only way to boost production was to deemphasize competition.

The Important Industries Law sought to address some of the lagging concerns of the late 1920s’ and pave the way for a more productive decade in the 1930’s. Japan at the time was plagued by a “dual structure” in the economy: on the one hand, huge zaibatsu had inefficient monopolies over most means of production, while on the other hand, the small and medium firms—which paled in productive capacity to the zaibatsu but employed more workers—were engaged in cut throat competition to supply basic goods and service to the Japanese population (Gao 1997). Workers in small and medium firms made a fraction of what their counterparts in the zaibatsu were earning, and their prevalence in the population meant much social unrest and potentially destructive consequences for Japan’s government. By allowing the cartelization of industries, Kishi and Yoshino took the profit principle out of the corporate governance equation and replaced it with a concern for the public interest (koueki). (Gao 1997) Their law also benefited some companies more than others, in particular the heavy industries, which required more capital, manpower, and expertise than others. Following 1931, and for the rest of Yoshino’s tenure as Vice-Minister, MCI emphasized the development of the heavy and chemical industries in Japan. As Yoshino put it, “industry needs a plan of comprehensive development and a measure of control” (Johnson 1982: 108). This was consistent with Japanese military actions in Manchuria, and larger Japanese security concerns about the potential military threat from the United States.

Japan in the 1930’s was even more tumultuous than it had been in the 1920’s. While politicians and businessmen were largely failing to handle the situation largely because both groups failed to get public trust, industrial nationalist bureaucrats like Kishi managed the economy. These kakushin kanryou, or “reform bureaucrats” (Gao 1997: 77), were committed to Japan’s military pursuit during the war and its economic “conquests” after the war (Johnson 1982). They mistrusted the zaibatsu and had faith in the state’s ability to manage the economy and the war effort. Kishi became directly entangled in Japan’s war effort in 1936 when he was appointed the head of Japanese economic operations in Manchukuo, Japan’s puppet regime in Manchuria. After five years of occupying Manchuria, the Japanese had made only modest economic footholds. Their only source of real economic power was in the management of the South Manchurian Railway Company, headed by Kishi’s longtime friend, Matsuoka Yousuke, also from Yamaguchi Prefecture. Matsuoka was the Foreign Minister for Japan in 1940 that sealed the deal on the Tripartite Pact, forming the axis alliance. While working under Yoshino at MCI, Kishi also sent many of his most able-minded protégés to work on industrial policy in Manchukuo, making his eventual tenure there something of a reunion. In addition to working closely with Matsuoka, Kishi was also reunited with his great friend and future Vice-Minister at MCI, Shiina Etsusaburo (Johnson 1982). The 1940’s and 1950’s were often referred to as the “Kishi-Shiina line” because of their shared dominance of economic policymaking (Johnson 1982: 131). Their ideas are still relevant to understanding Japan’s economy today. Much of the policy that they enacted over the between 1940 and 1960 was at least partially borne from their experiments with industrial policy in Manchukuo from 1936 to 1939. Manchukuo was the perfect starting ground (they also referred to is as the “proving ground”) for their ideas: the government was supplying them with plenty of capital free of political or bureaucratic entanglements, and the military engagements in the region put constant pressure on the productive capacity of the region, prompting Kishi and Shiina to adopt top-down state-mandated policies. (Johnson 1982: 132) While the Yoshino-Kishi line of the early thirties was about “self-control,” the Kishi-Shiina line that would followe was about “state-control.”

Tojo Hideki, the Commander of the Kwangtung Army in Manchukuo and eventual Prime Minister of Japan, who had first requested Kishi’s presence in Manchuria, again selected Kishi as the Minister for MCI later in 1941. His Vice-Minister was Shiina; together, Kishi and Shiina would bring their practice of industrial policy to the heart of the Empire and in so doing put themselves at the heart of the war effort. The Kishi-Shiina line replaced the Yoshino-Kishi line of the 1930’s, but not surprisingly there were many similarities between the two especially concerning automobile acts (Gao 1997). Yoshino and Kishi’s last act before resigning as heads of MCI was to pass the Automobile Licensing Law, which made it mandatory for automobile manufacturers to get MCI licenses for production. Kishi granted licenses to only two firms: Nissan and Toyota. Nissan, the bigger of the two at the time, was one of the major economic forces behind Japan’s efforts in Manchuria. The law not only gave both companies clear advantages because they were the only legal producers of automobiles, but also signaled a new direction for industrial policy: now the state, not companies, was in control (Johnson 1982). Later, in 1938 while Kishi was in Manchuria, the Japanese government passed the National General Mobilization Law, which was in the spirit of Kishi’s state-controlled industrial policy and in some ways a modification of his and Yoshino’s 1931 Important Industries Law. The new law gave the state power over management and production to ensure that all resources of the nation were employed for the national interest. The cartels that the government put together were called Control Associations. The move was also seen around the world as a kind of declaration of Japanese hostility and preparation for war (Gordon 2003).

In fact, Japan was already so mired in a war in Manchuria. When Kishi and Shiina took charge at MCI in 1941 they inherited an economy that was grossly inefficient and unprepared for the coming struggle in the Pacific against the United States. The National General Mobilization Act was partly to blame. It allowed the state to organize cartels but provided little oversight over what was produced. Although there was political incentive to shift production from consumer goods to military ones, there was as of yet no economic incentive or logic for doing so. Kishi and Shiina worked to fix this. They passed the Enterprise Readjustment Act, which was geared at helping producers to transition their lines of production from consumer goods to military ones. Officials from MCI were assigned to factories to ensure that “adjustments” were made, and within 18 months of the passing of the Enterprise Readjustment Act, most producers were reined in and contributing to the war effort (Johnson 1982). The difference between this Kishi-Shiina intervention and that of the Yoshino-Kishi years was the state’s heavy hand in ensuring production for the public interest. Competition was still relaxed and the profit principle virtually non-existent, but the transition from “self-control” on the part of companies to “state-control” dominance of industry was complete.

Not surprisingly, the transition from “self-control” to “state-control” hurt consumers. Consumer goods were virtually impossible to find by the time war with the United States rolled around because they had been substituted out for military goods (Johnson 1982). This transition partially reflected Kishi’s own personal belief in the preeminence of the state and mistrust of big business, but it was probably due more to the state of economic crisis and necessity that prevailed on the eve of war with America. As before, economic policy and innovation were motivated by crisis (Gao 1997). Kishi’s 1931 Important Industries Law was an attempt to balance zaibatsu interests with the public interest—namely the livelihoods of owners and workers in small and medium-sized firms. The law was only partially successful in achieving this, but it did supply the country with consumer and military goods to satisfy the country’s growing demands. Most of its successes were erased by the consequences of the Enterprise Readjustment Act, which ironically empowered the zaibatsu and disenfranchised the consumer. In the short-term, the move was an attempt to support a hopeless war effort: companies and markets could not effectively allocate resources to the battlefields but the state could (Gao 1997). Kishi and Shiina succeeded in bringing the country to a state of “total war,” where every able- bodied man or woman was working in factories to produce munitions for Japan’s deteriorating war cause (Gordon 2003). In the long run this led to the erosion of light industries in Japan, which had been replaced by the heavy industries during the 1940’s (Johnson 1982). Silk and textile mills were converted into aircraft and shipbuilding plants—Kishi’s and Yoshino’s earlier goal of a heavily industrialized country was finally realized. But at a huge cost: just two years later Japan would surrender in World War II and its prospects for future prosperity were necessarily bleak.

Kishi was still supportive of the war effort in 1943, when he and Tojo took the final step toward complete state domination of industry with the creation of the Ministry of Munitions (Johnson 1982). MM was the direct successor to MCI and would eventually be transformed into MITI during the Occupation. It was the leader in a hopeless war effort, and Kishi began to realize such starting in 1944. When Japan finally did accept defeat in August of 1945, Kishi, along with Tojo and dozens of others, was imprisoned in Sugamo Prison to await trial by the International Military Tribunal for the Far East (Kurzman 1960). Tojo was hanged in 1948 but Kishi was never tried, despite being suspected of Class A War Crimes. His non-trial is probably more a testament to the American change of heart toward Japan in 1947—called the “Reverse Course”—than any absence of guilt (Gordon 2003). Throughout most of the war effort his peers and the public revered Kishi as a man of unmatched intelligence and foresight despite the fact that most of his successes extended the war and the country’s misery (Kurzman 1960). Now the country was in utter ruin and Kishi a marginalized figure of the wartime elite.

The American victors quickly established their supremacy in Occupation era Japan. They dismantled and changed many of the institutions and practices that Kishi had promoted as Minister of Munitions. They replaced an Empire with an American-style democracy and a Naval Officer Prime-Minister, Suzuki Kantaro, with an anti-war conservative, Yoshida Shigeru (Gordon 2003). Shigeru would become, along with Kishi, one of the founding fathers of the “1955 system” in Japan, but they hardly liked each other. Shigeru was suspicious of Kishi’s activities during the war, especially his heading the Ministry of Munitions (Johnson 1982). Shigeru worked with the Americans to try and reinvigorate Japan politically and economically. Kishi’s industrial policy came under fire. In 1949, the President of Detroit Bank, Joseph Dodge issued a set of policy recommendations—known as the “Dodge Line”—that attempted to inject many neo-classical ideas into Japan’s post-war economy. In particular, Dodge recommended the cessation of state subsidies to industry and the eradication of the Reconstruction Finance Bank, which was giving loans to fledging businesses uneconomically in Dodge’s view. Shigeru and his followers in the bureaucracy, who had filled the vacuum in Japanese politics left by the American Occupation, implemented Dodge’s plan in 1949 (Johnson 1982). But it was only a temporary measure. By 1951, the Japan Development Bank was created and continued the role of the Reconstruction Finance Bank.

Despite Shigeru’s attempts to populate the bureaucracy with officials loyal to him and not Kishi, he could not prevent Kishi’s idea of industrial policy from sticking. Nor did he necessarily want to; despite their political differences, Kishi and Shigeru were still devout nationalists and wanted to see an independent and economically viable Japan once more. After the reverse course, the broad goals of the American occupiers were necessarily narrowed: to make Japan a bastion against communism in the East, the Japanese would need a modest remilitarization and a substantial economic renaissance (Gordon 2003). The only way to achieve high growth in the short-term would be to have the state intervene in markets to once again effectively direct resources toward production for the public interest. Ikeda’s launch of the People’s Finance Corporation and Council for Industrial Rationalization in 1949 was a token of Kishi’s philosophy winning out, even among Yoshida’s closest followers (Gao 1997). The advent of the Korean War in 1950 woke up Kishi’s production machine as the Japanese began to fulfill American orders for munitions and battle supplies and started what would become the “high-growth era” in modern Japanese history—the start of Japan’s post-war economic miracle (Johnson 1982). Ironically, it was Ikeda’s MITI, the reincarnation of Kishi’s Ministry of Commerce and Industry, that led the economic mobilization of Japan’s resources after the war, just as Kishi’s MCI and MM had led the military mobilization during the war. By 1952, MITI was to come full circle: Ikeda was forced out due to a disparaging remark about the sacrifice of small and medium-sized firms, and Kishi, who was finally allowed back into public life, was placed at its helm (Johnson 1982).

The stunning continuity of leaders and institutions before, during, and after the war was a great contributor to Japan’s post-war economic success. The war, a tragic experience for all, was not necessarily useless: young and old leaders ambitiously pushed the envelope. The country’s meteoric economic growth in the 1950’s and 1960’s was a function of that ambition fitted to a new economic and political environment. In 1952, Kishi and his followers at MITI adapted their industrial policy to a new economic climate by passing the Enterprise Rationalization Promotion Law (Johnson 1982). By 1952, Japan and parts of Western Europe were again on their feet, supported and even propped up by the United States part of a new international order that promoted peace and the free exchange of goods and ideas (Gordon 2003). The industrial policy of the 1950’s was a product of this environment and differed from its earlier “self-control” and “state-control” iterations. The newest iteration was a synthesis of the previous two, a middle ground of sorts: they were balanced out by kyouchou, or “cooperation” (Johnson 1982: 108). This new philosophy was less about international cooperation, which was limited by Japan’s need to protect its infant industries, and more about cooperation among big business, the government, and bureaucracy.

Kishi left the bureaucracy in 1957 to become Prime Minister, but left a long and enduring legacy inside MITI. From 1952 to 1970, Kishi and his followers effectively ran MITI, and by extension the booming Japanese economy (Johnson 1982). The best example is Sahashi Shigeru, called “Mr. MITI,” who took over at MITI in 1966 after more than two decades of service under Kishi. (Johnson 1982: 215) Sahashi worked with Kishi and Shiina at MCI and was brought to MITI by Kishi in the early 1950’s. At MITI he headed the Enterprises Bureau, which was responsible for making long run economic policy, and later the Heavy Industries Bureau, which was in charge of promoting Japan’s many nascent industries including transistors, automobiles, television and steel (Johnson 1982). His philosophy perfectly mirrored the one Kishi had developed after visiting Germany in 1930 before the war had started. Japan in the 1950’s and 1960’s was known for its devotion to “technological innovation in industries, to the installation of the most up-to-date machines and equipment and to generally increasing efficiency” (Johnson 1982: 108). The theory may have existed before the war but Kishi’s experiences running the economy during and after it put that theory to the test. Those experiences weren’t just important for Kishi; they were also essential to dozens of other future leaders, including Sahashi Shigeru, Ikeda Hayato and Satou Eisaku. Kishi, Ikeda, and Satou (who was Kishi’s biological younger brother) would serve as Japan’s Prime Ministers from 1957 to 1972—all former wartime bureaucrats (Gordon 2003). Sahashi was confined to the bureaucracy by his controversial opinions on the war and extreme nationalist views. Kishi, who was similar to Sahashi in these respects, broke the confines of bureaucracy but experienced only modest success as Prime Minister.

His involvement in the war effort was never forgotten. Often remembered as the “ghost of the Showa Era,” no matter how much important Kishi’s wartime experiences may have helped his—and Japan’s—post-war success, there was always a great deal of public mistrust about him. The bureaucratic ambitions that he realized while working behind the scenes during the war did not translate well into the political spotlight (Packard 1966). Kishi’s Prime Ministership probably received more scrutiny than any other in the post-war error and was undoubtedly subjected to some of the greatest pressure in modern Japanese politics (Gordon 2003). It all came to a head in 1960, when Kishi unilaterally pushed the controversial extension of the US-Japan Security Alliance through the Diet on May 19. Yoshida Shigeru worked out the original security deal in 1951, but it called for an optional continuation in 1960. Kishi, eager to cement his legacy and tighten his grip on power, defied the public in passing the extension (Packard 1960). Protests enveloped Tokyo and precipitated Japans’ greatest democratic crisis to date—Kishi was the subject of much antagonism. As a professor at Tokyo University put it at the time, “the pent up resentment and jealousy toward all bureaucrats exploded against Kishi, whose insolence typified the worst aspects of prewar bureaucracy” (Packard 1960: 246). Kishi’s miscalculation—some say the only one of his life—cost him his political career. He resigned on June 21, 1960 (Packard 1966).

The reaction of ordinary Japanese toward Kishi’s dictatorial passage of the Treaty of Mutual Cooperation and Security highlights an ever-present dualism in modern Japanese history. It simultaneously showed how little and how much Japan had changed since the Second World War. Japan’s post-war economy was a product of the industrial policy borne from economic and political crises during the war years (Gao 1997). Ironically, the same nationalism and determination that fueled the Japanese war machine also fueled its phoenix-like economic recovery. The same institutions and people led the country before, during, and after the war (Johnson 1982). Kishi was probably one of the most important people who were in charge of one of the most important institutions during that time span. That he was loved during the war and hated after it is not just a product of his complicated personal legacy; it is a product of Japan’s even more complicated war legacy. There is no doubt that the war was a tragic experience for the Japanese. However, it is equally clear that 1945 was not the “birth” of a new Japan, as many then and now believe. Kishi Nobusuke is the perfect example.

WORKS CITED

Gao, Bai. Economic Ideology and Japanese Industrial Policy: Developmentalism from 1931 to 1965. Cambridge: Cambridge UP, 1997. Print.

Gordon, Andrew. A Modern History of Japan: from Tokugawa times to the Present. New York: Oxford UP, 2003. Print.

Johnson, Chalmers. MITI and the Japanese Miracle: the Growth of Industrial Policy, 1925-1975. Stanford, CA: Stanford UP, 1982. Print.

Kurzman, Dan. Kishi and Japan; the Search for the Sun. New York: I. Obolensky, 1960. Print.

Packard, George R. Protest in Tokyo; the Security Treaty Crisis of 1960,. Princeton, NJ: Princeton UP, 1966. Print.