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MITI's invention of the concept of 'industrial structure' and the creation on April 1, 1961, of the Industrial Structure Investigation Council (Sangyo * Kozo* Chosa* Kai). The concept was simply a shorthand term for comparisons of Japanese industries with those of North America and Western Europe in terms of their capitalization, export ratios, concentration, economies of scale, and other indicators of international competitive ability. Once such comparisons had been made, the concept was further used to assert that Japanese industries were fully capable of competing in the international commercial arenabut not as they were presently structured. The number of enterprises competing in each industry had to be reduced, the few that were to remain had to be enlarged, and the preemptive investment and excess productive capacity that the keiretsu system had generated had to be brought under control. Industrial structure became the key intellectual defense for the devices Sahashi later promoted as vice-ministermergers and investment- coordination cartels in important industries.
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The Investigation Council perfected and legitimized the concept. Led by Ojima Arakazu, former MCI vice-minister and president of Yawata Steel, the council brought together all the top leaders of Japanese industry; and it produced one of the most searching analyses of any economy ever undertaken by a government.
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When the council's charter expired in 1964, it was merged with the old Industrial Rationalization Council of 1949; and it continues to the present as MITI's main official channel for administrative guidance of industry, the Industrial Structure Council (Sangyo Kozo Shingikai).
The original Industrial Structure Investigation Council was an outstanding example of MITI's employment of an ostensibly civilian commission to popularize and provide authority for its policies. The actual work of the council was done by MITI; the Enterprises Bureau was charged with writing reports and recommendations on such topics as industrial finance, labor, technology, and international economics, while the new Industrial Structure Investigation Office, which was attached to the Secretariat, investigated individual industries. The head of the office was Ojimi* Yoshihisa, the author of Ikeda's 1960 liberalization plan and himself a future MITI vice-minister.
The 50 members of the council strongly reflected MITI's 'old boy' networks. In addition to its chairman, Ojima Arakazu, the membership included Ishihara Takeo, executive director of the Tokyo Electric Power Company; Ueno Koshichi*, executive director of the Kansai Electric Power Company; and Tokunaga Hisatsugu, executive director of Fuji Steelall of them recently retired MITI vice-ministersplus
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such old stalwarts from MCI, MM, and the Cabinet Planning Board as Uemura Kogoro *, Inaba Hidezo*, Kitano Shigeo, Inayama Yoshihiro, and several other former officials. The key subunit of the council, its Industrial Order Committee (Sangyo* Taisei Bukai), where Sahashi worked out his ideas for a new comprehensive control law, had only seven members. They included an ex-Agriculture bureaucrat, the president of the Development Bank, an
editor, the executive director of Keidanren, the president of a private economic research institute, and a former MITI vice-minister (Tokunaga); the committee's chairman was the ubiquitous Arisawa Hiromi, the inventor of priority production during the occupation, a leader of the Industrial Rationalization Council, an authority on the coal industry, and MITI's most important academic adviser.
During July 1961 Sato* Eisaku succeeded Shiina Etsusaburo* as MITI minister, and Sahashi Shigeru succeeded Matsuo Kinzo* (who became vice-minister) as director of the Enterprises Bureau. When this occurred Imai Zen'ei was working in the difficult job of chief of the International Trade Bureau, where in conjunction with the MITI-controlled Coordination Bureau of the EPA he actually decided on the liberalization schedules for various industries. A year later, during July 1962, Imai was transferred to what was normally a preretirement position, director of the Patent Agency. Sahashi thus was left as the last major figure from the class of 1937 with an outstanding record in the mainstream of the ministry, industrial policy.
He still had one obstacle in his path to the vice-ministership, however. Matsuo Kinzo, the incumbent vice-minister, was from the class of 1934; but there were within the ministry two outstanding officials, one each from the classes of 1935 and 1936, who might be expected to take precedence over a member of the class of 1937. One of them, Koide Eiichi (1935), was out of the running because he was vice- minister of the EPA, the post that had been made a preretirement slot after the agency's economists' attempted coup. The other, Obori* Hiromu (1936), former chief of the Mining and Public Utilities bureaus and the current director of the Medium and Smaller Enterprises Agency, was Sahashi's problem. To get him out of the way, Matsuo and Sahashi suggested to Minister Sato that he appoint Obori as vice-minister of the EPA when Koide made his amakudari.
Despite protests from Koide, Obori himself, many other officials in the ministry, and even Chief Cabinet Secretary Ohira* Masayoshi (a future prime-minister and himself no stranger to bureaucratic infighting from his years in the Ministry of Finance), Sato went ahead with
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Obori's * appointment to the EPA. The path ahead now seemed clear for Sahashi, but the involvement of powerful politicians in the internal affairs of the ministry would, like the
affair, come at a price for both the ministry and Sahashi. Sato's* motives were to try to secure MITI as a base of operations for his own political drive to succeed Ikeda as prime ministermuch as Ikeda himself had done with Finance and Kono* Ichiro* with Agriculture. Moreover, rumors had circulated that Sahashi was thinking of running for the Diet after his own retirement, and Sato* wanted to make sure that if elected he would join the Sato factiona point not lost on two other faction leaders, Ikeda and Ono* Bamboku.
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Meanwhile, Sahashi's great achievement as chief of the Enterprises Bureau was the conception and advocacy of the Special Measures Law for the Promotion of Designated Industries (Tokutei Sangyo* Rinji Shinko* Sochi Hoan*, cabinet submission number 151 of 1963). This bill ultimately died in the Diet because it became simply too controversial for any politician to touch, but the debate over it crystalized all the key issues that had surfaced in the Japanese economy after postwar reconstruction, and it paved the way for the informal implementation of the bill's provisions during the late 1960's through administrative guidance. The Special Measures Law was without question the single most important piece of proposed economic legislation since the early years of the occupation.
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Its genesis, the furor surrounding it, and its final demise involved liberalization policy, jurisdictional disputes between MITI and the Ministry of Finance, the Antimonopoly Law, a debate over 'excess competition' in the Japanese economy, factional politics in the LDP, and a battle inside MITI over the vice-ministershipin short, the whole range of issues that go to make up Japanese industrial policy.
The basic problem addressed by the Special Measures Law was not liberalization itself, although the foreign demands for liberalization provided an excellent cover to avoid saying too publicly what the problem really was. Sahashi was less enthusiastic
