continue but that what should now be stressed was not speed but the 'utilization of growth' for the good of the whole society. He was concerned that the new MITI policy not become so oriented to social issues that it neglect the nurturing of new industries. He also recognized that too great a social welfare commitment by MITI would raise unmanageable jurisdictional disputes with other ministries. He also explicitly rejected any European or American notion of a static international division of labor; Japan, he said, would have to compete in the computer, aviation, and space industries, and he was not willing to concede these to any other country.
28
In light of all the comment on the 'private-sector industrial guidance model,' the ministry asked the Industrial Structure Council to recommend a new industrial policy for the 1970's. Not surprisingly, since he was in charge of the research efforts, the council confirmed and expanded many of Amaya's ideas. The new policy was published in May 1971. It acknowledged that high-speed growth had caused such problems as pollution, inadequate investment in public facilities, rural depopulation, urban overcrowding, and so forth. It proposed
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adding two new standards to those already in existence for determining what industries were appropriate for the new industrial structure. In addition to a high income elasticity of demand and a high growth rate of productivity, these were an 'overcrowding and environmental standard' and a 'labor content standard.' These new standards meant that the ministry would try to phase out industries that contributed to overcrowding and pollution and replace them with high-technology, smokeless industries ranking very high on the value-added scale. The objective was what was termed a 'knowledge-intensive industrial structure' (
*
*
*), the main components of which would be machines controlled by integrated circuits, computers, robot development of ocean resources, office and communications machinery, high fashion (including furniture), and management services such as systems engineering, software, and industrial consulting. In order to implement and administer these policies, a complete reform of the ministry was also recommended, which Vice-Minister Morozumi (June 1971 to July 1973) undertook to carry out.
29
If during the spring of 1971 the Industrial Structure Council's proposals seemed somewhat visionary and long range, before the summer was over most of the conditions on which they were predicated would be outdated. Two MITI ministers, Ohira* and Miyazawa (November 1968 to July 1971), had exhausted their usefulness in trying to solve the Japanese-American textile dispute. In July 1971 Prime Minister Sato* asked the LDP faction leader Tanaka Kakuei to take over and give it a try. Tanaka was a party politician but with a difference. Not only was he not a former high-ranking bureaucrat, he did not even have a university education. He was a self-made millionaire in the construction, railroad, and real estate businesses; and he had been a member of the Diet from his native Niigata prefecture since 1947, when he was first elected at the age of 29. Ten years later Kishi had appointed him postal minister, which made him one of the youngest cabinet members in Japan's history, and in 1962, when he was 44, Ikeda named him minister of finance (July 1962 to June 1965).
After performing well in that critical post, Tanaka went on to become secretary- general of the LDP, where he won Prime Minister Sato's* respect for his skill in managing two general election victories for the party (January 1967 and December 1969). At the Ministry of Finance and subsequently at MITI he became known as an activist minister, one who told bureaucrats what he wanted done, used them as his own personal brain trust, and often won their respect and loyalty because of his intelligence and generosity.
30
He was well known
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for his unusually sharp memory, and the press nicknamed him the 'computerized bulldozer.' He also had a lot of money of his own, received more of it because of his powerful positions within the party and government, and spent it effectively to enlarge his faction in the Dietall of which ultimately led to his downfall.
Shortly after Tanaka took over at MITI, the 'Nixon shocks' occurred. It is unclear to this day whether President Nixon and National Security Adviser Kissinger were retaliating against Prime Minister Sato * because of his failure to deliver on the textiles-for-Okinawa deal, or whether they simply overlooked Japan in the midst of their other troubles (Kissinger has acknowledged that it took him five years to gain some understanding of Japanese political processes).
31
Nixon and Kissinger did feel that they had reason to be irritated with Japan: capital liberalization was proceeding at a snail's pace, demands that Japan revalue its obviously undervalued currency were consistently rebuffed, the Vietnam War was causing the American balance of payments to hemorrhage, the textile dispute simmered on, and the American press was becoming sharply critical of Japan (see, for instance, the
of March 2, 1970, on Japan's 'hothouse economy,' and the
of March 7, 1970, on 'Japan, Inc.').
Whatever the case, in July 1971 the Nixon administration unveiled its basic shift in United States' policy toward the People's Republic of China without coordinating this demarche in any way with its leading East Asian ally; and on August 16, 1971, it suspended convertibility of the U.S. dollar into gold and put a 10 percent surcharge on imports into the American market. On August 28, 1971, the Bank of Japan cut the yen free from the exchange rate that Dodge had created in 1949; and on December 19, 1971, following conclusion of the Smithsonian agreement ending fixed exchange rates, revalued the yen upward by 16.88 percent to US$1 = ?308. Even before these dramatic developments, Japanese analysts were publishing books on the 'Japanese-American Economic War' and saying that 'the age of Japanese-American cooperation will never return.' This turned out to be vastly overstated, but no one knew that during 1971 and 1972.
Tanaka capitalized brilliantly on the Nixon shocks. He openly championed Japanese recognition of Pekinghis slogan was 'Don't miss the boat to China'and this ruined Prime Minister Sato's* chances of
