huge sums of money in the July election for the upper house and over charges that he had profited personally from his tenure in officeand, worse, that he had not reported the details to the tax authorities. No legal action was taken against him, but on November 26 he resigned as prime minister. Because the LDP had fallen to a new low in public esteem, Vice-President Shiina Etsusaburo* of the LDP turned to Miki Takeo (MITI minister when Sahashi was vice-minister); among politicians Miki was known to the public as 'Mr. Clean.' Among his several
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efforts to refurbish the party's tarnished image in the wake of Tanaka's rule by money-power politics (
), Miki championed Takahashi's law in the Diet.
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Unfortunately for Miki and Takahashi, the prime minister's sponsorship was not enough. The lower house passed the AML revision bill in order to save the prime minister's face, but it did so only on the understanding that Shiina would arrange to have it killed in the upper house, which he did. In February 1976, Takahashi resigned because of frustration and illness. However, as he left the scene, economic critics hailed him as the most colorful and effective chairman in the history of the FTC; and the LDP, now suffering from the thinnest of majorities in both houses, discovered that his proposed revision of the Antimonopoly Law was popular with the public. Thus, on June 3, 1977, a much watered-down version of Takahashi's law was enacted; the law made it somewhat harder for companies to operate blatantly illegal cartels, and it gave the FTC limited authority to break up monopolies.
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The effect on MITI of the black cartel case and the revision of the Antimonopoly Law was to put the ministry on notice that administrative guidance must be used in the interests of the nation and the people, and that the ministry should guard against abuses of its power. MITI had some trouble accepting this message, but it eventually got the point. As former Vice-Minister Morozumi said in a lecture to his juniors in the bureaucracy, as irritating as it can sometimes be, officials are duty bound to act within the law and on the basis of law.
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Under the pressure of all these external events and of its own internal reform, the ministry at last began to internationalize. During 1974 the new Industrial Structure Section in the Industrial Policy Bureau, led by the partly Harvard-educated economist Namiki Nobuyoshi, wrote new plans for the industrial structure that went well beyond both Amaya's 1969 thesis and the Industrial Structure Council's 1971 plan. The new plans also took account of the oil crisis, the economic conflicts with the United States and Europe, the public's changed attitude toward economic growth, and the current recession.
On November 1, 1974, the ministry published its first 'long-term vision' of the industrial structure, a document it revised annually for the rest of the decade and published for public discussion. The statement set stringent standards for energy conservation and petroleum stockpiling, spelled out in detail what a 'knowledge-intensive industrial structure' would look like, identified protectionism as a serious threat and demanded that Japan 'internationalize' for its own good, and in general explained to the public and the politicans where Japan
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stood economically and where it had to go in order to continue to prosper. The vision also introduced the concept of a 'plan-oriented market economy.' This is essentially Sahashi's old 'public-private cooperation formula' as institutionalized within the government; it gives the Industrial Structure Council the responsibility for annual coordination of budget priorities, investment decisions, and research and development expenditures.
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Capital liberalization was finally achieved in the years following the first 'vision' statement. On May 1, 1973, the government had announced that Japan was '100 percent liberalized'except that it still protected some 22 industries as exceptions, still applied all the old rules about joint ventures and subsidiaries, and still maintained numerous administrative restrictions on both trade and capital transfers ('nontariff barriers,' as they are called). Four of the exceptional industries were the standard 'sacred cows' of all countriesagriculture, mining, oil, and retail tradeand one was leather goods, included in order to protect the livelihood of a Japanese underclass, the burakumin. But the other 17 were the new strategic industries that MITI was nurturing.
Computers were the best-known case. Since the late 1960's MITI had poured money into domestic computer research, pushed companies into keiretsu, licensed foreign technology, and held off the competitionin short, MITI had formulated and administered a standard development program on the pattern of the 1950's. Its creation of the Machinery and Information Industries Bureau reflected this campaign: the bureau specifically linked computers and machines in order to prepare the way for the industries that the ministry had identified as export leaders after automobilessemiconductors, numerically controlled machine tools, robots, and advanced consumer electronic goods such as videotape recorders. However, by the mid-1970's MITI realized that protectionism could no longer be used as one of its policy tools, and it therefore scheduled full liberalization of the computer industry for April 1, 1976. Most of the other 17 exceptional industries were opened at the same time, as was retail trade.
The next major sign of internationalization was the ministry's decision to dismantle its main statutory powers, the Foreign Exchange and Foreign Trade Control Law of 1949 and the Foreign Capital Law of 1950. On November 11, 1979, almost 30 years to the day after SCAP approved it as a temporary measure, the Diet enacted MITI's revision of the Trade Law. This revision, which went into effect a year later, abolished the Foreign Capital Law, altered the language of the 'basic purpose' of the Trade Law from 'prohibition in principle' to 'free-
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dom in principle,' and reduced the powers of the government to residual rights of intervention in the economy in the event of balance of payments difficulties or other emergencies.
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With a global trade surplus during 1977 of some $17.5 billion, which was a 77 percent increase over 1976, Japan could finally afford to lower its guard somewhat.
The new economic conditions of the 1970's also afforded MITI opportunities to exercise many of the old functions that it had perfected over the previous 50 years. For example, during the late 1970's it was busy creating cartels in the 'structurally depressed industries' (textiles, rubber, steel, nonferrous metals, shipbuilding, and some petrochemicals) in order to allocate market shares to be scrapped and the number of employees to be retrained or pensioned. Based on the Temporary Measures Law for the Stabilization of Designated Depressed Industries (Tokutei Fukyo* Sangyo* Antei Rinji Sochi Ho*, of May 15, 1978), MITI established a ?10 billion fund (?8 billion from the Development Bank and ?2 billion from industry) for paying firms to scrap excess facilities; and it also obtained an exception to the Antimonopoly Law (opposed by the FTC) for 'investment-limiting cartels' and mergers whose purpose was to reduce excess capacity. It all seemed quite familiar.
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On the positive front, during the years after the oil shock the ministry converted most electric power generation from oil to liquefied natural gas, liquefied petroleum gas, or coal. It also
