The downfall of the 73-year-old prime minister was caused by his inability to pass a bill reforming Japan’s endemically corrupt political system. “If we don’t do it,” he had said, “we are all going to sink in a mud ship.” But in the end he had to walk the plank. Tainted by scandal himself, Miyazawa could not persuade his party’s power brokers to change the sordid system that got them where they are. And so, just three weeks before what would have been the crowning moment of his long public life-hosting the Tokyo summit of the seven most powerful democracies in the world Miyazawa’s career effectively ended. After the defeat he called a snap national election for July 18-a vote that could end nearly 40 years of Liberal Democratic rule and break apart the party that has dominated Japan’s postwar politics.

Suddenly, shockingly, the prospect of fundamental change in Japan’s political system actually seems plausible. After decades of one-party rule, the possibility now exists for a competitive, two-party system. And that change, if it comes, could dramatically affect everything, from Japan’s protection of its rice farmers to its trade relations with the rest of the world.

For now, however, Miyazawa will serve as a caretaker prime minister. He has become a “dead body,” the Japanese term for what Americans call a political lame duck. And that means that all sorts of urgent economic business is not going to get done for at least the next several months. Miyazawa, who speaks fluent English, will sit in the chair at the Group of Seven summit, but he will not have the clout to play a leadership role on key issues such as worldtrade liberalization and aid to the former Soviet Union. Stripped of all real power, he will be unable to make significant commitments on stimulating the Japanese economy, which is showing the first, faint signs of recovery from recession. Separate talks with the Americans on bilateral trade also are likely to go nowhere. Washington wants a new framework for reducing Japan’s trade surplus with the United States, but when Bill Clinton sits down with Miyazawa he will be talking to “the headless horseman,” as one Western diplomat in Tokyo put it last week. Miyazawa will have to leave the issue for his successor.

Who that successor will be is far from clear. Two parliamentary factions have broken away from the LDP. One consists of 10 young Diet members who bolted last Friday night. Another is called Reform Forum 21 and is led by two party heavyweights: Tsutomu Hata, a former finance minister, and Ichiro Ozawa, a former cabinet secretary. “I have lived my life at the very core of LDP politics,” Hata said last week. “I felt strongly that it had to be changed and reformed.” Not everyone takes the faction’s commitment to reform seriously. “They are fakes,” charges one of Miyazawa’s allies. Both Hata and Ozawa are products of the old, corrupt system. Ozawa learned how to use money in politics from two masters of the trade: former prime minister Kakuei Tanaka and former party boss Shin Kanemaru, whose careers were ended by scandal.

Another and perhaps more sincere reformist group is the Japan New Party. Led by Morihiro Hosokawa, scion of a famous samurai family, the party has been aggressively and successfully recruiting candidates to run in the next election. Some analysts think the party could win 50 or more of the 512 seats in the next Diet. All three reform groups are now likely to assess whether they could join forces to form a new, potent alternative to the LDP-joined, perhaps, by centrist members of Yamahana’s Social Democratic Party.

Angry voters: In the past, public outrage over political scandals usually subsided with the passage of time, partly because there was no credible alternative to an LDP government. But last week a poll by the Tokyo Broadcasting System showed an astonishing 81 percent of the respondents dissatisfied with politics as usual in Japan. After Miyazawa’s fall, most political analysts concluded that the ruling party was likely to lose the lower-house majority it has enjoyed almost without interruption since its founding in 1955. Some experts said the LDP might lose as many as 100 of the 274 Diet seats it currently holds.

If a genuine two-party system does emerge, more attention will have to be paid to the interests of the average Japanese voter, an urban consumer who pays the highest prices in the world for virtually everything. The political system could become much more sympathetic to calls for open markets and deregulation. That, in turn, could reduce friction with the United States. In the past, the Americans have had to act like an opposition party, applying pressure on such emotional issues as opening Japan’s rice market to foreign competition. That pressure sometimes worked and sometimes did not, but it always rubbed both sides raw. “If Japan had a real opposition party,” says a U.S. diplomat, “it could be the best thing that could happen to our relationship.” It could also give Japanese voters a meaningful choice for the first time in decades.