MITI and the Japanese miracle

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the Antimonopoly Law). During the 1950's administrative guidance was rarely mentioned in connection with MITI's actions because most of its orders, permissions, and licenses were then firmly based on explicit control laws. Administrative guidance came to be openly practiced and discussed during the 1960's, and then only because MITI lost most of its explicit control powers as a result of liberalization and the failure to enact the Special Measures Law. In a sense, administrative guidance was nothing more than a continuation by MITI of its established practices through other means. All Japanese observers concur in Shiroyama's conclusion. "After the failure of the Special Measures Law, the only thing left was administrative guidance."

³⁸

Administrative guidance differs from orders issued in accordance with, for example, the Foreign Exchange and Foreign Trade Control Law in that it is not legally enforceable. Its power comes from government-business relationships established since the 1930's, respect for the bureaucracy, the ministries' claim that they speak for the national interest, and various informal pressures that the ministries can bring to bear. The old Japanese proverb used to describe this threat of governmental retaliation is "To take revenge on Edo by striking at Nagasaki," meaning that the bureaucracy has the means to get even with a businessman who refuses to listen to its administrative guidance.

³⁹

As we shall see below, MITI has on occasion retaliated with force against an enterprise that rejected its advice.

In some of its forms administrative guidance is indistinguishable from a formal legal order by the government. An example is guidance through policy statements (

shido

*

yoko

*). This refers to the obligation of the public to pay attention and respond in good faith to properly drawn and published policies of the government, although penalties for noncompliance have never been specified. The most famous case of this form of administrative guidance occurred during the early 1970's, when the city of Musashino in the suburbs of Tokyo issued a policy statement saying that housing contractors who built large projects had to cooperate in providing or helping to buy land on which to build elementary schools. When a contractor ignored these guidelines, the city capped the water and sewage lines he had built for the project with concrete. The contractor took the city to court, but the court upheld the city.

⁴⁰

Generally speaking, few objections are possible when administrative guidance is couched in terms of the national interest. The press likes to cite the case of a city bank executive who called on the Ministry of Finance to protest that his bank could not absorb the full quota of government bonds assigned to it by administrative guidance. A Banking Bureau official replied, "So you think