On July 18, 1964, a month after Fukuda made this speech, Ikeda reshuffled his cabinet and replaced Fukuda with Sakurauchi Yoshio, the son of a prewar MCI minister (1931) and a leader of the Kono* faction (Nakasone faction after Kono's* death in July 1965). Sakurauchi continued as MITI minister in the Sato* cabinet but was replaced by Miki Takeo in June 1965. It was thus Sakurauchi, Miki, and Sahashi who had to combat the recession by implementing the ideas of the Special Measures Law through administrative guidance.
The institution of administrative guidance has done more than any other Japanese practice to spread the belief around the world that the Japanese government-business relationship is based upon some underlying, possibly culturally derived, national mores that have no parallels in other countries. The London
defines administrative guidance as 'Japanese for unwritten orders'; and Prof. Uchida Tadao of Todai* writes that 'the Diet is almost powerless in . . . determining economic programs in this country as such authority actually has been transferred to the administrative sector, particularly government offices.'
33
Many foreigners have protested. 'What bothers our manufacturers,' says Ernst Hermann Stahr of the Union of German Textile Manufacturers, ''is that it's not really a matter of Japanese competitiveness, but a maze of impenetrable government supports and subsidies. Our people feel that whatever they do, the Japanese will just lower their prices.'
34
It was administrative guidance that gave MITI the reputation during the 1960's of being the 'Ministry of One- Way Trade.'
35
On the other hand, a Japanese analyst writes, administrative guidance 'is what makes Japan's business tick. It is what made this country the world's third industrial nation. It is one of the pillars that support Japan Incorporated.'
36
There is nothing very mysterious about administrative guidance. It refers to the authority of the government, contained in the laws establishing the various ministries, to issue directives (
), requests (
*), warnings (
), suggestions (
), and encouragements (
*) to the enterprises or clients within a particular ministry's jurisdiction.
37
Administrative guidance is constrained only by the requirement that the 'guidees' must come under a given governmental organ's jurisdiction, and although it is not based on any explicit law, it cannot violate the law (for example, it is not supposed to violate
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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 (
*
*). 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
