REVIEW ARTICLE

The Man Who Would Import:

A Cautionary Tale about
Bucking the System
In Japan

Ore wa Tstisansho ni barasareta! By Sato Taiji. Tairyusha, Tokyo, 1986.

236 pages. Y1,000.

Reviewed by
FRANK K. UPHAM
Boston College

One of the minor mysteries of Japanese industrial policy has been how the
Ministry of International Trade and Industry (MITI) has implemented pol-
icy without recourse to formal legal compulsion. No single book can an-
swer this question, but I Was Butchered by MITI! gives a detailed and con-
vincing account of how policy was enforced in the petroleum refining
industry, one of several areas of the Japanese economy where MITI's pol-
icy demands are strong but its legal power weak. It is the story of the at-
tempt by Lions Oil, a small independent gasoline retailer owned by Sato
Taiji, to import gasoline in defiance of MITI's policy and the industry's
cartel. On a second level, it is the story of what happened when one Japa-
nese entrepreneur tried to make a buck by bucking the system.
The role of government in the Japanese economy is an important intel-
lectual and political topic in contemporary America. Whether Japanese
economic growth represents the fruits of a government-led "developmental
state" or, on the contrary, the blossoming of the free market has escaped
the academic confines of Japanologists and become an issue in the political
debate over American domestic and international economic policy. While

I benefited greatly from the comments of Richard J. Samuels, J. Mark Ramseyer, John 0.
Haley, Amelia Porges, several members of the Ministry of International Trade and Industry,
and many others.
1. The essence of this debate is neatly captured by a review of Daniel Burstein's Yen!
Japan's New Financial Empire and its Threat to America (New York: Simon and Schuster,
1988) by Jonathan R. Macey entitled "Pop-Thinking About Japan," Cornell International
Law Review, Vol. 22, No. 3 (Symposium 1989), pp. 623-33. Burstein is apparently a cham-

323
Journal of Japanese Studies, 17:2
? 1991 Society for Japanese Studies

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324 Journal of Japanese Studies

the industrial policy thesis was the conventional wisdom through the
1970s, the ideological ascendancy of neoclassical economics in America
and the growing independence of the private sector in Japan facilitated the
emergence in the 1980s of a revisionist attack on the idea of the state as
a central actor in Japanese economic development. To these scholars, the
best that can be said of government economic policy in the postwar period
is that it failed because the bureaucracy was too weak to implement it and
therefore too weak to affect seriously the operation of the market.2
Besides challenging bureaucratic omniscience in guiding the economy,
proponents of the free market thesis have raised the separate question of the
bureaucracy's power to influence private behavior. Part of the critique has
focused on the strength of politicians and the Liberal Democratic Party
relative to the bureaucracy, but another aspect focuses on the ministries'
lack of legal power. When one examines the statutory basis of MITI au-
thority, for example, it is clear that MITI has very little legal power to con-

pion of the dirigiste school; Macey is clearly a champion of the "unleashing of market
forces" school. Neither is a Japan specialist and both are addressing general audiences with a
great deal of attention to their own domestic political agenda and little regard to the complex-
ities of Japan itself.
The treatment of these issues among students of Japan, although certainly just as heated
at times, shows a great deal more sensitivity to the complexity of the society, economy, and
politics of Japan. For the origin of the concept of "developmental state," see Chalmers
Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975 (Stan-
ford: Stanford University Press, 1982). For an example of a contrary view, see John 0. Haley,
"Adminstrative Guidance versus Formal Regulation: Resolving the Paradox of Industrial Pol-
icy," in Gary R. Saxonhouse and Kozo Yamamura, eds., Law and Trade Issues of the Japa-
nese Economy: American and Japanese Perspectives (Seattle: University of Washington
Press, 1986), pp. 107-28. Haley describes these contrasting approaches as ascribing Japan's
postwar economic success either to "the promotional policies of a gifted and farsighted bu-
reaucracy in large measure designed to suppress domestic competition" or to "the competitive
freedom of the markets" (p. 107). Haley clearly comes down on the side of the latter ap-
proach, but his article is of especial interest for our purposes because it discusses not only the
general question of competition versus regulation but also the effectiveness of administrative
guidance when not backed up by formal legal power, which was the case in MITI's battle with
Lions Oil.
2. Haley, for example, resolves the "paradox" of ubiquitous industrial policy and a
"fiercely competitive" domestic market by arguing that administrative guidance, the govern-
ment's most common tool for implementing its policies and the means used by MITI in the
Lions Oil incident, was so weak that "Japanese postwar economic achievement can thus be
credited in part to administrative guidance because it ensured the failure of a bureaucratically
set agenda" (emphasis added). Haley, "Administrative Guidance," p. 108. Instead, Haley ar-
gues, the weakness of administrative guidance "helped to preserve a competitive market econ-
omy by maximizing the freedom of individual firms over economic decisions although behind
the veil of pervasive governmental direction" (ibid.). Haley notes, however, that where the
government had the formal legal power to force compliance with regulation, competition
could be suppressed.

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 Upham: The Man Who Would Import 325

trol corporate behavior. Without the legal means to influence behavior,

the critics argue, it is unclear why any private firm would comply with
MITI policy unless it was in the firm's own interests. It follows that if firms
comply only when it is consistent with their interest, there is little reason
to credit claims of an independent government role in Japan's economic
development.
One counterargument to this portrayal of MITI irrelevance is the image
of Japan, Inc., a vision of Japanese society as dominated by a partnership
between big business and elite bureaucrats. Here, otherwise profit-seeking
corporations comply voluntarily with distasteful policy because the bureau-
crats' use of consensus-based decision making reinforces a traditional sub-
missiveness to authority and insures an identity of long-term interests be-
tween the government and business. Put on an international level, this
description of Japan engenders in foreigners a fear of Japan as "a mono-
lithic, consensual, machinelike organism bent upon national aggrandize-
ment" at the expense of every other nation's economy.3
While early versions of this school have been criticized for ignoring the
influence of politicians and for exaggerating the unity of both Japanese
business and bureaucracy, more recent versions, dubbed the "New Japan,
Inc.,"4 have stressed both the multiplicity of competing forces in Japan
and the ties among them. Variously phrased as "reciprocal consent"5 or
the "network society,"6 these approaches emphasize the matrix of relation-
ships that combine elements of both competition and interdependency.
They can tell us a great deal about the overall shape and nature of economic
policy and provide a plausible explanation of why firms are willing to sac-
rifice short-term interests in their relations with the government and with
each other. Even these accounts, however, can not explain fully why an
individual firm would voluntarily sacrifice its long-term interests to comply

3. Richard J. Samuels, The Business of the Japanese State: Energy Markets in Com-
parative and Historical Perspective (Ithaca: Cornell University Press, 1987), p. 19. My de-
scription of these two schools draws on Samuels' similar description, but the schema is quite
common, if inevitably unfair to the scholars involved. See, for example, Ronald Dore's
review of David Friedman, The Misunderstood Miracle: Industrial Development and Politi-
cal Change in Japan (Ithaca: Cornell University Press, 1988) in Journal of Asian Studies,
Vol. 49, No. 2 (May 1990), pp. 402-4.
4. See Gregory W. Noble, "The Japanese Industrial Policy Debate," in Stephan Hag-
gard and Chung-in Moon eds., Pacific Dynamics: The International Politics of Industrial
Change (Boulder: Westview Press, 1989), for a review of the literature on industrial policy.
5. Samuels, Japanese State.
6. Tsujinaka Yutaka, "Reng6: The Final Participant in Japan's Osmotic Corporatism: A
Network Interpretation of its Strength," paper presented at the panel, "Incorporating Labor:
The Process of Integration and Opposition in Contemporary Japan," chaired by Gary D. Al-
linson, 42nd Annual Meeting of the Association for Asian Studies, April 7, 1990, Chicago,
Illinois.

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326 Journal of Japanese Studies

with national policy or why some MITI initiatives are followed and others
ignored. While fully addressing the institutional and political complexity
of policy implementation, they usually sidestep the ultimate lawyer's ques-
tion of precisely how bureaucrats, or others, obtain compliance in individ-
ual cases. Instead, they simply refer to the black box of MITI's administra-
tive guidance, the very same device that the free market critics dismiss as
too weak to be effective.7

One reason that the phenomenon of administrative guidance is rarely

examined is that in the difficult cases it is neither explicit nor public.
When the conflict involves large firms or whole industries as in Sumitomo
Metals' resistance to a steel production cartel in the mid-1960s or the battle
between the petrochemical industry and the petroleum refiners over the
price of naphtha in the 1970s, it is news and the media respond with lavish
and detailed coverage. But when the object of persuasion is a small firm
trying to exploit an opening in an industry cartel, the process of pressure
and persuasion less frequently comes to light.
The academic value of Sato's I Was Butchered by MITI!, therefore, is
that it illuminates this process from a perspective that is rare in Japan and
unique in the English literature on industrial policy: that of the individual
entrepreneur faced with an opportunity that runs directly counter to na-
tional policy. What makes the book fun to read is the passion and flair for
the dramatic with which Sato attacked establishment policy and the candor
and irony with which he describes the seamy deal-making that held this
particular piece of industrial policy together.
Because, the day-to-day detail of the Lions Oil incident is what makes I
Was Butchered by MITI! valuable and because few of my readers will ever
read the book, this essay will spend more time and space than usual in de-
scription of what happened when and who said what to whom.8 Because
I also would like to capture some of the vitality of the original, I have
retained Sato's convention of using boxing rounds to establish the chro-
nology. I have not, on the other hand, retained his habit of describing the
physique of each of the men who appear in the story (much as interviews in
what used to be the "women's page" of American newspapers always de-

7. Samuels, Japanese State, p. 224.

8. For those readers who wonder how much to trust Sat6's account, I can report that it is
consistent with most media reporting of the same events, although a great deal of the detail
did not appear in the media. Since the media was to some extent manipulated by Sato, how-
ever, consistency here is not conclusive. I can also report that, in separate interviews, three
MITI officials confirmed the gist of what Sato wrote. They all believe, however, that there is a
great deal more self-interest in Sat6's actions than is apparent from Sato's "David and Goli-
ath" portrayal of events. It may also be of interest to note that Sato was not always accurate in
facts known to this reviewer, such as the time on pp. 142-43 when he referred to Columbus
discovering America in the Mayflower! Nonetheless, I believe that most of what Sato says and
what I repeat here constitutes an accurate, albeit exceedingly biased, account.

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 Upham: The Man Who Would Import 327

scribe what female interviewees are wearing no matter how unrelated to the
topic of the interview). In the second section of the essay I speculate on
what the book can and can not tell us about the role of law in Japanese
industrial policy and economic regulation.

1. The Saga of Lions Oil

Round One: The Growth of an "Outlaw Business"

Sat6 Taiji is not your ordinary Japanese executive celebrated in the

pages of Fortune or profiled in Business Week. He did not graduate from
Keio or the University of Tokyo, and he is not the scion of an illustrious
family. He is the bastard son of a blackmarketeer and a spurned mistress
whose first and true love had been a famous actor. He is a former amateur
boxer and the unrepentent veteran of street fights with Korean toughs; in-
stead of using his large gasoline profits to play golf in Scotland or buy
property in Hawaii, he maintains a stable of boxers and spent a good deal
of money and energy in a quixotic attempt to import rice into Japan. Sato is
a renegade within the insiders' world of Japanese business, and his career
is testimony to both the opportunities and limits accorded the outsider in a
world of unspoken agreements and implicit promises.
Sato's first gas station was a rundown building that had been repos-
sessed by the bank after the previous owner had defaulted on the mortgage.
When Sato initially approached the same bank for a loan to purchase the
station, he was refused. He had no business experience and the location on
a one-way residential street was considered unsuitable for a gas station.
Sato then went to the home of the bank's managing director and stood out-
side his door every morning, bowing silently as the director left his gate
and entered the company car to go to work. On the fifth day, Sato was no-
ticed, prostrated himself before the director, and received the loan (p. 39).
He then had to get gasoline to sell. Since the previous proprietor of the
station still owed his wholesaler for gasoline, the keiretsu9 wholesalers ini-
tially refused to sell to Sato and he was forced to go to the spot market,
which amounted to about 3 per cent of total sales of gasoline each year.
The wholesale price then was Y98/liter, the retail price was Y 120, and the
spot price was Y75. Sato figured that he could sell retail for Y 100 and still
make a profit. But a serious problem remained: retail sales were always on
credit and Sato did not have enough capital to wait until his customers paid
him (p. 42).

9. Sato uses the term keiretsu to refer to the refining companies who were the only do-
mestic producers of gasoline and the only firms allowed to import under MITI's administrative
guidance. They were the dominant members of the Petroleum Association of Japan, the trade
organization that cooperated with MITI in trying to maintain the wholesale and retail cartels.

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328 Journal of Japanese Studies

So he decided to sell cheaply for cash, a tactic he describes as "outlaw

business" (p. 42). To do so, he did what no other gas station owner had
done. He advertised on radio, put fliers on cars, and set up a neon sign.
Innovative marketing and low prices worked. In 90 days, his volume was
six-fold that of neighboring stations, and he was on his way to acquiring
his next station.
His competitors' reaction was dramatic. Local members of the gas sta-
tion trade association organized convoys of cars to go to his station. Each
bought Y500 of gas; demanded clean ashtrays, windshields, etc.; and paid
with Y 10,000 notes. They cut his hoses, poured water in his storage tanks,
blocked delivery tankers, and harassed their drivers (p. 44). The police
were no help. When Sato knocked out one of his tormentors who had
attacked him, he was fined Y300,000 for excessive force in self-defense
(p. 45). When Sato complained to the police about the harassment, includ-
ing the cutting of hoses and insertion of water, they replied, "You're de-
stroying order in the industry. You're the problem" (p. 53). They refused to
protect him. To add insult to injury, patrol cars were allowed to buy gas
only at stations owned by association members.
Despite this harassment, Sato prospered. By 1981, he had founded
Lions Oil and had four stations and 35 employees. He also had great ambi-
tions for revolutionizing gasoline retailing. Other entrepreneurs were ex-
ploiting the same market niche and by the early 1980s there were 400 inde-
pendents nationally with about 1 per cent of retail gasoline sales (p. 53).
They were stymied, however, by the refiners' control of distribution. As
Sato put it, as long as the majors controlled the supply of gasoline, the
station owners were simply their "male geisha." So Sat6 began to study
alternatives.

Round Two: The Decision to Import

The precipitating event that made Sato and others think of importing
gasoline directly was the attempt by MITI and the trade association dur-
ing 1982-83 to require all gas stations to close on Sundays and holidays
(pp. 55-58). Sunday closing was ostensibly a reaction to decreased de-
mand and energy problems, but it stood to hurt the independents most be-
cause they relied on private drivers rather than company fleet accounts.
The independents formed an association to oppose Sunday closing and
eventually filed an administrative suit, but threats by MITI and the whole-
salers to raise prices and cut volume to recalcitrant stations convinced the
independents that directly importing gasoline was their only chance for
economic freedom. They formed the Direct Import Association (DIA) and
sent a representative to Singapore in October 1983, to inquire into import
possibilities. Sato was a vice president of the association.

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 Upham: The Man Who Would Import 329

Importing gasoline was not illegal in Japan in 1983. Section 12 of the

Petroleum Industry Law (PIL)'? required anyone who wished to import
petroleum products to notify MITI and to file annual plans. MITI had
the right to issue a formal request (kankoku) to the importer to change his
plans," but neither the PIL nor any other statute gave MITI the power to
compel compliance with its kankoku. In this respect, the PIL was typical of
many industrial policy statutes.12 It gave MITI a great deal of authority and
responsibility but very little legal power.13 General oversight authority and
cooperation with the industry were enough for MITI to get a high degree of
compliance with its policies in many areas of industrial policy,'4 but it was
not to be enough in the case of Lions Oil.
Sat6 and his allies in the DIA had consulted counsel and were very
aware of the legal vulnerability of MITI's policy. When Association Chair-
man Murata of Sawarabi Oil, a chain of eight independent stations located
in Kansai, went to MITI in early 1984 to report that they were importing
gasoline, the following exchange took place:

DIA member: We want to import gasoline, so we've come to register.

MITI official: There's no such thing.
DIA member: According to the law, if we register, it's OK.

Eventually registration was accepted but only as the import of sample

gasoline. The sample (30 kiloliters of gasoline, kerosene, and light oil) ar-
rived in Kobe on January 9, 1984 (pp. 60-61). Sat6's plans were on track.
The import of the sample convinced the industry and MITI that the
DIA was serious, and on March 12, 1984, a secret meeting was held at the
headquarters of the Petroleum Association of Japan between Murata and
Sat6 and representatives of MITI. After they were unsuccessful in persuad-
ing the DIA to forego importation because it would violate national policy,
the senior MITI official made the following proposal:

MITI has considered imports, but we want to go very cautiously because

of the policy of domestic refining of all domestically consumed petroleum
products. But we don't want any dealers running into difficulties, and we
could, as a part of our small and medium-scale business policy, talk to the

10. Law No. 128 of 1962.

11. Sections 12 and 10.

12. See Frank K. Upham, Law and Social Change in Postwar Japan (Cambridge,
Mass.: Harvard University Press, 1987), pp. 166-204.
13. The only real compulsory power granted to MITI by the PIL was the power to license
new petroleum refining capacity in ??4-7. While its leverage was effective in the 1960s when
the refining industry was expanding, by the 1980s, when the industry was shrinking, it was
meaningless.
14. It was less successful in other areas, a fact that is frequently pointed out by critics
of the industrial policy thesis. See, e.g., Haley, "Administrative Guidance versus Formal
Regulation."

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330 Journal of Japanese Studies

wholesalers about getting Sawarabi cheap gasoline. Adjustment payments

[under the table rebates from wholesalers to retailers] are prohibited, but
they may be unavoidable here. It would be a problem for MITI to help one
or two individual companies, so we'd like your help in not letting this leak
out. Since Sawarabi is a well known and influential firm, it would not be
advisable to have the money come directly from a wholesaler. It doesn't
matter how, but a wholesaler's name should not appear in Sawarabi's bank
account. We can use a dummy for that, perhaps a subsidiary. And for Lions
Oil, we've talked to General Oil's Section Chief for Operations. You won't
fall into the red. (pp. 63-64)

This deal leaked to the media and was denied by all (p. 67). At that
point, Murata and Sat6 again moved to import, and in May Sawarabi for-
mally notified MITI of its intention to import 3,000 kiloliters of gasoline
from Singapore. On July 9, however, Murata announced at a press confer-
ence, without any prior warning to Sat6 or other members of the DIA, that
he had decided not to import gasoline and that the DIA was henceforth
dissolved. Although disavowing any knowledge of the details, Sat6 as-
sumes that MITI and the industry had offered Murata an even better deal
(p. 71).

Round Three: The Singapore Contract

Sato was on his own, but he was determined to continue the effort be-
gun by the DIA. In November he went to Singapore and, after overcoming
resistance caused by Murata's treachery, signed a contract with the Sin-
gapore Petroleum Co. for the purchase of 3,000 kl of gasoline. After some
initial difficulty because of the unprecedented nature of the deal, Sato was
able to secure a letter of credit, and on December 3, he filed the "Intention
to Import Gasoline" and "Plan for Importation of Gasoline" with MITI.
On December 6, 1984, Sato held a press conference and announced that
Lions Oil was importing 3,000 kl from Singapore and planned to sell it at
retail at Y 140, as opposed to the average price of Y 150-155.
The MITI response was to convene the Petroleum Council, a statutory
advisory organ attached to MITI. It met on December 20 and quickly is-
sued a report consistent with preexisting policy. It noted the long-standing
Japanese policy of subsidizing kerosene, widely used for home heating in
Japan, by pricing gasoline high enough that petroleum refiners could sell
kerosene cheaply. The report warned that allowing Lions Oil to import gas
would create a price war in an industry already beset by excessive competi-
tion,'5 would destroy current energy and petroleum policy, bankrupt gas

15. Although bizarre to those familiar with the theory of the market, the concept that
competition that produces consistently low profit margins and threatens to bankrupt major
firms within an industry is "excessive" is commonly held in Japan and "excessive competi-
tion" is a frequently used justification for industrial policy measures.

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 Upham: The Man Who Would Import 331

stations, and generally create chaos in a heretofore orderly industry.16 The

Council agreed that in the long term imports should be liberalized but ar-
gued that it should be done very cautiously.
Acting on this report, MITI called Sato to the ministry on the 22nd and
asked him to reconsider. Sat6 refused and as he left MITI headquarters, he
told the waiting television cameras that he was importing gasoline to "cor-
rect MITI policy for the sake of Japan." He and his cause had become a
media event-as Sato put it in boxing terms, "I was in the ring [with
MITI], and all of Japan was behind me" (p. 111).
Two days later, MITI used its power under the PIL to issue a request
(kankoku) to Lions Oil that it withdraw its plan to import gasoline. Sat6
countered with a press conference at the port city of Kobe on December 27
where he denounced MITI policy as "petroleum sakoku" and announced
what he hoped would be a fait accompli: that the tanker Southern Cross 8
carrying 3,000 kl of Singapore gasoline would be entering port the next
day. Maintaining the historical analogy, its arrival would be, in Sato's
words, the second coming of the "black ships" of Commodore Perry
(pp. 118, 129).
The Southern Cross 8 entered Kobe harbor as scheduled on the 28th
accompanied by chartered boats, press helicopters, and whirring television
cameras. The Japanese media did not spare the hyperbole: One account
proclaimed the end of the Showa Era and announced that 1985 was the first
year of the "Imported Gasoline Era" and a second compared the Southern
Cross 8 to other historic ships such as the Mayflower (pp. 130-31). The
gasoline was unloaded to storage tanks the next day, and Sato was in-
formed that he could receive the gasoline and pass customs on January 7,
1985. He went home to celebrate the best New Year's of his life.

Round Four: MITI Counterpunches

Importing gasoline may not have had the revolutionary potential of the
Meiji Restoration or Sato Taiji the historic stature of Commodore Perry,
but MITI and the industry were taking him seriously. Free access to cheap
imported gasoline would have destroyed the basis of MITI's industrial and
energy policy and led to the collapse of the cartel that kept the refining
industry afloat. Lions Oil may have been small and 3,000 kl a miniscule
amount of gasoline, but no one was underestimating the long-term threat.
At the very moment that Sat6 was celebrating the arrival of the Southern

16. The report is included in Butchered at pp. 114-18. It is important to note that the
Petroleum Council was correct in arguing that Japanese consumers were not evenly burdened
by this policy. Since the high-priced gasoline subsidized low-priced kerosene, Japan's drivers
were sacrificed to benefit those households using kerosene for heat. Although Sato argued that
liberalization would benefit all consumers, he gave no convincing reason to disbelieve MITI's
argument that low heating costs were more in the national interest than low-priced gasoline.

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332 Journal of Japanese Studies

Cross 8 and the second "opening of Japan," his enemies were plan-
ning their counterattack. And, as Sat6 was soon to learn, knowledge of
MITI's formal legal power was not a reliable guide to the weapons at
their disposal.
Sat6 returned to work on January 4, 1985. Before beginning the new
year, he addressed his staff on the importance of the task before them and
urged them to continue the revolution that Lions Oil had begun. Only mo-
ments later as Sat6 prepared to begin the final arrangments for bringing the
gasoline through customs, there was a knock on his office door. In came
Yoshida, the branch manager of Jonan Credit, Lions' main source of fi-
nancing. With none of the usual New Year's greetings, Yoshida burst out,
"President Sat6, we can't continue financing! It's not my idea, but ....
We just can't finance any company that does not follow national policy"
(p. 147).
Because of previous difficulty in opening a letter of credit for the con-
tract with Singapore Petroleum, Sato had made prior arrangements with
Jonan, with which he had had long previous dealings, for the Y200 million
needed to clear customs. He had gotten Yoshida's approval and had de-
posited the necessary collateral. Without the Y200 million, Sat6 would not
be able to get the gasoline out of storage or sell it on the retail market. Yo-
shida's news had destroyed, at least temporarily, Sato's dream and threat-
ened his business, but Yoshida could offer no explanation beyond murmur-
ing apologies and repeating that it was a decision of the main office.
It was clear to Sat6 that MITI was behind the withdrawal of credit, but
he could not understand how MITI had applied pressure to Jonan. Unlike
boxing, Sat6 was now facing a foe who was invisible and who would not
even admit to being in the ring with him. No matter how hard Sato wanted
to strike back, there was no one at whom to direct his anger. Then, soon
after Yoshida's departure, Sato received a phone call from a MITI official
asking him if he wanted to meet. While an NHK reporter listened in, Sat6
tried to get the official to commit himself over the phone so that the MITI
pressure would become explicit:

Sats: When you say we should meet, concretely what do you

mean?
MITI official: We can talk about that when you get here.
Sato: I'm going to import, you know. On the seventh, I'm going
through customs.
MITI official: Can you?
Sat6: What do you mean?
MITI official: Nothing, nothing. We've got to meet before that.
Sato: What'll we talk about if we meet-the Minister's kankoku?
MITI official: Everything and anything ... it's a chance to talk.
Sat6: What if I can't?

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 Upham: The Man Who Would Import 333

MITI official: Oh, that would be trouble.

Sato: There's no trouble . . . is this administrative guidance?
MITI official: Mr. President, if you insist on a position that will ruin
you ...
Sat6: Why don't you say what you mean?

But Sato could induce no "smoking gun" indiscretion over the phone. Nor
could he or his supporters among the economic press figure out exactly
how MITI had exerted pressure on the managers of Jonan Credit. The re-
sult was clear, however. Sat6 could either take the risk of going to loan
sharks or capitulate. He chose the latter.
On January 7, the day on which he was originally to be in Osaka to
bring the gasoline through customs, he was instead meeting with MITI
officials in a room within their Kasumigaseki headquarters. Sat6 did not
give in easily, but after two hours of arguing, he decided to survive to fight
another day. On the eighth he again went to Kasumigaseki to sign an agree-
ment formally accepting MITI's kankoku and renouncing any intent to im-
port gasoline in the future. In addition he made a written request that MITI
use its good offices 1) to find a buyer for the current cargo at commercial
rates and 2) to assure future allocation of gasoline to Lions at the previous
conditions and for commercial prices. In other words, Sato was forced to
ask formally for MITI's intervention with the industry to arrange for the
purchase of the 3,000 kl of gasoline which Lions could no longer pay for
and to protect Lions from industry retaliation in the future (pp. 162-63).
MITI was successful in getting Nippon Oil, whose president was also
the chairman of the Petroleum Association of Japan (PAJ), to purchase the
gasoline. Nippon did not, however, bring it through customs as "gaso-
line." Instead, in order to maintain the principle of no direct import of
gasoline, Nippon brought it through as "naphtha." Naphtha was the feed-
stock for the Japanese petrochemical industry, and its import had been lib-
eralized after an earlier industrial policy battle between the petrochemical
industry and the petroleum refiners.'7 Nippon then issued a statement that it
had purchased the gasoline as a representative of the PAJ and at the request
of MITI in order to "save the situation caused by Lions' attempt to import
gasoline" and to "cooperate with national energy policy" (p. 166).
MITI also issued a statement in which it reiterated the threat to national
policy posed by Lions' actions and promised to apply its kankoku not only
to the case before it but also to any future instance of gasoline importing.
As for the general propriety of unrestricted imports, MITI noted that the
arrival of foreign goods in Japanese ports without any prior consultation
would be "regrettable." As for Lions Oil in particular, it noted that its as-
sistance in finding a buyer was exceptional and would not be repeated in

17. See Tokuhisa Yoshio, Nafusa sensi (Tokyo: Nikkan Sekiyu Nyusu, 1984).

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334 Journal of Japanese Studies

future. The kankoku was clear and unequivocable and, should it be vio-
lated again, resolute and stern enforcement measures would be taken.
There was, not surprisingly, no mention of what such measures would be
or on what legal basis they would be taken (p. 165).

Round Five: MITI Trumps the China Card (among Others)

Unlike MITI, Sat6 did not see his January 8 statement as the end of the
war. To him it was just one battle in a much longer struggle in which he
was only the latest in a long and honorable line of "outlaw" businessmen
who had challenged government policy and industry cartels (pp. 135-44).
In the prewar era, it was Matsukata K6jiro, who undercut the government-
sponsored cartel in the early 1930s by importing gasoline from the Soviet
Union. His "red oil" led to a fall of 50 per cent in the retail price of gaso-
line within a year.'8 In the postwar period, Sati's hero was Idemitsu Sazo,
who fought MITI petroleum policy throughout the period and whose Ide-
mitsu Petroleum broke an earlier cartel in 1963 by resigning from the Pe-
troleum Association and producing beyond its cartel allocation.'9
While Sato was similar to his forerunners in justifying his self-interest
in terms of consumer benefit, he differed from them in his attitude to
Japan's international position. Both Matsukata and Idemitsu had further
justified their actions by references to Japanese nationalism and resistance
to Anglo-American domination of the international oil market. Sato, on
the other hand, argued that his actions were necessary steps in the inter-
nationalization of Japan and gloried in the opportunity to embarrass MITI
and the industry in front of the foreign press (pp. 169-70).
Holding forth at the Foreign Correspondents Club, however, was not a
substitute to importing gasoline, and finding a willing seller in the face of
Japanese government opposition was not going to be easy. First Sat6 went
to Singapore in late January, but the Singapore Petroleum Co., which had
a very lucrative business exporting naphtha to Japan with MITI's blessing,
was no longer interested (pp. 170-75). Next, on February 13, he headed
for the Philippines, where he signed a contract for 4,500 kl to be delivered
in April. He also was able to arrange financing with a variety of new
sources, including a foreign bank, that Sato thought would insulate him
from MITI pressure. By March, however, the Philippine ambassador in-
formed him that the deal was in trouble because the Japanese government
had threatened to delay foreign aid loans if the contract were honored
(p. 180). By late April the deal was dead.
MITI pressure on Singapore and the Philippines made it clear that any
deal that Sat6 could make would have to keep the source of the gasoline

18. Samuels, Japanese State, p. 175.

19. Ibid., pp. 182, 203.

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 Upham: The Man Who Would Import 335

secret and minimize the time between the required PIL filing with MITI
and the arrival of the gasoline. Thus, on May 24, when Sat6 announced to
the MITI reporters' club that a tanker with cheap gasoline would be arriv-
ing in Osaka on June 2, he had already heard that the tanker had been
loaded and that it was ready to leave port the 25th. In the press conference
he refused to divulge the name of the seller or the location of the refinery.2?
The new source was the People's Republic of China. A Japanese
businessman had introduced Sato to PRC representatives, who imme-
diately agreed both to secrecy and speed. At their suggestion that further
insulation would be possible if the deal was structured through a third
country, a Hong Kong oil company was enlisted as the middleman. The
deal was struck on May 13; the contracts were signed the 16th; the tanker
entered Huangpo port on the 23rd; and Sato was informed the 24th that it
was loaded and ready to leave the next day. Sato thought that he had taken
every precaution this time. On the 25th he made the necessary notification
to MITI.

The tanker never arrived. When Sato called the shipping company that
evening to confirm the departure from China, he was told that, contrary to
his previous information, the gasoline had not been loaded. Investigation
through Hong Kong revealed that there had been "some difficulty in pro-
duction." When Sat6 finally reached the Chinese representatives in Tokyo,
he was told that production and pipeline problems had caused an indefinite
delay and that they could not export any gasoline to Lions Oil at the present
time. They would, however, be happy to sell him naphtha!

Epilogue: Gasoline is "Liberalized"!

The China card finished Sat6. His psychic and financial resources were
depleted and further pursuit of his dream seemed futile. MITI, the petro-
leum refiners, and their overextended banks, on the other hand, heaved a
collective sigh of relief. Order in the markets had been maintained and ex-
cessive competition avoided once again.
The Lions Oil incident had, however, been a close call for the industry
and for the regulatory framework within which it existed. Had Lions Oil
had greater financial resources and had Sato been able to find a foreign
"outlaw businessman" willing to make a one-shot profit at Japan's ex-
pense, the result might well have been different. In the aftermath of
Lions, therefore, the Petroleum Association of Japan sat down with MITI
to devise a new regulatory mechanism to meet the changed circum-

20. He also announced that his lawyer had assured him that his promise to MITI not to
import was not legally binding but, just in case, the deal was done under his wife's name.
When questioned about the moral basis for breaking his promise, Sato responded that the true
immorality was MITI's legally groundless interference with his business.

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336 Journal of Japanese Studies

stances. The possibility of many more entrepreneurs like Sato made it

clear that MITI's administrative guidance would have to be backed by
formal legal power, but it was equally clear that a complete ban would be
unacceptable to Japan's trading partners. Sato's grandstanding for the for-
eign press had exacerbated the foreign pressure for liberalization that had
been growing as the world refining industry faced increasing overcapacity
in the 1980s.
Thus, the new system had to be portrayed as a liberalization at the same
time that it conclusively eliminated the specter of a free market exploitable
by renegades like Sato. The solution was the Provisional Measures Law on
the Importation of Specified Petroleum Refined Products, effective January
1986.21 Deftly sidestepping the fact that existing law already allowed free
import of refined products, MITI trumpeted the new legislation as contrib-
uting to the internationalization of Japan by creating a system of licensed
importers. The criteria for licensing included domestic refining and storage
capacity and effectively limited potential importers to the existing refiners.
The new law thus eliminated the slightest possibility that small companies
like Lions would enter the downstream market and disrupt the industry
cartel. "Liberalization" had been achieved, excessive competition avoided,
and the reemergence of outlaws like Sato legally precluded.

II. The Lessons of Lions Oil

While proponents of both views of Japan's economic development

will find plenty in this account of the Lions Oil incident to their liking,
one episode in a 40-year history of postwar industrial policy can neither
prove nor disprove either interpretation. Nonetheless, the same detail and
uniqueness that makes the Lions case impossible to generalize also pro-
vides insight into the complexity of industrial policy and the applicability
of competing theories of explanation.

Cartels, Markets, and National Policy

One thing that appears clear from Sato's story is that market forces op-
erated in Japan virtually as they would have operated elsewhere under simi-
lar circumstances. But it seems equally clear at least for the Lions Oil
incident that the market does not necessarily triumph, even when there are
no formal means of enforcing the cartel.
The ease with which Sato and other independents made large profits by

21. The law was translated as the Provisional Measures Bill on the Importation of Spe-
cific Petroleum Refined Products by the Petroleum Association of Japan. It was passed by the
Diet in December 1985. Although MITI had originally intended the law to expire after five
years, the Diet extended it to ten years because of pressure from the petroleum industry.

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 Upham: The Man Who Would Import 337

price cutting and relatively obvious advertising strategies implies the exis-
tence of a successful cartel against at least these forms of competition. The
harassment of Sato by neighboring gas station owners affiliated with the
refiners was the natural reaction of oligopolists to anyone threatening
the continued receipt of their economic rents. Despite police condoning of
the harassment, however, it did not succeed. Sat6 prospered, and his pros-
perity spawned imitators. The cartel at the retail level did not hold, at least
initially.
Although only hinted at in Sato's account, one possible explanation
was that the refiners, who were both the ultimate enforcers and benefici-
aries of the retail cartel, were quite willing to use "outlaws" like Sato,
Murata, et al., to absorb the excess supply through the spot market. As the
practice of rebates and other under-the-table payments attests, they were
also willing to reward retailers bold enough to cheat on their fellow gas
stand owners. As long as the scope of evasion was reasonable, the in-
creased competition on the retail level benefited the refiners, as demon-
strated by their continued willingness to supply Sato despite his aggressive
marketing. It was clear to at least Sat6 that the refiners wanted to squeeze
as much profit out of the retail sector as possible without threatening the
continued existence of their affiliated stations. As long as they remained
united in their complete control over the source of gasoline, they could
eventually control the scope and nature of competition on the retail level.
To use Sato's language, the refiners could afford to pay a few of their male
geisha a little extra as long as they did not try to open their own inn and
employ their own geisha.
But when Sato moved beyond merely extorting a larger piece of the
retail pie to attacking the fundamental structure of the cartel, he changed
the game in two important ways. First, he challenged the common interest
of the refiners in a way that made it more difficult to play one off against
the other. As long as his actions harmed mainly other retailers, who were
largely independently owned franchisees, the refiners' fundamental inter-
ests were not affected; aggressive entrepreneurs like Sato might induce
members of the PAJ to cheat on the margins in terms of price and quantity
sold to independents, but the basic structure of the cartel was unaffected.22

22. One question at this point is why the wholesalers continued to supply Lions Oil with
gasoline even as he was trying to break their wholesale cartel. A total boycott of Lions by the
members of the Petroleum Association of Japan would have broken Lions well before Sato
could have imported enough gasoline to become his own supplier. It seems, however, that
Lions had a stable supply throughout this period. One reason may be that one or more of the
wholesalers refused to participate in a boycott or surreptitiously violated it. Given the huge
stakes involved if Sat6 was successful in breaking the cartel and the very marginal additional
profits for selling to him in violation of an industry boycott, this explanation seems implau-
sible. The more likely explanation is that the domestic and international political situation
made it impossible to destroy Lions Oil in so blatantly illegal a manner.

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338 Journal of Japanese Studies

Once he threatened the cartel's monopoly on gasoline distribution, how-

ever, the specter of total collapse of market order was close at hand. The
prospect of not only renegades like Sat6 but also general trading companies
entering the market must have been a powerful motivation for unity. At this
point even Idemitsu Petroleum, the cartel-busting maverick that Sato had
so admired, got into line (p. 187). As long as Lions Oil refused the kind of
sweetheart deal that had convinced Murata of Sawarabi Oil to dissolve the
Direct Import Association, however, unity alone would not be enough. The
cartel needed some means of enforcement other than continually upping
the ante.
The apparent solution was government intervention. MITI had long
been deeply involved in the petroleum industry and had a statutory obliga-
tion to monitor developments within the industry. It also had a clear politi-
cal mandate to create and maintain a stable and secure source of energy for
Japanese industrial growth in the postwar period. As part of that policy,
MITI had developed the principle of favoring the domestic refining of all
domestically consumed petroleum products. To enforce this policy, MITI
had declared that no gasoline should be imported absent special circum-
stances, and until Sato's challenge in the mid-1980s no one had violated
this injunction despite the clear legality of importing upon notification.
The primary reason was that the cartel created by the import ban bene-
fited the refiners, who were the most likely importers, and the refiners in
turn had control over the retailers through their resulting monopoly on dis-
tribution and the retailers' affiliation along keiretsu lines.23 Another impor-
tant factor was that the Japanese refining industry has never been inter-
nationally competitive. In large part a creature of government desire to
have a domestic counterpart to the foreign majors, it remained dependent
on MITI protection from foreign competition throughout the postwar pe-
riod and was unlikely to bite the hand that fed it, especially when the ar-
rangement was so lucrative for all but Japanese drivers.24
To import under these circumstances was almost unthinkable. The logi-
cal candidates were the independent station owners like Sato, but the com-
bination of under-the-table payoffs on the one hand and the possibility of
being driven out of business by competitor harassment or wholesaler pres-
sure on the other limited the number of persons willing to buck the system
to a hardy few.

23. Another reason that refiners had not challenged MITI earlier was the latter's control
over expansion of capacity. By the 1980s and 1990s, however, overcapacity was the norm in
the industry, and this means of control lost most of its force for most refiners. See Upham,
Law and Social Change.
24. A logical candidate to try to break the cartel was a foreign subsidiary, but they had
been brought into the cartel from the beginning as silent, non-participating partners. See Sam-
uels, Japanese State.

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 Upham: The Man Who Would Import 339

Cartel Enforcement and Bureaucratic Power

When Sat6 entered the ring with MITI, he may have been the only per-
son in Japan who expected him to win. Sat6 knew-indeed gloried in-the
fact that he was a David facing the twin Goliaths of big oil and the Ministry
of International Trade and Industry. What gave Sato courage was the law
and faith in his ability to compete in a free market. He had consulted coun-
sel and he knew that MITI had no formal legal power to prevent him from
importing gasoline, and he knew that once the cartel was broken he could
sell more gasoline cheaper than his rivals and still make a handsome profit.
He was not afraid of MITI's vaunted administrative guidance or of the
bogeyman of excessive competition. It is almost as if Sato had been read-
ing the Western commentators who had relegated MITI to economic irrele-
vance and legal impotence.
Sat6 almost pulled it off. He rebuffed MITI's repeated informal at-
tempts to bribe, cajole, and intimidate him into submission. When young
bureaucrats sanctimoniously cited national policy, Sato blithely countered
with an assertion of his legal rights and a denunciation of existing policy
as self-serving and inefficient protection of oil refiners at the expense of
Japan's consumers. Nor did it faze him when MITI turned to the formal
process of invoking the Petroleum Council. Instead of being awed by the
prestige of its members, he dismissed them and the process as industry
pawns (p. 113). When MITI then issued a formal kankoku based on the
Council's recommendation, Sato simply ignored it, as he was legally en-
titled to do. Sat6 had called the establishment's bluff, and he was confident
that the vaunted administrative guidance would be exposed as no more than
a paper tiger.
He was wrong, although it remains unclear precisely why. The ratifica-
tion of existing policy by the Petroleum Council, the clear statement of this
policy through the kankoku process as explicitly authorized in the Petro-
leum Industry Law, and the centrality of energy policy in the minds of
many Japanese undoubtedly contributed to Japanese banks' disinclination
to support Lions Oil. In its best light, Sato's venture must have seemed a
quixotic and risky gamble; at worst, it was no more than a selfish attempt to
profit at the expense of national security.
Still, bankers have been known to finance risky and selfish ventures in
the past, and it may be equally plausible to argue that the banks were acting
in their own rather than the nation's interest in refusing to finance Sato.
Japanese banks have profited greatly from the refiners' distribution cartel.25

25. On the relationship between the banks and the oil companies, see ibid., pp. 220-24,
273-77. There is also the possibility that the Ministry of Finance intervened at some point
with a direct threat to banks who continued to finance Lions Oil. Sato suspected as much, but
he was never able to find evidence of it, and MITI officials emphatically deny it.

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340 Journal of Japanese Studies

Despite a general weakness within the Japanese oil industry in the 1970s,
the banks had continued to profit from fees and commissions, foreign ex-
change transactions, short-term financing, and other services and loans to
the refiners. While in theory the liberalization of gasoline imports might in
the long run have meant a more efficient industry and even greater profits
for the banks, the prospect of indefinite profits in the future must have
looked less than compelling to bankers facing the immediate disruption of
an industry that was still a reliable, albeit declining, profit center. More-
over, the banks were not simply suppliers of financial services to the indus-
try; most of them held equity positions as well. The shakeout in the oil
industry that would have inevitably followed unrestricted gasoline imports,
therefore, was no more in the financial interest of the banks than it was of
the Japanese oil industry.26
But not even the shutting off of domestic credit was enough, at least
initially, to stop Sato. For his next attempt, he was careful to arrange fi-
nancing through the Japanese branch of a Korean bank. He was trying to
avoid the web of interdependence and shared interest among Japanese eco-
nomic institutions that both opens opportunities for renegade entrepreneurs
like Sat6 and also makes it difficult for them to survive on the outside in the
long run. When Sat6 tried to import from the Philippines and the People's
Republic of China, however, he discovered that the power of the web, if
not the web itself, extended beyond Japan's borders. At that point, Sato
sensed defeat, and administrative guidance had won.

Conclusion

Should one conclude from MITI's victory against Lions Oil that it is
indeed wise and powerful? That it is impossible to buck administrative
guidance even when it is not legally binding? That Japanese firms happily
follow the dictates of public authority even when against their interests?
Hardly. It is instructive in this context to note that MITI immediately
drafted and had passed by the Diet a statute that gave it precisely the formal
power that the Petroleum Industry Law had denied it. The struggle with
Lions Oil had gone down to the wire, and had world market conditions for
gasoline been different, the result might have been even more embarrassing
for MITI. The battle had been won, but the limitations of administrative

26. One might at this point wonder why no "outlaw" banks stepped forward to replace
Jonan Credit. There may have been some banks that did not have a vested interest in the pre-
servation of the status quo. One answer is that Sat6 simply did not have the time to find such a
bank, even if one existed, after Jonan backed out. It is also possible that no such domestic
bank existed. There is little reason to believe that the Japanese banking industry was any less
cartelized in the mid-1980s than the refining industry, and the Ministry of Finance had a great
deal more direct control over the banks than did MITI over refiners.

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 Upham: The Man Who Would Import 341

guidance had been exposed. It was true that Japan's industrial and financial
establishment had eventually formed a united front against a free market in
petroleum products, but this unity might not hold in the future, especially
if the next direct importer were to be an established maverick like Idemitsu
or an export refinery like the Saudi Arabian National Oil Company. Even if
unity was assumed, the continued internationalization and liberalization of
the financial markets and the chance that not all foreign sources of supply
would be so easily bullied as Sato's erstwhile suppliers effectively meant
that domestic unity would not be enough. What if, for example, Sato's next
partner was T. Boone Pickens?
The weakness of administrative guidance should not, however, lead
one to believe that the Lions Oil incident stands for the eventual triumph of
the free market. Whatever may have been the case in other sectors of the
postwar Japanese economy-and it is important to stress that the energy
sector is heavily regulated in virtually every economy-the unleashing of
market forces has never been either the ideal or the reality for the petro-
leum industry. Fear of excessive competition, that ubiquitous Japanese eu-
phemism for an unregulated market that might produce losers as well as
winners, was the unifying force for all the players in the saga except Sato
himself. When MITI, the banks, and the refiners saw that administrative
guidance alone might no longer be enough to forestall the market, they
caused the Diet to give MITI the formal power to ensure the future health
of the cartel that had served all of them so well for so long. To mistake this
result or similar results in other sectors for the "blossoming of market" is
to make as silly a mistake as those who claim that Japanese are naturally
submissive to government fiat or that MITI bureaucrats are both omniscient
and omnipotent.
Nor is the lesson of Lions that the truth lies somewhere in between: that
MITI is sort of powerful, but not powerful enough in the long run to fend
off the onslaughts of the market forever. While this middle ground inter-
pretation might be quite accurate for most sectors of the Japanese economy
and especially for those exposed to international-and thus uncontrol-
lable-competition, there is nothing in the Lions result to indicate the
eventual triumph of the free market. While imports of gasoline have risen
and some forms of retail competition have become more common since
1985, representatives of the oil industry still talk in the 1990s in terms of
the need to "refrain from excessive competition such as price-cutting" and
the unattractiveness of the Japanese retail and wholesale market to new
foreign entrants.27 Indeed, the end result of the Lions episode was the
strengthening, not weakening, of controls over the market and the almost

27. Interview with Nagashima Kazushige, president of Kyodo Oil, in The Japan Times
Weekly International Edition, July 9-15, 1990, p. 18. Emphasis added.

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342 Journal of Japanese Studies

certain exclusion of either domestic or foreign competition for the estab-

lished firms.

The lesson of Lions Oil is that neither the market nor a dirigiste bureau-
cracy can explain Japanese economic growth or the role of government pol-
icy. In these particular circumstances, it is clear that the government could
not have enforced existing policy without the cooperation of both the in-
dustry involved and the banks. It is equally clear, however, that the govern-
ment too played an indispensable role. The role assigned MITI under the
Petroleum Industry Law may be weak in terms of coercive legal power, but
it has given MITI both the authority and the access to information neces-
sary to play the role of referee and enforcer in the resulting refiners' cartel.
Without this mediating role, it is doubtful that the cartel, even in as weak
and vulnerable an industry as oil refining, would hold for long. In a more
vigorous or fragmented industry without a statute like the PIL, moreover,
MITI's admonishments might mean next to nothing and administrative
guidance be no more effective than American jawboning.
But it may be wrong even to think in terms of government intervention
in the economy or private influence on public policy. To do so assumes a
clear separation between public and private spheres that makes bureau-
cratic participation in business decision making or industry participation in
public policymaking seem exceptional when at least in the Lions Oil cir-
cumstances both were constant parts of the decision-making structure. In
the oil refining industry and many others, what is announced as national
policy is the result of negotiations between the state and the private sector.
In some circumstances the declared policy may be nothing more than the
ratification of what the leading institutions of the private sector desire; in
others, it may reflect to a greater degree the needs of third parties within
society, as was the case in environmental control policy. Similarly, in some
circumstances, the policy may hold despite a lack of coercive legal power;
in others it may fail even with legal authority, if not power.28 What remains
constant, however, is the process of negotiation between the government
and the private sector-and on occasion with third parties like pollution
victims, unionized workers, or trading partners-and the desire by all par-

28. Declining industries policy in the late 1970s and early 1980s presents several ex-
amples of instances where MITI and industry coordination were unsuccessful in controlling
competition despite MITI authority to facilitate cartelization under depressed industry legis-
lation. See Noble, "The Japanese Industrial Policy Debate," on the minimill industry, and
Richard J. Samuels, "The Industrial Destructuring of the Japanese Aluminum Industry," Pa-
cific Affairs, Vol. 56, No. 3 (Fall 1983), but note the contrasting examples cited in Merton J.
Peck, Richard C. Levin, and Akira Goto, "Picking Losers: Public Policy Toward Declining
Industries in Japan," Journal of Japanese Studies, Vol. 13, No. 1 (Winter 1987), pp. 79-123.
The legislation did not give MITI compulsory legal power to enforce the resulting cartels,
which undoubtedly contributed to their failure. See Upham, Law and Social Change.

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 Upham: The Man Who Would Import 343

ties to the negotiation to create a situation over which they can maintain
some degree of control. As Richard Samuels has said, "The Japanese bu-
reaucracy does not dominate, it negotiates."29 From the viewpoint of an
"outlaw" like Sato Taiji, however, it might be added that the bureaucracy
and its friends also bribe, threaten, and even butcher when necessary.

29. Samuels, Japanese State, p. 260.

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