The Rise of The Social "Keiretsu." Socially Responsible Capitalism

Background
When Japanese trade ministers decided to move into the US market, they invented a unique commercial vehicle to do so. It is called the “Keiretsu.” This is a group of companies cooperating within a formal framework to achieve a single market goal.
The companies may be be engaged in related businesses. For example a company that makes microwave ovens and a TV manufacturer, along with an Exporter and possibly an International Marketing agency may be in a Keiretsu together where the objective is to sell the consumer electronics industry in another country.
Rationale:
• The Social keiretsu is based upon the proposition that any comprehensive strategy for addressing poverty anywhere must be based upon an economy of supply and demand.
• The Keiretsu, by offsetting significant market entry costs of the private sector companies permits sustainable operations until demand can develop sufficiently for normal profits to be obtained.
• With the goal of realizing the greater good of economic development, The government partnership with the Keiretsu, may sanction otherwise forbidden business practices, make exceptions to import rules, monopoly and other anti-competitive legislation to enable the economic development goals.
• The non-profit may recovers these espenses from future profits of the private sector.
Principal Advantage

The Social Keiretsu enables for profit corporations to operate sustainably in poor communities until consumer income reaches market levels. In addition to producing prosperity, The Social Keiretsu actually creates new and profitable markets for the products and services of the its member organizations.


Our model of The Social Keiretsu employs both profit and non-profit strategies to provide goods, services, and essential knowledge and skills to the poor in a cost effective and profitable enterprise. The Social Keiretsu is an advanced form of public/private partnerships in which the parties are fully engaged in formal operating relationships. Mutual responsibilities are contractually enforceable under international commercial law and finally economic incentive is dependent upon accomplishment of the total social mission.

Problem Statement
The following describes a current evolving crisis on the African Continent.. In fact the UN’s World Food Organization estimates the cost of the looming food crisis in Africa at $500 million (USD). In order to provide food security in high-risk famine areas, an innovative, fast response food growing system is needed. The alternative is massive charitable giving by foreign donors.

Unfortunately, the acquisition cost of the means of production is significant and no bank, or financial institution wants to take the risk of financing multiple installations without significant collateral. The poor have no collateral.. Also, the owner of the system cannot sell it without making a reasonable profit and the poor can afford neither the cost of acquisition, nor ongoing operating expenses. Another major impediment to the deal is the lack of skill and knowledge of how to operate and maintain technically sophisticated equipment. Finally, even though the problem is wide spread and once in place the basic economy can support such production, the economic return is too far out in the future for anyone to accept such a risk/reward proposition. The problem seems intractable

Enter the The Social Keiretsu
The socio economic conditions described in the previous section fly in the face of any conventional, non-charity, maket driven solution. Without the Social Keiretsu, or something very much like it, massive amounts of charity will be needed and the problem will repeat itself over time. The Social Keiretsu will provide a market driven solution to the problem that is both sustainable, long-term.

How it Works
The Social Keiretsu, as presented above, is formed under the auspices of a directorate that sets the goals and objectives. (see:  above ) The directorate may consist of one or more members of the keiretsu It provides direction and in return receives performance reports on specific projects and programs as mutually agreed. This provides an organized framework for cooperation in both strategic and tactical action with policy decisions made at the Directorate. (see:  above) Logistics and other assistance and support are provided by second level resources: Civil Society, Para Statals, and Government Agencies (see:  above) The third level consists of for profit market driven businesses or corporations who can now provide market quality products and services along with full waranttee’s and customer support.
Purpose & Scope
It is the purpose of the Social Keiretsu to provide both physical and economic resources to the poor that would be unattainable through any traditional mechanism of the market. This requires extraordinary policies be implemented that support such strategies. One example is import duties and process. Most small countries are extraordinarily protective of imported technology, logistics and transport, commercial rules, rights of property etc. Through constructive engagement with the agencies and departments of many governments such limitations and restrictions can be obviated. This is mainly achieved through the cooperative business like alliances formed within the Keiretsu. Agencies are full participants and have the cooperation and transparency necessary to safeguard the public trust. However, the fiscal controls and visibility called for by the Directorate to assure fairness in attribution of cost, expense, and profit discourage casual malfeasance by the local autorities.

Benefits
One prinicipal benefit of this model is that it permits both for profit and non profit to coexist with each working to the benefit of the poor. Additionally, the Social keiretsu enables the opening and establishment of new markets as the poor achieve prosperity their spending power increases and a new market is established.

Also important is the formalization of the internal relationships. For example, all parties are contractually bound to deliver goods, services, and supporting resources as contacted. This is not a casual association that can be disbanded at the whim of one of the parties. Therefore, it is more likely to be taken seriously by all concerned. The principal benefit however accrues to the poor who are lifted out of poverty in perpetuity by means of a nascent but growing local economy and commercial infrastructure.

Finally it is the for profit corporations that will see the most immediate and tangible benefit for participation. Whole markets will be created that were non existant before and will now be open to the commercial members of the Keiretsu who will have proprietary inside knowledge of the value and supply chains, the key outlets and customers. For the commercial enterprise it is truly “The Undiscovered Country.”

Conclusion
It has been said that, the greatest heresy is to take “a truth,” and make it, “The Truth.” None the less, we believe we have found a method for addressing structural poverty at the grass roots. This strategic initiative will provide enormous commercial opportunity. It will open access to a significant untapped market, The Next 4 Billion (see: Hammond, Kramer, Katz, Tran, & Walker, MIT Press, April, 2008) As the present financial crisis has all but crushed global stock markets and asset values have plummeted, great opportunity lies in the developing world. (see: New Realities in Microfinance & Philanthropy, J. Peloquin and G. Wyse, Micro Finance Focus, www.microfiancefocus.com)

This is what capitalism has been seeking, a means to address social causes with a viable profit driven model. Here it is. The advent and rise of The Social Keiretsu brings an unprecedented opportunity to meld the gospel of plenty and free markets to the millennium goals of the international community and The United Nations. What could be more appropriate in the new age of “Change Now,” finally, Socially Responsible Capitalism.