Japan pioneered corporate group formation in East Asia in 1860s to early 1900s. To build a prosperous economy, the 1860s Japanese government imported entire steel mills, parts-making factories, defense works and other industries from USA, UK, and Germany. Imports included engineering trainers. Once profitable, the government sold the industries to local elites at low prices and long-term installment. Since elite families were few, they cornered the deals, in the process creating corporate groups (zaibatsu) that numbered scores of companies per family. The zaibatsu soon captured large chunks of the Korean, Chinese and other Pacific Rim markets, in the process lifting the Japanese masses' living standards to a great degree.
Japanese industries' need for raw materials however led to the Japanese armed forces' conquest of Pacific Rim nations from 1942 to '45. Japan was roundly defeated and occupied by US forces in 1945, which spelled the end of the zaibatsu groups. To Japan's favor however, the US-led Allied forces had to fight the Korean and later Vietnam wars, which meant a great need for Japanese-made war materiel. Japan's armies of engineers, managers and State bureaucrats aided by US loans hence resurrected Japanese industries, in the process creating new corporate groups (keiretsu). The new corporate group members owned each other, their managers, government, and some elites.
By 1960s to '90s, keiretsu companies had expanded into 100 to 200 giant corporations per group that sold entire factories, public works, oil refineries and other basic industries to developing economies, aside from capturing large chunks of the world's markets for vehicles, appliances and electronic products. Soft loans granted by keiretsu and Japanese State banks plus the high quality of keiretsu products enabled Japan to successfully compete against Western companies that 'acted alone'. In 1990s, Japanese gross domestic production soared to $7 trillion yearly versus 3rd World equivalents at just $50 billion to $100 billion. Each of the top keiretsu sold each year the equivalent of an entire 3rd World people's yearly GDP. In effect, the Japanese showed 3rd world peoples why they have been so poor! 3rd World countries have for too long been hobbled by labor-capital conflicts for 'just wages', corporate 'leave us alone' policy versus government, politicians viewing businesses as milking cows, non-inclusion of the business sector in State economic planning, and entrepreneurs' inability to create large-scale businesses able to capture world markets. The Japanese way on the contrary considered State and the business sector as one in the fight against Western companies for world market dominance. The result was the quick build-up of the Japanese masses as among the wealthiest worldwide from 1960s to present.
The keiretsu did their 'magic' thru joint ventures with companies worldwide thru capital sharing, parts sub-contracting, technology licensing, components assembly, build-operate-transfer, sales dealerships, and even 99% financing of entire industries. One example of 99% financing was the Philippines' iron sintering plant and integrated steel mill in the 1970s which unfortunately tanked under local management and had to be sold to an Indian company. Japanese financing for sale of industrial projects in developing countries was provided by billion-dollar keiretsu banks plus Japanese government banks, always on long term and at low interest, provided Japanese companies supplied major equipment.
Parts of the Japanese model were copied by other Pacific Rim nations in the 1960s to 90s, in the process creating large middle classes within the region as well. In the Philippines, corporate groups began to form in the 1960s, when the dollar-short Marcos regime and US-Japanese aid started financing politically-connected elites for corporate group build-up and expansion. By 1990s, local elites had built conglomerates of 50-100 companies per family, although at just 10% or so of Japanese keiretsu scale. Each Philippine group included a bank which created money out of thin air based on collateral value and borrowers' ability to pay. All the activities created a 20 million-strong middle class, which being able to afford education further created an expatriate force of ten million employees in various countries.
Unfortunately, rampant corruption within the Marcos regime plus perpetual oil price rises stifled further economic growth. By mid 1980s, much of the industrial joint ventures and their dependent industries had tanked, unemployment had risen to double digits, inflation ranged from 20 to 50%, and the Communist rebel army had grown to a 20,000- strong hit and run force. In 1986, the 20-year old dictatorial Marcos regime was ended by a military putsch, with Marcos and his cronies escaping to the USA. The succeeding regime charged Marcos with amassing some $10 billion in assets abroad, plus major shares in 200 or so Philippine companies. The corporate shares were apparently 'gifted' by entrepreneurs as thanks for State aid, protection against militant labor, and hopes of even more business opportunities. Local elites for their part rebuilt their corporate groups by the 2000s thru new joint ventures, flooding of local markets with imported products, building malls and condos, engaging in utility industries (power, water) and mining, etc. Neither State nor elites however attempted to resurrect the Marcos-period effort to build a basic steel industry, forcing the country to rely 99% on imports of industrial items.
These times almost all products sold in Philippine markets are imported from China and Western countries. '100% native' manufacturing is near-zero. Only a handful of consumer goods companies have built niches in world markets, and 99% of farms are still 'garden size' at 1.6 hectares average area. Poverty thereby still rules the Philippine masses (of which some 70% are Elementary-level bottom poor). Conversely, less than a hundred local elite families (mostly Filipino-Chinese) have even become 'super elites' who control all conglomerates, including major banks. Unfortunately, not one local politician has broached a workable plan to address such tragic disparity in wealth and economic power.
What are the lessons for our Movement? First, the financing of elites' corporate groups by State and international aid will logically further widen local wealth gaps. Such aids are best used to finance mega co-op corporate groups that will naturally channel wealth among the masses. Second, the skilled masses (employees and managers) largely build and run elites' conglomerates. They can certainly do the same for themselves and for creating jobs for bottom poor. Third, 1st World companies engaging in joint venture with local mega co-ops will build the investment courage and large-scale business culture badly needed by local employee masses. Fourth, mega co-ops and their government must create money out of thin air the same way elite banks do by setting up Employees' banks which will help finance mega co-op corporate groups. Fifth, to stop 'traditional' corruption at State, the Mega Co-op Movement has to set up a referendum-style government of 600,000 top corporate and sectoral skills forming an Internet Congress that votes on all major State contracts via websites. Since no contractor can afford to bribe hundreds of thousands of 'electronic signatories', large-scale corruption becomes next to impossible.
But what exactly is a mega co-op? It is a stock cooperative (ownership evidenced by stock share certificates) set up by 1,000+ employees and scores of corporations and State agencies. It has to be managed by top retired corporate directors, CEOs and managers. Voting has to be one vote per investor no matter the volume of investments to avoid elite control. Large investors' interest should be limited to obtaining high dividend rewards and rises in market value of mega co-op capital shares, not to gain total control. To avoid corruption and further ensure top consultancy skills as well as assuage large investors' fears of 'no control', all major policies and contracts have to be approved by 30+% of the largest investors thru internet voting. The large percentage ensures middle sector investing masses' participation in management to protect mass investors' interests.
The starter? Since Philippine employee masses are risk-averse especially when it comes to large-scale business, long-existing 1st World companies which are highly trusted in the Philippines have to get involved from joint venture planning stage with local pre-coops. 1st World employee groups have to persuade their companies to engage in such 'intrapreneurship' by proposing projects jointly formulated with Philippine counterparts. World employee masses' desire to earn good 'sideline' income, plus world companies' need for good dividend income, plus all responsible citizens' desire to address global warming thru clean and green industries should serve as catalysts towards planet-scale action to such ends. This blog's posts, which describe said planet-saving projects may serve as starter guide.
Japanese industries' need for raw materials however led to the Japanese armed forces' conquest of Pacific Rim nations from 1942 to '45. Japan was roundly defeated and occupied by US forces in 1945, which spelled the end of the zaibatsu groups. To Japan's favor however, the US-led Allied forces had to fight the Korean and later Vietnam wars, which meant a great need for Japanese-made war materiel. Japan's armies of engineers, managers and State bureaucrats aided by US loans hence resurrected Japanese industries, in the process creating new corporate groups (keiretsu). The new corporate group members owned each other, their managers, government, and some elites.
By 1960s to '90s, keiretsu companies had expanded into 100 to 200 giant corporations per group that sold entire factories, public works, oil refineries and other basic industries to developing economies, aside from capturing large chunks of the world's markets for vehicles, appliances and electronic products. Soft loans granted by keiretsu and Japanese State banks plus the high quality of keiretsu products enabled Japan to successfully compete against Western companies that 'acted alone'. In 1990s, Japanese gross domestic production soared to $7 trillion yearly versus 3rd World equivalents at just $50 billion to $100 billion. Each of the top keiretsu sold each year the equivalent of an entire 3rd World people's yearly GDP. In effect, the Japanese showed 3rd world peoples why they have been so poor! 3rd World countries have for too long been hobbled by labor-capital conflicts for 'just wages', corporate 'leave us alone' policy versus government, politicians viewing businesses as milking cows, non-inclusion of the business sector in State economic planning, and entrepreneurs' inability to create large-scale businesses able to capture world markets. The Japanese way on the contrary considered State and the business sector as one in the fight against Western companies for world market dominance. The result was the quick build-up of the Japanese masses as among the wealthiest worldwide from 1960s to present.
The keiretsu did their 'magic' thru joint ventures with companies worldwide thru capital sharing, parts sub-contracting, technology licensing, components assembly, build-operate-transfer, sales dealerships, and even 99% financing of entire industries. One example of 99% financing was the Philippines' iron sintering plant and integrated steel mill in the 1970s which unfortunately tanked under local management and had to be sold to an Indian company. Japanese financing for sale of industrial projects in developing countries was provided by billion-dollar keiretsu banks plus Japanese government banks, always on long term and at low interest, provided Japanese companies supplied major equipment.
Parts of the Japanese model were copied by other Pacific Rim nations in the 1960s to 90s, in the process creating large middle classes within the region as well. In the Philippines, corporate groups began to form in the 1960s, when the dollar-short Marcos regime and US-Japanese aid started financing politically-connected elites for corporate group build-up and expansion. By 1990s, local elites had built conglomerates of 50-100 companies per family, although at just 10% or so of Japanese keiretsu scale. Each Philippine group included a bank which created money out of thin air based on collateral value and borrowers' ability to pay. All the activities created a 20 million-strong middle class, which being able to afford education further created an expatriate force of ten million employees in various countries.
Unfortunately, rampant corruption within the Marcos regime plus perpetual oil price rises stifled further economic growth. By mid 1980s, much of the industrial joint ventures and their dependent industries had tanked, unemployment had risen to double digits, inflation ranged from 20 to 50%, and the Communist rebel army had grown to a 20,000- strong hit and run force. In 1986, the 20-year old dictatorial Marcos regime was ended by a military putsch, with Marcos and his cronies escaping to the USA. The succeeding regime charged Marcos with amassing some $10 billion in assets abroad, plus major shares in 200 or so Philippine companies. The corporate shares were apparently 'gifted' by entrepreneurs as thanks for State aid, protection against militant labor, and hopes of even more business opportunities. Local elites for their part rebuilt their corporate groups by the 2000s thru new joint ventures, flooding of local markets with imported products, building malls and condos, engaging in utility industries (power, water) and mining, etc. Neither State nor elites however attempted to resurrect the Marcos-period effort to build a basic steel industry, forcing the country to rely 99% on imports of industrial items.
These times almost all products sold in Philippine markets are imported from China and Western countries. '100% native' manufacturing is near-zero. Only a handful of consumer goods companies have built niches in world markets, and 99% of farms are still 'garden size' at 1.6 hectares average area. Poverty thereby still rules the Philippine masses (of which some 70% are Elementary-level bottom poor). Conversely, less than a hundred local elite families (mostly Filipino-Chinese) have even become 'super elites' who control all conglomerates, including major banks. Unfortunately, not one local politician has broached a workable plan to address such tragic disparity in wealth and economic power.
What are the lessons for our Movement? First, the financing of elites' corporate groups by State and international aid will logically further widen local wealth gaps. Such aids are best used to finance mega co-op corporate groups that will naturally channel wealth among the masses. Second, the skilled masses (employees and managers) largely build and run elites' conglomerates. They can certainly do the same for themselves and for creating jobs for bottom poor. Third, 1st World companies engaging in joint venture with local mega co-ops will build the investment courage and large-scale business culture badly needed by local employee masses. Fourth, mega co-ops and their government must create money out of thin air the same way elite banks do by setting up Employees' banks which will help finance mega co-op corporate groups. Fifth, to stop 'traditional' corruption at State, the Mega Co-op Movement has to set up a referendum-style government of 600,000 top corporate and sectoral skills forming an Internet Congress that votes on all major State contracts via websites. Since no contractor can afford to bribe hundreds of thousands of 'electronic signatories', large-scale corruption becomes next to impossible.
But what exactly is a mega co-op? It is a stock cooperative (ownership evidenced by stock share certificates) set up by 1,000+ employees and scores of corporations and State agencies. It has to be managed by top retired corporate directors, CEOs and managers. Voting has to be one vote per investor no matter the volume of investments to avoid elite control. Large investors' interest should be limited to obtaining high dividend rewards and rises in market value of mega co-op capital shares, not to gain total control. To avoid corruption and further ensure top consultancy skills as well as assuage large investors' fears of 'no control', all major policies and contracts have to be approved by 30+% of the largest investors thru internet voting. The large percentage ensures middle sector investing masses' participation in management to protect mass investors' interests.
The starter? Since Philippine employee masses are risk-averse especially when it comes to large-scale business, long-existing 1st World companies which are highly trusted in the Philippines have to get involved from joint venture planning stage with local pre-coops. 1st World employee groups have to persuade their companies to engage in such 'intrapreneurship' by proposing projects jointly formulated with Philippine counterparts. World employee masses' desire to earn good 'sideline' income, plus world companies' need for good dividend income, plus all responsible citizens' desire to address global warming thru clean and green industries should serve as catalysts towards planet-scale action to such ends. This blog's posts, which describe said planet-saving projects may serve as starter guide.
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