The Japanese word “keiretsu” literally means system or series. In general usage it refers to a “a set of companies with interlocking business relationships and shareholdings.” Historically it is the recreation of the “zaibatsu” – industrial combinations that dominated Japan through the Second World War, dismantled by General MacArthur in the course of occupation, and reconnected over the next 40 years.
A keiretsu is built on bank, but the ties exist up and down an industrial value/service chain and across a set of related industries. The business keiretsu is not simply about money; it is also about control over some commercial sphere. One key functional objective is to protect the member firms from hostile takeover.
In South Korea this arrangement defines a chaebol. In Cold-War East Germany, it was called a Kombinat. In America this might be called a trust and anti-competitive (hence the phrase “anti-trust.”)
In the next several postings I hope to demonstrate how the network spotlighted by eduwonkette and discussed much earlier by Alexander Russo and yours truly is a kind of social keiretsu in market-based public education reform.
I will argue that the Walton and Gates foundations, and to a lesser extent others, fill the role of 1) bank in their relationship to 2) a think tank axis formed by AEI, Fordham, and edsector; and 3) a social venture capital investment portfolio organized by 4) the New Schools Venture Fund. This collection exercises top-down control over 5) the National Alliance of Public Charter Schools, which claims to speak for the bottom-up charter movement as a whole. Readers can decide for themselves whether this is true and, if true, troubling.
The members of a commercial keiretsu share an interest in maintaining their positions of control - the currency of control consists of board membership and finance. Members of a policy keiretsu share the same interest, but more forms of currency. Money and board membership remain the most valuable commodities, but access to policymakers and media, academic legitimacy and cutting edge reform activities are also highly tradeable.
The bankers get overall control of a set of activities with a veneer of approval from policy studies and academia. The policywonks get grants, rare seats at the table of operating activities, and academic acknowledgement and policy credibility from research grounded in real reform activities. The investment intermediaries get access to policy makers and legitimation from policy and academic research. Their combined diversity gives their top-down control of the charter movement the illusion of bottom-up ordination.
Each party’s share of this whole is worth far more than their individual part – ask any reporter, policymaker, or average informed citizen. Cleverly, or too cleverly, this might also create an incentive for mutual “covering fire.”
My intent is to explain one layer of the relationships that tie the group together - board memberships, funding, shared publications, conference participation, etc - in each of this series of essays/postings. Readers can decide for themselves what is happening here, what the effects are on the policy discussion, and whether or not it’s a good thing. I’ll try very hard to stick to “just the facts ma’am” and leave my analysis to the very end.
Next: Directorships
