Coghlan and MacKenzie begin: "As protests against financial power sweep the world this week, science may have confirmed the protesters' worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy."
American businesses figure prominently on the top 50 list of 'superconnected' companies. (photo: Adbusters)
The Capitalist Network That Runs the World
20 October 11
s protests against financial power sweep the world this week, science may have confirmed the protesters' worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.
The study's assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.
The idea that a few bankers control a large chunk of the global economy might not seem like news to New York's Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world's transnational corporations (TNCs).
"Reality is so complex, we must move away from dogma, whether it's conspiracy theories or free-market," says James Glattfelder. "Our analysis is reality-based."
Previous studies have found that a few TNCs own large chunks of the world's economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy - whether it made it more or less stable, for instance.
The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company's operating revenues, to map the structure of economic power.
The work, to be published in PLoS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What's more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world's large blue chip and manufacturing firms - the "real" economy - representing a further 60 per cent of global revenues.
When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network. "In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network," says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.
John Driffill of the University of London, a macroeconomics expert, says the value of the analysis is not just to see if a small number of people controls the global economy, but rather its insights into economic stability.
Concentration of power is not good or bad in itself, says the Zurich team, but the core's tight interconnections could be. As the world learned in 2008, such networks are unstable. "If one [company] suffers distress," says Glattfelder, "this propagates."
"It's disconcerting to see how connected things really are," agrees George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank.
Yaneer Bar-Yam, head of the New England Complex Systems Institute (NECSI), warns that the analysis assumes ownership equates to control, which is not always true. Most company shares are held by fund managers who may or may not control what the companies they part-own actually do. The impact of this on the system's behaviour, he says, requires more analysis.
Crucially, by identifying the architecture of global economic power, the analysis could help make it more stable. By finding the vulnerable aspects of the system, economists can suggest measures to prevent future collapses spreading through the entire economy. Glattfelder says we may need global anti-trust rules, which now exist only at national level, to limit over-connection among TNCs. Bar-Yam says the analysis suggests one possible solution: firms should be taxed for excess interconnectivity to discourage this risk.
One thing won't chime with some of the protesters' claims: the super-entity is unlikely to be the intentional result of a conspiracy to rule the world. "Such structures are common in nature," says Sugihara.
Newcomers to any network connect preferentially to highly connected members. TNCs buy shares in each other for business reasons, not for world domination. If connectedness clusters, so does wealth, says Dan Braha of NECSI: in similar models, money flows towards the most highly connected members. The Zurich study, says Sugihara, "is strong evidence that simple rules governing TNCs give rise spontaneously to highly connected groups." Or as Braha puts it: "The Occupy Wall Street claim that 1 per cent of people have most of the wealth reflects a logical phase of the self-organising economy."
So, the super-entity may not result from conspiracy. The real question, says the Zurich team, is whether it can exert concerted political power. Driffill feels 147 is too many to sustain collusion. Braha suspects they will compete in the market but act together on common interests. Resisting changes to the network structure may be one such common interest.
The Top 50 of the 147 Superconnected Companies
1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co
7. Legal & General Group plc
8. Vanguard Group Inc
9. UBS AG
10. Merrill Lynch & Co Inc
11. Wellington Management Co LLP
12. Deutsche Bank AG
13. Franklin Resources Inc
14. Credit Suisse Group
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp
17. Natixis
18. Goldman Sachs Group Inc
19. T Rowe Price Group Inc
20. Legg Mason Inc
21. Morgan Stanley
22. Mitsubishi UFJ Financial Group Inc
23. Northern Trust Corporation
24. Société Générale
25. Bank of America Corporation
26. Lloyds TSB Group plc
27. Invesco plc
28. Allianz SE
29. TIAA
30. Old Mutual Public Limited Company
31. Aviva plc
32. Schroders plc
33. Dodge & Cox
34. Lehman Brothers Holdings Inc*
35. Sun Life Financial Inc
36. Standard Life plc
37. CNCE
38. Nomura Holdings Inc
39. The Depository Trust Company
40. Massachusetts Mutual Life Insurance
41. ING Groep NV
42. Brandes Investment Partners LP
43. Unicredito Italiano SPA
44. Deposit Insurance Corporation of Japan
45. Vereniging Aegon
46. BNP Paribas
47. Affiliated Managers Group Inc
48. Resona Holdings Inc
49. Capital Group International Inc
50. China Petrochemical Group Company
* Lehman still existed in the 2007 dataset used.
Graphic: The 1318 transnational corporations that form the core of the economy.
(Data: PLoS One)
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Comments
I think that a democracy can be a good way to rule the world, and we sure don't have that in our nation. Our elected officials pay no heed to the voice of the people but kiss up to the 1% who line their pockets. Step one to getting a democracy would be to send every single person in the HOuse or Senate to the line at the unemployment office. Give them a pink slip and replace them with someone who will listen to the people.
Outline by John Spritzle and Dave Stratman
http://newdemocracyworld.org/revolution/Thinking.pdf
John Steinsvold essay:
http://evans-experientialism.freewebspace.com/steinsvold.htm
"Invisible Hand" book by Larry K. Mason
http://nopom.info/about.html
I would like to believe we are in the last death grip of a fascist-capitalist system
Change is inevitable...
They'll start listening to us again when it is in their interest to do so.
Its only modern-ist (bankster) propaganda that Monetary systems are so unfathomably complicated that no one may dare change them without imploding the galaxy. Well guess what; it already is imploding; its their fault; and they're yesterday's news.
At least with the former we do have some kind of chance... of being seen & heard as more than just the sum of our parts.
http://kucinich.house.gov/UploadedFiles/NEED_Act_FINAL_112th.pdf
In Libya Gaddafi had a no interest banking system . . . Unfortunately he was just assassinated also. Libya's banking system will shortly change IMHO.
According to a number of sources, the Bengazhi (All-CIA-duh) rebels had their plans in hand for a local McDonald's franchise- er, 'privately-run Central Bank'- within weeks of taking their first city by force of arms, under the NATO air cover. In hindsight will it be just another Iraq-II type mugging? What will happen to the richest country in Africa's money, wealth, and assets now?
Well, Tom, at least you got that right.
And until we restore the fairness in broadcasting act - that Reagan did away with - and pay for campaigns ourselves, coporations will certainly make sure we continue our headlong plunge into nazi/fascism, and then into the abyss of feudalism.
But it's sad how so many have been totally conned into thinking that the corruption and concentration of power stems from gov bureaucrats, and change would come by just shrinking government.
We need to get corporate money out of politics and more worker control of decisions made by business. In Germany, half of the board of large corps must be made up of workers in that company.
Despite the article's distractions about asking Oceanographers & Economists what they think of Political Sci. (& history) matters, I like Dr. Braha's concl. words, that interests will "compete in the market, but act together on common interests. Resisting changes to [thus making a collective defense of] the network structure [centuries old privileges] may be one such common interest." But its really just common sense, as is the 'finding' that financial co's. (which can literally CREATE money out of thin air, as opposed to EARNing it) dominate the higher echelons of the list.
FRL- Fractional Reserve Lending, deregulated in a 'globalized' 'race to the bottom'... lowest regs., lowest wages, lowest 'interference' from govt's or other organized groups of citizens is not neo-lib or neo-con [though it is a con-game]; just neo-imperialism... the 1% who move it around and their 2 or so % hangers-on, vs. +95% normal people- those who are not particularly insiders in the shell game.
We really need to come up with a new system. The one that's dying now was dreamed up from the 1200s-1600s, and somehow- mostly via the heavy hand of Big Gov't regs- managed to last another 4 centuries
Please fill in the blank after "and?" for me. I lost half my brain to a stroke and didn't have as much to spare as the character that brags he can do better than the rest of us with "half his brain tied behind his back" (at least that is what 'friend of the workingman' Limbaugh used to boast about)
This article is about the power of TNC's, not government. Are you saying, kill government so no one can have power over it at all? Seems a little extreme and fairly stupid. Try your Ron Paul talking points somewhere else.
Bravo Noitall! You are exactly right! And the best way to do that is to INSPIRE people - which is what you OCCUPIERs have been doing very well. For some excellent ideas on how to further that MISSION, see George Lakoff's article on Huffington Post. http://www.huffingtonpost.com/george-lakoff/occupy-wall-street_b_1019448.html
Gee, some of us even know that a smart voter would not leave politicians, who work for Wall Street, in congress, where their seniority always sits them in the chairmanships position controlling legislation. that is simply to “beg” the devil to screw you.
In this nation term limits were put into the Constitution, by the Founding Fathers, to keep down wealth’s corruption on government; and damn if today’s party voter is smart enough to figure that out? Having you're party, in congress, with his/her seniority; has trashed your, your children, and grandchildren’s futures.
The republican and the democrat, in congress, sit the stage for the biggest ripoff, of the people, in this nations history. And wealth, well wealth still has its political insurance to assure that it will continue getting richer no matter the cost to we the people.
Actually the founding fathers did not put term limits for the presidency in the constitution, though they did restrict themselves, for whatever reasons, to two terms. Washington, for instance thought he was to old to serve another term and didn't choose to run for a third term. Term limits were only passed after Franklin Roosevelt had indicated a desire to run for a fourth term, so the 22nd. Amendment was only passed by the Congress in 1947 and ratified by the states in 1951. Keep in mind though that the founders did originally charter corporations, including banks, for a period of 20 years. And even though those to our right probably don't like the thought, it was to control the accumulation of vast wealth that they feared would place undue influence on our government as had happened in Europe. We should remember their concerns.
Term limits is not the answer. The corporations will just find someone else to do their bidding.
I say "running" but of course they aren't running it in any useful sense: they're just parasites on the backs of the people who do the real work (most of whom live in the Third world nowadays). And of course their "running" the world is going to lead to rising sea levels, melting methane clathrate and the extinction of the human race (or at least the vast majority of us. The rest will be back to the stone age, and will have to wait for a natural disaster to finish the job.)
Still, keep calm and carry on. Business as usual...
"return to your homes your jobs are safe"-Dr.Jose Arguelles
"Keep on shopping"-George W. Bush
It would seem that worse things could happen! Screw the children...time to stop having them!
Both even offer good benefits and decent -if often unjustified- salaries to those who don't rock the established-in-concrete-boat -like, trying to organize at the lower levels.
And yet they rail at and claim to hate each other in their seemingly endless struggle for supremacy and power over as many of us as possible and in extremes, are willing to take away individual freedoms under variously fabricated guises like "National Security", "Unprofitability " etc.
Now they are inseparable, wholly-owned AND understand each other much better than they let on publicly.
The real task of the OWS bloc is to realize this and gut it!
And what you have described that "many corporate and government powers hate" is a well functioning, creative, and profitable true "small business."
The backbone of the country are the real, innovative, money starved, true small businesses, who provide most of the jobs and work their a$$es off 70 or 80 hours a week and treat their employees like family-even the ones who aren't family.
I know because I stared a small travel agency with $750 I borrowed from my ex-mother-in-law and she and several other family members worked in the company.
We eventually had twelve employees and did about $2 million a year with one major and two other Fortune 500 companies and with a number of other clients that we also served for about 20 years.
We were able to finance some receivables but never qualified for any other bank loans. But we survived and provided a lot of jobs with benefits.And paid a lot more taxes than most Fortune 500 companies.
It seems like small businesses like us HAVE to be super-creative to even survive in these times and I'm trying to do this without credit, (The credit bureaus are a joke anyway) which was destroyed my my getting seriously ill just once WITH insurance in the wonderful for profit health non-system.
Best of luck t'ya.
"A rich man will sell the rope with which to hang him, if he thinks he can make a profit".
And...
"Under Republicans, man exploits man.
Under Democrats, it is just the opposite".
Teach your kids, stop teaching them to spend on anything. Stuff is not kewl!
If no one bought anything but basic needs for a month around the world...you would hear the tree fall in the woods.
Anyone with OWS get a boycott on products for a month except needs.
I believe all people worldwide just want to live in freedom, without tyranny, oppression, or exploitation, it's only the few who are sick with greed, gluttony, and warmongering who are making this world uninhabitable for the rest of us. We can overcome them with unity and not just in not purchasing, but, by tuning out their propaganda of hate, racism, and religious intolerance.
"Concentration of power is not good or bad in itself, says the Zurich team, but the core's tight interconnection s could be."
While the researchers may not want to go there, study the effects of concentration even a little and the evidence moves the question. Yes it is bad.
Monetization is the most often used gambit to rationalize costs. Economists or politicians or business people wish to "externalize" costs born by others who are ruled out of the equation.
Over and over in history, the concentration of power, while sometimes offering advances in some particular area or technology, invariably harm some people. One only need observe the language of and describing power concentration to get a feel for the depth at which the human condition understands this.
The difficulty is in sorting out truism from opinion. Evidence, as the Zurich team is gathering, is the basis for sorting.
A Tea Party Rep on MSNBC confessed to Matthews that whoever becomes president doesn't realyy matter as long as they get the house and senate.
I called the Obama comment line and said his failure to pass the jobs act only shows how powerful the congress is under its current majority. It is clear why the prize they want the most is a majority in the house and senate and while the nation is distracted by the presidential race the GOP is working hard to steal the house and congress. WE MUST NOT LET THAT HAPPEN!
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