Revealed – the capitalist network that runs the world

From the New Scientist 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. 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. 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.” From Orbis 2007, a database listing 37 million companies and investors worldwide, researchers 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 [caption id="attachment_7369" align="alignleft" width="501" caption="The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue (Image: PLoS One)"]The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue (Image: PLoS One)[/caption] ties to two or more other companies, and on average they were connected to 20. 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. “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. 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. George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank, 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. 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 [h/t Chris Roche] ]]>

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Comments

3 Responses to “Revealed – the capitalist network that runs the world”
  1. John Magrath

    “The super-entity is unlikely to be the intentional result of a conspiracy to rule the world”…..
    But now it knows it exists (as a result of this research being done)….uh oh….

  2. Joymalya Chakraborty

    Progressive taxation considering labor as tax points both on X axis with capital and revenue ( in and outflows ) on Y , pre-break even follows progressive taxation on revenue growth. With accumulated revenue as with the article , operational taxation may be effective in some cases .

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