Newscientist has an article to be published in PloS One on who has power in our world economy in an attempt to start the process of finding ideas or rules that will make our world economy more stable.
Seems the Occupy folks are onto something – as we all already knew. The article reports on an analysis of the 43,000 transnational corporations and their inter-relationships, revealing the relatively small group of companies, mainly banks, with disproportionate power over the global economy. The transnational corporations (TNCs) study went beyond prior studies of direct ownership and included in the study indirect ownership.
Using Orbis 2007’s database of 37 million companies and investors they found the links amoung the 43,060 TNCs, revealing a core of 1318 companies with interlocking ownerships who on average had connections to 20 others in the list. The 1318 represented 20 per cent of global operating revenues, while controlling a majority of “large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues”.
And of course the 1318 TNCs included 147 “super-entity”(s) that controlled 40% of the total wealth. The article notes that this means “less than 1 per cent of the companies were able to control 40 per cent of the entire network”. Most of the 147 were financial institutions, with the top 20 including Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.
So we now know why a single small bank problem in the US can affect the world’s economy – they are all tightly interconnected so problems propagate.
But this study is just a start as a simplifying assumption was made that ownership equals control, despite the hands off of management approach of most fund managers. But it does suggest we need a global anti-trust rule. One unlikely to be implemented idea is to establish incentives that will reduce the concentration of power such as a tax that increases as your TNCs’ world wide power as measured by wealth and revenue controlled by you and your connections increases.
The current incentives are for ever more concentration of wealth and power because new companies find a connection to old companies logical and indeed studies show that more wealth and income flow toward the most highly connected of the TNCs. So as we get screwed by the TNCs just remember it is not personal – just the logic of business and not a conspiracy – that produces the one percent that owns everything – and as long as politics equals money – controls everything.