Revealed: the capitalist network that runs the world

Revealed: the capitalist network that runs the world

    by Andy Coghlan and Debora MacKenzie

 

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

AS PROTESTS against financial power sweep the world, 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 Occupy Wall Street movement spreads to London (Image: Dave Stock)

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)         

From New Scientist @ http://www.newscientist.com/article/mg21228354.500-revealed--the-capitalist-network-that-runs-the-world.html

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Living in a Theater State: Plug in and Be Lit up by the American Hologram

Living in a Theater State

Plug in and Be Lit up by the American Hologram

TV and movies keep us in an entertained stupor, awed, mislead, and most importantly, distracted

By Joe Bageant

 Ajijic, Mexico -- I've spent most of this week watching American television and movies. I leave the TV on all night long. I toss and turn with my bad back, and bad lungs, catch a rerun episode of Two and a Half Men, or CSI, and conk out again. Then I awaken to the U.S. morning talk shows. It's a grueling regimen, only for the strong. Or the lonely. For periodic relief, I switch to Mexican television (be patient, I really am going somewhere with this).

Mexican TV is not one iota better than US television, but is veeerrry heavy on the booty. More than heavy. Astronomical. Think all-but-bare tits and ass close-ups every fifteen seconds, straight through commercials, dramas, comedy shows, history shows, and even the news where possible.  Every show but the bullfights and that old nun who comes on at ten PM, who invariably drives me back to the U.S. channels.

 Ahhhh … Safely in the American national illusion, where all the world's a shopping expedition. Or a terrorist threat. No matter, as long as it is colorful and wiggles on the theater state's 400 million screens. Plug in and be lit up by the American Hologram.
This great loom of media images, and images of images, is so many layers deep that it has replaced reality. No one can remember the original imprint. If there was one. The hologram is a hermetic snow globe, a self-referential circuitry of images, and a Möbius loop from which there is no logical escape. Logic has zilch to do with what is going on. The smallest part holographically recapitulates the whole, and vice versa. No thinking required, we just cycle and recycle through an aural dimension. Not all that bad, I guess, if it were not generated by forces out to fuck every last pair of eyeballs and mind plugged into it.
The investing class has put thousands of billions into movies, TV and other media to keep the hologram lit up over the past six decades. Which is to say, keep the public in an entertained stupor, awed, mislead, and most importantly, distracted. But the payoff probably runs in the trillions.
For the clear-eyed citizen, there is a growing inner horror and despair in all this, with nowhere to turn but the Internet. The Net is a cyber reality, no more real than the hologram, and indeed a part of the hologram, though not quite yet absorbed and co-opted by capitalism. We take what relief we can find.
However, for the unquestioning rest, the hologram, taken in its entirety, constitutes the American collective consciousness. Awareness. It enshrouds every citizen, defining through its permeation the daily world in which we all operate. Whether we love or hate it, there is no escape. Go live in a shack in the woods. Call that escape. But everything in the outside world continues to run in accordance with the humming energy of the hologram. There is no cutting our umbilical link to the womb of this illusion, this mass hallucination. There is only getting a longer umbilical cord, closing your eyes, and pretending that what the rest of the nation does has no effect on you. We were all born and raised in that womb. We can no more divorce the neurochemistry and consciousness it shaped in us, than we can deny that we had an earthly mother and are of her tissue. Our consciousness is born of the hologram's connective neural and electrical tissue.

 

That common womb of American consciousness is dying. Slowly or rapidly, depending on how you assess the global ecocide and peak everything, it is dying. There will be resuscitations along the way, more massive infusions of money, fear and the rawest sort of fantasy fed to a mood and commodity drugged public. Still, its condition is terminal, because the hyperdrive consumer culture it was built to sustain, is itself unsustainable. Its appetite ate the world. In fact, so voracious is its appetite that even if our "consumer economy," (legalized feudal theft) sees a recovery, and resumes the level of growth required just to keep capitalism alive, it will die just that much faster.
It is not in capitalism's DNA to care about the death of the earth. Nor is it in the brain chemistry of an American satiated on prime beef and sailing across the landscape at 70 miles per hour in a $40,000, steel exoskeleton from General Motors, to care. Hominid gratification is what it is -- hard wired -- and there is no circumventing it.
The system has just begun its crash, and already we are seeing an armed infantilized nation wail, hurl blame and do horrific things, the worst of which we do to one another (excluding sending predator drones after Middle Eastern school kids). Surveillance, witch hunts, destruction of civil liberties, and the government inching toward star chamber trials for those who do not display correct traits. Citizens embracing totalitarianism as stability in the face of the ultimate instability -- the death of the planet.
The political regime or philosophy does not exist which can turn this scenario around. Slow it down, maybe, but put things in reverse, nope. Not when six billion mouths are munching at one end of the last noodle, and at the other end a fraction of a billion well armed technological people want the entire noodle. Not when life is already so damned cheap you can buy a girl slave in Haiti for twelve bucks, or 50 child slaves for your Asian sweatshop for less than the cost of a new car. Or an American working man for half of what it takes to support a family, then throw his ass over the company fence when he's no longer needed. Or bury him in mines as he cries out in Jesus' name, blow him up in Iraq, and Stelazine his kids minds and souls under the hot lights of the hologram, readying them for "the labor market." Schenectady or Soweto, life is dirt-cheap and getting cheaper everywhere on the planet.

Meanwhile, gangster capitalism needs that hologram to maintain the illusion that life is not cheap, and that Jennifer Anniston's ass can be yours in mind and dream (Personally, I'm a Julianna Margulies fan -- The Good Wife"). And most of all, "The Gram" is required to keep its captives deluded and sated enough to remain productive and consuming -- not to mention hating the right people -- right up to the last moment before total collapse, and they are no longer needed. The higher owning/investing class is safe, no matter what happens. Oh sure, as Edward Bellamy wrote, a few of them topple from their high perch on humanity's coach during the hell bent journey, but their class remains.
What happens to the rest of us in that great, sweating, moaning throng who have drawn the coach these centuries? What will remain for us on ruined plains of collapse?
Here is what I believe will remain. Reality and the truth, and the opportunity for spiritual evolution, which, in the end, I think will include most people. And much suffering. The reality of the world has always involved suffering. Despite the ballyhoo of modern science and technology, just as much suffering remains, more actually, given our increased numbers on the planet. Suffering happens to individual human beings and there are far more of those now. Of course, fat cat NGOs and governments deal in percentages and rates, so they will not have to account for the increased millions of miserable beings. We have more humans suffering -- and not just from poverty either, think of depleted uranium, toxic waste, sweatshop slavery -- than we had humans on earth a couple hundred years ago.
The hologram has, and still does, prevent Americans from grasping any of this. Instead, the hologram allows us to believe that life can exist without suffering. We actually achieved that state for a while, too, by forcing the suffering on unseen people elsewhere. We accepted the hologram's one voice to the many as truth (not that we had much choice, The ‘Gram was all we knew), then let our souls and national character necrotize in the warm bath of self-gratification and statist hubris.
Nasty picture ain't it? One surely painted by a bitter, sick old man who hates America. Years ago, my fellow countrymen used to ask if I hated America. They finally quit asking me when I started answering, "Hell fucking yes!" But I don't hate Americans. In fact, while I do not believe in "hope" -- that superstitious, childish wishing upon a star -- I do believe America is once again, for all the wrong reasons, the last best hope of the world. If we do not succeed in destroying it first.
Clearly, we have taken an unimaginably disastrous course, and intend to take everyone else out with us. Yet we have only done what most of the world's nations would have done, given such brute power and wealth for such a time. Perhaps more accurately, done what most of the world's governments and leadership would have. So long as nations have hierarchical leadership, they will have escalating hierarchical greed, power hunger and destructive folly -- and therefore, eventually approach hierarchical evil at some point. It may be an old saw, but power does corrupt.
Study us. See how an essentially good people (although the Native Americans would never agree) went wrong. After all, we were born the same unblemished child as everywhere else on the planet. And even now, given what has happened, one cannot fully indict all the "little people," past or present. My granddad was a decent guy until the day he died. So were my dad and mom. And I try to be. But all of us can be rendered blind by faceless machines not entirely of our own creation, and then made submissive beasts to the coarsest among us. Ask any German. Or Hutu. We can be manipulated to believe that the rules do not apply to us, as in the cult of American exceptionalism. Arrogance is experiential and environmental in cause. I've been there and back several times in my life, and I am sure of that. Human experience can make and unmake arrogance. Ours is about to get unmade.
Inside most Americans is a globally brattish child. Thanks to our endowed natural resources (since squandered) and to armed national theft abroad, the American has not suffered enough to become a responsible adult on the planet. I suggest that others learn from our example and do differently while they still have the chance. Take heart that they may yet live in a country where capitalism's nihilistic dynamo has not built up such a head of steam. There are still some left, but as near as I can tell -- and mind you, I don't know shit -- their leadership is caught up in the same elite games and traps. National leadership is its own moral and spiritual trap.
Who am I to give advice? Nobody. But this is the Internet, and any dick brain with a keyboard may do so.
My advice is to resist pride in anything said to be national, whether it be prosperity, healthcare, culture, competence, social cohesion and identity, or whatever. Pride and courage do not live in the same house. Courage, which has little to do with blood and guts, but everything to do with sacrifice, chooses to dwell alongside humility.
Again, what will be left after the big collapse? Perhaps after a period of terror, violence and chaos, when the undeniable on-the-ground truth becomes apparent, through ecological disaster, war and other events, a more positive national cathexis will occur. If it does, it probably will not resemble anything we can conceive of in these times. If we can get past the terror involved from our present apprehensive vantage point, it is easy to see why positive national, even global cathexis may be unavoidable.

Cause for well-reasoned optimism exists. Its way the fuck out there, but it's there. Not that it is something to cling to, or even pursue. Clinging and desire are the cause of all suffering in the first place. Doing so only prolongs suffering, personal, national or planetary. The Buddhists are right about that one. So are the Baptists when they say "The world gets right when the people get right."
The big problem at the moment though, for us as sentient beings, is:
What to do when I get out of bed each day? Give money to the Democrats? Move out of the country? Stay and fight the bastards?
Throwing money at frauds and fools doesn't work. Moving to Mexico or Canada takes money in a time when money and jobs are scarce everywhere. As for staying and fighting, really fighting, there is not one person reading this who is going to go strangle the sleazy fucks having martinis on Wall Street with their pet Senator. Nobody reading this is going to instill genuine physical fear, which is the only thing such lizards might respond to. We are left to work within the system, as per the hologram's directive. Their system. Ha!
The answer, to me at least, is to do the most obvious thing first. And I do mean obvious in the most mundane sense. Like fixing breakfast with all the contemplative awareness possible. Seriously. The tiniest right action, the action in complete unself-conscious natural awareness, connects to all the rightness in the universe. And the universe is always right. Because it owns all of our asses, plus black holes, and those teensy pinholes in time that physicist say make you an immediate neighbor of Shakespeare and mastodons -- only you don't know it. It owns the molecules of the ages. Everything.
This proposition is unappealing to Americans and just about everyone else in the western world. To be perfectly honest, a big screen TV, the Internet, and tickets to a Rams game are more accessible and immediately gratifying. Right action in the moment does not light up your neural pleasure centers like cheap sex or jalapeno Doritos. However, I am trying to do it anyway, at least until the opportunity for cheap sex presents itself. When it does, it will most likely be the right action for that moment. Funny how things work.
In any case, by the mundane right action of breakfast, I mean fixing breakfast to locate one's heart in that particular day. Then proceeding toward the least harm one can discern to do, with full knowledge that we always do harm, whether we intend to or not (the world is full of subtle unintended violence). Eliminate whatever suffering in sentient beings one encounters, whether it be in bums, dogs, kids, plants, or the rich fucker next door moaning over his enormous tax bill. To him that is suffering. There's no sliding scale about this shit. I once worked for a guy who bawled when some kid keyed his Porsche. Misery is relative.  Compassion is sublime.

Besides, this is what the heart is designed for -- to serve as a compass for the spirit, regardless of how one defines spirit or denies its existence. What the hell, we gotta call the best in ourselves and in our species something, so we can connect with it. The mind has some terrible limitations in doing that sort of thing. As in, it cannot. Necessary as rationalization is for survival, reason ain't everything. In the big picture, it is a small ingredient. Merely an asset, a monkey tool.

Even thinking seems ultimately to lead to the value of non-thinking, which is to say, pure human existence and consciousness. Pure unadulterated duration. This is the most fearless plain, the one on which all things are manifest as they really are, in their purest form, before social and personal hallucinations settle over them like a shroud.
In such times as these, that hard bright plain is bitch to find, much less travel. For sure it starts with the moment called now.
And right now, good god, it's two AM! Time for the nightly Law and Order rerun on Mexican TV.

Hologram take me home.

Joe Bageant is author of the book, Deer Hunting With Jesus: Dispatches from America's Class War (Random House Crown), about working class America. A complete archive of his on-line work, along with the thoughts of many working Americans on the subject of class may be found on his website.

From http://www.alternet.org/media/146888/we%27re_living_in_a_theater_state_--_plug_in_and_be_lit_up_by_the_american_hologram?page=entire

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