George Carlin was right, and here’s proof. Thankfully, the Occupy Wall Street movement represents the fact that more and more people are waking up to this fact.

Revealed – the capitalist network that runs the world

by Andy Coghlan and Debora MacKenzie

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 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

Original post on newscientist.com

42 Responses to “Carlin Was Right (Of Course)”

  1. So what happens when my comments get flagged as spam? sure Lieanid is doiong that, but as long as he has to read the stuff I say about him okay with it. I liked the Jeopardy post I made yesterday. Lieanid posts on LOTS of videos, not just this one. No way is that fraud a doctor. He may be nice at times but deep down just a flaming asshole.

  2. asbach mcmin says:

    I agree with Ron Paul’s opinion on the right to health insurance, as well as his opinions on iraq and afghanistan. However I believe social security should merely be more controlled and not given to any idoit who who has a neck pain. His ideas on that are a bit extreme.

  3. Australians keep up their anti-corporatism campaign, known as ‘Occupy Sydney,’ by marching in the city in their thousands, Press TV

  4. lakemperke zad says:

    This video is a mix of facts and fiction, you blamed Free Markets which is completely fictional. Kaynesian Economics is our system of State Corporatism. Which was created due to the 16th Amendment and Central Banking. Under a Free Market our economy was much stronger. Look at your history. Oh and the criminals you point out…well you are correct they are involved in Corporatism. I suggest learning Austrian Economics rather than regurgitating half truths.

  5. I don’t know too much about politics, but this only covered one kind of corporatism. It’s a far older concept than Benito Mussolini, it has to do with securing ‘rights’ of a group of people. It’s an side effect of democracy. A quick read on wikipedia can get this far.

  6. bonadicesn says:

    Michael Moore is such a hypocrite. He bashes on Capitalism yet it is capitalism that has allowed him to gain his millions of dollars and popularity. If he was in Cuba and he decided to make “Communism: A Love Story” he would be killed on the spot.

  7. eirohander botterier says:

    i have sent an e-mail to the”Dan Patrick Show” on8/17/11,asking Danny-boy to have Dave Zirin on his show before the 10th anniv. of 9/11/01.i challenged Danny-boy to have Dave Zirin in the studio & to talk about,why Danny-boy chose not to talk about Osama Bin Laden’s death on his show,but &this is a big butt,Danny-boy has spoken several times in orgasmic tones’bout the big football games coming up on 9/11/11 & the bombing.Sad to money is that Danny-boy will not do this,butt i is waiting

  8. Occupy DC anti-corporatism protesters in Washington have marched against the Democratic fundraiser for US President Obama, whom they claim is a ‘corporate puppet.’

  9. wewethibea schmerst says:

    Don’t you have that free speech zone thing in America? If you can restrict the right of free speech and expression to citizens like that, it makes perfect sense to put some restrictions on corporations. At least it does to me.

  10. Facehammer on Introducing… The “Nolibs” Talk Radio Show! All the vile racism, sexism, corporatism, warmongering and beer-soaked screaming rage fits you can handle! –

  11. The Age of Ecology. What has almost destroyed our world?

    Corporatism! Economic growth in a finite world is not sustainable!

  12. And who pays the government?  Taxpayers.  The only thing that government can do is take money from someone and give it to someone else.  There is no telling how that money could have been put to productive use in the private sector.  Every tax dollar is one less dollar in the hands of entrepreneurs, workers, and consumers.  Shrink the government and let the free-market work.  (we need to switch from Corporatism to Capitalism first though).

  13. o'dohlber hal says:

    allisonkilkenny: Protest seems to be perceived by Harlem residents as being anti-Obama, but without nuance of corporatism. Communication fail. –

  14. cate minah says:

    Wednesday Drive on 89.7 FM – currently exploring the ‘grubby corporatism’ of Westpac’s local job cuts and their exploitation of 457 visas.

  15. bie vaard says:

    I believe in capitalism. But that’s not what we have. We have Corporatism. It works in favor of those that can afford favor.

  16. In Britain, an historic shift is taking place. Social democracy is being replaced by corporatism; hence the convergence of the main

  17. “Sadly, Ron Paul is outside the and is seen as a threat to those in power. Hence, he is deliberately hidden by mainstream media.”
    You are talking about only one group of people who are against him.
    In my opnion, he pushes his ideology(his moral, the way he thinks should be etc.) but nothing about what worked before and what will. He even makes false info, to defend that.
    What time in history no regulation and no tax actually worked?

  18. Radical thinking is needed if UK industry is to seize the provided by technological change Something is stirring in the boardrooms of British industry. You heard it at Davos. Peter Mandelson is onto it, and last week Vince Cable joined in. The scale of the structural economic crisis facing the western democracies after the crash of the consumerist boom is driving radical new thinking. As western governments confront the structural and debt crisis legacy of the credit-fuelled boom in the City, retail and housing, industrial policy is “in” again. But as the chancellor finalises his budget, the industrial policy business wants to see today is unrecognisable from the discredited corporatism of the 1970s. It’s an ambitious, modern, entrepreneurial vision of a “rebalanced innovation economy”, and – as Mandelson acknowledged – today’s industrial activism is being shaped by a new generation of Conservative ministers. At this year’s conference, it was George Osborne and…

  19. therman bess says:

    Capitalism is Dead & the GOP Killed it. What We Have Now is Corporatism. The Corporate Takeover of Our Democracy. –

  20. artwitzthu sellardt says:

    I like the Olympics and wish we could compete in our own right. Not so keen on the corporatism I saw in George Sq yesterday.

  21. Breaking News – LOST is Centralized Control of the World by the UN: Susanne Posel Occupy Corporatism June 9, 201… –

  22. molarkmann bald says:

    We don’t will under a capitalist society we live under the grip of corporatism and not adam smiths invisible hand.

  23. he’s right. Eastwood didn’t lie, he’s nt a pol, he’s a movie hero like Reagan. Reagan used his celebrity 2 sell corporatism.

  24. Reading “The Shock Doctrine” by Naomi Klein: I’m not sure our problem is lack of information, it’s more David (us) vs Goliath (corporatism).

  25. Yeah, I figured Heza was being sarcastic, and talking about those places that are basically scams. Edit: but I couldn’t figure out how to convey that succinctly.

  26. Focus on the problem or focus on the solution. Which world do you live in? Roll up your sleeves, humanity vs. corporatism

  27. “Fascism should more properly be called corporatism because it is the merger of state and corporate power.” — Benito …

  28. Douglas Rushkoff is the author of Life Inc: How Corporatism Conquered the World and How We Can Take It Back, out this week in paperback from RandomHouse, as well as Program or Be Programmed from ORBooks. Follow…

  29. dury garberraul says:

    Nice scare tactic. Tuition will go up anyhow; prob not $lack but of priorities, privatization and corporatism in higher ed.

  30. ker heffrena says:

    U run yr biz Nda ground, govt bails U out? That ain’t capitalism. That’s fascism. Corporatism. Cronyism. If it was capitalism UdB outta biz

  31. “Fascism should more properly be called corporatism because it is the merger of state and corporate power.” – Benito Mussolini. 

  32. artillman says:

    Republican a US political that runs on the platform of racism, sexism and corporatism. Of by and for r …

  33. trojasmund graina says:

    Transhumanism: How the Elite Plan to Live Forever: Susanne Posel Occupy Corporatism December 13, 2012     The eu… … –

  34. By Susanne Posel Occupy Corporatism The Swiss Federal Institute (SFI) in Zurich released a study entitled “The Network of Global Corporate Control” that proves a small of corporations – mainly banks – run the world. A mere 147 corporations which form a “super entity” have control 40% of the world’s wealth; which is the real economy. These mega-corporations are at the center of the global economy. The banks found to be most influential include: • Barclays • Goldman Sachs • JPMorgan Chase & Co • Vanguard Group • UBS • Deutsche Bank • Bank of New York Melon Corp • Morgan Stanley • Bank of America Corp • Société Générale However as the connections to the controlling groups are networked throughout the world, they become the catalyst for global financial collapse.

  35. shulkovsky dalkes says:

    eaturbrainz on Fascism is Alive and Gaining Strength in America: They claim to be super-patriots, but they would destroy every guaranteed by the Constitution. They demand free enterprise, but are the spokesman for monopoly. –

  36. New revelations Gov/Corp collusion to kill 2011 movement is what Mussolini called “corporatism” which sees democracy as the enemy. –

  37. mothevachi borgio says:

    That the nuts blather about? It already came & they didn’t notice, much less stop it. Wage slavery, usury, corporatism. –

  38. her metorn says:

    Govt Will Never Stop Corporatism b/c Corporations are Buying Up Govt. We Have to (NON-VIOLENTLY) Take Matters Into Our O …

  39. busdenleif says:

    Just read your profile that you are against corporatism. So where do you expect people to work if there are no corporations?

  40. Capitalism is Dead and the GOP Killed it. What We Have Now is Corporatism. Corporations Want to Govern and Run This Coun …

  41. bachmilote says:

    “fascism should more properly be called corporatism because it is the merger of state and corporate power.” who thinks the uk is democratic? –

  42. suriakoker chutte says:

    Chavez along with Evo Morales in Bolivia and Rafael Correa in Ecuador have been fighting to keep corporatism away fr …

Trackbacks/Pingbacks

  1. Rich vs Wealthy | Cogniphilia - [...] In my opinion, the most lucid, incisive, and trenchant comedian was Geroge Carlin. I consider myself lucky for having…

Leave a Reply

Your email address will not be published. Required fields are marked *