Capitalism’s Cabal: The Companies that Run the World

We all know that corporations and banks rule the world, but what I don’t think most of us understand is how that power and wealth is truly compacted and wielded by relatively few entities in a world with a population about to hit the seven billion mark.

A new analysis has revealed that the world’s ownership rests with just 1,318 companies that make up the core of the global economy. The analysis was performed by three systems theorists in Zurich, Switzerland, and shows not only the ownership of the world’s wealth, but the incestuous relationship they have with each other, as New Scientist points out:

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)

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.

So who’s in the top 10, top 20, top 50? Some familiar names, many of whom were instrumental in the financial collapse of 2008:

• Barclays plc
• JP Morgan Chase & Co
• UBS AG
• Merrill Lynch & Co Inc
• Deutsche Bank AG
• Credit Suisse Group
• Bank of New York Mellon Corp
• Goldman Sachs Group Inc
• T Rowe Price Group Inc
• Morgan Stanley
• Bank of America Corporation
• Lehman Brothers Holdings Inc
• The Depository Trust Company
• Massachusetts Mutual Life Insurance
• Deposit Insurance Corporation of Japan

The article at New Scientist downplays the sinister aspect of such concentration of power and wealth, but points out the problems:

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.”

This explains the severity of the financial collapse in 2008, and left to its own devices, does not bode well for the future.