Network of 147 Companies Controls Nearly 40% of Global Economic Value of Transnational Corporations

October 21, 2011 in News

A diagram of network topology models from the study, particularly the bow-tie structure that is most applicable to the transnational corporate network of global capitalist ownership.

Revealed – the capitalist network that runs the world (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 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. 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.

Top 50 control-holders (The Network of Global Corporate Control):

RankEconomic actor nameCountryNACE codeNetwork positionCumul. network control (TM, %)
1BARCLAYS PLCGB6512SCC4.05
2CAPITAL GROUP COMPANIES INC, THEUS6713IN6.66
3FMR CORPUS6713IN8.94
4AXAFR6712SCC11.21
5STATE STREET CORPORATIONUS6713SCC13.02
6JPMORGAN CHASE & CO.US6512SCC14.55
7LEGAL & GENERAL GROUP PLCGB6603SCC16.02
8VANGUARD GROUP, INC., THEUS7415IN17.25
9UBS AGCH6512SCC18.46
10MERRILL LYNCH & CO., INC.US6712SCC19.45
11WELLINGTON MANAGEMENT CO. L.L.P.US6713IN20.33
12DEUTSCHE BANK AGDE6512SCC21.17
13FRANKLIN RESOURCES, INC.US6512SCC21.99
14CREDIT SUISSE GROUPCH6512SCC22.81
15WALTON ENTERPRISES LLCUS2923T&T23.56
16BANK OF NEW YORK MELLON CORP.US6512IN24.28
17NATIXISFR6512SCC24.98
18GOLDMAN SACHS GROUP, INC., THEUS6712SCC25.64
19T. ROWE PRICE GROUP, INC.US6713SCC26.29
20LEGG MASON, INC.US6712SCC26.92
21MORGAN STANLEYUS6712SCC27.56
22MITSUBISHI UFJ FINANCIAL GROUP, INC.JP6512SCC28.16
23NORTHERN TRUST CORPORATIONUS6512SCC28.72
24SOCIÉTÉ GÉNÉRALEFR6512SCC29.26
25BANK OF AMERICA CORPORATIONUS6512SCC29.79
26LLOYDS TSB GROUP PLCGB6512SCC30.30
27INVESCO PLCGB6523SCC30.82
28ALLIANZ SEDE7415SCC31.32
29TIAAUS6601IN32.24
30OLD MUTUAL PUBLIC LIMITED COMPANYGB6601SCC32.69
31AVIVA PLCGB6601SCC33.14
32SCHRODERS PLCGB6712SCC33.57
33DODGE & COXUS7415IN34.00
34LEHMAN BROTHERS HOLDINGS, INC.US6712SCC34.43
35SUN LIFE FINANCIAL, INC.CA6601SCC34.82
36STANDARD LIFE PLCGB6601SCC35.2
37CNCEFR6512SCC35.57
38NOMURA HOLDINGS, INC.JP6512SCC35.92
39THE DEPOSITORY TRUST COMPANYUS6512IN36.28
40MASSACHUSETTS MUTUAL LIFE INSUR.US6601IN36.63
41ING GROEP N.V.NL6603SCC36.96
42BRANDES INVESTMENT PARTNERS, L.P.US6713IN37.29
43UNICREDITO ITALIANO SPAIT6512SCC37.61
44DEPOSIT INSURANCE CORPORATION OF JPJP6511IN37.93
45VERENIGING AEGONNL6512IN38.25
46BNP PARIBASFR6512SCC38.56
47AFFILIATED MANAGERS GROUP, INC.US6713SCC38.88
48RESONA HOLDINGS, INC.JP6512SCC39.18
49CAPITAL GROUP INTERNATIONAL, INC.US7414IN39.48
50CHINA PETROCHEMICAL GROUP CO.CN6511T&T39.78

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