GO
Loading...

The Super-Entity That Rules the World

A team of theorists at the Swiss Federal Institute of Technology in Zurich have determined that global corporate control is far more concentrated than many people think.

A core of just 147 firms — many of them financial companies — control 40 percent of the wealth of 43,060 transnational corporations. A broader core of 737 control 80 percent, according to the theorists.

From New Scientist:

"In effect, less than 1 per cent of the companies were able to control 40 percent of the entire network," says Glattfelder, researcher at the ETH. 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, Calif., a complex systems expert who has advised Deutsche Bank.

The data used by the Swiss theorists was from 2007. My hunch is that ownership is even more concentrated now. For example, Barclays is at the top of the list from the 2007 data. But Lehman Brothers, which was acquired out of bankruptcy by Barclays, is also on the list. The global financial consolidation that followed the financial crisis has only made the concentration worse.

You can download the Swiss paper here.

Questions? Comments? Email us atNetNet@cnbc.com

Follow John on Twitter @ twitter.com/Carney

Follow NetNet on Twitter @ twitter.com/CNBCnetnet

Facebook us @ www.facebook.com/NetNetCNBC

NetNet TV

Wall Street