capitalism – RE-DESIGN

Once upon a time, in a land far away, there lived two brothers. The first brother was like an ox: strong, dutiful, and hard-working. The second brother was like a rotten apple – useless, menacing, and foul. The first brother set up a small enterprise, which quickly took root and sprawled. Soon, he needed to hire a helping hand. He could either employ his brother, who was wicked and lazy but still a relation, or a Stranger, who was diligent and qualified, but came from some distant God-forsaken place. At this point the story forks and you, the reader, have to choose which path to take: – You hire the stranger. The enterprise grows and prospers. Your brother vanishes in misery. Every Christmas you send him a present to an address he has long abandoned. This is the way of the capitalist. – You hire the brother. He might be trouble, but he is of your own blood. And, on his advice, you close your community to strangers. Soon, your brother stops showing up for work, and when he does, he shows up drunk. You quarrel and curse, but you stay loyal, and the enterprise rapidly goes into wreck. But you go down together. This is the way of the nationalist. – You hire the stranger. Every month you take a generous slice from your profit and a big cut from the stranger’s salary, and you give them to your brother. Your brother acquires a big TV, junk food addiction, and…

All conspiracy theorists know that the global economy is concentrated in the hands of a few. But even they will be blown away by this paper which maps the network of global corporate ownership and control. Here is the (somewhat understated) abstract: “The structure of the control network of transnational corporations affects global market competition and financial stability. So far, only small national samples were studied and there was no appropriate methodology to assess control globally. We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure and that a large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic “super-entity” that raises new important issues both for researchers and policy makers.” (Vitali, Glattfelder and Battiston) Some of the findings: – almost 40% of the economic value of transnational companies in the world is in the hands of a group of 147 tightly-interconnected companies “which has almost full control over itself” (p.6) – “[N]etwork control is much more unequally distributed than wealth…[T]he top ranked actors hold a control ten times bigger than what could be expected based on their wealth” (p.6) – 10 companies control 20% of the network; 50 companies control 40% of the network (!) – 35 of these 50 companies belong to a strongly connected core, meaning that they are all “tied together in an extremely entangled…

Tag: capitalism

The Good, the Bad, and the Stranger

Concentration of control in the global economy