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Posted: 25 October 2011 - 0 comment(s) [ Comment ] - 0 trackback(s) [ Trackback ]
Category: Off-beat

 

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Visualizing the "super entity."

Courtesy: New Scientist

 

Three systems theorists at the Swiss Federal Institute of Technology in Zurich have taken a database listing 37 million companies and investors worldwide and analyzed all 43,060 transnational corporations and share ownerships linking them. They built a model of who owns what and what their revenues are and mapped the whole edifice of economic power.

They discovered that global corporate control has a distinct bow-tie shape, with a dominant core of 147 firms radiating out from the middle. Each of these 147 own interlocking stakes of one another and together they control 40% of the wealth in the network. A total of 737 control 80% of it all. The top 20 are at the bottom of the post. This is, say the paper’s authors, the first map of the structure of global corporate control.

The #occupy movement will eat this up as evidence for massive redistribution of wealth. The New Scientist talked to one systems theorist who is “disconcerted” at the level of interconnectedness, but not surprised. Such structures occur commonly in biology, things like fungus, lichen and weeds. Economists say the danger comes when you combine hyperconnection with the concentration of power. The Swiss scientists warn that this can lead to an unstable environment. No Scheisse, Sherlock.

But the web of corporate control is not de facto a conspiracy of world domination. There are many reasons for tightly bundled nodes and connections: anti-takeover strategies, reduction of transaction costs, risk sharing, increasing trust and groups of interest.

A few caveats with the data set: It excludes GSEs and privately-held companies and is dominated by banks, institutional investors and mutual funds that don’t always have much in the way of control over assets. Reader danogden left an especially good comment below: “…pension plans, corporate 401(k) plans and individual funds..manage trillions in assets ultimately belonging to individuals who are predominantly not in the “1%”. …There are a number of “custodian banks” in the list — companies who hold the assets of asset managers to ensure timely processing of things like foreign dividend and bond interest, name changes (due to mergers, etc.), foreign currency conversion and the like…Again, they do not own the assets, or even really control the assets — they merely house the assets. A better list would be the actual asset OWNERS, rather than the vendors who manage, house and clear said assets.”

See the top 50 on the control list at the New Scientist. One of the co-authors, Dr. James Glattfelder, says he will be publishing next week the bigger list of 737 companies that control 80% of the global economy. The 147 are included in that group.

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

 

http://www.newscientist.com/data/images/ns/cms/mg21228354.500/mg21228354.500-3_600.jpg

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


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