[P2P-F] scientific study : "a few bankers control a large chunk ofthe global economy"

Thu Oct 20 13:02:50 CEST 2011

Apparently they mention, in the article, using ( 2007 ) data from

http://www.bvdinfo.com/Products/Company-Information/International/Orbis

?

it seems to be possible to register for a free trial ? :

http://directory.bvdep.com/register/register.asp?language=en&productId=SuiteSearch

On Thu, Oct 20, 2011 at 10:26 AM, Apostolis Xekoukoulotakis <
xekoukou at gmail.com> wrote:

> I wonder which data sets they used and how I can get them.
>
> Interesting.
>
>
> 2011/10/20 Natalie Golovin <10natalie at cox.net>
>
>>   Wow-Thanks!
>>
>>  *From:* Dante-Gabryell Monson <dante.monson at gmail.com>
>> *Sent:* Wednesday, October 19, 2011 3:37 PM
>> *To:* econowmix at googlegroups.com ; p2p-foundation<p2p-foundation at lists.ourproject.org>;
>> gtmonnaie at gtmonnaie.be
>> *Subject:* [P2P-F] scientific study : "a few bankers control a large
>> chunk ofthe global economy"
>>
>>
>> http://www.newscientist.com/article/mg21228354.500-revealed--the-capitalist-network-that-runs-the-world.html
>>
>> ( found via "The Next Edge"
>> http://www.facebook.com/groups/120497731371323 - thanks ! )
>>
>>
>> AS PROTESTS against financial power sweep the world<http://edition.cnn.com/2011/10/15/world/occupy-goes-global/?hpt=wo_t3>this week, science may have confirmed the protesters' worst fears. An
>> analysis <http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf> of
>> the relationships between 43,000 transnational corporations has identified a
>> relatively small group of companies<http://www.newscientist.com/article/mg21228354.500-revealed--the-capitalist-network-that-runs-the-world.html#bx283545B1>,
>> mainly banks, with disproportionate power over the global economy.
>> [image: 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 <i>(Image: </i>PLoS
>> One<i>)</i>]
>>
>> 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*)*
>>
>> *
>> *
>>
>> 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<http://occupywallst.org/forum/proposed-list-of-demands-please-help-editadd-so-th/>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<http://www.sg.ethz.ch/people/formercoll/jglattfelder>.
>> "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<http://www.bvdinfo.com/Products/Company-Information/International/Orbis>,
>> 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.
>>
>> John Driffill <http://www.econ.bbk.ac.uk/faculty/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<http://www.newscientist.com/article/dn20777-haircuts-identified-as-a-cause-of-financial-crisis.html>.
>> "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, California,
>> a complex systems expert who has advised Deutsche Bank.
>>
>> Yaneer Bar-Yam, head of the New England Complex Systems Institute (NECSI),
>> warns that the analysis assumes ownership equates to control, which is not
>> always true. Most company shares are held by fund managers who may or may
>> not control what the companies they part-own actually do. The impact of this
>> on the system's behaviour, he says, requires more analysis.
>>
>> Crucially, by identifying the architecture of global economic power, the
>> analysis could help make it more stable. By finding the vulnerable aspects
>> of the system, economists can suggest measures to prevent future collapses
>> spreading through the entire economy. Glattfelder says we may need global
>> anti-trust rules, which now exist only at national level, to limit
>> over-connection among TNCs. Bar-Yam says the analysis suggests one possible
>> solution: firms should be taxed for excess interconnectivity to discourage
>> this risk.
>>
>> One thing won't chime with some of the protesters' claims: the
>> super-entity is unlikely to be the intentional result of a conspiracy to
>> rule the world. "Such structures are common in nature," says Sugihara.
>>
>> Newcomers to any network connect preferentially to highly connected
>> members. TNCs buy shares in each other for business reasons, not for world
>> domination. If connectedness clusters, so does wealth, says Dan Braha of
>> NECSI: in similar models, money flows towards the most highly connected
>> members. The Zurich study, says Sugihara, "is strong evidence that simple
>> rules governing TNCs give rise spontaneously to highly connected groups". Or
>> as Braha puts it: "The Occupy Wall Street claim that 1 per cent of people
>> have most of the wealth reflects a logical phase of the self-organising
>> economy."
>>
>> So, the super-entity may not result from conspiracy. The real question,
>> says the Zurich team, is whether it can exert concerted political power.
>> Driffill feels 147 is too many to sustain collusion. Braha suspects they
>> will compete in the market but act together on common interests. Resisting
>> changes to the network structure may be one such common interest.
>>
>>
>> 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
>>
>> *Graphic:* The 1318 transnational corporations that form the core of the
>> economy<http://www.newscientist.com/articleimages/mg21228354.500/0-revealed--the-capitalist-network-that-runs-the-world.html>
>>
>> *(Data: *PLoS One*)         *
>>
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>
>
> --
>
>
> Sincerely yours,
>
>      Apostolis Xekoukoulotakis
>
>
>
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