Small Network of Corporations Run the Global Economy

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A University of Zurich study reports that a small group of companies – mainly banks – wields huge power over the global economy. The study was completed by Stefania Vitali, James B. Glattfelder, Stefano Battiston at the Swiss Federal Institute in Zurich

The study is the first to look at all 43,060 transnational corporations and the web of ownership between them – and created a ‘map’ of 1,318 companies at the heart of the global economy. The study found that 147 companies formed a ‘super entity’ within this, controlling 40 per cent of its wealth.

All own part or all of one another. Most are banks – the top 20 includes Barclays and Goldman Sachs. But the close connections mean that the network could be vulnerable to collapse. In effect, less than one per cent of the companies were able to control 40 per cent of the entire network.

Economists such as John Driffil of the University of London, a macroeconomics expert, stated that the value of its study wasn’t to see WHO controlled the global economy, but the tight connections between the world’s largest companies.

The collapse of 2008 showed that such tightly-knit networks can be unstable, Some of the assumptions underlying the study have come in for criticism – such as the idea that ownership equates to control. But the Swiss researchers have simply applied mathematical models usually used to model natural systems to the world economy, using data from Orbis 2007, a database listing 37 million companies and investors.

The top 25 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
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

Title: Does One “Super Corporation” Runs the Global Economy: Study claims it could be terrifyingly unstable
Publication: Mail-On Line, 10/20/11
Author: Rob Waugh.

Title: The Network of Global Corporate Control
Authors: Stefania Vitali, James B. Glattfelder, Stefano Battiston
Publication: Public Library of Science
Date of Publication: 26 October 2011

Student Researcher: Sean Lawrence, Sonoma State University
Faculty Advisor: Peter Phillips, Sonoma State University