Networking: Strong Ties Bind Transnational Corporations
A new study analyzing transnational corporations demonstrates the power a core group of 1,318 companies has over the global economy. The most powerful, not surprisingly, are banks.
The study, conducted by researchers at the Swiss Federal Institute of Technology in Zurich, explores the network of transnational corporations — including who owns who among other economic relationships — and further discover that a super-connected 147 companies control 40% of the wealth in the total network.
(These “super-connected” companies are represented by the red dots in the image above. The “merely” very connected are in yellow.)
Via New Scientist:

[The study] combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations…
…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.”…
…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. Sugihara 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.

Image: The 1318 transnational corporations that form the core of the global economy. Dot size represents revenue. New Scientist via PLoS One.
Study (PDF). 

Networking: Strong Ties Bind Transnational Corporations

A new study analyzing transnational corporations demonstrates the power a core group of 1,318 companies has over the global economy. The most powerful, not surprisingly, are banks.

The study, conducted by researchers at the Swiss Federal Institute of Technology in Zurich, explores the network of transnational corporations — including who owns who among other economic relationships — and further discover that a super-connected 147 companies control 40% of the wealth in the total network.

(These “super-connected” companies are represented by the red dots in the image above. The “merely” very connected are in yellow.)

Via New Scientist:

[The study] combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations…

…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.”…

…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. Sugihara 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.

Image: The 1318 transnational corporations that form the core of the global economy. Dot size represents revenue. New Scientist via PLoS One.

Study (PDF). 

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