[Updated with link and bumped to top for your convenience. First posted on Aug. 17].
| Estimated multinational network (red dots are big fishes) |
Only 147 super-companies control 40% of the economic power of all multinational corporations.
While the Swiss researchers found some 600,000 such multinational companies (defined by having more than 10% of their assets in a second state), it is less than one per thousand the ones who really control the global markets.
Full story at Science News. They mention a paper published at arXiv.org but I could not find it.
Update (Aug 22): Found the link!
Stefania Vitali, James B. Glattfelder and Stefano Battiston, The network of global corporate control. ArXiv 2011. Freely accessible (will eventually be published at Physical Review).
However Yves Smith at Naked Capitalism makes quite a criticism of its findings:
Essentially it seems that the study considers ownership by brokers (who are middlemen) and not actual stockholders.
However the finding on the concentration of the economic structure may be quite real (at least in the opinion of Inside Science), even if the individual stockholders remain blurry behind their middlemen. This is particularly true for the Anglosaxon counties:
See also: USA: 400 people own more wealth than half the citizenry.
Update (Aug 24):
One of the authors of the paper, James B. Glattfelder, has issued a reply to Yves Smith's criticism, which cam be found at his blog, j-node.
As I understand it, the key issues is the reliability as informing of ownership of the Orbis database Bureau van Dijk. If the database is truthful or close to it, then the paper is surely correct in its conclusions but if the database is wrong or does not report ownership properly for whichever reason in most cases, then the results reached by the paper are wrong.
This is the key issue, one I cannot take a stand on.
But I do think that this kind of research is most important to carry on in any case because we are entitled to know who holds the reigns of power.
Update (Aug 22): Found the link!
Stefania Vitali, James B. Glattfelder and Stefano Battiston, The network of global corporate control. ArXiv 2011. Freely accessible (will eventually be published at Physical Review).
However Yves Smith at Naked Capitalism makes quite a criticism of its findings:
As our Richard Smith tartly noted, “This looks like a list of people who *aren’t* in control. And since they own so much equity worldwide, that is interesting too.”
Essentially it seems that the study considers ownership by brokers (who are middlemen) and not actual stockholders.
... the work was done by physicists, which means they may not have understood the limits of the data they were working with.
However the finding on the concentration of the economic structure may be quite real (at least in the opinion of Inside Science), even if the individual stockholders remain blurry behind their middlemen. This is particularly true for the Anglosaxon counties:
The most pared-down backbones exist in Anglo-Saxon countries, including the U.S., Australia, and the U.K. Paradoxically; these same countries are considered by economists to have the most widely-held stocks in the world, with ownership of companies tending to be spread out among many investors. But while each American company may link to many owners, Glattfelder and Battiston’s analysis found that the owners varied little from stock to stock, meaning that comparatively few hands are holding the reins of the entire market....
The biggest fish was the Capital Group Companies, with major stakes in 36 of the 48 countries studied. In identifying these major players, the physicists accounted for secondary ownership — owning stock in companies who then owned stock in another company — in an attempt to quantify the potential control a given agent might have in a market…. Glattfelder added that the internationalism of these powerful companies makes it difficult to gauge their economic influence.
See also: USA: 400 people own more wealth than half the citizenry.
Update (Aug 24):
One of the authors of the paper, James B. Glattfelder, has issued a reply to Yves Smith's criticism, which cam be found at his blog, j-node.
As I understand it, the key issues is the reliability as informing of ownership of the Orbis database Bureau van Dijk. If the database is truthful or close to it, then the paper is surely correct in its conclusions but if the database is wrong or does not report ownership properly for whichever reason in most cases, then the results reached by the paper are wrong.
This is the key issue, one I cannot take a stand on.
But I do think that this kind of research is most important to carry on in any case because we are entitled to know who holds the reigns of power.
A response to Ms. Smith's critique:
ReplyDeletehttp://j-node.blogspot.com/2011/08/network-of-global-corporate-control.html
Thanks for posting here, Mr. Glattfelder.
ReplyDeleteThe main contempt that Smith seems to have is that the studied stockholders are not true owners but the companies and individual middlemen they hired to purchase the stock. This should obviously distort the result up to the point of making it totally useless maybe.
This critical issue you liquidate with a mere reference to the Orbis database. Of course you have accepted these data at face value trusting their reliability and I presume that Yves and Richard Smith have reasons to doubt the reliability. If they are right, you could maybe have used of the assessment of a good economist when preparing your research, avoiding this critical issue of the raw data.
But if they are wrong and the Orbis database is (mostly) reliable, then all the criticism issued in Naked Capitalism is wrong and the paper is correct instead.
I'd be interested (and I bet you are also) on having that point clarified because it is the key element that makes your paper good or pointless.
In any case, I do think that this kind of research is much needed, that the Humankind wants to know who are the real bosses and which are their real connections, because it is obvious that who controls the economy is most of the time able to control everything else (and therefore must be held responsible for their real power and how they use and abuse it).