Tuesday, October 25, 2011 by Globe and Mail
WINTERTHUR, Switzerland - Here’s a gift to Occupy Wall Street
protesters around the world: you now have scholarly proof that banks
control the world.
Researchers at the Swiss Federal Institute of Technology Zurich, also known as ETH, have published a paper that argues just 147 companies account for a large chunk of the total economic value of all the transnational companies around the world. No exact dollar figures, but it’s obviously a vast sum.
Among the top 50 corporations, 45 operate within the financial industry. Barclays PLC is the most powerful, according to the ETH study, followed by such well-known names as JPMorgan Chase & Co., UBS AG, and Merrill Lynch & Co., Inc.
The United States takes home first prize with 24 companies cracking the researchers’ top 50 list, followed by the U.K. with 8, France with 5, Japan with 4, and Germany, Switzerland and the Netherlands tying with 2 companies each. Canada has one company in the researchers’ top 50: Sun Life Financial, Inc. secures the 35th spot.
The research shows “a large portion of control flows to a small tightly-knit core of financial institutions,” authors Stefania Vitali, James Glattfelder and Stefano Battiston wrote in their study entitled: The network of global corporate control.
“This core can be seen as an economic 'super-entity' that raises new important issues both for researchers and policy makers.”
While the authors note that many in the worlds of academia and the media already believe the world’s economy is run by a small number of companies, there was no actual data to back it up. So they set out to study the elaborate ownership structures of 43,060 transnational companies, eventually uncovering more than one million ownership ties within that network.
The authors believe this level of control among a small number of players has a significant impact on the world’s economic health. The 147 companies in the “core” control 40 per cent of the total economic value of all transnational corporations.
“The top ranked actors hold a control ten times bigger than what could be expected based on their wealth,” the authors noted.
The intense interconnection and concentration of power weakens market competition as players form blocs, according to the study. There’s another drawback to those close links, particularly among the banks: when one runs into problems its woes spread quickly to the others.
Critics say the study doesn’t take into account that fund managers don’t always choose to control a company’s strategy via their investment, among other complaints.
Nevertheless, the study is sure to warm the hearts of Wall Street protestors camping out on these cold fall days.
Researchers at the Swiss Federal Institute of Technology Zurich, also known as ETH, have published a paper that argues just 147 companies account for a large chunk of the total economic value of all the transnational companies around the world. No exact dollar figures, but it’s obviously a vast sum.
Among the top 50 corporations, 45 operate within the financial industry. Barclays PLC is the most powerful, according to the ETH study, followed by such well-known names as JPMorgan Chase & Co., UBS AG, and Merrill Lynch & Co., Inc.
The United States takes home first prize with 24 companies cracking the researchers’ top 50 list, followed by the U.K. with 8, France with 5, Japan with 4, and Germany, Switzerland and the Netherlands tying with 2 companies each. Canada has one company in the researchers’ top 50: Sun Life Financial, Inc. secures the 35th spot.
The research shows “a large portion of control flows to a small tightly-knit core of financial institutions,” authors Stefania Vitali, James Glattfelder and Stefano Battiston wrote in their study entitled: The network of global corporate control.
“This core can be seen as an economic 'super-entity' that raises new important issues both for researchers and policy makers.”
While the authors note that many in the worlds of academia and the media already believe the world’s economy is run by a small number of companies, there was no actual data to back it up. So they set out to study the elaborate ownership structures of 43,060 transnational companies, eventually uncovering more than one million ownership ties within that network.
The authors believe this level of control among a small number of players has a significant impact on the world’s economic health. The 147 companies in the “core” control 40 per cent of the total economic value of all transnational corporations.
“The top ranked actors hold a control ten times bigger than what could be expected based on their wealth,” the authors noted.
The intense interconnection and concentration of power weakens market competition as players form blocs, according to the study. There’s another drawback to those close links, particularly among the banks: when one runs into problems its woes spread quickly to the others.
Critics say the study doesn’t take into account that fund managers don’t always choose to control a company’s strategy via their investment, among other complaints.
Nevertheless, the study is sure to warm the hearts of Wall Street protestors camping out on these cold fall days.
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