The Global 147
By Mark Mason at Aug 16, 2011
A recent study tested the oft-claimed notion that the wealth of the world is concentrated and becoming ever-more concentrated in the hand of the few.
The study examined the distribution and control of wealth held by corporations, not individuals. Of 43,060 corporations included in the study, 147 control about 40 percent of the wealth, and importantly has control over itself. The authors refer to this core group as a financial "super-entity." This group, about one-third of one percent of the corporations studied, has controlling interests, and thus control of economic wealth is lumped into a few giant transnationals. Okay this has been suspected; a hypothesis is now presented with some supporting empirical evidence. Not surprisingly, three-fourths of the controlling 147 are financial institutions. In addition, 737 corporations possess 80 percent of total corporate network control. That's 1.7 percent controlling 80 percent.
What is particularly noteworthy is that the study attempted to measure control of wealth, controlling interests, going beyond many other studies which counted wealth held by corporations. Not only is the distribution of wealth of interest but elucidating the network of power over wealth directs our attention to the "entangling alliances" and the degree to which "really-existing" capitalism does not resemble a free market. Corporations are not ball bearings in a bag. They exist as complex interrelated and intertwined institutions with a small set of players taking on a centralized control over many other corporations. This study claims to offer the first empirical evidence directed at documenting corporate control networks.
When we're told that a bank is "too big to fail" it's because of the network of entangling control, not the concentrated wealth itself. Wealth is highly concentrated as many previous studies have shown. This study documents, as they say in their own words: "...network control is much more unequally distributed than wealth. In particular, the top ranked actors hold a control ten times bigger than what could be expected based on their wealth." If JP Morgan Chase goes down, a cascade of collapses would follow.
Wealth is concentrated; control of wealth is super-concentrated. The paper offers the first ranking of corporations by power, not by wealth.
The authors ask two questions arising from the results of their study:
1) Is the global marketplace openly competitive (free) or concentrated? The free market, isn’t.
2) What does concentration of power suggest about global financial stability? They make a first-approximation of systemic risk through the measurement and pattern-recognition of concentrated control. The results are worrisome