Zurich University calculates number of protests
Baku, October 22 (AZERTAC). A University of Zurich study \'proves\' that a small group of companies - mainly banks - wields huge power over the global economy. 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. The 1,318 transnational corporations that form the core of the globalised economy - connections show partial ownership of one another, and the size of the circles corresponds to revenue. The companies \'own\' through shares the majority of the \'real\' economy. \'In effect, less than one per cent of the companies were able to control 40 per cent of the entire network,\' says James Glattfelder, a complex systems theorist at the Swiss Federal Institute in Zurich, who co-wrote the research, to be published in the journal PLoS One. 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 no axe to grind: they 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.
"Reality is so complex, we must move away from dogma, whether it\'s conspiracy theories or free-market," says James Glattfelder. "Our analysis is reality-based." Previous studies have found that a few TNCs own large chunks of the world\'s economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy - whether it made it more or less stable, for instance. The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company\'s operating revenues, to map the structure of economic power. The work, to be published in PloS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What\'s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world\'s large blue chip and manufacturing firms - the "real" economy - representing a further 60 per cent of global revenues. When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network. "In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network," says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.
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