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Concentration of corporate and elite power at the root of economic and ecological crisis

Susan George

Susan George provides an introduction to TNI’s State of Power 2013 report, exposing how the unprecedented concentration of corporate and elite power is at the root of our economic and ecological crisis.

Towards the end of 2011, three young, smart and tenacious mathematicians specializing in complexity theory at the Zurich Polytechnic published the paper the rest of us had been waiting for – except, to be truthful, we didn’t even know we’d been waiting for it. Nobody had ever assumed it might be possible to put the powerful structures of corporate control in an unarguably rigorous scientific framework.1

That is what Stefano Battiston, James Glattfelder and Stefania Vitali, or BG&V, did with their Network of Global Corporate Control and TNI is gratefully borrowing from them in this pamphlet. Naturally we had good sources for our Infographics series before and we’re using them again—lots of lists of the Biggest and the Richest had been published earlier from reliable sources such as the UN or major corporations themselves (e.g. Merrill-Lynch) or magazines serving that very clientele like Forbes.

But BG&V skewered the Davos Class – my name for those who personify the interconnected nature of the world’s most powerful corporations; interchangeable individuals with common interests and goals that make them a genuine international, nomadic social class.

The mathematicians did it by mapping the topography of the corporate universe just as astronomers map the suns, planets, constellations and supernovae of the night sky and they demonstrated how they are interconnected through direct and indirect ownership.

One percent control 40% of TNCs

Starting with a vast data-base of 43.000 TNCs (Transnational Corporations) they reduce this huge sample to a core group of 1300 of the largest, most powerful companies with strong links to each other, links guaranteeing that three-quarters of all the ownership ties remain in the hands of the core firms themselves.

This group is further refined to 737 companies that control 80% of the value of all 43.000 companies in the initial sample. The next refinement produces a “super-entity” of 147 companies, with near total control over itself plus 40% of the value of all the TNCs.

But it’s the annex that supplies the real kicker in the form of a list of 50 companies that exemplify what BG&V call the “knife-edge” property—that uncomfortable perch where things can go one way or the other, in the right or wrong direction.

If all is well with the economy the structure looks strong and healthy. But if a single one of these hugely interconnected companies gets into trouble, the dominoes are set up to fall and it can be Lehman Brothers or worse, all over again. Who, then, figures on this exclusive list? Of the 50 corporations, only two are involved with the real economy—Walmart and the China Petrochemical Group—the rest are all banks, mammoth insurance companies or other financial firms.

The actors of the Davos class are not conspiring or conniving nor are the structures of their power relationships the result of some intentional design— they simply reflect the Way Things Are. And the way things are is extremely dangerous, especially on the edge of the corporate knife.

Money and Oil

The exceptional concentration of the financial sector figures prominently in this issue of the State of Power and for good reason. Partly it’s because of the concentrated nature of the sector, as BG&V so brilliantly illustrate.

But there are other reasons to worry about the concentration of corporate power and one of them is, paradoxically, climate change. Finance, properly oriented, could be helping us to invest in a massive transition to clean energy and transport throughout the world. But check out the infographics on the inter- linkages between finance and big oil and gas, as well as with gas-guzzling vehicles’ producers and you will see a different light shine on the subject.

The tableau of links between the Boards of Directors of the largest banks and the largest energy companies does not give the impression that these interests are about to take up arms against each other, to put the matter as gently as possible. It looks, rather, like a flagrant case of ‘I scratch your back and you scratch mine’.

The enormous profits of the oil and gas giants and the enormous profits of the banks ensure that they will defend each other mutually and will also defend the status quo. Meanwhile, these extractive industries guarantee that global warming will continue. In fact, the boldest experts say that we may as well stop even discussing how to avoid it. Unless governments by some miracle stop defending at once both the banks and the extractive industries, the planet is going to change more and more rapidly. The conversation now has to be about adaptation for the most vulnerable.

Inequality back on the public agenda

This doesn’t mean that citizens should stop resisting power and give up, quite the contrary. Other infographics will remind readers that all too often, corporate power leaves State power in the shade.

The power of the richest .01 percent of the population has also become a permanent scandal. Most of the High Net Worth Individuals—and the crème de la creme Ultra-High Net Worth Individuals–are in the US or Europe. This tiny segment of the population pays lower taxes than at any time since the 1920s and that, at least, we can hope to change. Economists as famous and as listened-to as Joseph Stiglitz are now explaining how huge inequalities “hold back the recovery”.

Barack Obama is in his second term and could perhaps be persuaded to do something about the stagnant US economy and win tax increases on corporations and the rich, difficult as the Congress may be. In Europe, where for the moment austerity reigns, it’s easy to show that austerity policies do not and cannot work, if by “working” one means bringing about recovery (preferably in a good and green way) and creating more jobs.

Even the IMF is announcing–sometimes in roundabout and veiled terms — that it’s being forced by circumstances to rethink its policies.

Power of resistance

Infographics readers have every reason to continue to resist and to create more centers of tension, helping others to see how the cards are now stacked against ordinary people and how they can create a mass consciousness of this injustice. Whatever the destiny of Occupy Wall Street, it made a permanent contribution by making the “1%” part of the international conversation. All of us at TNI hope that this issue of The State of Power will help more and more people to understand that our real problems stem from the 0.1%, indeed the 0.001%.

1. Vitali S, Glattfelder JB, Battiston S (2011), The Network of Global Corporate Control. PLoS ONE 6(10): e25995. doi:10.1371/journal.pone.0025995

Susan George is one of Trans National Institute’s most renowned fellows for her long- term and ground-breaking analysis of global issues. This article by Susan George was originally published on under a Creative Commons Licence, Jan 22, 2013

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