Who Runs the World ? – Network Analysis Reveals ‘Super Entity’ of Global Corporate Control

(Planetsave) In the first such analysis ever conducted, Swiss economic researchers have conducted a global network analysis of the most powerful transnational corporations (TNCs). Their results have revealed a core of 787 firms with control of 80% of this network, and a “super entity” comprised of 147 corporations that have a controlling interest in 40% of the network’s TNCs.

global netweook analysis of corporate control, strongly connected core

Strongly Connected Component (SCC); layout of the SCC (1318 nodes and 12,191 links). Node size scales logarithmically with operation revenue, node color with network control (from yellow to red). Link color scales with weight.

[Note to the reader: see the very end of this article for a ranking of the top 50 ‘control holders’]

When we hear conspiracy theorist talk about this or that powerful group (or alliance of said groups) “pulling strings” behind the scenes, we tend to dismiss or minimize such claims, even though, deep down, we may suspect that there’s some degree of truth to it, however distorted by the theorists’ slightly paranoid perception of the world. But perhaps our tendency to dismiss such claims as exaggerations (at best) comes from our inability to get even a slight grip on the complexity of global corporate ownership; it’s all too vast and complicated to get any clear sense of the reality.

But now we have the results of a global network analysis (Vitali, Glattfelder, Battiston) that, for the first time, lays bare the “architecture” of the global ownership network. In the paper abstract, the authors state:

“We present the first investigation of the architecture of the international ownership network, along with the computation of the control held by each global player. We find that transnational corporations form a giant bow-tie structure* and that a large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic “super-entity” that raises new important issues both for researchers and policy makers.” [emphasis added]

(…) Top 50 Control-Holders Ranking:

{source: the following is quoted directly from the research paper]

This is the first time a ranking of economic actors by global control is presented. Notice that many actors belong to the financial sector (NACE codes starting with 65,66,67) and many of the names are well-known global players.

The interest of this ranking is not that it exposes unsuspected powerful players. Instead, it shows that many of the top actors belong to the core. This means that they do not carry out their business in isolation but, on the contrary, they are tied together in an extremely entangled web of control. This finding is extremely important since there was no prior economic theory or empirical evidence regarding whether and how top players are connected.

Shareholders are ranked by network control (according to the threshold model, TM). Columns indicate country, NACE industrial sector code, actor’s position in the bow-tie sections, cumulative network control. Notice that NACE codes starting with 65,66, or 67 belong to the financial sector.

Rank , Economic actor name, Country, NACE code, Network Cumul. Network position, control (TM, %)

1 BARCLAYS PLC  GB 6512  SCC 4.05
2 CAPITAL GROUP COMPANIES INC, THE  US  6713  IN  6.66
3 FMR CORP  US  6713  IN  8.94
4 AXA  FR  6712  SCC  11.21
5 STATE STREET CORPORATION US 6713 SCC 13.02
6 JP MORGAN CHASE & CO. US 6512 SCC 14.55
7 LEGAL & GENERAL GROUP PLC GB 6603  SCC 16.02
8 VANGUARD GROUP, INC., THE  US 7415 IN 17.25
9 UBS AG  CH 6512  SCC 18.46
10 MERRILL LYNCH & CO., INC. US 6712  SCC 19.45
11 WELLINGTON MANAGEMENT CO. L.L.P. US 6713  IN 20.33
12 DEUTSCHE BANK AG DE 6512  SCC 21.17
13 FRANKLIN RESOURCES, INC. US 6512  SCC 21.99
14 CREDIT SUISSE GROUP  CH 6512 SCC 22.81
15 WALTON ENTERPRISES LLC US 2923 T&T 23.56
16 BANK OF NEWYORKMELLON CORP. US 6512 IN 24.28
17 NATIXIS   FR 6512 SCC 24.98
18  GOLDMAN SACHS GROUP, INC., THE US 6712 SCC 25.64
19 T. ROWEPRICE GROUP, INC. US 6713 SCC 26.29
20 LEGG MASON, INC. US 6712 SCC 26.92
21 MORGAN STANLEY US 6712 SCC 27.56
22 MITSUBISHI UFJ FINANCIAL GROUP, INC. JP 6512 SCC 28.16
23 NORTHERN TRUST CORPORATION US 6512 SCC 28.72
24 SOCIÉTÉ GÉNÉRALE FR 6512 SCC 29.26
25 BANK OF AMERICA CORPORATION US 6512 SCC 29.79
26 LLOYDS TSB GROUPPLCGB 6512 SCC 30.30
27 INVESCOPLCGB 6523 SCC 30.82
28 ALLIANZSE DE 7415 SCC 31.32
29 TIAA US 6601 IN 32.24
30 OLD MUTUAL PUBLIC LIMITED COMPANY GB 6601 SCC 32.69
31 AVIVAPLC GB 6601 SCC 33.14
32 SCHRODERSPLC GB 6712 SCC 33.57
33 DODGE & COX US 7415 IN 34.00
34 LEHMAN BROTHERS HOLDINGS, INC. US 6712 SCC 34.43
35 SUN LIFE FINANCIAL, INC. CA 6601 SCC 34.82
36 STANDARDLIFEPLCGB 6601 SCC 35.2
37 CNCE FR 6512 SCC 35.57
38 NOMURA HOLDINGS, INC. JP 6512 SCC 35.92
39 THE DEPOSITORY TRUST COMPANY US 6512 IN 36.28
40 MASSACHUSETTS MUTUAL LIFE INSUR. US 6601 IN 36.63
41 INGGROEP N.V.  NL 6603  SCC 36.96
42 BRANDES INVESTMENT PARTNERS, L.P. US 6713 IN 37.29
43 UNICREDITO ITALIANO SPA IT 6512 SCC 37.61
44 DEPOSIT INSURANCE CORPORATION OF JP JP 6511 IN 37.93
45 VERENIGING AEGON  NL 6512 IN 38.25
46 BNPPARIBAS  FR 6512 SCC 38.56
47 AFFILIATED MANAGERS GROUP, INC. US 6713  SCC 38.88
48 RESONA HOLDINGS, INC.  JP 6512  SCC 39.18
49 CAPITAL GROUP INTERNATIONAL, INC.  US 7414 IN 39.48
50 CHINA PETROCHEMICAL GROUP CO.  CN 6511 T&T 39.78

Read more: Planetsave (http://s.tt/138oe)

The network of global corporate control (Vitali, Glattfelder, Battiston)


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