You are currently browsing the monthly archive for October 2011.
AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters’ worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.
The study’s assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.
The idea that a few bankers control a large chunk of the global economy might not seem like news to New York’s Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations (TNCs).
“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.
John Driffill of the University of London, a macroeconomics expert, says the value of the analysis is not just to see if a small number of people controls the global economy, but rather its insights into economic stability.
Concentration of power is not good or bad in itself, says the Zurich team, but the core’s tight interconnections could be. As the world learned in 2008, such networks are unstable. “If one [company] suffers distress,” says Glattfelder, “this propagates.”
“It’s disconcerting to see how connected things really are,” agrees George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank.
Yaneer Bar-Yam, head of the New England Complex Systems Institute (NECSI), warns that the analysis assumes ownership equates to control, which is not always true. Most company shares are held by fund managers who may or may not control what the companies they part-own actually do. The impact of this on the system’s behaviour, he says, requires more analysis.
Crucially, by identifying the architecture of global economic power, the analysis could help make it more stable. By finding the vulnerable aspects of the system, economists can suggest measures to prevent future collapses spreading through the entire economy. Glattfelder says we may need global anti-trust rules, which now exist only at national level, to limit over-connection among TNCs. Bar-Yam says the analysis suggests one possible solution: firms should be taxed for excess interconnectivity to discourage this risk.
One thing won’t chime with some of the protesters’ claims: the super-entity is unlikely to be the intentional result of a conspiracy to rule the world. “Such structures are common in nature,” says Sugihara.
Newcomers to any network connect preferentially to highly connected members. TNCs buy shares in each other for business reasons, not for world domination. If connectedness clusters, so does wealth, says Dan Braha of NECSI: in similar models, money flows towards the most highly connected members. The Zurich study, says Sugihara, “is strong evidence that simple rules governing TNCs give rise spontaneously to highly connected groups”. Or as Braha puts it: “The Occupy Wall Street claim that 1 per cent of people have most of the wealth reflects a logical phase of the self-organising economy.”
So, the super-entity may not result from conspiracy. The real question, says the Zurich team, is whether it can exert concerted political power. Driffill feels 147 is too many to sustain collusion. Braha suspects they will compete in the market but act together on common interests. Resisting changes to the network structure may be one such common interest.
The top 50 of the 147 superconnected companies
1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
5. State Street Corporation
6. JP Morgan Chase & Co
7. Legal & General Group plc
8. Vanguard Group Inc
9. UBS AG
10. Merrill Lynch & Co Inc
11. Wellington Management Co LLP
12. Deutsche Bank AG
13. Franklin Resources Inc
14. Credit Suisse Group
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp
18. Goldman Sachs Group Inc
19. T Rowe Price Group Inc
20. Legg Mason Inc
21. Morgan Stanley
22. Mitsubishi UFJ Financial Group Inc
23. Northern Trust Corporation
24. Société Générale
25. Bank of America Corporation
26. Lloyds TSB Group plc
27. Invesco plc
28. Allianz SE 29. TIAA
30. Old Mutual Public Limited Company
31. Aviva plc
32. Schroders plc
33. Dodge & Cox
34. Lehman Brothers Holdings Inc*
35. Sun Life Financial Inc
36. Standard Life plc
38. Nomura Holdings Inc
39. The Depository Trust Company
40. Massachusetts Mutual Life Insurance
41. ING Groep NV
42. Brandes Investment Partners LP
43. Unicredito Italiano SPA
44. Deposit Insurance Corporation of Japan
45. Vereniging Aegon
46. BNP Paribas
47. Affiliated Managers Group Inc
48. Resona Holdings Inc
49. Capital Group International Inc
50. China Petrochemical Group Company
* Lehman still existed in the 2007 dataset used
Graphic: The 1318 transnational corporations that form the core of the economy
We are pleased to announce the release of our 20th anniversary issue of Lumpen Magazine! It’s hard to believe it’s been going on this long. For this special issue Plural Design created an overview of 20 years and 116 issues of the publication. It features an 80 page magazine with a 24 page BONUS publication inside. The magazine is printed entirely in full color and features spreads, articles and images from previous issues. Here are some sneak peeks at the two covers. The mgazine will be released on Friday, October 21, at several art shows and venues in Bridgeport. Please join us and pick one up a the MDW Fair vernissage at the Geolofts; at the opening of Judy Natal’s exhibition at the Co-Prosperity Sphere; at the opening for Thad Kellstadt at Eastern Expansion; and at Maria’s Packaged Goods & Community Bar, where we will be partying until 2am..
Issues will be available throughout the city during the next week.
A series of films about how humans have been colonised by the machines they have built. Although we don’t realise it, the way we see everything in the world today is through the eyes of the computers.
This is the story of the dream that rose up in the 1990s that computers could create a new kind of stable world. They would bring about a new kind global capitalism free of all risk and without the boom and bust of the past. They would also abolish political power and create a new kind of democracy through the internet where millions of individuals would be connected as nodes in cybernetic systems – without hierarchy.
The film tells the story of two perfect worlds. One is the small group of disciples around the novelist Ayn Rand in the 1950s. They saw themselves as a prototype for a future society where everyone could follow their own selfish desires. The other is the global utopia that digital entrepreneurs in Silicon Valley set out to create in the 1990s. Many of them were also disciples of Ayn Rand. They believed that the new computer networks would allow the creation of a society where everyone could follow their own desires, yet there would not be anarchy. They were joined by Alan Greenspan who had also been a disciple of Ayn Rand. He became convinced that the computers were creating a new kind of stable capitalism – “Like a New Planet”, he said.
But the dream of stability in both worlds would be torn apart by the two dynamic human forces – love and power.
and part 3
The anti-Wall Street protest has often resembled a street party. In occupied Liberty Park, people banged on drums, danced, performed mime, even dangled donuts to bait cops. Their mood has been merry, which is remarkable considering that they’ve been sleeping out in the open, on hard ground, in a compact park, without even tents over them. Food and money have been limited, and sanitation a logistical nuisance, yet even a cloudburst in the middle of the night, drenching everyone, was greeted with cheers. A sign, “THE REVOLUTION WILL BE PLAYFUL.”
Critics have slandered these protesters as idle and frivolous, as muddled crybabies who would flee from any job application, not that anyone’s hiring, by the way. This rally, then, is just a noisy blight on America’s crooked economic engine. With a first dusting of snow, these anarchists, hippies, art students, bums and trust fund kids would all go home to mommy. Third-term billionaire mayor Bloomberg—who says money can’t prolong life?—even moaned that this protest was targeting people just “struggling to make ends meet,” and he was sorta right, of course, because there’s no way Wall Street’s end can meet any of our ends.
When noticed at all, the protesters’ frequent meetings have often been dismissed as pointless and confused. Surely nothing will come of their callow and cumbersome deliberations. Their decisions can’t and won’t matter. America’s life and death matters are decided by cynical, rich old guys in suits, not bongo stroking freaks, so debate all you want, but there’s no way your jejune ideas can inflect, however slightly, this monster bank-dominated, Federal Reserve-run, two war party system.
With the just released The 99% Declaration, our ruling class has been issued an ultimatum, however. The anti-Wall Street protesters will convene a National General Assembly in Philadelphia from July 4th, 2012 until October of 2012, resulting in a “PETITION OF GRIEVANCES to be submitted to all members of Congress, The Supreme Court and President and each of the political candidates running in the nationwide Congressional and Presidential election in November 2012.” If these grievances are not redressed within one year, the 99% “will organize a third independent political party to run candidates in the 2014 mid-term elections.”
This is the best news I’ve heard in a while. Finally, some much needed oxygen in this suffocating political dungeon. These mostly young protesters have stayed clear of any current politician. Showing more maturity than many of their elders, they trust neither Democrats nor Republicans. They are not suckered by Obama nor distracted by Clinton’s Usher and Lady Gaga circus. It’s incredible, isn’t it, that the man who enacted NAFTA and repealed the Glass-Steagall act can now go on television to lament that “the American Dream has been under assault”?
With their rejection of this walled up and dead end system, the protesters can bring to mind Bartleby, with his “I’d prefer not to,” but this movement is not just a refusal to be co-opted into a murderous and life-sapping existence. Last week, America entered yet another war, but who’s keeping track any longer? A Yahoo! headline, “Mysteries of Clinton’s Big Concert Solved,” and the Cardinals are amazing, aren’t they?
A third, viable political party is long overdue. Though the moneyed interest will surely bare its fangs before it gives up even a sturgeon egg from its privileged table, it is high time we break apart this mad vehicle before it hurls us all into the abyss.
Linh Dinh is the author of two books of stories, five of poems, and a just released novel, Love Like Hate. He’s tracking our deteriorating socialscape through his frequently updated photo blog, State of the Union.
WHEREAS THE FIRST AMENDMENT TO THE UNITED STATES CONSTITUTION PROVIDES:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
BE IT RESOLVED THAT:
WE, THE NINETY-NINE PERCENT OF THE PEOPLE of the UNITED STATES OF AMERICA, in order to form a more perfect Union, by, for and of the PEOPLE, shall elect and convene a NATIONAL GENERAL ASSEMBLY beginning on July 4, 2012 in the City Of Philadelphia.
I. Election of Delegates:
The People, consisting of all United States citizens who have reached the age of 18, regardless of party affiliation and voter registration status, shall elect Two Delegates, one male and one female, by direct vote, from each of the existing 435 Congressional Districts to represent the People at the NATIONAL GENERAL ASSEMBLY in Philadelphia convening on July 4, 2012. The office of Delegate shall be open to all United States citizens who have reached the age of 18. Executive Committees, elected by local General Assemblies from all over the United States, shall organize, coordinate and fund this national election by direct democratic voting. The Executive Committees shall operate similarly to the original Committees of Correspondence during the first American Revolution.
II. Meeting of the National General Assembly and Deliberation:
At the NATIONAL GENERAL ASSEMBLY, the 870 Delegates shall set forth, consider and vote upon a PETITION OF GRIEVANCES to be submitted to all members of Congress, The Supreme Court and President and each of the political candidates running in the nationwide Congressional and Presidential election in November 2012.
III. Proposed Petition for the Redress of Grievances:
This PETITION OF GRIEVANCES shall be non-partisan and address the critical issues now confronting the People of the United States and will be deliberated and voted upon by the 870 Delegates in consultation with the 99%.
The final version of the PETITION OF GRIEVANCES voted upon by the Delegates of the National General Assembly MAY or MAY NOT include the following issues:
1. Implementing an immediate ban on all private contributions of money and gifts, to all politicians in federal office, from Individuals, Corporations, Political Action Committees, Super Political Action Committees, Lobbyists, Unions and all other private sources of money to be replaced by the fair and equal public financing of all federal political campaigns. We REJECT the concept that money is equal to free speech because if that were so, then only the wealthiest would have a voice. These actions must be taken because it has become clear that politicians in the United States cannot regulate themselves and have become the exclusive representatives of corporations, unions and the very wealthy who spend vast sums of money on political campaigns to influence the candidates’ decisions and ensure their reelection year after year.
2. The immediate reversal, even if it requires a Constitutional Amendment, of the outrageous and anti-democratic holding in the “Citizens United” case by the Supreme Court, which equates the payment of money by corporations and unions to politicians with free speech. Bribery is not protected speech.
3. Prohibiting all public officials and their immediate family members, whether elected or appointed from EVER being employed by any corporation they regulate while in office and/or holding any stock or shares in any corporation they regulate while in office until a full 5 years after their term is completed.
4. A complete lifetime ban on accepting all gifts, services, money, directly or indirectly, to any elected or appointed officials or their immediate family members, from any person, corporation, union or other entity that the public official was charged to regulate while in office.
5. A complete reformation of the United States Tax Code to require ALL citizens to pay a fair share of a progressive, graduated income tax by eliminating loopholes, unfair tax breaks, exemptions and deductions, subsidies (e.g. oil, gas and farm) and ending all other methods of evading taxes. The current system of taxation favors the wealthiest Americans, many of who pay fewer taxes to the United States Treasury than citizens who earn much less and pay a much higher percentage of income in taxes to the United States Treasury.
6. Medicare for all American citizens adjusted by a means test (i.e. citizens who can afford it will opt-out of Medicare and pay their own health insurance or opt-in and pay a means tested Medicare premium). The Medicaid program, fraught with corruption and fraud, will be eliminated except for the purpose of providing emergency room care to indigent non-citizens who will not be covered by Medicare-for-all.
7. New comprehensive regulations to give the Environmental Protection Agency the power to shut down corporations, businesses or another entity that intentionally damages the environment and/or criminally prosecute individuals who intentionally damage the environment. Immediate adoption of the most recent international protocols to cap carbon emissions and new goals to transition away from fossil fuels to reusable or carbon neutral sources of power as soon as possible.
8. Adoption of an immediate plan to reduce the national debt to a sustainable percentage of GDP by 2020. Reduction of the national debt to be achieved by BOTH a cut in spending to corporations engaged in perpetual war for profit, the “healthcare” industry, the pharmaceutical industry and all other sectors that use the federal budget as their income stream AND a truly progressive income tax code that does not allow the wealthy and corporations to evade taxes through excessive deductions, subsidies and loopholes.
9. Passage of a comprehensive job and job-training bill to employ our citizens in jobs that are available with specialized training and by putting People to work tomorrow by repairing America’s crumbling infrastructure. Establishment of an online international job exchange to match employers with skilled workers or employers willing to train workers in 21st century skills.
10. Student loan debt relief. Our young People and students are more than $830 billion in debt from education loans alone. Payment and interest on these debts should be deferred for periods of unemployment and the principal reduced using a corporate tax surcharge.
11. Immediate passage of the Dream Act and comprehensive immigration and border security reform including offering visas, lawful permanent resident status and citizenship to the world’s brightest People to come and work in our industries and schools.
12. Recalling all military personnel at all non-essential bases and refocusing national defense goals to address threats posed by the geopolitics of the 21st century, terrorism and limiting the large scale deployment of military forces to instances where Congressional approval has been granted to counter the Military Industrial Complex’s goal of perpetual war for profit.
13. Mandating new educational goals to train the American public to perform jobs in a 21st Century economy, particularly in the areas of technology and green energy, taking into consideration the redundancy caused by technology and the inexpensive cost of labor in China, India and other countries and paying our teachers a salary that is competitive with the private sector.
14. Subject to the elimination of corporate tax loopholes and exploited exemptions and deductions stated above, offering tax incentives to businesses to reconstruct the manufacturing capacity of the United States and reinstitution of the Works Progress Administration and Civilian Conservation Corps and other emergency governmental agencies required to create new public works projects to provide jobs to the 46 million People living in poverty, the 9.1% unemployed and 10% underemployed.
15. Implementing immediate legislation to encourage China and our other trading partners to end currency manipulation or impose a consumption tax on goods that those countries export to the United States calculated by comparing the fair market value of the currency to the manipulated valuation.
16. Immediate reenactment of the Glass-Steagall Act and increased regulation of Wall Street and the financial industry by the SEC, FINRA and the other financial regulators, and the commencement of a Justice Department criminal investigations into the Securities and Banking industries practices that led to the collapse of markets, $700 billion bail-out, and financial firm failures in 2007-2008.
17. Adoption of President Clinton’s plan to end the mortgage crisis and instead of the Federal Reserve continuing to lower interest rates for loans to banks who are refusing to loan to small businesses and consumers, the Federal Reserve shall buy all underwater or foreclosed mortgages and refinance the these debt at 1% or less to be managed by the newly established Consumer Protection Agency (and foreclosure task force described below) because 1% or less is the interest rate the Federal Reserve loans to the banks directly who hoard the cash rather than loan it to the People and small businesses.
18. An immediate one year freeze on all foreclosures to be reviewed by an independent foreclosure task force appointed by Congress and the Executive Branch to determine, on a case by case basis, whether foreclosure proceedings should continue based on the circumstances of each homeowner.
19. Subject to the above ban on money and gifts in politics, additional campaign finance reform requiring free air time and public campaign finances to all candidates who obtain sufficient petition signatures and/or votes to participate in the primaries and/or electoral process, shortening the campaign season and allow voting on weekends and holidays. Voting must be accessible to all citizens for democracy to work.
20. An immediate withdrawal of all troops from Iraq and Afghanistan and a substantial increase in the amount of funding needed for veteran job placement and the treatment of the physical and emotional injuries sustained by veterans in these wars. Our veterans are committing suicide at an unprecedented rate and we must help now.
BE IT FURTHER RESOLVED that IF the PETITION OF GRIEVANCES approved by the 870 Delegates of the NATIONAL GENERAL ASSEMBLY in consultation with the PEOPLE, is not acted upon by Congress, the President, and Supreme Court, to the satisfaction of the Delegates of the NATIONAL GENERAL ASSEMBLY, said Delegates shall organize a THIRD, COMPLETELY NON-PARTISAN, INDEPENDENT POLITICAL PARTY to run candidates for every available Congressional seat in the mid-term election of 2014 and again in 2016 until all vestiges of the existing corrupt corporatocracy have been removed by the ballot box.