Posts Tagged ‘Corporate networks’

“Super-entity” has interlock on global economy

October 24, 2011

Mathematical analysis of corporate interlocks by Swiss scientists reveal a “super-entity” of 147 companies which potentially dominate the world economy and potentially threaten world economic stability.

A team of three scientists at the Swiss Federal Institute of Technology began with a data base of about 37 million companies whose stock is publicly traded, according to a report in New Scientist.  From this they selected 43,060 companies which own shares in other companies.  Within this group they found 1,318 that owned shares in two or more other companies; they accounted for 20 percent of global corporate revenues, and 60 percent of the revenues of blue chip and manufacturing companies.

At the heart of those companies was a “super-entity” of 147 companies whose shares were entirely owned by other members of the group.  Although they comprised fewer than 1 percent of the companies analyzed, they accounted for 40 percent of the wealth in the group.  About three-quarters of the companies are banks and financial firms.

The scientists said there is no evidence that this is the result of a conspiracy.  Rather it is the logical working out of an algorithm which allows for corporate ownership of other corporations.  But it could create problems for world economic stability.  Failure of one or more of the 147 companies could endanger the others, and the ripples would spread into the world economy.  And if the heads of the companies acted in concert, they would be a superpower.

So in addition to a “too big to fail” problem, we have a “too interlocked to fail” problem.

Click on Revealed: the capitalist network that runs the world for the full article in New Scientist.

Click on A tightly knit network of companies runs the world for more about the study.

Below is a list of the top 50 companies in the 147-company “super-entity.”