If there is indeed a
tiny elite with disproportionate control over the world economy, it may
be more a matter of science than conspiracy, new research suggests.
A study by complex systems theorists at the Swiss Federal Institute of Technology analyzes
the relationships among 43,000 international corporations and
identifies a small tightly interconnected group that wields exceptional
global power. A New Scientist story by Andy Coghlan and Debra MacKenzie reports that their paper, soon to be published in PloSOne, is the first to reach beyond ideology to empirically identify such a power network. As a story in Fast Company puts it, the ultra wealthy one percent criticized by Occupy Wall Street may be inevitable because of the way networks work.
Swiss researchers used mathematical modeling used in studying natural
systems to analyze comprehensive corporate data of ownership among the
world's transnational corporations. "Reality is so complex, we must move
away from dogma, whether it's conspiracy theories or free market,"
researcher James Glattfelder told the New Scientist
analysis is reality based." The researchers found 1,318 companies with
interlocking ownership that were on average connected to 20 other
companies. The 1,318 appeared to collectively own a portion of the
economy representing 60 percent of global revenues. Untangling the
ownership web further, the team found a "super entity" of 147 companies
that was even more tightly knit. All of the ownerships in those
companies were held by other owners in the super entity - and the super
entity controlled 40 percent of the total wealth in the network. In
effect, according to Glattfelder, less than one percent of the companies
were able to control 40 percent of the network.
of power isn't a bad thing in itself, the team says, implying that
greed and corruption are not inevitable. But tight interconnectivity
suggests distress for one or a few players can have disastrous cascading
effects. The researchers think identifying the architecture of global
economic power can help make it more stable and identify means to ward
off large scale future collapses. Glattfelder suggests there maybe a
need for global anti-trust rules to limit over connectivity.
The study has its critics. Yaneer Bar-Yam,
who heads the New England Complex Systems Institute, notes ownership
doesn't always mean control, and he thinks more analysis of the system
is needed. Company owners buy shares in other companies for business
reasons, not necessarily for power.
a complex systems scholar at the Scripps Institution of Oceanography in
La Jolla, California, stresses the importance of understanding how
interconnected world economic entities really are. He told the New Scientist
that the Zurich study offers evidence that simple rules governing the
transnational corporations "give rise spontaneously to highly connected
groups." In a Seed Magazine essay,
Sugihara explains the phenomenon of rapid shifts in complex systems of
all types and tells why ecological systems offer insights into the
connectedness and fragility of complex financial systems.