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Catching a Falling Financial Knife

Meet the Global Corporate “Supra-Government”

Politics / Social Issues Jan 30, 2013 - 01:05 PM GMT

By: Andrew_G_Marshall

Politics

We live in a corporate culture, where most of us have worked or currently work for corporations, we spend our money at corporate venues, on corporate products, watch corporately-owned television shows and movies, listen to corporate-sponsored music; our modes of transportation, communication and recreation are corporately influenced or produced; our sports stadiums and movie theaters are named after car companies and global banks; our food is genetically altered by multinational conglomerates, our drinking water is brought to us by Coca-Cola, our news is brought to us by Pfizer, and our political leaders are brought to us by Exxon, Shell, Goldman Sachs and JP Morgan Chase.


In this global corporate culture it is often difficult to take a step back and look at transnational corporations, beyond what they represent in our culture, and see that they are, in fact, totalitarian institutions with power being exercised from the top down, with no democratic accountability, legally bound to be interested only – and exclusively – in maximizing quarterly short-term profits, often to the detriment of the environment, labor, human rights, democracy, peace and the population as a whole.

In this first of a three-part series on the reaches of global corporate power, we'll look specifically at the size and network influence of the world’s largest corporations. This is especially important given that the world's population faces increasing challenges with over 1 billion people living in slums, billions more living in poverty, hunger and increasing starvation; with unemployment increasing, austerity and "adjustment" programs demanding that even those in the once-industrialized West dramatically reduce their living standards; as the environment is plundered and pillaged, and as governments give corporations more state welfare and subsidies while cutting welfare and social services for the poor.

Corporate culture creates, over time, a totalitarian culture as this dominant institution seeks to remake society in its own image - where people are punished and impoverished as corporations are supported, rewarded and empowered.

The network of global corporate control, in numbers

In the year 2000, of the world’s 100 largest economies, 51 were corporations, while only 49 were countries, based upon national GDP (gross domestic product) and corporate sales. Of the top 200 corporations in 2000, the United States had the largest share with 82, followed by Japan at 41, Germany at 20, and France at 17.

Of the world’s 100 largest economic entities in 2010, 42% were corporations; when looking at the top 150 economic entities, 58% were corporations. The largest corporation in 2010 was Wal-Mart, the 25th largest economic entity on earth, surpassed only by the 24 largest countries in the world, but with greater revenues than the GDP of 171 countries, placing it higher on the list than Norway and Iran.

Following Wal-Mart, the largest corporations in the world were: Royal Dutch Shell (larger than Austria, Argentina and South Africa), Exxon Mobil (larger than Thailand and Denmark), BP (larger than Greece, UAE, Venezuela and Colombia), followed by several other energy and automotive conglomerates.

In 2012, Fortune published its annual Global 500 list of the top 500 corporations in the world in 2011. The top 10 corporations in the world, as determined by total revenue, are: Royal Dutch Shell, Exxon Mobil, Wal-Mart Stores, BP, Sinopec Group, China National Petroleum, State Grid, Chevron, ConocoPhillips, and Toyota Motor.

Among some of the other top 100 are: Total (11), Gazprom (15), E.ON (16), ENI (17), ING Group (18), GM (19), General Electric (22), AXA (25), BNP Paribas (30), GDF Suez (33), Banco Santander (44), Bank of America (46), JP Morgan Chase (51), HSBC Holdings (53), Apple (55), IBM (57), Citigroup (60), Société Générale (67), Nestlé (71), Wells Fargo (80), Archer Daniels Midland (92), and Bank of China (93).

The 10 largest corporations in Canada include: Manulife Financial, Suncor Energy, Royal Bank of Canada, Power Corporation of Canada, George Weston, Magna International, Toronto-Dominion Bank, Bank of Nova Scotia, Onex, and Husky Energy.

The 10 largest corporations in Britain are: BP, HSBC Holdings, Tesco, Vodafone, Barclays, Lloyds Banking Group, Royal Bank of Scotland, Aviva, Rio Tinto Group, and Prudential.

The 10 largest conglomerates in France are: Total, AXA, BNP Paribas, GDF Suez, Carrefour, Crédit Agricole, Société Générale, Électricité de France, Peugeot, and Groupe BPCE.

The 10 largest conglomerates in Germany are: Volkswagen, E. ON, Daimler, Allianz, Siemens, BASF, BMW, Metro, Munich Re Group, and Deutsche Telekom.

The 10 largest conglomerates in the United States are: Exxon Mobil, Wal-Mart Stores, Chevron, ConocoPhillips, General Motors, General Electric, Berkshire Hathaway, Fannie Mae, Ford Motor, and Hewlett-Packard.

In October of 2011, a scientific study about the global financial system was released, the first of its kind, undertaken by three complex systems theorists at the Swiss Federal Institute of Technology in Zurich, Switzerland. The conclusion of the study revealed what many theorists and observers have noted for years:

“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.” As one of the researchers stated, “Reality is so complex, we must move away from dogma, whether it’s conspiracy theories or free-market... Our analysis is reality-based.” Using a database which listed 37 million companies and investors worldwide, the researchers studied all 43,060 trans-national corporations (TNCs), including the share ownerships linking them.

The mapping of "power" was done through the construction of a model showing which companies controlled other companies through shareholdings. The web of ownership revealed a core of 1,318 companies with ties to two or more other companies. This "core" was found to own roughly 80% of global revenues for the entire set of 43,000 TNCs.

And then came what the researchers referred to as the “super-entity” of 147 tightly-knit companies, which all own each other, and collectively own 40% of the total wealth in the entire network. One of the researchers noted, “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network.”

This network poses a huge risk to the global economy, noted the researchers: “If one [company] suffers distress... this propagates.” The study was undertaken with a data set established prior to the economic crisis, thus, as the financial crisis forced some banks to fail (such as Lehman Brothers) and others to merge (such as Merrill Lynch and Bank of America), the “super-entity” would now be even more connected, concentrated, and thus, dangerous for the economy.

The top 50 companies on the list of the “super-entity” included (as of 2007): Barclays Plc (1), Capital Group Companies Inc (2), FMR Corporation (3), AXA (4), State Street Corporation (5), JP Morgan Chase & Co. (6), UBS AG (9), Merrill Lynch & Co Inc (10), Deutsche Bank (12), Credit Suisse Group (14), Bank of New York Mellon Corp (16), Goldman Sachs Group (18), Morgan Stanley (21), Société Générale (24), Bank of America Corporation (25), Lloyds TSB Group (26), Lehman Brothers Holdings (34), Sun Life Financial (35), ING Groep (41), BNP Paribas (46), and several others.

In December of 2011, Roger Altman, the former Deputy Secretary of the Treasury under the Clinton administration, wrote an article for the Financial Times in which he explained that financial markets were “acting like a global supra-government,” noting:

"They oust entrenched regimes where normal political processes could not do so. They force austerity, banking bail-outs and other major policy changes. Their influence dwarfs multilateral institutions such as the International Monetary Fund. Indeed, leaving aside unusable nuclear weapons, they have become the most powerful force on earth."

Altman continued, explaining that when the power of this “global supra-government” is flexed, “the immediate impact on society can be painful – wider unemployment, for example, frequently results and governments fail.” But of course, being a former top Treasury Department official, he went on to praise the “global supra-government,” writing that, “the longer-term effects can be often transformative and positive.”

Ominously, Altman concluded: “Whether this power is healthy or not is beside the point. It is permanent,” and “there is no stopping the new policing role of the financial markets.”

So, this small network of dominant global companies and banks, many of which are larger than most countries on earth, with no democratic accountability, are also acting independently as a type of “global supra-government” forcing even our dysfunctional and façade-like “democratic” governments to collapse if they do not do as “financial markets” say - such as the recent cases of democratically-elected governments in Greece and Italy whose officials were forced out and replaced with unelected bankers.

In any other situation that’s called a coup d'état. But as Altman’s view reflected, powerful government officials will not oppose this network, whether or not the power is good for human lives and human communities - which is, in Altman’s words, “beside the point.” After all, in his view, “it is permanent.”

Unless, of course, the people of the world decide to have a say in the matter.

Part 2 of this series will appear on Thursday.

Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.

I am a 24 year old independent researcher and writer based out of Montreal, Canada. I have written dozens of articles, essays, and reports online and in print on a wide array of social, economic, and political issues, always from a highly critical perspective. My writing can be found on my blog, www.andrewgavinmarshall.com. I am Project Manager of The People's Book Project (www.thepeoplesbookproject.com), an initiative through which I am attempting to write a comprehensive book on the institutions and ideas of power in our world, and what we can do about it.

© 2012 Copyright Andrew Gavin Marshall - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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Catching a Falling Financial Knife