Thursday, October 20, 2011

Discovering the capitalist network

Obviously, the New Scientist is disingenuous to pretend that no studies have hitherto confirmed global structures of ownership in this pattern, or that it has thus far been the preserve of - what else? - 'conspiracy theory'.  There has been tonnes of sociological work on the workings of capitalist class power, the role of corporations and finance, etc.  Nonetheless, this looks serious:

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.

The research was apparently aimed at finding means of stabilising capitalism - an impossible dream.  The significance of these findings lie elsewhere.  It isn't about networks of 'conspiracy' either.  Capital is value in motion.  The class power of the capitalist class derives from its accumulation of surplus value by putting money into circulation as capital.  These figures illustrate the concrete effects of the neoliberal phase of capital accumulation, in which the combined structures of imperialism and financialised capitalism have concentrated the control of surplus value, and thus of investment and all the prerogatives and benefits that come from that, in the hands of a very small number of people disproportionately based in Manhattan: that's the Dollar-Wall Street regime.  It is on the basis of that general understanding that one can then drill down into the subject of networking and class cohesion, which is what is meant by 'conspiracy'.  One of the points made in Michael Useem's study, The Inner Circle, is that class-wide perspectives and solidarity among the corporate ruling class is underpinned not just by social cohesion, philanthropy, lobbies and political action committees, but by practises such as the sharing of managers between multiple firms, dispatching promising managers to be non-executive directors on other company boards, etc.  Such practises allow capitalist directors to gain a 'business scan', and collectively form part of what Useem calls the 'interlocking directorate'.  Financial corporations play a particular role as the nerve centres of production, and the centralisation and concentration of capital has been most advanced in this sector.  This means that the 'interlocking directorate' is much more condensed within finance.  So, these findings can be used to expand on previous work to illustrate something about the current distribution of capitalist class power.  It's the 1%, stupid.