The horizon is not so far as we can see, but as far as we can imagine

147 Companies control 40% of the World Economy

Wealth and income are important, but power trumps. What matters is control, and control is even more concentrated than wealth.  This study found that control was about ten times more concentrated, in fact. (PDF)

Most of the companies on the list are financial companies.

Why?  Because financial companies can create money. It’s hard to make more money than people who can make money.  The only folks who come close control bottleneck resources like oil, or have what amounts to oligopoly control over something people need (pharma, for example.)  Money is permission: you can’t do squat in a market economy without it.  Those who can create it, or who have excessive profits, control what other people can do.

It is for this reason that Jefferson said that banks were more dangerous to democracy than even standing armies.

Money making and differential profits lead to differential power. Over time, if your rate of return is higher than everyone else’s you will gain so much more money than them that you can buy them out, or out-bid them.  The first thing you will do, if you have any sense, is take control of government, because government, which controls the rules of the game (legislation) and violence, is the only other power which can destroy you.  Once they are under control (and the bailouts proved Western governments are under the control of financial institutions), the only remaining threats are your own ability to drive yourself off a cliff, and the very small chance of revolution, which is likely to happen only after you’ve destroyed yourself in any case.

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  1. russ

    Some possible food for thought for future articles: power in the context of technology and computer software and corporate + NSA influence on “open” software to cripple security/privacy with backdoors, and the fact that the US military is Red Hat Linux’s largest customer.

    E.g. see

  2. someofparts

    I deliberately got the cheapest little place I could find as close as possible to wealthy liberals. That way I benefit from the quality of life they can afford for their own habitat, like a serf living close to the castle for protection. They pay for extra police services, so I can safely work a night shift, and it’s easy to furnish my place well from their yard sale cast-offs. But the best perk is banking at their credit union and enjoying all the plain vanilla, non-predatory services they offer.

    Job-wise the strategy is to be like the wee little ancestors of our present day horses. Be small enough to hide from the dinosaurs and find a quiet out-of-the-way place where the other little horses seem to be doing well, especially if some of them have been doing well for a long time.

    So far so good.

  3. Memory Metal Bumper

    Russ: I’m pretty suspicious of the absence of P2P IPv6 support in every single piece of SIP software, open or proprietary, that I’ve ever looked at.

    IPv6 support for relayed calls–where it’s not really needed anyway–no problem.

    For direct calls, where it’s actually useful? Forget it.

    The self-evidently obvious IPv6 killer app, the original (circa 2001) raison d’être of the commonest free SIP client, and it just Doesn’t. Exist. Anywhere.

    Even the “free” SIP developers seem most insistent that all of the considerable bandwidth used by all those SIP sessions should be passed through their relays rather than going point-to-point. Isn’t that so very amazingly altruistic and generous of them? Paying through the nose themselves to provide those relays so that their users can, free of charge, be spared the terrible inconvenience of an efficient low-latency direct connection.

    It just restores ones faith in humanity, it does–after all, there’s nothing they could doing with all that data other than just passing it on to its rightful recipients, right?

  4. A very well put summary of the trajectory of capitalism. The implication is clear: Reform can never succeed for long. A different system entirely is needed.

  5. Oh dear, where to begin? Financial companies do not “create money”. Governments do that via their own government-controlled central banks. Your Fed has been printing the stuff as fast as they can and instead of dropping it by helicopter over the land so that at least ordinary citizens might get it and use it in *their* best interest, they simply bought government IOUs! How daft is that? That fella Ponzi would have had wet dreams if he had thought of that one!

    Nor do companies “control 40% of the world economy”. They might, on certain readings of their accounts (put two accountants in a locked room and you will get twelve opinions depending on who is paying the most in fees!) *constitute* a percentage of world economy but the thing with companies is that they come and they go, they wax and they wane, so if they can’t control themselves what makes you think they control any part of the world’s economy? And anyway, if your figures are correct it means on average each company controls(?) 0.272% of the “world economy” – 0.272% – big deal, so what?

    And whilst we’re on the subject, what actually and precisely do you mean by “the world economy”?

  6. Pelham

    @David Duff

    The Federal Reserve is owned by private banks. Check it out. Far from being above the fray as commonly supposed, the Fed is about the least independent institution that human imagination could conceive.

    It is supposedly answerable to Congress, but Congress can only raise questions and can’t do anything to force a change in Fed policy. And, of course, as every sentient being knows, Congress itself is owned by corporate America, including the banks, so they would be hardly so inclined.

    Private banks create money by crediting accounts. Then, if necessary to maintain their own cash reserves, private banks go to the interbank market to borrow funds overnight or to the Fed, which in some utterly phony hocus-pocus with the Treasury, also creates money as needed. Basically, the Fed is a monopoly producer of our currency with a mandate to keep the supply tight and ensure that creditors maintain a free whip hand over the rest of us.

    All the money the Fed creates goes to the private banks, which in turn lend it out only at what meets the classical definition of usurious rates or invests it according to their own whims.

    This is the Anglo-American banking system, one that at least since World War Two has come to dominate the world in concert with other central banks set up to mimic the model. What’s uniquely perverse about the system is the sharp distinction between its interests and the well-being of the nations in which these banks are based. Hence the big globalization drive, sucking the life out of advanced economies and imposing crushing debt burdens pretty much everywhere. When not extracting maximum profit from such fanciful and phony creations as the derivatives markets, shadow banking and bubble markets, the system resorts to the baser strategies of outsourcing, offshoring and labor arbitrage.

  7. Dan H

    Stop engaging the troll.

    Or , Ian, just ban the douche already. Hes obviously not going to stop.

  8. Celsius 233

    Dan H
    February 18, 2014
    Stop engaging the troll.
    Or , Ian, just ban the douche already. Hes obviously not going to stop.
    Alas, I think you are correct. After going through the linked PDF it’s pretty apparent DD is indeed a troll. I’ll not engage him again. Cheers.

  9. Question: The Vitali et al. paper states 147 transnational companies control the network but table S1 implies it’s 50 companies. What am I missing?

  10. Mary McCurnin

    Don’t ban the troll. We can just ignore the little jerkipoo. Much more fun to see him leave of his own accord.

  11. Ian Welsh

    I think the 50 is just all they put in the paper, not the 147.

  12. @ Pelham

    “Basically, the Fed is a monopoly producer of our currency with a mandate to keep the supply tight and ensure that creditors maintain a free whip hand over the rest of us.”

    More or less my point exactly. And as you also correctly aver, whilst it might be answerable to questions from Congress that is the limit of their power but as the President appoints the Fed chairman he will ensure that they are of like minds.

    As to the control banks have over us, well, if you borrow money what else do you expect? It comes down to the old adage that if you owe your bank $100 you call them ‘Sir’, if you owe them a $billions they call you ‘Sir’!

    There are those, of course, who wish to see central banks disbanded completely. At face value it has its attractions but I am insufficiently knowledgeable to be certain – do you have any views?

    I only complain about our distinguished host’s use of the word “control” in his title which is not only incorrect but unnecessarily alarmist.

    As for the children in the crèche complaining because someone comes here and dares to engage in conversation rather than chanting in unison like some peculiar cult, I can only say – grow up!

  13. cripes

    Concerning Mr. Duff’s comments here about who “creates” money and “controls” the world economy he is, as usual, spectacularly wrong on several counts. I have seen him make a pest of himself elsewhere with his simple minded libertarian apologias for corporate malfeasance, pompous pretensions of educating others for their errors and an indefatigable urge to describe advanced finance capital as it it were still run like a mom-and-pop store, incapable of influencing the workings of the “free market.”

    However, some of his issues are worth discussing, although he does not bring much to the effort.

    Financial institutions do indeed create money through the process of fractional reserve credit creation, and when that is insufficient, by employing central banks they created, such as “your Fed” (!) to create some more. By this device debt issued becomes a demand on the labor of the rest of us, or our assets, should there be any, to repay the “money” they created out of thin air.

    Duff should appreciate that even revered libertarian economist Murray Rothbard says so:

    “Commercial banks – that is, fractional reserve banks – create money out of thin air. Essentially they do it in the same ways as counterfeiters. Counterfeiters, too, create money out of thin air by printing something masquerading as money or as a warehouse receipt for money. In this way, they fraudulently extract resources from the public, from the people who have genuinely earned their money. In the same way, fractional reserve banks counterfeit warehouse receipts for money, when they circulate as equivalent to money among the public.”

    As to the issue of control of the world economy, the paper advances an idea of Network Control as a metric of power, replete with advanced algorithms I won’t pretend to understand, and so is not a simple recitation of gross assets or earnings as a portion of the world economy (currently estimated at about 72 trillion). This point seems to have escaped Mr. Duff. I consider myself a humble journeyman in the thickets of political economy, but is helps to pay attention to the actual argument.

    The list itself is almost entirely financial institutions, basically confirming the almost total eclipse of industrial capital’s former prominence in the capitalist order–as Lenin predicted a century ago–to the detriment of industrial corporations, unions and wages. It’s almost enough to make us pine for the age of Henry Ford and the Wobblies, but I won’t.

    So yes, Mr. Duff, it’s pretty clear the bankers have wrapped their tentacles around the entire planet and are squeezing the life blood from us all, including you. Spend more time listening and learning and less time condescending.

  14. @ Cripes:

    “I consider myself a humble journeyman in the thickets of political economy” – you are not alone, sir, I am your faithful bag-carrier!

    I agree (dread words!) that central banks create money (and I said so up above) but I would only emphasise that they do so with the encouragement of governments who, in the final analysis, control them.

    I would add, with startling originality(!), that it is “money that makes the world go around”. Without it we would have to invent something else otherwise global, national and even local economies would collapse. I keep hearing that e-money is going to take over entirely which will at least save printing costs! Again, that will be used and/or abused by mainly politicians – but all for our benefit, of course!

    Incidentally, I am not a “libertarian” although I may well be simple-minded, however, 75 years has finally convinced me that all governments should come with a, er, ‘government health warning’!

  15. cripes

    Duff: all banks create money, even the little credit union or S&L, when they make a loan. Central banks are only part of the problem, even then depending how they function. Suggest you read up on fractional reserve banking.


  16. cripes

    Duff: read the charter of the federal reserve. It is owned and operated by it’s member banks, not the federal government. Hell, the government is owned and operated by thr banks. See goldman sachs.

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