Monday, 24 October 2011

Corporatism is the enemy of Capitalism

H/T Greg Tingey
Greg has pointed us to the New Scientist, which reports the findings of a team of Swiss scientists who have turned their analytic skills to the ownership of business enterprises. The full piece is well worth a read, but the headline findings are that;

  • 1,318 of some 43,060 global corporates (3%) directly generate 20% of global operating revenue, and between them own firms that generate 60% of global revenue
  • 147 'super corporates' control 40% of the wealth of the network
Now of course without reading the primary research paper and finding the definitions used for 'wealth' and 'network' and so on in accounting terms we can only be fairly sure that the research shows that a small number of global corporates with complex links control a large part of the world's economy. In recent weeks I've offered arguments that support the contention that the corporates are the enemy of capitalism, of laissez-faire capitalism, because of the use of their power to restrict and control competition  I've also offered arguments that the corporates are beyond the actions of any single government, making a nonsense not just of national tax and regulatory regimes but of the G8 itself.

Importantly, I've also stated that this isn't some engineered global conspiracy by a shadowy group wanting to take over the world. That's the stuff of kids' comics, not rational debate. The economic power of the super corporates has arisen because it's what they do; mergers, acquisitions, takeovers, horizontal and vertical integration and maximising profit in a world marketplace have grown the super corporates as inevitably as soil, water and sunlight will grow green plants. The problem is, however benign their origin, they exercise tremendous power over our lives outside of any democratic control; we are all disenfranchised by their scale and reach. There's not even a formal framework for dialogue between our elected governments and the dominant corporates. I've no idea what the answer to any of this is - except that occupying St Pauls' is fairly pointless - but the picture is becoming clearer.

The top ten super-corporates named in the study are:- 

1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co
7. Legal & General Group plc
8. Vanguard Group Inc
10. Merrill Lynch & Co Inc


Sean said...

Whats needed is some sort of secular, secularism. Govt seperated from all large bodies, corparates, unions, ngos, fake charities ect.

Legal basis for political manifestos, two year public approved budgets.

The jury used in civil cases, with easier public access to the courts.

For starters

tomsmith said...

Isn't it pretty uncontentious that banks have lots of money that people give to them in order to invest? You would expect a lot of banks to be at the top of this list I think.

Anything coercive that banks and other corporations can do is enabled or encouraged by government. Corporations don't have power over people in the sense that governments do (i.e. the power to force directly). I think that the problem is still government.

Anonymous said...

Maybe those mediaeval types had it right when they forced the jews (which was their code for bankers) to engage in no other business than usury.

They could only take deposits and lend at interest.

Cash cow said...

Surprised Goldy Socks is not somewhere on that list. Perhaps they hide their tracks better than others.

Weekend Yachtsman said...

"they exercise tremendous power over our lives outside of any democratic control"

Just like the EU commissioners then.

Democracy is over; when the challenges came, we didn't defend it.

Too late now; we have all those fights to fight over again, and I'm not sure we're up for it, or up to it.

Greg Tingey said...

To which, I may add:

If one looks at the “World’s Largest Companies” according to other criteria as here:
Where they are rated by either revenue, or market value, or by sales/profits/assest, one gets very different answers.

There is also the point that between 45-55% of share-valuie in “the West” at least, is owned by Pension funds.

The awkward question now, is what is the best measuring-stick to use?
Which set of criteria are most relevant?

tomsmith said...

"There is also the point that between 45-55% of share-valuie in “the West” at least, is owned by Pension funds."

Aren't pension funds owned by the people that pay into them?

tomsmith said...

Just as bank funds are owned by savers and investors?

English Pensioner said...

Personally, I'd be far happier if Europe was run by Barclays than the mob in Brussels!
They would make real decisions, and I'm sure that the total pay and bonuses of those at the top would be considerably less that those at the top of the EU.

Budgie said...

tomsmith said: "I think that the problem is still government."

I very much agree. Corporates do not pass laws, governments do. In the UK half of the GDP is spent by government. The other half is spent by people and corporates who must obey the laws made by the governments.

No UK corporate chief had any where near as much power as Brown, even his mate Fred the Shred. Brown increased government spending by 50%, borrowing off our children to extend his delusions. He turned the UK economy into an indebted disaster, of which even RBS is only a component.

Tony Baverstock said...

This paper proves getting a paper on finance published does not need any knowledge of finance. About 97% of all traded equities are held in collective investment schemes, of which pension funds are one type. The schemes are owned by the savers, you and me, and managed by professional managers. The equities of the scheme may be held in the name of the scheme. I will not bore you with the difference between unitized and policy based schemes and the different ownership structures. But just because the name of a large financial group is in name of the owner does not mean they own the share in the way it would a subsidiary. Further many fund do not own the equities directly but hold them via custodians. Custodian, which are part of large banks, will hold the equities In a nominiee name, which will include their name but they have nothing more than legal ownership. In all matters they must act on the instructions of the beneficial owners. So looking at the share register of large companies shows most shares are owned by investment schemes and custodians. Not a big surprise and proves nothing.