Cooking the Books: Who Controls the World? (2011)

The Cooking the Books column from the December 2011 issue of the Socialist Standard

Some people think that a sinister elite controls the world from behind the scenes. Candidates for this role range from the Bilderberg Group (which does exist) to the Elders of Zion (who don’t). These conspiracy theorists would be heartened by a recent headline in the New Scientist: “Revealed – the capitalist network that runs the world.”

A study of 43,000 transnational corporations (TNCs) by a team of systems theorists from the Federal Institute of Technology in Zurich  revealed: ‘a core of 1,318 companies with interlocking ownerships. Each of the 1,318 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 1,318 appeared to collectively own through their shares the majority of the world's large blue chip and manufacturing firms - the "rear 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 cert of the total wealth in the network. "In effect, less than 1 per cert of the companies were able to control 40 per cent of the entire network".’ (newscientist.com/article/mg21228354.500)

‘Runs the world’ is too strong as it implies that the ‘super-entity’ is actually in control of the economy whereas its components have to operate within and accept the constraints of the uncontrollable world market.

Nor is any conspiracy implied. It is rather a description of the structure of the world economy. Systems theorists see it as a typical pattern of complex systems. For Marxists, it’s confirmation of Marx’s view that the tendency of capitalism is for the concentration and centralisation of production and ownership.

The researchers claim a practical outcome from their research: that, as the New Scientist put it, it could help identify ways of making capitalism more stable’.

The assumption seems to be that if one of the 1,318 gets into financial trouble this will affect all those others within the network with which it has links. But the links that are relevant for the workings of the economy are not so much ownership and control as suppliers (sellers) and buyers (users). If, for instance, because of overproduction in the industry, a steel plant has to close, then the suppliers of all its materials will be affected; as will its workers and those of its suppliers and the stores and shops which sell them consumer goods. That’s the way overproduction in one key industry spreads to the rest of the economy.

The researchers’ proposal – ‘global anti-trust rules … to limit over-connection amongst TNCs’ – wouldn’t solve this problem. In fact it might make it worse by encouraging more, inevitably chaotic competition. In any event, it is only intended to prevent the initial shock spreading so fast and so far. Since capitalist production proceeds by way of series stops and starts such shocks are inevitable from time to time. There’s nothing governments can do to prevent this. Conspiracy theorists misread this as showing that governments are beholden to a shadowy elite.

They can relax. The world economy is not controlled by an elite (even if there is an easily identifiable elite that benefits from it). It is not controlled by anybody. It’s an uncontrollable economic mechanism that can only be ended by making the Earth’s resources, natural and industrial, the common heritage of all.  A ‘New World Order’, if you like, but a democratic one.