THEORY: Bank Road is longer than you think it is

by Lindsey

Complex systems theorists at the Swiss Federal Institute of Technology have completed a study on relationships (PDF) between 43,060 transnational corporations (TNCs), using data from the Orbis 2007 company database. The study, about to be published in PLoS One, has revealed there are

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.

1318 superconnected (red) and connected (yellow) TNCs at the core of the global economy (PLoS One)

Some critics argue the study lacks nuance; the head of the New England Complex Systems Institute reminds us in New Scientist that ownership does not necessarily mean power, for instance.

Other theorists quoted in the article are more interested in broad takeaways and policy implications. The TNC relationship structure, similar to other naturally-occurring structures, indicates owners of the superconnected TNCs are unlikely to be part of a global conspiracy to consolidate wealth and power. In fact, the lack of collusion may be more worrying than a conspiracy would have been: if the superconnectedness of the core economy occurred naturally and spontaneously, then, without new regulation, the stability of the global economy may continue to depend on the performance of the hyperconnected TNCs. (In 2007, the 34th most connected TNC was Lehman Brothers.)

The world’s most superconnected company in 2007, according to the researchers? Barclays plc. As I mention all the time, I live in northern Ghana. There isn’t a whole lot going on around here, but there are TWO air-conditioned Barclays banks here. On Bank Road.