A man dressed as an "evil banker" stands outside Saint Paul's Cathedral in central London as protestors gather on October 15, 2011 (AFP Photo / Leon Neal)
Bankers really do control the world! That’s according to Swiss researchers who, in an exhaustive scientific study, mapped out a blueprint showing the real architects of global economic power.
From freemasons to the Council on Foreign Relations to Bilderberg, the belief that secretive groups control the world’s economic and political system are quite possibly as old as human civilization itself.
But while Occupy Wall Street protestors may be slightly exaggerating in calling themselves the 99 per cent, a recent study conducted by the Swiss Institute of Technology in Zurich shows that they aren’t too far off the mark.
Drawing from a 2007 Orbis database, which lists 37 million companies and investors spanning the globe, the researchers focused on 43,000 transnational corporations and the share ownership which connected them. Based on their analysis, the Swiss team found that a core of companies, the majority of which are in the banking sector, yield excessive power over the global economy, the weekly New Scientist magazine reports.
Within this group, 1,318 companies with intertwined ownership structures were on average connected to 20 other companies.
Representing some 20 per cent of global operating revenues, the study also shows this group of 1,318 controls the bulk of the largest blue chip and manufacturing firms. In terms of the real economy – the part which produces actual goods and services – they take in some 60 per cent of global revenues.
The team was further able to break down this group into what they described as a “super-entity” of 147 companies that controls some 40 per cent of the network’s wealth.
"In effect, less than one per cent of the companies were able to control 40 per cent of the entire network," says James Glattfelder, one of the researchers behind the study, as cited by the New Scientist.
And when it comes to the top 50 groups within the super-entity, more than a few would be familiar to those who have been camping out in downtown Manhattan over the last month.
Bank of America Corporation, Morgan Stanley, Goldman Sachs Group Inc, Merrill Lynch & Co Inc, and JP Morgan Chase & Co were included among the top 25.
Quick to dismiss criticism that they are merely concocting another conspiracy theory, Glattfelder insists that their research is evidence-based.
"Reality is so complex, we must move away from dogma, whether it's conspiracy theories or free-market," says James Glattfelder. "Our analysis is reality-based, "he said, as cited by the weekly.
Money makes money
The most recent study of the Swiss researchers builds on past economic theories which also recognized such systemic concentrations of wealth.
In 1906, an Economist named Vilfredo Pareto discovered that around 20 per cent of the population in his native Italy controlled around 80 per cent of the land. This observation has come to be known as Pareto's Principle.
Pareto also found that while individual ratios of wealth and control might vary from country to country, the actual distribution is always the same. That is to say, natural wealth, regardless of human effort, tends to accumulate rather than spread around. That accumulation leads to wealth condensation, a theory more commonly understood as the idea that money makes money. And if less than one per cent of the surveyed companies control 40 per cent of the network, it appears that a slim few have managed to concentrate an astronomical level of wealth into their few hands.
For the researchers, however, the issue of wealth concentration is less important than how deeply the network is integrated.
As the 2008 financial crisis has shown, when a relatively small group yields tremendous power over the global economy, their mistakes will ripple across the world.
Ultimately, those invested in studying the network which controls the bigger part of our world economy hope that through greater understanding, they will be able to make the financial system more stable.
For example, Yaneer Bar-Yam, head of the New England Complex Systems Institute, has suggested taxing firms if their interconnectivity becomes excessive in order to discourage risk, the New Scientists reports. Others have proposed global anti-trust laws to help regulate the level of connectivity.
One question not answered by the study is just how much political power the financial elite are able to wield. John Driffill, a macroeconomics expert at the University of London, told the New Scientist that the interests of 147 companies would most likely be too diverse to sustain collusion.
But while the capitalist network which controls our economy might not be an active conspiracy, they will inevitably have some interests that correspond. The desire to fight any attempts to regulate the network most likely remains a point they can all agree on.