There isn't one cabal. There's a 147 of them.
October 20, 2011 6:19 AM   Subscribe

The 147 companies that run the world.
posted by empath (93 comments total) 37 users marked this as a favorite

 
Here's the paper.
posted by empath at 6:21 AM on October 20, 2011 [6 favorites]


Well, paint me pessimistic. I thought the number would be much smaller.
posted by steamynachos at 6:23 AM on October 20, 2011 [7 favorites]


So they're using info from 2007? I wonder how much the list has changed, seeing as how, you know, the world economy has kind of gone in the pooper since then.
posted by phunniemee at 6:23 AM on October 20, 2011 [4 favorites]


I was of the impression the world economy was controlled by people yelling at Wall Street at big screens, so that the screens would have mercy on us and show good numbers.
posted by mccarty.tim at 6:25 AM on October 20, 2011 [28 favorites]


So where is the list of the 147 companies?
posted by Eyebeams at 6:29 AM on October 20, 2011 [1 favorite]


Or they could have skipped the fancy pants analysis and copied down names from a recent Davos Summit sign in sheet.
posted by notyou at 6:32 AM on October 20, 2011 [3 favorites]


They only list the top 50 in the paper.
posted by empath at 6:32 AM on October 20, 2011 [2 favorites]


Wow, that is very interesting. I find it particularly interesting how they rationalize it as the "natural state of a capitalist economy." More of this type of economics, please. We need to know how things naturally trend, so we can make more accurate rules.
posted by rebent at 6:32 AM on October 20, 2011 [1 favorite]


Worth noting that their analysis doesn't include privately held companies. So you won't find Koch, Cargill or PricewaterhouseCoopers on this list. And honestly, if I were designing a cabal, I'd have it be privately owned too. Makes things much harder to track down.
posted by seanmpuckett at 6:33 AM on October 20, 2011 [4 favorites]


ObOnion: Just Six Corporations Remain.
posted by gauche at 6:34 AM on October 20, 2011 [5 favorites]


I think it might be interesting to see who sits on the boards of those companies. I actually was talking to some people about the recent buy out of my company and it turns out that there's been a whole bunch of mergers and acquisitions in the industry recently, and it turns out that the boards and investors of a lot of the companies that have been all merged in past year or so were the same people. We thought we were competing, but it turns out that we weren't at all.
posted by empath at 6:35 AM on October 20, 2011 [6 favorites]


(wow, did i use 'it turns out' 3 times in the same paragraph? I did.)
posted by empath at 6:36 AM on October 20, 2011


"147 companies rule the world. Here are 36 pages explaining our methodology for identifying these 147 companies. That rule the world. There was no room left to list the last 97 of them, however."

Scientists. *Shakes head sadly*
posted by Eyebeams at 6:39 AM on October 20, 2011 [11 favorites]


"Turns out" acquired all the other phrases that imply a longer story and a surprising revelation.

But that's capitalism for ya, empath.
posted by notyou at 6:39 AM on October 20, 2011 [9 favorites]


"147 companies rule the world. Here are 36 pages explaining our methodology for identifying these 147 companies. That rule the world. There was no room left to list the last 97 of them, however."

The margin was too small to contain them.
posted by empath at 6:43 AM on October 20, 2011 [4 favorites]


More of this type of economics, please. We need to know how things naturally trend, so we can make more accurate rules.

Perhaps if capitalism self-organizes around rules, much like the Internet routes around damage, we need to understand and apply rule-making on a higher, global level.
posted by Blazecock Pileon at 6:43 AM on October 20, 2011 [5 favorites]


147 companies essentially running the entire world economy, eh? Seems like time for some trust busting to me. That might seem like a lot, but when you consider how often CEOs move from one company to another and how often board members are common across different companies, it's really not nearly enough.

Concentration of power is not good or bad in itself, says the Zurich team, but the core's tight interconnections could be.

Technically correct, but misses the deeper poetic truth: Nothing is good or bad in itself, from a scientific point of view, so I'm not sure why there's a need to offer this qualification. From a humanistic point of view, I'd say too much concentration of power is generally bad for most people, and it's certainly undemocratic. It's also dangerous for economic stability because when fewer decision makers are ultimately driving the markets, they become more exposed to the risks of bad decision making.

One thing won't chime with some of the protesters' claims: the super-entity is unlikely to be the intentional result of a conspiracy to rule the world.

Does anyone really see it this way though? Power-seeking patterns of human behavior have never required a deliberate conspiracy to explain them, have they? Of course the individuals making the decisions that led to this point are trying to accumulate power. You don't need a systems theorist to understand that, at the individual level, individual hedge fund managers and bankers certainly are trying to "rule the world" in the sense that they always want the economic/political power to be able to act in ways that further increase their economic power so they can gain financially.

It doesn't matter whether you think of that as a "conspiracy" or not--that whole subject of discussion is just a pointless distraction from the reality. Yes, the current status quo is a result of lots of individual bankers and executives deliberately pursuing more power, and in some cases, colluding in that common interest.

Whether that does or does not satisfy some objective or subjective definition of a "conspiracy" is just a distracting cultural sideshow that turns out to be irrelevant either way and just shifts the focus away from the mechanical realities of what's happening.
posted by saulgoodman at 6:44 AM on October 20, 2011 [20 favorites]


1 per cent of the companies were able to control 40 per cent of the entire network

So even among corporations we see almost exactly the same pattern of wealth distribution as we do in personal incomes in America (1% controlling 43% in that case). That is cool (and unsettling).
posted by pjaust at 6:50 AM on October 20, 2011


Was reading some commentary on this elsewhere, and someone noted that the excellent Doug Henwood (of the LBO) pointed out that it's making the mistake of treating the bank and other financial institutions that handle the transactions for the actual owners of the shares/capital etc. (Saying that, not actually read the report myself yet).
posted by Abiezer at 6:52 AM on October 20, 2011 [1 favorite]


it's making the mistake of treating the bank and other financial institutions that handle the transactions for the actual owners of the shares/capital etc.

If so, that sounds like a very basic mistake. Surely complex systems theorists would have their shit together a little better than that, right? Especially before going so public with their research.
posted by saulgoodman at 6:55 AM on October 20, 2011


I'm simultaneously surprised and not surprised by that top 50 list. Not surprised that they're nearly all banks. Surprised that it doesn't include meganational corporations like HP, GE, ExxonMobile or SABMolsonCoors.

Wait. What?
posted by slogger at 6:58 AM on October 20, 2011 [1 favorite]


Can we organize a hostile takeover?
posted by three blind mice at 6:59 AM on October 20, 2011



Holy shit what a pile of crap that is. Look at the list - its all institutional fund managers. The hold the shares for the clients
posted by JPD at 7:00 AM on October 20, 2011 [4 favorites]


This analysis is so flawed I feel that this thread should be deleted.
posted by JPD at 7:01 AM on October 20, 2011 [1 favorite]


In similar news, discussion at the United Nations is dominated by a handful of translators.
posted by ceribus peribus at 7:03 AM on October 20, 2011 [21 favorites]


If so, that sounds like a very basic mistake. Surely complex systems theorists would have their shit together a little better than that, right? Especially before going so public with their research.
They'd hardly be the first economists to miss something due to working within a particular paradigm, so who knows? Doug Henwood's a sharp commentator and I presume has read the report; certainly something I'll bear in mind when read it.
posted by Abiezer at 7:03 AM on October 20, 2011


Since this is my field, a few points about the paper and the issues here:

1) It certainly isn't the first paper to look at interlocking control, its been a topic examined over the last 50 years in business schools and sociology departments. In fact, this is a pretty bad examination of which companies rule because of the lack of clarity over how they define control. Much cooler is They Rule, an interactive tool which lets you visualize links between boards of directors, and also think tanks like Brookings and so on. The results can be a bit scary.

2) Their methods seem to emphasize financial ties, but this is a bit dumb. Many of these companies are only investment vehicles. For example, Vanguard (#8) is a not-for-profit company that has very little to do with traditional Wall Street, they are simply one of the biggest players in ETFs and retirement savings, so they technical "own" lots of other companies. It is actual control - board seats and corporate control that really matter.

3) For a detailed description of the sociology of corporate control, Who Rules America is a good introduction.
posted by blahblahblah at 7:04 AM on October 20, 2011 [29 favorites]


Also, was going to do a post on this stuff at some point, if this thread gets dropped (the article is pretty mediocre, for the JPD, myself, and others gave), I still will....
posted by blahblahblah at 7:06 AM on October 20, 2011


No White Castle? I'm dubious.
posted by jonmc at 7:06 AM on October 20, 2011 [4 favorites]


I'll give you the names of the guys who aren't on that because of their fund management/custody bizzes -

Walmart.
China Petrochemical (although I suspect even the analysis of these two companies could be flawed because they also own large quoted subsidiaries.
posted by JPD at 7:08 AM on October 20, 2011


Holy shit what a pile of crap that is. Look at the list - its all institutional fund managers. The hold the shares for the clients

Thinking it through a bit more, I guess their point in this analysis is not strictly about the ownership but about who controls economic decision-making. If 147 banks and hedge funds are making all the investment decisions, then in a sense, they do control the economy, even if they don't technically own the shares they're trading.

I think their point may be more about the concentration of economic investment decision making power in too few hands, which might be a more legitimate concern.
posted by saulgoodman at 7:08 AM on October 20, 2011 [1 favorite]


ah, blahblahblah thanks for the clarifications and added context--missed it on preview.
posted by saulgoodman at 7:10 AM on October 20, 2011


Saul-

I can tell you absolutely first hand that most companies don't listen to their large institutional shareholders unless you start to get real chippy and threatening them to do things.

Hell half their top 10 is passive money anyway - those guys are just voting their proxies the way the consultants tell them to and that's it.
posted by JPD at 7:11 AM on October 20, 2011 [1 favorite]


34. Lehman Brothers Holdings Inc

LOL
posted by Segundus at 7:11 AM on October 20, 2011


Sorry to keep ranting - but they've got Capital Group on their list twice . 2 and 49 are the same company.
posted by JPD at 7:12 AM on October 20, 2011 [1 favorite]


> Holy shit what a pile of crap that is. Look at the list - its all institutional fund managers. The hold the shares for the clients

I most emphatically do not agree with this. You can look at the SEC documents on who owns what, and to just pull a random example from my memory of a couple years ago I did the fetch from Edgar deal on the company I worked for which was very revealing to me.

The biggest shareholder of record: Fidelity Investments.

The agent for my retirement account by some odd pure and ironic coincidence: Fidelity Investments.

Essentially the people who are fucking us over is our own damn selves. What some genius like the LBO guy needs do is devise a mechanism whereby us little guys can exercise control over what we rightfully own. How hard can that be?
posted by bukvich at 7:16 AM on October 20, 2011


Seconding blahblahblah's recommendation of Domhoff's work - he also has a book, if you prefer that format. David Rothkopf's Superclass is worth reading too, although it's more a tour of the upper elite than an analysis.
posted by AdamCSnider at 7:23 AM on October 20, 2011


Barclays is a British company. We don't even have the top spot in the world domination list. This must be rectified. #OccupyLondon
posted by Ad hominem at 7:23 AM on October 20, 2011


What some genius like the LBO guy needs do is devise a mechanism whereby us little guys can exercise control over what we rightfully own. How hard can that be?

Hard. Look at the history of shareholder control mechanisms over the past century. The Board is where it's at.
posted by gauche at 7:25 AM on October 20, 2011 [1 favorite]


Do you think Fidelity Investments is acting on its own behalf or on behalf of its investors then? Because FMR is the largest non-passive equity manager in the US. FMR showing up on the SEC docs isn't Ned Johson owning those shares, its the 401ks and mutual funds of a million Americans owning those shares. Fidelty is not noted for taking any sort of activist approach to investing at all.

Barclays is a British company. We don't even have the top spot in the world domination list. This must be rectified.

Barclays was on that list because in '07 they still owned BGI - which is the largest index fund and ETF provider in the world. It is based in San Francisco and is now owned by Blackrock. So you know USA! USA!
posted by JPD at 7:26 AM on October 20, 2011


What some genius like the LBO guy needs do is devise a mechanism whereby us little guys can exercise control over what we rightfully own. How hard can that be?
He has done.
posted by Abiezer at 7:27 AM on October 20, 2011 [1 favorite]


And their wee-beady-eyes!
posted by blue_beetle at 7:31 AM on October 20, 2011


This reminds me of They Rule, which used to be one of my favorite sites to play around with. It looks like it's been supplanted now by LittleSis, which I haven't gotten to mess with much yet. They Rule says that they've integrated with LittleSis, so I'm off to see how current their links are...
posted by fiercecupcake at 7:32 AM on October 20, 2011 [2 favorites]


So where is the list of the 147 companies?

Just check the guest roster of this year's Bilderburg meetup!

/justkidding

/actuallynoi'mnot
posted by FatherDagon at 8:06 AM on October 20, 2011 [1 favorite]


I don't see Caddis Enterprises, Inc. on that list. I must resolve to work harder on my evil schemes.
posted by caddis at 8:08 AM on October 20, 2011


Well, it's a well known fact, Sonny Jim, that there's a secret society of the five wealthiest people in the world, known as The Pentavirate, who run everything in the world, including the newspapers, and meet tri-annually at a secret country mansion in Colorado, known as The Meadows. The Queen, The Vatican, The Gettys, The Rothschilds, *and* Colonel Sanders before he went tits up.
posted by Rock Steady at 8:28 AM on October 20, 2011 [1 favorite]


Wow, epic fail on having Vanguard Group as one of those that "control" the economy. As others have pointed out mutual fund managers don't own much of anything, never mind "control".

This study isn't about capitalism it's about the poor state of multidisciplinary studies at the Swiss Federal Institute of Technology.
posted by storybored at 8:30 AM on October 20, 2011 [1 favorite]


I would have sworn there were 666.
posted by dances_with_sneetches at 8:30 AM on October 20, 2011


So, are people upset that there are 1% who "rule", or upset with the specific members of the 1% who are ruling? Because the New Scientist paper says this sort of aggregation is natural and expected, a reflection of the underlying system of connectedness, it's not a conspiracy. The takeaway quote from the NS article:
If connectedness clusters, so does wealth, says Dan Braha of NECSI: in similar models, money flows towards the most highly connected members.
This makes total sense. Wealth is basically just information, and information flows most through the most highly connected nodes of the network. The only way to get rid of the 1% is to get rid of a system based on connectedness, and that would be impossible. All you could do is reduce connections (complexity) which would just reduce information (wealth) for everyone.
posted by stbalbach at 8:34 AM on October 20, 2011 [1 favorite]


The only way to get rid of the 1% is to get rid of a system based on connectedness, and that would be impossible. All you could do is reduce connections (complexity) which would just reduce information (wealth) for everyone.

Arrgh. What?

The point would be to have more nodes with more distribution. Increasing consolidation of a network over time--fewer nodes with influence--would have the opposite effects to those you're describing. And just because a process or phenomenon occurs naturally doesn't mean its beneficial to us or that we shouldn't be actively managing it.

Tornadoes and hurricanes develop and occur naturally, too. That doesn't mean we don't need to track them, adopt mitigation strategies and early warning systems, or that they are "good" for us.
posted by saulgoodman at 8:49 AM on October 20, 2011 [3 favorites]


One of the most important functions of the modern state (post 20s and 40s progressive era) has been to mitigate the natural consequences of unregulated capitalism, which (paraphrasing others with better credentials than mine) is the most efficient possible machine for concentrating wealth in fewer hands left to its own devices. What we're seeing now is exactly what we should be seeing if the reformers from those previous eras in history were right, given the specific kinds of backsliding on economic, social and tax policy we've been doing since the 80s. So what's happening now, if anything, should tell us it is within our power to correct these issues given enough time and social and political will.
posted by saulgoodman at 8:53 AM on October 20, 2011 [1 favorite]


Patagonia?!
posted by Flashman at 8:54 AM on October 20, 2011


Also, we did not have the same skewed income inequality distribution in the US as recently as the 60s and 70s, so no, the 1% thing is not inevitable.
posted by saulgoodman at 8:55 AM on October 20, 2011 [1 favorite]


Essentially the people who are fucking us over is our own damn selves.
posted by PeterMcDermott at 9:01 AM on October 20, 2011


...*and* Colonel Sanders before he went tits up.

Rock Steady, you actually believe that he's... bwahahaha!

OMG! You're... One of Them!
posted by IAmBroom at 9:11 AM on October 20, 2011


I read this as "147 companies that ruin the world".
posted by boygeorge at 9:20 AM on October 20, 2011


Umm, one world government leads to exploitation and suffering just as surely as one world corporation, Blazecock Pileon. In fact, these powerful corporations have an even more disproportionate influence upon international lawmaking than national lawmaking.

We need better national law making coupled with less anti-democratic international law making. Yes, the U.S. should begin standing up to it's environmental obligations, but that's off topic here.
posted by jeffburdges at 9:35 AM on October 20, 2011


The use of the words "control" and "run the world" in the article doesn't make sense. Companies don't "control" the economy. Companies are at the mercy of consumers to buy their stuff. They succeed only if people like what they're selling enough to spend their money on it.
posted by John Cohen at 9:46 AM on October 20, 2011


So, are people upset that there are 1% who "rule", or upset with the specific members of the 1% who are ruling?

Both. Mostly the former, though. The problem is not so much the specific people (though we wish they weren't such a bunch of rapacious, greedy, sociopathic parasites) as the fact that the extreme concentration of power in our society leaves the vast majority of the people in it – me, you, and everyone we care about – effectively powerless.

Sure, you can vote if you happen to live in a developed country with fair elections and you aren't a member of a disenfranchised demographic. And you can write letters to your representatives, if you still believe that this will have any more effect than writing one to Santa Claus. And you can sign petitions (where your signature will be even less valued than the letter you might have written) and maybe even volunteer on a candidate's campaign if you still believe that there are politicians out there who really care about the interests of the people.

The effects that ordinary citizens using ordinary channels can have on the policies and systems put in place by their governments are as nothing compared to the effect that a CEO of some megacorporation or manager of some hedge fund can have, by simply calling up their old pal the president, or the secretary of state, or their favorite senator, and arranging to have a nice little sit-down lunch or maybe play a round of golf together where they can have a chat about how things are going in the country and in their industry. This is to say nothing of the millions upon millions of dollars that are paid every year to professional lobbyists who do nothing all day but try to persuade policymakers to adopt policies that they desire – in some cases even drafting "model legislation" for them to propose in congress.

The individuals involved are in the end just people. Powerful, selfish people who are disconnected from the rest of the world and can't see anyone with houses in fewer than three countries as fully human, but people nonetheless who are pursuing basically human goals of trying to gather resources, ensure their own survival, make a comfortable and pleasant life for themselves, and pass on their genetic material to another generation. It is the systems that have evolved through these processes, the entrenched policies and mechanisms by which the powerful are able to maintain and increase their power, that end up making things more and more difficult for the people down below. Consider the fact that most of the protesters in the American 99 Percent movement are really in the top 10%, certainly worldwide if not in the USA. Now consider that the same systems that are making life difficult for those people are also making life absolutely, unbearably impossible for literally billions people in Sudan, Myanmar, Brazil, etc. The effects are far removed from the people who are making the decisions, but nonetheless the economic fallout that keeps most of the world poor and helpless is a direct consequence of a few people being so astronomically rich and powerful.

We, the "upset people", would like to see these systems dismantled and regulations put in place to curb the abilities of people to gather wealth and power to themselves, so that the riches and the power can be shared among more people, where it might grow faster and benefit a larger slice of the population. We feel that if we could bring those astronomically wealthy people down out of the stars and reduce them to maybe the height of a high-flying plane, it would be a whole lot easier to take the masses of the world who are, to various degrees, suffering and powerless and elevate them to a state where they have a chance of a stable life and some measure of control over their destinies. It seems like a reasonable enough desire, to me. We don't want to literally steal the money from those who have it and give it back to other people, we just want to make it harder for people to hoard their money and their power and use it to push everyone else down.
posted by Scientist at 9:52 AM on October 20, 2011 [10 favorites]


Umm, one world government leads to exploitation

That's an untested conjecture, since there's never really been an actual one-world government in practice (unless you count those periods in history when nations in Europe or some other region mistakenly thought their region was the whole world and declared themselves the ones-to-rule-them-all), but I suspect you're right. Unless the structure of whatever power-sharing mechanisms any hypothetical one world government had were highly decentralized and democratic, rather than authoritarian and centralized, there's a real risk of the old boss being the new boss.

Companies are at the mercy of consumers to buy their stuff. They succeed only if people like what they're selling enough to spend their money on it.

You think? They don't ever succeed by using clever competitive practices and "vertical integration" to drive competitors out of markets by sheer economic force? By using surplus profits in one market to fund loss-leaders that drive competitors out of others, for example? They don't ever succeed by creating extremely complicated financial instruments that aren't worth the ink they're printed on and then paying ratings agencies to grade them as AAA when they know they aren't? Or by surreptitiously getting laws that give them a favorable competitive advantage passed?

I think you've got a slightly too simplistic and optimistic view of the world there.
posted by saulgoodman at 9:56 AM on October 20, 2011 [2 favorites]


in some cases even drafting "model legislation" for them to propose in congress.

Really that's a lot closer to most cases, particularly at the state levels.
posted by saulgoodman at 10:00 AM on October 20, 2011


Re: the one-world government thing; I think it's clear at this point that what we need is decentralization and distribution of power. People need to have systems in place which give them the opportunity to affect the makeup of their world at the level of the neighborhood and city, and there need to be mechanisms that allow local decisions and resolutions to be passed up the chain to higher levels. Simultaneously, money needs to be disentangled from politics so that having more wealth does not give one more political power.

There are two things that I've been taking from the 99 Percent movement that I think are really valuable:

1: Separation of Money and State. Just as unchecked religious organizations have a tendency to exert undue power over political bodies to the detriment of the citizenry, so too do unchecked financial organizations. We need a constitutional amendment or some other kind of powerful, landmark legislation that severely curtails the ability of people and organizations to use wealth to influence the political process.

2: A General Assembly in Every Neighborhood. Citizens need to have the opportunity to regularly practice policy- and consensus-making and to engage in the kind of give-and-take that is necessary for good-faith relationships among people. We need a way for small groups of people to get together and discuss policy issues that are relevant to their lives and make decisions that can either be implemented locally or collectively passed up to higher levels of power – where there should be official systems in place to recognize and integrate the assemblies' resolutions.

We need to decrease the amount of structures available to wield power from the top and increase the ability of people at the bottom to wield it. We are meant to be a society of the people, a representative democracy in which everybody's interests are represented and every member has a voice. While that ideal has never been truly achieved, it nevertheless remains a noble goal to strive for and it is one that should guide us as we make the laws and the networks that shape our nation and our world.
posted by Scientist at 10:23 AM on October 20, 2011


as someone who hangs out at neighborhood policy meetings i heartily endorse some ows homies to come and join me in the festival of boredom and pettiness that is local politics!
posted by beefetish at 10:28 AM on October 20, 2011 [1 favorite]


I'd be very surprised if AXA was still anywhere near that high on the list now. They've had some shockingly bad years of late.
posted by TheDonF at 10:31 AM on October 20, 2011


I know what you mean, beefetish. I think though that if involvement were closer to universal, and if people understood and used a more consensus-based approach rather than majority-rules, the people who were there to actually be helpful, generate ideas, form compromises, and give perspective would drown out the petty dictators and the one-note canaries. At least, I hope so.

There are plenty of people who aren't really good-faith consensus-builders like this at the Occupation General Assemblies, and yeah they drag things down and make things longer and more frustrating than they have to be, but in trying to deal with them people create a lot of new ideas and really try hard to help everyone see every perspective on the issue so that all can realize that their own goals and desires are not necessarily paramount and everyone who doesn't see things their way is not necessarily capital-"W" Wrong. In the end the consensus that is reached is one that more-or-less everybody can more-or-less agree to more-or-less abide by, and honestly I think that's about the best you can expect from any group of people larger than about three.

It does work, though it is indeed often boring and frustrating. It works though if people understand the process and are willing to commit to making it work. When you get bad actors they are generally overwhelmed by the good ones, as long as there are enough people present.
posted by Scientist at 10:44 AM on October 20, 2011


Still though I don't mean to say that I think that neighborhood GAs are a panacea. There are definitely a lot of people out there who genuinely believe some pretty poisonous shit and who don't know how to back down or to compromise. I think it's something that would require a lot of practice and education. I do think that the consensus process makes better decisions in the end though, and even, in time, better people.
posted by Scientist at 10:46 AM on October 20, 2011 [1 favorite]


scientist, i am being grumpy but i am also totally serious, OWS people should take that shit to their neighborhood councils. if anything the ows experiments have taught people what consensus-building looks like (sorta) and how to move a discussion along (sorta) which is so much better than the ultra-petty neighborhood ding-dongery that can crop up. like ultra-petty. like "what are you going to do about the part of the sidewalk that i trip on? what about that" levels of petty. i am more worried about that attitude in people than i am about people believing evil, poisonous shit because it's much harder to dismiss the ultra-petty in a non-insulting way.

deeeeeeerail
posted by beefetish at 10:54 AM on October 20, 2011


Tangentially, check out this newly released secret government report NPR got a hold of from 2000 that warned of the terrible consequences for global financial markets if the US managed to actually pay off all its debt (which at the time seemed inevitable).

Had the previous administration not pulled off its various debt increasing stunts (like extra tax cuts for the rich), the US was projected to have absolutely no debt left by as early as next year. Why did we choose not to let the debt disappear? Because there wouldn't be any US Treasury Bonds left on the market for investors.

How much more obvious could it be that all the newly created surplus wealth at the top is responsible for our current problems? It even explains why we ended up with our current trillion-dollar deficits!
posted by saulgoodman at 11:10 AM on October 20, 2011 [4 favorites]


Somebody might consider FPPing that new report with some context. I've got to stop this now and go be productive.
posted by saulgoodman at 11:11 AM on October 20, 2011


Arrgh. What? The point would be to have more nodes with more distribution.

Exactly, which is what modern developed economies have been doing for the past 100 years. But the point is, the more nodes there are, the more clusters will develop, naturally. The more you try to fix the problem the bigger the problem becomes - the 1% problem is systemic to the solution.

It's like the Internet, theoretically it is fully distributed and no single node a point of failure. In reality there are certain nodes which are at the core, the loss of which would take down large parts of the net. It's not by intentional design, it's just how things happen naturally. Certain nodes become too big to fail, the more complex the system, the more this happens. The electric grid is another example. In finance the problem is so complex they don't even know which nodes are too big so they run "stress tests" to try and game it, but even that is just guessing.
posted by stbalbach at 11:24 AM on October 20, 2011


Why did we choose not to let the debt disappear? Because there wouldn't be any US Treasury Bonds left on the market for investors.

This is true. Debt is important, debt is money. Without debt the financial system would cease to function. Debt isn't bad, it's only bad when the ratio of debt to the ability to pay it back gets too high. We need national debt it's important. It's totally unlike personal debt.
posted by stbalbach at 11:28 AM on October 20, 2011 [2 favorites]


It's not by intentional design, it's just how things happen naturally.

But we used to do a much better job preventing this from happening. Remember, Marx's theory was that capitalism would inevitably collapse according to roughly the same logic you're now characterizing as inevitable. (He characterized it as inevitable, too; I don't. I think it can be mitigated with proper economic policy. And that's why I'm not a Marxist.)
posted by saulgoodman at 11:38 AM on October 20, 2011


sorry. really gone this time.
posted by saulgoodman at 11:38 AM on October 20, 2011


* Lehman still existed in the 2007 dataset used

Doesn't the demise of Lehman kind of undermine the claim that the listed companies control the world.
posted by Mental Wimp at 11:46 AM on October 20, 2011


Yes, stbalbach, debt at the national level isn't all bad, despite the recent political circus--but why did the previous admin seem so gleefully eager to create this much debt? Imagine what happens to the US economy--and all our social programs--when a massive treasury bond bubble bursts (which it will eventually have to because servicing the interest will eventually cause a negative feedback effect)?

What's good for investors with loads of surplus wealth isn't always good for the poor and middle class. That's the whole point here.

dammit. oh well, i did finish one thing.
posted by saulgoodman at 12:06 PM on October 20, 2011


debt is inflationary, normally inflation is good for people who don't own hard assets - aka the poor and the middle class. (If you own a home with a fixed rate mortgage inflation is a home run for you). Delevering is deflationary, and is very bad for borrows and renters.
posted by JPD at 12:12 PM on October 20, 2011


Because there wouldn't be any US Treasury Bonds left on the market for investors.



Investors don't want to buy treasuries - its the lowest yielding investment available. Investors buy treasuries when they are scared or have to buy something riskless. The decision not to eliminate the debt had nothing to do with a desire by the moneyed classes to own that asset.
posted by JPD at 12:14 PM on October 20, 2011


We need better national law making coupled with less anti-democratic international law making.

The problem is that it seems like capital flows from higher regulation to lower regulation, while labor is forced to stay localized to political regions through visa and other document restrictions. (If you don't have a work visa or a passport, you can't move to where the capital invariably goes.)

Perhaps this is a natural or emergent phenomena that can be modeled with equations, much like voltage or water moving from higher potential to lower potential.

Perhaps we can set up a new Manhattan Project that puts out-of-work particle physicists on studying this network, modeling how capital behaves as legal regulations on environmental and worker safety and wage protections hit different nodes of the network that are concentrated in different political regions.

Maybe a one-world-government isn't the answer — but uneven enforcement of different nations' laws (as well as local corruption) simply puts pressure on the network to redraw edges to maximize profit.

If the main nodes of the network can "fix" the network faster than a grab-bag of local laws can be enforced, then the network's caretakers win.
posted by Blazecock Pileon at 12:16 PM on October 20, 2011


Well, according to the government's own report, the policy certainly did have to do with concern that there'd be no where for investors to park surplus wealth (all investment wealth, even at the retirement saver level, is surplus wealth after all).

It was a decision made to prop up the global banking system. And yet, we were never informed of the true reasoning behind those policies, and in fact, the real reasons were made confidential.

Meanwhile, many of the same political interests are now using the debt they deliberately created to hold programs for the poor and middle class hostage politically.
posted by saulgoodman at 12:19 PM on October 20, 2011 [2 favorites]


Investors don't want to buy treasuries

Banks aren't acting as investors when they buy treasury bonds?

posted by saulgoodman at 12:20 PM on October 20, 2011


they buy treasuries because they don't have to hold capital against them.
posted by JPD at 12:23 PM on October 20, 2011


"Investors" may not want to buy Treasuries, JPD, but plenty of other financial types (insurers, pensions, banks), whose businesses can't really tolerate lots of risk, do want to buy government debt.
posted by notyou at 12:25 PM on October 20, 2011


It was a decision made to prop up the global banking system. And yet, we were never informed of the true reasoning behind those policies, and in fact, the real reasons were made confidential.

Meanwhile, many of the same political interests are now using the debt they deliberately created to hold programs for the poor and middle class hostage politically.


you've conflated two totally different issues. I can agree with you about the latter and disagree with you about the former.

A reasonable level of debt is good for an economy. Its like Macro 001
posted by JPD at 12:25 PM on October 20, 2011


"Investors" may not want to buy Treasuries, JPD, but plenty of other financial types (insurers, pensions, banks), whose businesses can't really tolerate lots of risk, do want to buy government debt

Do you see this: " Investors buy treasuries when they are scared or have to buy something riskless. "
did you see where I wrote that? did you bother to read what I said? no I guess not. But hey I expressed something other than the party line so I must be wrong.
posted by JPD at 12:26 PM on October 20, 2011


All I'm really saying though, JPD, is that this report makes it clear policymakers wanted to avoid zero US government debt because they were afraid that would harm global banking and retirement system.

So I don't understand what we're disagreeing about. Banks are investors. Any wealth that isn't immediately recirculated into use is called "surplus." Banks need T-Bills to invest in, so the government's secret policy position is that zero debt is a threat to the stability of the global banking system, and the real truth is, we absolutely depend on US debt to keep capitalism going. That's what shaped the policy.

Why keep the report shrouded in secrecy if policymakers didn't consider this controversial?
posted by saulgoodman at 12:32 PM on October 20, 2011


Remember, Marx's theory was that capitalism would inevitably collapse according to roughly the same logic you're now characterizing as inevitable. (He characterized it as inevitable, too; I don't. I think it can be mitigated with proper economic policy. And that's why I'm not a Marxist.)

Have you read Capital? Marx doesn't do this; his case is that capitalist social relations will bring into the world the material means for their overthrow and a disenfranchised body of proletarians whose best interests would be in a different mode of living. The internal contradictions of those relations will also throw up crises where the opportunity for change presents itself, but it will take conscious action to achieve that. He repeated the point about 'men making their own history' numerous times, most famously in the often quoted passage in the 18th Brumaire of Louis Bonaparte. So the inevitable end of capitalism if it exists at all isn't its economic collapse but the arising of a political will for something else.
It's true later Marxists also got this wrong, but it's not what the bearded one was about himself. Anton Pannekoek wrote about this at some length back in the 1930s for those who are interested.
posted by Abiezer at 12:38 PM on October 20, 2011 [3 favorites]


But the strictly economic piece of Marxist thought--the cyclical destructive nature of capitalism, as I understand it, is basically an analog to the idea expressed above about the nodes in the economic network inevitably increasing their relative economic power and through that concentration having more sociopolitical influence (which is then used to exploit labor). But that's all based on second and even third hand analysis, so you might be right.
posted by saulgoodman at 12:43 PM on October 20, 2011


beefetish, I'm going to back out from here so as not to start a derail, but I just wanted to say that I totally agree that people should take the consensus-building skills and community-organizing techniques they are learning at Occupations and bring them back to their neighborhoods. This clearly *must* happen if the movement is to become successful in a lasting way.
posted by Scientist at 12:55 PM on October 20, 2011 [1 favorite]


If I understand you right saulgoodman, that sounds like the theories of Henryk Grossman that Pannekoek criticises in that longer article I linked, so you're definitely right that some Marxists made the claim.
I've been struggling through Capital again this summer so am prone to jumping in when Marx's ideas are discussed, and one of the things that's struck home from returning to the original was that he was offering a 'critique of political economy', i.e. going against the notion of strictly economic thinking, which he felt concealed the underlying social relations; as he says in The Poverty of Philosophy, "Economists explain how production takes place in the above-mentioned relations, but what they do not explain is how these relations themselves are produced, that is, the historical movement which gave them birth. "
posted by Abiezer at 12:59 PM on October 20, 2011


I would love to see the 9/11 names algorithm run through the boards of these companies. It's only 147 of them, the data set is is both public and manageable. How many nodes are y'all predicting? I expect 3.
posted by Xoder at 1:33 PM on October 20, 2011


Except your networks caretakers are by-definition the powerful.

There has been a meaningful push towards international environmental regulation because (a) the science is clear, unlike economics, (b) most have zero chance of benefiting from the pollution, and (c) the oil men are only a minority of the powerful.

You cannot achieve similar successes with labor because all powerful people benefit from exploiting labor. Instead, you must divide the power structures against one another, probably according to nationality, probably by ending this free trade religion.

I've suggested several times that the U.S. should 'discover' industrial espionage spyware built into semiconductor technology to inspire the creation of a domestic semiconductor industry. Europe could ban imports from foreign factories where employees work more than 40 hours per week and lack health benefits.
posted by jeffburdges at 5:54 PM on October 20, 2011


Kind of crazy that 147 corresponds with Dunbar's Number.
posted by quadog at 7:57 PM on October 20, 2011 [2 favorites]


I just have to say, I love this so hard. Thank you for posting it.
posted by GrammarMoses at 6:00 AM on October 21, 2011


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