What if Large Businesses Are Really Macroeconomic Entities?

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Yves here. I assume that most readers would regard Richard Murphy’s observation that some companies are as or even more powerful than governments as obvious. But he is correct to point out that economists and policy makers don’t seem to have integrated that development adequately into their thinking. Only now are governments kinda-sorta coming to grips with the fact that international mega businesses are threats to governments. It isn’t just that these companies are very skilled at all sorts of arbitrage. It is also that they often have enough clout domestically to make it difficult to check them, or worse, have managed to get themselves seen as national champions. China still saw fit to go after Jack Ma, but that regime believes in the importance of official authority and has not fallen for the libertarian love of markets. It’s hard to think what Jeff Bezos or Elon Musk would have to do to be on the receiving end of a similar wings-clipping in the US.

And Murphy is thinking only swashbuckling multinationals, like the automakers, Big Pharma, and our course our new tech overlords. The biggest private equity firms also represent concentrated economic power. Eileen Appelbaum and Rosemary Batt have documented how private equity acquisitions of outsources medical practices have allowed them to muscle hospitals and insurers and jack up prices, which has been reflected in the increased number and average cost of “surprise billing” episodes.

And most have no clue as to how much clout these firms have, in part because their operations through their portfolio companies are sprawling. But one indicator: when KKR went public in 2010, it said its total number of employees via its portfolio companies would make it the fifth biggest employer in the US. It is hard to imagine that the relative standing of private equity compared to the rest of the economy has fallen in the last decade-plus

In other words, while articulating the problem of too big to control businesses is nice and necessary, it’s a long way short of solving it. I have some ideas but they presuppose bloody-minded officials, a species well on its way to extinction.

I am reminded of:

In the original stage production, Audrey II eats Seymour and show closes with the plant is on its way to world domination. Movie viewers did not like that conclusion so it was rewritten to have Seymour save the planet by electrocuting Audrey II.

The mass consumer demand for a happy ending exemplifies the tendency to deny how bad things can get.

By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK

I recently suggested to colleagues that I thought that we were looking at accounting in the wrong way. We were still seeing large companies (now commonly called PIEs, which stands for public interest entity) as if they were microeconomic entities.

But what if they were not? What if they were macroeconomic entities? Then what?

The evidence supports this suggestion. Many multinational corporations are much larger than many countries.

By definition a PIE has a macroeconomic impact.

And if that is true the whole ‘theory of the firm’ view of the entity is wrong when applied to it. What the entity actually is, in that case, is a power bloc to rival government, and in the case of the big tech companies and others we do, of course, see that to be the case.

So why are we holding them to account as if they are still just companies? They aren’t. The shareholders (one or two founders apart) have very little control in most cases (and I will note the exception of Exxon in another blog). Those shareholders have no meaningful ownership stake in the firm: they simply own a right to an income stream the company might pay. And the obligation to stakeholders is, in most cases, greater.

So why not treat them for what they are? And why not regulate them as macroeconomic entities, accountable to all, and not just a few shareholders whose identity is, in any case, unknown because of the way in which modern shareholding is registered?

Thoughts are welcome.

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32 comments

  1. Jack

    I don’t think regulating them is the answer. Complete deconstruction is the answer, sort of like when the US broke up ATT the first time. Yves had it right in her comments. They need to be destroyed ; “Seymour save[d] the planet by electrocuting Audrey II.”

    Reply
  2. Jesper

    This might be a tangent so my apologies: The first thought that comes to my mind is that the neo-liberal belief that private sector is always more efficient than the public sector might need to take a hit.
    Macro-economic entities are so large that their idea of bad ideas and/or bad management never survives in the competitive private sector is rarely true. It can happen that a big macro-economic entity in the private sector fails and thereby the falied idea and /or failed managment is stopped but I belive it to be rare.

    The cronyism, bureaucracy, waste etc that is supposedly only to be found in the public sector is something that I’ve seen in every single large multi-national company that I’ve worked for. I’d say that the size of the organization is a more relevant predictor of cronyism, excess bureaucracy, waste etc than the form of ownership.

    So from that possible tangent then yes I agree, the large companies, macroeconomic entities should be:
    1. Either regulated so tightly that ownership does not matter -> might as well nationalise them as control is in effect exercised mostly by the regulating body
    2. Broken up and then the (what I consider now to be) mythical efficiency of the private sector might actually have a chance to be realized though free-market competition where failures are allowed and bail-outs aren’t done.

    Introduce a tax based on turnover starting at a reasonable amount of turnover and a tax based on number of domestic subsidiaries. None of them an allowable tax-deductible expense and maybe that will allow for transparency and an environment where the (often mythical) plucky entrepreneur has a chance of success.

    Reply
    1. campbeln

      A family member works with Walmart as part of a team that does tech integrations. The best description of their working relationship is that Walmart has weaponized their incompetence.

      Internal teams come to the external vendor for reporting on data they send in because the internal departments can’t manage to do the same. When tech integrations are on tight timelines or running behind, it’s easier and cheaper for the external vendor to eat the cost of development than to wait on them to find their asses with both hands.

      Time and time again this plays out, not necessarily as an active intent by the internal Walmart teams, but as the paths of least resistance due to upper managements actions or inactions.

      Having personally worked in large government organisations across three of the five eyes, I can confidently say that “government” isn’t the problem, it’s ANY sufficiently large human organisation, namely those with power, that are the problem.

      Reply
  3. John

    I recently picked up Kim Stanley Robinson’s Mars trilogy and have been idly rereading portions of it. I was struck again by how much what he calls “transnational companies” in the near future of the novel resemble the mega corporations of the present and how they mirror their behavior and their profit-is-the-only-virtue goal. I do not see any way to regulate them nor do I see any will to break them up. In continued pursuit of their goals they bid fair to “foul the nest” and destroy it.

    Reply
  4. The Rev Kev

    When it is said that ‘shareholders have no meaningful ownership stake in the firm’, is that ordinary shareholders or institutional shareholders? Big difference there. I would have thought that institutional shareholders would have a big say in how things are run. I think too that it has been obvious for decades now that these multinationals operate on their own laws and more than a few are more powerful than some countries. But what would intrigue me more would be the power structure in who exactly is directing these organizations exactly. Is it the Board of Directors? I understand that you have some high-powered people that sit on multiple-boards which would trend for a more uniform mode of behavior for those transnationals. So for me it would be not so much those transnationals but the power base in each that directs them and if there are links between these bases of power operating across multiple organizations.

    Reply
    1. Dr. R.k. Barkhi

      Here’s the answer to your question:

      A study by the Swiss Federal Institute of Technology in Zurich has found that a mere 147 corporations control the world – orchestrating events and controlling governments.

      The analysis, which looked at the relationships between 43,000 transnational corporations, identified that only a tiny handful of mega-corporations, mostly banks, had a disproportionate amount of power over world events.

      Newscientist.com reports: “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.”

      Previous studies have found that a few TNCs [Trans-National Corporations] own large chunks of the world’s economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy – whether it made it more or less stable, for instance.

      The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company’s operating revenues, to map the structure of economic power.

      The work, to be published in PLoS One, revealed a core of 1318 companies with interlocking ownerships. 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.

      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 cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

      (There follows a list of these companies.see site)

      Source:

      https://www.technocracy.news/147-transnational-companies-run-world/

      Reply
      1. Yves Smith Post author

        This study is utter garbage. Anyone who knows bupkis about finance knows that but it was done by physicists who didn’t bother understanding what the data meant.

        It treats fund managers as owners. They are not. They are managing money on behalf of investors. Firms like Vanguard not only do not exercise any control, they are not paid enough in terms of management fees to bother.

        The data is further corrupted by the fact that virtually all individual shareholders (including the super-rich) own them in “street name”. Their ownership is listed in the name of their broker (Fidelity, Schwab, TD Ameritrade, Vanguard) etc.

        Reply
        1. Dr. R.k. Barkhi

          Your raise some valid points. Upon rereading the article and finding a more complete description here:

          https://www.shiftfrequency.com/147-companies-run-world/

          I see what u r saying about fund managers etc. however the authors used that information to establish connections. They assume that translates to control.

          In regards to your comment, I looked up Vanguard n found;

          The Vanguard Group, Inc. is an American registered investment advisor based in Malvern, Pennsylvania with about $6.2 trillion in global assets under management, as of January 31, 2020. It is the largest provider of mutual funds and the second-largest provider of exchange-traded funds in the world after BlackRock’s iShares. In addition to mutual funds and ETFs, Vanguard offers brokerage services, variable and fixed annuities, educational account services, financial planning, asset management, and trust services. Several mutual funds managed by Vanguard are ranked at the top of the list of US mutual funds by assets under management. Along with BlackRock and State Street, Vanguard is considered one of the Big Three index funds that dominate corporate America. Founder and former chairman John C. Bogle is credited with the creation of the first index fund available to individual investors and was a proponent and major enabler of low-cost investing by individuals.Wikipedia

          Type:Privately held company

          Industry:Investment management

          Founded:May 1, 1975

          Founder:John C. Bogle

          Key people:Mortimer J. Buckley, (Chairman & CEO)

          Products:Mutual funds, Exchange-traded funds, Broker, Asset management, Sub-advisory services

          Revenue:$6.936 billion (2020)

          AUM:$7.1 trillion (2020)

          Number of employees:17,600 (January 31, 2020)

          Now a thesis that a company owning $6+ trillion in assets will not or does not assert any control because “Firms like Vanguard not only do not exercise any control, they are not paid enough in terms of management fees to bother.” is dubious at best when the company has an income of $6.9 billion in one year. The sheer size of these assets n income in a market economy belonging to a company unwilling or able to leverage them in one way or the other is unbelievable imo..

          ” Along with BlackRock and State Street, Vanguard is considered one of the Big Three index funds that dominate corporate America “. Strange , in your view then the use of the word “dominate”?

          Furthermore since we are talking about fiscal connections ,in this case via mutual funds & stocks, is it realistic to assume that a CEO wouldn’t leverage their ownership of their shares regardless of who manages them in affecting policy further “downstream”,especially in coordination with other like minded CEO s? This being a daily exercise in the Business world ,i think not.

          I take issue with the sensationalist wording “control” used in the article. This is corrected at the end here:

          The top 50 of the 147 super-connected companies

          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
          9. UBS AG
          10. Merrill Lynch & Co Inc
          11. Wellington Management Co LLP
          12. Deutsche Bank AG
          13. Franklin Resources Inc
          14. Credit Suisse Group
          15. Walton Enterprises LLC
          16. Bank of New York Mellon Corp
          17. Natixis
          18. Goldman Sachs Group Inc
          19. T Rowe Price Group Inc
          20. Legg Mason Inc
          21. Morgan Stanley
          22. Mitsubishi UFJ Financial Group Inc
          23. Northern Trust Corporation
          24. Société Générale
          25. Bank of America Corporation
          26. Lloyds TSB Group plc
          27. Invesco plc
          28. Allianz SE 29. TIAA
          30. Old Mutual Public Limited Company
          31. Aviva plc
          32. Schroders plc
          33. Dodge & Cox
          34. Lehman Brothers Holdings Inc*
          35. Sun Life Financial Inc
          36. Standard Life plc
          37. CNCE
          38. Nomura Holdings Inc
          39. The Depository Trust Company
          40. Massachusetts Mutual Life Insurance
          41. ING Groep NV
          42. Brandes Investment Partners LP
          43. Unicredito Italiano SPA
          44. Deposit Insurance Corporation of Japan
          45. Vereniging Aegon
          46. BNP Paribas
          47. Affiliated Managers Group Inc
          48. Resona Holdings Inc
          49. Capital Group International Inc
          50. China Petrochemical Group Company

          Click to Edit – 3 minutes and 47 seconds
          Reply ↓

          Reply
  5. JustAnotherVolunteer

    I find the term PIE (public interest entity) extremely curious in this context. In my experience most of these entities are free riders and leverage public goods and local regulation (think tax abatements and government grants and subsidies) for private gain. Elon Musk is a master at this kind of thing as is Amazon.

    The PIEs excel at extracting as much as possible from one regime while stashing private assets in another. Poor coordination from those who might be expected to guard public interests is just another business opportunity.

    Reply
  6. Tim Worstall

    So why are we holding them to account as if they are still just companies? They aren’t. The shareholders (one or two founders apart) have very little control in most cases (and I will note the exception of Exxon in another blog). Those shareholders have no meaningful ownership stake in the firm: they simply own a right to an income stream the company might pay. And the obligation to stakeholders is, in most cases, greater.

    So why not treat them for what they are? And why not regulate them as macroeconomic entities, accountable to all, and not just a few shareholders whose identity is, in any case, unknown because of the way in which modern shareholding is registered?

    Thoughts are welcome.

    Well, here’s a thought. What you’re describing is fascist economics. No, not what happens now, your ideas about how things should develop. I am not joking either.

    An important aspect of fascist economies was economic dirigism,[27] meaning an economy where the government often subsidizes favorable companies and exerts strong directive influence over investment, as opposed to having a merely regulatory role. In general, fascist economies were based on private property and private initiative, but these were contingent upon service to the state.[28]

    Fascist governments encouraged the pursuit of private profit and offered many benefits to large businesses, but they demanded in return that all economic activity should serve the national interest.[13] Historian Gaetano Salvemini argued in 1936 that fascism makes taxpayers responsible to private enterprise because “the State pays for the blunders of private enterprise. […] Profit is private and individual. Loss is public and social”.

    Do note that I am not trying to say that Richard Murphy is a fascist. I am though insisting that the economic management method he outlines here – allow the capitalists to keep their profits but subordinate decision making in large companies to the state – is the method the fascists used.

    I really don’t think that Richard Murphy is a fascist. I just think he’s ignorant.

    Reply
    1. marku52

      But has he stopped beating his wife?

      So your solution (you didn’t bother to propose one) is TINA?

      Mine is antitrust writ large. Mow Amazon Google Faceplant down to the size where you can drown them in a bathtub.

      Reply
      1. Synoia

        An important aspect of fascist economies was economic dirigism, meaning an economy where the government often subsidizes favorable companies and exerts strong directive influence over investment, as opposed to having a merely regulatory role. In general, fascist economies were based on private property and private initiative, but these were contingent upon service to the state.

        Oh, Do we then have fascism? It appears to me that the State, Our Elected Lawmakers, is Contingent upon service to the Companies for election money.

        Reply
    2. Dr. R.k. Barkhi

      what u described sounds exactly like the situation here n now. For example doesnt “our” government subsidize the petroleum industry,even during times when they are making historical profits in the billions?

      “the State pays for the blunders of private enterprise. […] Profit is private and individual. Loss is public and social”. That’s called a “bail-in” as in “our” government’s STOP toward bank failures and/or the “too big to fail” rationalisation. I’ve learned to define Free Market Capitalism as “playing around in the market until u go bankrupt at which point the tax payers bail you out and therefore its Free.”

      Therefore i see no validity either in your comments or your analysis(?) of Mr. Murphy’s statements,(which I’m neither for or against.). Perhaps i missed them but i saw no mention of anything resembling “fascist capitalism” there, except in your reply.

      I do think Mr Murphy brings up a critical topic for discussion,for which I’m thankful for.

      Reply
    1. anon y'mouse

      some of us have long ago assumed this to be true.

      the entire history of the 20th century is essentially a gloss, cast like an old cowboy film.

      Reply
  7. Jeremy Grimm

    If large firms have macroeconomic impacts and yet are not part of macroeconomic theory and are still included in microeconomic theory … what does that say about current economic theories?

    The tail of this brief post raises another question in roundabout. Who can hold macroeconomic firms to account and by extension who can be held accountable for the actions of macroeconomic firms? The shareholders are along for the ride but hold no reins. Large share holders, founders, macroeconomic financial firms might hold firms to account or might be held accountable — but strangely this post did not mention the high level executives of macroeconomic firms. I tend to favor the view of some science fiction and several recent films that macroeconomic firms have indeed become as if persons; synthetic persons of papers and words driven by and directed with Neoliberal morality, beyond the control of any human person or group of persons. I believe Government is the only entity large enough and sufficiently powerful to control and dismantle macroeconomic firms — which might explain Neoliberalism’s peculiar antagonism of Government while macroeconomic firms insinuate their control over Government to use Government power in service to the Neoliberal drives and morallity of macroeconomic firms. Government is never a problem as long as it remains a tool wielded by macroeconomic firms for their purposes.

    I had believed some political solution to the predations of macroeconomic firms might be possible. The last election cycle and the essentially unanimous Congressional support for the mysteriously ready-made CARES Act disabused me of that fantasy. I am held in stasis by the Corona pandemic. Otherwise I feel more and more strongly that a time nears when I would be very glad to be far far away from large cities.

    Reply
    1. Synoia

      Who can hold macroeconomic firms to account?

      No one. They are sudo sovereign entities, and the nearest historic parallel are Pirates, such as Sir Francis Drake, or Cecil Rhodes, who will relocate to a Country willing to bend to their requirements.

      Reply
      1. greg

        All made possible by rules protecting financial secrecy and information asymmetries. Get rid of them. All business, all finance, should be open and exposed to public and government scrutiny. The costs to society of these rules is far greater than any possible benefits.

        And as is becoming increasingly apparent, the global economies can no longer afford financial secrecy. Too many slugs and bugs hiding under the rocks.

        Reply
  8. LarryMotuz

    Fascinating.

    It has never occurred to me to treat mega-corporations as equivalent to macroeconomies. I fully agree that they are. Certainly the ‘investor provisions’ of many trade agreements treats them as de facto fully equivalent to nation statesI

    This is well worth exploring further..

    Reply
  9. Ernie

    So, corporations = government now?!

    That’s my takeaway from this discussion. So the way to deal with them is to treat them like government. Since in a country formed as a democratic republic individuals are the sovereign in control of the government, the large companies should be under the control of the body of sovereign individuals, i.e. the citizens of the countries in which the companies exist. I am speaking technically, of course, since in, for instance the USA which is formed as a democratic republic, most do not acknowledge that it is the individual that is the sovereign, and that the body of sovereign individuals are the rightful government (keeping in mind that the USA’s representative democracy is the method chosen for the sovereign body to do the work of governing.)

    Of course in countries that are not formed as democratic republics, different approaches will be used, such as the various forms of totalitarianism.

    Reply
  10. Sound of the Suburbs

    We talk about corporate power.
    Corporations are not sentient beings, they have no intelligence.
    The people who run them take the decisions.

    What does good capitalism look like?
    My friend runs a small firm and I can see capitalism has a very acceptable face.
    He wants a well oiled machine that runs well.
    There may be big cogs and small cogs, but this machine needs all those cogs turning together.
    He doesn’t want good people to leave, as he knows getting a good replacement is easier said than done. He will pay a good rate for good people to keep them.
    He tries to keep them happy and organises occasional social events for the staff so they feel valued. The last thing he wants is for his staff to think he is just using them, or that he is taking advantage of them.
    This is his money machine and he wants it to run in the best way it possibly can.
    Everyone does well out of this arrangement and he makes lots of money.

    What are we doing to it to make it so bad?

    We aim to maximise profit, and pass that profit out to shareholders that don’t actually do any of the work.
    There is much less to go around for those within the company.
    There is much less to re-invest in the company.

    We start loading companies up with debt.
    Debt repayments suck more money out of the company.
    There is less to go around for those within the company.
    There is less to re-invest in the company.

    We reward, and incentivise, a few at the top to pass out as much as possible to share holders and in debt repayments.
    There isn’t a lot left for the rest of the workers.
    There isn’t a lot left to re-invest in the company.

    We have a system that is designed to pass out as much as possible to those that don’t actually do any of the work.

    How do we maximise that further?
    Western companies couldn’t wait to off-shore to low cost China, where they could make higher profits.
    Maximising profit is all about reducing costs.
    China had coal fired power stations to provide cheap energy.
    China had lax regulations reducing environmental and health and safety costs.
    China had a low cost of living so employers could pay low wages.
    China had low taxes and a minimal welfare state.
    China had all the advantages in an open globalised world.

    Environmentally friendly measures cost money and reduce profit.
    The goal is to maximise profit.

    When you maximise what you pass out to shareholders, you are going to get an environmental disaster.

    Reply
    1. Sound of the Suburbs

      Where does the idea of maximising profit actually come from?
      It isn’t classical economics, where they could observe a world of small state, unregulated capitalism directly.

      “But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin.” Adam Smith

      Exactly the opposite of today’s thinking, what does he mean?
      When rates of profit are high, capitalism is cannibalising itself by:
      1) Not engaging in long term investment for the future
      2) Paying insufficient wages to maintain demand for its products and services
      Today’s problems with growth and demand.
      Amazon didn’t suck its profits out as dividends and look how big it’s grown (not so good on the wages).

      The benefits of the system can be passed upwards in dividends or downwards in wages.
      Both actually detract from the money available for re-investment as Jeff Bezos knows only too well.
      He didn’t pay dividends and paid really low wages, to maximise the amount that he could re-invest in Amazon and look how big it’s grown.
      The shareholders gains are made through the value of the shares.
      Jeff Bezos hopes other people are paying high enough wages to buy lots of stuff from Amazon; his own workers don’t have much purchasing power.

      Reply
      1. cnchal

        > The benefits of the system can be passed upwards in dividends or downwards in wages.

        The benefits can flow both ways, simultaneously.

        > He didn’t pay dividends and paid really low wages, to maximise the amount that he could re-invest in Amazon and look how big it’s grown.

        Bigger than many governments, which is Richard Murphy’s point. The difference is that Amazon is a dictatorship run by a psychopath. The inhumane working conditions in an Amazon warehouse are the new standards of work, imported from China, just like the crapola Jeff sells.

        > The shareholders gains are made through the value of the shares.

        It’s price, dammit. Price is what one pays. Value is what one gets.

        > Jeff Bezos hopes other people are paying high enough wages to buy lots of stuff from Amazon; his own workers don’t have much purchasing power.

        That’s what Dollar General is for.

        Reply
        1. Sound of the Suburbs

          In the Keynesian era it mainly went downwards in wages.
          Now, it mainly goes upwards in dividends.
          There are three ways it can go; Jeff Bezos favours the third way.

          I am always looking for parallels between the 1920s/1930s and now.
          Today we have our billionaires; and the media can’t get enough of them.
          They made it, so can you.

          Back then, it was the robber barons, and the media couldn’t get enough of them.
          They made it; so can you.
          https://www.youtube.com/watch?v=BM20eUDP6GE

          Reply
  11. Alice X

    Politics is the shadow cast on society by big business.

    John Dewey, 1931. nearly one hundred years ago.

    True then, true today; end capitalism!

    Reply
    1. Dr. R.k. Barkhi

      Excellent. I read recently that Frank Zappa worded it as “politics is the entertainment aspect of business”. Dewey,imo, was brilliant n probably forgot more about education than most”educators” ever knew.

      Reply
  12. Alice X

    Nowhere is mentioned Investor-state dispute settlement (ISDS) components of bi-lateral and multi-lateral trade agreements. They have been increasingly predominant since the then approaching post colonial times of the 1950’s, pull out the troops and leave the lawyers. These supersede, and override the laws of the individual states. They are standard practice today. It works great for the capitalists anywhere they go, it keeps profits up no matter what entity, local or not.

    Reply
  13. Susan the other

    Maybe we should borrow an argument from the concept of ‘trespass’. In land and property ownership there are obligations attached to the right of ownership. Now more so with EPA rules and stricter development rules and rising taxes. Rights and obligations are also balanced neighbor against neighbor which obligate each to respect the rights of the other. No trespassing; no piles of toxic garbage; no hazardous junk; no loud music after a certain hour. With macroeconomic entities obligations seem to be laundered like hot money. They are dispersed among the shareholders. There is no single person of interest to take responsibility. Debts of the corporation, for instance, are assessed against shareholder dividends. So the government doesn’t have to bust up the big corporation for monopoly practices so much if it can just impose fair obligations on the macro-entities. Especially since most of them practice the socialization of their losses without a hitch. Chances are that these mega corporations wouldn’t have become so mega if they had had to meet a fairness standard of obligations to society. Trespassing on the rights and well being of others might be a good place to start.

    Reply
  14. Michael Hudson

    Well, what is important about this observation is that Soviet companies were indeed governments in miniature. They provided housing, meals, entertainment, and sometimes were entire cities (as in the Togliati plant).
    So privatizing them stripped away all these social functions. That is partly what destroyed Russia after 1991.

    Reply
  15. Dr. R.k. Barkhi

    Your raise some valid points. Upon rereading the article and finding a more complete description here:

    https://www.shiftfrequency.com/147-companies-run-world/

    I see what u r saying about fund managers etc. however the authors used that information to establish connections. They assume that translates to control.

    In regards to your comment, I looked up Vanguard n found;

    The Vanguard Group, Inc. is an American registered investment advisor based in Malvern, Pennsylvania with about $6.2 trillion in global assets under management, as of January 31, 2020. It is the largest provider of mutual funds and the second-largest provider of exchange-traded funds in the world after BlackRock’s iShares. In addition to mutual funds and ETFs, Vanguard offers brokerage services, variable and fixed annuities, educational account services, financial planning, asset management, and trust services. Several mutual funds managed by Vanguard are ranked at the top of the list of US mutual funds by assets under management. Along with BlackRock and State Street, Vanguard is considered one of the Big Three index funds that dominate corporate America. Founder and former chairman John C. Bogle is credited with the creation of the first index fund available to individual investors and was a proponent and major enabler of low-cost investing by individuals.Wikipedia

    Type:Privately held company

    Industry:Investment management

    Founded:May 1, 1975

    Founder:John C. Bogle

    Key people:Mortimer J. Buckley, (Chairman & CEO)

    Products:Mutual funds, Exchange-traded funds, Broker, Asset management, Sub-advisory services

    Revenue:$6.936 billion (2020)

    AUM:$7.1 trillion (2020)

    Number of employees:17,600 (January 31, 2020)

    Now a thesis that a company owning $6+ trillion in assets will not or does not assert any control because “Firms like Vanguard not only do not exercise any control, they are not paid enough in terms of management fees to bother.” is dubious at best when the company has an income of $6.9 billion in one year. The sheer size of these assets n income in a market economy belonging to a company unwilling or able to leverage them in one way or the other is unbelievable imo..

    ” Along with BlackRock and State Street, Vanguard is considered one of the Big Three index funds that dominate corporate America “. Strange , in your view then the use of the word “dominate”?

    Furthermore since we are talking about fiscal connections ,in this case via mutual funds & stocks, is it realistic to assume that a CEO wouldn’t leverage their ownership of their shares regardless of who manages them in affecting policy further “downstream”,especially in coordination with other like minded CEO s? This being a daily exercise in the Business world ,i think not.

    I take issue with the sensationalist wording “control” used in the article. This is corrected at the end here:

    The top 50 of the 147 super-connected companies

    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
    9. UBS AG
    10. Merrill Lynch & Co Inc
    11. Wellington Management Co LLP
    12. Deutsche Bank AG
    13. Franklin Resources Inc
    14. Credit Suisse Group
    15. Walton Enterprises LLC
    16. Bank of New York Mellon Corp
    17. Natixis
    18. Goldman Sachs Group Inc
    19. T Rowe Price Group Inc
    20. Legg Mason Inc
    21. Morgan Stanley
    22. Mitsubishi UFJ Financial Group Inc
    23. Northern Trust Corporation
    24. Société Générale
    25. Bank of America Corporation
    26. Lloyds TSB Group plc
    27. Invesco plc
    28. Allianz SE 29. TIAA
    30. Old Mutual Public Limited Company
    31. Aviva plc
    32. Schroders plc
    33. Dodge & Cox
    34. Lehman Brothers Holdings Inc*
    35. Sun Life Financial Inc
    36. Standard Life plc
    37. CNCE
    38. Nomura Holdings Inc
    39. The Depository Trust Company
    40. Massachusetts Mutual Life Insurance
    41. ING Groep NV
    42. Brandes Investment Partners LP
    43. Unicredito Italiano SPA
    44. Deposit Insurance Corporation of Japan
    45. Vereniging Aegon
    46. BNP Paribas
    47. Affiliated Managers Group Inc
    48. Resona Holdings Inc
    49. Capital Group International Inc
    50. China Petrochemical Group Company

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