The Network of Global Corporate Control: TRANSNATIONALS [Corporations] form a giant bow-tie structure, a large portion of control flows to a small tightly-knit core of financial institutions ~ core economic “super-entity”

Thus, similar to the WWW, the TNC network has a bow-tie structure [21] (see Figure 2 A and Appendix S1, Section 6). Its peculiarity is that the strongly connected component, or core, is very small compared to the other sections of the bow-tie, and that the out-section is significantly larger than the in-section and the tubes and tendrils (Figure 2 B and Table 1). The core is also very densely connected, with members having, on average, ties to 20 other members (Figure 2 C, D). As a result, about 3/4 of the ownership of firms in the core remains in the hands of firms of the core itself. In other words, this is a tightly-knit group of corporations that cumulatively hold the majority share of each other.

 

Introduction

A common intuition among scholars and in the media sees the global economy as being dominated by a handful of powerful transnational corporations (TNCs). However, this has not been confirmed or rejected with explicit numbers. A quantitative investigation is not a trivial task because firms may exert control over other firms via a web of direct and indirect ownership relations which extends over many countries. Therefore, a complex network analysis [1] is needed in order to uncover the structure of control and its implications. Recently, economic networks have attracted growing attention [2], e.g., networks of trade [3], products [4], credit [5], [6], stock prices [7] and boards of directors [8], [9]. This literature has also analyzed ownership networks [10], [11], but has neglected the structure of control at a global level. Even the corporate governance literature has only studied small national business groups [12]. Certainly, it is intuitive that every large corporation has a pyramid of subsidiaries below and a number of shareholders above. However, economic theory does not offer models that predict how TNCs globally connect to each other. Three alternative hypotheses can be formulated. TNCs may remain isolated, cluster in separated coalitions, or form a giant connected component, possibly with a core-periphery structure. So far, this issue has remained unaddressed, notwithstanding its important implications for policy making. Indeed, mutual ownership relations among firms within the same sector can, in some cases, jeopardize market competition [13], [14]. Moreover, linkages among financial institutions have been recognized to have ambiguous effects on their financial fragility [15], [16]. Verifying to what extent these implications hold true in the global economy is per se an unexplored field of research and is beyond the scope of this article. However, a necessary precondition to such investigations is to uncover the worldwide structure of corporate control. This was never performed before and it is the aim of the present work.

http://www.plosone.org/article/info:doi/10.1371/journal.pone.0025995#s3 

When, thanks to Mark Novitsky, a federal whistleblower, I learned that Karen Hudes, who earned her J.D. at Yale, our most distinguished School of Law, and an M.Phil. in economics at the University of Amsterdam, which is also a formidable institution, had been removed from her position as Senior Counsel for the World Bank because of her efforts to expose corruption and reaffirm the rule of law in the form of appropriate standards of accounting, I was dumbfounded. What initially appear to be obscure issues of international finance, moreover, have the potential to sever ties between us and our NATO allies and weaken the national security of the United States. The stakes involved are therefore extremely high for every American citizen.

http://hebrewvisionnews.info/?p=1466

 

World Bank Insider Blows Whistle on Corruption, Federal Reserve

By Alex Newman

Global Research, May 26, 2013

The New American

A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve.

The network has seized control of the media to cover up its crimes, too, she explained. In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success.  

Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.”

http://www.globalresearch.ca/world-bank-insider-blows-whistle-on-corruption-federal-reserve/5336492