But, But, They Own Everything!

In what many took to be fodder for the capitalism-is-a-conspiracy theorists, boffins have claimed that about 150 companies, mostly banks, are controlling the majority of the economic power.

Yup.

They do.

The paper itself.

In network analysis terms it\’s all no doubt terribly interesting for people who like network analysis.

In economic or business terms what they\’ve found is that companies with large fund management arms (banks, mutual funds, insurance companies, these sorts of things) own lots of shares.

Which is rather one of those well, why don\’t you just blow me down with a wet kipper sort of findings.

14 thoughts on “But, But, They Own Everything!”

  1. So the market produces nomopolies which are unaccountable to the public?

    I thought the other day you said it didn’t.

    I thought you said that it increased competition and made more players more likely to provide efficiency.

    Presumably, you support the type of deregulation that would allow the biggest to get bigger?

    To coin the Daily Mash. Reading you and your robotic fellators is like spending 20 minutes in a mental hospital.

    Metal poisoning?

  2. nomopolies are where you cat demands you supply it with the most expensive branded food.

    Tim adds: Now, that, I will grant you Arnald, was amusing.

  3. monopolies which are unaccountable to the public

    1. Where, in this, is the monopoly? This isn’t describing a market. An equivalent formulation would be “large companies which own lots of shares own lots of shares in large companies”.

    2. To what extent, and to which “public”, do you suggest should companies be accountable? Legally, exempting illegal acts or breach of regulations where they are accountable to one or more states, most jurisdictions insist that companies are legally required to be accountable to and only to their shareholders. (The mechanism for achieving the last isn’t necessarily working well, but that’s not the point.)

  4. It may be fund management firms that ‘own’ the shares but the thing is, they don’t. They do what their name suggests, manage funds.

    Who’s funds are they managing? People with pensions and investments.

    So these 150 firms do not actually own the shares. It is their clients whose assets they manage. Sure the FM’s have the power over the companies they own, but that is to make profit for their clients. If they don’t make profits, their clients should move their funds away from them.

    simple. very, very simple. In someways, quite beautiful that we can concentrate most of the capital we have with a relatively small number of firms in the world and use their skills and experiences to make it work the most efficiently, whilst as investors we can still hold them accountable. Therefore doctors, mechanics, bus drivers and everyone else can go about their jobs more specifically. Sounds a bit like division of labour which I think has been proven to be a good thing.

    As long as we can get over the fact, or try to do something about it, that governments continue to make it hard to work out where to allocate capital by making decisions that are only predictable in their stupidity.

  5. MW
    Absolute fucking bollocks.

    If that were the case then pension funds and the like would be soaring.

    You cannot accept that the whole network that pretends to allow the public ‘choice’ and ‘accountable managers’, is just a fee taking cartel.

    What planet, seriously, are you on. Beautiful?

    Only the major shareholdres benefit. Only the major companies benefit. No one else does.

    Tim adds: This is even more amusing Arnald. For what the research has just proven is that the major shareholders are us, through our pensions and insurance funds.

  6. Arnald

    ‘If that were the case then pension funds and the like would be soaring.’

    Pick the right one and it will be. You have a choice of what you want to invest you pension in which can be a very diverse range of asset classes. Its called choice. You shouldn’t be scared of it

    ‘Fee taking cartel’

    Firstly, people should be paid for the work they do, so yes they should take some fees. If you disagree with the amount and feel it is a cartel, then there is nothing stopping you taking evening classes to pass the CFA and then raising funds to invest yourself.

    ‘Beautiful’

    Yes, I use that seriously.

    ‘Only the major shareholdres benefit. Only the major companies benefit. No one else does.’

    WTF do you mean by that? The major shareholders are Asset Managers which effectively means the ordinary public who invest and save are the major shareholders. How stupid are you?

  7. The original quote is utter bullshit by misrepresenting the conclusions in the paper.
    A small group of the 1430 TNCs have directly and indirectly substantial shareholdings in the other TNCs. It takes Jonathan Edwards with his eyes closed to get to their controlling a majority of economic power.
    So governments (national and local) have no economic power; the domestic utility companies have no economic power; trade unions and small shopkeepers have no economic power; Yale and other universities, schools and charities have no economic power; you and I have no economic power?
    By the way, my stockbroker has set up systems that allow its clients to vote the shares that they own but it holds on their behalf. If other have done so then the numbers in the original paper would be overstated.

  8. That’s why they call it capital formation. Without it very few things would work well. But granted it could be done differently, if only WE were in charge…

  9. @ Arnald
    Murphy believes in a market, but not a free market – a market controlled by his diktats.
    Equality – so you get the same income whether or not you work.
    No financial speculation – so farmers cannot hedge against a fall in the price of the harvest when investing by buying fertiliser.
    I could go on and on …

  10. @ Arnald
    You underestimate the independence and intelligence of cats: I grew up with three, each of which had different favourite foods.
    I am willing to admit that it was a good quip, but more apposite for children or dogs.

  11. Arnald’s basic thesis is that these companies hold all the power.
    Of course the companies are beholden to their shareholders (via pension funds investment trusts in addition to personal share portfolios) so they act in their interest.
    Arnald does not have a stake in this system so is pissed. The shareholders, who do have a stake in the system, are rather pleased that parasites like Arnald who doesn’t, have little influence.
    Seems a good enough system to me.
    Arnald.
    Fuck off.

  12. @ bloke in spain
    Please do not accept the Arnald falsehood. Companies do not have power to any significant extent – governments have power: today’s FT moans that Anglo-American will have to pay $900m of tax to the Chilean government because the Chilean-government-controlled Codelco will exercise an option to buy 49% of a mine at far less than value using an obviously inappropriate basis for valuation. Not that I weep any tears for those who have to pay $900m of tax on their capital gains, but it shows who has the power.

  13. @John77
    Oh, concur concur. Wish companies did have more power. I’d feel much safer in the hands of any multinational than government. At least the people who run them have a vague idea what they’re supposed to be doing.

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