Links omitted, that New Scientist item editorializes:
John Driffill of the University of London, a macroeconomics expert, says the value of the analysis is not just to see if a small number of people controls the global economy, but rather its insights into economic stability.
Concentration of power is not good or bad in itself, says the Zurich team, but the core's tight interconnections could be. As the world learned in 2008, such networks are unstable. "If one [company] suffers distress," says Glattfelder, "this propagates."
"It's disconcerting to see how connected things really are," agrees George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank.
Yaneer Bar-Yam, head of the New England Complex Systems Institute (NECSI), warns that the analysis assumes ownership equates to control, which is not always true. Most company shares are held by fund managers who may or may not control what the companies they part-own actually do. The impact of this on the system's behaviour, he says, requires more analysis.
Crucially, by identifying the architecture of global economic power, the analysis could help make it more stable. By finding the vulnerable aspects of the system, economists can suggest measures to prevent future collapses spreading through the entire economy.
Reading the entire item four easily posed questions come to mind: First, "reality" seems to be that people not firms [despite Mitt Romney's and the US Supreme Court's confusion between the two] make decisions and exercise tactics and strategies toward meeting their goals and ends, via their subtle or bold use of ways and means. In short, people run [aka manipulate] things. Second, the suggestion that analyzing economic-business ties on a global scale, using complex systems theory and social networking study tools, and saying, "Wow, banks seem to be placed in pivotal places," is no more than saying the bank cartel runs the world. Nothing really new to that statement, and the debate will rage on whether this "scientific" study avoiding "dogma" and being "reality based" says boo. So, what's new, is the second question. Third, the reporting suggests the study authors believe that study such as theirs can help show how the system can be more stable, globally. That presuposes a will and intent on the part of the concentrated few to favor stability and having folks generally feeling secure, vs. making money off of cycling the system, shaking down vulnerable folks here and there for the sport of it and to show power is like an automobile where if you buy it you want to drive it; while an alternate view might be that keeping folks on tenderhooks and insecure, on payments so to speak, adds a stability of a kind the movers and shakers might prefer over a different stability promoting individuality and hubris among the many. Fourth, to say my stuff is "reality based" is pushing levels of credibility which you, I and others might really accord their stuff. Is there a dogma to such a claim, and what is reality? Philosophy and politics each in its way wrestles with reality and illusion and the allegory of the cave is quite old. Back to the first question, I have seen studies attempting to document the extent of interlocking directorates - the how and why of, say the CEO and board chair of Weyerhauser sit on the board of some German bank, and some family with a background in brewing in the US might hold seats on the board of a Canadian mining firm. The interlocking-directorate studies have been fragmented and inconclusory. Yet everyone knows board interlocks exist, and board fees and compensation are out of line with the time commitment. And there is the phone, for pre-meeting board member-to-member contact. Schmoozing as well as influence dealings. And the board meetings can be in Maui or Macau or Dubai or Monaco, if the firm's really tightly controlled and exploited by senior management wanting on-board confederates and where shareholder discontent of any level can be largely ignored.
I had a law school prof who argued that institutional investors don't vote the shares they sell the shares whenever they see management misconduct or even speculate it might be at play. Takeover and green mail specialists are different from a mutual fund, where the fund trades instead of intruding. It is in the business of buying-selling-taking management fees, and not in the business of poking a nose into some firm's internal workings where the gears could grind the nose or the press could notice and the fund managers could gain a reputation of intrusiveness which might be counterproductive to their business plan for early uber-comfortable retirement.
At any rate, the New Scientist story is interesting. The study has been published online at PLOS, here. Glattfelder's put his papers onto arXiv, here. The prepublication version of the study on arXiv is here. That allows arXiv direct search of coauthors, with Battiston's arXiv work listed here. Consider this. Battiston is coauthor. I have not looked, but one has to wonder how different this item from two years ago is from the one that has caught recent attention. I may have a look. It would not be wholly unprecedented to see authors write the same thing years apart, put into different envelopes. Publish or perish encourages artful idea recycling.
Glattfelder's ETH homepage is here. His photo seems to show an academic with a wry smile. Battiston's homepage, here. Their ETH institute's publications list, here. Glattfelder links over to media coverage of the corporate-interlock study in a way reminding me of hunters displaying mounted head trophies around a den. It looks as if the 2009 paper did not grow such legs.
So, that said, is this new and vital insight or same-old? It clearly is notches below the publishing of the human genome, where us and chimps are being, years later, postulated to differ somewhere in the "junk DNA." The beat goes on.
_______________UPDATE_______________
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| Differences? In the Junk DNA. Lovability. The tie. |
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Google Scholar shows one cite was found to the PLOS item, which you can download from here. This item itself cites an interlocking directorate study, The Small World of Corporate Boards. Martin J. Conyon, Mark R. Muldoon (2006), which I could not find online as a free download. However, what appears to be a 2005 pre-publication version can be downloaded, per Google Scholar. If inclined, you can spend a day or more tracking down detail on the "Small World" model, but at 26 pages the 2005 item probably tells you as much, or more than you care to know about methodology. The thing falls short of naming names of who it is that is running the world. It probably would be un-academic to get into that, you can email the authors, and since their aim was to get published would naming names foster or deter that outcome?
The original New Scientist item, (again here), does name names, by listing the 50 best connected firms worldwide. The list is more informative than the computerized visualization.
If you want names of persons, probably just rely on Googles of this kind. Or this. Or this. Or this. Or this. Or this. Or this.
Does anyone know of any study which might take such attendance and membership lists and correlate names with firms such as Glattfelder identifies as the top 50, in terms of management positions or board membership? Or taking such lists and cross-correlating them. Mix in the Forbes richest persons reporting, etc. Pick the top twenty names for being on the most such lists, having the biggest overlap factor, and see who's who?
Any reader knowing of studies of that nature, please give a cite in a comment.
But again, is such knowledge of names and pedigrees as important to you as knowing and trusting the guy who fixes your car? Or being assured of the freshness of foods at the local supermarket? Go figure. Occupy your mind.