Capital Networks

How might we quantify, much less visualize, the networks that control the flows of global capital? While sociologists, political scientists, historians, economists, and many other scholars have long known that global finance is controlled by a handful of organizations and individuals, there were few ways to effectively map out the networks that control global speculative markets. Until now.

A team of Swiss “econophysicists” has developed an intricate network analysis that provides empirical support for claims about the disproportionate and overwhelming power falling to a small number of international firms. In fact, their analysis finds that ten firms in particular wield incredible power in world markets, shedding illusions that markets are controlled by vast groups of people and organizations.

Moving beyond a simple analysis with identified nodes, these scholars built a model to account for the dynamic and varied influence of organizations under changing market conditions, the power gained by intermediaries, and the structures of corporate ownership. By both quantifying and visualizing the nodal relationships between actors in stock markets, this team lends substantial empirical support to what many scholars have understood for quite a long time.

You can read the full paper here (pdf).

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