When the giants play with fire
By Frederic F. Clairmont *
December 1999
So far as the concentration of capital is concerned, the century is ending as it began. Back in 1906 in The Jungle, the novelist Upton Sinclair (1878-1968) denounced the fiction of the "American paradise" and the crimes of big business in the days of the "Robber Barons". He wrote that "it is the grand climax of the century-long battle of commercial competition - the final death grapple between the Chiefs of the Beef Trust and Rockefeller's Standard Oil for the prize of the mastery of the ownership of the United States." After the Great Depression of 1873, the concentration of industry and banks was proceeding at such a pace that two federal investigators, the economists J. B. and J. M. Clark, could write in 1912 that "the mere size of the consolidations which have recently emerged is enough to startle those who saw them in the making. If the carboniferous age had returned and the earth had repeopled itself with dinosaurs, the change made in animal life would have scarcely seemed greater than that which has been made in the business world by these monster-like corporations" (1).
It was this change in the concentration of wealth and political power that caused the leading German industrialist and founder of AEG, Walter Rathenau, to say, at the start of the century, that "300 men, who all know each other personally, control the economic destinies of Europe and between them choose their own successors" (2). What has changed since then is that in Europe those 300 have become fewer than 150. Concentrations have reshaped capital not only in the United States, but also in France, the United Kingdom, Germany and Japan - that is in the five countries that dominated the world economy at the start of the century and where the headquarters of nearly 90% of the world's 200 biggest companies are currently located.
These 200 megafirms, for which the North Atlantic Treaty Organisation is the shield and sponsor, cover the whole of human activity: from industry to banking, wholesaling to retailing, extensive farming to every possible niche of financial services, both lawful and unlawful. For the "big boys" of banking and insurance, the distinctions between clean money and dirty money have in fact long since disappeared. However, these 200 have surgically restructured themselves, driven by voracious predatory appetites looking for ever larger prey. For example, in the US in 1998 alone, Exxon took over Mobil for $86bn, Travelers Group Citicorp for $73.6bn, SBC Communications Americatech for $72.3bn, Bell Atlantic GTE for $71.3bn, and AT&T Media One for $63.1bn.
Together, these five mergers and acquisitions totalled more than $366bn. Worldwide, they amounted to $2,500bn and will exceed $3,000bn in 1999. Since the start of the decade, $20,000bn have been spent in this way, two and a half times the gross domestic product (GDP) of the US. This "concentrationist" universe is illustrated by the three accompanying tables.
Table I shows the market capitalisations, that is the value in dollars of the shares at any given time multiplied by the number of shares in circulation. Table II uses figures for turnover and profits to show the geographical distribution of transnational power from two different, but related, points of view.
What the figures in Table I show is the overwhelming size of the American colossi - 71.8% of the total world market capitalisations of the 50 largest companies - and the massive inequalities between the top six leading economies. Enough to put into their proper perspective the fine words about a "market economy" bringing about the best allocation of human and financial resources. It also highlights the extent of the power wielded by the transnationals under cover of the globalisation myth.
Table II reveals another dimension to international domination. In terms of turnover and profits, the 200 megafirms are divided geographically among the same six countries as the top 50 in terms of market capitalisation: US (74), Japan (41), Germany (23), France (19), UK (13) and Switzerland (6). Together, these countries are home to 88% of all firms and have been gaining ground steadily for six years. The US has advanced (from 60 to 74 firms), while Japan has fallen back (from 60 to 41 firms). Since 1982 the turnover of the 200 has risen from $3,000bn to $7,000bn and, despite the contraction in the world economy, their annual growth in current prices (as shown in Table III) was twice that of the 29 member countries of the Organisation for Economic Cooperation and Development (OECD). The same table shows that since 1992 the turnover of the 200 has been higher than the combined GDP of all the countries outside the OECD.
Although right-thinking theory presents the accumulation of capital as saving and investment, it must nevertheless be remembered that the colossal sums that drive up the stock markets and whet the giant predators' appetites are derived from debt. Between 1997 and 1999 total world debt (of households, businesses and governments) increased from $33,100bn to $37,100bn. That is an annual exponential growth of 6.2%, three times that of world GDP.
But by pursuing these policies the giants are playing with fire. Like the "rationalisation" of the 1920s and 1930s, in everyday language "cost cutting" and "value creation" mean the loss of hundreds of thousands of jobs. Hence the renewed fighting spirit among the workforce. The hit men, those "killer capitalists" lying in wait within those giant firms, like Al Capone's gangsters on the lookout for their rivals at the corner of a clandestine distillery, should ponder once in a while on the fate that awaited their authentic predecessors.
* Economist
(1) J. B. and J. M. Clark, The Control of Trusts, Macmillan, New York, 1912.
(2) Walter Rathenau, quoted in "Neue Freie Presse", Berlin, Winter 1909.
Translated by Malcolm Greenwood
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