May 14, 2002

Who Rules the World?

James Petras

A lot of superficial books and articles have been written about "globalization", "global corporations" and "empire" without the least notion of the real structure of power. An analysis of a recent survey by the Financial Times (supplement May 10, 2002) of the 500 largest companies in the world based on value, country and sector puts an end to the debate about empire globalization or imperialism. The nation-state in this case the imperial states are not disappearing but are central to understanding the centers of economic and political power.

Almost 48% the largest companies and banks in the world are US and 30% are from the European Union, only 10% are Japanese. In other word, almost 90% of the biggest corporations who dominate industry, banking, trade are US, European of Japanese. Economic power is in these 3 geographic economic units - not in some meaningless concepts like "empire" without imperialism or "de-territorialized" multi-national corporations. Within this imperial system, US imperial economic power is still dominant. If we examine key economic sectors this becomes abundantly clear. Five of the top ten banks are US, six of the top ten pharmaceutical/biotech companies, four of the top ten telecommunications companies, seven of the top information technology companies, four of the top gas and oil companies, nine out of the top ten software companies, four of the top ten insurance companies and nine of the top ten general retail companies. Only in the insurance sector does the European Union have greater proportion of the top ten than the US (a 5 to 4 margin). US imperial power is diversified across various economic sectors, but particularly the dominant force in finance, pharmaceutical and biotech, information and software and retail trade. In other words, giant US companies have a powerful network of control over the major sectors of the "new economy" , finance and trade. The concentration of US economic power is even more evident if we look at the top ten companies in the world: 90% are US owned; of the top 25, 72% are US owned; of the top 50, 70% are US and of the top 100, 57% are US owned. Within the inner circle of the biggest companies, the US has an overwhelming presence and dominance.

Africa and Latin America are absent from the list. And the so-called Asian Tigers have 3 companies among the top 500, less than 1%.

The policy implications of this concentration of power are important. No Third World country can afford to "liberalize" its markets because the US-European bloc will immediately seize control because of their superior resources. The liberal argument that free trade will increase the "competitiveness" of third world economies is false, since there is such a lopsided concentration of economic power in the US and European companies. Secondly, the concentration of power is not merely a product of efficiency,management and knowhow but a direct result of US and European state policies. For example, the US Congress has just approved (May 2002) a $182.28 bill subsidy for US agro-business over the next decade, making a joke of Washington's "free trade" proposals. The implications for Third World policymakers is clear: they must protect and subsidize their public or private producers in order to gain a share of markets, at home or abroad - just as the leading imperial powers practice.

The concentration of world economy power in the US and to a lesser degree European Union companies and banks means that world markets are not competitive but in large part shaped by the US and EU monopolies which dominate them. Financial flows, pharmaceuticals, software and insurance are shaped by the top ten US and EU companies. World markets are divided up among the 238 leading US and 153 European companies and banks - this concentration of power is what defines the imperial nature of the world economy, together with the markets they control, the raw materials they pillage (80% of the leading oil and gas companies are US and EU owned) and labor they exploit. The anti-globalization movement's pursuit of "another world is possible" must confront this monopolization or economic power and the imperial states which defend it. The only way to democratize globalization is to socialize these giant monopolies wherever they operate or face economic pressure and threats to undermine local economies.

The imperial states, particularly the US, has a serious problem in sustaining its empire for several reasons. The military cost , the US military budget has risen almost 20% for 2002/3, and the tax cuts of the rich which stimulate overseas investments, have led to a serious budget deficit and greater cuts in social spending, threatening fiscal and political stability. More important the power and economic concentration of US companies and banks has been based on overseas investments, profits and re-exports to the US via subsidiaries. The result is the growing overseas economic empire has savaged the US balance of payments - the US has a trade deficit this year approaching the unsustainable level of one-half trillion dollars ($400-500 billion).

The US economy depends essentially on a massive flow of funds from overseas investors to sustain its external deficit. In other words, as empire grows, the 'republic' goes into deeper crises, stripped of its competitive enterprises and unable to limit its consumer imports. This contradiction cannot be easily resolved, because the political leadership is totally committed to empire building and the only concession it can make to the domestic economy is greater subsidies and greater protection - which in turn increases tension and conflicts with its imperial competitors in Europe and its client export regimes in the Third World.

The Bush Administration's resolution of this contradiction of imperial growth and domestic decay is to conquer overseas countries with vital resources. Washington's move into the Caspian Sea oil producing countries, its plans to invade Iraq, are part of the plan to extract wealth which can be transferred back to the US to finance its deficits. The Latin American Free Trade Agreement is an integral part of this strategy: by monopolizing Latin American markets the US can lower its trade deficits and capture lucrative financial and trade sectors.

Plan Washington-Puebla-Panama is the proto-type of new imperial strategy of increasing US exports directly to Mexico, while US owned or sub-contracted maquiladoras move cheaper labor markets to China, Vietnam and India. While it is clear that US imperial control over the world economy is still a reality, it is also clear that power is based on fragile foundations and a highly polarized global order. The emergence of mass anti-capitalist movements and a run against the dollar could lead to the fall of the empire.