The phenomenon of globalization has led to a significant concentration of wealth and capital in the hands of a few. This trend is evident not only in the growing accumulation of money and assets but also in the control that major capital holders exert over investments, employment, and financial decisions worldwide. According to the Swiss Federal Institute of Technology, a core group of 147 companies, through interconnected shares in other firms, collectively controls 40 percent of the wealth within the global network. Furthermore, a total of 737 companies dominate a staggering 80 percent of the global market.
Economist Nuriel Rubini highlights that the wealthiest 10 percent of Americans hold 90 percent of stock market capital in the United States. Additionally, data from the International Monetary Fund (IMF) indicates that the concentration risk within the S&P 500 index is at a historical high. This concentration risk pertains to the scenario where a significant portion of the total value of an investment portfolio or index stems from a small number of stocks or sectors.
The largest companies, including Apple, Microsoft, and Nvidia, wield considerable influence over the movement of the entire index. This dominance underscores the heightened vulnerability of the economy to fluctuations within the technology sector, often referred to as the “Magnificent 7.” Should a bubble emerge in this sector, the potential repercussions could jeopardize overall economic stability, increasing the risk of a crisis.
Shifting Dynamics in Global Business
This ongoing trend aligns with findings presented in a April 11, 2020 article by The Economist, titled “The Business of Survival.” The publication identifies three prevailing trends shaping the global business environment: the vigorous adoption of new technologies, an inevitable withdrawal from free global supply chains, and a concerning rise in well-connected oligopolies. The article notes that more than two-thirds of American industries have become more concentrated compared to the 1990s.
When analyzed through a Marxist lens, these observations reflect Vladimir Lenin‘s concept of imperialism: a technologically driven concentration of capital, fragmentation of global markets, and the economic and political dominance of oligopolies intertwined with financial and production capital. While The Economist views this as a deviation from liberal capitalism, Lenin would categorize it as a necessary phase in its evolution.
Those hesitant to draw parallels with Marxist terminology may find similarities in Hobson’s 1902 work, “Imperialism: A Study.” Hobson outlines processes from the late 19th century, including productivity growth outpacing domestic consumption, struggles for external investment outlets, and the entanglement of financial elites (oligopolies) with state power.
Recognizing the historical consequences of earlier forms of imperialism raises questions about whether contemporary capitalists have learned from the past. There is hope that today’s economic leaders are cognizant of the potential fallout from their actions, particularly in an era marked by conflict and instability. The lessons of history may serve as a cautionary tale for those navigating the complexities of modern capitalism.
