The phenomenon of globalization has contributed to a significant increase in the concentration and centralization of capital. This concentration is not merely reflected in the accumulation of wealth but also in the sheer scale of capital that now influences investments, employment, and financial decisions globally. According to the Swiss Federal Institute of Technology, a core group of just 147 firms controls approximately 40 percent of the wealth within the global network through interconnected shares in various companies. In total, 737 companies account for a staggering 80 percent of all economic activity.
Economic experts have expressed alarm over these trends. Notably, economist Nouriel Roubini highlights that the wealthiest 10 percent of Americans hold 90 percent of equity capital in the United States. The International Monetary Fund (IMF) reports that the risk of concentration within the S&P 500 Index, which tracks the largest publicly traded companies in the U.S., has reached a historical maximum. This risk refers to a scenario where a large portion of the total value of an investment portfolio or index is derived from a small number of stocks or sectors.
The dominance of a handful of highly valued companies, often referred to as the “Magnificent 7,” including giants like Apple, Microsoft, and NVIDIA, indicates a growing sectoral concentration, primarily within the technology industry. This trend suggests an increased reliance on and vulnerability of the economy, as a potential downturn in the tech sector could jeopardize overall economic stability.
The implications of these developments extend beyond mere financial metrics. As noted by The Economist in an article titled “The Business of Survival,” published on April 11, 2020, three key trends are shaping the global business environment: the aggressive adoption of new technologies, the inevitable withdrawal from free global supply chains, and a concerning rise in well-connected oligopolies. The report states that more than two-thirds of American industries have become more concentrated since the 1990s.
This analysis echoes the observations of Vladimir Lenin, who characterized imperialism through the lens of technologically driven capital concentration, fragmented global markets, and the dominance of oligopolies that merge banking and industrial capital. While The Economist views these trends as deviations from liberal capitalism, Lenin identified them as essential phases in the evolution of capitalism itself.
For those wary of the parallels drawn with Marxist terminology, similar themes can be found in J.A. Hobson‘s 1902 work, “Imperialism: A Study,” which highlights processes from the late 19th century, including productivity growth outpacing domestic consumption, competition for external investment outlets, and the intertwining of financial interests with state power.
The historical consequences of old imperialism serve as a cautionary tale. As the world grapples with these contemporary issues, there is hope that today’s capitalists have learned valuable lessons from the past. At the very least, it is crucial for them to recognize that the current geopolitical landscape poses risks that could impact their stability as well.
