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The Occupy Movement has developed a mantra that addresses the great inequality of wealth and power between the world’s wealthiest 1 percent and the rest of us, the other 99 percent.
While the 99 percent mantra undoubtedly serves as a motivational tool for open involvement, there is little understanding as to who comprises the 1 percent and how they maintain power in the world. Though a good deal of academic research has dealt with the power elite in the United States, only in the past decade and half has research on the transnational corporate class begun to emerge.1
Foremost among the early works on the idea of an interconnected 1 percent within global capitalism was Leslie Sklair’s 2001 book, The Transnational Capitalist Class.2
Sklair believed that globalization was moving transnational corporations (TNC) into broader international roles, whereby corporations’ states of origin became less important than international agreements developed through the World Trade Organization and other international institutions. Emerging from these multinational corporations was a transnational capitalist class, whose loyalties and interests, while still rooted in their corporations, was increasingly international in scope.
Sklair writes:
Estimates are that the total world’s wealth is close to $200 trillion, with the US and Europe holding approximately 63 percent.
To be among the wealthiest half of the world, an adult needs only $4,000 in assets once debts have been subtracted. An adult requires more than $72,000 to belong to the top 10 percent of global wealth holders, and more than $588,000 to be a member of the top 1 percent. As of 2010, the top 1 percent of the wealthiest people in the world had hidden away between $21 trillion to $32 trillion in secret tax exempt bank accounts spread all over the world.4
Meanwhile, the poorest half of the global population together possesses less than 2 percent of global wealth.5
The World Bank reports that, in 2008, 1.29 billion people were living in extreme poverty, on less than $1.25 a day, and 1.2 billion more were living on less than $2.00 a day.6
Starvation.net reports that 35,000 people, mostly young children, die every day from starvation in the world.7
The numbers of unnecessary deaths have exceeded 300 million people over the past forty years. Farmers around the world grow more than enough food to feed the entire world adequately.
Global grain production yielded a record 2.3 billion tons in 2007, up 4 percent from the year before - yet, billions of people go hungry every day.
Grain.org describes the core reasons for ongoing hunger in a recent article, “Corporations Are Still Making a Killing from Hunger”:
Addressing the power of the global 1 percent - identifying who they are and what their goals are - are clearly life and death questions.
It is also important to examine the questions of how wealth is created, and how it becomes concentrated. Historically, wealth has been captured and concentrated through conquest by various powerful entities. One need only look at Spain’s appropriation of the wealth of the Aztec and Inca empires in the early sixteenth century for an historical example of this process. The histories of the Roman and British empires are also filled with examples of wealth captured.
Once acquired, wealth can then be used to establish means of production, such as the early British cotton mills, which exploit workers’ labor power to produce goods whose exchange value is greater than the cost of the labor, a process analyzed by Karl Marx in Capital.9
A human being is able to produce a product that has a certain value. Organized business hires workers who are paid below the value of their labor power. The result is the creation of what Marx called surplus value, over and above the cost of labor.
The creation of surplus value allows those who own the means of production to concentrate capital even more. In addition, concentrated capital accelerates the exploitation of natural resources by private entrepreneurs - even though these natural resources are actually the common heritage of all living beings.10
In this article, we ask:
We will examine a sample of the 1 percent:
These companies include oil, gas, and various mineral extraction organizations, whereby the value of the material removed far exceeds the actual cost of removal.
We will also examine the investment sector of the global 1 percent:
This sector includes global central banks, major investment money management firms, and other companies whose primary efforts are the concentration and expansion of money, such as insurance companies.
Finally, we analyze how global networks of centralized power - the elite 1 percent, their companies, and various governments in their service - plan, manipulate, and enforce policies that benefit their continued concentration of wealth and power.
The Extractor Sector - The Case of Freeport-McMoRan (FCX)
Freeport-McMoRan (FCX) is the world’s largest extractor of copper and gold.
The company controls huge deposits in Papua, Indonesia, and also operates in North and South America, and in Africa. In 2010, the company sold 3.9 billion pounds of copper, 1.9 million ounces of gold, and 67 million pounds of molybdenum.
In 2010, Freeport-McMoRan reported revenues of $18.9 billion and a net income of $4.2 billion.11
The Grasberg mine in Papua, Indonesia, employs 23,000 workers at wages below three dollars an hour. In September 2011, workers went on strike for higher wages and better working conditions. Freeport had offered a 22 percent increase in wages, and strikers said it was not enough, demanding an increase to an international standard of seventeen to forty-three dollars an hour.
The dispute over pay attracted local tribesmen, who had their own grievances over land rights and pollution; armed with spears and arrows, they joined Freeport workers blocking the mine’s supply roads.12 During the strikers’ attempt to block busloads of replacement workers, security forces financed by Freeport killed or wounded several strikers.
Freeport has come under fire internationally for payments to authorities for security.
Since 1991, Freeport has paid nearly thirteen billion dollars to the Indonesian government - one of Indonesia’s largest sources of income - at a 1.5 percent royalty rate on extracted gold and copper, and, as a result, the Indonesian military and regional police are in their pockets.
In October 2011, the Jakarta Globe reported that Indonesian security forces in West Papua, notably the police, receive extensive direct cash payments from Freeport-McMoRan. Indonesian National Police Chief Timur Pradopo admitted that officers received close to ten million dollars annually from Freeport, payments Pradopo described as “lunch money.”
Prominent Indonesian nongovernmental organization Imparsial puts the annual figure at fourteen million dollars.13
These payments recall even larger ones made by Freeport to Indonesian military forces over the years which, once revealed, prompted a US Security and Exchange Commission investigation of Freeport’s liability under the United States’ Foreign Corrupt Practices Act.
In addition, the state’s police and army have been criticized many times for human rights violations in the remote mountainous region, where a separatist movement has simmered for decades.
Amnesty International has documented numerous cases in which Indonesian police have used unnecessary force against strikers and their supporters. For example, Indonesian security forces attacked a mass gathering in the Papua capital, Jayapura, and striking workers at the Freeport mine in the southern highlands. At least five people were killed and many more injured in the assaults, which shows a continuing pattern of overt violence against peaceful dissent.
Another brutal and unjustified attack on October 19, 2011, on thousands of Papuans exercising their rights to assembly and freedom of speech, resulted in the death of at least three Papuan civilians, the beating of many, the detention of hundreds, and the arrest of six, reportedly on treason charges.14
On November 7, 2011, the Jakarta Globe reported that,
Virgo Solosa, an official from the union, told the Jakarta Globe that they considered the demands, up from the (then) minimum wage of $1.50 an hour, to be “the best solution for all.”
Workers at Freeport’s Cerro Verde copper mine in Peru also went on strike around the same time, highlighting the global dimension of the Freeport confrontation. The Cerro Verde workers demanded pay raises of 11 percent, while the company offered just 3 percent.
The Peruvian strike ended on November 28, 2011.16
And on December 14, 2011, Freeport-McMoRan announced a settlement at the Indonesian mine, extending the union’s contract by two years. Workers at the Indonesia operation are to see base wages, which currently start at as little as $2.00 an hour, rise 24 percent in the first year of the pact and 13 percent in the second year. The accord also includes improvements in benefits and a one-time signing bonus equivalent to three months of wages.17
In both Freeport strikes, the governments pressured strikers to settle. Not only was domestic military and police force evident, but also higher levels of international involvement. Throughout the Freeport-McMoRan strike, the Obama administration ignored the egregious violation of human rights and instead advanced US-Indonesian military ties.
US Secretary of Defense Leon Panetta, who arrived in Indonesia in the immediate wake of the Jayapura attack, offered no criticism of the assault and reaffirmed US support for Indonesia’s territorial integrity. Panetta also reportedly commended Indonesia’s handling of a weeks-long strike at Freeport-McMoRan.18
US President Barack Obama visited Indonesia in November 2011 to strengthen relations with Jakarta as part of Washington’s escalating efforts to combat Chinese influence in the Asia-Pacific region.
Obama had just announced that the US and Australia would begin a rotating deployment of 2,500 US Marines to a base in Darwin, a move ostensibly to modernize the US posture in the region, and to allow participation in “joint training” with Australian military counterparts.
But some speculate that the US has a hidden agenda in deploying marines to Australia.
The Thai newspaper The Nation has suggested that one of the reasons why US Marines might be stationed in Darwin could be that they would provide remote security assurance to US-owned Freeport-McMoRan’s gold and copper mine in West Papua, less than a two-hour flight away.19
The fact that workers at Freeport’s Sociedad Minera Cerro Verde copper mine in Peru were also striking at the same time highlights the global dimension of the Freeport confrontation. The Peruvian workers are demanding pay rises of eleven percent, while the company has offered just three percent. The strike was lifted on November 28, 2011.
The fact that the US Secretary of Defense mentioned a domestic strike in Indonesia shows that the highest level of power are in play on issues affecting the international corporate 1 percent and their profits.
Public opinion is strongly against Freeport in Indonesia.
On August 8, 2011, Karishma Vaswani of the BBC reported that,
Freeport strikers won support from the US Occupy movement.
Occupy Phoenix and East Timor Action Network activists marched to Freeport headquarters in Phoenix on October 28, 2011, to demonstrate against the Indonesian police killings at Freeport-McMoRan’s Grasberg mine.22
Freeport-McMoRan (FCX) chairman of the board James R. Moffett owns over four million shares with a value of close to $42.00 each. According to the FCX annual meeting report released in June 2011, Moffett’s annual compensation from FCX in 2010 was $30.57 million. Richard C. Adkerson, president of the board of FCX, owns over 5.3 million shares.
His total compensation in was also $30.57 million in 2010 Moffett’s and Adkerson’s incomes put them in the upper levels of the world’s top 1 percent.
Their inter-connectness with the highest levels of power in the White House and the Pentagon, as indicated by the specific attention given to them by the US secretary of defense, and as suggested by the US president’s awareness of their circumstances, leaves no doubt that Freeport-MacMoRan executives and board are firmly positioned at the highest levels of the transnational corporate class.
Freeport-McMoRan’s Board of Directors
The board of directors of Freeport-McMoRan represents a portion of the global 1 percent who not only control the largest gold and copper mining company in the world, but who are also interconnected by board membership with over two dozen major multinational corporations, banks, foundations, military, and policy groups.
This twelve-member board is a tight network of individuals who are interlocked with - and influence the policies of - other major companies controlling approximately $200 billion in annual revenues.
Freeport-McMoRan exemplifies how the extractor sector acquires wealth from the common heritage of natural materials - which rightfully belongs to us all - by appropriating the surplus value of working people’s labor in the theft of our commons.
This process is protected by governments in various countries where Freeport maintains mining operations, with the ultimate protector being the military empire of the US and the North Atlantic Treaty Organization (NATO).
Further, Freeport-McMoRan is connected to one of the most elite transnational capitalist groups in the world: over 7 percent of Freeport’s stock is held by BlackRock, Inc., a major investment management firm based in New York City.
The Investment Sector - The Case of BlackRock, Inc.
Internationally, many firms operate primarily as investment organizations, managing capital and investing in other companies.
These firms often do not actually make anything except money, and are keen to prevent interference with return on capital by taxation, regulations, and governmental interventions anywhere in the world.
BlackRock, based in Manhattan, is the largest assets management firm in the world, with over 10,000 employees and investment teams in twenty-seven countries.
Their client base includes,
BlackRock acquired Barclay Global Investors in December of 2009.
As of March 2012, BlackRock manages assets worth $3.68 trillion in equity, fixed income, cash management, alternative investment, real estate, and advisory strategies.23
In addition to Freeport-McMoRan, BlackRock has major holdings in,
...and many more.24
BlackRock manages investments of both public and private funds, including,
...and numerous others.
According to BlackRock’s April 2011 annual report to stockholders, the board of directors consists of eighteen members. The board is classified into three equal groups - Class I, Class II, and Class III - with terms of office of the members of one class expiring each year in rotation.
Members of one class are generally elected at each annual meeting and serve for full three-year terms, or until successors are elected and qualified. Each class consists of approximately one-third of the total number of directors constituting the entire board of directors.
BlackRock has stockholder agreements with,
Two to four members of the board are from BlackRock management:
BlackRock’s Board of Directors
***
A 2011 University of Zurich study, research completed by Stefania Vitali, James B. Glattfelder, Stefano Battiston at the Swiss Federal Institute, reports that a small group of companies - mainly banks - wields huge power over the global economy.26
Using data from Orbis 2007, a database listing thirty-seven million companies and investors, the Swiss researchers applied mathematical models - usually used to model natural systems - to the world economy. The study is the first to look at all 43,060 transnational corporations and the web of ownership between them.
The research created a “map” of 1,318 companies at the heart of the global economy. The study found that 147 companies formed a “super entity” within this map, controlling some 40 percent of its wealth.
The top twenty-five of the 147 super-connected companies includes:
Notably, for our purposes, BlackRock board members have direct connections to at least seven of the top twenty-five corporations that Vitali et al. identify as an international “super entity.”
BlackRock’s board has direct links to seven of the twenty-five most interconnected corporations in the world. BlackRock’s eighteen board members control and influence tens of trillions of dollars of wealth in the world and represent a core of the super-connected financial sector corporations.
Below is a sample cross section of key figures and corporate assets among the global economic “super entity” identified by Vitali et al.
Other Key Figures and Corporate Connections ...within the Highest Levels of the Global Economic “Super Entity”
The directors of these super-connected companies represent a small portion of the global 1 percent.
Most people with assets in excess of $588,000 are not major players in international finance. At best, they hire asset management firms to produce a return on their capital.
Often their net worth is tied up in nonfinancial assets such a real estate and businesses.
Analysis - TCC and Global Power
So how does the transnational corporate class (TCC) maintain wealth concentration and power in the world?
The wealthiest 1 percent of the world’s population represents approximately forty million adults. These forty million people are the richest segment of the first tier populations in the core countries and intermittently in other regions.
Most of this 1 percent have professional jobs with security and tenure working for or associated with established institutions. Approximately ten million of these individuals have assets in excess of one million dollars, and approximately 100,000 have financials assets worth over thirty million dollars.
Immediately below the 1 percent in the first tier are working people with regular employment in major corporations, government, self-owned businesses, and various institutions of the world.
As seen in our extractor sector and investment sector samples, corporate elites are interconnected through direct board connections with some seventy major multinational corporations, policy groups, media organizations, and other academic or nonprofit institutions.
The investment sector sample shows much more powerful financial links than the extractor sample; nonetheless, both represent vast networks of resources concentrated within each company’s board of directors.
The short sample of directors and resources from eight other of the super-connected companies replicates this pattern of multiple board corporate connections, policy groups, media and government, controlling vast global resources. These interlock relationships recur across the top interconnected companies among the transnational corporate class, resulting in a highly concentrated and powerful network of individuals who share a common interest in preserving their elite domination.
Sociological research shows that interlocking directorates have the potential to facilitate political cohesion.
A sense of a collective “we” emerges within such power networks, whereby members think and act in unison, not just for themselves and their individual firms, but for a larger sense of purpose - the good of the order, so to speak.28
Transnational corporate boards meet on a regular basis to encourage the maximization of profit and the long-term viability of their firm’s business plans. If they arrange for payments to government officials, conduct activities that undermine labor organizations, seek to manipulate the price of commodities (e.g. gold), or engage in insider trading in some capacity, they are in fact forming conspiratorial alliances inside those boards of directors.
Our sample of thirty directors inside two connected companies have influence with some of the most powerful policy groups in the world, including,
They influence some ten trillion dollars in monetary resources and control the working lives of many hundreds of thousands of people.
All in all, they are a power elite unto themselves, operating in a world of power elite networks as the de facto ruling class of the capitalist world.
Moreover, this 1 percent global elite dominates and controls public relations firms and the corporate media.
Global corporate media protect the interests of the 1 percent by serving as a propaganda machine for the superclass. The corporate media provide entertainment for the masses and distorts the realities of inequality. Corporate news is managed by the 1 percent to maintain illusions of hope and to divert blame from the powerful for hard times.29
Four of the thirty directors in our two-firm sample are directly connected with public relations and media.
Thomas H. O’Brien and Ivan G. Seidenberg are both on the board of Verizon Communications, where Seidenberg serves as chairman. Verizon reported over $110 billion in operating revenues in 2011.30
David H. Komansky and Linda Gosden Robinson are on the board of WPP Group, which describes itself as the world leader in marketing communications services, grossing over $65 billion in 2011.
WPP is a conglomerate of many of the world’s leading PR and marketing firms, in fields that include advertising, media investment management, consumer insight, branding and identity, health care communications, and direct digital promotion and relationship marketing.31
Even deeper inside the 1 percent of wealthy elites is what David Rothkopf calls the superclass.
David Rothkopf, former managing director of Kissinger Associates and deputy undersecretary of commerce for international trade policies, published his book Superclass: the Global Power Elite and the World They Are Making, in 2008.32
According to Rothkopf, the superclass constitutes approximately 0.0001 percent of the world’s population, comprised of 6,000 to 7,000 people - some say 6,660.
They are the,
...people at the absolute peak of the global power pyramid.
They are 94 percent male, predominantly white, and mostly from North America and Europe.
These are the people setting the agendas at the,
They are from the highest levels of finance capital, transnational corporations, the government, the military, the academy, nongovernmental organizations, spiritual leaders, and other shadow elites.
Shadow elites include, for instance, the deep politics of national security organizations in connection with international drug cartels, who extract 8,000 tons of opium from US war zones annually, then launder $500 billion through transnational banks, half of which are US-based.33
Rothkoft’s understanding of the superclass is one based on influence and power.
Although there are over 1,000 billionaires in the world, not all are necessarily part of the superclass in terms of influencing global policies. Yet these 1,000 billionaires have twice as much wealth as the 2.5 billion least wealthy people, and they are fully aware of the vast inequalities in the world. The billionaires and the global 1 percent are similar to colonial plantation owners.
They know they are a small minority with vast resources and power, yet they must continually worry about the unruly exploited masses rising in rebellion. As a result of these class insecurities, the superclass works hard to protect this structure of concentrated wealth.
Protection of capital is the prime reason that NATO countries now account for 85 percent of the world’s defense spending, with the US spending more on military than the rest of the world combined. 34
Fears of inequality rebellions and other forms of unrest motivate NATO’s global agenda in the war on terror.35
The Chicago 2012 NATO Summit Declaration reads:
NATO is quickly emerging as the police force for the transnational corporate class.
As the TCC more fully emerged in the 1980s, coinciding with the collapse of the Union of Soviet Socialist Republics (USSR), NATO began broader operations. NATO first ventured into the Balkans, where it remains, and then moved into Afghanistan. NATO started a training mission in Iraq in 2005, has recently conducted operations in Libya, and, as of July 2012, is considering military action in Syria.
It has become clear that the superclass uses NATO for its global security.
This is part of an expanding strategy of US military domination around the world, whereby the US/NATO military-industrial-media empire operates in service to the transnational corporate class for the protection of international capital anywhere in the world.37
Sociologists William Robinson and Jerry Harris anticipated this situation in 2000, when they described,
Robinson and Harris’s theory accurately predicts the agenda of today’s global superclass, including,
Furthermore, this agenda leads to the further pauperization of the poorest half of the world’s population, and an unrelenting downward spiral of wages for everyone in the second tier, and even some within the first tier.40
As Andrew Kollin states in State Power and Democracy,
And in Globalization and the Demolition of Society, Dennis Loo writes,
The Occupy movement uses the 1 percent vs. 99 percent mantra as a master concept in its demonstrations, disruptions, and challenges to the practices of the transnational corporate class, within which the global superclass is a key element in the implementation of a superelite agenda for permanent war and total social control.
Occupy is exactly what the superclass fears the most - a global democratic movement that exposes the TCC agenda and the continuing theater of government elections, wherein the actors may change but the marquee remains the same.
The more that Occupy refuses to cooperate with the TCC agenda and mobilizes activists, the more likely the whole TCC system of dominance will fall to its knees under the people power of democratic movements.
Notes
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