Who Owns the Means of Production? Uneven Geographies of Financialization - Shiny Contest Submission

Who Owns the Means of Production? Uneven Geographies of Financialization

Authors: Albina Gibadullina

Abstract: Financialization is a term used to describe the growing power of finance. In the US, one of the central characteristics of financialization has been the rise of financiers as the largest shareholders of American firms. Through a series of interactive visualizations, this project explores the question of who owns the means of production in the US and the world at large. By examining an extensive global corporate ownership dataset, featuring 6.4 million ownership ties of 2.9 million firms around the world, I visualize the exceeding influence exerted by US finance in the global corporate network.

Full Description: Financialization is a term used to broadly describe the rising importance of finance in the global economy and society at large (Epstein, 2005). In the United States, one of the primary characteristics of the post-1980 financial turn has been the rising share of corporate profits accrued by the US financial sector (Krippner, 2005). This led to the conceptualization of financialization as a new regime of accumulation where profits increasingly accrue through financial rather than productive channels (ibid).

By examining the primary profit-generating activities performed by the US financial sector as a whole and the composition of its income sources and assets, in my Master's thesis I demonstrated that the increased profitability of US finance can largely be attributed to a transition from credit intermediation (i.e. lending) to the management and ownership of capital. By showing how the share of US capital directly owned and managed by US financial firms has grown from 3 percent in 1945 to at least 62 percent in 2018, I proposed that financialization in the United States should be primarily understood as a new regime of property relations, in which the class of financiers have established themselves as the direct owners of the means of production, having at their discretion ultimate control over the US economy by way of collectively holding the most shares by far in American corporations.

This analysis project expands on the research conducted in my Master's thesis by examining two main questions. First, it explores the extent to which financiers have established themselves as the new, dominant owners of capital in other countries or whether financialization as a new regime of property relations has been a US-only phenomenon. Secondly, it develops visualizations to show the global dominance of American financial firms in this global corporate ownership network. The empirical analysis involves examining 6.4 million ownership ties of 2.9 million firms around world from 2018 that add up to $114.4 trillion in owned equity. The project aims to expose a staggering consolidation of power obtained by the US financial sector through a series of static and interactive visualizations and advance our understanding of the influence exerted by American finance in the global economy, contributing to the literatures of financialization, corporate networks, and geographies of advanced producer services.

The project examines corporate ownership data provided by the Orbis database (Bureau van Dijk), which offers the most comprehensive co-ownership dataset of firms (both public and private) and state enterprises available to date, covering over 375 million entities around the world, and providing detailed financial and geographical information for each firm and quantifiable ownership ties between them. Although the data coverage is uneven with significantly less information available on firms located in the Global South (see Garcia-Bernardo and Takes, 2018), for each firm Orbis tries to provide basic information on firm's location and industry, financial information from firm's balance-sheets and income statements, as well as data on corporate ownership ties by listing everyone who owns a particular firm and everyone who a particular firm owns.

While Orbis advertises that it has some information on 375 million firms, in 2018 only 8.9 million firms had available information on total assets (a metric relevant to estimating the value of equity and quantifying each ownership tie in dollar terms). As often the case with financial data, the distribution of the total assets variable was highly skewed with a small number of firms accounting for a large share of total assets. I filtered my sample of firms based on the total assets variable, collecting information on all firms with at least $1 million in total assets in 2018. My dataset features 2.9 million unique firms located in 202 countries. I estimate that cumulatively these 2.9 million firms account for 99% of total assets in the Orbis database. For each firm, I collected basic and financial information, as well as information on all of its shareholders (and their respective basic and financial information). My core list of 2.9 million firms has 6.4 million unique shareholders, featuring 6.7 million weighted ownership ties between them, totalling $114.4 trillion in owned equity. Given that it is next to impossible to properly visualize 6.6 million nodes with 6.7 million edges, I have aggregated information in the derived dataset at the level of countries and sectors. This aggregation allows me to visualize the dominance of the domestic financial sector within each country as well as visualize the power of the US financial sector in the global corporate network.

Visualizations were developed using the following R packages: dplyr, tidyr, ggplot2, plotly, visNetwork, igraph, forcats, DT, maps, ggiraph, RColorBrewer, scales, chorddiag, and htmltools. The project webpage and interactive visualizations and tables were developed using shiny and shinydashboard.

MA thesis link: Gibadullina, A. (2020). Capital ownership in contemporary financialization : theorizing the new regime of property relations (T). University of British Columbia. Retrieved from Capital ownership in contemporary financialization : theorizing the new regime of property relations - UBC Library Open Collections

Keywords: finance, financialization, corporate networks, geography, network analysis, USA
Shiny app: https://albinagib.shinyapps.io/finance/
Repo: Data-analysis/app.R at main · albina23/Data-analysis · GitHub
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