Words&Dirt

“Today, in the sunset of the fossil fuel era, the oil industry remains the most concentrated industry in the world, followed closely by the telecommunications and the electrical power generation and distribution industry.  Virtually all the other industries that depend on the fossil fuel/telecommunications matrix require, by necessity, huge capital expenditures to establish sufficient vertical integration and accompanying economies of scale to recoup their investments and are therefore forced to manage their own far-flung activities using highly rationalizing command-and-control processes.

Three of the four largest shareholding companies in the world today are oil companies––Royal Dutch Shell, ExxonMobil, and BP.  Underneath the oil giants are ten banks––JPMorgan Chase, Goldman Sachs, BOA Merrill Lynch, Morgan Stanley, Citigroup, Deutsche Bank, Credit Suisse, Barclays Capital, UBS, and Wells Fargo Securities––that control nearly 60 percent of the worldwide investment banking market.  And, as mentioned in chapter 1, beneath the financial investors are 500 globally traded companies––with combined revenue of $22.5 trillion, which is equal to one-third of the world’s $62 trillion GDP––that are inextricably connected to and dependent on fossil fuel energy, global telecommunications, and the world’s electricity grid for their very existence.  In no other period of history have so few institutions wielded so much economic power over the lives of so many people.

The unprecedented––and unimaginable––concentration of economic power was not just happenstance or a byproduct of man’s insatiable avarice.  Nor can it be rationalized away by simply blaming deregulation or finding fault with political ineptitude or, worse still, political collusion and enablement––although these were all contributing factors to its growth.  Rather, on a more fundamental level, it flowed inexorably from the communication/energy matrices that were the foundation for the First and Second Industrial Revolutions.

Like it or not, giant, vertically integrated corporate enterprises were the most efficient means of organizing the production and distribution of mass produced goods and services.  Bringing together supply chains, production processes, and distribution channels in vertically integrated companies under centralized management dramatically reduced transaction costs, increased efficiencies and productivity, lowered the marginal cost of production and distribution, and, for the most part, lowered the price of goods and services to consumers, allowing the economy to flourish.  While those at the top of the corporate pyramid disproportionately benefited from the increasing returns on investment, it’s only fair to acknowledge that the lives of millions of consumers also improved appreciably in industrialized nations.”

––The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism, by Jeremy Rifkin, pg. 54-5