Is a Corporate Singularity Possible?
A thought experiment that seems apt for our extreme times.
Owning 100% of everything would be impossible to overlook. However, perhaps you don’t have to own it so much as control it. Is it possible for a handful of investors to control a serious percentage of the world’s corporate wealth without most people being aware of that? News Flash: That may already be the case right now.
The possibility of black holes in space (bodies with gravitation so strong even light could not escape) was first proposed incredibly in 1783 by Rev. John Michell, an English natural philosopher. 132 years later, Einstein reintroduced the concept in his theory of general relativity. Subsequent equations showed that certain values describing the behaviour of black holes approached infinity and that any material crossing their event horizon would never come back. These amazing entities, which are now known to exist in our universe, became known as singularities.
In the 1950's, mathematician John von Neumann proposed the potential for a different kind of singularity here on earth—a technological singularity. The idea is that the pace of technology could well accelerate to the point at which it exceeds human intelligence, surpasses our own affairs, and takes on its own evolution. A number of organizations, such as the Machine Intelligence Research Institute and the Singularity University, are devoted to studying (and preparing for) this very real possibility. Like the matter crossing the event horizon of a black hole, the understanding is that when humanity crosses into a technological singularity, there will be no going back—our species will be changed forever (or indeed may become inconsequential).
Both concepts share some mathematical properties. They are real world manifestations of exponential formulae, where the values exceed the bounds of any other natural phenomena. They also represent positive feedback loops, with measurement values being conceptual and therefore not subject to physical limitations. For example, even the number of atoms in our universe is assumed to be finite (a number guessed at being between 78 and 82 digits long), but conceptually our number system goes on forever.
I've spent the two decades researching and writing about the notion of number-based values. These are measures of value that operate entirely within the world of numbers. Their value need not be backed up by physical assets or energy, so they are hypothetically not constrained by real world limitations. Money is a number-based value. More is always worth more (within the monetary system), and there is theoretically no limit as to how much money any single entity can claim as its own. Of course, the tangible value of money is the power that it can wield in practical terms. There are indeed matter and energy limitations in that sense, given the finite resources of the planet upon which money is recognized as having any power at all.
In 2017, I explored the possibility of a corporate singularity*. Times have changed, but I decided to revisit some of those ideas with some updated stats…
The idea of a corporation is a curious one. Here you have an entity that, by definition, has a compulsion to accumulate monetary wealth. It has been granted human rights and yet is not bound by human life spans. There is no limit to the physical assets that it may hold or the energy it may wield, except the aforementioned resource limitations of the world (or worlds) in which it operates. While corporations exist entirely as legal entities, I propose that there may be thresholds past which the bodies which regulate such concepts–our governments and justice system–are subject to the power of the corporation, not the other way around. The case for the existence of such thresholds is growing; we see hints of this in our political systems, and that evidence is increasing in the twenty-first century: The privatization of natural resources such as water, the rise of corporate militaries, the power of industry lobbyists and political patrons, globalization beyond the bounds of nation states, and commercial influence in our electoral systems and on our everyday lives.
It has long been recognized that our economic systems are structured in such a way that, generally speaking, the rich get richer. We used to talk about the über wealthy as being the 1%. Then it became the 0.1%. This year, the wealthiest top ten men owned $2.4 trillion, about 10% more wealth than the 4.1 billion people who make up the poorest half of humanity. That’s a dramatic illustration of what our economic system is capable of and where it’s going. Still, for some of them, a significant proportion of their wealth will be directed to philanthropy—they are human after all. Moreover, in less than 30 years, most of them will be dead.
Now consider this: The market capitalization of Walmart ($817B) is 74% higher than net worth of the wealthiest person (Elon Musk, $470B). Walmart, being a corporation, will not die of old age. (Indeed some of the oldest and largest corporations in the world today were already in business when Rev. Michell first shared his fantastic notion of black holes in 1783.) And when it comes to philanthropy, Walmart, like other publicly-traded commercial corporations is mandated to do one thing and one thing only: grow in size and generate more and more profit. This got me thinking. Might it be possible for a few corporations to eventually reach a similar status as those ten men—where ten corporations (or fewer) privately control more than half of the world's assets? (Or, say, rights to all of the fresh water?) Is there anything that would absolutely prevent this? If so, I don't know what that might be.
Effective Control
Owning 100% of everything would be impossible to overlook. However, perhaps you don’t have to own it so much as control it. Is it possible for a handful of investors to control a serious percentage of the world’s corporate wealth without most people being aware of that? News Flash: That may already be the case right now.
We’ve all heard of billionaires Zuckerberg, Musk, Buffett, Bezos, etc. But how many of us are familiar with Larry Fink, the CEO of BlackRock, controlling an estimated 12 TRILLION dollars in financial assets? (26 times more than the richest billionaire.) BlackRock and related corporations, Vanguard and StateStreet, hold an effective-controlling interest in just about every major publicly-traded company you can think of—and many, many more that you can’t.)
What is a controlling interest? It doesn’t have to be 51%. Corporations are run by a board of directors, supposedly elected by the thousands of shareholders. The reality is that if you own about 8% of the voting shares, you effectively get to decide who is on the board—and that is precisely the percentage that BlackRock, Vanguard, and StateStreet tend to hold.
More to the point, unlike humans, corporations have the power to merge or to buy each other out. With seemingly exponential growth potential, and no theoretical limits to wealth, is it not possible to have a "corporate singularity"–a state in which a single corporation holds legal title to every asset on earth (and possibly, by that time, other celestial bodies)? Obviously, the structure of civilization would be very different, were any entity ever to reach that destination, but it also got me thinking about what changes we might expect along the journey to that conceptual singularity. If it’s not impossible, what does that say about the way in which humanity has evolved? Should we be concerned right now? Are there thresholds or tipping points that lurk within our lifetime–horizons that would make a corporate singularity more likely (if not inevitable)?
What do you think?
* A few writers use the term "corporate singularity" to refer to that time when a corporation seemingly becomes a thinking, acting, reacting entity, focused on its goal of profit generation without the annoyance of human morals or ethics interfering. In other words, its focus becomes singular and direct. This is a useful concept (and obviously relevant), but not the meaning I created for my article.
One reader shared with me a concise description of the main positive feedback loop referred to in this post: http://www.thwink.org/sustain/articles/016/CorporateDominanceLoop.htm
Again, a very entertaining and thought provoking essay, Andrew. You didn't use the word complex or complexity in you piece. It's quite possible that the breakdown of complexity maybe be what would stop the corporate singularity. But I'm a fan of the media sage, Marshall McLuhan who analyzed new developments (artifacts) or media with his not-so-famous anymore Tetrad, four ways to consider the new: What does it enhance; What does it replace or make obsolete, What does it bring back that had previously been obsoleted, and finally What does it reverse or flip into when pushed to extremes. This last question is most pertinent as it's possible that such a large corporation would no longer be capable of running smoothly even with AI when there is no outside wealth to plunder. It's also quite possible that the absurd nature of this growth would bring about a "class inversion," an polite phrase for revolution with all its ugliness.
Today I read an article (Reuters? But I can't find the link) that suggested that decades ago 70% of the stock price value could be found in the buildings, equipment an inventory of a stock whereas today it is only about 10%. The rest of the "value"is in the brand name and future earner potential, attributes that would seem to be in the mind of the purchaser. Is it possible that a corporate singularity by definition is a bubble that would burst?