Always making ours a 99

When St Paul's Cathedral closed its doors in the face of the Occupy movement, the order might have come direct from the Top. After all, the Gospels show Jesus shrugging that the poor will always be with us, and that to those that have, more will always be given. And both predictions are confirmed in a new scientific analysis of the global financial system.

A group of Zurich-based mathematicians has dissected a database of 37 million companies and investors to see who owns what in the modern world.

From the data available, they drew a map of the shareholding networks of the world's transnational companies. Most fascinating was the discovery that 147 companies owned 40 per cent of the total wealth. The top 20 contains all the names you might expect: Barclays Bank, JPMorgan Chase & Co, the Goldman Sachs Group and so on.

Although it sounds like ammunition for the anti-capitalist movement, the banks can argue that the system will never work any other way. Anyone seeking to join a global financial system will want to connect to the institutions that are strongest and most successful - giving them ever more power and success.

In fact, finding yourself in financial thrall to the "1 per cent" is the inevitable result of being part of this self-organising network. Researchers have been seeing this characteristic in networks of various kinds since the early 1990s. It was first observed on the internet: some sites have disproportionate influence in terms of the number of sites that connect to them. Network theory characterises this in a "power law" that defines how many sites will have a particular number of connections.

The power law is the network equivalent of the Bell curve. This applies to characteristics - the height or intelligence of individuals is distributed, most people being average or near-average and with a rapid fall-off in the number of "outliers". The Bell curve can be used to describe an enormous number of natural distributions. The power law is similarly ubiquitous in networks.

In ecology, it determines how predator species feed on any given number of different prey species. Epidemiologists have shown that it applies to how many people have a particular number of sexual partners - a useful means of disease-control planning. Even the number of mathematicians who have co-authored a paper with a certain number of mathematicians follows the law.

This is not about sentient beings making conscious choices; the same thing applies to the networks of biological proteins inside your body. Here, things are as precarious as the financial networks: when something goes wrong with a highly connected protein such as p53, it usually results in a tumour because p53 regulates proteins which, unregulated, bring disease.

Webbed feat

The bottom line is that whenever networks exist, they take on these characteristics because interdependence works best in the presence of inequality; it is no wonder the Occupiers can't put their finger on specific aims and objectives. But it's worth pointing out that ecological food webs
have evolved to manage the risk. They exist with a system of sub-networks connected by weak links. When one network collapses, the damage is limited to a small number of species. Building such contingencies into the financial system may be the only defence that works.

In every other aspect, the financial network seems to follow an unimpeachable natural law. In a global financial system, the 99 per cent with very little will always be with us. And, to the banks that have, more shall be given. It's very depressing.

Michael Brooks's "Free Radicals: the Secret Anarchy of Science" is published by Profile Books (£12.99)

Tags:Science