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Producers, intermediaries and consumers:
the price chain approach
February 14, 2014
Abstract: Production chains are becoming more complex, with the different tiers frequently belonging to different corporations, and located in different regions or countries. Between the original producers and the end consumer, there are a growing number of commercial, financial and legal intermediaries who tend to make it more difficult to understand how successive tiers of the production chain are reflected in value added and corresponding prices. This paper suggests that more research be concentrated on the price chain that accompanies the production chain, which would give a clearer picture of where inflation is generated, where major irregularities and oligopoly price fixing may be found, as well as where the procyclical reactions take place, generating instability. Therefore, we shall analyze the concept of the price chain, the dynamics of the production chain control, the power of intermediaries – taking the example of commodity traders – and the role of financial intermediation. The final part of the paper presents the impact on wealth concentration, and the need to improve our understanding of the price formation process, in addition to the traditional measurements of inflation.
Key words: price chain, commodity traders, inflation, oligopoly, finance, derivatives
Production chain and appropriation of results
The view we inherited is that profit is generated in the enterprise, which pays workers less than the value obtained. This is unquestionably true, whether we call the extra value obtained profit, surplus value, or in a more neutral way, just surplus. There is not much to add to this debate. What we want to target here is how profit moves along the production chain. Less and less the producer appropriates the added value of a particular product, while the intermediary increasingly does so.
The graph below shows how the price chain of a product, coffee, is formed as we progress along the production chain, from production of the grain by the farmer, to when it is transformed into the coffee we drink.
That is to say, the evolution of the price from farm gate in Uganda to the bar in the UK, from 14 cents paid to those who produce the coffee up to the equivalent of 42 dollars we pay at the bar. We use the example of coffee from Uganda to illustrate a general tendency. Excerpted from the excellent international study on the application of science and technology to agricultural economics, it gives us the dimension of the problem for a very well-known product. 
It is appropriate to follow the evolution of the columns, which represent the value obtained at each step: the farm gate, primary marketing (trader price), in the port of Mombasa, at Felixstowe UK, cost of product after processing at the factory, price on the supermarket shelf, and finally the price when made into coffee. Note, above all, the ridiculous participation of the coffee producer, who bears the bulk of the work. When considering the first five steps, the participation of economic agents that may be viewed as productive (producer, primary commercial service, transport, processing) in the value paid by the end consumer is still very small.
The huge jump in price occurs on the shelf of the supermarket, the Walmarts or equivalents in any country. And another jump occurs “when made into coffee,” i.e., when served as coffee. The graph speaks for itself. The values on both ends, 14 cents and US$ 42, give an idea of the deformation of the logic of remuneration of factors and of economic agents.
There is nothing very new in this, we all know the weight of middlemen, a concept invented precisely to give a negative connotation to intermediaries of the production processes who gain not by helping, but by creating bottlenecks or tolls on the production cycle. However, what we want to point out is that there is a significant imbalance between the efforts deployed to study and disseminate price changes over time, essentially inflation, and how poorly the variation of prices within the production chains is studied. This subject arises from time to time, for example when the TV channel “Globo Rural” broadcasted about tomato producers in Parana that refused to sell the product at the price of a few cents per kilo (four reais per box of 30 kilos, at the time), knowing how much the consumer would pay in the street markets.
The economic impact of this process is simple: on the side of the producer, the profit is insufficient to develop, increase or improve production, and therefore supply does not expand. On the consumer side, the price is very high, which reduces consumption. The intermediary is the one who profits, with very high margins on a relatively small product flow.
The logic of disintermediation, of course, is to reduce profits generated at the toll, redistributing this appropriation of surplus value between the producer, who may then produce more and better, and the consumer, in the form of lower prices, which will allow for an increased consumption, thereby absorbing a larger product flow. And the intermediary will find that by earning less on a larger volume, he will again have his share of the cake without harming the productive chain.
Control of the economic cycle
Where does the middleman’s power to hamper the process and maximize his profit come from? Another chart from the same study illustrates the small producer‘s and the end consumer’s situations facing the “bottleneck” of the large intermediaries. The chart’s title is “Market concentration offers fewer opportunities for small-scale farmers.” The aim here is essentially to understand the difficulty of small-scale agriculture, yet the argument is valid for a very wide range of productive activities.
The overall meaning of the chart is that the broad base at the bottom, representing the small-scale farmers, comprises many producers (over four million in Brazil), dispersed and therefore with little force. Then there is a bottle neck just above the level of traders (primary market), and the bottleneck becomes even narrower on the level of product processors, continuing so on the retail level. At the consumer level, the hourglass radically widens again, because there are millions of consumers with no individual power to influence prices. When the end consumers ask why the price has increased, they are told that the product just “went up”. But where did it go up?
The importance of such studies, which appear only occasionally, in exceptional cases, is that they show where inflation actually arises (it is the moment of the radical price “jump “), and therefore where development of production processes is also hindered. We have many institutions today that closely track inflation, also because of its importance for the readjustment of rents, wages and so on. However, the analysis of the source of the change in the general level of prices focuses on sectors that stand out, for example food, and not on the variations of price within each production chain.
There is almost no research on where the price is increased, in which particular link of the production chain. Graphs like the ones above are very rare and, in any case, are neither systematic nor regular in portraying the progression over time. And yet, all the cost data for each product exists, because enterprises need them to set the final sales price. A kind of reverse engineering is required, taking a final product, such as a medical drug, to monitor the evolution of costs at each processing and intermediation level.
This would disclose, for example, the cost of financial intermediation in production processes, another type of bottleneck that heavily burdens the price of end products and reduces the chain’s productivity. It would also stimulate additional investments at the bottleneck areas, to diversify supply and reduce the effect of cartelization (monopsonies or oligopsonies, in economic jargon). It would be a powerful tool for the Conselho Administrativo de Defesa Econômica (Administrative Council for Economic Defense) to identify points of incidence for antitrust policies and market defense mechanisms. This would also enhance the balance of power between producers and intermediaries, an increasingly unbalanced relationship.
This situation, in which we are all aware of how the various types of middlemen hinder the dynamics of production and consumption, but fail to produce any adequate information about how the end price of each product is reached, can no longer be sustained. Just to measure inflation is not enough, we need to know how it is generated, and by whom. It is not very complex to compare the worth in the wholesale market of ascorbic acid, the familiar vitamin C, to what we pay at the pharmacy. Just to give an idea, a 4 dollar vitamin C package in the pharmacy has roughly 3 cents of ascorbic acid.
In terms of streamlining the production process in general, bottlenecks that generate extraordinary profits without adding corresponding value must be identified. These are the production chain links inflating prices and blocking the expansion of the production cycle. With fewer large intermediaries hampering the main production chains, a clearer understanding of the price chain formation would be essential. The various institutions that accompany inflation in such detail could easily open a promising window of activity, and greatly help the rationalization of production processes.
The power of the intermediaries
Looking at the price chain, therefore, leads us to identify the bottleneck, where money is effectively made, where profits accumulate without equivalent productive effort or economic contribution. It is the universe of commodity traders. A dossier disclosed by Reuters, which cannot be considered slanted against speculative systems, and organized by Joshua Schneyer, helps to understand the process.
“For the small club of companies who trade the food, fuels and metals that keep the world running, the last decade has been sensational. Driven by the rise of Brazil, China, India and other fast-growing economies, the global commodities boom has turbocharged profits at the world’s biggest trading houses.
They form an exclusive group, whose loosely regulated members are often based in such tax havens as Switzerland. Together, they are worth over a trillion dollars in annual revenue and control more than half the world’s freely traded commodities. The top five piled up $629 billion in revenues last year, just below the global top five financial companies and more than the combined sales of leading players in tech or telecoms. Many amass speculative positions worth billions in raw goods, or hoard commodities in warehouses and super-tankers during periods of tight supply.”
As they work with physical assets, current efforts to regulate financial speculation (as proposed by Dodd-Frank in the U.S.A. and correspondents in the EU) do not reach them, which means that nobody regulates them. “Outside the commodities business, many of these quiet giants who broker the world’s basic goods are little known. Their reach is expanding. Big trading firms now own a growing number of the mines that produce many of our commodities, the ships and pipelines that carry them, and the warehouses, silos and ports where they are stored. With their connections and inside knowledge — commodities markets are mostly free of insider-trading restrictions — trading houses have become power brokers, especially in fast-developing Asia, Latin America and Africa.”
The view we have, largely due to uninformed or interested comments in the business press, is that price fluctuations of commodities result from variations in supply and demand. That is to say, market mechanisms. In fact, one cannot imagine that a commodity with such broad and balanced levels of production and consumption as oil suffer variations between 17 and 148 dollars a barrel in a few years. It is a trade that deals with goods vital for world economy, but whose prices and flows result primarily from mechanisms of economic speculation and political power. The study by Schneyer cites Chris Hinde, editor of the London Mining Journal: “Most commodity buyers in the world are price takers. The top trading firms are price makers. It puts them in a tremendous position [of power].”
The important fact here is that products which are the blood of economics, such as food, minerals and energy, are not regulated either by rules or by market mechanisms, much less by any planning system that considers resource depletion or environmental impacts.
The formal regulation by laws, agreements and equivalents does not take place, primarily, because it is a global market, and there is no global government. Individual countries are unable to address the process. When Argentina wanted to restrict grain exports to prioritize feeding its own population, the world severely condemned the country, as if food production should not satisfy the need for food. The resulting chaos can be seen in simple figures: the Earth produces 2 billion tons of grain per year, which is about one kilo per day per capita, and we have a billion people starving. Here we have a regulatory void, where large intermediation corporations navigate freely.
The second chaos factor is the oligopolization system. In practice, in addition to the five major operators, few others have a systemic significance. This means that these corporations are able to set prices and manipulate the supply in an organized way. This is called “market” by the press, but it is not market in the economic sense of the free play of supply and demand. In the absence of effective competition, the mechanisms of manipulation become standard practice. An example? Glencore, in 2010, controlled 55% of the world trade in zinc and 36% of the copper trade. Vitol and Trafigura in 2010 sold 8.1 million barrels of oil per day, equivalent to oil exports from both Saudi Arabia and Venezuela. (Schneyer, pg.2)
A third factor is secrecy. The companies have little visibility worldwide, only experts are aware of what takes place in this small club. And no one has formal authority to demand the data in this global space. The few legal actions against practices – that would be illegal in any country with regulation against market manipulation, including Brazil – are solved with the so-called “settlements”, compensatory adjustments whereby the enterprise avoids recognizing fault. In the study of the 22 billion dollars of the Charles Koch fortune, Forbes cites the comment of a former lobbyist for the company: “The idea is, why open the books to the world?” The results are immense fortunes in the hands of those who produced no wealth but who charge toll on all significant transactions.
The study specifies the major global groups, often little known names, yet critical players in the global economy. Next is some basic information on key groups, with the names of the researchers, always from the Schneyer report, with some additional data from other sources:
VITOL, founded in 1996, headquartered in Rotterdam and Geneva, negotiated $ 195 billion in 2010. Intermediates oil, gas, coal, metals, sugar. “They navigate as closely to the limits of legality as possible,” said an analyst who asked anonymity. They clandestinely provided fuel for Libyan rebels, which today warrants them a strong position (Richard Mably). More recent information points to a turnover of US$313 billion in 2012, and control by the American BLACKSTONE group, New York.
GLENCORE, founded in 1974 by Marc Rich, one of the founders of the global toll on the commodity system. Also based in Switzerland, deals with metals, ore, energy and agricultural products. They negotiated 145 billion in 2010. Rich was indicted in the U.S.A., but received a pardon from President Clinton. The South African Ivan Glasenberg is the key partner. (Clara Ferreira Marques) In 2012, revenues seem to have been $ 150 billion.
CARGILL, founded in 1865, a family business, sales of $ 108 billion in 2010, in trade of grains, seeds, salt, fertilizers, metals, energy. A culture of secrecy and aggressiveness, with advertising campaigns to create a friendly image. Seeks to control new markets of recyclable plastic and low-calorie products for Kraft, Nestle and Coca-Cola. When Ukrainian government sought to privilege the domestic grain consumption by the population, Cargill, along with the American companies Bunge and ADM, “agreed to undertake a public relations effort with the goal of creating a political problem for the Government of Ukraine”, which would require. “recruiting farmers to play an active role.” This became known only because the instructions to the U.S.A. ambassador were leaked by Wikileaks. (Christine Stebbins)
ADM, formerly Archer Daniels Midland, founded in 1902, traded grains, seeds, cocoa, worth $ 81 billion in 2010. “Corn goes in one end and profit comes out the other.” As a company based in the U.S.A., it has been sued for numerous cases of price manipulation and environmental crimes, but the cases are regularly transformed into settlements. The rap sheet of the company can be seen in ADM settlements in Google. (Karl Plume)
GUNVOR, founded in 1997 by the Swede Tornqvist and Russian Timchenko, headquartered in Geneva. Dealing in oil, coal, gas, this company is heavily leveraged by Russian political power. This company gives an idea of how quickly money is earned in this area: it went up from $ 5 billion in 2004 to $ 80 billion in 2011. Political relations are essential in this business.
TRAFIGURA, another company based in Geneva where banking secrecy allows both tax evasion and undeclared sources of funds, negotiates oil, $ 79 billion in 2010. Founded in 1993 by Marc Rich, who escaped from prison in the U.S.A. migrating to Europe. Numerous illegalities did not prevent the expansion of the company that became the third largest independent trading company in oil, and second in the area branch of metals. It works with storage, offering huge infrastructure to stock commodities and leverage prices. (Dmitry Zhdannikov and Ikuko Kurahone). In 2012, revenue seems to have been $ 124 billion. In 2013, Trafigura bought the harbor of the Southeast in Itaguai, in partnership with the investment fund Mubadala Development.
MERCURIA, founded in 2004, quite new but already one of the top five energy traders, had a turnover of $ 75 billion in 2011. Of course, headquarters are in Geneva. The company owns mines and oil fields in many countries. Raised its capital from Jankielewicz and Smolokowski, J + S Group, whose fortune came from the trading of Russian oil to Poland. (Christopher Johnson)
NOBLE GROUP works with sugar, oil, coal and grain. Invoiced $ 57 billion in 2010. It was founded in 1986 by British Richard Elman, headquartered in Singapore, another tax haven, with a strong profile of intermediating commodities with China and Hong Kong. (Luke Pachymuthu)
LOUIS DREYFUS, old family business (1851) now in the hands of Margarita Louis-Dreyfus, deals with everything from wheat to orange juice in an amount of $ 46 billion (2010). The owner says it is to maintain the family name and of the Olympique of Marseille. Everything is secret in the company. (Gus Trompiz, Jean François Rosnoblet)
BUNGE, founded by the Dutchman Johann Bunge in 1818, negotiated $46 billion (2010) in grains, oilseeds, sugar, a large intermediary of agribusiness in Brazil and Argentina of fodder for pigs and other animals in China. The CEO is the Brazilian Alberto Weisser. Sued for 300 million dollars of tax evasion in Argentina. The world’s largest oilseed processor. In 2012, invoiced $ 50 billion. Very powerful in Brazil.
WILMAR INTERNATIONAL, founded in 1991, headquartered in Singapore (another tax haven) negotiated $ 30 billion in 2010, directed by Kuok Khoon Hong. 20% of the soybean market in China, vertical integration of the entire production chain, from planting to final marketing, encompassing refining, bottling, transportation etc. Relies heavily on palm oil. Strengthening its position in the sugar market in Brazil. (Harry Suhartono and Naveen Thakral)
ARCADIA, founded in 1988 by the Japanese company Mitsui, is owned by John Fredriksen, according to Reuters traded about $ 29 billion (2010) in oil. Sued for manipulation of oil prices in 2008, stocking huge amounts of the product to simulate a supply crisis and profit in the derivatives market. Fredriksen gave up the Norwegian nationality in 2006 for that of Cyprus, where less taxes are paid. Wikileaks and Reuters reported political manipulations in Yemen and Nigeria.
What do we perceive in this short survey of a dozen groups? First, of course, the immense power of such a small number of groups that control the blood of the world economy, in the form of grain, oil, ore, energy, transportation systems, with corresponding financial infrastructure and the complementary giant speculation system on derivatives. This is not “market” in the sense of free-market, with each one trying to serve better (the so-called competitiveness), but a toll system where end users of commodities have little to say, and the countries of origin, even less.
It is also important to signal the preference of these groups to be based in tax havens. It is interesting to note that they make money trading usually what they do not produce, they manipulate the prices we pay – we end consumers find this price included or attached to the shelf products – and they are sufficiently international to benefit from fiscal havens where they do not pay taxes. In a way, it is net profit.
We also note to what extent most of these groups are recent. There are some very old ones like Cargill or Bunge, but even they are reconverted to speculative processes on a gigantic scale. In general, good relations, massive political and military support when necessary, allow for leaps such as the Guvnor going from a turnover of $ 5 billion to 80 billion in seven years. Here, we are watching a quite current process of oligopolization of the access system to key raw materials of the planet.
A significant geopolitical shift is also noteworthy, with strong expansion of Russian and in particular Chinese presence. It can be said that there is an overall increasing weight of Asia. But these new players join, apparently, the traditional speculative behavior logics of market manipulation and political truculence, and help to shape a stronghold of access power to raw materials that feed the productive chains of virtually all economic areas.
An important fact is that everything points out that these global groups are simply beyond any legal system. The transnational dimension allows them to migrate their registered offices according to pressures. All of them have problems with the law, but when they are sentenced, with rare exceptions as the imprisonment of three ADM executives in 1993, they solve their problems with the so-called settlements, agreements that allow them to pay a certain sum not to acknowledge guilt. Put the name of any of these companies together with “settlements” in Google and you will have immediate access to the rap sheet of the group.
Articulation with the financial system
As a rule, the large intermediation systems are not very interested in the product itself. They are mainly interested in the market fluctuations over time and space, including the triggering and exploitation of these fluctuations. That is to say, the financial dimension of their activities is essential. The support mechanisms they have available are essentially tax havens, derivatives and, particularly, futures markets. Up to a certain point, the giants of financial intermediation and those of trade intermediation work hand in glove, notwithstanding that each naturally tries to maximize its share of the pie.
The existence of tax havens is essential in this process, since they ensure that any and all legal or illegal economic activity has a space of planetary extraterritoriality, i.e., may migrate to a legal limbo with fictitious names, without being accountable to anyone and without risks, reintegrate themselves into legal procedures in several countries. We have already discussed this mechanism in another study; here we shall only recall what helps us situate the processes of commercial intermediation.
With the 2008 financial crisis, pressures to control the world speculative systems dramatically increased, and the issue of tax havens and illegality/opacity of flows was even addressed in successive meetings of the G20. This is how data began to appear. Notably, we have the research coordinated by Henry James, for the Tax Justice Network, where it was found that the stock of funds in tax havens, fruits of tax evasion, drug money laundering, undeclared sales of weapons or corruption, reached between 21 and 32 trillion dollars for a GDP of $ 70 trillion, i.e. something like a third or half of the world GDP. The research, of unsuspected origin and methodology, caused a planetary shock because there was no idea of the dimensions of this phenomenon. Brazil has an estimated 520 billion dollars in tax havens.
The Economist supplemented this research with a dossier that basically wondered where the 20 trillion dollars are, and identified the major financial markets that manage these resources: the U.S.A. state of Delaware, Miami and London. Therefore, the idyllic islands serve as legal locations, and protection in terms of jurisdiction, taxation and information, but the management is carried out by the large, well known banks in the financial markets above, basically 28 “systemically significant” financial groups, such as Barclays, HSBC, Goldman & Sachs, UBS, and so on.
The third major source of data is the ICIJ, the International Consortium of Investigative Journalists, who received a wealth of inside information on tax havens, having recently begun to disclose the names, values of accounts and so on. Data from several sources coincide and strengthen one another.
This is a huge drain that allows financial cycles to remain exempt of investigation. In an excellent and brief overview by Kofi Annan, about the illegalities perpetrated by transnational corporations in Africa, in particular the transfer mispricing, artificially low fictitious prices of African raw materials exports to pay fewer taxes. Sale at fictitious prices is made to companies of the group located in tax havens, to then be resold at full price in the international market. Thus, mispricing together with the system of tax havens and shell companies costs to the Continent $ 38 billion dollars per year, more than the sum of foreign aid and investment. The system is planetary.
The system of derivatives tops the process. It is noteworthy that the volume of speculative transactions is incomparably greater than the volume of actual transactions. Typically, oil on the tanker will change hands dozens of times during a day, negotiated by groups who do not have the slightest interest in oil, but only in the game of changing prices. Outstanding derivatives in the second half of 2012 were about 633 trillion dollars, nine times the total world GDP.
This directly affects both producers and consumers of commodities, by generating immense price instability at both ends. Speculation profits precisely from this instability. Take a country that depends on grain exports to import the oil it needs. It requires certain guarantees enabling it to supply its domestic market. The futures market, a segment of derivatives, guarantees a fixed sale price for their grain, the same occurring with call options on oil. Theoretically, at the origin, more security is generated on both ends. However, the more unstable the “market” and volatile the prices, the more producers and consumers at both ends have to rely on futures markets, and prices depend more on the behaviors of intermediaries. For intermediaries, fluctuations are a factor of profit, and allow them to charge increasing tolls on production and consumption, without producing anything.
The concentration of accumulated world wealth
We are used to focus on the concentration of income. To understand the impact of these processes, it is more meaningful to analyze accumulated wealth. The Research of Credit Suisse identified the owners of 223 trillion dollars of assets, and found, for example, that 69.3% of adults in the world (at the base of the pyramid, the poorest) have only 3.3% of the wealth. Those who earn average or low wages pay for food and transportation. People with high income buy real estate for rent, stocks that earn etc., thereby leading to a concentration of accumulated wealth far exceeding the income. While typically the Gini coefficient that measures income concentration ranges from 0.30 to 0.45 (and 0.50 in Brazil), the concentration of wealth in the world stays around 0.80, an incomparably greater inequality. This methodology is very important, and only recently is being more publicized and included in analyses. Drawn up by the Swiss financial group Credit Suisse, this research is not slanted against the rich.
The reading of the pyramid is simple. At the top, for example, adults who have more than a million dollars are 29 million people, 0.6% of adults on the planet. The wealth at their disposal adds up to 87.5 trillion, representing 39.3% of the 223 trillion of wealth evaluated. It is important for our analysis, that the large fortunes of this top of the pyramid are not producers, but people dealing with paper. According to the Swiss report, “the wealth portfolios of individuals are also likely to be similar, dominated by financial assets and, in particular, equity holdings in public companies traded in international markets”.
Of particular interest here, is of course, the top of the pyramid, which shows the extreme concentration at the level of ultra-high net worth individuals. We are talking about basically 84,500 people with personal fortunes above $ 50 million. The dominance of traditional centers of wealth is overwhelming: 47% of these individuals are in North America and 26% in Europe. That is to say, 73%, almost three quarters of the great fortunes accumulated in the world are in the so-called “North”, fueled by financial intermediation and business systems that reproduce the global concentration of wealth. Brazil participates in this ultra-rich set of 84,500, with 1,500 individuals in 2012.
In the study of WIDER, United Nations University, Brazil ranks as the seventh country with most unequal distribution of income. It is also important here to revisit the analysis of James Henry’s report to the TJN seen above, that much of the wealth of the very rich is not sufficiently accounted for, as it is in tax havens, bringing about a general underestimate of concentration.
The key feature of the change is the shift of profit and economic and financial power from producers, capitalists in the sense of the manufacturing past century, to intermediaries, toll collectors of various types. Dominance goes to financial intermediaries, commodities brokers and intermediaries of communication systems.
Returning to the analysis of the global corporate control network developed by the Swiss Federal Institute of Technological Research (ETH in German acronym), it becomes more evident how, in the 147 groups that control 40% of the corporate world, there is a prevalence of financial groups in the order of 75%.
Obviously, this standpoint shifts the analysis about the structure of corporate power. One thing is the turnover of each group. Another dimension comes from the calculation of network control on a range of other activities, originating from each group, through financial and stock control. The ETH research shows that when the control is included, and therefore the indirect ways a group has to influence the use of resources by other groups, the concentration of power is ten times higher than that seemingly wielded simply by the turnover of each group. “We find that only 737 top holders accumulate 80% of the control over the value of all TNCs [transnational corporations]… This means that network control is much more unequally distributed than wealth. In particular, the top ranked actors hold a control ten times bigger than what could be expected based on their wealth. ”
ETH – Major groups in terms of global corporate control
In the roster above, the study authors placed the 50 largest groups in the world. In the NACE code that categorizes the action field, figures beginning with 65, 66 and 67 correspond to financial groups.
When discussing findings, the authors strongly emphasize how detrimental this is to the mechanisms of market competition. Power of the intermediaries became planetary, there are few systemically significant groups, and price manipulation becomes perfectly feasible. On the whole, the issue is no longer only to assess the impact of wealth concentration in a few hands in its ethical dimension, but to understand the extent of detriment to market mechanisms which we believed generated equilibrium through competition. Here we are clearly evolving towards what other studies have called “economic toll”, where the biggest losers are the producers on the one hand and consumers on the other.
Insofar as the system of price formation in a number of strategic areas obeys induced speculative manipulations at the expense of traditional supply and demand mechanisms, it is important to adopt statistical analysis of price chains, as data will reflect where changes effectively occur, both in terms of excessive profits for non-producers, and in terms of centers that generate inflation and procyclical movements, which unbalance the global economy and hamper the capabilities of economic organization on the level of nations.
 Ladislau Dowbor is full professor at PUC-SP in the fields of economics and management, and consultant to various UN Agencies. Books and studies available in https://dowbor.org – Contact: email@example.com
 IAASTD – Agriculture at a Crossroad – International Assessment of Agricultural Science and Technology for Development – UNDP, UNEP, WHO, UNESCO, New York, 2009 – https://www.unep.org/dewa/agassessment/reports/IAASTD/EN/Agriculture%20at%
 Joshua Schneyer – Commodity Traders: the Trillion Dollars Club – https://dowbor.org/2013/09/joshua-schneyer-corrected-commodity-traders-the-trillion-dollar-club-setembro-201319p.html/ or www.reuters.com/assets/print?aid=USTRE79R4S320111028
 “Carta Capital”, October 9th, 2013, pg. 33.
 The Ways of Corruption: a systemic outlook, Economia Global e Gestão/Global Economics and Management Review – Nº 3/2013, Vol. XVII, Dez. 2012, ISSN 0873-7444
 Tax Justice Network, The Price of off-shore revisited – https://www.taxjustice.net/cms/front_content.php?idcat=148 Os dados sobre o Brasil estão no Appendix III, (1) p. 23 https://www.taxjustice.net/cms/upload/pdf/Appendix%203%20-%202012%20Price%20of%20Offshore%20pt%201%20-%20pp%201-59.pdf ;
 The Missing $20 trillion: special report on off-shore finance – The Economist, February 16th 2013, Editorial, pg. 13
 For data from ICIJ, see www.icij.org/offshore/how-icijs-project-team-analyzed-offshore-files
 Kofi Annan – G20: how global tax reform could transform Africa’s fortunes –September – 2013 “ Between 2008 and 2010, transfer mispricing cost Africa an average $38.4 billion every year, more than its inflows from either international aid or foreign direct investment.” https://dowbor.org/2013/09/kofi-annan-g20-how-global-tax-reform-could-transform-africas-fortunes.html/
“The over-the-counter (OTC) derivatives market shrank slightly in the second half of
2012. The notional principal of outstanding contracts fell by 1% to $633 trillion,” BIS Quarterly Review, June 2013, International banking and financial market developments – p. 19 https://www.bis.org/publ/qtrpdf/r_qt1306.pdf
A 7 minutes instructive video on YouTube helps to understand this mechanism: https://www.youtube.com/watch?v=rpM9XxJ-vo4&feature=youtube_gdata_player
Crédit Suisse Global Wealth Report – 2012 – https://www.credit-suisse.com/ch/en/news-and-expertise/topics/wealth.article.html/article/pwp/news-and-expertise/2012/10/en/the-global-wealth-pyramid.html ; With different methodology, the WIDER (World Institute for Development Economics Research) of the United Nations University concluded that “ in the world the wealthier 2% own more than half of worldwide total wealth and that this elite dwells almost exclusively ,in North America, Western Europe and rich countries of the Asian Pacific”. James B. Davies, Personal Wealth from a Global Perspective, https://www.wider.unu.edu/publications/books-and-journals/2008/en_GB/personal-wealth-paperback/ Also an excellent overview has been drawn up by Oxfam-UK, Working for the Few, January 2014, https://www.oxfam.org/en/policy/working-for-the-few-economic-inequality
 S. Vitali, J.B Glattfelder and S. Battiston – The Network, of Global Corporate Control – Chair of Systems Design, ETH Zurich – corresponding author firstname.lastname@example.org – Full text available in arXiv (pre-publishing), and published by PloS One in October, 26th 2011 https://www.plosone.org/article/related/info%3Adoi%2F10.1371%2Fjournal.pone.
0025995;jsessionid=31396C5427EB79733EE5C27DAFBFCD97.ambra02. – Because of its debacle in 2007, Lehman Brothers has a special mention on the chart.
 “What are the implications for market competition? Since many TNCs in the core have overlapping domains of activity, the fact that they are connected by ownership relations could facilitate the formation of blocs, which would hamper market competition”. (p.7)