An excessively concentrated degree of investment power is in the hands of very few, very large institutions. By virtue of their size and by virtue of the pressure that they are under to provide performance over a very short time period these institution have adopted stock exchange trading policies which can disrupt markets, because they are not counterbalanced by other types of investors who may be operating under different performance criteria or have different perceptions of value. The traditional balance between large institutions and individual investors, between short-term speculators and long-term investors, between occasional investors and regulars, which has always produced a degree of market equilibrium, is gone.
The complexity of modern stock markets and the speed at which they interact are beginning to alienate the individual investor, who feels he is incapable of coping with that complexity on his own. He is thus at a considerable disadvantage to the professional investor who has all these tools at his disposal. The alienation of the individual investor from the market tends to be followed by a certain alienation. If the individual feels he no longer has a direct stake in the economy and is forced to delegate his ownership and decision-making power to a large faceless, unaccountable institution, that leads to disillusionment with the entire system.
According to a 2001 study by the Institute for Policy Studies, 51 of the largest 100 economies in the world are corporations, not countries. This conclusion is based on a comparison of corporate sales and gross domestic product. Put in economic terms, this means that General Motors Corp. is bigger than Denmark, IBM is bigger than Singapore and Sony is bigger than Pakistan.
"Free trade" goes hand in hand with the dominance of Trans-National Corporations (TNCs) in trade. It is reported that with emerging globalization, TNCs have quadrupled in number from around 7,000 to 44,000, including also the emergence of the superconglomerates which have increased concentration of economic power in industrial and economic sectors. TNCs control a full two-thirds of world trade with one third of trade actually intra-TNC transactions.
Hence, as the Pope remarked so discerningly, "economic domination has taken the place of the open market. Unbridled ambition for domination has succeeded the desire for gain; the whole economic regime has become hard, cruel and relentless in frightful measure." As a consequence, even the public authority was becoming the tool of plutocracy, which was thus gaining a stranglehold on the entire world. (Papal Encyclical, Pacem in Terris, 1963)