Capital Allocation & Ownership

capital-allocation-ownership measures structural power over who owns the world's strategic firms and who allocates the capital that funds them — expressed through equity ownership and asset-management concentration, not lending. The structural question is: whose capital owns the residual claim on, and steers the allocation of investment into, the firms the rest of the world depends on? — not how large a country's stock market is. It is the ownership/equity face of Strange's finance structure, complementary to credit-markets (the debt/credit-creation face).

This metric is what lets the index attribute the structural power of foreign-domiciled champions (TSMC, ASML) to the real holder of their residual claim — the US asset-management and capital-allocation complex — instead of expanding the country set to add their host states (decision-log D18/D20).

Strange locates the finance structure in the power over access to capital, and treats the integrated global capital market as a single allocative system whose terms a dominant power sets:

• the access-to-capital lever: "The power to create credit implies the power to allow or to deny other people the possibility of spending today and paying back tomorrow… the power to let them exercise purchasing power and thus influence markets for production" (Strange 1994, p.90) — equity capital is the other face of this allow/deny-access lever.
• the terms of cross-border investment as a core structural issue: structural power decides "the terms on which investments are made across national frontiers… and the ways in which credit is made available through international capital markets" (Strange 1994, p.12) — who sets the terms on which the world's capital is placed.
• the single integrated allocative system: "all the major capital markets of the world are so closely linked together that in many respects they function as if they were one system… The bankers and dealers in securities operate as though time zones were more significant than political frontiers" (Strange 1994, p.90) — allocation runs through one system, and whoever governs/owns its commanding nodes holds the lever.
• the foundational distributional question this answers: "Who gets the opportunities and who is denied an opportunity… or more fundamentally a share of all the values, not only wealth" (Strange 1994, p.18) — ownership of the residual claim is the purest form of "who gets a share of the values."
• the historical precedent that this is a structural asymmetry: Bretton Woods was made workable by "the outflow of American public funds and private capital into the world" (Strange 1994, p.105), and the US could deter "foreign borrowers from borrowing on American capital markets" (Strange 1994, p.105) — the capital-allocation tap as an instrument of structural power.