March 11, 2118
BOSTON–A team of scientists at the M.I.T. High-Velocity Monetary Object Observatory announced on tuesday the discovery of a “super-dense corporate cluster” localized in mid-town Manhattan. The first structure of its kind to be observed, the cluster raises profound questions about the relationship between the physical and the economic worlds, and lends credence to the controversial new discipline known colloquially as “quantum economics.” “Most great breakthroughs begin with great observations,” notes M.I.T. Assistant Professor Marguerite Fury, leader of the research team. “And this is a truly paradigm-shifting observation. Physics and economics both just got much more interesting.”
The cluster, dubbed AA-1, is a “binary system” consisting of two, interrelated, capital-dense companies and a surrounding cloud of smaller, lighter firms drawn to the two central giants. AA-1 differs from other large-scale corporate partnerships and joint ventures because the two giants involved are linked through a peculiar ownership relationship known as a “mobius control stitch.” Professor Fury explains: “The two giants in AA-1, AOL and Amalgamenture, each own majority stakes in the other. AOL owns 52% of Amalgamenture, and Amalgameture owns more than 60% of AOL. This sort of thing happens occasionally in the course of hostile takeover and defense maneuvers, but usually resolves itself relatively quickly. The AA-1 stitch, though, has persisted for more than 40 years, largely because of the unprecedented size of the two linked companies.”
The “stitch” linking the two companies creates a “control paradox.” “The cluster is characterized both by a management surplus and a management deficit,” explains Professor Fury. “There are too many managers for the interlocked firms, which should be one firm with one management team. At the same time, there are too few managers. The board of directors of each company leads the companies separately, but nobody leads them together. This paradox creates an oscillating control vacuum that sucks in, alternately, firms that are control weak and control strong. The cloud surrounding the stitched giants is thus saturated with merger and spin-off transactions.”
In addition to attracting the swarm of merging and spinning corporations that compose the cluster’s characteristic cloud, AA-1 is also responsible for “spontaneous transaction pair production” attributed to a “large magnitude debt/equity density differential” between the two giants at the focus of the cluster. According to the team, the two giants belong to different “classes.” AOL is a conventional multi-national, characterized by globally disbursed operations, large employee base, and significant current assets and free cashflow. Amalgamature, in contrast, is a “super-leveraged holding firm,” with significant free cashflow, but debt orders of magnitude greater than equity and with nominal staff and a single Manhattan office.
Professor Fury elaborates: “The density differential at the heart of AA-1 generates an asymmetric transaction space in which independent transaction processes form. This sort of formation happens all the time in regular clusters, but the two sides of the transaction collapse into a single process almost instantaneously. In AA-1, for the first time, we’ve been able to observe buyons and sellons before they collapse into a transaction, giving us new and invaluable insight into the way transactions form.”
According to the M.I.T. team, AA-1 is a unique system, at least for now. “We’re very lucky that our discipline is gaining steam at just about the same time that complex monetary objects like AA-1 are forming,” notes Professor Fury, “but AA-1 is just the beginning. We anticipate that the next hundred years will see capital formations that dwarf AA-1 and produce wondrous effects we can’t yet imagine.”