GLOBAL CAPITAL
How the new global capitalism really works, today.
Most folks think about money as belonging to a national economy. Dollars for the US, the Euro for the EU, Yuans for China. But money, or more properly capital, flows between borders. And does so in the trillions each day. Counting a trillion seconds would take 36,000 years. So, we’re talking about real money here.
Running a system of free-flowing capital is complex, and that system took years to construct. Leading the process were capitalists in financial institutions and the state apparatus. Not just in national governing bodies, but also transnational bodies such as the WTO and IMF. In other words, the transnational capitalist class (TCC)—the capitalists and political elites who rule over global accumulation and production.
A major pillar of this system is offshore finance known as nonresident capital. It moves beyond the reach of national states, and operates in a separate parallel legal regime to the one you and I live under. These trillions of dollars exist in a space built exclusively for business and billionaires, and holds much of the world’s capital stock, capital flows and property claims. This circulates in offshore financial centers (OFC), where one can borrow money, structure funds, form companies, protect investments, and avoid taxes. There are about 100 such centers, comprising a globally integrated space and operating beyond the control of any individual state. Untouched by elections or any democratic control, it is a state unto itself. The most important centers are the Bahamas, Bermuda, the British Virgin Islands, the Cayman Islands, Hong Kong, Singapore, the Netherlands, Ireland, Luxembourg, Belgium, and Switzerland.
Take the example of Russia’s state-owned oil giant, Rosneft. Rosneft escaped sanctions and raised about $15 billion, which comprises a 20 percent stake in the company. This was accomplished through a joint venture between the Qatari Investment Authority and the globe-spanning Swiss oil trader Glencore (which has investors the world over). Funds went through several shell companies, which themselves owned shell companies in various OFCs. The final purchase was made by a Singapore company owned by a London firm controlled by a company with a mailbox in the Cayman Islands. Welcome to the world of global capitalism and the TCC.
As pointed out by Hendrikse and Fernandez, this exclusive world of the TCC includes “European royals to American nouveaux riches; from Chinese princelings and Arab princes to Russian oligarchs and African warlords–the global elite has effectively carved out a secretive, tax-free and sovereign homeland for itself1.” To that list we should add the more ordinary billionaires and multimillionaire stock owners, CEOs, and trust-fund babies.
In the next installment we’ll look at some history, and how the Netherlands became the world’s largest recipient of foreign direct investments and the world’s largest investor.
Jerry Harris is the national secretary of the Global Studies Association of North America, and on the international board of the Network for Critical Studies of Global Capitalism. His articles have often appeared in Race & Class (London), Science & Society (New York) and International Critical Thought (Beijing). His last book was Global Capitalism and the Crisis of Democracy. His work has been translated to Chinese, Spanish, Portuguese, German, Czech, and Slovak.
Reijer Hendrikse and Rodrigo Fernandez. “Offshore Finance, How Capital Rules the World.”