For those who missed it, Professor Ronen Palan, one of very few academics to have taken a serious and active interest in offshore, recently wrote another superb and readable article entitled The New Dependency Theory. Old-style dependency theory, he said, hypothesised that the world capitalist economy is structurally arranged to facilitate massive transfers of capital from developing countries to the developed world. But:
“The new dependency theory agrees that net outflows of capital from developing countries have been continuing unabated for the past three decades. But—and this is a key difference between new and old dependency theory—these illicit flows are a problem not only for developing countries but also for developed ones.”
And what are both developed and developing economies “dependent” on? Well, offshore finance is central to this picture. And increasingly, offshore is where the power lies.
As usual, there’s too much interesting stuff in here to point to, so I’ll just highlight one section that interests me in particular, and is squarely in agreement with what slowly dawned on me as I was researching Treasure Islands.
“Progressive academics have tended to understand the development of the offshore financial market in terms of Wall Street domination or American ‘imperialism’. But the historical evidence suggests that the U.S. Treasury—as opposed to the Wall Street fraternity—resisted its emergence between the early 1960s and the late 1970s, to no avail. Indeed, if any one polity played an important role in the emergence of the new financial architecture, it was not the American state but the British Empire. Attempts to explain its development in terms of class or national interest are also problematic. Until very recently the offshore was not even superficially understood, let alone consciously designed.”