draining development.pdf - Khazar University

462 Draining Development?ation of domestic and international economies. More specifically, itincludes the increasing dominance of the finance industry in the sumtotal of economic activity, of financial controllers in the management ofcorporations, of financial assets among total assets, of marketized securitiesand, particularly, equities among financial assets, of the stock marketas a market for corporate control in determining corporate strategies,and of fluctuations in the stock market as a determinant of businesscycles (Dore 2000). Braudel’s concept of disembedded capitalism pointsin the same direction: capitalism is “a series of layers built on top of theeveryday market economy of onions and wood, plumbing and cooking.These layers, local, regional, national and global, are characterized by evergreater abstraction, until at the top sits disembodied finance, seekingreturns anywhere, uncommitted to any particular place or industry, andcommodifying anything and everything” (Mulgan 2009, 10–11). There isa wide consensus that financialization has been a dominant feature oflate 20th-century globalization. The volume of transnational capitalmovements has expanded exponentially since the 1970s, having long agoceased to reflect trade financing requirements, despite the fast growth ofinternational trade (Cohen 1996). As the forest of legitimate transnationalcapital movements has blossomed and thickened, the opportunitiesto hide illegal or illicit capital assets within it have multiplied. 2Tax havensSome tax havens have their historical roots in the 19th century, but theirexplosive growth dates from the early 1970s (Palan, Murphy, and Chavagneux2010). Conceptually, tax havens are easy to define. They are“jurisdictions that deliberately create legislation to ease transactionsundertaken by people who are not resident in their domains, with a viewto avoiding taxation and/or regulations, which they facilitate by providinga legally backed veil of secrecy to make it hard to determine beneficiaries”(Palan, Murphy, and Chavagneux 2010, 236). They are characterizedby high levels of secrecy and the ease with which companies andother legal entities, including trusts, can be established and registered.There are enormous disputes over which jurisdictions should formallybe labeled as tax havens. For our present purposes, it is useful to distinguishtwo broad categories. The first are basic tax havens, as exemplifiedby Cayman Islands. These are secrecy jurisdictions that “remain mere