“Only little people pay taxes.” Frank Lee Reviews “Treasure Islands” (2011) & “The Finance Curse” (2018) by Nicholas Shaxson

The Wheel of History Turns

To understand the present, we must understand the past, and possibly the future direction of historical processes. Well where did it all begin?

Well “it” (i.e., unbounded, rent-seeking, extractive capitalism) had existed for a long period of time dating back to the 19th century and perhaps beyond.

Economic theories have always been little more than a rationale for what was essentially a conflict between classes and vested interests, and, whisper it softly, this is still essentially the case. The rentier regime based upon rent extraction on behalf of the land-owning aristocracy was historically pitted against the rising industrial manufacturing classes, the bourgeoisie in the manufacturing cities and towns.

Additionally, the emerging working class was beginning to flex its economic, and in the fullness of time, its political muscles.

Unexpectedly perhaps, what was to emerge was an (albeit unstable) marriage of convenience between bourgeois and proletariat against the rentier class. In the UK the liberal reformers of the 19th century, David Ricardo, J.S.Mill et al. and during the 20th century J.M.Keynes. [1] carried the struggle against the ruling rentier classes, but both lacked a mass movement and were ultimately superseded though not completely extinguished by radical socialist reformers, principally based around the Independent Labour Party, the Trade Union Congress, and the Fabian Society.

These were to form the Labour Representation Committee, which eventually became the Labour Party in 1906. A similar process was apparent in Germany when the SPD increasingly took on the role of leader of the working class against the Bismarckian political ascendency, anti-socialist laws notwithstanding. The Fabian socialist Weltanschauung was systematically outlined in Fabian Essays in Socialism, first published in 1889, where the general evolutionist theme is clearly discernible.

The essays identify and break down general historical trends into more specific ones: firstly, there was the onward march of democracy; secondly, the increasing organization of the economy and the demise of laissez-faire; thirdly, the gradual socialization and integration of society.

In one of the essays, The Historic Basis of Socialism, Sidney Webb argued that the unstoppable momentum of democratisation would provide the bridge to socialism; democracy being the prerequisite for a socialist society.

The mainstream which has borne European society toward socialism during the past 100 years has been the irresistible progress of democracy. De Tocqueville drove and hammered this truth into the reluctant ears of the old world two generations ago; and we have pretended to carry it about as part of our mental furniture ever since.”[2]

Sentiments of the above sort, common enough at the time and still valid today, seem curiously antique in the modern world. The struggle between productive and extractive capitalism has always swung to and fro between the banking, landowning, financial elites and the industrial, manufacturing class strata, and in addition, with the working class in a struggle against both; although the labour movement often formed alliances against the financiers and rentier elites.

Both Teddy and Franklin D Roosevelt were to become engaged in a struggle against extractive rentierdom and monopoly by mobilising state policies and institutions during different historical epochs – the policies of Trust busting, and the New Deal being the successful outcomes of this struggle, although they stopped well short of socialism. The latest manifestation of this cyclical phase of political/ideological struggle – i.e., neoliberalism – came into existence roughly in the early 1970s and became entrenched from the 1980s onwards. (See more below.)

Point of Arrival

In our own time the dominance of the rentier classes and extractive capitalism seems, in the short term at least, to be complete. The central ideological features of this mode of financial hegemony are: tax avoidance/evasion, corporations and intra-firm trade, deregulation and privatisation – lesser and perhaps more sordid goals included corruption and criminality; and the whole configuration enveloped by an all-encompassing culture which is anti-state, anti-tax, anti-redistributive; a winner-takes-all mindset which erodes social solidarity leading to various types of social crises and malfunctions, both individually and collectively.

Symptomatic of these changes is manifest in today’s world where at any one time a huge ball of speculative hot money circumnavigates the globe in search of a quick buck at somebody else’s expense. Such a practise can only take place in the absence of capital controls (which of course entailed deregulation).

The developing East Asian economies in 1997/98 became a target for such a speculative attack and were brought low by this incursion of hot money – a visitation as welcome as a cloud of locusts – and were then picked clean as their currency, property and exchange rates were destabilised and looted before the exit of these same speculative flows. Not being shackled by a liberalisation of their capital account, China had capital controls and so escaped the 97/98 crisis largely unscathed.

In another contemporary context the author notes:

Developing countries lost $1.2 trillion, in 2008 – losses that have grown at 18% per year. Compare this to the $18 billion in foreign aid that they received during the same period … that means that for every dollar that we (i.e., the West) we have generously been handing across the top of the table we have been taken 10 dollars of illicit money under the table … Remember that the next time some bright young economist wonders why aid to Africa is not working.” [3]

These monies generally emanate from various corrupt regimes in Africa, Latin America and other developing areas but are nullified, by a considerable margin, by the inflows of monies from the developed world. Strange to say that the developing world is in effect subsidising the developed world.

Moreover, in addition to the flow of monies from the developing to the developed world there should be added other clandestine streams which wend their way into licit outlets by way of offshore mechanisms and subterfuges after having been carefully laundered.

…these financial flows break down into three categories. Criminal monies, from drug smuggling, counterfeit goods, racketeering and so on, accounting to about one third of the total. Corrupt money – local bribes remitted abroad, or bribes paid abroad or a small part of the total, or the third total, cross-border commercial transactions. An important fact to note from this is that the drugs smugglers, terrorists and criminals use exactly the same offshore mechanisms and machinations – shell banks, trusts and dummy corporations – that corporations use.” [4]

Moreover, in our own gilded age tax avoidance continues to grow and diversify in the form of an excrescence on the real economy; this situation is tolerated and even encouraged due to the many vested interests that profit (literally) from it. In mafia parlance tax avoidance and money laundering enjoys a ‘made’ (protected) status.

The laws and regulations – the ‘super-ego’ – which once kept the uncontrollable ‘Id’ of finance capital in its Pandora’s Box, unfortunately no longer prevail. The annulment of these legal instruments which forbade any infringement of these rules, e.g., the Glass-Stegall Act of 1934.

Glass-Stegall strictly separated the activities of commercial banks from investment banks preventing speculators from making bets with depositors’ money (which in passing was revoked by the Clinton administration – but of course!) as well as capital controls, or the gold-dollar standard of fixed exchange rates enshrined in the Bretton Woods Agreement of 1944; all this ended when the lid of Pandora’s Box was lifted and all the evils and miseries of the world flew out to afflict mankind.

The Financial Ascendency

The pivotal moment in this deregulatory zeitgeist was the ‘Big Bang’ of 1986 as it was called. This was explosive enough, but an even bigger bang followed:

Modern histories of London’s growth as a financial centre typically point to the Big Bang of 1986, the sudden deregulation of London’s markets driven by the Thatcher administration … However, one particularly astute journalist – Tim Congdon – wrote in the Spectator magazine, of a much bigger bang which had transformed international finance over the last 25 years …

…An extraordinary situation has arisen, where the euromarket which has no physical embodiment in an exchange building or even a widely a widely recognised set of rules and regulations is now the largest source of capital in the world … According to Gary Burn the eurocurrency/eurodollars emergence … ‘was the first shot in the neo-liberal counter-revolution against the social market and the Keynesian Welfare State.’ This was the banks and financial industries great move offshore.”[5]

There now exists a tax haven archipelago consisting of dozens of offshore locations straddling the globe. For UK this consists of its crown dependencies in the Channel Islands, principally Jersey, Guernsey and in the Irish Sea, the Isle of Man.

More outlying havens would include those Caribbean outlets the Cayman Islands, Bermuda, the British Virgin Islands, the Bahamas, Montserrat as well as several smaller jurisdictions, and finally to a number of pacific atolls.

And of course, the UK is itself a tax haven which is why American banks came to the UK to escape the more stringent restrictions placed upon them in the US. The UK thus became a financial Guantanamo in the sense in which they could do things in the UK that they could not get away with in the US. To get some idea of the magnitude of monies squirreled away in one UK tax haven, Jersey, Trusts, a specific type of asset, are not simply about tax.

Many people would be surprised … to find out how central these havens are to global finance, there are some £400 billions tied up in ‘Trusts’ – basically a tax avoidance racket – and a description of what trusts are, how they work, who they belong to, and who profits from their existence is another book – from the tiny tax have of Jersey alone – and several trillion $s worth worldwide shrouded in secrecy.” [6]

If flight money and tax evasion capital of these proportions are piling up just in Jersey how much more has been moved offshore to the rest of the world? One can only guess at the magnitudes involved.

The Iron Law of Money

Offshore is a world apart; it has a distinct culture and clientele drawn from both ends of the opulent classes. What we have is a merger of the global overworld with the global underworld held together by secrecy and an oath of Omerta. Dukes, Bankers, Oligarchs, Gangsters, corporate CEOs, millionaires and billionaires. After laundering these groups appear eminently respectable and as clean as a whistle.

Offshore general frameworks which distinguished between criminal and the legitimate have been eroded away and replaced by networks of trust that distinguish between the well-established on the one hand, and the unknown and dubious on the other.

Individuals with sums to launder and/or invest with minimal taxation want to know that the people with whom they deal can be trusted not to have any moral qualms. If the bankers don’t know someone, that someone may have to jump through many hoops; if they are long-standing and trusted clients the rules fall away.

These opaque networks who are deferential to the aristocracy of wealth and money and oblivious of formal laws, are the ultimate comfort for the banks wealthy clients and totally amoral. As F Scott Fitzgerald once commented:

Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand.

They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are.

They are different.”

The iron law of money is not new: in the gilded jazz age of late 19th century America of The Great Gatsby. we can see the echo of our own present decadence. It speaks through the voice of Amory, a central character in one of F Scott Fitzgerald’s lesser novels.

I detest poor people” thought Amory suddenly. “I hate them for being poor. Poverty may have been beautiful once, but it’s rotten now. It’s the ugliest thing in the world. It’s essentially cleaner to be corrupt and rich than it is to be innocent and poor…”

Never before had Amory considered poor people … Amory saw only coarseness, physical filth, and stupidity.[7]

Our present-day doyenne of individualistic nihilism – Ayn Rand – could not have put it better.

Decline and Fall

Of course, the New World Order or “It” started at the culmination of the 1970s or fag end of the Keynesian Welfare State. Neo-liberalism and the New World Order were pushed forward by an Anglo-American financial offensive which for a time carried all before it. Roaring on into the 1990s it seemed unstoppable.

The new orthodoxy became hegemonic in politics, the media, academic and business economics, fashion and culture changed along with popular attitudes and beliefs. The Washington consensus, subsumed, the EU/NATO, IMF, World Bank, World Trade Organization, Bank of International Settlements, OECD, all of which became imbued with the new orthodoxy.

One of the more salient features of this process was the withering away of the egalitarian programmes of the reformist centre left political organizations which would avoid the commitments of the past. Social-Democracy was always understood to be in favour of a society for all the people, full employment, social inclusion and social welfare and a fair taxation system.

The centre-left, however, decided to jettison its past and get with the post-industrial model and a post-industrial society and economy. Into the limelight strode Tony Blair, ex-Fettes public schoolboy. Leaving Fettes College at the age of eighteen, Blair next spent a year in London attempting to find fame as a rock music promoter.

This didn’t work out, so he became enrolled as a law St.John’s College Oxford. After leaving he was able to con his way into the leadership of the Labour party, travelling light on policies, but with a specific notion of where he wanted the Labour party to go and where he wanted to take it.

He eventually transformed the Party into an institution the City of London would learn to love. Also engaged in this turning of wine into water was Hebert Morrison’s grandson Peter Mandelson who apparently was –“intensely relaxed about people getting filthy rich as long as they pay their taxes”.

Of course, it never occurred to Mandelson that the filthy rich had no intention of paying their taxes and Labour’s ‘light regulatory touch’ enabled them to do just that. Just how far Labour was to go in its infatuation with neoliberal policies was starkly illustrated by the then Chancellor, Gordon Brown.

In 2005, Britain’s then Chancellor, Gordon Brown, introduced his Better Regulation Plan, scorning the ‘heavy hand’ of regulation and exalting ‘a million fewer inspections every year, a risk-based approach to regulation to break down barriers holding enterprises back.’

Financial regulation would have ‘not just a light touch but a limited touch’; this would ‘move us a million miles away from the old assumption … that business unregulated, will invariably act irresponsibly’.

The new model of regulation could be applied, he continued ‘to the administration of tax.’ The light or limited touch now extends to official ‘independent’ commissions for reform, which are led by trusted members City networks, operate under narrow terms of reference, and always end up advocating some tinkering, never more, to the status quo.”[8]

Oh, dear! There are times when words fail one, this is one of those times.

The Road to Nowhere

Globalism, that is to say neoliberalism writ large, presents another dimension complementary to the tsunami of capital flows, both licit and criminal, circulating around the world. During the Trente Glorieuses 1945-1975 of regulated capitalism, unemployment was low, as was inflation, living standards steadily increased, and the social safety net was an indispensable feature of the system.

Finance serviced the manufacturing industrial sector with investment loans at low rates of interest. In historical terms this was a limited interlude before capitalism returned to its more normal predator propensities of earlier times. The deregulation of finance and capital flows carried very dangerous and damaging consequences especially when it was allowed to slosh around the world at will, unchecked by democratic controls.

The East Asian crisis of 1998/89 was one example of this, and the 2008 blow-out was another. If a domestic economy is open to tides of hot money – rootless money not tied to any particular real project or nation – then it is difficult and impossible to pursue desirable vital such as full employment and nation building.

Any attempt at to boost industry by lowering interest rates will see an outflow of capital in search of higher premiums elsewhere. Free flow of capital seeking its own interests has the unfortunate effect of conducting its own monetary and fiscal policies to the detriment of nation states. But this is precisely the object of globalization. Markets must rule.

It was the German social theorist Wolfgang Streeck who put it concisely. ‘Once upon a time markets were fitted into nations, now nations are fitted into markets.’ If governments wanted to act in the interest of their citizens, there was no alternative to curbing these wild speculative flows which could and have wreaked havoc.

Keynes was well aware of the benefits which might accrue from cross border trade but regarded cross-border speculative finance to be far more dangerous.

I sympathise … with those who would minimise rather than maximise economic entanglement between nations. Ideas, knowledge, art, hospitality, travel- these are things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all let finance be primarily national.”

Unfortunately, the TINA (There Is No Alternative) refrain has insinuated itself deeply into the popular consciousness. Neo-liberalism, financialization, globalization was, according to its proponents, the way to go, the right side of history. The upshot of these polices, however, has been uniformly disappointing.

The roll-out of neoliberal policies represented a one-size fits all set of policy prescriptions. These were listed by the IMF as Structural Adjustment Policies (SAPs) for application in developing countries but they could also and did apply to developed states. The list ran as follows:

  • Removing restrictions in foreign investments and liberalisation of current accounts
  • Reducing wages and other in-work benefits, sickness pay, pensions etcetera, to make exports more competitive. Radically reduce government spending on health, education. The few social services which remained were gutted.
  • Cutting tariffs, quotas, and other restrictions on imports to grease the way for global integration.
  • Devaluing the local currency to make exports more competitive.
  • Privatising and Deregulating state industries.

There you have it. Basically, a programme for austerity. Everywhere this policy has been operationalised it has been an abject failure. Please note the word – ‘competitive’ which keeps on recurring throughout and needs some examination.

The concept of national competitiveness [argues Shaxson] is a complex, tricky area … Many people have been tricked into believing that Britain can be compared to a giant corporation … UK PLC …competing on a world marketplace, pitted against Germany or Luxembourg in a global race. These claims are nonsense…

A case study illuminates this point. In September 2017, James Murdoch the Chairman of Sky, said an odd thing. The Murdoch family had been for some time trying to win full control of Sky … but the British authorities had referred the move to the Competition and Markets Authority, the Monopolies regulator. Murdoch complained that this decision was sending was sending a terrible signal to the world’s investors …’If the UK is truly open for business post-Brexit. We look forward to moving through the regulatory process …

This is what I – Shaxson – call the ‘competitiveness agenda’. The notion that you must dangle endless goodies in front of multinationals and large global investors in case they run away to somewhere like Geneva or Singapore… ‘Open for Business’ in practice means doing what the big banks and multinationals want at the cost of other parts of your economy if need be. Britain, Murdoch argued, should strive to be more ‘competitive’ by approving a deal which would strengthen an already dominant firm, thereby restricting competition in the market. Therefore, for Britain to be more ‘competitive’ it should reduce competition.[9]

The cat really ought to have been out of the bag for some time past. Modern extractive capitalism is not about free markets and competition, or too much nanny state. It is about monopoly, cartels, monopoly rents, restriction of competition and massive state subventions including subsidies, grants and tax exemptions for R&D and publicly funded research, not to mention bailouts (see below). Furthermore the ‘competition agenda’ gives rise to the austerity agenda, cutting corporate tax levels means cutting other taxes in different areas of the economy, once more – austerity.

In its turn this austerity gives rise to social and economic inequality. This is characterised by increasing wealth and income inequality as the corporations and the CEOs are inundated with monies through tax cuts – to make their businesses more competitive of course – whilst the mass of ordinary folk sees their incomes become stagnant and/or declining. And this has further ramifications. Monies showered on the well-to-do is increasingly idled whilst debt levels among the population at large continue to rise. This gives rise to low growth and ongoing stagnation in the economy.

The Dutch Disease

The Dutch Disease (or curse) is an economic term for the negative consequences that can arise from a spike in the value of a nation’s currency. It is primarily associated with the new discovery or exploitation of a valuable natural resource (e.g. oil) and the unexpected repercussions that such a discovery can have on the overall economy of a nation.

The negative impact involves an external demand for this asset which will push up the country’s exchange rate leading to a rise in the price of its export goods and an increase in the price of its imports.

Shaxson explains this in what happened in Angola after the discovery of substantial oil reserves:

Academics had worked out that for many mineral rich countries like Angola, their natural resource abundance seemed to result in lower economic growth, more corruption, more conflict, more authoritarian politics and greater poverty than their resource poor peers … it’s not just that mineral-rich countries don’t harness their natural resources to benefit their people, or that powerful crooks snaffle the wealth and stash it away offshore, though that is also true.

The big point is that all this money flowing from their natural resource endowment can make their populations even worse off than if the riches had never been discovered … money can make a country poorer. But few people in Angola doubted that the minerals were feeding the civil war had cursed their country in deep and long-lasting ways …

In Angola and in other African countries up and down the western African coastline … the oil sector was draining the life out of other parts of the economy. All the best and highly remunerated people were being sucked out of industry, agriculture, government, civil society and the media. Instead they were flocking toward the high-salaried oil job high salaried jobs.

Those clever people who did stay in Angola’s government soon lost interest in the difficult challenges of national development, whose prospects had been savaged anyway, and politics became little more than a corrupting, conflict-ridden game of jostling to get access to the flows of oil money.” [10]

Such is the fate of single-crop economies, which are invariably lopsided and vulnerable to changes in world prices. Diversified economies will produce better and more lasting outcomes. What is particularly disturbing in this respect is the parallels which can be drawn between Angola and Britain.

The growth of financialization in the UK, partly a political decision and both cause and effect of the finance curse. From the 1970s onward the star of industry and manufacturing waned whilst the star of finance waxed. Manufacturing and industry were, so tiresomely, fuddy-duddy and uncool, and the ‘hip’ trend setters in the media, universities, business colleges, and academia were in the forefront of a New World Order based – an order based upon shuffling paper around.

But for all the trillions of Eurodollars which stream through the Square Mile and the beautiful people who populate fashionable restaurants and theatres, the country is no better of overall than many of its continental peers with only poor to middling GDP growth and underfunded health and education systems. Financialised capital doesn’t fit well with public goods.

Once upon a time banks were in the business of funding productive investment to start up companies out of their from their deposit capital. Depositors were encouraged to lend to banks due to reasonable rates of interest. More recently commercial banks have been lending in the main to property speculators, mortgage lending and stock buybacks.

A century ago 80% of bank lending went to finance business. Now banks are mostly lending to each other and into housing and commercial; little more than 10% of bank lending goes to businesses outside the commercial sector.

Banking and loans which underpinned the economy are now parasitic upon the economy. They are the archetypal rent-extractors, when they were once a source of lending for productive investment by the industrial/manufacturing sector and SMEs.

Thus, the same lopsided and uneven development at the global level was also happening at the national level in the UK. Financialization in the UK has made some people and some areas rich, but only at the expense of making other people and regions poorer by denuding them of the necessary investment capital which would provide the wherewithal for steady growth.

Exactly how this upward redistribution policy from poor to rich is engineered takes up considerable space amounting to almost entire chapter in Shaxson’s second book So I can only give brief resume of what he says.

The finance curse analysis shows that it seems that … all this money swirling around our oversized financial sector seems to be making us collectively poorer. The mainstream narrative is that the City of London, Canary Wharf and Mayfair are the geese that lay the golden eggs.

But the finance curse reveals these are different birds: cuckoos in the nest crowding out other sectors … A lot of evidence and research is emerging to show that once the financial sector grows beyond a certain size it starts to turn away from its critically useful and important functions and towards those more lucrative and destructive.

Further expansion beyond this optimal size tends to make the economy that hosts it grows more slowly and generate a range of other harms. Britain’s financial sector passed its optimal size long ago …” [11]

It would not be stretching credulity too far to suggest that London seems to be undergoing a slow financial, economic and political secession detaching itself from the rest of the UK, having and pursuing its own goals and longer-term interests. Consider that,

…over 55% of the value of shares listed on the FTSE 100 is owned by foreigners, which means that much if not most of the inflow to the London nexus hardly touches the sides, even in central London; it flows straight back out again as interest or dividends. And these financial flows are not benefiting London either; they are enriching a wealthy sub-set of London, at the same time as they extract more from poorer and middle-class parts of the capital … in terms of wealth and ownership London itself is one of the most income and wealth unequal places in the western world. At the last count the richest 10% of its inhabitants possessed 173 times the wealth of the poorest 10%.” {12]

But of course, all of these disturbing developments were lost on the business, financial and political elites, particularly in the Anglo-American world. Asset-price inflation fed by cheap money was referred to as ‘growth’ (sic!) the economy was said to be delivering the goods and everyone was getting richer – except, that is, for the majority who were not and who were sinking deeper into debt. Then the dark brown stuff hit the fan circa 2008


The Shakers and Movers of Wall Street and Canary Wharf were duly shaken and moved by the 2008 events. At the meeting between these gentlemen and Obama they were informed by the President that only he stood between them and the pitchforks. The great bailouts began.

Banks and other financial institutions were either hung out to dry (Lehman’s) or forcibly merged with other companies with public monies. The same scenario was played out in the UK with the rescue of Northern Rock and the Royal Bank of Scotland. What this actually meant was that the public authorities took the debts and toxic waste from the private sector and transferred it to the public sector balance sheet.

This meant that the programme of austerity received an additional push. Thus, the very economic factors which brought about financial Armageddon were touted and used to repair the damage!

The cure for debt driven growth was – wait for it – more debt! Growth in the OECD countries has limped along at roughly 2% or less, which is practically depression figures. According to Bloomberg, (January 2019), Global debt is reaching record figures. Overall, global debt has grown to $244 trillion as of the third quarter of 2018

  • Total government debts exceeded $65 trillion in 2018, up from $37 trillion a decade ago, and rose faster in mature markets
  • Non-financial corporate debt rose to over $72 trillion last year, now near an all-time high of 92% of GDP
  • Household debt grew by over 30% to $46 trillion helped by strong growth in emerging markets, notably from China; though Czech Republic, India, Mexico, Korea, Malaysia and Chile all recorded more than 20 percent increases since 2016
  • Financial sector indebtedness rose to about $60 trillion, up 10% from a decade earlier

Of course, and referring back to Pandora’s Box (see above) the last thing to come out was – hope! Are we supposed to cheer up at this point? I do hope that this provides us with some solace. In the words in one of the characters in Samuel Becket’s short piece, Imagination Dead Imagine ‘You must go on, I can’t go on’ I’ll go on.’

So, we go on.

Lotta Continua!


  • [1] In passing it should be noted that Keynes was always hostile to socialism as he understood it. See J.M.Keynes, Why I am a Liberal, some quotes: ‘The class struggle will find me on the side of the educated bourgeoisie.’ ‘The Labour Party is a class party, and that class is not my class.’ ‘How can I adopt a creed which, preferring the mud to the fish exalts the boorish proletariat above the bourgeois and intelligentsia who with all their faults are the quality in life and surely carry the seeds of human advancement.’
  • [2] Fabian Essays in Socialism – pp.41.42
  • [3] Global Financial Integrity Progamme Quoted in Treasure Islands
  • [4] Ibid.- Treasure Islands – p.27
  • [5] Nicholas Shaxson – Treasure Islands – p.89
  • [6] Ibid. Trusts, passim
  • [7] F Scott Fitzgerald – This Side of Paradise – p.236
  • [8] Shaxson – Treasure Islands – p.272
  • [9] J.M.Keynes – Collected Works – xxi – p.236
  • [10] Shaxson – Ibid. p.8
  • [11] Shaxson – Ibid. p.10.
  • [12] Shaxson Ibid. p.229


If you enjoy OffG's content, please help us make our monthly fund-raising goal and keep the site alive.

For other ways to donate, including direct-transfer bank details click HERE.

0 0 votes
Article Rating
Notify of

oldest most voted
Inline Feedbacks
View all comments
Denis O'hAichir
Denis O'hAichir
Jun 7, 2019 2:26 PM

Well argued article.

Andy Sweet
Andy Sweet
Jun 3, 2019 3:16 PM

will you be discussing 9/11?

Jun 3, 2019 3:12 PM

Thank you for publishing this

Jun 3, 2019 8:49 AM

Hardly a mention of Jean Caude Juncker, Luxembourg and tax evasion on an industrial scale.
Still, the article is basically correct, because the 95% are the ones who keep nations going, by their toil and by their inability to dodge paying tax.

Jun 3, 2019 5:33 AM

Over a period of time, I got to know many people in the world of finance and business generally. It seemed to me that about 99% of what went on was bent. It was quite rare to find things that were above board.

One of these was a very pleasant young chap who worked for a commercial bank. He was a money launderer. He set up a “branch” for the bank on a tiny Caribbean island. The “bank” was a shack at the end of an airstrip. Small aircraft would land and a passenger would get out and deposit a Samsonite suitcase full of cash. After a time, the passengers no longer bothered to get out. They would just beckon him over and hand over the suitcase through the plane window, with the engines still running. They were mainly twin engined light aircraft.Eventually, the planes didn’t even bother landing. They just lobbed the Samsonite suitcases out of the plane as they passed over. He soon had an impressive collection of Samsonite suitcases. He just had to watch out to avoid getting whacked round the head by a suitcase “bomb.” He laundered money all over the world.

I knew someone else with impressive accountancy qualifications who worked for a large multinational mining company. He was the Bribes Officer. His job was to pay the bribes to foreign heads of state. He’d phone up the recipient to tell him, “Good morning, Mr. President, I’ve just deposited another $5 million in your Swiss account.” He knew most of the African and Third World leaders personally. The funny thing was, he was extremely religious and strictly observed the Sabbath. He wouldn’t do anything like play football on a Sunday.

Another wealthy businessman I knew made a fortune by re importing British drugs. It took me some time to understand his business model. Drug companies, like Wellcome, produced drugs in the UK. Some of their production was sold in the UK, to the NHS. Some of it was sold abroad. They charged the NHS three times as much as their foreign customers. So he bought up drugs that had been sold abroad, re imported them to the UK, and sold them to the NHS at a big mark up, but for less than they were being charged. He made a lot of money for himself, and everybody seemed happy with the arrangement, including presumably the UK taxpayer, who was none the wiser. I thought at first he was buying seconds, or stuff past its sell by date, but it wasn’t. It was exactly the same.

I knew a very successful furniture salesman, who was also coincidentally very religious. He sold office furniture, some of it very high quality. He said it was possible that every sale he made was bent. It was very rare that any deal he did was straight. He sold office furniture to London councils, and the people he dealt with at the councils were mainly West African Mafia types who had somehow wangled jobs there. Some of them were illegal immigrants. They put the furniture he sold them through the books at a vastly inflated price, and trousered the difference. There didn’t seem to be any proper internal controls. The councils were notoriously inefficient and maladministered at the best of times. Whether it’s improved at all since then I don’t know, but somehow I doubt it. He also sold a lot of office furniture to Nigerian fraud gangs. They would rent an office, obtain furniture, vehicles, photocopiers, computers, office equipment, all on credit, pay the first month’s down payment, then decamp, selling all the vehicles, office equipment etc. Creditors would find an empty office a few weeks later. It was obvious they were up to this from the outset. I said – don’t you get the sack from the company for selling stuff you never get paid for? He said – Oh no, the company doesn’t mind, it still gets paid, the finance company bears all the loss. He would go back a few weeks later, buy back the furniture he had sold for 10p in the pound, and sell it on again privately. He had a range of furniture, including high price items like hardwood desks that sold for thousands of pounds. He bribed somebody at a London financial institution, a bank specialising in loans to Eastern European governments, to win a £2 million contract to supply all the furniture. He had to hand over an attache case full of cash at 6 am one morning. Everything was put through the books at a multiple of the real price. That was true of the whole operation. The place was built with Italian marble inside. Everybody there was bent. They were creaming it off like mad. The bank was set up by western financial institutions to make loans to countries like Poland, but it just seemed to be a money making racket for everybody there from top to bottom.

They were all quite nice people in their own way. This is the way things are. I’ve met many others like them.

Jun 2, 2019 11:01 PM

Fabian socialism isn’t a socialism it’s a a rich ours club designed to entrap people away from socialism. Fuck the Fabian society

Jun 2, 2019 11:01 PM
Reply to  John

Boys not ours. Predictive text is awful

Francis Lee
Francis Lee
Jun 3, 2019 7:54 AM
Reply to  John

The Fabian Society of 1884 was nothing like the Blairite FS of today. Apart from the Webbs there were other interesting thinkers and radicals such as Graham Wallas, Sydney Olivier, Annie Besant, G.B.Shaw, William Clarke. These people were responsible for a copious output of writing such as Fabian Essays in Socialism and Fabian Socialist Tracts which started with ”Why are the many poor?” That was the first wave of socialist radicals, the second wave included Leonard Woolf who wrote ‘Empire and Commerce in Africa’ a splendid polemic and the science fiction writer, H.G.Wells.

These people were sincere radicals and creative writers and thinkers, a little before their time perhaps, and should not be dismissed with casual expletives. It is always a good idea to actually read what the object of your criticism before launching into an emotional tirade.

Rhisiart Gwilym
Rhisiart Gwilym
Jun 2, 2019 5:09 PM

Useful piece – but someone really needs to do a thorough proof-read of the whole text; peppered with glitches.

Also it would help if both Frank and Nicholas – and a whole bunch of others who comment on socio-economic matters – would get a firm hold – finally – on a fundamental fact of logic, into which our faces our ramming right now at full tilt: Growthforever – of anything: economic activity, population, resource extraction, whatever – on a finite planet is simply not possible. Eventually this doltish delusion of professional economists comes up hard against the non-negotiable realworld Limits; which reality is now unfolding unmistakably, for all who want to look with open eyes, and minds. The end of growthforever has to happen some time, and the early manifestations of that end-time are here right now. Sod growth. It’s over. Forget it, and start working at strategies to manage a shrinking economy (aaaargh! shockhorrorstorm! blasphemy!), leading eventually to a steady-state one. Fantasise how we will, that’s where we’re heading now willy nilly.

Hint: our *actually-practicable* choices, in reality, are two: scarcity socialism, or vicious, hierarchical neo-feudalism; neoliberalism writ large and set in stone.

And please, technonarcissists (Jim Kunstler’s coinage), spare us your limpid scientismic faith-based mantra that technology will ALWAYS find a way, soon it will be taking us to the stars, and the future is Startrek-shaped. It ain’t. There’s no such thing as trilithium crystals. Better make the best of this one planet that we’ve got. We shall be staying here; and probably with a good deal less industrial hitechery possible in the future than what we and our home planet are suffering – briefly, one only time – now.

Jun 2, 2019 2:15 PM

First of all: well done Frank, for getting to the end of “The Finance Curse”. I found it a tautological re-stating of ‘Treasure Islands’: which was saying nothing that following TJN; TNI; Richard Brooks; the SPERI Report; and Susan George hadn’t already said. I picked up an old copy of one of Susan’s books the other day: which said something like: “by the time you read this book (6 hours) 100,000 (Un)people will have died from poverty related causes”. Murdered by (debt) money.

Why I can’t read Shaxson is because it contains a tacit acceptance of this fact. Yes, the Fat Cat’s take the spoils and sequester them offshore: but who shopped in the now defunct BHS onshore? And had Green not done that which is legal – following the corporate playbook …as he himself said – voted for and legitimised by the public: materialistic people would still be shopping there. One of Shaxson’s themes is the ‘finance curse’ is oversize: not that it is a parasitical, biocidal, blood money imperialism over all humanity and all life. Just what is the optimum size for omnicidal parasitical Wetiko psychosis?

Taxing the City down to an optimal psychotic imperialism, and closing the tax loopholes that allow but a few individuals to benefit from maximal and conspicuous self-love: seems to miss the point that all the micro-self-maximisations and self-absorbed micro-imperialisms impact the macro-level of materialistic murder by money just as much. Is that the point: that we want the high street blood money materialist outlets re-opened; the conflict resource hungry commodities to flow onshore from off; that we go back to work in extractivist industrialised ecological rape culture; and prosper again from the contained and controlled murder-by-money exploitation-machine that is the City? How utterly repugnant and amorally atavistic is that? Green et al are symptomatic of a deeper dialectical materialist sociopathology – one that has an endemic majoritarian endocolonisation and contagion. One Shaxson cannot see.

The thing about the historical dialectic is that it did result in socialism – perhaps even a communal Marxism – one that was hijacked and sent offshore. With the resulting austerity and hollowed out materialism left onshore. Much of the modern critique, I find, is motivated by socio-materialistic envy and desire-jealousy. If only the Robber Barons hadn’t taken the majority for themselves …think of the materialistic prosperity we could have had? I find this the dullest of dullest false consciousness wingeing. Of course the Robber Barons stole the fucking lot, and put it where no one can find it. Did you not notice while you were shopping and living the exact mirror-capitalist materialistic lifestyle – only perhaps on credit not capital?

And if the materialistic dialectic continues: they will regrow the City and do it all over again. As anyone who has even been in a room – even without actually reading – with Marxist literature in it would know.

We got here by the subjectification of materialist choices. That the rich benefit optimally and the poor sub-optimally is written into the capitalist code. Accumulation by dispossession is all that follows primitive accumulation. If you benefit and are OK with this arrangement: it is because you have chosen to conform and consent to capitalist imperialism. Realising this too late – that we got the shit end of the stick – what I call Primate Protest politics (chucking back your cucumber because someone else has grapes – and you prefer grapes). Well, Doh!

OK, we are here now. But wanting to protract the materialistic dialectic is beyond stupidity …like no one has been paying the slightest bit of attention as to the why and how of capitalist accumulation that brought us to this highly predictable and obvious place. I do not know how many people die per six hours to fund such stupidity …but it will not decrease while we equivocate about how to re-optimise the system to re-inflate our deflated, over-financialised, materialistic, murder-by-money, imperialistic bubbles of self-love. How about we get real instead: and find real solutions – not just shrink the City and make the Fat Cats pay their taxes? ‘Xcuse my French: but that is fucking sick.

Only little people pay taxes …with their lives. To fund the bourgeois equivocation about how to re-bourgeois their lives. Can anyone else see the problem I had with that …reading Shaxson?

Jun 2, 2019 1:39 PM

Excellent article articulating many of my bugbears!

I would like more to be written about:-

1, the Euro Dollar shadow banking.

2. The massive increase in the Public Debt over the last 9 years – where did it go?

The General Election will be happening and both these subjects will be central to stopping the promotion of the Brexit party and the risen from dead LibDems/NuLabInc.

Francis Lee
Francis Lee
Jun 3, 2019 5:41 PM
Reply to  DunGroanin

What is the Euromarket?

The term euromarket has two distinct meanings. In finance, it is the market for eurocurrencies: these are all currencies that are held outside their country of issue. In commerce, it refers to the single market of the European Union (EU) in which goods and services are freely traded between member countries, and which have a common trade policy with non-EU countries.
Breaking down the Euromarket

A euromarket can be used to describe the financial market for eurocurrencies. A eurocurrency is any currency held or traded outside its country of issue. For example, a eurodollar is a dollar deposit held or traded outside the U.S. A key incentive for the development and continued existence of such a market is that it is free from the regulatory environment (and sometimes political or other country-specific risks) of the “home” country. The “euro-” prefix in the term arose because originally such currencies were held in Europe, but that is no longer solely the case and a eurocurrency can now be held anywhere in the world that local banking regulations permit. The eurocurrency market is a major source of finance for international trade because of ease of convertibility and the absence of domestic restrictions on trading.
Euromarket as the Single Market of the EU
The term can also be used to refer to the single market of the European Union. The single market was created by the abolition of restrictions on the movement of goods and services (as well as people) between member countries of the EU. The European Commission describes the single market as “one territory without any internal borders or other regulatory obstacles to the free movement of goods and services.” The free flow of goods and services across borders makes it easier for companies to operate across countries. It is intended to improve efficiency, stimulate trade and help growth, while also helping achieve the political objective of deeper integration between EU member countries. Note that most, but not all, members of the EU have adopted the euro as their currency, so the eurozone (which refers to the countries that have adopted the euro in a common monetary union) is not synonymous with the euromarket

Shadow Banking

Shadow banking is a blanket term to describe financial activities that take place among non-bank financial institutions outside the scope of federal regulators. These include investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds and payday lenders, all of which are a significant and growing source of credit in the economy.

Despite the higher level of scrutiny of shadow banking institutions in the wake of the financial crisis, the sector has grown significantly. In May 2017, the Switzerland-based Financial Stability Board released a report detailing the extent of global non-bank financing. Among the findings, the board found that non-bank financial assets had risen to $92 trillion in 2015 from $89 trillion in 2014. A more narrow measure in the report, used to indicate shadow banking activity that may give rise to financial stability risks, grew to $34 trillion in 2015, up 3.2% from the prior year and excluding data from China. Most of the activity centers around the creation of collateralized loans and repurchase agreements used for short-term lending between non-bank institutions and broker-dealers. Non-bank lenders, such as Quicken Loans, account for an increasing share of mortgages in the United States. One of the fastest-growing segments of the shadow banking industry is peer-to-peer (P2P) lending, with popular lenders such as LendingClub.com and Prosper.com. P2P lenders initiated more than $1.7 billion in loans in 2015.

I hope this is useful


Jun 2, 2019 1:25 PM

Thanks for the article. Could I recomend “Moneyland” by Oliver Bullough, which looks at the same issues in some detail.

Jun 2, 2019 4:19 AM

Having read Adam Smith, (which, I suspect most neoliberals have not!)
and Marx’s Kapital, can we say Capitalism really started when limited company format came in?
Where directors of companies were separated from the entity they ran.
Thus they were free to run it into the ground without personal obligation.
And this happened after Smith observed, and wrote his book?
(Best lines in Smith are where he warns against Scottish banks writing paper in London
to cover debts in Edinburgh- took days to communicate twixt the 2 then!)

Jun 2, 2019 11:23 AM
Reply to  davemass

Absolutely right.
It’s beautifully told in Joel Bakan’s “The Corporation” (2004).
Hence we end up with the world ruled by plutocracies.

Jun 2, 2019 3:47 AM

This is something that we, humans, so frequently forget…specially those of us who has more of something totally made-up, meaningless that will “not another minute buy”….and then…

“The Earth is a very small stage in a vast cosmic arena. Think of the rivers of blood spilled by all those generals and emperors so that in glory and in triumph they could become the momentary masters of a fraction of a dot. Think of the endless cruelties visited by the inhabitants of one corner of the dot on scarcely distinguishable inhabitants of some other corner of the dot. How frequent their misunderstandings, how eager they are to kill one another, how fervent their hatreds. Our posturings, our imagined self-importance, the delusion that we have some privileged position in the universe, are challenged by this point of pale light.”

Carl Sagan

Gezzah Potts
Gezzah Potts
Jun 2, 2019 9:27 AM
Reply to  Ramdan

Really appreciate this quote Ramdan. All the trivialities and banality and emptiness of modern, uber consumerist society in the West, the chasing after more and more possessions; stuff. End of the day…. all meaningless. I try and look at the whole – connectedness – Gaia – everything as one.

Jun 2, 2019 11:29 AM
Reply to  Gezzah Potts

Karl Marx called it “commodity fetishism”.
He was spot on.

different frank
different frank
Jun 2, 2019 11:52 AM
Reply to  Ramdan

Rather like fleas fighting over who owns the dog.

Jun 3, 2019 12:05 AM

Fleas carrying plague too…

Jun 2, 2019 3:23 AM

As for the little people paying the taxes, a few years ago I finished a job on a Friday and moved to start another one the following Monday. A few days later, I received a letter from HMRC informing me that I owed them 18p and that I would be prosecuted if I failed to rectify this immediately.

Most commendable diligence on the part of HMRC. It’s unfortunate this zeal does not extend to the big boys. Like Philip Green paying himself a “special dividend” of £1,200 million, or rather paying it to his wife in Monaco, with not a penny piece in tax. But then again he does have a fleet of superyachts to finance. And in the US the three musketeers, Gates, Buffett and Bezos, owning more than the bottom 50% of the population, 160 million people. For the big corporations, paying taxes is largely optional, and they largely opt out of doing so, in most cases legally, because the law does not apply to them. They make up the law as they go along to suit themselves, and retrospectively legalise their illegality. Boeing haven’t paid a penny piece in tax for about 15 years now. You can say much the same about a rogue’s gallery of all the biggest corporations, Google, Amazon, Starbucks, General Electric, Boots Chemist. Operating profits are turned into losses by sleight of hand. The Donald used this trick in his Big Apple property empire for years. Critics of Trump mistakenly point to these “losses” and exploitation of bankruptcy to portray him as a failed, incompetent businessman, but they are missing the point. The Jewish oligarchs who looted Russia of its wealth in the 90s used similar tricks. They sold Russian oil on the world market for $30. But they laundered it by first selling it to a shell company in Switzerland for $7, its production cost. So they made no profit and paid no tax, and just seven of them ended up owning 70% of the wealth of Russia.

In the past, the millionaires of the Gilded Age who were the equivalent of today’s billionaires, were at least involved in productive businesses and industries. Carnegie, Rockefeller, Vanderbilt, Ford, may have been unscrupulous robber barons, but at least they left behind them steel mills, railroads, oil refineries and car plants. The current crop of barons are exclusively of the Philip Green variety. They become rich through financial manipulation, buying businesses with borrowed money, loading them down with debt, and looting the pension funds. They create nothing of value. Like Gates and Bezos, exploiting monopoly positions and suppressing competition. Or more prosaically, the Glazier Brothers and Manchester United. Or the Berezovskys, Khordokovskys, Abramoviches, Fridmans and Kolomoiskys, combining financial manipulation and outright looting with high level corruption, fraud and plain gangsterism. The line between parasitic rent seeking and outright criminality is increasingly blurred.

Finance used to make up 2% of the US economy in the 70s. It is now 40%, the same level as in the UK. In the past, both countries used to make things, but they have been hollowed out and deindustrialised. Cities like Detroit have lost over half their population and come to resemble Wild West ghost towns. They are being reclaimed by nature. This financialisation contributes nothing of value to the economy or society as a whole. It is rent seeking, pure and simple. Shuffling around pieces of derivatives toilet paper and pretending they are worth billions.

The relatively productive capitalism of the past has been replaced by crony capitalism, crapitalism, parasitic finance capitalism, a looting kleptocracy, call it what you wish. Capitalism has been cannibalising itself, impoverishing the vast bulk of the working and middle classes, whose lot is now slashed wages, salaries, benefits, and pensions, and chronic insecurity, and who now have little or no stake in the system. With all public services being cut to the bone to bear the brunt of the bail outs. Taking on a lifetime of debt to finance education or a one bed £500,000 flat in London.

Our crapitalist system collapsed in 2008. It collapsed as communism did before it, but succeeded in lasting a little longer before it did. Since then it has been on life support, sustained in its zombie state only by a combination of tens of trillions in money printing and negative interest rates to inflate asset bubbles. Debt has mushroomed beyond any control. From 2010-2015, the Cameron/ Clegg double act doubled the national debt from £750 to 1,600 billion to bail out the banksters. It has since ballooned to its current level of over $3,500/ £2,700 billion, exacerbated by the collapse of the currency, which is the inevitable result of these policies and nothing to do with Brexit.

A general collapse on a far greater scale than 1929 is inevitable. The only question is when and exactly how this will come about, and if this again ends in global war, as seems increasingly likely.

Jun 2, 2019 9:20 AM
Reply to  mark

“… Carnegie, Rockefeller, Vanderbilt, Ford, may have been unscrupulous robber barons, but at least they left behind them steel mills, railroads, oil refineries and car plants …”

They also left behind museums, libraries (especially public libraries, in the case of Andrew Carnegie), universities and even the five-day work week.

Jun 2, 2019 11:27 AM
Reply to  Jen

Yeh, but now the banks are awash with laundered drug money and the ethics that come with that. The current plutocrats have the ethics of Arnold Rothstein, Al Capone and Pablo Escobar. Can’t see them building libraries or museums.

Jun 2, 2019 12:22 PM
Reply to  Einstein

That’s true … they have the ethics of Mitt Romney who (with Bain Capital) bought up productive businesses with borrowed money, took those businesses’ profits and saddled the same businesses with the responsibility of having to pay the interest on the loans that Bain Capital took out. This forced them to sell their assets and lay off staff.

Nup, can’t see Bain Capital building libraries or museums either … they’d cannibalise them too if those could be privatised.

Jun 2, 2019 11:15 PM
Reply to  Jen

Yes, very true. When Ford wasn’t sending his private army in to gun down strikers, he raised the daily wage to an unprecedented $5 a day so his workers could afford to buy the cars they were producing, creating a market for his products.

Fair dinkum
Fair dinkum
Jun 2, 2019 2:06 AM

Tell us something we don’t know Frank.
But you know what?
Every oligarch, every psychopath and every member of the One Per Cent share the same fate as the rest of us.
Being dead.
Justice prevails.

Jun 3, 2019 12:06 AM
Reply to  Fair dinkum

Yeah, but who wants to be dead…?
I think the meaning of life goes somewhat beyond that.

Jun 2, 2019 12:05 AM

Only the Little People go to jail too

Jun 3, 2019 12:07 AM

Pitchforks it is, then.