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Tue Jan 15, 2013, 10:55 PM

The New Dependency Theory

The New Dependency Theory
by Ronen Palan

The crisis that began in late 2007, and which seems to be continuing for the foreseeable future, has highlighted the role of global wholesale financial markets in creating what may be described as new dependency relationships. Old dependency theory was a structural-Marxist theory. It hypothesised that the world capitalist economy is structurally arranged to facilitate massive transfers of capital from developing countries to the developed world. 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.

This is so for two reasons. First, the net flow of capital is not necessarily transferred to or invested in the developed world. Rather, the transfer of financial resources from developing countries joins a large pool of capital registered in offshore locations. Second, there is evidence that developed countries are subject to net external outflow of capital as well. In contrast to old dependency theory, the new theory suggests that capital transfers do not necessarily operate on a regional or intra-national basis; rather, wholesale global financial markets have emerged as gigantic re-distributive machines that play a key role in the continuing and growing gap between rich and poor world-wide.

In developed countries, the main detrimental impacts of illicit flows are growing income inequalities and a weakening and narrowing of the tax base, as effective (as opposed to nominal) tax rates by corporations and rich individuals decreases continuously. For developing countries these problems are compounded further: they include poor governance structure, a large black economy, lack of capital for basic infrastructural projects, and over-reliance on foreign aid money that generates harmful political-economic dynamics. More fundamentally:

• Alternative sources of elite revenue made possible by illicit capital flows reduce the need for negotiated settlements between government and society, which lie at the heart of the development of the European democratic state model, and undermines the development of efficient and accountable state institutions
• Proximity of large offshore financial centres damages capacity for an endogenous financial system

more@
http://www.newleftproject.org/index.php/site/article_comments/the_new_dependency_theory


I'm reminded of Who Runs the World

In the first such analysis ever conducted, Swiss economic researchers
have conducted a global network analysis of the most powerful
transnational corporations (TNCs). Their results have revealed a core of
787 firms with control of 80% of this network, and a “super entity”
comprised of 147 corporations that have a controlling interest in 40% of
the network's TNCs
.

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Reply The New Dependency Theory (Original post)
Trillo Jan 2013 OP
pansypoo53219 Jan 2013 #1
mlr Jan 2013 #2
Egalitarian Thug Jan 2013 #3

Response to Trillo (Original post)

Wed Jan 16, 2013, 02:31 AM

1. why do the rich need MORE money?

don't they have bootstraps, hell, private planes, limos, MONEY? why do they NEEEED tax cuts? it's not like they ever PAY.

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Response to pansypoo53219 (Reply #1)

Fri Jan 25, 2013, 07:20 PM

2. why the rich need more money

 

I believe the short answer to your question Pansy is that once the private banking family cartel called the Federal Reserve Board was established in 1913 America has borrowed, yes borrowed the money it needs from them with interest instead of minting it as the Constitution requires. The interest on all that currency has gone to these few families, and they became uber-wealthy. The ruling elite. What would you do if you were making obscene amounts of money from the richest nation to ever exist. They did what every one else would do with these trillions of dollars, they bought up everything in sight, from small corporations to major corporations, to politicians, to think tanks to further their agenda. It used to make me angry when I first discovered how far down the road we are, but given how ignorant people are, maybe being a slave to the ruling elite is better than going back to warring villages. Who's to say?

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Response to mlr (Reply #2)

Sat Jan 26, 2013, 06:49 PM

3. But slavery and warring factions are not the only alternatives. There is a better way. n/t

 

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