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Tax evasion and white collar criminals

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"Banking secrecy will no longer take place." With these words, the German finance minister, Wolfgang Schäuble, declared on October 27, 2014, in front of four European daily newspapers (“Les Echos”, “El País”, “The Times” and “Corriere della Sera”) the international will to confront the tax evasionl.

His words are framed within the framework of a global agreement on exchange automatic tax information system that took place this past Wednesday, October 29 in Berlin. This will aim, for the year 2017, to solve tax evasion towards tax havens such as the Cayman Islands, Switzerland or Liechtenstein. Although it is considered an important step to curb corruption, and we do not doubt it, it is nothing more than a facade covering other structures to carry out tax evasion. In this article we will try to outline what a common practice represents in times of crisis: a regulation that serves as a social pretext towards a growing deregulation of these illicit activities.

Financial capitalism

Financial capitalism is globalization.

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“Globalization is, in effect, driven by the profit of banks, speculators and traffickers of multinational (American) firms and under the multiform domination of the hyperpower of the USA[1]. The type of capitalism that is being imposed, especially that which appears after the Cold War, is a globalized, deregulated and “financialized” model”Excessively. Of these three characteristics, the last one is the most prominent. “Financialization” represents a “process by which financial services, solidly implanted, take over the dominant role in matters of economy, culture and politics within a national economy [2] and worldl ". For finance to be established as such, it is necessary to open certain borders (globalization) and the deregulation (or in other words liberalization) of the economy of the states. Likewise, all this is accompanied by the development of new communication technologies (such as the internet) and of large multinational companies.

The financial capitalism works at multiple levels but it is on the supranational - or global - scale where it is found guarantees of progress, since financial capital escapes state control, and therefore goes to its wide. Since the State should be the regulator of the economy (the ideological foundations of the nation state), the capitals would have to be framed in them, assuming their laws and regulations. The search for extreme profitability on a global scale, at levels far from social reality, can cause imbalances given the “de-territorialization” of the economy, and causing periods of crisis economic.

The 2008 Economic Crisis: Context for Reforming the Criminal Foundations of Financial Capitalism

It is commonly understood that the current economic crisis began in 2008 with the collapse of the American bank of Lehman Brothers. But such blaming of the aforementioned banking entity masks a deeper, more structural reality, whose responsibility has gone unnoticed in many households. We refer to a criminal reality of the speculative practices of banks, especially excess credit (taking large risks) and the undercover sale of toxic financial products. This reality appeals to white-collar criminals at the core of high-finance movements.

These financial "scams" occur at times of economic euphoria, when control of the economy is overshadowed by optimism in the markets. When the "speculative bubble" explodes - due to the inability to repay the debt by certain sectors economic or society -, the bad practices of the banks are exposed, as we were able to observe with the case of Bankia in Spain. In reality, what happens is a collapse in the productive structure. The large number of competitors within the financial sector leads to a progressive decline in the rate of profit of the financial monopolies, and forces them to change strategy in order to perpetuate their dominance monopolistic / oligopolistic. Then, the financial monopolies / oligopolies are heading to restructure the productive system legitimized by social urgency.

It is there where attempts are made to regulate those "defects" of the capitalismor, with the aim of avoiding other relapses of the system and the political and social uproar. Capital evasion in tax havens would be one of the great problems. In Spain, just entering the economic crisis (2009), large companies evaded € 42,710 million[3] (remember the € 22,000 million injected into Bankia by the State). However, parallel to the regulation of these structural defects, another monopolistic model of global fraud is being generated.

The "High Frequency Trading", New Criminal Structure?

The agreement on the exchange of tax information, instigated by the Organization for Economic Cooperation and Development (OECD)[4] and signed by 49 countries in Berlin on October 29, 2014, aims to provide confidence in society and in the markets. It seems that, at least from the outset, this is good news.

But this new regulation is nothing more than a new mask for the criminal character of capitalism. In other words, the construction of new structural bases of the productive system that will serve to perpetuate the power of the monopolies / oligopolies in the production of new capital evasion mechanisms.

High frequency trading or High frequency trading (in English) is a transaction technique that uses sophisticated computers capable of executing orders at high speed with the purpose of taking advantage and making a profit by operating automatically when they find differences between prices on the values ​​[5]. It is a form of trading algorithmic that acts on a time scale much higher than the human one. Thus, the human brain is replaced by algorithmic calculations and supercomputers, making the human increasingly dispensable.

We find ourselves before a new technological paradigm, based on artificial intelligence, which is nothing more than a new financial engineering structure that favors a few people who own large capital. The regulation of tax havens, as we have been saying, it will be nothing more than a makeup service to fiscal fraud world if these new speculative practices are not regulated. The autonomous ability of these large computers, the ability to make ultra-fast profits and even evade capitals (since it is impossible to follow the speed of these mechanisms) contrasts with the global political turn against the fraud.

The tax evasion, the economical crisis, the corruption… Represent a hidden face of the reality of crime. The media focuses on highlighting the most visible acts but not those with the most social repercussions. Rodrigo Rato is an example of the impunity of white-collar criminals whose actions have a higher impact on society.

Bibliographic references

  • [1] Yves Lacoste, Mondialisation et géopolitique, Hérodote. Revue de géographie et géopolitique, La Découverte, 2003, Paris.
  • [2] Gayraut, Jean-François, Le nouveau Capitalisme criminel (“The New Criminal Capitalism”), Odile Jacob, 2014, Paris.
  • [3] Union of Finance Technicians.
  • [4] Exactly, it was the World Tax Forum, a branch of the OECD, who organized the international agreement.
  • [5] Gayraut, Jean-François, Le nouveau Capitalisme criminel (“The New Criminal Capitalism”), Odile Jacob, 2014, Paris.
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