The governance of global wealth chains

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Whilst I don't often link to academic papers here (and they are now a big part of my life) I thought some new work from my colleagues on the EU Horizon 2020 project, ‘Combatting Fiscal Fraud and Empowering Regulators (COFFERS)', Leonard Seabrooke and Duncan Wigan at Copenhagen Business School might be worth an exception.

In ‘The Governance of Global Wealth Chains' Len and Duncan suggest a long overdue update to the huge body of work flying under the banner of Global Value Chains. That work has traced power relations between lead firms and suppliers in globalised production and how these relationship condition who does what in the journey of a commodity from raw material to shop shelf. What this new paper does is something important: it says that any such survey of power relations is incomplete when issues of finance, law, accounting and taxation are left unexplored. As readers of this blog are well aware, who gets what from economic globalisation is as much a function of the machinations of finance as any relative productive capacity in the strictest physical sense. What this means is that the paper suggests that if we are to find a path to a more equal, just and prosperous world, we can't just follow the commodity, we better also follow the money. Here's the abstract, but I suggest it's worth a read:

This article offers a theoretical framework to explain how Global Wealth Chains (GWCs) are created, maintained, and governed. We draw upon different strands of literature, including scholarship in International Political Economy and Economic Geography on Global Value Chains, literature on finance and law in Institutional Economics, and work from Economic Sociology on network dynamics within markets. This scholarship assists us in highlighting three variables in how GWCs are articulated and change according to: (1) the complexity of transactions, (2) regulatory liability, and (3) innovation capacities among suppliers of products used in wealth chains. We then differentiate five types of GWC governance — Market, Modular, Relational, Captive, and Hierarchy — which range from simple ‘off shelf' products shielded from regulators by advantageous international tax laws to highly complex and flexible innovative financial products produced by large financial institutions and corporations. This article highlights how GWCs intersect with value chains, and provides brief case examples of wealth chains and how they interact.


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