Same Colonial Wealth Extraction, Different Name

If you keep up with right-libertarian media, you’ve probably seen more than one puff piece on how much global capitalism has improved things for people in the Third World: higher per capita GDP, longer life expectancies, and so on. But if average standards of living have gone up, according to an article at the Guardian (Jason Hickel, “Aid in reverse: how poor countries develop rich countries,” Jan. 14), they’ve done so despite $2 trillion in net annual outflow of wealth over and above the amount received in aid, trade flows and investment. $1.3 trillion goes in annually as capital investment and foreign aid, and $3.3 trillion is extracted.

The net total since 1980 is $16.3 trillion — less than a half trillion a year — suggesting the rate of extraction has accelerated over the years. Of that $16.3 trillion, $4.2 trillion is interest on debt. And remember, most World Bank and private loans are for the purpose of building the infrastructure needed to make offshored Western manufacturing profitable — in other words, to facilitate the extraction of wealth. Third World countries are basically socializing the operating costs of Western capital, like roads and utilities, by obtaining loans to build them — and then squeezing the interest payments out of their taxpayers. As Third World countries increasingly turn to the kinds of “public-private partnerships” in infrastructure that Nicholas Hildyard wrote about in “Licensed Larceny,” we can expect the share of total public revenues committed to paying off contracted debt to private corporations to skyrocket, further increasing the net outflow of money.

Repatriated profits are another major share of the extracted wealth. “Think of all the profits that BP extracts from Nigeria’s oil reserves, for example, or that Anglo-American pulls out of South Africa’s gold mines.” Those examples are telling. Resource extraction isn’t some relic of the distant colonial past. All those mineral mines and oil wells, all that enclosed agricultural land that were seized by Western capital under colonialism, are still owned by the heirs and assigns of the original looters. Land and resources that are the rightful legacy of the people of those countries, and should have been reclaimed by them long ago, are instead a bleeding sore supplying rents to transnational corporations.

But the bulk of those repatriated profits — a whopping $13.4 trillion since 1980 — are concealed under other names to evade national restrictions on capital export. False prices are stated on invoices to disguise additional money being moved out of the country. Trade misinvoicing in developing countries amounted to $700 billion in 2012 alone. That figure only covers misinvoicing of goods, by the way — misinvoicing trade in services could add another trillion annually to the mix.

And remember: Most (I’m really just saying “most” to be nice here) of those profits result from theft. They result from extraction of those above-mentioned stolen resources like fossil fuels and minerals, from the sale of produce grown on land stolen from peasants both in colonial times and under Western-backed post-colonial regimes, and from the use of “intellectual property” to control the conditions under which other people are allowed to produce stuff (most actual production is outsourced to independently owned facilities).

The main function of Third World states since independence is exactly the same as that carried out by colonial administrations under the old Empires: to make the world safe for continued extraction of wealth by Western capital. Third World governments that fail at their duty of protecting wealth extraction — let alone directly impede it — quickly find themselves overthrown.

So with all this net outflow of money — currently to the tune of $2 or $3 trillion a year — what about the increased GDP and life expectancies right-libertarians are always crowing about?

It’s disingenuous to credit “capitalism” for them. Let’s just acknowledge right up front that whatever improvements exist, exist despite this massive outflow of stolen money, and not because of it. The main direct impact on individual well-being comes from technical innovations. And improved ways of doing things are developed by human beings. The main function of transnational corporations is to claim artificial property rights in these improved ways of doing things developed through cooperative human effort, to obstruct the process by which new ideas normally spread, and collect tribute from allowing it to be shared and used. As Arthur Chu once put it, “isms” like capitalism and socialism don’t make the iPhone or anything else. Human beings make things. The “isms” just decide how the rewards are distributed.

If absolute poverty is indeed declining in the Global South as a result of technical progress and better ways of doing things, despite the annual theft of trillions of dollars in wealth from those countries, imagine how much they’d benefit from that technical progress without parastic corporations holding artificial state title to their stolen land and resources, and exacting tribute for the right to use ideas.

The Center for a Stateless Society (www.c4ss.org) is a media center working to build awareness of the market anarchist alternative