Global wealth chains in the international political economy

Abstract

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.

Global inequality chains: integrating mechanisms of value distribution into analyses of global production

“…This therefore brings within its purview such diverse phenomena as money laundering, double tax treaty networks, tax competition between jurisdictions, complex derivative financial products, and collective investment schemes. As with global value chains, scholars who study global wealth chains are particularly concerned with questions of how the elements of the chain are brought into connection with each other, and how governance is articulated and distributed through the chain (Seabrooke and Wigan 2014).…”

Rents, Power and Governance in Global Value Chains

“…Recent work, however, has attempted to broaden the scope of GVC and GPN analysis to incorporate external political economy issues (Neilson et al 2014;Ponte and Sturgeon 2014;Ravenhill 2014;Seabrooke and Wigan 2014). Moreover, there has also been a concerted effort to start the process of analysing GVCs through a broader governance lens dealing with national and supranational institutions, and issues of international tax and wealth accumulation (Mayer and Phillips 2017;Bair 2017;Postuma and Rossi 2017;Seabrooke and Wigan 2017 work by specifically focusing on how governance in GVCs provides opportunity or constrains various actors from exercising of power over the distribution of rents.…”

Corporation tax as a problem of MNC organisational circuits: The case for unitary taxation

“…Whatever functions some of the independent parts have, the whole is also configured to enable the minimisation of tax. The particular forms the circuit may take serve to illustrate Seabrooke and Wigan's (2014) recent call to develop an understanding of global wealth chains (GWC) as an adjunct to the more common emphasis on global value chains. Many others have set out the ways in which the post-Fordist period has involved the development of a variegated, unevenly developing neoliberalism (e.g.…”

“…This is based on the capacity to create organizational circuits through which MNCs can advantageously shift sales, revenue and profit. These organizational circuits serve to illustrate the significance of global wealth chains (GWC, Seabrooke and Wigan, 2014) as an important adjunct to the concept of global value chains. Much of the capacity to engage in tax avoidance is a consequence of a longstanding structural flaw in the international tax system.…”