International Politics

Capitalism still fine, despite Panama Papers release 

Zachary Voth 

Ottawa, ON. 

April 12, 2016 


Protesters outside 10 Downing Street

Well, the Panama Papers seem to be the best thing since Bernie Sanders to happen for left-of-centre theorists and writers everywhere. You can't scroll five inches without reading another headline on the coming collapse of global capitalism. This has been foretold, apparently, by the massive amounts of tax evasion revealed in the recent leak of information from Mossack Fonseca. The masses will really have had enough one of these days.

The argument, at its most basic, is that the wealthy 1%, aren't content to simply fleece the rest of us through their shameful ownership of the means of production. In addition to this, they won't even pay their legitimately prescribed taxes, as evidenced by the Panama Papers. We have to rise up, and take control of our economy. The free market won't distribute wealth to everyone, so we have to do it ourselves. The proof has just been leaked.

Here's the thing: While free markets and a capitalist mode of production are overarching requirements for tax fraud, there are other interceding variables in the mix. The tax code, for one thing. Offshore tax havens obviously catch a lot of flak, but they aren't expressly illegal, in most cases. If we as citizens don't like that, then our duly elected representatives can change our laws and how they are enforced. The troubling bit is when those politicians, like Iceland's now former prime minister, have money overseas as well, as it's a clear conflict of interest.

None of that has much to do with capitalism, at any rate. The problems we face have some achievable solutions: Stricter tax laws, more money for enforcement, and clearer guidelines on conflicts of interests for our leaders would all help stop the shell game that keeps money out of government coffers. It could even work in favour of the wealthy. After all, if a government gets to collect more money that would have gone overseas, that provides an opportunity to cut the original tax rate and keep revenues neutral.

In any case, what won't fix the Panama problem is ditching capitalism as a means of distributing resources. It has its problems, sure, but socialism hasn't had a great track record either when it comes to corruption. It also tends to be worse at distributing resources, which creates an even greater host of problems. The Soviet Union is a great example of both corruption and economic failure in a socialist system. (I am aware of assertions that it was an authoritarian state, not a socialist or communist one, but it is good to remember that authoritarianism and socialism are not mutually exclusive.)

The blow-back over the Panama Papers isn't over yet. There may yet be more revelations about the goings on at the foggy edges of our tax system that inspire more controversy. I am still confident that capitalism will stagger on in a similar way to now, as governments incrementally improve rules and regulations like that always do. Maybe if the discourse was more focused on these practical solutions, rather than the improbably demise of global capitalism, positive change would come faster. The system through which we distribute our resources isn't going anywhere.

The views and opinions expressed in all articles are those of the author alone. They do not reflect the positions of the author's current or previous employers, any organization to which the author belongs, or The Young Canadian Media.