Ken Klippenstein. Leak: Democratic Org “Anti-Extremism” Project Targets Left

Leak: Democratic Org “Anti-Extremism” Project Targets Left

Ken Klippenstein August 14th 2026

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Third Way, a prominent Democratic lobby group in Washington, has a new multi-million dollar effort to “combat extremism” on the “far-left,” an internal staff email leaked to me reveals.

“[E]xtreme far-left voices gaining purchase over the past year … represent a sharp break from a traditional left wing in American politics,” the July 23 email says. This break, the email continues, has led to the rise of a faction that is both “radical” and “illiberal” — figures like Zohran Mamdani — pursuing a government like authoritarian Cuba.

“When some folks hear ‘socialism’ they think of Scandinavia, but what the activists behind the DSA are advocating for is closer to Cuba,” the email says, referring to the Democratic Socialists of America.

Cuba!

	Leaked email 4.45KB ∙ PDF file
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The irony is that Third Way, sharply critical of the Trump administration, is echoing it perfectly. In fact, the email was sent just days before the release of a State Department report alleging Cuban influence on the American left, mentioning such frightening subversives as Ben Cohen (founder of Ben & Jerry’s Ice Cream) and Los Angeles Mayor Karen Bass, as I reported at the time.

Also, earlier that month, Secretary of State Marco Rubio led an international summit on “political terrorism” also targeting the left, even introducing a new term: “Far-Left Terrorism.”

It’s not a war against Trump or MAGA or the Republicans in 2028. It’s not against disinformation or foreign influence; that was yesterday’s panic. It’s not against anti-semitism, or the impact of social media, or guns. It’s not even against violence in general.

It’s a war against other Democrats (socialists specifically), and what Third Way labels far-left “extremism.” That sure sounds more like the FBI and homeland security than a “center left … organization that champions moderate policy and political ideas,” as it describes itself

This isn’t just someone running their mouth in an email, either. The author, senior vice president of Third Way, Lanae Erickson, is announcing an organized and sustained effort to defeat the supposed new extremist threat.

As the email says, “we are launching a strategy to drive awareness of these threats to the party, including adding to our team by hiring a Director of Anti-Extremism to help us make the case against these noxious ideas and recruit many others to do the same.” 

The goal, the email continues, is to “create a counterweight to the forces pushing more Democrats to embrace extreme and illiberal ideas.”

Third Way’s president, Jonathan Cowan, alluded to the plan last week.

“We are preparing for the next war that is coming,” Cowan told the New York Times, describing a $15 million effort to discredit democratic socialism between now and 2028. This week, Third Way posted a job announcement for a director to head its “Anti-Extremism” project, corroborating the email.

Screenshot of new Third Way job announcement

Beyond the Washington rhetoric, Third Way is saying that if your political views aren’t vanilla, you’re an “extremist.” That’s national security’s polite word for terrorist, once a reference to Muslim Americans and would-be revolutionaries but now applied to any American citizen who dares to venture away from Party talking points.

What is worse, it used to be the case that when the government or the administration, whether Obama or Bush, used the word “extremist” they were always careful to include a qualifier: “violent extremism.” That meant that physical violence (actual or intended) was necessary to get one labeled a terrorist.

Back during the Obama years, there was “countering violent extremism.” Then from Trump’s first term to Biden, there was “domestic violent extremism.” The FBI’s threat categories carried it too — “racially or ethnically motivated violent extremism,” “anti-government or anti-authority violent extremism.” They are all imperfect and ugly labels, but the “violent” qualifier at least maintained a pretense that there was a threat of physical harm. And pretended that the threat label wasn’t questioning free speech or association.

Now it’s just “extremism” — one word. Third Way is joining the Trump administration in dropping the violence qualifier. It’s enough to just have the wrong beliefs; wrong, that is, in the eyes of the Party apparatus in Washington.

When I asked Third Way this week how it defines this “extremism,” spokesperson Kate DeGruyter said that the effort “is aimed at the DSA itself, not at liberal Democrats” — though it wasn’t clear how they define “liberal Democrats.” Asked who gave Third Way the $15 million for this project, DeGruyter’s only response was: “This a new effort and we are in the process of fundraising.”

Before Dr. Abdul El-Sayed won the Michigan primary to run for Senate as a Democrat, Cowan, the Third Way president, issued an open letter and op-ed directly targeting him as a member of DSA despite his never having been a member of the organization and explicitly describing himself as a “capitalist.” (Third Way tells me it now supports El-Sayed, presumably because he’s since won.)

Three members of Congress are DSA members or describe themselves as democratic socialists — Senator Bernie Sanders and Reps. Alexandria Ocasio-Cortez and Rashida Tlaib — along with the mayor of the country's largest city, Zohran Mamdani. You may have heard of them.

The Times reported that Third Way’s new campaign would go after both self-described democratic socialists and candidates like El-Sayed, whom Cowan at the time accused of running a DSA-style campaign without the membership card. So because DSA is too narrow, Third Way has done exactly as the FBI would do: it has expanded the definition of the threat category. The war is against members of DSA and people who espouse DSA positions or use DSA tactics, or just socialists, or just “far-left extreme voices and forces,” as Third Way says, or even more broadly people with “politically toxic ideas and offensive rhetoric.”

Politically toxic ideas and offensive rhetoric? That sounds like me and half the people I know. 
I call top bunk at the Third Way reeducation camp!

Third Way is all but an arm of the Democratic Party. It’s run by former administration officials — Cowan was chief of staff at the Department of Housing and Urban Development under Bill Clinton — and exists to supply the party’s leadership with the language that leads to the talking points that become the way elected Democrats describe the country and their own voters.

As for what this all looks like in practice, Third Way provided a preview this week in its remarks on Francesca Hong’s campaign for Democratic candidate to be Governor of Wisconsin.

“She’s not a real person,” Yemisii Egbewole, a Senior Fellow at Third Way and former Biden White House official, told Mark Halperin. She added an implication of mental illness, saying Hong is “deeply unsettled, and she should really work through in therapy some of her own beliefs.”

The goal, with the “extremist” label, is thus to make anyone who doesn’t conform with the vanilla politics of Washington seem not just idiotic but insane. It’s a real-life One Flew Over the Cuckoo’s Nest, and if your beliefs aren’t something you’d see on cable news, the nurse would like to see you.

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Trump Model Management: Where Is Alexia Palmer?

Where Is Alexia Palmer

Bruce Fanger

Trump Model Management, a seventeen-year-old foreign model, and questions that were never answered

White Rose,

August 14, 2026

I have written about Alexia Palmer many times. The first time was in 2016, when she had the pluck to do something few seventeen-year-old immigrant models would have dared to do. She went up against Donald Trump’s modeling company and demanded the money she said she had been promised.

Ten years later, I am still asking questions about her.

Not Jeffrey Epstein. Not photographs of Trump at parties. Not guilt by association. Trump Model Management. Donald Trump’s company. Alexia Palmer’s experience. The immigration documents. The money.

Palmer was recruited in Jamaica when she was seventeen years old. Trump Model Management brought her to the United States through the H-1B visa program. According to court documents reviewed by Reuters, the agency represented in connection with her visa that she would receive at least $75,000 per year for three years.

Palmer said that was not remotely what happened.

She alleged that after three years with Trump Model Management, she received only a few thousand dollars after commissions, expenses and other deductions. ABC reported that the agency took roughly 80 percent of her earnings in expenses and fees and obtained only 21 shoots for her during those three years. Her visa also meant she could not simply walk across town and work for another employer while remaining legally employed in the United States. Palmer described the experience herself in brutal language: she said she felt “like a slave.”

Think about the power relationship here.

A seventeen-year-old girl is recruited in Jamaica by an American modeling company owned by one of the wealthiest and most famous men in the United States. The company participates in bringing her across an international border under an employer-sponsored visa. Immigration paperwork represents employment worth $75,000 a year. She arrives in New York dependent upon that employment arrangement and later says that virtually none of the money she expected ever reached her.

Somebody should have investigated this as possible labor trafficking and exploitation of a foreign minor.

That is the part I am no longer interested in saying politely.

Trafficking does not require somebody chained in the back of a truck. Federal labor-trafficking law concerns obtaining labor through force, fraud or coercion. Whether Palmer’s circumstances satisfied every element of a trafficking offense is precisely the kind of question an actual investigation could have examined.

Where was that investigation?

Instead, Palmer attempted to fight Trump Model Management through civil litigation. Her complaint alleged violations involving wage law, immigration law, fraud, breach of contract, unjust enrichment, conversion and RICO.

People sometimes dispose of this story with four words:

“She sued and lost.”

That is an extraordinarily misleading description of what happened.

There was no trial. There was no jury. Palmer never received an evidentiary hearing in which she took the stand, Trump Model Management’s representatives took the stand, witnesses were cross-examined, the competing accounts were tested and a finder of fact determined what actually happened to her.

Judge Analisa Torres dismissed the federal lawsuit at the pleading stage. On Palmer’s labor claim connected to the H-1B program, the court ruled that she had failed to exhaust the administrative process through the Department of Labor and therefore could not pursue that claim in federal court. Other claims were dismissed because the court concluded that Palmer had not sufficiently alleged or supported the legal elements necessary for those particular causes of action.

The underlying facts were never adjudicated at trial.

That distinction matters.

Nobody heard Palmer testify and then found her testimony false. No jury examined all the evidence and declared Trump Model Management innocent of exploiting her. No evidentiary hearing tested the entire story and produced a factual finding that everything described by Palmer had been legitimate.

The lawsuit was dismissed.

The questions were not.

Palmer did what the judge said the H-1B process required. She went to the Department of Labor. Bloomberg Law reported in April 2016 that her attorney confirmed she was continuing the fight there. Later reporting indicated that the Labor Department complaint was also dismissed and that Palmer was appealing that decision.

Then something else happens to the Alexia Palmer story.

It goes quiet.

Very quiet.

I have been looking for this woman for years. I have followed leads. I have searched the internet and social media. I have written about her repeatedly. I have contacted people who have resources and political reach far beyond mine, including Alexandria Ocasio-Cortez and others, hoping someone would take an interest in finding her and determining what happened after those proceedings.

My writings on this subject have reached substantial audiences.

Still, I cannot find Alexia Palmer.

That does not mean Donald Trump made her disappear. I have no evidence of that, and I am not going to invent some Hollywood ending because the actual story is disturbing enough.

It does mean I want to know where she is.

Palmer was hardly invisible in 2016. She spoke publicly. She appeared on national television. She challenged Trump Model Management in federal court. She spoke directly to reporters about her treatment. Then the public trail becomes exceedingly difficult to follow.

So where is she?

What became of the Department of Labor appeal?

Did she return permanently to Jamaica?

Did she receive money through some later arrangement?

Was there ever a settlement?

Was there a confidentiality agreement?

Did she simply decide she had endured enough and wanted nothing further to do with Donald Trump, modeling, lawyers, reporters or the United States?

Was she pressured by anybody?

Is she alive, healthy and happily living a private life somewhere?

I hope that last answer is the answer.

Then let us find her and hear it from Alexia Palmer.

There is another reason these questions deserve attention. Palmer’s allegations were not the only allegations concerning Trump Model Management. Other former foreign models later described questionable immigration practices, crowded agency housing, large deductions from their earnings and working arrangements that left them with remarkably little money. In September 2016, Senator Barbara Boxer called for federal immigration authorities to investigate allegations concerning Trump Model Management.

Trump Model Management eventually shut down in 2017.

Alexia Palmer’s questions survived it.

This is why I get irritated when every discussion of Trump and young women immediately gets dragged back to Jeffrey Epstein.

There are serious questions about Epstein, certainly.

I do not need Epstein for this one.

Donald Trump owned Trump Model Management. Palmer was recruited into Trump Model Management at seventeen. Trump Model Management participated in securing the visa that brought her from Jamaica to the United States. The immigration paperwork represented substantial annual earnings. Palmer said the promised money never materialized. She said deductions consumed most of what she earned. Her ability to work legally in America was tied to the employer who had brought her here. She fought the company in court and then through the Department of Labor.

That record stands on its own.

If you stripped Donald Trump’s name from the story and told Americans that a wealthy American businessman operated an international modeling company that recruited a seventeen-year-old girl in Jamaica, brought her across an international border under employment paperwork representing $75,000 a year, placed her into an arrangement where she claimed she ultimately received only a few thousand dollars, and controlled the employment upon which her legal work status depended, I suspect people would have a very different reaction.

They might even use the words possible international labor trafficking.

They certainly ought to use the words possible exploitation of a foreign minor.

Somebody should have investigated exactly that.

Not a civil judge deciding whether a complaint satisfied the technical elements of several causes of action.

Investigators.

People empowered to subpoena records. Follow the money. Examine immigration submissions. Interview every model housed by the agency. Determine who made the representations contained in visa applications. Compare those representations with actual bookings and payments. Determine how housing and other charges were calculated. Interview the people who recruited teenage models overseas. Determine what management knew and when they knew it.

That is what I mean by investigation.

Perhaps such an investigation would have found no trafficking crime at all.

Fine.

Then we would have an answer.

Instead, we have a seventeen-year-old girl, an international recruitment operation, employer-controlled immigration status, enormous discrepancies between projected earnings and money allegedly received, allegations of exploitative conditions, a lawsuit dismissed without the underlying factual dispute ever being tested at an evidentiary trial, an administrative fight that disappeared from public attention, and a woman who seems to have largely vanished from the public record.

Those are not answers.

Those are reasons to ask harder questions.

I have been asking them since 2016.

I will ask the simplest one again.

Where is Alexia Palmer? 

The Oakland Construction Site: A Lesson in Capital and Labor

Richard Mellor
Afscme Local 444, retired
8-13-26

 

I was walking in downtown Oakland a while back, and as I walked past a large construction site, an image jumped right out at me. It wasn’t the scale of the building or the heavy machinery, but a simple piece of makeshift plywood. Painted right in the center, in rough, urgent spray-paint, were the words: "Pick up the Pace!"

 

It caught my eye because, instantly, I saw how that phrase encapsulates my own life existence and that of millions of working people throughout the world. It hits home for me.

 

What it does is express a fundamental social relation: the dynamic between the buyer of labor power (the employer or capitalist) and the seller of that labor (the worker). The price of that worker’s labor power is what we call wages. Most of us survive, raise families, and navigate our lives off the wages we receive during our lifetime. If we’re lucky, we can save some of it and even invest it, earning a little extra without working—a welcome boost, but rarely something we can rely on. In the era of capitalist decline, and over many decades here in the US, it often takes working three jobs and many hours simply to survive.

 

This relationship is the entire basis of the capitalist system of production and the ultimate source of wealth in society.

 

The workers on this Oakland building site receive a paycheck. They may work 10 or 8 hours a day for it. If these workers are union members, they will likely have better conditions and possibly higher wages. If not, their overall package—vacations, sick leave, and healthcare—is often inadequate or non existent.

 

Meanwhile, the owner of capital—the investors and companies funding this construction project—expects a return on their investment. They get this by paying the workers less in wages than the total value the workers create during the day.That gap, that unpaid surplus value, is where profit is born.

 

If the return on that investment falls below expectations, the employer has two primary choices. One is to lengthen the time the worker is on the job. The other is to force the worker to speed up, to move faster—literally, to "pick up the pace," as that spray-painted sign demanded.

 

This second option is often preferable to capital. Over the past century or more, workers have banded together and built unions to pressure employers, limiting the hours of work in a day or week and forcing employers to pay extra—overtime—if those limits are crossed.

 

The raw demand to simply "pick up the pace" becomes a clearer visualization of how capital extracts its surplus and what the source of their profits is, the unpaid labor of the working class.

 

Lebanon: This is an orchestrated war.

This is an orchestrated war.

Mohamad Safa *

 

Israel is making southern Lebanon unliveable—exactly as outlined in the document it submitted to the international community years before regarding the 6 to 8 kilometers border zone—a document the media is unaware of.

 

Twenty years after the adoption of UN Security Council Resolution SCR1701, Israel has violated it more than 50,000 times since its adoption in 2006. Israel has violated all signed agreements, and all international norms with absolutely no consequences.

 

Israel currently occupies and controls 20% of Lebanon, systematically demolished more than 81 villages—Ancient villages where Jesus Christ once walked, villages that have stood the test of time for centuries and centuries, with prehistoric and Roman-era roots—destroyed homes, roads, bridges, and all infrastructure, as well as farmland, forests, valleys, hills, and entire ecosystems.

 

According to Article Il of the UN Genocide Convention, genocide involves specific acts committed with the “intent to destroy, in whole or in part, a national, ethnical, racial or religious group.”

 

Israel is engaged in the deliberate destruction of the means of life in southern Lebanon which itself  is evidence of genocide. Wiping out entire villages is not military necessity. It is the deliberate destruction of civilian infrastructure. These are war crimes under international law: Wanton devastation not justified by military necessity.

 

The war in Lebanon has reached a point where it can no longer be described as anything other than genocide and ecocide. When Israel flattens an entire villages, the rest of the world has one clear obligation—cut off that military's access to weapons. 

 

Don't be fooled by current leaders statements calling for an end to the genocide in Gaza and Lebanon. If they really wanted to end it, they would have stopped military aid to Israel.

 

World leaders must move beyond expressing deep concern and strong condemnation of Israel’s genocide to taking steps to stop it , and that means immediately ending all military aid to Israel. 

 

Israel is committing another genocide in Lebanon with complete impunity, so regularly that the world has lost interest—just like it has lost interest in Gaza.

 

Lebanon is the second most-documented genocide in history after Palestine, yet the most denied.

 

* Mohamad Safa, is a former UN representative for the Patriotic Vision Association (PVA).  

On Facebook  https://www.facebook.com/mhdksafa. 

Financial Times investigation Reveals Israels Total Destruction in Lebanon. The Gaza Method.

Watch a video based on this report here. 

FT has a firewall and I couldn't get the article. RM

Shaiel Ben-Ephraim 

 

This investigation by the Financial Times is staggering in its findings and in its scope and methodological rigor. Some of the findings, backed up by incredible levels of forensic evidence: 

 

1) Israel completed much of its systematic destruction across Israeli-occupied southern Lebanon after Israeli forces took control of already-emptied villages in mid-April, and after the April 17 ceasefire. The ceasefire was used to make these areas completely uninhabitable. 

 

2) The scale of destruction is incredible. Roughly 85,000 housing units damaged or destroyed (likely an undercount); 62 villages and farms inside the "yellow line" occupation zone, covering ~6% of Lebanon and extending ~10km inland, with ~270,000 residents barred from returning. Over 20% of the south's farmland and forest destroyed, ancient olive groves worst hit. All Litani river bridges destroyed; at least 2,500km of water infrastructure gone.

 

3) This is stated policy and an intentional plan to make an entire area uninhabitable and never allow the population to return. Defence minister Israel Katz explicitly invoked the "Rafah and Beit Hanoun model" and later boasted of destroying "24 Lebanese villages… not house by house, but entire villages."

 

4) This is without a doubt a war crime. Destruction of property requires immediate military necessity and not speculative ideas that Hezbollah may use a building some day. Not allowing the return amounts to the ethnic cleansing of the area. 

 

The lack of any real consequences for Gaza, meant that Israel felt free to do the same in Lebanon. It is now doing the same in the West Bank. This will stop unless we stop it.

 

Shail is on Facebook at https://www.facebook.com/shaiel.benephraim  On Twitter at @academic_la 

 

WAPE 2026: Adam Smith, imperialism and financialisation – and an award

Last week, the 19th Congress of the World Association of Political Economy (WAPE) took place at the University of Greenwich, London. WAPE is a Chinese-run academic economics organisation, linking up with Marxist economists globally. “Even though that might seem like bias, the WAPE forums and journals still provide an important outlet to discuss all the developments in the world capitalist economy from a Marxist perspective. Marxist economists from all over the world are welcome to join WAPE and attend WAPE forums.” (WAPE mission statement). 

The theme of this conference was the contribution of Adam Smith to political economy, because it is 250 years since Smith published his An Inquiry Into the Nature and Causes of the Wealth of Nations – and in effect, pioneered political economy (now called economics by the mainstream).

The Chair of WAPE, Chen Enfu, from the Chinese Academy of Social Sciences, in addressing the conference on Adam Smith’s theory of national wealth said that, while Smith has become the guru of ‘laisser-faire’, free market economics, in reality, he did not merely advocate free markets but also explained the development of modern economies within the framework of the social division of labour, moral norms and the role of the state.

In Wealth of Nations, Adam Smith argues that, as each individual pursues his or her own economic activity, the individual is unaware that the combination of all these individual actions produces a market for production and consumption that is not under his or her control but leads ‘invisibly’ to a better outcome for all.  Behind this was Smith’s great insight that modern industry is based on a division of labour: when the production of commodity is broken down into discrete parts where human labour specializes instead of workers doing every part of the process, productivity rises and costs and prices fall.

But as Dogan Gocmen of Dokuz Eylut University explained in his keynote address to the conference, there is the apparent contradiction in Smith’s views. In his earlier work,  The Theory of Moral Sentiments (1759), Smith articulated an ethical critique of the commercial society as analysed in the” Wealth of Nations”. So Gocmen argued it would be wrong to think that Adam Smith’s view consisted merely that the ‘invisible hand’ of the market should rule.

https://dogangocmen.wordpress.com/wp-content/uploads/2012/12/the-adam-smith-problem-and-adam-smiths-utopia5.pdf

There were many sessions during the conference on Smith’s contribution to political economy and many presentations aimed to ‘save Smith from neoliberalism’, as Stavros Mavroudeas put it in his presentation. Adam Smith became the man that Chicago University economists like George Stigler and Milton Friedman turned to as their theoretical mentor for the ‘free market’; and was lauded by right-wing free market politicians like Margaret Thatcher, inspiring them to adopt policies to reduce the size of government and state and ‘let the market rule’ in all aspects of social organization.  And global free market economists like Friedrich Hayek and the Austrian school of free market economics look to Smith for their basic approach. There is even a ‘think-tank’ based in the UK named after him that claims to develop economic policy based on clear ‘free market’ principles. Its slogan is “Using free markets to create a richer, freer, happier world.” But Smith was not some raging free market evangelist that denied the role of government or for that matter considered that human behaviour was driven by material self-interest and nothing else. That is a myth created by today’s free marketeers that Smith was opposed to government and to moral behaviour over material interest.

However, as Cheng Enfu said, while Marx recognised Adam Smith’s theoretical acheivements, in particular, his identification of labour as the fundamental source of the creation of wealth, Smith’s version of the labour theory of value  was contradictory. He adhered to the view that labour created value, but also Smith reverted to a theory of value based on ‘factors of production’ ie rent from landlords, profits from capitalists and wages from labour, rather than all value being created by labour and then appropriated by landlords, bankers and capitalists. 

Smith’s’ ‘factors of production’ theory now dominates modern mainstream economics and his labour theory of value has been put in the bin. As Marx said: “Adam Smith’s ‘contradictions are of significance because they contain problems which it is true he does not solve, but which he reveals by contradicting himself. His correct instinct in this connection is best shown by the fact that his successors take opposing stands based on one aspect of his teaching or the other.” Theories of Surplus Value I, 151. Marx also criticised Smith for treating the capitalist mode of production as a utopia, an eternal and natural order, denying its historic transitory chraracter as in Marx’s materialist conception of history.

While the ideas of Adam Smith were the theme of this year’s conference, the over 150 attendees from all parts of the world and the over 100 papers presented discussed many other subjects, including the nature of knowledge, imperialism, AI and technological innovation, value theory, and of course, China.

As usual, it is not possible to cover all these papers in this short post.  I shall concentrate on the sessions where I made a presentation and others that I attended.  There was a session on the Marxist theory of the circuit of capital.  Here there was a disagreement between Alan Freeman and Guido de Marco on one side, who reckon Marx had a disequilibrium theory of value morphing into prices of production and into the circulation of capital; and on the other side, Fred Moseley who argues that market prices and the circuit of capital are bound by a long-term equiibrium prices of production. I won’t go into the ins and outs of this debate and its implications in this post.  Instead, let me refer readers to a new book edited by Freeman and De Marco entitled Money, Value and Marx’s Circuit of Capital where various authors present their arguments on the circuit of capital.

My own presentation was in a session on imperialist exploitation, in which I argued that under the rule of imperialism, the poor countries of the world would never close the gap with the richer Global North, either in per capita income, productivity or human development.  Only China stood a chance of doing so.  None of the BRICS will catch up to the current high-income country level in the next 20 years, except China. China would reach that by 2041 and would match the projected level for the high-income countries by 2046.

China will match the current level of ‘human development’ (HDI) in the rich economies by 2039, but it would take until 2046 for China to reach the projected average rich country HDI in that year.  Every other BRIC country will fail to meet either of those targets in a generation.

The main reason is that wealth (value) is being persistently transferred from the South to the North; AND profitability in the Global South is falling faster than labour productivity growth is rising, thus lowering investment growth. China may be the exception because its investment growth is less determined by profitability than in any other major Global South economy. 

In the same session, Michael Tyrala of Hong Kong University presented some astonishing facts about the level of offshore tax dodging and its impact on the ability of governments, particularly in poor countries, to develop their economies. According to conservative estimates, as of 2015, somewhere between $7.6-36 trillion of untaxed financial wealth has been parked offshore, growing by somewhere between $200-850 billion annually, disproportionately affecting developing countries. This stash represents 8-38% of total global financial wealth and 3-14% of the $250 trillion total global financial and non-financial wealth. That compares with official development assistance (ODA) by the OECD countries of just $153 bn. 

It seems that 73% of the Fortune 500 multinationals and 98% of the FTSE 100 operate tax haven subsidiaries. According to research published by the IMF, an estimated “$12 trillion, or almost 40 percent of all foreign direct investment positions globally – are completely artificial”, consisting of “financial investment passing through empty corporate shells with no real activity”, likely for tax purposes, and this “phantom FDI keeps soaring, outpacing the growth of genuine FDI”. (Damgaard, Elkjaer and Johannesen 2018; 2019).

International tax avoidance and evasion by high net worth individuals and multi-nationals ravage potential national government tax revenues, exacerbate income and wealth inequality (around 50% of all wealth in tax havens is owned by the 0.01%, and around 77% by the 0.1%.) and gives an unfair competitive advantage to the wealthiest companies, the tax rates of which are conservatively estimated to be some 4-8.5% lower than those of similar domestic-only operations, SMEs, and startups, stifling innovation.  As for regulation, forget it.

In another session on financialisation, I was to present a paper but was unable to do so because of illness.  (The slides for my paper are here https://thenextrecession.wordpress.com/wp-content/uploads/2026/08/financialisation-or-profitability.pdf). Financialisation, like neoliberalism, is a buzz word among leftists and heterodox economists. Many argue that ‘financialisation’ has created a new source of income that does not come from the exploitation of labour, but from the rise of finance capital, monopoly control and the gouging money out workers and productive capitalists, in other words, from rent not profit.  But despite the claims of the ‘financialisation school’, the empirical evidence is just not there. There is an array of empirical studies that show financial income is not a significant form of corporate income and profits from production remain overwhelmingly dominant.

In contrast, Marxist theory argues that financial investment is a counteracting factor to the tendency for the rate of profit to fall in capitalist accumulation. Marx called this investment in ‘fictitious capital’, which is when capital is accumulated in financial and speculative sectors seeks to reap higher rates of profit compared to productive sectors. where there is a fall in the rate of profit.

In the session, Mavroudeas and Pontis argued that a large part of financialization literature treats fictitious capital as ‘virtual capital’: namely an autonomous sphere that generates profits independently of production and exploits through ‘dispossession’ rather than through the extraction of surplus-value from human labour. But this is a Keynesian view. For Marx, fictitious capital is a specific function of interest-bearing capital. It is a wager on the future extraction of surplus-value and thus remains geared, despite several layers of separation, to the sphere of production. Fictitious does not mean virtual: financial profits remain a redistribution of surplus-value.

To finish, let me tell readers that the WAPE Council this year gave me an award for my ‘significant contribution to Marxian economics’ – with a very heavy bronze globe!  I shall be publishing my acceptance speech some time soon.