Looking for solutions to racial wealth inequality in isolation of the financial systems’ colonial roots could risk us continuing to uncritically rely on the very institutions and instruments that are responsible for ongoing racial wealth extraction. This means that we must look at the ongoing role of extraction in the global South and on marginalised communities (racialised communities, working class people, trans people, women and disabled people) by the City of London stock exchange.
Those who historically shaped the tax system (privileged men with land ownership who were also involved in the enslavement of people of African descent) in their favour must be further investigated and challenged for us to reform those advantages they built into the system for themselves. Tax havens need to be a major focus for racial wealth campaigners because their roots in the legacy of the empire continue to play a role in maintaining global wealth inequality.
At the time of the fall of the British empire, Britain gradually structured its economy not around manufacturing and productive sectors, but around finance. The City of London banks provided the financing for the Empire that the colonies would pay interest to, which was further facilitated by its independent legal jurisdiction and by its role in helping London become the engine of colonial competition, driven by this racialised exploitation.
“In order to create these spaces, they used the expertise developed during empire and the territorial remnants of the Empire, such as Britain’s dependent territories, financial expertise and networks established during Empire and the knowledge of how to establish, run and benefit from an international financial system.” Tax Justice Network
It is no surprise therefore that Britain has consistently tried to defend its own tax havens from international efforts to address their role in facilitating tax avoidance, human rights abuses and corruption. Though there is growing pressure in the UK itself to take action e.g., by people like Margaret Hodge’s parliamentary group on tax and corruption.
Therefore, the deconstruction of the global tax haven network, and other tax abuse practices is quite possibly one of the most effective starting points to addressing global racial wealth inequality. Action on tax abuse through tax havens, however, continues to have a racialised element to it, with the US and European nations placing a focus on havens in Black majority regions without reflection on their own role in the creation and the existence of tax havens on European or US shores. An example of this includes the targeting of Liberia’s tax havens, depicting the perpetuation of historical patterns of exploitation and systemic racial inequalities. This approach reinforces negative stereotypes about African countries and their ‘ability’ to manage their own economies. Addressing tax havens in Liberia and other developing nations should be approached collaboratively, while also addressing systemic issues like historical exploitation, corporate greed, and a lack of regulatory oversight.
A transformation in the economy
Just Transition is a term that has its roots and traditions in worker-led environmental movements from the Americas. It describes a set of principles, processes, and practises that build economic and political power to shift from an extractive economy to a regenerative economy. Its principles include fair treatment of workers and communities impacted by transitions to more sustainable economies, meaningful participation of all stakeholders in decision-making processes, building economic and political power from the grassroots, and regenerative practices that restore ecological health. The transition must be just and equitable, redressing past harms and creating new relationships of power for the future through reparations.
Decolonising Economics uses the term Just Transition to ground a vision for systems change that attends to racial inequality and other forms of social injustice. Before anyone can begin to address the racialised elements of the tax system or strategize for a tax system rooted in racial justice principles, it’s crucial to build a mental framework for what it means to decolonise the economic system. The Strategy for a Just Transition Framework built by Movement Generation is an important starting point as it guides us in systems change thinking by recognising the purpose and function of our existing economy (an extractive, financialised economy), and the purpose and function of an economy rooted in social justice (a living/caring economy).
This framework presents the ideas of an extractive economy as being: “An economy based on the removal of wealth from communities through the depletion and degradation of natural resources, the exploitation of human labour (a particularly precious natural resource) and the accumulation of wealth by interests outside the community (i.e., big banks, big oil, and big box stores). The purpose of the Extractive Economy is the accumulation of wealth and power in the hands of a few, enforced through the violent enclosure of land, labour, and capital. The violence of enclosure can only result in the erosion of biological and cultural diversity.”
The conditions that enable the extractive economy to continue unchallenged include the development and maintenance of a “colonial mindset” – a worldview that established itself during the colonial era through the construction of “race” – the idea that different groups of people can be valued based on their ethnicity and distance from whiteness. The social construct of race has its roots in the colonial era, because it forms part of the ideas around the “other” that identifies anyone that deviates from the mainstream of “whiteness” as “on the margins”.
These dominant narratives around groups of largely marginalised communities were used to explain experiences of inequality, including trans and queer people being immoral, disabled people being useless, working-class people being lazy and racialised people being “savage”. As Nim Ralph writes: these ideas around the “other” were used to justify all kinds of violence against people of African, Indigenous, Latin American and Asian descent, for the pursuit of profit.
Instead, The Strategy for a Just Transition Framework developed by Movement Generation presents a comprehensive approach to achieving a Just Transition. It includes five key components: power-shifting, resilience-based economies, ecological restoration, cultural reclamation, and transformative justice. The framework emphasizes the importance of grassroots movements and community-led solutions to environmental and economic challenges. Examples of these solutions include community land trusts, worker-owned cooperatives, regenerative agriculture practices, Indigenous language and cultural revitalization, and restorative justice programs. The framework seeks to address the root causes of environmental and social injustices, including racism, colonialism, and economic inequality, and promote transformative, systemic change that challenges dominant power structures and creates a more just and equitable society.
The Strategy Framework for a Just Transition supports our understanding of systems change in a way that addresses the colonial roots of the economic system. The framework recognises that any adaptation to the existing economy will be meaningless for racial justice unless it acknowledges the role and function of white superiority in the ongoing impact of racial wealth inequality globally. Whether it is adapting the existing system, building new systems, or facilitating the transition process, there is a role for everyone in this framework.
Challenging the tax system through the lens of the colonial mindset will uncover the history of wealth extraction from racialised populations. This mindset continues to influence the way we think about taxation and social justice, and it is important to acknowledge and challenge this mindset in our work towards racial justice. Many mainstream tax and social justice organizations have failed to consider the historical and ongoing impacts of colonisation on wealth distribution, which has been a fatal flaw in their efforts to address racial justice.
To address this flaw, it is essential to incorporate Indigenous and marginalised communities’ perspectives and voices in the development of tax policies and solutions. This involves listening to and prioritising their needs and values in decision-making processes, which can lead to more equitable and sustainable tax policies. Additionally, it is necessary to support community-based solutions that challenge the colonial mindset and instead shifting the focus of taxation towards supporting community well-being, sustainability, and justice, rather than simply generating revenue.
