AvanteRedGarde
24th April 2009, 20:12
[Unequal exchange came up in another thread. I thought I'd post this here so people could get a better grasp of what exactly it is and its implications]
A Maoist-Third Worldist Position on Unequal Exchange
by End Imperialism (monkeysmashesheaven.wordpress.com)
Unequal exchange refers to the terms of trade between the oppressed nations and the imperialist nations in the world economy. Unequal exchange is not the only means by which the transfer of value from the former to the latter is achieved (others are western control of currencies and currency markets, loans with extortionate interest rates, “austerity” programs imposed by institutions such as the IMF, price-fixing, transfer pricing, repatriation of profits by transnational corporations – whose initial investments can be almost entirely covered by the proceeds from unequal exchange alone- , royalties from monopoly of intellectual property rights, not to mention the outright theft by force of arms of entire continents of land (Africa, the Americas, Australia) and labour (Africa) etc., etc.). Nonetheless, unequal exchange is a principal means by which the Third World today is plundered of its resources.
Unequal exchange, according to Samir Amin, accounted for $300 billion worth of value transferred from the Third World to the First World in 1980 (1). As noted above, that $300 billion does not account for repatriation of profits from capital export, royalties from patents, monies from debt peonage, financial swindling, or any of the other ways in which the First World fleeces the Third World daily, monthly and yearly. Köhler (2) estimates (by multiplying the exchange rate deviation between the centre and periphery by the nominal volume of centre-periphery trade in goods and then subtracting the latter) that the magnitude of unequal exchange in 1995 was US$1.75 trillion. In 1985 the magnitude of unequal exchange was, according to Köhler, worth around US$300 billion. That is a proportionate increase of nearly six times over a ten year period. If we were to apply the same proportionate increase over the period 1995 to 2005, the magnitude of value of unequal exchange from the non-OECD to the OECD countries would be worth over US$10 trillion in 2005.
What is Unequal Exchange?
Even in so far as capital’s profitability is equalised through its ability to go anywhere at any time to exploit labour as it likes (though by no means is this actually the case, since profit rates tend to be higher in the Third World than in the first) (3), the value of competing capitals is different because of differences in wages, situations of technological monopsony (when the monopoly capitalist countries are the only seller, especially of advanced electronic technology, and the single major buyer of much of the Third World’s produce), and organic compositions of capital. Unequal exchange occurs when poor countries are forced to sell the product of a high number of hours of labour-power paid low wages to a rich country which sells them the product of a low number of hours of labour-power paid high wages. Since only labour creates value and surplus value, surplus value (and ultimately profit) is entirely created in the labour-extensive Third World countries.
The means to equalise wage levels between poor and rich countries are foreclosed because of First World labour market protectionism in both its trade unionist and political forms and because of the constant and ongoing military suppression of the working class in the Third World (cf. Chomsky and Herman, “The Real Terror Network”, etc., etc.). The latter is perpetrated principally (but not exclusively since colonialist invasion is imperialism’s frequent resort) by comprador regimes which act as tribunes of wealth to the First World backed up and installed by massive force of arms supplied, and very lucratively sold, by First World imperialist governments.
Most of the world’s production is done within and between a small number of transnational corporations based in europe, the u$, japan, au$tralia, etc. But that does not necessarily entail an equalisation of technology, even though that has certainly been a real tendency over recent decades. Rather, the imperialist countries retain possession of the most advanced technology and force Third World compradors to buy their outmoded and more labor-intensive technology so as to boost flagging surplus-value creation.
The common claim that using advanced technology makes First World workers more productive is groundless where the calculation is based on socially necessary labor — and it is not socially necessary for Indian peasants to be stuck with hoes and sticks when, for example, American agricultural workers use tractors. Moreover, the actual intensity of labour is higher in the Third World than the First World. Finally, labour is not remunerated under capitalism according to its “productivity”. An hour of socially necessary labour is an hour of social necessary labour whether it is employed using robotic production techniques or using hoes. If anything, Marx tended to see higher wages as the product of an especially successful militant proletarian struggle having wrung them from the capitalists. We can see now that this is not at all the case. The “workers” of the West are the richest in the world, yet only the blindest chauvinist would claim that this is because of their advanced socialist politics. Rather, the incomes of the world’s most reactionary and bourgeois working class, the white workers of the advanced industrial nations, are high because their wages are inflated by receipt of imperialist superprofits. Yet high wages are not unrelated to high organic compositions of capital.
In discussing the superexploitation of entire nations by imperialism, Marxist economist Henryk Grossman (4) writes:
“In international trade there is not an exchange of equivalents, because, just as in the domestic market, there is a tendency toward equalization of profit rates. Therefore the commodities of the highly developed capitalist country, that is, of a country with a higher organic composition of capital, are sold at prices of production (5), which are always greater than their values. On the other hand, the commodities of countries with a lower organic composition of capital are sold under free competition at prices of production that as a general rule must be less than their values…. In this manner, transfers of the surplus value produced in the less developed country take place within the sphere of circulation in the world market, since the distribution of the surplus value is not according to the number of workers employed but according to the magnitude of the capital involved.”
Marx says that different industries with the same degree of exploitation, the same underpayment of the worker for the value produced by her labour, have different rates of profit depending upon the organic composition of capital involved in the production process. Those commodities which have a lower ratio of variable to constant capital embedded in them, that is, which have relatively more living labour (wage-labour) employed in their production than dead labour (constant capital or technology), typically sell below their value in comparison to those commodities produced using a higher organic composition of capital. (6) But Marx says that the profit rate is equalised across branches of production by means of capitalist competition (whereby capital withdraws from industries with low rates of profit and invests in others with a higher rate of profit). Thus, competing capitals with different organic compositions sell commodities at average prices which account for the uniform distribution of surplus value across the branches of production. Overall where one commodity sells for less than its value, there is a corresponding sale of another commodity for more than its value.
One of the major means by which monopoly capitalism, wherein competition amongst capitals has shifted to an international level, secures its high rate of profit is precisely in the form of unequal exchange of commodities. Marx (7) writes:
“From the fact that the profit [the average revenue drawn by the total capital employed in a given inter/national unit - EI] may be less than the surplus value [the amount of value produced by industry over and above the cost of employing the labour-power of the workers required to produce it - EI]… it follows that not only individual capitalists but nations too may continuously exchange with one another… without gaining equally thereby. One nation may continuously appropriate part of the surplus labour of the other and give nothing in exchange for it, except that here the measure is not as in the exchange between capitalist and worker.”
Dussel (8) applies Marx’s insight to the world market, writing:
“Within the “world market” there is a “total world capital” (the only one- along with capital “in general” or in the abstract- in which the total surplus-value is equal to the total profit), parts of which are the “total national capitals.” It is within “total world capital” (not as a single capital, but as the sum of all real capitals) that international competition fulfils its role in the levelling and distribution of the total world surplus value (at least that of the capitalist nations).”
However, and this is the crucial point for Maoist-Third Worldists, he affirms that competition is annulled on an international level by various militaristic and police state measures, which become intensified as monopoly seeks to maximise dwindling profit rates and attacks the proletariat in its demands for a better standard of living and political influence. As Marx (9) put it:
“[State] intervention has falsified the natural economic relation. The different national wages must therefore be calculated on the assumption that the part of them that goes to the state in the form of taxes was received by the worker himself… eternal laws of nature and reason, whose free and harmonious working was only disturbed by the intervention of the state… state intervention, i.e. the defence of those laws of nature and reason by the state, alias the system of protection, was necessitated.”
But the state’s actions are dictated by the needs and interests of the commanding heights of the economy, under monopoly capitalism, imperialist interests. Because of the protectionism adopted by the state and its dominant institutions under monopoly capitalism (in fact, a kind of neo-mercantilism antecedent to the age of “classical” competitive capitalism) “there is no fluidity in the world transmission of technology, of population, of capital as a totality. There is a national average, both of wages and of the organic composition of capital.” (10)
As Third World countries engage in unequal exchange of their commodities on the international market, they are forced to drive down wages to compete with the higher “productivity” (11) (strictly speaking, volume of goods produced) of the imperialist multinational corporations. The low wages of Third World producers are embodied in commodities with low prices, which can sell in advanced western markets for very high prices given the correspondingly high levels of wages there. Dussel (12) writes:
“Objectively or relatively, the product of a less-developed national capital contains a greater proportion of labor-value (“higher price of labor”), although subjectively or absolutely, the worker receives less per month (“a lower wage”). In the more developed countries the worker subjectively receives more wages per capita (creating a larger internal market), but the value of the commodity is less (it has a lower proportion of wage-value: it needs less necessary time per unit of product).”
There is a dialectical relationship between high wages, high organic composition of capital and imperialist superexploitation. A vicious cycle of superexploitation is involved in the process of unequal exchange (the exchange of commodities embodying different values for equivalent prices), whereby a commodity with a high organic composition of capital (and thus a low value) trading freely with a commodity embodying a low organic composition of capital (and thus a high value) inter-nationally allows for high wages in the first, in turn reinforcing the drive to accumulate constant capital by the monopoly capitalist, that is imperialist, powers. The rising surplus occasioned by global overproduction and an ever increasing wage bill for First World workers causes the haute bourgeoisie of the monopoly capitalist countries to seek to mitigate the resultant crisis through investment in further labour saving technology. This process decisively resounds to the benefit of the bourgeoisified workers of the imperialist countries, who are able to purchase extremely low cost commodities (both necessary and luxury goods) as sold by Third World capitalists forced to buy the overpriced products of First World labour. As Dussel (13) puts it:
“[The] essence or foundation of dependency (as Marx would say) is the transfer of surplus-value from a less-developed total national capital to the one that is more developed. It is necessary to compensate for this loss by extracting more surplus value from living labour in the periphery. Dependent capital hence drives the value of the wage below the value necessary to reproduce the capacity to work- with all the known consequences. At the same time, it intensifies the use of this labour by reducing the time necessary to reproduce the value of the wage, relatively and in new ways.”
Dussel again (14):
“In the case of a product produced in Mexico and in Detroit, within competition (because monopoly situations are built, albeit negatively, from competition), it is necessary to distinguish between the “national value” of the product [how much labour-power has been employed in its production – EI], the national price (in Mexico and in the United States) [the cost of its consumption relative to wages in the country consumed – EI], and the average international price [its average price on the international market – EI]. The determination of average world profit should operate in the same way as the determination of an average national profit (among the different branches of production). In the same manner the value of national labor capacity (in Mexico or in the United States), or its national prices (its wages), would allow the conclusion that one is above and the other is below a hypothetical world average. Palloix argues that unequal exchange as a result of different organic composition determines the different rate of surplus-value or the different value of the wage in underdeveloped and developed countries.”
Unequal Exchange and Anti-Imperialism
The concept of unequal exchange is of vital consequence for the Maoist-Third Worldist movement, the International Communist Movement as it exists today. It is impossible today to be a communist and not be a Third Worldist, not to stand first and foremost for the national liberation and independence of the Third World nations held down by imperialism and exploited as nations through such mechanisms as unequal exchange. Dussel (15) sums up this point eloquently:
“The process of national [in the sense of necessitating a United Front between all patriotic anti-imperialist classes – EI] and popular [in the sense of this United Front being led by the working classes – EI] liberation is the only way to destroy the mechanism of constant and increasing transference of surplus value from the less developed total national capital. This assumes overcoming capitalism as such, since the extraction of surplus value (a living capital-labour relation) is articulated to the transfer of surplus value in the competition between total national capitals of different levels of development.”
Notes.
(1) Samir Amin, “The Class Structure of the Contemporary Imperialist System”, Monthly Review, vol. 31, no. 8, 1980, pp. 9-26.
(2) Gernot Köhler, ‘Time Series of unequal exchange, 1960-1998’ in Gernot Köhler and Emilio José Chaves (editors) Globalization: Critical Perspectives (New York, Nova Science Publishers, Inc., 2003), p. 374.
(3) Baran and Sweezy (P.A. Baran and P.M. Sweezy, Monopoly Capital (Harmondsworth, Penguin, 1966), p. 193) argued that the profit rate in the u$a is only a quarter of that abroad, whilst Kidron found that the profit rates of foreign companies in India are higher than in their respective home countries. In any case, the profits extracted from even small investments in the oppressed nations areas are much greater proportionately than those acquired in the imperialist nations. Jalée (Pierre Jalée, The Pillage of the Third World (New York, Monthly Review Press, 1968), p. 76) explains:
“[There] are many well-meaning people, both in the imperialist countries and the Third World, who still have illusions as to the usefulness of private investment in the underdeveloped countries.
It is simple to make the following calculation: a foreign private enterprise sets up in a Third World country where it makes a regular, yearly profit of 10 percent on its investment. If the whole of these profits are transferred abroad, at the end of the tenth year an amount equal to the original investment will have been exported. From the eleventh year onwards, the receiving country will be exporting currency which it has not received; in twenty years it will have exported twice as much, etc. If the rate of profit is 20 percent instead of 10 percent the outflow will begin twice as early. If only half the profits are exported the process will be only half as rapid. This example is a somewhat oversimplified hypothesis, but reflects reality. There is no end to the loss [in Third world national wealth] through such outflows, except [through] nationalisation or socialisation of the enterprises.”
(4) Henryk Grossman, quoted in Enrique Dussel, ‘Marx’s economic manuscripts of 1861-63 and the concept of “dependency”’ in Latin American Perspectives, vol. 17, no. 2, Post-Marxism, the Left and Democracy, Spring 1990, p.66.
(5) “The prices which arise by drawing the average of the various rates of profit of the different spheres of production and adding this average to the cost prices of the different spheres of production are the prices of production.” (Marx, Capital, vol. III, chapter 9).
(6) Sau writes, “Typically, the method of production of agricultural goods requires a relatively smaller constant capital in comparison with industrial goods. Should the rate of profit be equalized between two trading countries having the same rate of exploitation of labour, the country specializing in the export of agricultural goods therefore would suffer a loss of surplus in the process of exchange.” (Ranjit Sau, Unequal Exchange, Imperialism and Underdevelopment: An Essay on the Political Economy of World Capitalism (Calcutta, Oxford University Press, 1978), p. 48). Further, “[The] price of a commodity is a multiple of the sum of constant and variable capitals, the multiplier being given by simply one plus the rate of profit. If, for one reason or another, the wage rate is reduced, ceteris paribus [other things being equal], the price of the commodity will be lower as the variable capital declines. So it will command, in exchange, less labour than it was doing before.” (Sau, p. 50).
(7) Marx, Grundrisse, p. 244.
(8) Dussel, p. 77.
(9) Marx, Grundrisse,
(10) Dussel, pp. 78-9.
(11) “On the world market, national labour which is more productive also counts as more intensive, as long as the productive nation is not compelled by competition to lower the selling price of its commodities to the level of their value.” (Marx, Grundrisse).
(12) Dussel, p. 78.
(13) Dussel, p. 71.
(14) Dussel, p. 67.
(15) Dussel, p. 93.
.
A Maoist-Third Worldist Position on Unequal Exchange
by End Imperialism (monkeysmashesheaven.wordpress.com)
Unequal exchange refers to the terms of trade between the oppressed nations and the imperialist nations in the world economy. Unequal exchange is not the only means by which the transfer of value from the former to the latter is achieved (others are western control of currencies and currency markets, loans with extortionate interest rates, “austerity” programs imposed by institutions such as the IMF, price-fixing, transfer pricing, repatriation of profits by transnational corporations – whose initial investments can be almost entirely covered by the proceeds from unequal exchange alone- , royalties from monopoly of intellectual property rights, not to mention the outright theft by force of arms of entire continents of land (Africa, the Americas, Australia) and labour (Africa) etc., etc.). Nonetheless, unequal exchange is a principal means by which the Third World today is plundered of its resources.
Unequal exchange, according to Samir Amin, accounted for $300 billion worth of value transferred from the Third World to the First World in 1980 (1). As noted above, that $300 billion does not account for repatriation of profits from capital export, royalties from patents, monies from debt peonage, financial swindling, or any of the other ways in which the First World fleeces the Third World daily, monthly and yearly. Köhler (2) estimates (by multiplying the exchange rate deviation between the centre and periphery by the nominal volume of centre-periphery trade in goods and then subtracting the latter) that the magnitude of unequal exchange in 1995 was US$1.75 trillion. In 1985 the magnitude of unequal exchange was, according to Köhler, worth around US$300 billion. That is a proportionate increase of nearly six times over a ten year period. If we were to apply the same proportionate increase over the period 1995 to 2005, the magnitude of value of unequal exchange from the non-OECD to the OECD countries would be worth over US$10 trillion in 2005.
What is Unequal Exchange?
Even in so far as capital’s profitability is equalised through its ability to go anywhere at any time to exploit labour as it likes (though by no means is this actually the case, since profit rates tend to be higher in the Third World than in the first) (3), the value of competing capitals is different because of differences in wages, situations of technological monopsony (when the monopoly capitalist countries are the only seller, especially of advanced electronic technology, and the single major buyer of much of the Third World’s produce), and organic compositions of capital. Unequal exchange occurs when poor countries are forced to sell the product of a high number of hours of labour-power paid low wages to a rich country which sells them the product of a low number of hours of labour-power paid high wages. Since only labour creates value and surplus value, surplus value (and ultimately profit) is entirely created in the labour-extensive Third World countries.
The means to equalise wage levels between poor and rich countries are foreclosed because of First World labour market protectionism in both its trade unionist and political forms and because of the constant and ongoing military suppression of the working class in the Third World (cf. Chomsky and Herman, “The Real Terror Network”, etc., etc.). The latter is perpetrated principally (but not exclusively since colonialist invasion is imperialism’s frequent resort) by comprador regimes which act as tribunes of wealth to the First World backed up and installed by massive force of arms supplied, and very lucratively sold, by First World imperialist governments.
Most of the world’s production is done within and between a small number of transnational corporations based in europe, the u$, japan, au$tralia, etc. But that does not necessarily entail an equalisation of technology, even though that has certainly been a real tendency over recent decades. Rather, the imperialist countries retain possession of the most advanced technology and force Third World compradors to buy their outmoded and more labor-intensive technology so as to boost flagging surplus-value creation.
The common claim that using advanced technology makes First World workers more productive is groundless where the calculation is based on socially necessary labor — and it is not socially necessary for Indian peasants to be stuck with hoes and sticks when, for example, American agricultural workers use tractors. Moreover, the actual intensity of labour is higher in the Third World than the First World. Finally, labour is not remunerated under capitalism according to its “productivity”. An hour of socially necessary labour is an hour of social necessary labour whether it is employed using robotic production techniques or using hoes. If anything, Marx tended to see higher wages as the product of an especially successful militant proletarian struggle having wrung them from the capitalists. We can see now that this is not at all the case. The “workers” of the West are the richest in the world, yet only the blindest chauvinist would claim that this is because of their advanced socialist politics. Rather, the incomes of the world’s most reactionary and bourgeois working class, the white workers of the advanced industrial nations, are high because their wages are inflated by receipt of imperialist superprofits. Yet high wages are not unrelated to high organic compositions of capital.
In discussing the superexploitation of entire nations by imperialism, Marxist economist Henryk Grossman (4) writes:
“In international trade there is not an exchange of equivalents, because, just as in the domestic market, there is a tendency toward equalization of profit rates. Therefore the commodities of the highly developed capitalist country, that is, of a country with a higher organic composition of capital, are sold at prices of production (5), which are always greater than their values. On the other hand, the commodities of countries with a lower organic composition of capital are sold under free competition at prices of production that as a general rule must be less than their values…. In this manner, transfers of the surplus value produced in the less developed country take place within the sphere of circulation in the world market, since the distribution of the surplus value is not according to the number of workers employed but according to the magnitude of the capital involved.”
Marx says that different industries with the same degree of exploitation, the same underpayment of the worker for the value produced by her labour, have different rates of profit depending upon the organic composition of capital involved in the production process. Those commodities which have a lower ratio of variable to constant capital embedded in them, that is, which have relatively more living labour (wage-labour) employed in their production than dead labour (constant capital or technology), typically sell below their value in comparison to those commodities produced using a higher organic composition of capital. (6) But Marx says that the profit rate is equalised across branches of production by means of capitalist competition (whereby capital withdraws from industries with low rates of profit and invests in others with a higher rate of profit). Thus, competing capitals with different organic compositions sell commodities at average prices which account for the uniform distribution of surplus value across the branches of production. Overall where one commodity sells for less than its value, there is a corresponding sale of another commodity for more than its value.
One of the major means by which monopoly capitalism, wherein competition amongst capitals has shifted to an international level, secures its high rate of profit is precisely in the form of unequal exchange of commodities. Marx (7) writes:
“From the fact that the profit [the average revenue drawn by the total capital employed in a given inter/national unit - EI] may be less than the surplus value [the amount of value produced by industry over and above the cost of employing the labour-power of the workers required to produce it - EI]… it follows that not only individual capitalists but nations too may continuously exchange with one another… without gaining equally thereby. One nation may continuously appropriate part of the surplus labour of the other and give nothing in exchange for it, except that here the measure is not as in the exchange between capitalist and worker.”
Dussel (8) applies Marx’s insight to the world market, writing:
“Within the “world market” there is a “total world capital” (the only one- along with capital “in general” or in the abstract- in which the total surplus-value is equal to the total profit), parts of which are the “total national capitals.” It is within “total world capital” (not as a single capital, but as the sum of all real capitals) that international competition fulfils its role in the levelling and distribution of the total world surplus value (at least that of the capitalist nations).”
However, and this is the crucial point for Maoist-Third Worldists, he affirms that competition is annulled on an international level by various militaristic and police state measures, which become intensified as monopoly seeks to maximise dwindling profit rates and attacks the proletariat in its demands for a better standard of living and political influence. As Marx (9) put it:
“[State] intervention has falsified the natural economic relation. The different national wages must therefore be calculated on the assumption that the part of them that goes to the state in the form of taxes was received by the worker himself… eternal laws of nature and reason, whose free and harmonious working was only disturbed by the intervention of the state… state intervention, i.e. the defence of those laws of nature and reason by the state, alias the system of protection, was necessitated.”
But the state’s actions are dictated by the needs and interests of the commanding heights of the economy, under monopoly capitalism, imperialist interests. Because of the protectionism adopted by the state and its dominant institutions under monopoly capitalism (in fact, a kind of neo-mercantilism antecedent to the age of “classical” competitive capitalism) “there is no fluidity in the world transmission of technology, of population, of capital as a totality. There is a national average, both of wages and of the organic composition of capital.” (10)
As Third World countries engage in unequal exchange of their commodities on the international market, they are forced to drive down wages to compete with the higher “productivity” (11) (strictly speaking, volume of goods produced) of the imperialist multinational corporations. The low wages of Third World producers are embodied in commodities with low prices, which can sell in advanced western markets for very high prices given the correspondingly high levels of wages there. Dussel (12) writes:
“Objectively or relatively, the product of a less-developed national capital contains a greater proportion of labor-value (“higher price of labor”), although subjectively or absolutely, the worker receives less per month (“a lower wage”). In the more developed countries the worker subjectively receives more wages per capita (creating a larger internal market), but the value of the commodity is less (it has a lower proportion of wage-value: it needs less necessary time per unit of product).”
There is a dialectical relationship between high wages, high organic composition of capital and imperialist superexploitation. A vicious cycle of superexploitation is involved in the process of unequal exchange (the exchange of commodities embodying different values for equivalent prices), whereby a commodity with a high organic composition of capital (and thus a low value) trading freely with a commodity embodying a low organic composition of capital (and thus a high value) inter-nationally allows for high wages in the first, in turn reinforcing the drive to accumulate constant capital by the monopoly capitalist, that is imperialist, powers. The rising surplus occasioned by global overproduction and an ever increasing wage bill for First World workers causes the haute bourgeoisie of the monopoly capitalist countries to seek to mitigate the resultant crisis through investment in further labour saving technology. This process decisively resounds to the benefit of the bourgeoisified workers of the imperialist countries, who are able to purchase extremely low cost commodities (both necessary and luxury goods) as sold by Third World capitalists forced to buy the overpriced products of First World labour. As Dussel (13) puts it:
“[The] essence or foundation of dependency (as Marx would say) is the transfer of surplus-value from a less-developed total national capital to the one that is more developed. It is necessary to compensate for this loss by extracting more surplus value from living labour in the periphery. Dependent capital hence drives the value of the wage below the value necessary to reproduce the capacity to work- with all the known consequences. At the same time, it intensifies the use of this labour by reducing the time necessary to reproduce the value of the wage, relatively and in new ways.”
Dussel again (14):
“In the case of a product produced in Mexico and in Detroit, within competition (because monopoly situations are built, albeit negatively, from competition), it is necessary to distinguish between the “national value” of the product [how much labour-power has been employed in its production – EI], the national price (in Mexico and in the United States) [the cost of its consumption relative to wages in the country consumed – EI], and the average international price [its average price on the international market – EI]. The determination of average world profit should operate in the same way as the determination of an average national profit (among the different branches of production). In the same manner the value of national labor capacity (in Mexico or in the United States), or its national prices (its wages), would allow the conclusion that one is above and the other is below a hypothetical world average. Palloix argues that unequal exchange as a result of different organic composition determines the different rate of surplus-value or the different value of the wage in underdeveloped and developed countries.”
Unequal Exchange and Anti-Imperialism
The concept of unequal exchange is of vital consequence for the Maoist-Third Worldist movement, the International Communist Movement as it exists today. It is impossible today to be a communist and not be a Third Worldist, not to stand first and foremost for the national liberation and independence of the Third World nations held down by imperialism and exploited as nations through such mechanisms as unequal exchange. Dussel (15) sums up this point eloquently:
“The process of national [in the sense of necessitating a United Front between all patriotic anti-imperialist classes – EI] and popular [in the sense of this United Front being led by the working classes – EI] liberation is the only way to destroy the mechanism of constant and increasing transference of surplus value from the less developed total national capital. This assumes overcoming capitalism as such, since the extraction of surplus value (a living capital-labour relation) is articulated to the transfer of surplus value in the competition between total national capitals of different levels of development.”
Notes.
(1) Samir Amin, “The Class Structure of the Contemporary Imperialist System”, Monthly Review, vol. 31, no. 8, 1980, pp. 9-26.
(2) Gernot Köhler, ‘Time Series of unequal exchange, 1960-1998’ in Gernot Köhler and Emilio José Chaves (editors) Globalization: Critical Perspectives (New York, Nova Science Publishers, Inc., 2003), p. 374.
(3) Baran and Sweezy (P.A. Baran and P.M. Sweezy, Monopoly Capital (Harmondsworth, Penguin, 1966), p. 193) argued that the profit rate in the u$a is only a quarter of that abroad, whilst Kidron found that the profit rates of foreign companies in India are higher than in their respective home countries. In any case, the profits extracted from even small investments in the oppressed nations areas are much greater proportionately than those acquired in the imperialist nations. Jalée (Pierre Jalée, The Pillage of the Third World (New York, Monthly Review Press, 1968), p. 76) explains:
“[There] are many well-meaning people, both in the imperialist countries and the Third World, who still have illusions as to the usefulness of private investment in the underdeveloped countries.
It is simple to make the following calculation: a foreign private enterprise sets up in a Third World country where it makes a regular, yearly profit of 10 percent on its investment. If the whole of these profits are transferred abroad, at the end of the tenth year an amount equal to the original investment will have been exported. From the eleventh year onwards, the receiving country will be exporting currency which it has not received; in twenty years it will have exported twice as much, etc. If the rate of profit is 20 percent instead of 10 percent the outflow will begin twice as early. If only half the profits are exported the process will be only half as rapid. This example is a somewhat oversimplified hypothesis, but reflects reality. There is no end to the loss [in Third world national wealth] through such outflows, except [through] nationalisation or socialisation of the enterprises.”
(4) Henryk Grossman, quoted in Enrique Dussel, ‘Marx’s economic manuscripts of 1861-63 and the concept of “dependency”’ in Latin American Perspectives, vol. 17, no. 2, Post-Marxism, the Left and Democracy, Spring 1990, p.66.
(5) “The prices which arise by drawing the average of the various rates of profit of the different spheres of production and adding this average to the cost prices of the different spheres of production are the prices of production.” (Marx, Capital, vol. III, chapter 9).
(6) Sau writes, “Typically, the method of production of agricultural goods requires a relatively smaller constant capital in comparison with industrial goods. Should the rate of profit be equalized between two trading countries having the same rate of exploitation of labour, the country specializing in the export of agricultural goods therefore would suffer a loss of surplus in the process of exchange.” (Ranjit Sau, Unequal Exchange, Imperialism and Underdevelopment: An Essay on the Political Economy of World Capitalism (Calcutta, Oxford University Press, 1978), p. 48). Further, “[The] price of a commodity is a multiple of the sum of constant and variable capitals, the multiplier being given by simply one plus the rate of profit. If, for one reason or another, the wage rate is reduced, ceteris paribus [other things being equal], the price of the commodity will be lower as the variable capital declines. So it will command, in exchange, less labour than it was doing before.” (Sau, p. 50).
(7) Marx, Grundrisse, p. 244.
(8) Dussel, p. 77.
(9) Marx, Grundrisse,
(10) Dussel, pp. 78-9.
(11) “On the world market, national labour which is more productive also counts as more intensive, as long as the productive nation is not compelled by competition to lower the selling price of its commodities to the level of their value.” (Marx, Grundrisse).
(12) Dussel, p. 78.
(13) Dussel, p. 71.
(14) Dussel, p. 67.
(15) Dussel, p. 93.
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