Third worldism and the labor theory of value

[Thug Lessons]

Last time I posted about this I had a great discussion. S. Artesian, if you're around and have time please come argue with me.

Let's say we have two workers doing identical labor and producing identical products, but they're in different countries. One lives in an imperialist country and receives a high wage while the other lives in a former African colony and receives a low wage. There are real examples where something roughly along these lines happens. How do we reconcile this difference in value terms? How can capitalists in imperialist nations afford to give a higher wage?

The 'first worldist', (for lack of a better term), explanation of this, as I understand it, is that workers in imperialist nations, because of greater productive capacity, etc., just produce more value. This makes no sense at all to me. If anything, greater productive capacity should push the socially necessary labor time for the production of commodities down, not up, and first world workers should actually produce less value per product, though more per unit of time. So unless these workers are producing a greater volume of commodities, far in excess of their greater productive capacity, then we can't use an increased rate of value production to explain their wages. An example of this problem playing out would be a McDonald's employee in the US compared to one in China, where the output in commodity form is roughly the same but the difference in wages is massive, in the opposite direction of what you'd expect based on this value analysis.

How this plays out politically is another question entirely, but these sort of situations are what push me towards a third worldist analysis of value.

[Broletariat]

I'll take a swing at it.

Price and Value, at an individual level, do not directly equal each other. TOTAL Value and TOTAL Price DO equal each other.

Where too much price is paid for too little value, too little price must be paid for too much value elsewhere in the economy.

[Thug Lessons]

I'll take a swing at it.

Price and Value, at an individual level, do not directly equal each other. TOTAL Value and TOTAL Price DO equal each other.

Where too much price is paid for too little value, too little price must be paid for too much value elsewhere in the economy.

Well that's not entirely correct or there wouldn't be a transformation problem, but I see what you're getting at. However, that doesn't really resolve the situation, because we're still left with no explanation as to why wages are, and more importantly can be, so much higher in the imperialist nations, which is really what I'm trying to get at here.

[Broletariat]

Well that's not entirely correct or there wouldn't be a transformation problem

There is no transformation problem. I go with a TSSI interpretation.

However, that doesn't really resolve the situation, because we're still left with no explanation as to why the value of labor-power is so much higher in the imperialist nations, which is really what I'm trying to get at here.

It's not higher, that's what I was saying. The value is the same, the price is different.

[Thug Lessons]

Yeah I edited that, I phrased it wrong originally.

[Broletariat]

Yeah I edited that, I phrased it wrong originally.

I think my answer still suffices, value is the same, price is different.

WHY price is different is another matter. Could be because the labour movement in that first world country was harder to subdue, or that the tactic chosen to subdue the labour movement was bribery whereas in the third-world it was just strong-armed down.

[Tim Finnegan]

The price of the commodity of labour power does not correlate directly with the price of the commodity which is produced by the application of that labour. The workers receive different wages because the labour power which they are selling- in terms of quantity (i.e. time) and quality (i.e. the skill-level of their work)- has a different value in each locale. Rather, the exchange value of a commodity is defined by the socially necessary labour time of that commodity, which means that the exchange value varies depending on the market which the commodities are entered into. If two first-world and third-world-produced commodities are produced in the same manner and enter into the same market, the exchange value would average out as if they were produced in the same locale, with the result that the first-world-produced commodity will have a low profit margin because of high labour costs, while the third-world produced will have a high profit margin because of relatively low labour costs. In cases where they do not, as in your "Chinese and American McDonalds" example, the exchange values of the produced commodity will be determined locally.

[Broletariat]

The price of the commodity of labour power does not correlate directly with the price of the commodity which is produced by the application of that labour. The workers receive different wages because the labour power which they are selling- in terms of quantity (i.e. time) and quality (i.e. the skill-level of their work)- has a different value in each locale. The price at which the produced commodity is sold at will, if the commodities enter into the same market, average out as if they were produced in the same local, with the result that the first-world-produced commodity will have a low profit margin because of high labour costs, while the third-world produced will have a low profit margin because of relatively high labour costs. The exchange value of a commodity is not defined by the amount or cost of labour time that went into any one item, but to the socially necessary labour time of that commodity.

Do we not, essentially, have a global market?

[Thug Lessons]

I think my answer still suffices, value is the same, price is different.

WHY price is different is another matter. Could be because the labour movement in that first world country was harder to subdue, or that the tactic chosen to subdue the labour movement was bribery whereas in the third-world it was just strong-armed down.

The really important question here is how capitalists can afford these higher wages. The average wage for an urban worker in China are around $6000 annually, while the minimum wage in the US comes to about $15,000 annually, (note that these are conservative estimates for the situation in question, because McDonald's workers in China probably earn less than the average wage for an urban worker, and I know that McDonald's pays more than minimum wage in the US, because I've worked fast food before). Could McDonald's really afford to more than double its wages for Chinese workers and still turn a profit? I find that very doubtful.

[Broletariat]

The really important question here is how capitalists can afford these higher wages. The average wage for an urban worker in China are around $6000 annually, while the minimum wage in the US comes to about $15,000 annually, (note that these are conservative estimates for the situation in question, because McDonald's workers in China probably earn less than the average wage for an urban worker, and I know that McDonald's pays more than minimum wage in the US, because I've worked fast food before). Could McDonald's really afford to more than double its wages for Chinese workers and still turn a profit? I find that very doubtful.

They bribe some parts of the proletariat with higher wages and stiff arm the rest of the proletariat with lower wages.

Where one up exists another down exists, the counteraction of the two is where you'll find Value.

This would be my guess.

[Lenina Rosenweg]

I'm a relative newbie at this but my understanding is that value is at heart a social relationship.Aren't there other determinants of value besides productivity?The difference in the organic composition of capital would lower value in First World countries but wouldn't this be more than offset by other determinants, such as the differing costs of the reproduction of labor in First and Third World countries including the accustomed standard of living in the particular country or region where it exists?Value, including that of labor power, is embedded and produced within a network of social relations.

[Tim Finnegan]

Do we not, essentially, have a global market?

For certain commodities, if not all, yes, but I'm not sure what you mean to ask by that...?

(And apologies for the butchering of my last post- I hadn't yet seen your quoting of it- but I don't think that it changed anything essential.)

The really important question here is how capitalists can afford these higher wages. The average wage for an urban worker in China are around $6000 annually, while the minimum wage in the US comes to about $15,000 annually, (note that these are conservative estimates for the situation in question, because McDonald's workers in China probably earn less than the average wage for an urban worker, and I know that McDonald's pays more than minimum wage in the US, because I've worked fast food before). Could McDonald's really afford to more than double its wages for Chinese workers and still turn a profit? I find that very doubtful.

Again, this is a poor example. Restaurants of this sort operate in a highly localised market, and neither the exchange value of the commodities sold or the price paid for the labour power of the workers in two locations have any bearing on each other over such great distances. You'd have to compare two units of production with the same intended market.

They bribe some parts of the proletariat with higher wages and stiff arm the rest of the proletariat with lower wages.

"Higher" than what? The value of their labour power, presumably? That's really something that you'd need to demonstrate.

[Broletariat]

For certain commodities, if not all, yes, but I'm not sure what you mean to ask by that...?

(And apologies for the butchering of my last post- I hadn't yet seen your quoting of it- but I don't think that it changed anything essential.)

My reason for asking is that, if a global market exists then the whole "Certain locales" thing essentially goes out the window, aside from transportation costs and such right? Capitalism breaks down local barriers and opens up international markets from what I understand.

[Thug Lessons]

The price of the commodity of labour power does not correlate directly with the price of the commodity which is produced by the application of that labour. The workers receive different wages because the labour power which they are selling- in terms of quantity (i.e. time) and quality (i.e. the skill-level of their work)- has a different value in each locale. Rather, the exchange value of a commodity is defined by the socially necessary labour time of that commodity, which means that the exchange value varies depending on the market which the commodities are entered into. If two first-world and third-world-produced commodities are produced in the same manner and enter into the same market, the exchange value would average out as if they were produced in the same locale, with the result that the first-world-produced commodity will have a low profit margin because of high labour costs, while the third-world produced will have a high profit margin because of relatively low labour costs. In cases where they do not, as in your "Chinese and American McDonalds" example, the exchange values of the produced commodity will be determined locally.

The problem here is that the socially necessary labor time to produce a Big Mac in China is nearly the same as it is in the US. Your explanation here makes perfect sense, but it's based entirely on bourgeois economics where we're concerned only with the dynamics of the local market and disregard the role of SNLT in regulating exchange value entirely. This might seem like a pedantic criticism, but it isn't. If workers can achieve a far higher standard of living and capitalists can retain high profit margins while value production remains the same, then we should take the neoclassical approach, because SNLT doesn't seem to play much of a role at all.

[Lenina Rosenweg]

I think my answer still suffices, value is the same, price is different.

WHY price is different is another matter. Could be because the labour movement in that first world country was harder to subdue, or that the tactic chosen to subdue the labour movement was bribery whereas in the third-world it was just strong-armed down.

Looking at the sorry state of the contemporary US labor movement and the fact that average US wages have remained static for the past 30 years while the mal distribution of wealth has dramatically increased does not lend credence to the belief that the US and western working classes are being "bought off". If bribery was part of the social contract this is not true any longer.In this age of austerity, when people from Scott Walker to David Cameron to Papandreou are busy attacking our living standards, this Third Worldism does not make sense. There has to be another dynamic going on.

Wouldn't the globalization of capital utilize the differing local production costs resulting from differing formations of value resulting from the "combined and uneven development" inherent in "geographical space"?

Imperialism and neo-colonialism certainly exists but I feel the Third Worldists have the wrong take on this.

[Tim Finnegan]

My reason for asking is that, if a global market exists then the whole "Certain locales" thing essentially goes out the window, aside from transportation costs and such right? Capitalism breaks down local barriers and opens up international markets from what I understand.

Again, for certain commodities, but I still don't see why this is a sticking point. As I said, the exchange value of wage labour is determined separately from the exchange value of commodities, so the fact that a product experiences a lowering in its socially necessary labour time is only relevant insofar as that influences the amount of money that a given capitalist is willing to pay for labour power. If a capitalist chooses to pay twice the money in the US that he could in Mexico for no other reason than personal preference then, well, more fool him.

[Thug Lessons]

I'm a relative newbie at this but my understanding is that value is at heart a social relationship.Aren't there other determinants of value besides productivity?The difference in the organic composition of capital would lower value in First World countries but wouldn't this be more than offset by other determinants, such as the differing costs of the reproduction of labor in First and Third World countries including the accustomed standard of living in the particular country or region where it exists?Value, including that of labor power, is embedded and produced within a network of social relations.

This is precisely the problem. If the standards of living can be pushed ever upward, (and I don't think there's any dispute that this could be done even in the US, at the very least through a more egalitarian distribution of wealth), while neither increasing the time workers devote to labor nor further developing the means of production, then we don't have a situation where the process of capitalist accumulation pushes wages towards baseline subsistence at all, but quite the opposite.

[ZeroNowhere]

Why is it that capitalists increase productivity, again?

[Lenina Rosenweg]

This is precisely the problem. If the standards of living can be pushed ever upward, (and I don't think there's any dispute that this could be done even in the US, at the very least through a more egalitarian distribution of wealth), while neither increasing the time workers devote to labor nor further developing the means of production, then we don't have a situation where the process of capitalist accumulation pushes wages towards baseline subsistence at all, but quite the opposite.

There's more to it than this though. This strategy wasn't followed.After the Long Boom ended in the 1970s US and other capitalist ruling classes opted for the opposite strategy, a period of intense devaluation, retrogression, "shock doctrine" both in the Third World and in the West.That's why we can see linkages between the struggles in Tahrir Square and Madison, which the workers involved were aware of.

China and other areas were brought online into the system of global capitalism, vastly increasing the labor supply and decreasing First world, especially US wage rates.A lose/lose strategy. A win/win strategy could have been followed but that wasn't in the cards.

[Thug Lessons]

Why is it that capitalists increase productivity, again?

They have to, because of competition between firms. When commodities are produced below the socially necessary labor time (through greater productivity) they can be sold for a lower price, and so will be more likely to realize their value in the market.