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At the Historical Materialism conference, the Saturday discussion
between Professor David Harvey and myself on Marx’s double-edge law attracted
more than 250 people. Sunday’s session on the economics of modern
imperialism that I had organised also attracted a good turnout of around 60
people, many of which were clearly experts on the subject. Unfortunately
for them, the four speakers (including myself) went over their allotted times
and used up the available discussion time – apologies all round!
Anyway, at least the speakers
presented some important arguments. I spoke last. But I think in
this post, I shall outline my presentation first because I think it sets the
scene for the others. G Carchedi and I have been working on some new
empirical work, trying to gauge which countries are the imperialist ones and
how much value they are able to extract from the dominated or periphery (we
prefer those names rather than ‘Global North’ and ‘Global South’, which is too
geographical). We emphasise that we are looking at the economic
foundations of imperialism, not the political aspects or the superstructure if
you like, ie the political control by imperialist countries over the periphery,
or military might or interventions etc. Direct political control through
colonies has mostly disappeared (although not completely); so imperialism
operates mainly through economic control now (while throwing in the occasional coup
or proxy war). After all, that is the aim of the imperialist powers: to
appropriate as much value and resources from the dominated as possible. In that
sense, the economic determines the political.
If we focus on the transfer of
value from the periphery to the imperialist economies, there are several ways
that this is achieved. There is value transfer through unequal
exchange in international trade; through global value chain
flows (transfer pricing) within multi-nationals; through factor income
flows (debt interest, equity profits and property rents); through seignorage (ie
control of the money supply: dollar is king) and through capital flows (foreign
direct investment inflows and portfolio flows. ie buying and selling financial
assets).
So which are the imperialist
countries? Carchedi and I define them as those countries which get a
long-term appropriation of value from subaltern countries. And this is
achieved by the appropriation of surplus value by high technology companies
(and countries) from low technology companies (countries). So imperialist
countries can be defined as those with a persistently large number of companies
as measured by their high national average organic composition of capital (OCC)
and whose average technological development is higher than the national average
of other countries.
In our work, we used the IMF
data on net primary income flows between countries. These are cross-border
flows of profit, interest and rent. We found that when these flows are
netted out, there are about 10 countries at the most that fit the bill as
imperialist. Indeed, nothing much has changed in the 100 years since
Lenin wrote his analysis of imperialism: it’s still the same countries.
No others have made it from dominated to imperialist status. Net primary
income per head is concentrated in the G7 plus a few other small states and the
tiny tax haven states). Every other country is an ‘also-ran’.
The G8-plus countries own the
vast bulk of all the foreign-owned assets. Even the so-called BRICS
(Brazil, Russia, India, China and South Africa) own little abroad compared to
the imperialist countries. The G8 has six times as much FDI stock as
the BRICS.
The main way that value is
transferred from the periphery to the imperialist nations is still through
international trade. There has been a large increase in intra-firm trade by
affiliates to the parent company using price mark-ups (transfer pricing).
For example, UNCTAD reckons that trans-national companies (TNCs) are involved
in 80% of global trade. And of TNC trade, about 40% is intra-firm; 15% through
fixed contracts with suppliers and 40% with so-called arms-length firms (ie not
owned affiliates but 'captive' domestic firms). Actual intra-firm trade
(affiliates to parent company) is about 33% of all annual trade. So the
main way is still export trade on world markets with internationally set
prices.(UNCTAD GVC)
In Capital, Marx shows that,
through competition, there is a tendency for the profit rates measured in value
(labour time) to equalise into prices of production. There is a transfer of
value from some capitals to others to bring about this equalisation of profit
rates. This transfer process in competition also applies to international
trade. The transfer of value from the dominated to the imperialist
economies is achieved by the tendency to equalise rates of profit between
nations in the international market for goods and capital.
The periphery has less
technology and more labour and so produces more value (in labour time) to make
the same product. The imperialist countries have more technology and less
labour and so produce less value (in labour time). When profit rates are
equalised through competition in world markets, then a portion of the extra
surplus value that has been extracted from the workers by the capitalists in
the South gets transferred to the capitalists of the North. So, although
international trade in goods and services appears to work through equality of
exchange (money for goods, goods for money at set prices), beneath the surface,
there is an unequal exchange of value (UE). The imperialist
capitals gain extra value while the peripheral capitalists lose value. Figure
13 of my PP presentation shows how this transfer of value works. (The economics foundations of imperialism)
Carchedi and I have made
calculations of the magnitude of this transfer of value. We used some
aggregate databases and applied a formula for the transfer. Details of this are
in Figure 14 of the PP presentation and excel files are available for anybody
who wants to replicate and check our methods and workings. We found that
the transfer of value from the dependent bloc (defined as below) to the G7 rose
from $20bn a year in the 1960s; to $90bn in the 1970s, dropping off to $50bn in
the 1980s. Then with China becoming the great trading force, there was a
take-off from the late 1990s to reach over $120bn by the time of the Great
Recession.
So there is annual value
transfer from these countries to the G7 through their international trade of
$120bn or more a year. This annual transfer of value to the imperialist
countries (G7) is equivalent to about 2-3% of their combined GDP. But the
transfer from the dominated countries is much more, around 10% of their combined
GDP. So there is a substantial transfer out of the South through unequal
exchange.
Recently, other authors have
tried to compute the magnitude of the transfer of value to imperialist
countries. Using the World
Input-Output database, Italian economist Andrea Ricci of Urbino University,
Italy found that for the developed countries "the global amount of
value transfers corresponded to 1.8 percent of global value added… while for
developing economies, the relative size of outflow transfers ranged from 10 to
20 percent of the domestic value added." Ricci unequal exchange And Greek Marxist economists,
Lefteris Tsoulfidis and Persefoni Tsaliki, looked at the transfer of value in
trade between the US and China. They find a similar magnitude of
bilateral transfer of value between the US and China as we do. URPE_CHN_2019
In our view, based on the
Marxian theory of unequal exchange, the transfer of value from the periphery to
the imperialist countries through international trade and competition takes
place because the imperialist countries have a much higher organic composition
of capital. That expresses their technological superiority and delivers
much higher labour productivity. The G7 economies on average are five times
more technologically superior than the BRICS and so four times more productive
per worker.
This is where the other
speakers at the session come in. John Smith is author of the highly
commended, award-winning book, Imperialism in the 21st century. The book’s main
argument is that imperialism rests and thrives on the ‘super-exploitation’ of
workers in the ‘Global South’.
What do we mean by
'super-exploitation'? Well, Marx referred briefly to the idea that some workers
may end up receiving wages that are below the value of their labour power (the
amount needed to live and reproduce). But he did not base his theory of surplus
value on ‘super-exploitation’. For Marx, even without super-exploitation,
workers were still exploited for surplus value and profit under capitalism.
However, John Smith reckons
that super-exploitation is now the main generator of imperialist value gains in
the 21st century and technological superiority and ‘normal’ exploitation are no
longer in the driving seat, so to speak. For John, this is almost self-evident,
given the incredibly low wages in the sweatshops of many Global South countries
and the huge mark-ups in the global value chain for imperialist
multi-nationals. Anybody who denied this and argued that workers in the
North were just as or even more exploited would be denying the very existence
of imperialism.
At the HM session, Andy
Higginbottom from Kingston University provided some of the theoretical support
for the thesis of ‘super-exploitation’ as the economic driver of
imperialism (HM 2019 Labour super-exploitation plus transformation makes for
international value (1). He pointed out that Marx’s transfer of value
model as shown in our PP Figure 13 assumed equal rates of surplus value. That
clearly could not be reality. If you relaxed that restriction, then different
rates of surplus value between imperialist and peripheral economies come into
play in the transfer of value, and not just differing rates of organic
composition and labour productivity. And then it can be argued that the
rate of exploitation is not just affected by labour intensity, productivity
etc, but also by differences in wages (i.e. super-exploitation).
But I don’t think Marx’s
theory of unequal exchange must assume equal rates of surplus value in all
countries. In Figure 20 of our presentation, we show that value is
transferred from South to North through trade in the same way even with
differing rates of exploitation; indeed if the rates of surplus value are
higher in the South, then the North gains even more value in the transfer. But
the Southern capitalists also gain more, because they are exploiting their
workers even more, either by longer hours and intensity and/or by poverty
wages.
The point is that the transfer
to the North takes place because of the imperialist countries’ superior
technology and labour productivity. That enables them to sell their goods
in world markets at costs below the international average. The Southern
capitalists try to compensate for their lower technical level and productivity
by driving the wages of their workers down. So the higher rate of exploitation
in the South, whether by super-exploitation or not, is a reaction to the
failure to compete against the North.
In our empirical analysis, we
found that the contributions to the transfer of value from South to North came
from both higher organic composition in the North and higher rates of
exploitation in the South – it is both, not just technical superiority, nor
just exploitation. But there is also a transfer of value between imperialist
countries through trade. And indeed, competition there remains
fierce. The annual flows of FDI show that, until very recently, flows between
advanced capitalist economies were higher than between the imperialist and the
less developed South. In the decade from 2007, inflows to developed
economies exceeded inflows to developing economies. Last year was the
first reversal of that.
In his paper for the HM
session, Smith developed an analysis of the rate of exploitation
(s/v). Exploitation and super-exploitation in the theory of
imperialism. He reminds us that Marx recognised a so-called ‘moral
and historical’ component in the value of labour-power, i.e. "the
extent to which the class struggle and general social evolution (different ways
of saying the same thing) has resulted in the incorporation of new needs into
those necessary for the reproduction of labour-power.”
That means that the value of
labour power is partly set by the class struggle. But super exploitation is not part of Marx's theory of value,
or s/v. In the process of production, capitalists might force a lower
wage. If the necessities of life and their production prices remain the same,
the lower wage purchases less wage goods (consumption falls) as the price of
labour power (wages) falls below its value (the production price of those
socially determined necessities). That is super exploitation. But if this
low wage is maintained permanently, workers must eventually accept a lower
value of labour power in the goods and services that they can buy with
it. In that sense, super exploitation becomes simply a higher level or
rate of (“normal”) exploitation because the value of labour power has been
lowered by the class struggle. Yes, there is more exploitation, but not ‘super-exploitation’
as a new category of capital.
So I don’t think that
super-exploitation is proven either theoretically or empirically as “the
single-most important means of increasing the rate of surplus value and
countering the tendency of the rate of profit to fall.” (Smith). Or
that imperialism has an “insatiable lust for super-exploitable labour”.
Imperialism has a lust for profit and is the result of the drive for more
profit beyond national borders as the rate of profit at 'home' fell.
Denying the dominance of super-exploitation as the main form of
exploitation under imperialism is not “imperialism denial”, like global
warming or climate change denial, as Smith suggests.
Moreover, it just might be
that the days of ‘super-exploitation’, as Smith categorises it, are
ending. At the launch of a new book at HM, Ashok Kumar, a lecturer in
International Political Economy at Birkbeck University, argued that there are
signs that the ‘monopsony’ power of the imperialist buyers of the products of
suppliers in the global South is weakening because the number of producers is
also shrinking. This increases the countervailing power of the Southern
capitalists (producers) against the Northern capitalists (retailers). And
that gives a window of opportunity for the workers of the Southern sweat shops
to push up wages through successful struggles - of which Kumar gives examples.
While it is possible to argue
any super exploitation of the workers in the low technology countries (the
so-called "South) is caused by the technological backwardness of the
South’s capitalists, it is impossible to argue the opposite; that this
technological backwardness is caused by super exploitation. And if super
exploitation is determined, it cannot be the main determinant element. In sum,
the productivity of labour is key to the transfer of value in trade
between imperialist countries and the periphery. The major cause of UE is technological
superiority. Differences in the rates of surplus value are significant but play
a lesser role. Exclusive emphasis on only one of these two factors is
misleading.
Moreover, even it were the
case that super-exploitation is the main cause of higher rates of surplus value
in the peripheral economies, a transfer of value has to take place. And
that can only go to countries with vastly superior technology and labour
productivity and can maintain that superiority through monopolising that
technology. Indeed, that was one of the arguments made by Sam King,
from Victoria University Australia, at the HM session, based on his upcoming
book on imperialism.
Sam reckoned that Lenin’s
Imperialism was still valid. There were still only a few countries
reaping these value transfers. Although Lenin refers to ‘monopoly
capital, he did not mean that there was no competition between capitals.
Competition still took place voraciously between various imperialist economies
but also with ‘Southern’ capitalists. The monopoly was in the technical
superiority of the imperialist companies, which they jealously guarded.
The labour productivity gap between these countries and the periphery had not
altered since Lenin’s time. Now in the 21st century, the US is worried
that its technology ‘monopoly’ may be threatened by China’s move up the
value-added ladder. This is the real reason for the current trade war.
The empirical evidence shows
that imperialism is an inherent feature of modern capitalism. Capitalism’s
international system mirrors its national system (a system of exploitation):
exploitation of less developed economies by the more developed ones. The
imperialist countries of the 20th century are unchanged – it’s still the G7/10.
There are no intermediate, ‘sub-imperialist’ economies. And China is not
imperialist on these measures. And the transfer of value from the periphery to
the imperialist core is continually rising.
Finally, Marx’s model of
unequal exchange shows that the economics of imperialism works through the
transfer of value by the exploitation of the workers of the South by the
capitalists of the South and then through the transfer of some of that surplus
value appropriated to the capitalists of the North in international markets and
internal global value chains. The workers of the North do not benefit in any
way from this imperialist transfer.
To suggest, as some do, that
the welfare state, pensions and national health services in the North were only
possible because of the imperialist exploitation of the South is economic
nonsense. After all, the great period of imperialist exploitation was in the
neo-liberal period of globalization since the 1980s, when the welfare and wage
gains of workers in the North were taken back. Globalisation of the late
20th century was a response to falling rates of profit in the North (as it was
in the late 19th century). It is also a political insult against the
class struggles made by Northern workers to achieve those gains in the first
place. Both the workers of the South and the North are exploited by
capital. It is capital that is the enemy of both.
