Unequal Exchange

jones/bhandari djones at uclink.berkeley.edu
Thu Jan 26 05:15:01 MST 1995

This was posted to the line by wpc:

> There is scarcely anything appart
>from a few minerals and primary products that
>can be produced with less labour in a poor
>country than in a rich country. Mexican peasant
>farmers probably expend more than 10 times as
>much labour to produce a ton of maize as does
>a US farmer, but there can only be one
>world price for maize, one which reveals that
>most of the Mexicans labour is socially unnecessary.
>No modification of commodity exchange is possible
>that will get round this. Only the development
>of labour productivity in the less developed
>countries can effect a change.

At one level, this is wrong.  Check out the research of Harley Shaiken on
the Mexican auto industry: "low wages in the high tech, export-oriented
sector have little to do with either productivity or quality.
Manufacturing compensation in Mexico was 15 percent of the US level in
1992....The huge supply of surplus labor in the traditional sector spills
over into the high tech sector, pushing wages downward.  These depressed
wages have little relation to the productivity of the advanced sector but
offer a 'persistent advantage in unit labor costs' (Blecker)" Quoted from
Latin American Research Review, Spring 1994, p. 68

  In one of  Shaiken's courses, we visited television factories in Mexico
where workers are actually  more productive of real output but receiving
about 1/10th of the wage of workers in similarly technically equipped
plants in San Diego. The standard of living of the mostly women proletariat
is miserable, and even if their wages are higher than most other workers in
Mexico, especially women, the intensity of their work is surely taking
years off their lives.  That is, be their payment high or low, the lot of
the laborers is growing worse. And that is also true in the imperialist
countries; see for example Mike Parker and Jane Slaughter's analysis of
just-in-time production.

The "increasing misery" thesis, so often mocked by Marxists and
non-marxists alike, is underlined by the intensity factor, already
highlighted and carefully developed by Grossmann in the conclusion to his
1929 monograph (left out of abridged and trans version of the book but
recently trans , as well as critiqued, by K Lapides in the Summer 1994
issue of the History of Political Economy; that a tran would now only
appear, i.e., as capital is again proving  its crisis tendency or its law
of motion, in its own way confirms Grossmann's theory of crisis and

In his 1979 book The Political Economy of the Working Class Geoffrey Kay
had already noted that contemporary industrialization now combines absolute
and relative surplus value.

But consider the following passage from Michel Chossudovsky.  He combines
an interesting blend of Ricardian Socialism, Adam Smith's durable-vendible
criterion of productive labor and Leninist nationalism; what I think he is
attempting to do is displace the labor/capital conflict with a
contradiction between productive competitive capital and parastic monopoly
capital.  Perhaps this passage will provoke comment as it comes close to
abandoning class analysis:

While there are substantial differences in labour productivity between rich
and poor countries, the wide disparaties in real earnings between countries
are not attributable to differences in productivity.  The precepts of
conventional productivity theory can easily be refuted: the low and middle
income receive twenty percent of world income yet they produce a far
greater percentage of world output.  The fact of the matter is that for
each dollar of output and income generated in the third world, between
three and ten dollars worth of 'value added' accrues to the developed
countries without there being any explicit 'productive' activity taking
place in the developed countries

Consider for instance a third world country which is producing an
agricultural staple such as coffee.  The international fob price of coffee
is of the order of $1 a kg of green coffee yet the (roasted) coffee in the
DC's market retails for approximately US $10/  The farmer in the third
world will receive approximately 25-50 cents per kg whereas 50-75 cents
will be appropriated b non-prodcuders in the thrid world country in the
form of profits, commercial margins associated with transportation,
storage, processing and export of the coffee.  The tendency will be for the
large export houses and merchants to appropriate a sizeable portion of this
surplus.  From its sle at an fob price $1 to its retails price of $10, $9
will be appropriated by international merchants, distributors, wholesalers
and retailers in the OECD countries.  The surplus appropriated at this
phase--essentially by non-producers--is more than 20 times the farmgate
price.  However, out of a farmgate price of say 25-50 cents, only a
fraction will actually accrue to the farmer for the work put into producing
the coffee: rent must be paid, agricultural loans must be reimbursed
(including an important component of local level usury), farm inputs must
be paid for, etc.

What this example conveys is that for each dollar received by the third
world farmer, at least another two or three are received by non-producers
within the country and at least naother ten are recieved by non-producers
of the DCs. The income of the producing country goes up by $1 for each kg
of coffee produced and that of the DCs by $9.  The share of world income of
the DCs is increased without any material production taking place.  It is
worth noting that the nominal price of coffee (and the earnings of coffee
producers) has declined by more than 50 percent since the early 1980s
whereas the income of non-producers in the developed counties derived from
coffee production have increased from approximately $7.50 to $9 per kg as a
result of the collapse of commodity prices.  It should be noted that
similar patters of appropriation and price formation exist with regard to
most primary commodities produced by third world countries.

We also observe a comparable pattern of price formationin the production of
manufactured exports.  In the garment trade for instance an international
fashion designer will pruchase a Paris designed shirt for three to four
dollars in Vietnam or Thailand.  The product willl then be resold in the
European market 45 dollars: $41 of income accrus to 'non-producers'  in the
developed countries, ten times the earnings of income to direct producers:
the GNP of the third world producer goes up four dollars, whereas that of
the importing western country goes up 41 dollars.  Material commodity
production through the appropriation of economic surplus supports the
growth of income and consumption in the advanced countries.

Economic and Political Weekly (Delhi) Nov 2, 1991, p. 2528


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