Globalisation/Unequal Exchange

Chris Burford cburford at
Mon Sep 11 07:20:06 MDT 1995

Globalization/Unequal Exchange

On Thurs 7th Sept Rakesh posted

>>an absoutely  brilliant analysis of "the ratio of
dynamic to stagnant sectors" in an individual nation.  The analysis comes
from Tilla Siegel who I believe is now a Prof (or perhaps Chair) of
Sociology at the Goethe University at Frankfurt.<<<<

I too found this passage from 1984 extremely valuable.

Marx never promised that the process of centralization of capital
would proceed evenly within a market, whether national or global.

Furthermore since the continuation of capitalism depends on state
intervention to control the process of centralization into an
absolute monopoly, it is implicit that while the advanced capitalist
powers control the harmful effects of monopoly within their own
economies, they have no interest in controlling the effects of monopoly
to the extent that they manifest themselves as a relative monopoly
between the advanced and the less technologically advanced countries.

The simplistic marxist assumption that the process would be evened
out by the tendency of capital to seek out the cheapest labour force
to exploit, though significant, has been counterbalanced by other factors
that just about prevail over it. Among these is the need for a
relatively high cultural level for the labour force required for
technologically advanced production and also for the mass market for
technologically advanced commodities. The migration of skilled labour
to the areas of high technological concentration may be more important
than the migration of capital to the areas of cheapest labour.

(This broad picture is not invalidated by the fact that the countries
of east Asia have found a virtuous circle of accumulation of capital
and rising cultural level of the workforce, which makes them strong
challengers for economic hegemony in the global market of the 21st

There is therefore a growing disparity between technologically advanced
and technologically backward countries, which puts *all* classes in the
technologically backward countries at a substantial disadvantage.

Is this the fundamental nature of the marked inequality in the world?

Earlier this century the fact of imperialism seemed self-evident. For
long, Lenin's analysis was accepted as authoritative in marxist circles.
It has been debated on this list.

With decolonisation in the 50's and 60's and liberation wars most
dramatically in Vietnam, there was a shift towards analysing neo-colonialism
as the exploitative and imperialistic successor to colonialism. In this, the
comprador bourgoisie were seen as the surrogates for direct colonialist
rule, cooperating in politically and economically unequal relationships
between the imperialist countries and the ex-colonial countries.

Giant global monopolistic companies were further seen as agents of
oppression and exploitation. There was a debate about whether to call
them multi-national or transnational. Especially those with a stranglehold
over certain foodstuffs or raw materials, were seen as thwarting the
rights of poorer countries to band together to ensure more stable
commodity prices.

Various theories of unequal exchange were advanced usually from the
"third world" and not too well favoured by marxists whose sense of
orthodoxy led them to identify with the aims if not the practice of the
relatively technologically advanced Soviet Union. They were particularly
hostile to any suggestion that the rich "north" in some sense
exploited the poor "South" through "unequal exchange".

A fairly concise summary of a number the factors in "Unequal Exchange"
is given in  "Fair Trade" 1993, Zed Books, London and New Jersey, page 42,
by Michael Barratt Brown, Chair of Third World Information Network (TWIN)
and Twin Trading Ltd, London.

"there are major differences in the bargaining position of manufacturers
and primary producers in the world market" -

1. many food products are perishable and cannot, therefore, be held off
the market, as manufactured goods can, to prevent a fall in price.

2. many third world producers do not have the facilities for processing,
packaging and storing so as to get a better price and add value to their
basic product.

3. the monoculture of a number of ex-colonial countries makes them
especially vulnerable to swings in the international economy.

4. "while the number of manufacturing companies in the world can be counted
in their thousands , and the number is reduced with every year that goes
by, there are literally millions, literally tens, even hundreds of
millions, of peasant household engaged in primary production.

5. compared with manufacturering, the application of machinery to
primary production has been relatively slow. Thus output per person has
hardly risen over centuries in the case of many crops, while productivity
increases in manufacturing have taken place at annual rates of three to
four per cent. This is a doubling every 20 years.

6. "the very machinery and the new technology, together with the capital
available for investment to increase productivity, are in the hands of
the capitalists in the developed First World economies."

7. "These unequal trading relations between manufacturers and primary
producers have become incorporated in the operations of the large
transnational company, whose size and importance have steadily increased
over many years and most rapidly in the last decade. The dominant
position of these companies throughout the Third World, with their
control over both the buying and selling of the goods entering international
trade, provides the final explanation for the weakness of the millions
of small Third World producers in the world market."

This seems to me a good summary of a number of important factors. No doubt
some of the formuations can and will be challenged on this list, but
ultimately I look for a more abstract underlying explanation of "unequal
exchange" and I feel  the passage from Tilla Siegel that Rakesh
posted, comes close to it.

Essentially I think we have to say that the global market is not
homogeneously porous to all sorts of trade. Transnationals find the
medium highly fluid when they can shift hundreds of millions of dollars,
if not trillions, around the international currency exchanges each day, if
necessary to hedge against currency fluctuations (I am unsure what fraction
of the total volume of exchanges is accounted for by transnational

Furthermore they have flexibility to shift exchange value out of third
world countries by methods such as transfer pricing.

But to a Colombian peasant coffee-grower the medium of international
exchange is very viscous. He has virtually no alternative option if
cold economic winds blow. And it is an entirely fair rule of all
free bargaining that your bargaining position is as strong as your
next best alternative. He has no alternative but to lower his prices.

Marx described in Capital Vol 1, Chapter XV Section 3b, paragraph 8,
the situation of a

*sort of monopoly*

that occurs for the manufacturer of a commodity using new machinery
that produces relative surplus value [Steve, I concede he says the
words "Machinery produces relative surplus value", although he does not say
that machinery produces "surplus value"]

I submit that there is a force field around each producer using new
technology, delimited by the range and speed of circulation of the
commodity from that manufacturer. Similarly on a global level,
international exchange is not a medium of uniform viscosity to the passage
of all commodities and all relevant economic activities. It is the
achievement of a life time for one Philippino woman to migrate to London
to work for 10 years as a chamber maid to send somewhat more exchange
value back to help educate her three children in Manilla whom she will
not see for years, than she could earn in the Philippines itself. It
is by contrast a flash of the keyboard for a transnational to move
$100,000,000 from Tokyo to New York and back again.

This is the essence of this long post: that there are all sorts of
relative monopolies of differential technology that distort the uniform
functioning of commodity exchange in the global market.

Chris B, London.

PS. I see after composing this, that the MIM have joined the list.
Although I think they put the argument in a rather moralistic way,
the relative lack of revolutionary activity by the working class in the
technologically advanced countries has been a problem for marxism since
the beginning of the century. Lenin's theory about the weight of a labour
aristocracy enjoying their share of imperialist super-profits was rather
overlooked by mainstream communist parties.

Whether to extend the analysis to say the privileges are enjoyed
by the *whole* working of the advanced countries is a crucial point.
Certainly everyone can see that in terms of use-values they are
considerably better off on average (even allowing for deterioration in
the social quality of life). The question is whether this difference
also extends to a difference in the distribution of *exchange* value
in which the metropolitan working class is a) sharing in the benefits
of the asymmetry of the global market, or b) actually enjoying the
fruits of exploitation directly or indirectly.

(Depending on the analysis, how we go on to building political unity
between the working people of all countries, is another major question.)

In reply to:

From: djones at (jones/bhandari)
Date: Thu, 7 Sep 1995 22:41:50 -0800

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