Dependency Theory (Mine) - 2 of many

Julio Huato juliohuato at
Mon May 28 23:26:58 MDT 2001

[I use capitals for emphasis.]


>This does not mean
>there is no capitalist development/accumulation in the third world. There
>is, but it is extremely uneven because of the international surplus gained
>from the exploitation of third world workers by the imperialist centers and
>peripheral bourgeoisie.

According to Mine, the dependentist hypothesis regarding the nature of the
obstacles blocking or drastically dwarfing capitalist development in the
Third World is that Third World workers are exploited by "imperialist
centers and peripheral bourgeoisie."  This is what keeps the Third World
underdeveloped, according to Mine (or according to the dependentists in
Mine's view).

(1) The Main Argument of the Dependency Theory

IMO, a more fair, but equally general, formulation of the main argument of
the dependency theory would require us to replace the term 'exploitation'
above with the term 'super-exploitation'.  Here's why.

IMO, the EXPLOITATION OF WORKERS in the Third World by capitalists (domestic
or foreign) CANNOT be the cause of the Third World's capitalist
underdevelopment.  The exploitation of workers IS capitalist production.
The expansion of capitalist production entails an expansion of the
exploitation of workers.  Capitalist production cannot expand in any other
way but by means of an expansion in the exploitation of workers.  If the
capitalist exploitation of workers is underdevelopment, then the 'core' is

Furthermore, the exploitation of workers in a given country by capitalists
from another country CANNOT be the cause of capitalist underdevelopment
either.  Routinely, US capitalists exploit workers in Germany, England,
France, and Japan.  Also, Japanese and European capitalists exploit US
workers, etc.  Yet, the fact that the capitalists are in one country and the
exploited workers are in another country does NOT cause the country where
the workers are exploited to be underdeveloped.

Leaving theory aside and looking at the data, a disturbing fact for the
dependency theory is that MOST of the profit inflows into the US from abroad
come from other rich capitalist countries.  The dependency theory would have
us expect that most capital exports go to poor countries and most
'imperialist' profits come from poor countries also.  But the facts are not
consistent with this story.

It is very easy to verify these facts.  Balance of payments data show that
most of the acquisition of financial assets abroad by US people, Europeans,
and Japanese takes place in other rich countries.  Also the bulk of the
profits come from these very countries.  Of US$105 billion in 1999 income
from US direct investment abroad, over US$71 billion come from Western
Europe, Japan, Australia, Canada, and New Zealand.  In addition, the Asian
"tigers" send almost US$10 billion to the US.  Basically the same pattern is
followed by the income from other financial assets held by US capitalists
abroad.  This is not peculiar of the US.  Most income from capital owned by
Japanese, British, and Western European capitalists abroad come from their
richest partners -- conspicuously the US -- not from poor countries.  Prima
facie, the data indicate that the exploitation of workers by capitalists
from the 'core' is correlated to HIGHER levels of capitalist development in
the 'periphery' -- not to lower levels.

It must be stressed that the capitalist exploitation of Third World workers
is exclusively the appropriation by capitalists (domestic and foreign) of
the surplus value workers produce.  I explain below why this is so.  For
now, notice that for the dependency theory to survive, the cause of
capitalist underdevelopment in the Third World would have to be, NOT the
exploitation of workers in the Third World by local and foreign capitalists,
but their SUPER-exploitation.  That is, the exploitation over and above
NORMAL exploitation.  And this is probably what Mine meant to say.  Now, to
understand what capitalist super-exploitation is, we need to contrast it
with NORMAL capitalist exploitation.  Again, super-exploitation is the
unilateral appropriation of value produced by workers in the 'periphery' by
the 'core' capitalists over and above the NORMAL exploitation.  We need to
consider now normal exploitation more specifically.

(2) 'Normal' Capitalist Exploitation and Market Value

First, in each capitalist industry there are always capitalists who produce
with different levels of technical proficiency.  By the operation of the law
of value, producers with technically backward production conditions WASTE
labor while technically sophisticated producers obtain more value than their
production requires.  Since the technically sophisticated producers churn
out more goods per unit of similar labor time, their technical conditions
tend to dominate and become the regulators of what Marx calls the 'market
value'.  Small capitalists may waste a lot of labor time this way.  However,
this mechanism is not an anomaly in capitalist production.  It is a result
of the operation of the law of value.  It is, therefore, the NORMAL way in
which the capitalist mode of production functions.  Moreover, the fact that
the labor under sub-standard technical conditions is WASTED does not
constitute capitalist exploitation in Marx's sense.  [One might interpret
this process as if the excessive labor spent under sub-standard technical
conditions were 'transferred' to capitalists that use less labor by virtue
of their superior technical conditions.  I don't think this is the right way
to look at the process, as Marx's concept value hinges not on the actual
labor time SPENT but on the labor time currently REQUIRED.  But, even if we
looked at the process as one of labor transferences, Marx would not call it
exploitation because it's a transfer between capitalist producers.
Capitalists do not exploit capitalists in Marx's sense, because they do not
produce value directly.  Capitalists exploit workers (or direct producers)
only, because the latter are who actually produce value and surplus value.
The 'transference' interpretation would also be problematic because, in some
cases, it could imply that the workers who produce under better than
standard technical conditions 'exploit' the workers under sub-standard
conditions.] In summary, we cannot find super-exploitation here.

The previous reasoning presupposes capitalist production.  When traditional,
non-capitalist producers of a good compete with capitalist producers,
usually the capitalist producers will be more productive.  As a result, in
the formation of market value, a lot of the labor spent by traditional
producers will be wasted (or transferred, if you prefer).  The regulating
'market value' will be lower than the quantity of labor spent under
traditional production.  Yet, that's the normal way of operation of
commodity production.  And capitalist production is just generalized
commodity production.  For the reasons exposed above, the existence of this
normal mechanism characteristic of commodity production and, therefore, of
capitalist production CANNOT explain the underdevelopment of the capitalist
mode of production anywhere.

Now, let's say that the mechanism described above is a process by which
capitalists actually 'exploit' traditional small producers.  Then, it must
be noted, this kind of 'exploitation' also takes place regularly in rich
countries.  In fact, this type of 'exploitation' of small independent
producers has historically contributed to the 'proletarianization' of small
producers.  [This should not be confused with the expropriation of small
producers by capitalists, which has also taken place.]  The key thing is
that the forceful expropriation of small producers has contributed to create
the premises of the capitalist mode of production, but it is NOT a part of
the logic of capitalist production as such.

Now, for this type of 'exploitation' of traditional producers (peasants,
craftspeople, petite bourgeoisie, etc.) in the Third World by capitalists
(domestic & foreign) to be significant, peasants, craftspeople, etc. would
have to be engaged in A LOT of trade with the core.  Otherwise, this form of
'exploitation' would not be significant enough to explain underdevelopment.

We can then look at the facts and see what's the character of most foreign
trade between core & periphery.  IMO, the bulk of this trade is carried out
by capitalist enterprises in the Third World, not by traditional producers
directly, or even indirectly.   Moreover, a chunk of this trade happens
between capitalist firms that have the SAME owner (branch and headquarters
kind of deal).   Therefore, we'd be talking of the exploitation of
capitalists by capitalists or, worse, of exploitation of a capitalist by

(3) 'Normal' Capitalist Exploitation and Prices of Production

Another law of the capitalist mode of production is that the surplus value
produced by workers is distributed according to the general rule of equal
profit rate among capitalists.  The process of equalization of the profit
rate across industries entails a transfer of value from industries where the
value composition of capital is lower to industries where it is larger.
This mechanism captures logically the formation of prices of production,
what Marx calls the 'centers of gravity' around which actual market prices
fluctuate.  Again, this does NOT mean that the capitalists in
low-composition industries are exploited since it is not their labor but the
labor of workers which is at stake.  In fact, because of this profit rate
equalization law, the capitalists are the collective exploiters of the
collective worker.

Again, the fact that surplus-value originated in industries with low capital
composition ends up in the hands of capitalists in industries with high
capital composition is a NORMAL mechanism operating in the capitalist mode
of production.  No super-exploitation exists here.

(4) Super-Exploitation

The only possible ways super-exploitation is possible is by means of
forceful expropriation (robbery) or by 'unequal exchange'.  These forms of
super-exploitation are imperialist exploitation proper.  The first form of
super-exploitation was particularly large in colonial times (1480-1955).  It
caused a tremendous impoverishment in the Third World, which created
unfavorable initial conditions for the development of capitalist production
in the 'periphery'.  But it must be noted that these are violations (not
consequences) of the logic of capitalist reproduction per se.  Moreover,
IMO, in recent and present times, these forms of super-exploitation are not
large enough to account for the current obstacles in the way of capitalist
production in the 'periphery'.

Let's now examine the second one.  This form of super-exploitation requires
that non-capitalist producers in the Third World engage heavily in trade
with the 'core' AND (a) having the 'core' buy commodities, not at the prices
of production capitalist competition establishes (which would be NORMAL
exploitation), but at prices that are SYSTEMATICALLY lower than the prices
of production.  They would also have to be selling products to
non-capitalist producers in the Third World at prices SYSTEMATICALLY higher
than the prices of production.  For all practical purposes, this would
amount to thinly disguised robbery, true super-exploitation.  Now, how many
Third World non-capitalist producers are engaged in selling wares to the
core countries?  If Mexico is a representative case, not many.  I do not
know whether anyone has ever tried to estimate the 'unequal exchange' in the
trade between the 'core' and the 'periphery' in the form I have defined it
here (which, I contend, is consistent with Marx's theory of capitalist
production).  My impression is that thus considered, 'unequal trade' is not
significant enough to contribute to explain capitalist underdevelopment.

If we exclude 'unequal exchange', I doubt that the remaining
super-exploitation that can be documented is enough to explain the gap
between the 'core' and the 'periphery'.  This is why, I believe, all the
main predictions of the dependency theory are inconsistent with the facts.

In my next posting, I'll try to argue logically about the obstacles to the
capitalist mode of production in the Third World.
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