The debate so far on my blog about John Smith’s new book on imperialism has been enlightening, sometimes confusing, but, above all, important for understanding the nature of modern imperialism and the role of the global proletariat. I won’t repeat the points made in my original review of John’s book, but let me quickly summarise what I think John is saying.
John Smith argues that the main form of exploitation in ‘the South’ (what used to be called the ‘Third World’) is through ‘super-exploitation i.e. wages being forced below the value of labour power, which is defined as the average amount in hours of labour that it would take to sustain and maintain the labour force in capitalist production. Other forms of exploitation under capitalism: absolute surplus value (namely through maximising the working day); or relative surplus value (namely lowering the cost in hours for maintaining the labour force in a given day); according to John, these have become secondary forms of exploitation under modern imperialism.
John also argues that the rates of surplus value in the imperialist countries and the South are the same, but it only appears that the Northern workers have higher rates (i.e. are exploited more) because of the transfer of value and surplus value takes place from the South to the North through multi-national transfer pricing etc and the lowering of the prices of imported goods. So what John calls the “Euro-Marxists” are wrong in claiming that the workers of the North are just as exploited or, indeed, more so because they are more ‘productive’ when using the latest technology. John goes on to argue that this shows that the imperialist North is oppressing the dependent South in just the way that Lenin described one hundred years ago. There are still ‘oppressor’ and ‘oppressed’ nations. Lenin and the old ‘dependency’ theories are correct.
The debate on all these points has been enlightening. But I have to say that I am troubled by some of John’s analysis. First, there are the categories of ‘North’ and ‘South’. Now I know that these are shorthand definitions for imperialist economies/nations on the one hand and ‘dependent’ economies/nations on the other, just like the term ‘Third World’ was. But shorthand terms can cause confusion. For example, obviously Mongolia and Moldova are geographically in the North but not part of the ‘North’ as John categorises it.
Can we be so clear about the division between ‘oppressor’ and ‘oppressed’ nations? Take the Belgian Congo. In the 19th century, the people there were cruelly exploited and subject to slavery and genocide as a personal fiefdom of King Leopold. Their natural resources were devoured and so were the people. But the Congo was not an oppressed nation, because there was not one nation, but lots of small ‘nations’ or tribes in the region now called the Congo Republic.
For that matter, India was not really one nation when it became a firm colonial possession of British imperialism from the mid-1750s. Indeed, since independence in 1947, it has divided into three nation states. The people of India were exploited hugely by the British state and its commercial and industrial companies, and ensuring that no budding Indian-owned industry could develop. But is India an ‘oppressed nation’ in that sense now, when it is a nuclear power, has major industries under local ownership and the state machine?
Yes, the foreign multinationals of the North flourish in India, but so do domestic capitalists big time in the exploitation of the urban workforce and capitalistic farm production from tenants on the land. Some of the top local bourgeois have become international players, billionaires living in the North. And India has imperialist ambitions of its own in Nepal, Bhutan, Kashmir and even Burma. It is not all black (North) and white (South). Brazil too fits into this category of local bourgeois development alongside the multinationals of the North.
‘Oppressed nations’ like Korea, Indonesia, Malaysia or Taiwan now export not just goods (cars, phones, tablets, TVs etc) for profit but also capital into the rest of Asia and Europe. And they use cheap labour in China, Vietnam etc. Indonesia was an archipelago of nations owned by the Dutch. After independence, the Indonesian state in Java brutally suppressed smaller islands like East Timor and New Guinea. Is Indonesia an oppressed nation or an oppressor? And as some comments on the blog said, is China an oppressed nation facing imperialism when its cheap labour force (increasingly less cheap) is exploited in the same way by Chinese capitalists and by the state industries and not just by foreign multi-nationals?
Take Greece. It was increasingly dominated by Franco-German capital in the Eurozone which eventually brought the economy to its knees in the crisis. But Greek oligarchs also operated in shipping, pharma and mining to exploit Greek workers, (of whom some were super exploited). And Greek capital has always harboured its own imperialist ambitions in the Balkans in rivalry with Turkey. Or Ireland, which is highly dominated by American multi-nationals who take out a sizeable part of value created by Irish workers every year. Yet Irish capital has built ‘nationalist’ financial and pharma sectors.
So are all these examples oppressed nations or oppressor nations? Sometimes the oppressed is also the oppressor. There is some ‘North’ in the ‘South’. From an economic standpoint, imperialist domination means the appropriation of wealth and surplus value from other national economies. But imperialism is an articulated structure, starting from the dominant imperialist countries to the dominated ones. The dominated ones are in their turn dominant vis-à-vis other countries.
That brings me to the question of whether imperialist domination in the 21st century is mainly through ‘super-exploitation’ of the workers of the South, rather than mainly through the usual methods of exploitation (absolute and relative surplus value) that Marx concentrated his analysis on in the 19th century. In my original review, I said that I was not sure that John had proved that super-exploitation now ruled. The fact that the level of wages or hourly compensation is way lower in the ‘South’ than in the OECD countries does not prove ‘super-exploitation’. There could be confusion again here between exploitation and poverty. Exploitation is not given by wage levels but in Marxist terms by the ratio of surplus value or profits to the value of labour power or wages. Lower wages may mean higher exploitation but not necessarily so, and lower wages may mean ‘super-exploitation’ but not necessarily so.
Indeed, super-exploitation is a term that must relate wages to the value of labour power. But the latter is set by a ‘socially accepted’ level of wages, length of working day and intensity of labour. In one national economy, there can be different levels of exploitation, i.e. different wage levels, different intensities of labour and different lengths of the working day. In this case, super-exploitation comes with lower wages relative to those segments of labour that are paid the wage deemed socially necessary for the reproduction of the working class in that national economy As one commenter (I forget who) put it “Hundreds of millions of workers everywhere, not just in China, are paid below the value of the labor power, the cost of its reproduction– in the US, Germany, Italy, Spain; a large portion of this falls upon the migrant workers in those “advanced” countries– but certainly not all.”
But what holds within a country does not hold between countries. Different countries have different socially accepted such parameters. So I don’t think it is correct to talk of ‘super-exploitation’ internationally, of labourers in the North relative to labourers in the South, simply because wages in the latter are lower than in the former. There is no level of wages socially accepted as ‘normal’ by all nations. That does not mean that ‘super-exploitation’ in many countries of the South might not be the main form of exploitation. But the level of wages in these countries compared to those in the North does not prove that. There is not one ‘value of labour power’ as set by the North.
So I may have misunderstood, but I don’t agree with Andy Higginbottom as quoted by John Smith, who said “National oppression is manifest not only by dispossession, it is reproduced within the capital labour relationship as super-exploitation, that is to say intense work, long hours and the payment of a wage below the value of labour-power [i.e.] the minimum social standards achieved at that time in the heartlands of capital.” (My emphasis underlined). These last words suggest that super-exploitation is defined as wages being lower than the value of labour power in the North, the ‘heartlands of capital’. That can’t be right.
Indeed, the importation of cheap wage goods from the South increases the rate of exploitation in the North because it lowers the denominator of s/v. As Walter said: “since many goods that Northern workers need are now produced more cheaply in the South, Northern capitalists can get away with refusing wage increases to their workers; and many Northern workers are being forced into taking lower-paying jobs. These setbacks are partly compensated for by the cheaper consumer goods from the South. So the value of labor power in the North goes down; the much higher rate of s-v in the South contributes to a rising (but less extreme) rate of s-v in the North.”
What is going on in the transfer of value created by the exploited workers of the South to the North? Well, it seems to me that it is exactly what Marx explained in Capital as a process of the transfer of value from less productive capitals to more productive ones.
See this example below. In both the North and the South, the rate of exploitation (s/v) in value terms is the same = 100%. The capitalists of the North use the latest technology so that the time taken to produce the value of labour power is much less (20v) than in the South where the capitalists use less technology and more cheap labour. But the rate of exploitation is the same in this example (North 20/20 and South 60/60).
North: 80c + 20v + 20s=120V. Rate of profit = 20/(80c+20v) = 20% Rate of exploitation = 20s/20v = 100%
South: 40c + 60v + 60s= 160V. Rate of profit = 60/(40c+60v) = 60% Rate of exploitation = 60s/60v = 100%
Total: 120c + 80v + 80s= 280V. Average rate of profit = 80s/(120c+80v) = 40%.
The capitalists in the South get 160V in value out of their workers, while the capitalists in the North get 120V. The rate of profit in value terms in the North would only be 20% while it would be 60% in the South. But competition in the market equalizes the average rate of profit at 40%. So the market price of production for the North and South is 140 and the North gets a transfer of value of 20 from the South. The capitalists of the North get some of the value created by the workers in the South through price competition equalizing the rate of profit on the global market.
North = 80c + 20v + 40s = 140P (compared to 120V), so transfer gain of 20.
South = 40c + 60v + 40s = 140P (compared to 160V), so transfer loss of 20.
Now suppose that the workers in the South are super-exploited and forced to accept a lower wage (halved from 60v to 30v in the above example). Now the surplus value in the South is way higher (and the rate of surplus value is now 300% compared to 100% in the North). The process of the global market produces an average rate of profit that is higher than before, at 65%.
North = 80c + 20v + 20s = 120V. Rate of profit 20s/(80c+20v) = 20% Rate of exploitation 20s/20v = 100%
South = 40c + 30v + 90s = 160V. Rate of profit 90s/(40c+30v) = 130% Rate of exploitation 90s/30v = 300%
Total = 120c + 50v + 110s = 280V. Average rate of profit 110s/(120c+50v) = 65%
Through the transfer of values in the global market, the capitalists of the North now get an extra 45V out of the super-exploited workers of the South. Super-exploitation in the South increases profits for the North. Total surplus value in the North and South has risen from 80 in the first case to 110 in the super-exploitation case.
North = 80c + 20v + 65s = 165P (compared to 120V), so transfer gain of 45.
South = 40c + 30v + 45s = 115P (compared to 160V), so transfer loss of 45.
But the wages of the workers of the North are unchanged. In this sense, the workers of the North are not oppressing those of the South. Both the capitalists of the South and the North are, by squeezing more value out of the workers of the South. As Sartesian puts it: “Super-exploitation” certainly involves a transfer of value to the bourgeoisie. Indeed, it is subject to the same determinants as capitalist production anywhere in that the transfers and redistributions serve to create a general level of profit, and distribute that profit to the largest and most developed capitals with the most technically intensive structures. “Super-exploitation” does not involve a transfer of value to workers of advanced countries.”
Of course, imperialism also involves monopoly as well. In this case, that means controls and tariffs on the trade of the weaker capitals, the might of financial firepower for the dominant capitalist economies; and the restriction of labour flows from the poor to the richer countries (witness the current migrant crisis – this could boost growth and profits but lower wages in the North, as a sort of ‘in-sourcing’). Monopolistic structures are another way of transferring even more value from the South to the North, but it is still the same process of transfer of values from capitalists to capitalists, not from workers to workers. Marx’s law operates in a monopolistic market as in non-monopolistic markets.
However, there is no pure monopoly over technology, finance and markets; it’s really an oligopoly. So some Northern multi-nationals, attracted by the super-exploitation in the South and the potentially higher rate of profit, may set up with the latest technology to compete against other Northern multi-nationals and Southern capitalists. And some Southern capitalists may gain access to finance and new technology to compete too. That will start to drive up the organic composition of capital and lower the rate of profit. Super-exploitation may continue but Marx’s law of equalization will still operate and rates of profit will fall. The empirical evidence of rising organic composition and falling (if higher) rates of profit in the South is overwhelming – see the Figure below.
As Walter says: “Whereas borders prevent the free flow of labor, monopolies hinder the free flow of capital, and likewise inhibit the equalization of profit rates between North and South and even among Northern firms, strong versus weak. I do not say, as did Hilferding and Sweezy, that this means that the law of value has been repealed in the epoch of imperialism. It operates, but its operation has to be modified to take into account conditions that Marx put aside in order to grasp the essence of capital’s laws of motion.”
This transfer of value through the market for capitalists does create an ‘illusion’ that John Smith refers to. The price of output (GDP) in the North is higher than it would have been without the transfer of value from the South. For example, US corporate profits were $2.1trn in 2014, but $418bn came from profits from “the rest of the world” (although this includes profits from the other imperialist economies of the North), nearly double the ratio of the early 1980s. And probably even part of the ‘domestic’ profits will be due to transfer pricing accounting with subsidiaries in the South.
Super-exploitation can be important, but I would submit not in all cases, not always for long and not just in the South as compared to the North. That’s because when wages are forced below the value of labour power and are held there for some time, that can change the value of labour power itself (which remember is a socially as well as physically defined category). When wages fall below the value of labour power and are each time in the succeeding production process kept lower than the value of labour power, this becomes the new standard of living for labour and the value of labour power falls. So the lower wage becomes the money manifestation of the new value of labour power and ‘super-exploitation’ disappears! That’s because the value of labour power and thus the rate of exploitation are co-determined by the power relations between capital and labor (Capital I, pp.522-3).
Finally, there are the implications of the thesis. Was it ‘overproduction’ in the North that led to super-exploitation of workers in the South and lies behind the Great Recession and global financial crash? That seems to be what John saying at various points. As I said in my original review, using the term ‘overproduction’ does not get to the heart of the causes of the global crisis. It hides away from the ultimate contradiction between an expansion of use values that people need and the profitability of capital. It is the tendency for profitability to fall as capital accumulates that drove capitalists in the imperialist North to ‘outsource’ and to exploit the huge growing labour force of the South (including through super exploitation).
But it is not a battle between oppressed and oppressor nations or between the super exploited workers of the South and the maybe not so exploited workers of the North. As Roberto commented: “Smith’s economic analysis leaves me somewhat perplexed the political implications of his address. The workers of the dominated countries to free themselves from the domination of imperialism must fight against all the representatives of capital, including the bourgeoisie of their own country that lives off its exploitation. It is true that imperialism increases the gap between the dominant and the dominated countries, but this gap can never be overcome through inter-class alliance with its own bourgeoisie. Finally it must be said that, as there demonstrates the history of the past 30 years, the workers of the most developed countries are also exploited by capital, and with the growing economic contradictions, also their relative privileges are drastically reduced. This, in my opinion, objectively reopens the discussion of the necessary unity of the international proletariat to free both from the rule of capitalism as from its most odious expression of imperialism.”
Michael Roberts Blog 
Very nice. Regarding the percent of US profits derived from the rest of the world–it’s been a while since I checked, but I think you’ll find that over half (I think something like 2/3) are appropriated in other “advanced” countries– Canada, western Europe, Japan, Australia, etc. Among the “global South” countries, Mexico is (was?) the largest contributor to US corporate profits.
This makes sense– as profits follow investment, and most of US fdi is among the advanced countries.
And it’s important to add that that “flow”– US profits derived from the rest of the world is not the sole method of appropriation, as those figures are usually derived from US direct investment positions in other countries, and thus don’t account for US “domestic profits” enhanced by the imports the “intermediate” imports used in “final” production in the US.
Agree with you except on one point. You say:
“But the wages of the workers of the North are unchanged. In this sense, the workers of the North are not oppressing those of the South”
But this is not necessary. The reduction of workers’ wages in the North must equal the reduction in the value of their labour force for that to be true. Even if wages in the North are reduced to some point, might be the case that they are not fully reduced. So some profits transfered from the South may end up in the hands of (some) northern workers.
In this line, working class struggle in the North are (partly) a way to mantain this profits in their hands. The same holds true, of course, of the differencial of wages inside every national economy (as you say: there is a North in the South).
From this I don’t conclude that northern workers -in the North and in the South- are in complete accord with their capitalists. But they are to some point. I know that to say this is to say that working class is structuraly and objectively fragmented. And cannot unite if northern workers don’t fight for the improvement of wages in the (inner and outer) South. But this is another matter.
How does this differ, in essence, from the conditions throughout all and every capitalist economy where different sectors have different wage rates?
How does the “super exploitation” of textile workers in Bangladesh or Cambodia difference, in essence, from the lower wages historically paid to textile workers in the US? Was there a transfer of value to say autoworkers in Detroit from textile workers in North Carolina, such that textile workers were “super exploited,” and autoworkers had a vested material interest in maintaining that super exploitation, acting as “accomplices” to the bourgeoisie?
Or today, since the textile and fabric industry has been almost completely shutdown in the US, how does this differ from the the lower wages paid to agriculture workers, since WW2 mainly migrants from the “global South” or from food-processing workers, with great numbers of those workers being women of color?
An argument can be made that the history of capitalism, of modern development, is all about the transfer of value from agriculture to industry, from countryside to city– about releasing populations from rural production, about accumulation at the expense of the “direct producers,” (both facets of a single process), in order to create the class of “free” “detached” laborers, who find use in their labor power only as a means of exchange for an equivalent for the necessaries of their own reproduction.
And that process has always involved more and less intense exploitation of certain sectors of the class; wage differentials; greater or lesser degrees of impoverishment.
Doesn’t make it any more tolerable or acceptable, but it may mean that capitalism is not qualitatively different because of that specific condition or relation.
IMO, it definitely means there is no such thing as a capitalist country made up solely or exclusively of oppressors, and no such thing as a capitalist nation made up solely and exclusively of the oppressed.
You have to separate out oppressor and oppressed nations from the argument about super exploitation. They are different issues, but with commonalities and the fact of oppressor and oppressed nations has obviously allowed for the development we have seen.
So your whole objection to oppressor and oppressed nations misses the point I think, and isn’t particularly relevant. So I would ignore the first 10 paragraphs of your article.
“That brings me to the question of whether imperialist domination in the 21st century is mainly through ‘super-exploitation’ of the workers of the South, rather than mainly through the usual methods of exploitation”
Again I don’t think this is the question. Even if super exploitation was a marginal factor, it could be the marginal factor that held the thing together. Politically I think the nature of imperialism is crucial. I think we have seen an epoch of nationalist politics rather than class based politics and I think nationalism is still an important factor in retarding progressive politics. I see signs of it weakening but I don’t think you can overstate its importance to the history of the 20th century. And the world we live in now.
“Exploitation is not given by wage levels but in Marxist terms by the ratio of surplus value or profits to the value of labour power or wages.”
It isn’t “or wages” is it? It incorporates wages, pensions, public services, transfers through taxation, the price of final goods.
“But the latter is set by a ‘socially accepted’ level of wages, length of working day and intensity of labour.”
Marx as far as I know didn’t use the term socially acceptable level of wages; he used the words,
“Nevertheless, in a given country, at a given period, the average quantity of the means of subsistence necessary for the labourer is practically known.”
This I think is an important distinction. We can imagine, given Marx’s revolutionary goals, that he would have baulked at the idea of socially acceptable levels of wages, given workers are in constant struggle over such things.
Socially acceptable is not applicable when a peasant population has recently been driven off the land and forced into the towns. Also not applicable when one nation produces at one ‘acceptable’ level but the final goods are consumed by another set of workers enjoying a far higher ‘acceptable’ level. Frankly talk of acceptable levels under these circumstances is distasteful. Also not applicable when said workers are in a sweatshop and the boss has a whip.
To give the example of BMW. They knew the value of labour power of Bavarian workers and knew what German society deemed they needed to live on in order to reproduce the social relations. When BMW moved operations to Vietnam they immediately revaluated the value of labour power for a car production worker to be way below the level they had been paying. After six months it soon became practically known that the value of labour power, in capitalist terms, was way below what the Bavarian workers were enjoying. We could look at the hourly compensation stats by nation and conclude that every capitalist knows that the true value of labour power is way below the level the developed world worker is receiving! Another example would be a coal miner. In the UK it was practically known what the value of labour power was for a coal miner. Thatcher’s attack on the coal industry and the use of imported coal into the UK soon showed that the value of labour power for a coal miner was way below what had originally been known! This happens over and over again. The developed world capitalist knows for sure that his workers are paid way over the value of their labour power, he only has to point to the developing world worker to illustrate that.
Two important things here, not only does the capitalist know the developed world worker is paid above the value of his labour power, but the developed world worker knows the capitalist knows this! This one fact explains much of the politics of at least the last 40 years. The second important thing, even though the value of labour power is known, politics and technical aspects mean that any levelling off between the developed and developing world to the known value of labour power are retarded. And that in practical terms this means the developed world worker is paid above and the developing world worker is paid below the value of their labour power. Sven when productivity are taken into account.
I hate to be “that guy” but by socially acceptable, clearly what is meant is the wage (total remuneration) established by class struggle and in accordance with historico-cultural specificities. See Lebowitz’ “Beyond Marx’s Capital” for extensive coverage of “wages” in all Marx’s work.
But here is the issue being skirted about: super-exploitation as Smith describes it is incompatible with the laws of motion of capitalism and capitalist accumulation, as Marx discovered them. It contradicts Marx’s law of value, or, in other words it negates Marx’s analysis. Smith suggests as much with typical claims that Marx’s thought be provincialized to the mythical “competitive capitalism” of the 19th Century. Now we need Lenin, unavoidable bridge between old “mature” Marx and “new” Marxism (which replaces the old). Smith has gone further, even the new Marxism isn’t enough, it needs a new makeover. But why even retain Marx at this point, his language, concepts and clothes? This must be the farce before the new speaks its own language… of course only a new theory could illustrate that super-exploitation logically (i.e., theoretically) is valid, because using Marx’s conceptual framework there are too many holes to fill with mystification. For instance super-exploitation cannot appear simultaneously as (super)profit in the oppressor nations, as lowering the value of labor-power (holding or cheapening v) and as a raise in wages (v in money-terms). It defeats the purpose of collecting super-profits if the company (or branch of industry) is going then pay them out as higher wages (to buy off workers) while also outsourcing production to maintsin or lower labor costs. A simple two sector model of oppressor and oppressed economies would illustrate this point, work on which I am already preparing for publication elsewhere.
The real kicker is that if rate of profit (p’) between the two doesn’t diverge (classical theory of superexploitation as pillage) in opposite directions, the rate of surplus-value (s’) is the same in both, the rate of super-exploitation has to rise each cycle. At the same time, only an increase in investment in c in the oppressed economy is possible (relative to v). A rising organic composition of capital would depress the profit rate unless superexploitation is intensified assuming the rate of surplus value in sector II stays the same and is equal to s’ in I (Smith’s thesis, again even if they diverge the end result would be the same). But what to do with the super-profit? If it gets invested back into II it doesn’t matter if capitalists from I or capitalists from II are super-exploiting their population, the result is the same: increase in productive capacity of CII (total capital) and a relative catching up to sector I. If they are to pay off workers in the “north” they are unproductive expenditures, a raise in luxury consumption, but then then why outsource to control labor costs? The circle goes round and round…
The obvious and correct answer is Marx’s theory can already account for this entire issue without hypostatizing “super-exploitation.” If Vol III was more closely followed, Marx’s formulas on cost price, prices of production and generalization of rate of profit account for variance, as has been said. No theory of politics (imperialism in Leninist terms) is needed when the law of value already operates. If capital in general isn’t the base of imperial coercion, i.e., not as plunder, then Marx’s theory vale bolsa, is worth balls.
“I hate to be “that guy” but by socially acceptable, clearly what is meant is the wage (total remuneration) established by class struggle and in accordance with historico-cultural specificities. “
I think you are missing the crucial difference between what is socially acceptable and the way Marx phrased it, i.e. what is known. We can talk about a world market when capitalists can see that for example, Vietnamese workers can be more productive than German workers and at a fraction of the cost. What is acceptable is irrelevant, what is known is what creates the actual development. I.e. BMW moved to Vietnam not because of socially acceptable conditions of labour but what they knew. Which is why they also moved their 7 series production to Vietnam.
“it needs a new makeover. But why even retain Marx at this point, his language, concepts and clothes?”
I can’t think of any scientific theory that has stayed the same after 150 years. Not Newton, not Darwin, not even Einstein. The idea that is Marx if refined it invalidates the whole theory is a form of fundamentalism. Marx gave us the basic framework and key conceptual apparatus to understand the capitalist system. But the actual historical developments demand that the theory be updated and refined. I do not see how Marxism is being undermined here.
“It defeats the purpose of collecting super-profits if the company (or branch of industry) is going then pay them out as higher wages (to buy off workers) while also outsourcing production to maintsin or lower labor costs.”
It is a fair question that needs investigation. But I think you take your objection too far, it wouldn’t defeat the purpose if the exploitation was to such an extent that it allowed for workers to be ‘bought off’. Not that I would use the term bought off. You speak as if the capitalists all sat in a room and planned this out, I don’t think it quite happened that way. For example in Japan, they outsourced certain production functions but retained the ‘high value’ stuff. So while they took advantage of super exploitation they did so not just to reap the profits but also to expand production. Super exploitation was the happy side affect. But it was more of a ‘natural’ process, though undoubtedly the capitalists could see the Yen/Pound/Dollar signs in front of their eyes.
But the question we can throw back at you is this, if super exploitation results in no benefits when all the accounting is added up and balanced off, why have we seen production move to the developing nations on such a scale. How do you account for the development other than capitalists seeking cost reduction? And capitalists knowing that the value of labour power is lower than the level enjoyed by developed world workers?
“If capital in general isn’t the base of imperial coercion, i.e., not as plunder, then Marx’s theory vale bolsa, is worth balls.”
It wasn’t plunder it was simply opportunism, simply capitalists looking to reduce costs. There is nothing more capitalist than that!
It isn’t plunder because in the actual real world scenario a capitalist organisation is paying a wage labourer to produce concrete labour and from this they are producing exchange value. Only they are doing it for a lot less money and much worse conditions than the workers who were formerly employed. It is still on the basis of capitalism because we are talking about capitalist exploitation, so for example BMW exploited their Bavarian workers but then they upped sticks went to Vietnam and exploited them, only they exploited them to a far greater degree. Super exploitation seems like a reasonable word to describe the difference between what the Bavarian car worker got and what the Vietnamese one now receives. Unless you can think of a better word.
The question about what they do with the super profit is a bit like asking who buys the surplus product!
“I.e. BMW moved to Vietnam not because of socially acceptable conditions of labour but what they knew. Which is why they also moved their 7 series production to Vietnam.”
So what did BMW know that informed the decision to move production to Vietnam?
Did BMW know what the conditions of labor were; what the prevailing wage would require them to pay? did they know what taxes they would be required to pay? did they know what the transit costs would be for importing materials needed for production and what the costs would be for exporting finished products?did they know what the reliability of the infrastructure– power supplies, water supplies, communications capabilities– were and how that reliability translated into additional, or reduced, costs of production? did they know what environmental restrictions they would or would not be required to satisfy and how those restrictions, or lack thereof, translated into production costs? did they figure, calculate that the combination of lower wage requirements and the answers to all the other questions, combined with the importation of advanced technology accumulated through the exploitation of the labor force in “advanced” countries, would provide a boost to their profits???
You bet they knew. They knew the answer to all that and more. It’s called due diligence. No capitalist commits money to production and property which they themselves will own without knowing all that.
They knew that they could more intensely exploit the labor power of the Vietnamese workers than they could the labor power of workers in Bavaria with, temporarily at least because everything is temporary, less resistance.
They knew because the agents of the state in Vietnam, the would be agents of capital, administrators for capital, the national intermediaries for capital, advertised that to them.
And why did the national intermediaries do that? Because like the colonialists before them, the agents of the state could not revolutionize agricultural production, accelerate productivity in agriculture, to the level needed to support “development”– i.e. industrialization on their own, and the USSR was no longer in the picture.
No, it’s not plunder. And it isn’t always accumulation through driving the wage below the cost of the reproduction of the laborer.
I agree with most of your last comment, the only thing you forgot to add is that not only do you need a friendly national government in the developing nation you also need one in the developed nation. Which explains the Chicago school politics of the 80’s and 90’s and 2000’s…
Again you misrepresent the point: “socially acceptable” is not an ethical or moral evaluation, but one establish through the class struggle. The fact that you seem largely unaware of Marx’s own argument is what creates these instances of injecting an outside source into the debate to make it work. Marx must be wrong then, if he can’t account for this phenomenon with his theory, hence we need to update it. There is no fundamentalism involved in stating that this is a critique of Marx. However it hasn’t been demonstrated by you, Smith, or anyone else that Marx’s theory can’t account for what appears to be “super exploitation.” I am suggesting that it can and it does, thus negating the reason for this revisionism. A claim on the inadequacy of a theory can’t be made unless that inadequacy is demonstrated, which is my point. Reread Parts 1,2,3 of Vol 3 and this pseudo-problem is erased. In fact, after perusing my notes on counteracting forces (ch 14), Marx explicitly rejects the Ricardian view being developed in a different form by Smith (section on foreign trade).
Why does Smith appear to overlook the importance of this section to focus on the short section on wages below the value of labor power? He has an axe to grind: to criticize Marx in a bid to “improve him.” But why? Marx clearly doesn’t think superexploitation is a viable development strategy in “advanced capitalism” (late British hegemony), why would a more developed capitalism be an exception? Via Marx, Smith doesn’t illustrate this… so we reject Marx without at least a logical proof on why we should neglect him. Marx at least showed how Ricardo and the others were wrong. Smith just uses some diamat platitudes about concrete historical development manifesting concrete theoretical points. I need concrete logical proof, sorry.
As for the super-profits being reinvested in oppressed economies, it does matter, especially when the lion’s share is being invested in “communist” China, and when it simultaneously develops local capitals that can outcompete the TNCs, as Huawei is set to. Ignore Marx at your own peril. If his theory can’t account for the reality it describes, it is wrong. If it can it needs no alteration. I happen to think it does capture the present.
Suppose we assume that a worker is super-exploited using the most modern technology and that the rate of profit would be calculated based on 80c+2v+20s=102v [20s/(80+2v) or .245]. Actually super-exploited workers (mainly in the ex-colonial nations) are often exploited at even higher rates because the cost of reproduction of the work force in many “emerging economies” are absorbed by economies in the host countries that are “external” to the global field of value creation. For instance, Bantustans and what’s left of China’s or Vietnam’s socialist infrastructure. (The ex-Soviet Union’s has largely been dismantled.) I’ve read that the average relatively and absolutely super-exploited young laborer in China is used up in a year or two, and returns to his or her village to re-couperate. But I read that two years ago. I agree with Michael, that such conditions can’t last. …Agricultural workers in the US, that contribute to our basket of cheap wage goods here, can find little solace when they return to NAFTA ravaged Mexico.There is a great deal of labor unrest emerging everywhere, even in the imperial centers, not because labor here exploits super-exploited labor at home and abroad but because the effect of super-exploitation has been to allow for greater rates of exploitation of workers everywhere. Even American workers are awakening from their imperial illusions to these uncomfortable facts.
Thank you ! You make a clear point on this. Of course, there is a dialectical combination of politics and economics. But economics, production of value comes as infrastructure.
As a question of semantics, I prefer the terms of “center” and “peripheria”. It avoids dangerous and wrong others caracterizations, as geographics (norths vs souths) or ethnical (whites / blacks) or too statics (developped / underdevelopped) … There is a movement of capitalist accumulation coming from center and expanding to peripheria. And that movement of expansion is contradictory, combined and inequal.
The current phase of capitalism history is specific. At XXth century conditions, the tremendous gap of capital acumulations between states from the center and peripheria led to differents things : political subordination of states (colonialism), possibility class struggle gains in center states on basis of strong industrial working class and low concurrency.
Now, in main areas, political independance as been obtained, and accumulation level raised several (not all !) peripheric states at the rank of industrial leaders. As Marx said (Manifesto) : “This organisation of the proletarians into a class, and, consequently into a political party, is continually being upset again by the competition between the workers themselves.”
One question was raised by Rosa Luxemburg : can capitalism be stable without a preripheria towards which it expands continuously ? Rosa said no, explaining that capitalism always need to expand and that this is the basis for colonialism, imperialism and world crises. I think she was right.
For the capitalists the important thing is the amount of surplus labor and thus of surplus value they are able to be appropriated. To this end, all methods are good, the surplus relative to absolute surplus value and also the super-exploitation that is obtained with the wages forced below the value of labor power. I do not share the opinion of John that the first two forms have become secondary. Otherwise we do not we explain why so many owners invest capital to achieve higher labor productivity. It should also be remembered that not only in the peripheries, after a historical trend towards lower nominal hours of work, for several years we are witnessing a lengthening its including in Western countries.
There is no doubt, however, that the huge expansion of capitalist production occurred in recent decades in so-called emerging countries has been an element of support to the accumulation of capital and profits at an international scale. In the world market, the industrial workforce has risen from 490m in 1991 to 715m in 2012 (+ 46%), of which we know the majority concentrated in the peripheral countries. This new industrialization occurred both for the domestic market of these countries but also for the international market, especially through the relocation of companies based in Western countries, as with intermediate or final products commissioned by large multinationals.
It is important to note that, over time, this new working class produces with the latest business systems and technologies, so with a broadly similar level of productivity than firms in more developed countries, but with wages that for decades were lower even ten times those of workers of older industrialized countries. Also the times and pace of work in these companies are usually much higher than those of Western countries.
This was the real secret of revival (relative) of the profitability of capital in the 30 years previous, and this explains why despite the difficulties in the global economy are dated back at least from the mid-70s, but the explosion of the economic crisis just happens in 2007.
Coming again to our discussion, we need to determine whether there is now a true world market or not. That is, if these goods enter the world value chain and if in these countries the majority of the production takes place at the international conditions of average productivity of each sector. See in this regard the writings of Smith on three examples (Apple, T Shirts and Starbruck). Do not confuse the lower productivity in sectors producing the same goods and productivity between different sectors that produce different goods. In the first case the company with lower productivity will have to sell at a lower price or compensate for the lower productivity with an intensification of exploitation. In the second case, the productivity gap may be simply due to the different organic composition prevailing in the two sectors. To return to the examples of Smith today in components for electronics, or in the production of T Shirts, the industrious who produce in China or India produce exactly the average necessary labor time valid internationally.
From this point of view the objection of Michael on pay differentials do not seem very convincing. First, it is true that the value of labor power is perhaps set by a ‘socially accepted’ level of wages, length of working day and intensity of labour. But who determines that the current ones are socially accepted levels? It establish the balance of power between the classes, and perhaps it is no coincidence that the struggles for example in China for more wages have multiplied in recent years, proving that it is not very “socially accepted”. Those dictatorial and oppressive regimes that normally governed our pretend to denounce but which in reality are the first to benefit, impose a repressive climate and restriction of union rights, such as to make it difficult to protect the working conditions of the workers. So I repeat what I wrote in my previous post: Claiming that the wages paid to workers of the peripheries is appropriate to ensure their reproduction is very severe, since it suggests that these workers as needs to reproduce itself are inferior to those of workers in more developed countries. However, if these workers take the starvation wages it depends on the reasons mentioned above in which the entire world capitalist class helps to keep them.
But apart from that, it is true that these workers generally produce the average productivity conditions in the world of that sector, for the bosses there is a big difference between to produce the same goods from their country workers (whose salaries are still downhill) or those where wages can also be 10 times lower. For the capitalists this turns exactly into an increase of surplus value incorporated in the individual commodity or the entire production because of the low wages paid for the goods that end up on the world market. This I think you can call super exploitation. As for me, to say that the majority of workers in peripheral countries (I agree that it is difficult to find a satisfactory term) are super-exploited, is not to say that those of the countries of the center are not exploited, or worse they share with their masters privileges oppression of the dominated countries. Quite the contrary, the more capitalist force for the use of super exploited workforce has allowed them to change the rules of the labor market even in the most developed countries by imposing significant setbacks also to the workers of the metropolis and even worse their exploitation .
This is the reason why we must oppose the propaganda that seeks to boost competition and the conflict among the various sections of the international movement of workers and strengthen their united against their common enemies.
But I think John wanted to point out another fact. The fact that this international division of labor mainly benefit the major imperialist powers, through their dominant position in the global capital market, finance and armaments. At this point I believe the Norfield contributions, already reviewed by Michael, a good integration for the understanding of the current imperialism.
This makes it even today the distinction between dominant and the dominated countries, since the current situation involves a substantial difference between those who live in one country or another. Not only for salaried workers, who suffer a double oppression, is that of super-exploitation than to lack of rights and the chance to organize politically and unionized independently, but also for other social sectors (the underprivileged masses expelled from the economy of subsistence, the small intellectual bourgeoisie and not etc,). All this has little to do with the achievement of political independence but much with the current international division of labor and the hierarchy of economic and military power. But imperialism is not another thing from capitalism and with the involvement of the national bourgeoisies levels in the world market these network do not have any interest or to challenge the great powers or to improve the conditions of their workers. Therefore in summary, we could say that there is still a national issue, but it, in the current conditions can be solved only in the common struggle of the exploited against international capital to overcoming the wage labor. But it should not and can not forget the existence of imperialism and its consequences on the different sections of the international proletariat.
Does it make sense to say that wages are ‘below the value of labour power’? The value of labour power (setting aside for a moment the customary dimension of that calculation) would mean the value of the goods the worker needs to reproduce himself. Since workers do reproduce themselves, they could not over time, be paid less than it costs to reproduce themselves, unless they had income from another source (as, say, peasant small-holding or some such).
Of course, in the short term, workers may well accept less than they need to reproduce themselves, in desperation, but such an employer would quickly be out of workers. And of course, the question of what is the customary cultural level at which the workers reproduce themselves has a wide span. Still, a theory that says the workers do not earn enough to reproduce themselves, is not very convincing.
Yes, I do think it makes sense. For example, in the US workers who are forced to accept temporary or part-time employment frequently are forced to supplement their wages by either seeking aid from government programs (like SNAP, supplemental nutrition assistance program) or a second job, providing equally below subsistence level wages, are indeed super-exploited.
How significant is this in the accumulation of capital? As a trend, I think it’s quite significant.
In the short term and if life is cheap enough and if your motive is self enrichment at the expense of literally everything else then i think it makes perfect sense. Over the longer term the costs associated with appalling conditions of Labour will eventually surpass the benefits. But if we look at history it can take a century or more of struggle.
There is also another unknown variable in all of this, how far can the capitalists drive down the living standards of developed world workers? Even though the labour movement has effectively been defeated in the developed nations we still haven’t seen a massive reduction in living standards.
One stark statistic, in Vietnam 38% of consumption spend is on food, in Germany it is 11%. In the UK it is 9%. In ireland 7.5%.
Look at this from the perspective of a factory worker in Vietnam, they work more productively than the German worker yet not only are they compensated far less but global production, i.e. the things they make, are directed not for themselves but for some other group and in the interests of those that directly exploit them. They lose twice over!
Michael, I think you’re missing the larger implication of John Smith’s argument. The transfer of value through trade is twofold. Value is captured by purchasing intermediate goods (inputs) and consumption goods from the periphery below value, but incorporated and sold back to the periphery as finished goods above their values. You present one possible interpretation, where there is a transfer of surplus value within the capitalist class in much the same way that differences in the organic composition of capital moves value among various spheres of production.
Without trade:
80c + 40(v +s) = 120 (center)
40c + 120 (v + s) = 160 (periphery)
Becomes after trade:
80c + 85 (v + p) = 165 (center)
40c + 75(v + p) = 115 (periphery)
from which one possible result is:
80c + 20v + 65p = 165 (center)
40c + 30v +45p = 115(periphery)
If wages remained unchanged before and after trade and if there are no imported inputs that enter into production, the transfer is solely a one-off between capitalists.
But what if there is a feedback loop? To illustrate–
Before trade:
110c + 40 (v +s) = 150 (center)
10c +120 (v+s)= 130 (periphery)
So that, if after trade, the following occurs, because some of the inputs and wage goods are purchased below value by the center, but captured as additional profit while being sold above value after trade, resulting in:
80c + 40v +67p = 187 value captured (center)
40c + 20v + 33p = 93 value captured (periphery)
Because labor is distributed on a 1: 3 basis of center to periphery, each unit of labor time creates 160/4 or 40 units of new value. If therefore workers in the center receive a wage =/> 40, they are no longer exploited.
In this example, the drain of surplus value from periphery to center allows workers of the center to capture as much value in wages as they create, while also increasing the center’s rate of profit. In fact, the more successful the wage demands of the center, the more the periphery must finance the profitability of the entire system by intensifying the downward pressure on wages from their own workers.
This was the argument of Arghiri Emmanuel and of Zak Cope, that unequal exchange creates a new labor aristocracy of first world workers who are not actually exploited and who owe their living standards to the super-exploitation of third world workers.
I’m not arguing in defense of this extreme interpretation of the theory. But I am trying to lay it out as simply as I can in a way that I think is lacking in the discussion here so far.
But however we evaluate this, I think John Smith has made a major contribution in explaining how the tendency of the rate of profit to fall has been modulated by globalization. His, and analyses like his, have provided a missing link explaining where, despite the abject lack of productive investment over the past decades in the global north, a supplemental mass of profits could be drawn from to allay the crisis tendencies of the system. Not from accumulation in the north, nor from repatriated returns from direct investment in the south, but through global production chains that link center to periphery thru unequal exchange.
You say: “If therefore workers in the center receive a wage =/> 40, they are no longer exploited.”
That is very surprising, but if it was true (so if “they were no longer exploited”), whatever the reason; than no profits can be possible, as profits are “made” by the extra time of work, economically measured by the exploitation… Extra time of work, considered the given socially necessary time of producing all the goods and services of production and reproduction of the working class. So no longer exploited, economically means no longer exploitation, which means no longer profits can be possible.
If you miss this point, than whatever your argue or opinion may be about this discussion, is a nonsense (if is not a confusion making trick), until you “move a Finger”, at least to get it, to understand.
While I am impressed by Smith’s book, it is not because he attributes superexploitation as the main basis for imperialism. The importance of his book lies in his pointing out that much of the surplus value is captured by the North and has made the capitalist class of the major economies not confront their working class as severely as they would have had to do if this important source had not been there. This source of surplus value gave a longer life – and a higher rate of profit than it otherwise it would have had- and shows the necessity of taking account of those transfers of surplus value in order to understand why this crisis did not come much earlier. What has really happened is that the imperialist are enjoying the benefit of the lower value of labor power in those countries-often with the same or better tecnology. It is the power of the U.S. war machinea,it’s dollar dominance, and financial control that makes those super exploited such a golden goose for the major imperialist countries. That is what makes the imperialist nations oppressor nations.
Eliminate poverty in developing countries. Cast off the reserve army of labor in the global periphery. Outsourcing and unemployment in the core capitalist countries are backfired by poor conditions and no proper means of production in the domestic economies of the periphery. It is still Marx at his best. Exporting exchange value to underdeveloped capitalist countries in order to lump together more exchange value in the rate of return.
(I’m not a good english user, so my words can looks stupid and this question might be irrelevant to this article.)
As I know, your analysis on tendency of capitalism is based on the ‘law of tendency of the rate of profit to fall’. Well, this might be a silly question, but why does the ‘organic composition of the value’ matter in Marx’s law of profit?
Yes, r=S/(V+C)=(S/V)/(C/V+1), but ‘r=(S/C)/(V/C+1)’ also can be established. So, I think it’s just denominator(=CC,VC) that makes RoP fall, not the value composition of value. In the case that surplus value is steady, rising of organic composition doesn’t always decrease the rate of profit, but it’s ‘V+C’ that its increase makes the rate of profit fall.
This might be silly thougts, but I’m not convinced with Marx’s idea about the relation between value composition and rate of profit. What’s wrong with my idea?
North and South are misguiding geographical concepts. I come from Romania, which pays its workforce 6-7 times or even less than the average Western European workforce.
Now, I am not sure superexploitation is the right word. The thing is that in Romania, i.e. a developing country, there are two types of capitalists fighting for supremacy after the fall of the Communist block: local capitalists, scavengers of the ex-centralised Communist industrial infrastructure, who have dealt a death blow to the pre-1989 workforce at the end of the 1990s. These people are either unemployed for years, living off various state subsidies, or they have gone to find work in Western Europe. The latter case is more probable. The local nationalist capitalist class is no match for the international capital. The former is weak in terms of finances, invests little of the meagre profits they get and are usually involved in state-sponsored financial scams. Everybody hates them arond here even more than they do the latter.
Multinationals pay 10 times less than they do with the Western European workforce, but they provide a secured existence for a few urban dwellers in an ocean of rural unemployment and huge poverty. Western capital is perceived as a saviour by comparison to local capitalists, who pay worse or not even that and exploit hectically. So, there you have it. If it had not been for the economic misery of most people in developing countries, living off 100 euros a month in Europe paid by state budget, not Vietnam, I would not be so sure that superexploitation by foreign multinationals of core capitalist countries is possible anymore.
By the way, the c is the same in some areas of Romania as in most Germany, but the v is paid 300 euros a month just because there is a staggering number of people trapped in the reserve army of the proletariat out there. Figure that!
Not to forget mentioning the disturbing fact that the v for reproducing the wage earner in developing countries could be low by Western living standards, but enough for keeping alive v.
I wonder if anybody is willing to comment on Robinson’s theory of the rise of a Transnational Capitalist Class in “Global Capitalism and the Crisis of Humanity” (2014)? He argues the need for new concepts and that ” we cannot understand this new epoch through extant nation-state-centric paradigms”. Further ”Most data on the global economy comes from national collection agencies and has been disaggregated from a larger totality( the global economy) and then reaggregated into nation-state boxes”. ”There has been a shift from international market integration to global production integration”. We need to think beyond the country of domicile of a particular company or interlocking boards of directors. For instance by 2008 Chinese state companies had invested $3 billion in Blackstone which in turn had investments in over 100 TNCs. The Indian Tata Group runs more than 100 companies in 80 countries. When Brazil attacked northern agricultural subsidies i.e. seeking a global free market in agricultural commodities, this was not a national struggle against powerful northern neighbours, for the lifting of subsidies would benefit the Brazilian ”soy barons and other giant agro-industrial exporters that dominate Brazilian agriculture” ”These interests bring together Brazilian capitalists and land barons with giant TNCs …..that themselves, in their ownership and cross-investment structures bring together individual and institutional investors from around the world, such as Monsanto, ADM and Cargill.’
Robinson notes the harsh criticism of his “refusal to see uneven accumulation as a territorial process”.
In Ch 3 ”Beyond the Theory of Imperialism ” he castigates “the lynchpin of new imperialism theories…. the assumption that world capitalism in the 21st century is made up of domestic capitals and distinct national economies that interact with one another…driven by their national interests.”
I do not think Robinson would deny the existence of a local national capitalist class; rather his point is that such classes are of limited importance in analysing the dynamics of contemporary capitalism.
Let’s try this again. Maybe somebody will show me the error of my ways, and why Marx is wrong in repeatedly conjoining and identifying relative surplus value with the productivity of labor and increases in both with the application of fixed assets, value in the form of expanded means of production to the labor process.
The necessary labor in both advanced country N ( for North, but not North Korea) and super exploited country S (for South)is equal to the value embodied in a ton of steel. The working period in both countries is 40 hours per week.
In country N that time required to produce a ton of steel is 2 hours.
In country S that time required to produce a ton of steel is 20 hours.
Which country extracts in absolute terms, more surplus value from the labor process? Which country has a higher rate of surplus value?
“Which country extracts in absolute terms, more surplus value from the labor process? Which country has a higher rate of surplus value?”
I think the better question is, which country would be producing steel and which country wouldn’t be producing steel. Would it be the one that takes 2 hours or the one that takes 20?
Also referring to a point further up, looking at Marx when he says below the value of labour power he means below the normal level, and not below the minimum subsistence level (at least this is how I read him in volume 3). Another thing to think about.
In reality however both countries are producing steel, one country approximating Japan, or South Korea, and the other approximating China.
We can make the same comparison with coal production in China vs the US.
“In reality however both countries are producing steel”
Exactly!
Just to add to the flippant comment above, of the top ten steel producing companies in the world, 6 are from China. If you read up on the other companies you can see a trend of merger followed by partnership with some developing nation, for example Indonesia.
So the real point is that nations do not produce steel, companies do. So what you are saying is that 6 out of the top ten steel producing companies in the world are among the most inefficient in terms of productivity?
If you also look at steel production by year by nation in the advanced nations steel production has trended slightly down and in the developing nations very significantly up. Again the actual development of steel production, if we are to believe the productivity data of Sartesian, has moved to the most unproductive areas and away from the productive ones. Which chapter in Marx explains all this? i though he once quoted, Low prices knock down Chinese walls!
Actually companies don’t produce steel either, workers do. But since the selective employment of Marx’s theory here doesn’t appear to be a problem I can see why this passes as a more “correct” representation of the problem. Ch. 14 of Volume 3 effectively nullifies the need for this revisionism, and oddly enough is the source of its author’s misunderstanding.
Believe what you want. Steel production in China is dominated by state-owned-enterprises. It’s not exactly like POSCO, or Nippon Steel, or Arcelormittal, the most technically advanced enterprises, have picked up production and moved it to China.
It’s quite an easy thing to find man-hours per ton for steel production in various countries.
You can look it up, if you ever bothered to look up anything and be guided by something other than hearsay.
The “6 out of top 10” refers to gross volume, output; not productivity; not output per hour; not in revenue per worker; not in profit per production hour; not in any of the metrics that measure trends in development.
You can make the same argument for China’s coal industry, “6 of the top ten” blahblahblahblah, but every UNIT measure shows how “undeveloped” coal production is.
“If you also look at steel production by year by nation in the advanced nations steel production has trended slightly down and in the developing nations very significantly up.”
Yes, because the steel production is driven by the rate of profit, so the very applications of advanced technology that reduce productions times, enable workers to reproduce their wages in less time, expel living labor from production, thus reducing the value of labor, work to drive down the increment of profit in those enterprises in the “advanced areas.”
and the lack of advanced technology, the lower proportion of fixed assets, of already accumulated capital in relation to the proportion of living labor consumed in production yields a higher rate of profit. Marx does explain this in his discussions of rates of profit, and how the various rates of profit get evened out
This will get “evened out,” you can bet, the hard way, when the bubble around China’s steel industry bursts, and all that overproduction has nowhere to go.
The immense, and intense, overproduction of steel by the SOE’s in China; the declining profitability of the SOE’s, the announced mass layoffs in the SOE steel sector, the massive assumption of debt, including off balance sheet debt, “special investment vehicle” partnerships with local govts to buy and sell real estate have all been extensively documented.
And Robert is correct– We can verify the validity of Marx’s analysis by looking at the concrete history behind China’s massive output in steel production.
Back in 2000-2001, Thyssen Krupp, confronting the slowdown and anticipating a further slowdown in the world markets, and having developed improvements in the technologies of steel production, decided to get rid of portions of its older technology production plants.
Thyssen Krupp decided not to scrap these plants, but rather to seek buyers to dismantle them. lock, stock and two smoking barrels and carry them away.
The big buyer was……China, which dismantled the plants after purchase, using Chinese laborers working around the clock, 7 days a week, and shipped them to China.
Once there, the plants were “reanimated” by the dramatically lower wages paid by the SOE to the Chinese workers than that paid to Thyssen’s workers.
The older technology could once again produce a product more than competitive in price.
Of course it was no “transfer of value” through trade manipulations; no super-exploitation of labor in China by the Global North– it was the fact that with a dramatically lower, “archaic,” wage, that is to say the “less developed” reproduction cost of labor in China, that allowed the not-quite-yet completely archaic technology to garner a profit.
Michael Roberts,
If it is a stumbling block for the understanding that 1. somebody who is oppressed in one relation can at the same time be an oppressor in another relation 2. that it is possible to imagine a scenario where wealth is transferred from one nation to another without the workers of the latter benefiting from it, then it is not only the vulgar economists who are going to have a problem with coming to grips with reality.
I think the prime example of “super-exploitation” is the nazi work-camps.
Also, the debate is very rich in ideas and arguments, which only proves that, whether you agree with his point or not, John Smith’s book is very interesting and thought provoking. Its not just a matter of scholastic discussion. It all comes down to praxis, and the best strategy for the inter-national working class (too many times we forget that “internationalism” presupposes “nations”) in these dire times.
Imperialism is a historical phenomenon much older than capitalism. But since the 19th century, it’s come to acquire two distinct characteristics:
1)Its the struggle for world domination in the true sense of the word, meaning that for some nation-states there is virtually no place on the globe outside their (immediate or not) spheres of interest. I don’t agree with the view of “imperialist chain of command” or “imperialist pyramid” as it stretches the concept to the point where virtually every nation under the sun is imperialist.
2)Gradually “imperialism” lost its pre-modern, “white” (=nothing to hide) characteristics (colonies, direct political and military control, openly racial and religious signification of the process).
We should also pay heed (and i would like to know the author’s views) to the military characteristics of imperialism in the 21st century: war by proxies, black-ops operations, “orange” revolutions, civil wars, terrorism and the “war on terror” etc.
And what about the non-military submission of states and governments through debt? The example of Greece is illuminating: the first memorandum (2010) explicitly states that the country loses all the privileges that come from national sovereignty. The third memorandum (2015) states that the government can take no fiscal action without the consent of the creditors.
You want some “super-exploitation”?? I’ll give you super-exploitation. From the WSJ Weekend 3/12-3/13:
‘Instacart Inc. is cutting the fees it pays couriers who shuttle groceries in several cities, the latest Silicon Valley on-demand startup trying to contain costs in a tightened funding environment.
Instacart informed drivers in recent weeks in some cities, including San Francisco and Los Angeles metro areas, about new rates that in some cases will require workers to nearly triple their deliveries to make the same pay, according to emails reviewed by The Wall Street Journal.
Contract drivers in the company’s hometown of San Francisco who collect prepacked bags from grocery stores will earn $1.50 a dropoff, a cut of 63% from the previous guarantee of $4. Instacart is also slashing by 50% to 25 cents the commission it pays for each item in an order drivers collect when shopping in stores.
“We have made some recent changes to reduce variability in how much shoppers earn, and we are constantly innovating to help shoppers get orders,” Instacart said….
In its emails to drivers, Instacarts said drivers could still earn “$18 or even $20 or more per hours” based on its expectations for tips.’
“it’s expectation for tips.” That’s called reducing v by shifting the reproduction of the worker away from the employer and to…charities.
Nothing says primitive accumulation like the digital economy.
Welcome to the Global South, playing now in your neighborhood.
I think we can certainly see examples of super exploitation at the imperialist centres, though this usually involves immigrants who have fled the affects of globalisation at home. For example in the UK sports direct were virtually creating slave labour camps.
But, if we look at the macro data two things are clear,
1. workers in the developed world, regardless of productivity are paid substantially higher than the developing nations.
2. The so called sustained attack on workers in developed nations since the 1970’s is a myth.
Even in the time of austerity the targets are the most vulnerable and the weakest. Austerity is aimed at perhaps the bottom 20%. Everyone above that hasn’t really been affected as yet. though at the micro level you will find examples that contradicts this. But the general rule is as i have stated above.
Maybe Sartesian should take the advice he gives others, check the facts.
Of course I have checked the facts. The rate of poverty was halved in the US between 1959 and 1979, and with the absolute number in poverty declining, falling to about 11% of the population. After that it begins its climb upward, exceeding 15% in 2013, with an absolute number below the poverty line in the US now being about 50% higher than in 1979.
Maybe you ought to quit making up “general rules” when you clearly don’t know what you are talking about.
You are not checking the facts, you are cherry picking them and distorting them. Your sustained attack is a myth, the facts prove it.
You belief that the global North has not benefited from the exploitation of the global South is also against all the available data.
You use data to pull the wool over peoples eyes.
“Your sustained attack is a myth, the facts prove it.”
What facts are those? You haven’t provided any.
If I’m cherry picking, then certainly the overall sets of data ought to provide you with ample “facts” to refer to. All you’ve done so far is provide anecdotes…and postures.
“You belief that the global North has not benefited from the exploitation of the global South is also against all the available data.”
That’s not “my belief” because a) I don’t think there is such a thing as “global North” or “global South” b) the benefits that have accrued with “globalization” have accrued to a specific class and its agents c) what I do dispute is the “division of the world” into oppressed nations and oppressor nations.
I also dispute that the higher wage rates in the “advanced countries” are the product of lower wage rates in the less advanced countries; or are the result of the massive movements of capital into less developed areas over the last 30 years; or have been preserved by “super-exploitation”– the latest variation on the “primitive accumulation” pseudo-model of capitalism.
The burden of “superexploitation” proof is on the critics of Marx, which still hasn’t been theoretically (i.e. logically) provided, although Smith indicates that it is “empirically obvious,” even though value itself isn’t. The question isn’t that superexploitation is or isn’t possible at any one moment, but is it a possible development strategy in conditions of increasing productivity of superexploited through constant capital investment, what Smith describes. The answer is no, the math doesn’t add up.
See below addressing your points 1 and 2. Again I urge you to review Capital Vol 3 to clarify your “hang ups” about imperialism and wage differentials.
Questions for Edgar
First, you wrote today:
“1. workers in the developed world, regardless of productivity are paid substantially higher than the developing nations.
“2. The so called sustained attack on workers in developed nations since the 1970’s is a myth.”
No. 1 is certainly true, but I find No.2 hard to believe. Did you cite evidence for your claim? – I may have missed it.
Second, you wrote on March 10:
“When BMW moved their 5 series to Vietnam within six months the ‘uneducated’, ‘uncivilised ‘ and poorly paid Vietnamese workers were producing more cars per hour per week than the highly paid, ‘educated’ and ‘highly civilised’ Bavarian worker.”
Interesting and important. Can you cite an article or document that confirms this?
As someone who lives in the so-called “global south,” allow me to comment on 1 and 2. In terms of US $ workers here are paid less than workers in the global north (you can find all sorts of publications about ratios, from all sorts of research centers), but the difference is largely relative. A monthly wage of $700 in Ecuador provides one with a fairly comfortable existence in terms of consumer goods if one avoids products produced by TNCs that also sell in the US and Europe (cars and phones for example). Internally produced consumer items are cheap relatively (my weekly grocers bill for two comes out to $25 give or take). The government calculates minimum wage (366$ monthly) based on costs of a basket of basic commodities. Quality and quantity of goods aren’t comparable directly, but goods produced for global market (i.e. the biggest markets) tend to cost more. Marx explains why in Vol 3.
As for #2. A friend of mine is soing research on religion and neoliberal attitudes in the US. He finds total median wage from 1970s-present is largely static. Andrew Kliman finds the total wage bill for capital over the same time is largely static. That poverty within the working class is increasing for one sector with the 50% mark remaining roughly even, means higher tier wage earners are getting more from lower tier.
I think when you study wages and poverty you have to consider the level of debt carried.
Michael Hudson describes “a constant build-up of debt, and what junk economics doesn’t show is that America has taken off into a higher and higher level of debt in relation to government income, of family income and of corporate income, and I think we’ve finally reached the limit. And I think we’re now in what used to be called “the final crisis”. “The final crisis” is when the environment can’t continue along the laws that it’s been doing. It can’t restore the status quo ante because there’s only one way to restore equilibrium, and it’s not a self-stabilizing, an automatic stabilizer. If the problem is the credit system taking more and more personal income, for mortgage debt, student loans, for bank loans and the credit card debt, the only way that you can restore equilibrium is to wipe out the debt to the financial class.”.
(…)
“The federal government in this country guarantees mortgages up to 43% of their income. So, if the worker pays 43%, let’s say, for their home mortgage, about 10% for student loans, because you need to get a degree in order to get a job in order to qualify for a mortgage, and then maybe another 10% for an auto loan and some credit card debt in order to feed yourself, and so you’re already up to 60% and then the government takes 15% as pre-saving for social security and health care to produce enough of a surplus so that the tax rate on the upper 90% can be cut, so that the budget is in balance, then obviously, what you’re having is debt slavery, or debt peonage, instead of feudalism. So, I think if you can look at Marx’s laws of motion in a big sense, a huge gran d circle, then what we’re really seeing is not progress, but really what we’re seeing is what the ancient concept of time was, circle – the western idea is there is upward progress, but I think they all add up to a circular return, kind of a renewal of time, and this was Mesopotamia, Egypt, my teacher at the University of Chicago, Mercilia Eliade, wrote about The Myth of Eternal Return, but he didn’t talk about debt. And the whole point of eternal return in Mesopotamia was that any new rulers, the first thing they’d do was to proclaim a clean slate. wipe out the debt so that it can begin again. That was the ancient business cycle, and it worked. That’s the only way you can restore the status quo ante. The only way you can restore equilibrium is for government outside the business cycle. That’s why economists don’t talk about it. That’s the difference between the Marxist laws of motion and the economists’ laws of non-motion.”
Hudson is anything but sanguine about the prognosis. https://www.youtube.com/watch?v=AtQTLmK6lnQ .
I read the BMW story in an article in a business magazine, it was a few years ago but if I remember correctly it was talking about how BMW sales rose during the recession despite the weak global picture.
The claim that workers have not suffered a sustained attack has been backed up with evidence above. But if you want to look it up, look at the household disposable income statistics, look at hourly compensation by nation, look at food as a % of total spend by nation. Take in the fact that according to the UN 86% of the Earths resources are being consumed by 20% of the worlds population. Look at these stats for the UK:
Click to access dcp171776_368928.pdf
The picture could not be clearer, the world economy, and I think we can call it that, is primarily directed to fuel the consumption of the developed nations. A developed nations history can almost be traced by looking at the consumption patterns of the Global North.
In other words, Western consumerism, a fitting description i think, is built on a system of super exploitation, both of workers in the ‘global South’ and immigrant populations at the imperialist core. It is also built on plunder, land grabs and coercion. The main beneficiaries of this are the global capitalist class, especially those at the centre. Workers also share in the spoils of this system of international gangsterism, for example while many go hungry the best and most fertile land is given over to produce the products mainly consumed in the West. It is a simple story of capitalism, the wealthier you are the more you are able to consume, lend, borrow, get favourable interest etc etc etc. And if we take the stats often found on this site about the global elite and the concentration of wealth, when looked at the global picture the global elite in terms of wealth include a fair proportion of global north workers.
In other words the value of Labour power for workers in the global North is sustained, in part, by much lower levels for those in the global South.
That doesn’t mean I think global North workers are not exploited or that they shouldn’t actively look to overthrow capitalism. But you can’t hide from the facts. The claim that Western workers have faced a sustained attack to their living standards is simply false. Even during the austerity era the attack has been directed to the most vulnerable.
But if you can provide the statistics to show me evidence of this sustained attack, please go ahead.
Again there is nothing Marxist about your claims. You merely spout of a bunch of points any liberal could easily comjure and feel just as offended as you while failing to understand “why the global economy appears to be producing for consumption in the north.” First, capitalists only engage in economic activity to expand their capital value (Marx 101), not to treat norther workers to southern booty. This could be an outcome (and superexploitation can only be seen as plunder; which hasn’t been demonstrated at all yet), but you need a way to prove it. Not that 20% consumes 86% of the worlds resources, this says nothing of value relations, it is merely a statement about use-values and hypothetically could apply to socialist societies as well. But as I have said, superexploitation (a value relation) can’t be demonstrated vía Marx’s theoretical constructs because it is incompatible with capitalist social relations as an inner connection between various capitals. It can happen through a link between capitalists and peripheral modes of production tied to capitalism which dissappear daily. It could happen momentarily. It cannot be a development/accumulation strategy using capitalist means of extracting surplus value.
Perhaps you are hung up on structural inequality within capitalism that forces you to concoct or follow these theories which appear to explain the problem but in fact muddy up both Marxist logic and the problem itself. But we don’t need these extra theories, unless we are willing to abandon Marx.
So still no proof of superexploitation…
There was an invitation, and a challlenge, put out there to “recalculate” the rates of surplus value obtained in various industries in the US, to prove JS’s contention that higher rates of surplus value in capitals with a greater organic composition of capital were an illusion conditioned by a) infiltration of “value added” factors that masked the real make-up of the categories critical to the calculation itself and b) that different rates of relative surplus value basically cannot exist given an average intensity of labor and the same wage.
Nobody has taken up that invitation to recalculate, not rates of profit, but rates of surplus value.
A question was posed to demonstrate that the actual differences in the organic composition of capital in various industries, or within even one industry were immaterial to the mass of surplus labor and the ratio of that mass to the wage.
No one has undertaken that task.
Quoting Marx in Vol1, JS shows that increased productivity of labor can only mean the expansion of use-values with no influence on the relative surplus value.
Marx however states many times in many works that the productivity of labor is in fact not simply the expansion of use values, but the actual expansion of capital, through providing increased levels of surplus value
In chapter 16 of Volume 1, Marx writes:
“given the productiveness of labour and its normal intensity, the rate of surplus-value can be raised only by the actual prolongation of the working-day; on the other hand, given the length of the working-day, that rise can be effected only by a change in the relative magnitudes of the components of the working-day, viz., necessary labour and surplus-labour; a change which, if the wages are not to fall below the value of labour-power, presupposes a change either in the productiveness or in the intensity of the labour.”
In notebooks 3-4 of the Grundrisse, he writes:
“The increase in the productive force of living labour increases the value of capital (or diminishes the value of the worker) not because it increases the quantity of products or use values created by the same labour – the productive force of labour is its natural force – but rather because it diminishes necessary labour, hence, in the same relation as it diminishes the former, it creates surplus labour or, what amounts to the same thing, surplus value; because the surplus value which capital obtains through the production process consists only of the excess of surplus labour over necessary labour. The increase in productive force can increase surplus labour – i.e. the excess of labour objectified in capital as product over the labour objectified in the exchange value of the working day – only to the extent that it diminishes the relation of necessary labour to surplus labour, and only in the proportion in which it diminishes this relation. Surplus value is exactly equal to surplus labour; the increase of the one [is] exactly measured by the diminution of necessary labour.”
And this:
“It is sometimes said about machinery, therefore, that it saves labour; however, as Lauderdale correctly remarked, the mere saving of labour is not the characteristic thing; [12] for, with the help of machinery, human labour performs actions and creates things which without it would be absolutely impossible of accomplishment. The latter concerns the use value of machinery. What is characteristic is the saving of necessary labour and the creating of surplus labour. The higher productivity of labour is expressed in the fact that capital has to buy a smaller amount of necessary labour in order to create the same value and a greater quantity of use values, or that less necessary labour creates the same exchange value, realizes more material and a greater mass of use values. Thus, if the total value of the capital remains the same, an increase in the productive force means that the constant part of capital (consisting of machinery and material) grows relative to the variable, i.e. to the part of capital which is exchanged for living labour and forms the wage fund. This means at the same time that a smaller quantity of labour sets a larger quantity of capital in motion. If the total value of capital entering into the production process increases, then the wage fund (this variable part of capital) must decrease relatively, compared to the relation if the productivity of labour, i.e. the relation of necessary to surplus labour, had remained the same”
Clearly Marx is showing the relation between machinery, its impact on productivity, and the increase portion of the labor time that becomes surplus value– the part, the portion, the ratio, of capital of the constant capital that is exchanged for living labor declines. The portion of necessary labor has declined relatively.
In Volume 3 of Capital, Marx connects the increased productivity of labor created through the application of accumulated capital to the production process, this increase in relative surplus value, to the tendency of the rate of profit to decline:
“Moreover, it has already been demonstrated — and this constitutes the real secret of the tendency of the rate of profit to fall — that the manipulations to produce relative surplus-value amount, on the whole, to transforming as much as possible of a certain quantity of labour into surplus-value, on the one hand, and employing as little labour as possible in proportion to the invested capital, on the other, so that the same reasons which permit raising the intensity of exploitation rule out exploiting the same quantity of labour as before by the same capital.”
And:
“Now we have seen that, on the average, the same factors which raise the rate of relative surplus-value lower the mass of the employed labour-power. It is evident, however, that this will occur to a greater or lesser extent, depending on the definite proportion in which this conflicting movement obtains, and that the tendency towards a reduction in the rate of profit is notably weakened by a rise in the rate of absolute surplus-value, which originates with the lengthening of the working-day.
The tendency of the rate of profit to fall is bound up with a tendency of the rate of surplus-value to rise, hence with a tendency for the rate of labour exploitation to rise. Nothing is more absurd, for this reason, than to explain the fall in the rate of profit by a rise in the rate of wages, although this may be the case by way of an exception”
My personal favorite is Notebook 7 of the Grundrisse, the section on Capital as Fructiferous:
“The growth of the productive power of labour is identical in meaning with (a) the growth of relative surplus value or of the relative surplus labour time which the worker gives to capital; (b) the decline of the labour time necessary for the reproduction of labour capacity; (c) the decline of the part of capital which exchanges at all for living labour relative to the parts of it which participate in the production process as objectified labour and as presupposed value. The profit rate is therefore inversely related to the growth of relative surplus value or of relative surplus labour, to the development of the powers of production, and to the magnitude of the capital employed as [constant] capital within production. In other words, the second law is the tendency of the profit rate to decline with the development of capital, both of its productive power and of the extent in which it has already posited itself as objectified value; of the extent within which labour as well as productive power is capitalized.”
“What distinguishes surplus labour founded on machinery is the reduction of necessary labour time, which takes the form that fewer simultaneous working days are employed, fewer workers. The second moment, that the increase in productive power must be paid for by capital itself, is not free of charge. The means by which this increase in the force of production is set to work is itself objectified direct labour time, value, and, in order to lay hands upon it, capital must exchange a part of its value for it. It is easy to develop the introduction of machinery out of competition and out of the law of the reduction of production costs which is triggered [36] by competition. We are concerned here with developing it out of the relation of capital to living labour, without reference to other capitals.”
Well, I think Marx’s analysis explains what has happened in capitalism in the “advanced” and “less advanced” areas and in so doing, pretty much explodes the notion of “super-exploitation,” driving the cost of labor below its value as the determining factor in capital accumulation.
Super-exploitation can occur– anywhere; and it can even grow; but it cannot sustain the accumulation of capital, the actual expansion of the means of production as capital.
I’m sorry that deadlines and pressures of work forced me withdraw from the debate on my book – apologies to Sartesian, Michael and others for not until now answering your questions and comments, which I’ve found immensely useful and stimulating. For the record – and to reignite the debate, if you desire this – I am posting responses to major outstanding questions.
The productivity of labour and the organic composition of capital
This post addresses Sartesian’s question (posed, and therefore answered by me, both in the comments to Michaels original book review, and here, in comments on his ‘Thoughts’: “Can workers produce values equivalent to their own wages in less time… through the expansion of fixed assets…?” S/he answers yes, arguing that (given equal wages) workers in sectors with a high capital/labour ratio are subject to a higher rate of exploitation than in sectors with a low capital/labour ratio. I say no, arguing that “assuming both labors are of average intensity and assuming they are paid the same wages, the quantity of value produced in a standard working day by the hamburger-flipper standing in the car-park of a steel factory is the same as that produced during the same time by the steelworker inside that factory” (p242).
The answer to this matters a lot. If Sartesian is right then there’s a large hole in my argument that the global shift of production to low wage countries witnessed in recent decades has been driven by substantially higher rates of exploitation available in those countries. I remain convinced that I am right and that Sartesian is wrong, but in my haste to refute her/his argument I’ve missed an important detail, a grain of truth that needs to be rescued, and have failed to pin-point exactly where Sartesian’s error lies.
Sartesian says s/he agrees “that no matter how “advanced” the production process, how great “c”– and in particular the fixed asset portion of “c” is, the total value extracted in production… remains the same for that capitalist. 8 hours, after all, is always 8 hours. That is quite different from saying– regardless of the technical component, of the organic composition of capital in any or all particular sectors, the rate of surplus value– the portion of the working time that the capitalist appropriates without compensation, remains the same.”
Let us carefully examine this curious statement.
First, let us note that, in this context, “how great ‘c’ is” is just a different way of saying ‘organic composition of capital’. Thus the first part of Sartesian’s statement affirms that ‘the total value extracted in production’ in a given sector is independent of its organic composition. I agree with this. To argue otherwise, as does Michael Kidron and his modern-day disciples such as Alex Callinicos and Joseph Choonara, is to overturn this basic postulate of Marx’s theory of value. Sartesian is evidently aware of this and does not pursue this line of argument. Second, let us note that the value of this labour-power is determined by the quantity of socially-necessary labour time required for the production of the worker’s basket of consumption goods. This, too, is completely independent of the organic composition of capital in the sector in which this worker is employed. If we assume that the consumption levels of workers in sectors with different organic compositions is the same (i.e. that wages are equalised between the different sectors), then it necessarily follows that the rate of exploitation is identical, ‘regardless of the organic compositions’ of the different sectors, and the second sentence in Sartesian’s statement is nonsensical, and can only be made sensible by replacing ‘is quite different from saying…’ with ‘is the same as saying…’.
How does Sartesian justify this clanger? S/he wants to argue that ‘total value extracted’ in an 8-hour day is the same, but, using his/her words, “the portion of the working time that the capitalist appropriates without compensation” varies according to the organic composition of the capital which this labour sets in motion. With the value of labour-power given, (i.e., assuming uniform wages) Sartesian believes that workers in more capital-intensive sectors “produce values equivalent to their own wages in less time” than in less capital-intensive sectors. This directly and completely contradicts his/her affirmation that ‘total value extracted’ in an 8-hour day is the same, irrespective of organic composition.
So far, I have done nothing more than rehearse the dispute with Sartesian expressed in previous exchanges. Everything I’ve said so far in this comment applies to the rates of exploitation in different sectors with different organic compositions, and assumes that the productivity of each group of workers is the average for their particular sectors. In other words, it ignores intra-sectoral differences; i.e., it ignores what happens when an individual capital can produce a given commodity with less than the average socially-necessary labour-time. Most of the passages which Sartesian cites from Marx concerning relative surplus value to support his/her argument correspond to this level of abstraction and provide no justification for his/her argument. However, one extended passage cited by Sartesian deals specifically with intra-sectoral differences, i.e. it addresses differences between the average socially-necessary labour time required to produce a given commodity and the specific amount of labour-time needed for an individual firm to produce this commodity. About this, Marx says (Penguin, vol. 1 p435): “The exceptionally productive labour operates as intensified labour; it creates in equal periods of time greater values than average social labour of the same kind.” On the face of it, this appears to contradict Marx’s statement (vol. 1, p137) that “variations in productivity have no impact whatever on the labor itself represented in value… The same labor, therefore, performed for the same length of time, always yields the same amount of value, independently of any variations in productivity.” It is now clear to me that Sartesian’s error lies in her/his inability to resolve this apparent contradiction, and this is why s/he falsely believes that “rates of surplus value are dramatically higher… in the petroleum (or chemical, or computer equipment)” than in labour-intensive food production.
The contradiction between Marx’s two statements is only apparent because, in the first of these quotes, Marx focuses on firm-specific levels of productivity while in the second of these quotes he abstracts from this. The different rates of surplus value Marx talks about in the first quote deal exclusively with productivity differences between individual firms in a given sector, i.e. between firms producing identical commodities but in different amounts of time. Sartesian’s error is to transpose this to different sectors with different organic compositions. In order to see why this is a very big error, a major departure from Marx’s theory of value, we need to closely examine Marx’s argument.
In continuation of his first statement, Marx argues that “the capitalist who applies the improved method of production appropriates and devotes to surplus-labour a greater portion of the working day than other capitalists in the same business. He does as an individual what capital itself taken as a whole does when engaged in producing relative surplus-value. On the other hand, however, this extra surplus value vanishes as soon as the new method of production is generalised, for then the difference between the individual value of the cheapened commodity and it social value vanishes. The law of determination of value by labour-time….forces his competitors to adopt the new method. The general rate of surplus-value is therefore ultimately affected by the whole process only when the increase in the productivity of labour has seized upon those branches of production and cheapened those commodities that contribute towards the necessary means of subsistence, and are therefore elements of the value of labour-power.”
Several things of great importance arise from this.
First, the unequal distribution of surplus value is between capitalists ‘in the same business’, i.e. who produce the same commodities. The more productive capitalist will capture an extra share of surplus value at the expense of competitors whose productivity is lower than the average for that particular branch of production. It should be clear that this only applies to individual capitals in direct competition with each other, and does not in any way imply that capitals in branches of production with higher organic compositions have a higher rate of surplus value than those in branches of production with lower organic compositions. Sartesian’s argument therefore collapses in ruins.
My book deals with this issue as follows (pp241-4, asterixes indicate italics in original):
“Marx says [that] ‘a manufacturer who makes use of a new discovery before this has become general’ reaps a super-profit because his more technically advanced capital can produce a *given commodity* in less than the average socially necessary labor time required in the technically retarded country. These extra profits *only arise in competition between capitalists in the same branch*, producing similar goods in direct competition with each other, for example, cars, chemicals, or clothing, and results from capitals with differing costs of production all selling for the same price… Between branches of production, when trade is in dissimilar goods, matters are very different. Producers of entirely different commodities do not confront each other directly as competitors in product markets, but indirectly, as capitals competing for new investors. *Between* branches of production, assuming a uniform value of labor-power, relative prices are determined by the different amounts of socially necessary labor time required to produce each product and by profit-equalizing transfers of value generated by differences in the organic composition of capital….
“Value transfers to innovating capitals from less advanced capitals within a branch of production are the result of *differences in the individual productivities of the individual capitals* within that branch—and result in divergence in the rate of profit enjoyed by individual capitals. On the other hand, value transfers between different branches are effected by the *different value compositions of the total capital employed in the different branches*—and, in a unitary economy, in which capital and commodities freely flow, this results in *convergence* of the rate of profit between the different branches and the formation of an average, economy-wide rate of profit. Whether trade between countries involves competition between firms trading similar goods or instead involves the exchange of dissimilar goods is therefore of great importance, determining which type of value transfer is predominant. It is therefore highly significant that, as we saw in chapter 3, trade between imperialist nations is in similar goods, while, in contrast, trade between imperialist and developing nations are in different goods [chapter 3 discusses many exceptions to this, but argues that, in general, the relation between imperialist TNCs and their suppliers in low-wage countries, whether in-house FDI or arm’s length, is complementary, not competitive – e.g. M&S not compete with sweat-shops who make its garments]. We thus obtain this important result: in N-N trade differences in productivity are a prime cause of value-transfers and a prime determinant of above- or below-average profits, but in N-S trade *they are not*; and, for this reason, [innovation] does not explain anything about the interaction between imperialist and low-wage economies. An alternative explanation is required, one that rests on the central role played by the third form of surplus-value extraction, that is, super-exploitation.”
Second, more advanced production technique is only one of a wide range of factors which can cause surplus value to be unequally distributed between individual capitals. As is well known, Marx abstracted from all forms of monopoly that obstruct free competition. A capitalist with privileged access to cheaper raw materials or other inputs, or whose costs of transportation of finished commodities to the market are lower than for others in the same business, or which are able to profit from ‘brand rent’, will achieve the same result: a higher rate of surplus value than his competitors. To be consistent, Sartesian would have to argue that surplus profits arising from these factors also signify that its workers more rapidly replace the value of their labour-power, signifying a higher rate of exploitation.
Third, value, surplus-value etc are complex and contradictory social relations, and we should guard against reifying them, turning them into things, reducing them to mere numbers. The different rates of surplus value achieved by less- and more-productive capitals express the specific social relation between these capitals. When Marx says that “exceptionally productive labour operates as intensified labour,” this is only so because the labour employed by other capitals in direct competition with the innovating capital operate as less intensive labour. The exceptionally productive labour *operates as* intensified labour. This does not mean that this labour *is* more intense, i.e. that s/he is working harder and faster than average labour. It means that the effect, from the point of view of this individual capitalist, is *as if* his workers were working more intensively than average. Since the social value of the commodity is determined by the average socially-necessary labour time required for its production, it is clear that *all* of the labour employed in that sector counts equally towards the determination of this social average. This is why I explain in the book, in the midst of the passage quoted above, that
“It is important to note that, assuming labor of average intensity and complexity (we return to the subject of complex labor later in this chapter), all of the labor-power expended by workers employed in the less productive capitals counts equally toward total value, even if a disproportionate part of it is captured by the more productive capitalists. The more productive capitalists’ extra profits derive not from their own more productive workers but from surplus labor extracted from workers employed by technologically deficient capitals. Were these capitals to be driven out of production, the average socially necessary labor time required for the production of these commodities would decline, and with it their price and the surviving capitalists’ extra profits. Thus the value generated by productive workers in a given amount of time is independent of their productivity, even if the value added captured by their employers remains highly dependent on this. This is so fundamental, it must be repeated: a steelworker operating more technologically sophisticated machinery does not produce more exchange value, s/he simply allows her/his capitalist employer to capture a larger share of it. It follows that the rate of exploitation—assuming equal wages, intensity of labor, etc.—is not higher in more productive capitals than in less productive capitals, as Euro-Marxist critics of dependency theory argue.”
On the face of it, this passage from my book appears to contradict Marx’s statement that the exceptionally productive labour generates more value in a given amount of time than does average labour, but this contradiction is only apparent, for the reasons just given. Nevertheless, in retrospect, the book’s discussion of this issue is incomplete, and provides pedants and Euro-Marxists with a flimsy basis for rejecting my argument that the outsourcing of production to low-wage countries is driven by the higher rates of exploitation available there, and that this has been central to the (temporary) containment of the tendency the rate of profit to fall.
Response to ‘Thoughts on the debate on imperialism’.
Dear Michael, I regret that deadlines and pressures of work forced me withdraw from the debate on my book, and in particular that I didn’t answer questions that you posed before me on the eve of your post ‘Thoughts on the debate on imperialism’. For the record – and to reignite the debate, if you desire this – I am posting my responses to your questions.
Michael Roberts: “John Smith argues that the main form of exploitation in ‘the South’ (what used to be called the ‘Third World’) is through ‘super-exploitation i.e. wages being forced below the value of labour power, which is defined as the average amount in hours of labour that it would take to sustain and maintain the labour force in capitalist production.”
No, I do not believe that labour power has one average world-wide value. This is the point of view of Samir Amin, against which I explicitly argue (pp205-6):
“Samir Amin argues in the The Law of Worldwide Value that “labor-power has but a single value, that which is associated with the level of development of the productive forces taken globally,” and from this springs a simple concept of super-exploitation: workers who are paid below this global value are by definition super-exploited. [But this] converts the point toward which capitalism’s globalizing tendency is ultimately moving into something that already exists, or to put this another way, suppress[es] the very real contradiction between the national and international dimensions. There are two fundamental aspects to the relation between the value of labor-power and the development of the productive forces: on the one hand, as productive forces develop so the quantity of labor required to produce a given basket of consumption goods falls, and with it, therefore, the value of labor-power. On the other hand, the development of the productive forces stimulates the expansion of human culture and with it the development of new needs that are incorporated through social evolution and class struggle into the value of labor-power, causing the value of labor-power to rise. There is a national and an international dimension to both aspects; they cannot be reduced to one or the other for many reasons, not least that the giant strides in this direction during the neoliberal era have been accompanied by ever-deepening impediments to the unification of the global labor market.”
MR: “Other forms of exploitation under capitalism: absolute surplus value (namely through maximising the working day); or relative surplus value (namely lowering the cost in hours for maintaining the labour force in a given day); according to John, these have become secondary forms of exploitation under modern imperialism.”
This way of presenting the problem is misleading. What we are considering are not ‘different forms of exploitation’ but different ways to increase the rate of exploitation. I argue that, during the neoliberal era, the substitution of low-paid, more intensely exploited workers in low-wage countries for relatively higher-paid, less intensely exploited workers in rich countries has been a prime factor in countering the tendency of the rate of profit to fall, and that this corresponds neither to an increase in absolute surplus value nor an increase in relative surplus value. As the book explains (p238)
“Wage arbitrage-driven globalization of production corresponds neither to absolute surplus-value—long hours are endemic in low-wage countries, but the length of the working day is not the outsourcing firm’s main attraction—nor to relative surplus-value: necessary labor is not reduced through the application of new technology. Indeed, outsourcing is an alternative to investment in new technology. Raising surplus-value through expanding the exploitation of Southern low-wage labor therefore cannot be reduced to the two forms of surplus-value extraction analyzed in Capital—absolute and relative surplus-value. Global labor arbitrage-driven outsourcing is driven by lust for cheaper labor, and corresponds most directly to the “reduction of wages below their value.” In other words, global labor arbitrage, the driver of the global shift of production to low-wage nations, is the third form of surplus value recognized by Marx as a most important factor, yet excluded, as we have seen, from his theory of value.”
MR: “John also argues that the rates of surplus value in the imperialist countries and the South are the same, but it only appears that the Northern workers have higher rates (i.e. are exploited more) because of the transfer of value and surplus value takes place from the South to the North through multi-national transfer pricing etc and the lowering of the prices of imported goods.”
I haven’t the faintest idea where you get this from!!! If there is one thing that I have tried to stress above all else, it is that Chinese production line workers, Bangladeshi garment-makers etc are subject to higher rates of surplus value (a.k.a., in the current context, higher rates of exploitation) than workers in imperialist countries. The sentence preceding the last-cited quote from my book says “Analysis of contemporary imperialism must proceed from, and attempt to explain, a fact of transcendental importance: the systematic international divergence in the rate of exploitation between nations.”
I would also emphatically reject the notion that “it only appears that the Northern workers have higher rates (i.e. are exploited more)…” I don’t think it appears to anyone with unblinkered eyes that Northern workers are more exploited than their sisters and brothers in Bangladesh, China etc – not even to Northern workers themselves. The ONLY people who see things differently are eurocentric radicals who seek to use Marx to deny the realities of imperialist exploitation, or “Euro-Marxists” for short.
MR: “John goes on to argue that this shows that the imperialist North is oppressing the dependent South in just the way that Lenin described one hundred years ago. There are still ‘oppressor’ and ‘oppressed’ nations. Lenin and the old ‘dependency’ theories are correct.
No, not “in just the way that Lenin described…” In Lenin’s time capitalist relations had only begun to penetrate the subject nations; the relation between oppressor and oppressed nations was a relation between capitalist and precapitalist societies; the globalisation of the capital/labour relation was incipient, principally manifested in agriculture and resource extraction, and was only to invade modern industry six decades later. As I argue in the book (pp225-6): “Lenin could not have included a conception of how value is produced in globalized production processes because this phenomenon was only to emerge in a later phase of capitalist development. These circumstances have resulted in an inevitable disconnection, persisting right to this day, between Lenin’s theory of imperialism and Marxist value theory.”
MR: “ I have to say that I am troubled by some of John’s analysis. First, there are the categories of ‘North’ and ‘South’. Now I know that these are shorthand definitions for imperialist economies/nations on the one hand and ‘dependent’ economies/nations on the other, just like the term ‘Third World’ was. But shorthand terms can cause confusion…”
… and you then proceed to generate a great deal of needless confusion (“For example, obviously Mongolia and Moldova are geographically in the North but not part of the ‘North’… etc etc), whose effect is to dismiss this complex problem rather than shed any light on it… and to deny the continuing reality of national oppression, i.e. that some workers are more oppressed and exploited on account of the colour of their skin and the country of their birth or origin, that the global working class is deeply stratified along racial and national lines, so much so as to justify the description of apartheid – since its shares its form (conversion of low-wage nations into Bantustans that corral nationally-oppressed labour power behind militarised borders) and its essence (maximisation of surplus value extraction to the benefit of imperialism and its local lackeys).
I’m disappointed that you don’t ask how the theory of value can account for these facts and instead join with Sartesian and others in evading them. I’m also disappointed that your discussion of this point ignores what I said in an earlier response to a question from you about this:
“Neoliberal globalisation… [is a] new stage in the evolution of the capital/labour relation [which] possesses a very specific quality: the imperialist division of the world was inherited by capitalism; it is now inherent. In other words, the globalisation of the capital/labour relation, in the context of and on the foundation of a pre-existing division of the world into oppressed and oppressor nations, entails the internalisation of this division. Neoliberal globalisation is, therefore, the unfolding of the imperialist form of the capital relation.
“As a result, this latest stage of capitalist development has been leading not to convergence of the oppressed nations with the ‘advanced’ countries and the supersession of the North-South divide but to something meriting the term global apartheid, in which the southern nations have become labour reserves for super-exploitation by northern capitalists, producing industrial inputs and consumer goods, sustaining the western ‘consumer society’. This is imperialism on an entirely capitalist basis, in an advanced stage of its development, in which the globalisation of the capital/labour relation has taken place on the basis of inherited imperialist division of the world. In the neoliberal era, capitalism has fully sublated the old colonial division of the world; discarding all that is inimical to it and preserving and making its own all that promotes its continuation and expansion…The end of colonialism and the attainment of formal sovereignty may have emancipated the national bourgeoisies, but the great majority—those left with nothing but their labour-power to sell, in a word the proletarianised peoples of these countries—still await their emancipation. The world continues to be divided into ‘oppressed and oppressor nations’, but now the national bourgeoisies act as intermediaries and accomplices in the imperialist plunder of their nation’s nature and living labour.”
MR: “That brings me to the question of whether imperialist domination in the 21st century is mainly through ‘super-exploitation’ of the workers of the South, rather than mainly through the usual methods of exploitation (absolute and relative surplus value) that Marx concentrated his analysis on in the 19th century… In one national economy, there can be different levels of exploitation…But what holds within a country does not hold between countries. Different countries have different socially accepted such parameters. So I don’t think it is correct to talk of ‘super-exploitation’ internationally, of labourers in the North relative to labourers in the South, simply because wages in the latter are lower than in the former.”
There is a lot of confusion here, it seems to me. First, I do not say that workers in the South are subject to a higher rate of exploitation “simply because” their wages are lower. I do say that bourgeois economists and Euro-Marxists are wrong to argue that their wages are lower “simply because” their productivity is lower, as they do, and I present a mass of empirical and theoretical arguments to prove this. Second, your argument that it is “[in]correct to talk of ‘super-exploitation’ internationally” because “different countries have different socially accepted parameters” of what’s required to reproduce labour power does not stand up. As I have explained in my first point above, the concept of super-exploitation does not rest on the notion of a single, global value of labour power. If the value of labour power is higher in one country and lower in another, then – unless we except the bourgeois argument that the value produced by this labour is directly proportional to its value – it necessarily follows that the rate of exploitation is lower in the former and higher in the latter, whether or not these differences are “socially accepted.”
MR: “I don’t agree with Andy Higginbottom as quoted by John Smith, who said “National oppression is manifest not only by dispossession, it is reproduced within the capital labour relationship as super-exploitation, that is to say intense work, long hours and the payment of a wage below the value of labour-power [i.e.] the minimum social standards achieved at that time in the heartlands of capital.” (My emphasis underlined). These last words suggest that super-exploitation is defined as wages being lower than the value of labour power in the North, the ‘heartlands of capital’. That can’t be right.”
Why can’t it be right? If we assume that workers North and South work with average intensity and the length of the working day is the same in both regions, a lower value of labour-power in the South necessarily means a higher rate of exploitation. Defining a rate of exploitation that is higher than is standard within imperialist nations as ‘super-exploitation’ is perfectly valid and useful as a short-hand definition.
You then say “the importation of cheap wage goods from the South increases the rate of exploitation in the North because it lowers the denominator of s/v.” Well, not necessarily – this assumes that the size of the consumption basket does not increase. You follow this with some numerical examples – which add nothing because they are tautological, in that your (desired) conclusion – that “Super-exploitation in the South increases profits for the North…But the wages of the workers of the North are unchanged” – is also your premise. Northern wages are unchanged only because you chose not to change them!
You rhetorically ask “What is going on in the transfer of value created by the exploited workers of the South to the North? Well, it seems to me that it is exactly what Marx explained in Capital as a process of the transfer of value from less productive capitals to more productive ones.” This is very confusing. I suspect that “more productive capitals” is a sloppy shorthand for higher organic composition – this is suggested by your assumption of an equalisation of the rate of profit between these two groups of capitals. On the other hand, the literal meaning of your statement is very different from this: “more productive capital” suggests an innovating capital, a capital able to produce a given commodity with less than the socially-average quantity of labour – but in this case, we will see a divergences in profit rates, not an equalisation. Either way, your statement that this is exactly what Marx explained in Capital is insupportable – e.g. where does Marx discuss the effect on the rate of profit in one country of an increase in the rate of surplus value in another???
MR: “ In this sense, the workers of the North are not oppressing those of the South. Both the capitalists of the South and the North are, by squeezing more value out of the workers of the South. As Sartesian puts it: “Super-exploitation” certainly involves a transfer of value to the bourgeoisie. Indeed, it is subject to the same determinants as capitalist production anywhere in that the transfers and redistributions serve to create a general level of profit, and distribute that profit to the largest and most developed capitals with the most technically intensive structures. “Super-exploitation” does not involve a transfer of value to workers of advanced countries.”
*Nowhere do I argue that “workers of the North oppress those of the South.”* This is a crude characterisation of my view that expanded super- exploitation of workers in low-wage countries have compensated capitalists in imperialist countries themselves for expensive concessions (higher living standards, huge expansion of the social wage) made in order to secure docility and submission from their own workers. But only incurable dogmatists can exclude out of hand that some of these revenues are transferred to the state and used to finance healthcare or pensions, or that the capitalist benefiting from super-exploitation overseas may concede higher money wages to his own remaining employees. These may amount only to a mitigation of the rate of exploitation of these workers, but it certainly cannot be ruled out that such transfers may enhance the value of labour power so much that it exceeds the length of the working day – in other words, that such workers receive a super-wage, that such workers are a labour aristocracy.
MR: “Monopolistic structures are another way of transferring even more value from the South to the North, but it is still the same process of transfer of values from capitalists to capitalists, not from workers to workers. Marx’s law operates in a monopolistic market as in non-monopolistic markets.” This is, to be charitable, a weak argument: by definition the proceeds of capitalist production flow into the hands of capitalists – they own the commodities, they sell them, they gather the proceeds. Why must we disregard what then happens to them? If, on religious grounds (for that is what you risk turning Marxism into), we must rule out “transfers of value to workers”, how do we account for the wages received by workers employed in non-production activities, or in not-for-profit activities like state education? Are not their wages values transferred to them by their private capitalist or state employer?
In sum, your efforts to refute my argument rest on sophistry and a line of straw men. Towards the end of your ‘Thoughts’ you provide a striking example of both: “when wages are forced below the value of labour power and are held there for some time, that can change the value of labour power itself (which remember is a socially as well as physically defined category). When wages fall below the value of labour power and are each time in the succeeding production process kept lower than the value of labour power, this becomes the new standard of living for labour and the value of labour power falls. So the lower wage becomes the money manifestation of the new value of labour power and ‘super-exploitation’ disappears!”
MR: “Finally, there are the implications of the thesis. Was it ‘overproduction’ in the North that led to super-exploitation of workers in the South and lies behind the Great Recession and global financial crash? That seems to be what John saying at various points.”
This is another crude characterisation. In the conclusion to my book (p313), I argue that “The vast wave of outsourcing of production processes to low-wage countries…was a strategic response to the twin crises of declining profitability and overproduction that resurfaced in the 1970s… Exponentially increasing indebtedness succeeded in containing the overproduction crisis, but it has brought global financial system to the point of collapse. Outsourcing has boosted profits of firms across the imperialist world and sustained the living standards of its inhabitants, but this has led to deindustrialization, has intensified capitalism’s imperialist and parasitic tendencies, and has piled up global imbalances that threaten to plunge the world into destructive trade wars.”
You left out the ‘declining profitability’ bit in order to set up your straw man. As you can see from this quote, which repeats and summarises my previously developed argument, I explain that the expansion of debt was capital’s response to the crisis of overproduction that resurfaced in the 1970s, and that the outsourcing of production, the main subject of my book, was capital’s response to the declining rate of profit, and that these two manifestations of capital’s inherent contradictions have a common body and must be understand together. In the most general terms, the overproduction and the falling rate of profit both result from the growing productivity of labour. In times of crisis, they combine in a very specific way. The general tendency of the rate of profit to fall derives from the growing organic composition of capital, in which the value-producing element of capital, living labour, diminishes as a fraction of capital as a whole. Of course, this is what you constantly reiterate in your blog, and I agree with it. Overproduction has a specific and deadly effect: it destroys value. Overproduction in the steel industry is right now destroying value on a colossal scale (and this is just one of many reasons why Sartesian’s attempts to model the value relations of this sector by using statistics on value-added is dumb). So, the surfacing of overproduction has the potential to rapidly precipitate the latent tendency of the rate of profit to fall, and explains why capitalists are so terrified of its effects that they scramble to debase their currency, throw money out of helicopters etc in order to stop it happening.
You end by quoting the conclusion of Roberto’s excellent comment, which unfortunately until now I have not expressed my complete agreement with. “Smith’s economic analysis leaves me somewhat perplexed the political implications of his address. The workers of the dominated countries to free themselves from the domination of imperialism must fight against all the representatives of capital, including the bourgeoisie of their own country that lives off its exploitation. It is true that imperialism increases the gap between the dominant and the dominated countries, but this gap can never be overcome through inter-class alliance with its own bourgeoisie. Finally it must be said that, as there demonstrates the history of the past 30 years, the workers of the most developed countries are also exploited by capital, and with the growing economic contradictions, also their relative privileges are drastically reduced. This, in my opinion, objectively reopens the discussion of the necessary unity of the international proletariat to free both from the rule of capitalism as from its most odious expression of imperialism.”
I hope that when Roberto has read my book he will be less perplexed. Its penultimate paragraph:
“The southward shift of the working class, the reinforcement of the working class in imperialist countries through migration from oppressed nations, and the influx of women into wage labor in all countries means the working class now much more closely resembles the face of humanity, greatly strengthening its chances of prevailing in coming battles. Surplus-value extracted from these new legions of low-paid workers helped to dig the capitalism system out of its hole in the 1970s, when the imperialist order was challenged by overproduction, falling profits, and rising class struggle in its heartlands and by rebellions and revolutions in Asia, Africa, and Latin America. Together with their sisters and brothers in the imperialist countries, they have the capacity, the mission, and the destiny to dig a new hole, a grave in which to bury capitalism and bring to an end what Marx called “the pre-history of human society.”
My review of John’s Smith’s book
http://marxandphilosophy.org.uk/reviewofbooks/reviews/2016/2290
who is Walter?
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