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.”