HM2 – The economics of modern imperialism

At the Historical Materialism conference, the Saturday discussion between Professor David Harvey and myself on Marx’s double-edge law attracted more than 250 people.  Sunday’s session on the economics of modern imperialism that I had organised also attracted a good turnout of around 60 people, many of which were clearly experts on the subject.  Unfortunately for them, the four speakers (including myself) went over their allotted times and used up the available discussion time – apologies all round!

Anyway, at least the speakers presented some important arguments.  I spoke last.  But I think in this post, I shall outline my presentation first because I think it sets the scene for the others.  G Carchedi and I have been working on some new empirical work, trying to gauge which countries are the imperialist ones and how much value they are able to extract from the dominated or periphery (we prefer those names rather than ‘Global North’ and ‘Global South’, which is too geographical).  We emphasise that we are looking at the economic foundations of imperialism, not the political aspects or the superstructure if you like, ie the political control by imperialist countries over the periphery, or military might or interventions etc.  Direct political control through colonies has mostly disappeared (although not completely); so imperialism operates mainly through economic control now (while throwing in the occasional coup or proxy war).  After all, that is the aim of the imperialist powers: to appropriate as much value and resources from the dominated as possible. In that sense, the economic determines the political.

If we focus on the transfer of value from the periphery to the imperialist economies, there are several ways that this is achieved. There is value transfer through unequal exchange in international trade; through global value chain flows (transfer pricing) within multi-nationals; through factor income flows (debt interest, equity profits and property rents); through seignorage (ie control of the money supply: dollar is king) and through capital flows (foreign direct investment inflows and portfolio flows. ie buying and selling financial assets).

So which are the imperialist countries?  Carchedi and I define them as those countries which get a long-term appropriation of value from subaltern countries.  And this is achieved by the appropriation of surplus value by high technology companies (and countries) from low technology companies (countries).  So imperialist countries can be defined as those with a persistently large number of companies as measured by their high national average organic composition of capital (OCC) and whose average technological development is higher than the national average of other countries.

In our work, we used the IMF data on net primary income flows between countries. These are cross-border flows of profit, interest and rent.  We found that when these flows are netted out, there are about 10 countries at the most that fit the bill as imperialist.  Indeed, nothing much has changed in the 100 years since Lenin wrote his analysis of imperialism: it’s still the same countries.  No others have made it from dominated to imperialist status.  Net primary income per head is concentrated in the G7 plus a few other small states and the tiny tax haven states).  Every other country is an ‘also-ran’.

The G8-plus countries own the vast bulk of all the foreign-owned assets.  Even the so-called BRICS (Brazil, Russia, India, China and South Africa) own little abroad compared to the imperialist countries.  The G8 has six times as much FDI stock as the BRICS.

The main way that value is transferred from the periphery to the imperialist nations is still through international trade. There has been a large increase in intra-firm trade by affiliates to the parent company using price mark-ups (transfer pricing).  For example, UNCTAD reckons that trans-national companies (TNCs) are involved in 80% of global trade. And of TNC trade, about 40% is intra-firm; 15% through fixed contracts with suppliers and 40% with so-called arms-length firms (ie not owned affiliates but ‘captive’ domestic firms). Actual intra-firm trade (affiliates to parent company) is about 33% of all annual trade.  So the main way is still export trade on world markets with internationally set prices.(UNCTAD GVC)

In Capital, Marx shows that, through competition, there is a tendency for the profit rates measured in value (labour time) to equalise into prices of production. There is a transfer of value from some capitals to others to bring about this equalisation of profit rates.  This transfer process in competition also applies to international trade. The transfer of value from the dominated to the imperialist economies is achieved by the tendency to equalise rates of profit between nations in the international market for goods and capital.

The periphery has less technology and more labour and so produces more value (in labour time) to make the same product.  The imperialist countries have more technology and less labour and so produce less value (in labour time).  When profit rates are equalised through competition in world markets, then a portion of the extra surplus value that has been extracted from the workers by the capitalists in the South gets transferred to the capitalists of the North.  So, although international trade in goods and services appears to work through equality of exchange (money for goods, goods for money at set prices), beneath the surface, there is an unequal exchange of value (UE).  The imperialist capitals gain extra value while the peripheral capitalists lose value. Figure 13 of my PP presentation shows how this transfer of value works. (The economics foundations of imperialism)

Carchedi and I have made calculations of the magnitude of this transfer of value.  We used some aggregate databases and applied a formula for the transfer. Details of this are in Figure 14 of the PP presentation and excel files are available for anybody who wants to replicate and check our methods and workings.  We found that the transfer of value from the dependent bloc (defined as below) to the G7 rose from $20bn a year in the 1960s; to $90bn in the 1970s, dropping off to $50bn in the 1980s. Then with China becoming the great trading force, there was a take-off from the late 1990s to reach over $120bn by the time of the Great Recession.

So there is annual value transfer from these countries to the G7 through their international trade of $120bn or more a year. This annual transfer of value to the imperialist countries (G7) is equivalent to about 2-3% of their combined GDP.  But the transfer from the dominated countries is much more, around 10% of their combined GDP.  So there is a substantial transfer out of the South through unequal exchange.

Recently, other authors have tried to compute the magnitude of the transfer of value to imperialist countries. Using the World Input-Output database, Italian economist Andrea Ricci of Urbino University, Italy found that for the developed countries “the global amount of value transfers corresponded to 1.8 percent of global value added… while for developing economies, the relative size of outflow transfers ranged from 10 to 20 percent of the domestic value added.” Ricci unequal exchange And Greek Marxist economists, Lefteris Tsoulfidis and Persefoni Tsaliki, looked at the transfer of value in trade between the US and China.  They find a similar magnitude of bilateral transfer of value between the US and China as we do. URPE_CHN_2019

In our view, based on the Marxian theory of unequal exchange, the transfer of value from the periphery to the imperialist countries through international trade and competition takes place because the imperialist countries have a much higher organic composition of capital.  That expresses their technological superiority and delivers much higher labour productivity.  The G7 economies on average are five times more technologically superior than the BRICS and so four times more productive per worker.

This is where the other speakers at the session come in.  John Smith is author of the highly commended, award-winning book, Imperialism in the 21st century.  The book’s main argument is that imperialism rests and thrives on the ‘super-exploitation’ of workers in the ‘Global South’.

What do we mean by ‘super-exploitation’? Well, Marx referred briefly to the idea that some workers may end up receiving wages that are below the value of their labour power (the amount needed to live and reproduce). But he did not base his theory of surplus value on ‘super-exploitation’. For Marx, even without super-exploitation, workers were still exploited for surplus value and profit under capitalism.

However, John Smith reckons that super-exploitation is now the main generator of imperialist value gains in the 21st century and technological superiority and ‘normal’ exploitation are no longer in the driving seat, so to speak. For John, this is almost self-evident, given the incredibly low wages in the sweatshops of many Global South countries and the huge mark-ups in the global value chain for imperialist multi-nationals.  Anybody who denied this and argued that workers in the North were just as or even more exploited would be denying the very existence of imperialism.

At the HM session, Andy Higginbottom from Kingston University provided some of the theoretical support for  the thesis of ‘super-exploitation’ as the economic driver of imperialism (HM 2019 Labour super-exploitation plus transformation makes for international value (1).  He pointed out that Marx’s transfer of value model as shown in our PP Figure 13 assumed equal rates of surplus value. That clearly could not be reality. If you relaxed that restriction, then different rates of surplus value between imperialist and peripheral economies come into play in the transfer of value, and not just differing rates of organic composition and labour productivity.  And then it can be argued that the rate of exploitation is not just affected by labour intensity, productivity etc, but also by differences in wages (ie super-exploitation).

But I don’t think Marx’s theory of unequal exchange must assume equal rates of surplus value in all countries.  In Figure 20 of our presentation, we show that value is transferred from South to North through trade in the same way even with differing rates of exploitation; indeed if the rates of surplus value are higher in the South, then the North gains even more value in the transfer. But the Southern capitalists also gain more, because they are exploiting their workers even more, either by longer hours and intensity and/or by poverty wages.

The point is that the transfer to the North takes place because of the imperialist countries’ superior technology and labour productivity.  That enables them to sell their goods in world markets at costs below the international average.  The Southern capitalists try to compensate for their lower technical level and productivity by driving the wages of their workers down. So the higher rate of exploitation in the South, whether by super-exploitation or not, is a reaction to the failure to compete against the North.

In our empirical analysis, we found that the contributions to the transfer of value from South to North came from both higher organic composition in the North and higher rates of exploitation in the South – it is both, not just technical superiority, nor just exploitation. But there is also a transfer of value between imperialist countries through trade.  And indeed, competition there remains fierce.  The annual flows of FDI show that, until very recently, flows between advanced capitalist economies were higher than between the imperialist and the less developed South.  In the decade from 2007, inflows to developed economies exceeded inflows to developing economies.  Last year was the first reversal of that.

In his paper for the HM session, Smith developed an analysis of the rate of exploitation (s/v).  Exploitation and super-exploitation in the theory of imperialism.  He reminds us that Marx recognised a so-called ‘moral and historical’ component in the value of labour-power, i.e. “the extent to which the class struggle and general social evolution (different ways of saying the same thing) has resulted in the incorporation of new needs into those necessary for the reproduction of labour-power.”

That means that the value of labour power is partly set by the class struggle. But super exploitation is not part of Marx’s theory of value, or s/v.  In the process of production, capitalists might force a lower wage. If the necessities of life and their production prices remain the same, the lower wage purchases less wage goods (consumption falls) as the price of labour power (wages) falls below its value (the production price of those socially determined necessities). That is super exploitation.  But if this low wage is maintained permanently, workers must eventually accept a lower value of labour power in the goods and services that they can buy with it.  In that sense, super exploitation becomes simply a higher level or rate of (“normal”) exploitation because the value of labour power has been lowered by the class struggle. Yes, there is more exploitation, but not ‘super-exploitation’ as a new category of capital.

So I don’t think that super-exploitation is proven either theoretically or empirically as “the single-most important means of increasing the rate of surplus value and countering the tendency of the rate of profit to fall.” (Smith).  Or that imperialism has an “insatiable lust for super-exploitable labour”.  Imperialism has a lust for profit and is the result of the drive for more profit beyond national borders as the rate of profit at ‘home’ fell.  Denying the dominance of super-exploitation as the main form of exploitation under imperialism is not “imperialism denial”, like global warming or climate change denial, as Smith suggests.

Moreover, it just might be that the days of ‘super-exploitation’, as Smith categorises it, are ending.  At the launch of a new book at HM, Ashok Kumar, a lecturer in International Political Economy at Birkbeck University, argued that there are signs that the ‘monopsony’ power of the imperialist buyers of the products of suppliers in the global South is weakening because the number of producers is also shrinking.  This increases the countervailing power of the Southern capitalists (producers) against the Northern capitalists (retailers).  And that gives a window of opportunity for the workers of the Southern sweat shops to push up wages through successful struggles – of which Kumar gives examples.

While it is possible to argue any super exploitation of the workers in the low technology countries (the so-called “South) is caused by the technological backwardness of the South’s capitalists, it is impossible to argue the opposite; that this technological backwardness is caused by super exploitation. And if super exploitation is determined, it cannot be the main determinant element. In sum, the productivity of labour is key to the transfer of value in trade between imperialist countries and the periphery. The major cause of UE is technological superiority. Differences in the rates of surplus value are significant but play a lesser role. Exclusive emphasis on only one of these two factors is misleading.

Moreover, even it were the case that super-exploitation is the main cause of higher rates of surplus value in the peripheral economies, a transfer of value has to take place.  And that can only go to countries with vastly superior technology and labour productivity and can maintain that superiority through monopolising that technology.  Indeed, that was one of the arguments made by Sam King, from Victoria University Australia, at the HM session, based on his upcoming book on imperialism.

Sam reckoned that Lenin’s Imperialism was still valid.  There were still only a few countries reaping these value transfers.  Although Lenin refers to ‘monopoly capital, he did not mean that there was no competition between capitals. Competition still took place voraciously between various imperialist economies but also with ‘Southern’ capitalists. The monopoly was in the technical superiority of the imperialist companies, which they jealously guarded.  The labour productivity gap between these countries and the periphery had not altered since Lenin’s time.  Now in the 21st century, the US is worried that its technology ‘monopoly’ may be threatened by China’s move up the value-added ladder. This is the real reason for the current trade war.

The empirical evidence shows that imperialism is an inherent feature of modern capitalism. Capitalism’s international system mirrors its national system (a system of exploitation): exploitation of less developed economies by the more developed ones. The imperialist countries of the 20th century are unchanged – it’s still the G7/10. There are no intermediate, ‘sub-imperialist’ economies. And China is not imperialist on these measures. And the transfer of value from the periphery to the imperialist core is continually rising.

Finally, Marx’s model of unequal exchange shows that the economics of imperialism works through the transfer of value by the exploitation of the workers of the South by the capitalists of the South and then through the transfer of some of that surplus value appropriated to the capitalists of the North in international markets and internal global value chains. The workers of the North do not benefit in any way from this imperialist transfer.

To suggest, as some do, that the welfare state, pensions and national health services in the North were only possible because of the imperialist exploitation of the South is economic nonsense. After all, the great period of imperialist exploitation was in the neo-liberal period of globalization since the 1980s, when the welfare and wage gains of workers in the North were taken back.  Globalisation of the late 20th century was a response to falling rates of profit in the North (as it was in the late 19th century).  It is also a political insult against the class struggles made by Northern workers to achieve those gains in the first place.  Both the workers of the South and the North are exploited by capital.  It is capital that is the enemy of both.

47 thoughts on “HM2 – The economics of modern imperialism

  1. Thanks for this so useful and nice summary for all of us that could not make it to the conference!

    I have to say that it would be great to see the debate revive here, or see all relevant papers in a common edition.

    A few comments below:

    1. Marx, in an ascent from the abstract to the concrete, wanted to study first capital in abstraction of the state, then the state in capitalism, and only after that, international market (unfortunately he didn’t make it all the way!). The reason is obvious to me: the national state mediates the international market. Marx’s Capital is about the capitalistic mode of production (CMP), not about the whole capitalism function. It assumes that the CMP is the stronger determinant pole in its mutual determination with the superstructure of capitalism. This is the whole point of Marxian political economy of capitalism, which was made possible via the formal equivalence of all producers as sellers and buyers of commodities be it capital or labour that the domination of CMP brought to the history of human societies.

    However, this equivalence, which takes the forms of the assumptions of freedom of capital and labour to circulate in the market, and for prices to be set via the operation of competition (in all combinations, e.g., competition among capitals, competition among workers, and obviously between capital and labour) is constrained in two ways:
    a. it is mostly true only within individual national states, and only to a limited degree between states,
    b. the competition between capital and labour, i.e., class struggle is not purely economic, since labourers can unite and negotiate politically, whereas the bourgeoisie dominates the state.

    In both (a) and (b), the state becomes the crucial link.

    Therefore, when we speak of imperialism, we speak of two things:
    imperialism in the international relationships,
    imperialistic capitalism, i.e., as a stage in the historical development of capitalism.

    Imperialism existed before capitalism, e.g., relationships between pro-capitalistic empires, then, it took the form of relationships between capitalistic states and pre-capitalistic ones, and today, its dominant form is the one among capitalistic states.

    Therefore, imperialistic capitalism as the modern stage of capitalism coincides with the modern stage of capitalistic imperialism.

    Or, in other words, today, the domination of the CMP pole against the superstructural State pole is more and more under a big question-mark.

    If we may relax this a bit, we could put it differently: when we study the operation of the law of value in the international sphere (i.e., when we study the international market at the level of abstraction of the CMP, i.e., when the state’s role normally should not yet be visible, i.e., it should be abstracted), we have to account for modifications.

    What are these modificatiions? I agree with Smith and Higginbottom that the main modification is to introduce the rate of surplus value as a second independent variable (in addition to the organic composition of capital) into the system of marxist political economy.

    It is in this sense of super-exploitation, i.e., as systematic international differences in the rate of surplus value, that we should understand the concept and this is also what Smith and Higginbottom say.

  2. 2. Monopoly of technology is not the same as higher organic composition of capital. Monopolised technology leads to monopoly rents, because of restrictions to independently produce the same or a similar commodity. We have already discussed this problem of Carchedi’s logic and yours in a previous post on the political economy of intellectual (knowledge) labour.

    Even when the new technology raises the productivity of an industry, this is another industry from the one that produces the new technology. For the novel technology producer the reward is the market share taken from the producers of previous technologies. This is even more true for industries producing commodities for consumption, i.e., not means of production.

    When a national economy has many such technological monopoly champions, it manages to increase the average capital circulation speed, and thus, its rate of profit, whereas, monopoly rents accrue as well.

    The phenomenon I am describing now is parallel to the unequal exchange due to differing organic compositions of capital.

    When the dominant monopolies today are the ones of oil and other minerals’ production (i.e., “natural” monopolies) and of mainly consumer commodities production (personal computers and mobile phones, cultural industries like music and films, medications, etc), I strongly doubt that it is organic composition of capital and labour productivity, as opposed to monopoly, that underlies most of international transfer values. This is all the most true since most of production is anyway transferred to developing countries, together with the machinery of almost the latest technology (to join the cheap labour supply…).

  3. 3. So, here comes the problem:

    Monopoly is a result of state-institutional arrangements like different kinds of exclusive intellectual property rights or even more exclusive rights for exploitation of minerals and other natural resources etc

    Cheap labour is also a political issue of class struggle, oppression, dictatorships, dispossession of farmers etc

    The more super-exploitation (as defined in point 1), and monopoly (as defined in point 2) become important for modern imperialistic capitalism (and therefore imperialistic capitalism), the more it is the state that feedbacks to the CMP, even if we assume that CMP remains the dominant pole in the dialectics of CMP and state.

    For me, this is something to be expected even by Marx in Grundrisse, and it is an indication of the super-maturation of capitalism. Thus, although at the beginning of capitalism and as CMP rushes into history, there is a progressive historical evolution (using Heartfields draft:

    ‘Direct force, outside economic conditions, is of course still used, but only exceptionally. In the ordinary run of things, the labourer can be left to the “natural laws of production,” i.e., to his dependence on capital, a dependence springing from, and guaranteed in perpetuity by, the conditions of production themselves.’ (Marx, 1972: 689)

    things change later on:

    Lenin’s concept of imperialism, as a transitional stage of capitalism corresponds with the dynamic analysis of capitalist development framed by Marx. In his rough draft of Capital, Marx summarised:
    ‘As long as capital is weak, it still relies on the crutches of the past modes of production, or of those that will pass with its rise. As soon as it feels strong, it throws away those crutches, and moves in accordance with its own laws. As soon as it begins to sense itself and become conscious of itself as a barrier to development, it seeks refuge in forms which, by restricting free competition, seem to make the rule of capital more perfect, but are at the same time heralds of its dissolution and of the dissolution of the mode of production resting on it.’ (Marx, 1973: 651)
    Here the actual course of capitalist development, its refuge behind mercantilist tariff barriers, its emergence as free trade, and its retreat into monopoly and protection are pictured as the expression of capital’s own transition. Perceptively, Marx anticipates Lenin’s theme that capital will ‘take refuge in forms’ that are at odds with its own laws, such as monopoly, financial oligarchy, cartels and the export of capital. The specific features are not taken out of history, but related to the historical development of capital; they are, as Lenin explains, transitional forms.

    In other words, imperialism used to be EXTERNAL to CMP as far as international relations were not mainly relationships among capitalistic states. In today’s international chains of production and (surplus) value transfers, international states’ relations gradually become INTERNAL to CMP…

  4. 4. What is the most fundamental tendency?
    Monopoly competition for the systematic appropriation of super-profits based on monopoly rents, or super-exploitation (i.e., systematic differences in surplus-value rate)?

    I will vote for Smith’s and Higginbottom’s opinion on this for the simple reason that super-exploitation stands together with absolute and relative surplus value extraction as a third form of capitalistic exploitation, i.e., at a level of abstraction where neither competition of multiple individual capitals nor the state are still “visible”. In other words, (technological or monopoly) competition is a value distribution category, whereas super-exploitation is a category of the sphere of production of value.

    When we abstract from the monopoly competition or the differentiated state oppression and class struggle conditions, all that remains is the fact that all the additional surplus value entering in the system (and by the way counteracting the falling profit rate due to rising organic composition of capital) is the reduction in the consumption of labour, i.e., the increase in the surplus-value rate. When industrial workers of imperialistic countries are substituted by workers of developing countries all that changes at this level of abstraction is the international average level of labourer’s consumption. The effect of international differential provisions of state education, health, etc should also be taken into consideration in that respect.

    However, Michael, you are absolutely right, that this operation of super-exploitation is mediated by technology driven competition, either for relative surplus value (i.e., leading to higher organic composition of capital) or for monopoly rents (which I think is the rising tendency nowadays). In other words, just as the competition for relative surplus value raises the average organic composition of capital, similarly, the monopoly competition for the DISTRIBUTION of value, leads to super-exploitation in production in the non-monopolised branches and countries that cannot compete technologically.

    1. Your comments are very insightful and I agree with just about everything you say. This, in particular, is an essential point: “(technological or monopoly) competition is a value distribution category, whereas super-exploitation is a category of the sphere of production of value”

  5. 5. Together with monopoly rents/superprofits comes a labour aristocracy (just look at the investments of social security funds…).

    Even outside the part of the working class that could be characterised as labour aristocracy, we find that the imperialistic state cannot regulate the average level of state education, health and other social services, so as to benefit strictly ONLY the labourers that really need it (e.g., those that perform highly specialised or scientific labour). Many of the rest of the labourers benefit as well, and thus raise e.g., the value of the labour power of a bus driver in US relative to the one of a bus driver in Indonesia. In other words, the rate of surplus value varies more internationally than within the same national economy, or to make it more explicit, the rate of surplus value varies more between imperialist and exploited countries than within imperialist countries.

    Even when the rate of exploitation is the same, today’s communication technologies allow labourers to compare their ABSOLUTE consumption levels with labourers in other countries (which largely explains -together with imperialistic wars and interventions/conflicts- the immigration flows).

    Finally, in imperialist countries we find the biggest percentages of labour that is not productive of surplus value (state, marketing, management, advertising, big part of science, finance etc).

    All of the above factors affect the social and political struggles.

    I cannot know if the calculations of Jak Cope showing that ON AVERAGE the working class in imperialist countries is NOT exploited AT ALL, i.e., it consumes more or less as much value as it consumes.
    I would still thing that even if Cope is true, this on average still leaves the majority of the working class in those countries exploited to some degree, since the income distributions are heavily skewed.

    However, we cannot ignore the effect of the above factors upon politics. I think that they partly explain the almost non-existence of the communist parties and movements in most imperialistic countries.
    Instead, when you visit Greece, a country in EU periphery, not even a country outside OECD, I am sure you know that about 10% of the Greek people identify themselves as communists, anticapitalists, anti-imperialists, radical leftists or anarchists…, and our “orthodox” Communist Party of Greece scores 5-10% in national elections.

    1. What I think explains the virtual non-existence of the Communist parties and movements in most imperialist countries – and even more in the high-income oil exporters who are equally imperialist in their international policies and on the global stage – is not the working class not being exploited.

      The poor in these countries are extremely exploited, more so than they have been for many decades if not centuries. Moreover, opinion polls suggest that in many communities in imperialist countries their is overwhelming support for Marxism/Leninism or for the policies advocated by extant Marxist parties, notably in urban communities of color in the United States. I think 10 percent – your figure for Greece – greatly understates the level of support for anti-capitalist policies in the richest imperialist nations. In the United States, half all Millennials prefer socialism or even Stalinism over capitalism, a figure probably close to 100 percent in many urban communities of color.

      What explains the non-existence of Communist parties in the imperialist nations is the vastly enhanced wealth of the ruling class and the mass growth of marketing, advertising and mass television since the 1970s. With vastly lowered taxes and the growth of media technology, the ruling classes in the imperialist states (including the high-income oil monarchies) are able to effectively create a political monopoly. Alternatively and more accurately, I would say, re-establish the political natural monopoly earlier struggles of workers in Europe broke up in the century-and-a-quarter preceding the 1973 oil crisis.

      By shifting concentrated industrial production – the source of the class struggle that allowed the growth of mass democracy and socialism in Europe between 1848 and 1973 – to low-wage authoritarian regimes, investing heavily in arming those authoritarian regimes, and establishing tight links with the authoritarian oil monarchies (Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Bahrain, Oman and Brunei) the global ruling class has made it virtually impossible for the world’s workers to unite for a genuine classless democratic society. At the same time, huge investment in the imperialist nations (including the oil monarchies) in political and corporate propaganda means that those who can or do participate in politics are fed the most extreme capitalist doctrine and have no ability to question it.

      The ruling class would like to be able to do what the Nazis did and arrest – as it already has millions of nonwhite urban Americans who would provide a dangerous political base for a socialist party if they could vote – anybody who opposes the most extreme enrichment of the super-rich.

      1. I think that your comments refer to the super-exploited part of the US working class. I have nothing to say against it.

        However, in imperialist countries the super-exploited part of the working class is a minority, usually one that also bears some racist distinction (race, immigrants, refugees, etc).

        Instead, the more you move down the value and power chains, this part increases.

        In Greece, about 10% vote for communist/anticapitalist/radical parties. They don’t just support some of their policies.

        The percentage that actively supports them in unions, student associations etc is much higher.
        When I studies in electrical engineering about 20 of us would get about 350 student votes in a student union of about 1200 voters, and with this ~35% we would be the strongest power in our union, whereas for many decades now the state cannot reform the universities along their and EU’s desires, due to student strikes and university occupations that last for months.

        During the EURO crisis a percentage of about 40% of Greek people were positioning themselves against Euro and EU and even opting for exiting from them, although our participation there is a strategic choice of the (inter)national bourgeois class. Moreover, the Greek state, although buying the most expensive weapons and participating in NATO, has been very reluctant to provide soldiers in the various US and NATO wars, and, to my knowledge, there isn’t a single Greek dead soldier outside Greece after the Korea war…

        It is true that the mass media and political practices in US and other imperialistic countries increase the oppression and secure the political system from anticapitalist/socialist/communist politics. Moreover, the investments in media, cultural industries, armies, and police etc are anyway CONSUMERS of value, not producers, and therefore, imperialist countries that accumulate better can undertake more of it, than dependent ones. However, one should not underestimate the component of soft power I am talking about.

        I leave in Germany now. I know that it he benefits the German state gives to unemployed people stopped for one year, there would be a huge political crisis. They are very fundamental for gaining the support of the working class to the political system.

        In Greece, only 10% of all unemployed get any such benefit.

        Things are getting worse everywhere for the working class. As though with the development phase, this crisis or depression phase is worse for workers in dependent and exploited countries than in imperialistic ones.

        Imperialism is a means to “export” economic and political crisis to dependent countries. This is why revolution can explode easier in those countries and often takes the way of a national and democratic movement (e.g., Cuba). However, it is harder to stabilize and deepen such a revolution that a revolution in a more developed and resourceful imperialistic state.

  6. 6. I need to add a tiny comment:

    had imperialism been the “normal” capital competition in the international sphere due to organic composition of capital, labour productivity etc,

    then, the INTERNATIONAL SPHERE would become the main determination of capitalistic imperialism and imperialistic capitalism,

    and the question would arise as to why the same kind of competition within a national state is not imperialism…

    Only if the state, and with the state, monopolies and super-exploitation, come into the picture, we find get a notion of imperialistic capitalism that is logically prior to capitalistic imperialism.

    Monopoly competition and super-exploitation exist within countries as well, and are characteristic of the modern historical stage of capitalism ala Lenin.

    Of course, it is in the international sphere, where states are more than one and are polarised between a handful of imperialistic ones and the majority of exploited/oppressed/dependent ones, that imperialistic capitalism becomes more apparent, mediated by capitalistic imperialism, in which case, the latter follows logically the former.

  7. “The workers of the North do not benefit in any way from this imperialist transfer.”

    I find this intuitively highly implausible. After all, the workers in the imperialist countries have by and large not gone to the aid of the anti-capitalist revolution in the periphery, contrary to Lenin’s expectations.

    Do you argue it anywhere in detail?

    1. Unequal exchange is a transfer between capitals/countries. It is not between capital and labour. The formation of an average rate of profit in international trade means that part of the surplus value appropriated by Southern capitalists flows to the North. But that also means capital in the North appropriates extra use values produced in the South. So the workers in the North do not profit from UE, but they can gain from cheaper goods imported from the South. So they can be richer in terms of use-values, but not from the (exchange) value transfer from the South to the North. And so workers in the North can be better off. But these gains tend to be made only by a tiny minority of Northern workers, what Lenin called the labour aristocracy.

      1. Many thanks for the comment. I accept the main thrust of your argment. It was only the ‘in any way’ that bothered me, but now the ‘tiny minority’ does too.

        Clearly, most workers benefit from cheaper goods.

        Less clear to me is what happens to the (exchange) value transfer. Does none of it find its way into 1) the repressive apparatus that is used to quell insurgency in the periphery and help prevent countries from moving up the value-added ladder (‘the occasional coup or proxy war’ is a bit of a stretch), or 2) infrastructure development at home? If some does, it helps to maintain the supply of cheaper goods (1), and can mean that workers in the imperialist centre e.g. travel to work in less time and more comfortably than in the periphery (2). Transfer of value also (3) helps prevent peripheral countries moving up the value-added ladder. In sum, it would seem to benefit workers of the centre at least indirectly.

        If only an aristocracy of labour benefits economically from imperialism, it’s hard to explain e.g. the extraordinary strength of ‘social imperialism’ (socialism at home, imperialism abroad) in e.g. the British labour movement. In my experience, ‘false consciousness’ always has a real basis, i.e. is not purely delusional.

      2. What about deductions on those superprofits by imperialist states in the form of export tariffs, customs, overvaluation of their home currencies, and taxes? Would it not be possible through these mechanisms to cushion state coffers and pour these monies into the propping up of the welfare state? Such a transfer of wealth would not merely improve the lives of the labour aristocracy, but rather extend outward to the working class more thoroughly.

      3. MIchael there is nothing in principle that impedes this tiny minority (of labour aristocracy) to not be so tiny. This is something that has to be proven.

        Moreover, there are political consequences even if there is a systematic international difference of rates of exploitation. In conjunction with the difference between complex and simple labour, it can add up to a big difference in the absolute consumption of use values.

        Although Marx supposes that it is the relative character of exploitation more crucial for the formation of the social and political stance of the working class, this is true within a unitary economy of 1 and only level of development and with a tendency for the exploitation rate to converge to an average value, in which case the relative (to capital profits) becomes also absolute (among workers).

        Instead, today we have different aspects of relative, i.e., national wages relative to national profits, national wages relative to international profits (the first two are almost the same if national profits = imperialist profits), and national wages relative to international wages.

        Easier/Cheaper traveling and the modern communication technologies, documentaries in the TV etc (especially for the workers of imperialist countries) allow direct comparisons of how people live in US, EU, Japan, Canada, Australia etc and how they live in the rest of the world pretty much.

        I don’t understand how you expect that this doesn’t make a difference for politics when we accept that e.g., the sex discriminations DO make one, and there is a whole feminist social movement about it, although those discriminations concern far smaller differentials in wages and/or exploitation rates.

        In the end of the day Smith has very strong arguments:

        1. We should not conflate the value of the labour power = v with the value generated by it = s, because the two are linked by the surplus-value rate e = s/v, so that only when there is a single e, we have s growing with v, or, otherwise, and as long as s is transferred from exploited to imperialist countries, v can also grow a little bit (or more…) and take the form of super-wages.

        2. It suffices that the average e in imperialist countries and exploited ones is sufficiently different for all this discussion to become very important.

        3. Recognising such systematic differences doesn’t mean that we prioritise any kind of conflict between workers in imperialist and oppressed countries. It only means that we have to actively work our politics in a way to develop international solidarity on the common bases of e, be it big or small. Ignoring the e stratification, is not making unity easier, but more difficult.

  8. I agree that technological superiority is the material base for both value transfer and for superexploitation. To claim superexploitation comes before technological superiority is to fall to fascist mysticism (i.e. the argumento of “racial”, “cultural” superiority, or even on differences on climate between the two hemispheres).

    The unicorn that was the post-war welfare state was the result of multiple factors.

    The main one (material base) was the extraordinary profit rates resulted from the reconstruction, coupled with extremely cheap commodities coming from the Third World to feed the industrial infrastructures of these First World countries.

    The second most important one was the menace of the spread of the communist revolution thanks to the immense shadow cast by the USSR: its very presence gave a fabulous leverage for the working classes who already had a history of a well organized unionized structure under a socialist orientation. That’s why welfare states only arose in countries bordering the USSR (the European Peninsular, Japan and, as a late and distorted phenonenon, the Asian Tigers). Latin America received the “free market” treatment from the very beginning (there was no Marshall Plan for them).

    The third was the very legacy of social-democracy in some countries of Western Europe, but it’s important to highlight that many of the concessions of the welfare state only happened through behind the scenes cooption and betrayal of the revolutionary cause (e.g. Labour Party in the UK).

  9. Michael, your contribution was the only bright spot in what was one of the most turgid and useless sessions I have ever attended.

    Two things. Yes there is super exploitation but the word super is best used for selling toilet paper. Instead we should us the term “extreme exploitation” or more extreme exploitation because it expresses limits and whether those limits are breached. This occurs when the price of labour power falls below the value of labour power measured on an hourly basis, meaning the basket of goods needed to maintain the worker and their families are unobtainable leading to the premature death or sickness of the worker, generally by forcing them to compensate for this inadequate hourly wage by over-working hours. Secondly, when the subsidy to capital provided by labour produced outside the commodity economy breaks down, as for example in S Africa by 1973, when overcrowding in the “homelands” led to soil erosion destroying crops and depriving families of things like firewood and building materials.

    Secondly, we need to be careful when we talk about the equalisation of the rate of profit in this context. When imperialist firms contract out production they not only expropriate value but most of the surplus value as well. It can thus be said they exploit the local capitalist. This deprivation creates a crisis of accumulation in the colonial world for the local bourgeoisie, thus freezing the equalisation process which presupposes a greater retention of profits. This, rather than the technical superiority of capital in the developed world, is the main cause of the crisis in the colonial world and the ongoing gap.

    Only when China was able to retain more and more surplus value did it grow in stature to challenge the USA. We recall that in the early part of the century 50% of manufacturing value produced in China was realised outside China. I look forward to your data on China vs the USA share of global profits over time. I would consider this more important than the graphs you have posted above because the organic compositions you have posted are inflated in the G7 and deflated in the rest because of the transfer of value in the first place.

    The organic compositions

  10. Wouldn’t the point be that the equalisation of profit increases the rate of profit in the North, allowing imperialist countries to tolerate higher tax rates and thus social democratic welfare systems?

    The point about super-exploitstion vs very high baseline exploitation feels like splitting hairs, either way souther workers are deprived of resources such that northern workers have access to cheap commodities – feel like you should apply a sanity test here rather than laser focusing on the specifics of value theory

    1. True. Even the BEA recognised that cheap inputs (imports) boosted US productivity and profit margins. The recent collapse in the rate of profit in US manufacturing to levels last seen in 2009 is partly due to changes in the international value chain.

  11. The discussion is useful regarding the transfer of surplus value from the capitalists of some countries to the capitalists of other countries. But it is seriously incomplete. A crucial issue is the tension between established powers with stagnant economies (established in the sense of enjoying that transfer of surplus value) versus countries in a phase of vigorous development that now want “their fair share” of transferred surplus value. Germany was in the latter position in the years up to World War One. Germany and Japan were in the latter position in the years up to World War Two. And China is in the latter position today, while the U.S. stagnates.

  12. Thank you, Michael, for organising the session at HM, and for your very interesting account of it. There’s many points of discussion in your blogpost, and I’ll send a separate message for each one, to avoid a delay in responding and a tract when I do. But first, here’s a URL to a revised and finalised version of the paper –<
    Many small changes improve readability; more substantial changes are highlighted in light grey for the benefit of those who’ve read the paper from Michael’s link.

    1. Dear John,

      waiting for your reply to the comments above, I would like to ask for your permission to translate to Greek your paper for the HM 2019.

      It will be posted on the website of our Greek Marxists association (; one out of many!), without any financial implications, e.g., for free, no advertisements etc

      1. Dear Dionysios (and anyone else reading this).
        I’m very sorry for not responding promptly to your message, and yes, I’ve not made good on my promise to critically evaluate Michael’s report on the HM panel; apologies for that as well.
        Responding to Michael’s report is bound up with a closely related task—to further develop some of the ideas in my own paper to this panel. The note below is one element that is central to both tasks.
        I am delighted to give permission for my panel paper to be translated into Greek (please use the revised version I circulated shortly after the HM conference – I’m also delighted to inform you that this paper is shortly to be published as a chapter in a book to be published in English, Spanish and Portuguese by the Tricontinental Institute.


        Value-added and price of production

        Value-added is the basis for standard statistics on GDP, trade, productivity and much else. According to the concept of value-added, the value of a commodity is equal to the total cost of factor inputs plus the firm’s own ‘value-added’, i.e. the mark-up on its production costs; while a nation’s GDP, as I’ve shown in The GDP Illusion and in the chapter of that name in Imperialism in the Twenty-first Century, is equal to the aggregate value-added of all capitalist firms within a national economy (underlining just how speciously ideological is the concept of value-added, bourgeois economists consider governments to be incapable of adding value; the convention is to assume that goods and services generated by government activities merely replace the values consumed in the course of their production).
        This poses a question of fundamental importance: what is the relation between ‘value-added’ and Marx’s concept of ‘price of production”? I confess to being amazed that it has only recently occurred to me to ask such an obvious question! I am unaware of any work that does squarely pose this question—if you know of one, please help me out!

        So, what’s the answer? Value-added is fundamentally identical to the Marxist concept of price of production. Much debate, and enormous confusion, has been generated by a supposed inconsistency in Marx’s price of production formulae, in which all commodity inputs are defined in terms of labour values while the value of the commodities emerging from the production process are defined in terms of prices of production. To accuse Marx of inconsistency on this point is nothing but pedantry—the entire purpose of Marx’s prices-of-production formulae was to illustrate how, in a capitalist economy, the prices of all commodities systematically diverge from the quantity of socially-necessary labour power required for their production. Of course, the equilibrium market prices of all commodities are identical with their prices are production, but, had Marx defined the inputs in his famous formulae in these terms, the relationship between the values of commodities measured in terms of quantity of labour-power and as measured by prices of production would be completely invisible. And that’s the whole point!—prices of production reveal *nothing* about the quantity of (average, socially-necessary) labour-power required for the production of these commodities. And the relationship between value-added and prices are production is simply this: once inputs are defined in terms of prices of production, Marx’s formula becomes identical to the bourgeois concept of value-added.

        Towards the end of his discussion of prices of production in volume 3 of Capital, Marx says

        “Those very economists who oppose the determination of commodity value by labour-time, by the quantity of labour contained in the commodity, always speak of the prices of production as the centres around which market prices fluctuate. They can allow themselves this because the price of production is… [a] prima facie irrational form of commodity value, a form that appears in competition and is therefore present in the consciousness of the vulgar capitalist and consequently also in that of the vulgar economist.” Marx, [1894] 1991, p. 300

        The prices of capitalistically-produced commodities are ‘prima facie irrational’ because competition between capitals for profits causes prices of production to depart from socially-necessary labour time, so instead of revealing living labour to be the content of commodity value, this essential fact is systematically concealed. This seriously vitiates attempts by Marxists, Michael Roberts included, to derive the mass and rate of surplus value – s/v, and the rate of profit s/(c+v) using data constructed from the fundamentally bourgeois concept of value-added.
        Statistics based on value-added or prices of production do not reveal anything about the value and surplus value generated in any given firm, sector (if any, recalling that some firms/sectors are engaged in non-production activities) or nation—instead, what’s revealed in competition and measured in statistics on GDP and productivity are transformed values, irrational values. Specifically, two types of information completely disappear in the process of transformation of values into prices of production: information concerning the value transfers generated by differences in the composition of capital; and any and all information about the rate of surplus value, including any and all differences in the rate of surplus value arising from differences in the value of labour-power. In other words, Michael Roberts’ and others’ attempts to compute the rate of profit and determine its trajectory using data that ‘emerges in competition’, i.e. all available statistics on price and profit, *precludes* transfers of value generated by differences in the rate of exploitation, and are therefore fundamentally flawed.

  13. Michael, I am sure you make a distinction between “state” and “country”. Otherwise, you are using the mainstream interchangeable use of the two. Also, wouldn’t it better to talk about the political economy of imperialism rather economics of imperialism, especially that even many bourgeois economists acknowledge today the crisis and inadequacy of economics, a field that has very little connection to reality?

  14. Reading this note i remembered the work of Rolando Astarita, a marxist economist that disagree with the tesis of imperialism or unequal change. He has a whole book explaining his position, but i send you an article that resumes the question. Please, if you can give me your view over the arguments of Astarita… Thank you for your attention, sorry about my english.

  15. I promised to take up my many points of disagreement (and some of agreement) with Michael’s commentary one by one – but other tasks got in the way, and it’s also become clear to me that his views need to be tackled systematically. So I’m working on an article that does this.
    As a place-holder and a preview, here is a key passage from the introduction to my workshop paper:
    “Imperialism is today manifested in an apartheid-like global system of racism, national oppression, cultural humiliation, militarism and state violence that… has converted [southern nations] into reserves of super-exploitable labour-power for transnational corporations and their suppliers to feed on.
    “The systematic violation of equality between proletarians profoundly affects the global operation of the law of value—how could it be otherwise, given that value relations are social relations? The systematic violation of equality between proletarians is incontrovertible, and so are the divergent rates of exploitation that necessarily flow from this.
    “Yet many Marxists dogmatically insist that the value relations of the contemporary global economy are identical to those in the idealised marketplace analysed by Marx in his quest for a ‘general theory’ of capital, and that none of the simplifying assumptions he made to that end need to be relaxed.”
    Does this criticism apply to Michael’s view on the “economics” of imperialism? Yes, I will argue that it does…

  16. What about nations as Denmark and Norway? Why aren’t they represented in the graph? What is their relation to the Swedish Imperialism?

      1. I am baffled by the inclusion of Hungary.
        Hungary is full of western European (mostly German) companies. The steel mill in our hometown is Russian owned. And so on.

        Is it because of the Hungarian oil company (MOL)? I can’t think of anything else.

      2. Hungarian here. If I have to take a guess it is due to (1) Hungarian Oil and Gas Public Limited Company which has 2,000 service stations in nine countries (mostly in the region), (2) OTP Bank Group which is serving clients in 10 countries, and (3) Gedeon Richter Plc. ( with 7 global subsidiaries. These are the three largest companies on the Hungarian stock index. Apart from these I see no real measurable value transfers going towards Hungary. But if you look into the ownership structures of the above mentioned you’ll find that they are still majorly foreign owned & & (p. 16) so I really don’t think that the data provided by comrade Michael could be accurate.

    1. It was very difficult to hear Paul – the sound was terrible but from I could follow it seemed broadly correct. In our forthcoming paper on imperialism, Carchedi and I shall deliver a much more detailed and comprehensive analysis

  17. I know. But since it is at the top in the chart above – at the top of G7/G20 countries, my question is: why is it excluded in the new analysis of imperialism published on Brill? Not being in the G20 or G7 is not really a reason to leave it out.

    p. 13: “In the EU, one common bond is the euro, which is advantageous both to German and to the other European countries’ capitals and disadvantageous for labour.” This needs explaining.
    “The hegemonic imperialist countries become regional powers and gain spheres of political influence within their blocs.” Why? This also needs explaining. Example Germany and France vs. Portugal and Greece. OCC in Germany vs. the OCC in Portugal, etc.

    1. To make it easy for ourselves, we did the calculations of transfer of surplus value within the G20. We could have widened the data universe to include the small imperialist countries and many other dominated countries, but that would have required a mammoth piece of work. Maybe we shall return to that task later. Similarly it would be interesting to calculate the impact of surplus value transfers from the periphery to the core in the EZ to show, as you say, the hegemonic position of FRA-DEU over the rest. That would be another paper. By the way, we did do some calcs for transfers between the US and the UK (not published) which shows what you expect – a transfer from the UK to the US but quite small compared with the transfer from India, Brazil and China to the US (which we also did but did not publish).

  18. Regarding unequal exchange, can you give a pair of countries and the commodities you think are being sold below their value and the commodity sold above its value?

  19. Would you be able to elaborate on why you do not believe in the existence of sub-imperialism? From what I understand of your model, unequal exchange occurs as a result of uneven technical development resulting in uneven organic composition of capital. However the world is not simply divided into “developed” and “undeveloped” countries, rather levels of industrialization, automation, labor productivity etc. exist on a gradient. If this is the case, would this not still produce some transfer of value from the periphery to the semi-periphery, even if still more value is transferred from both to the core?

    1. If I am allowed to intervene, this looks to me more than different levels of dependence, imperialist exploitation and underdevelopment, than different levels of imperialism.

      I would call imperialistic the countries that have systematically – over a long period of time – a greatly positive balance of surplus value.

      Only those countries reproduce their capital at the expense of their competitive national total capitals, i.e., they consume, accumulate etc more surplus value than they produce at home.

      This is more in accordance with the leninist theory of a bunch of countries exploiting the whole world as well, which is pretty much the case today as well.

      Moreover, unlike Michael, I believe that monopoly superprofits are more essential than the difference in the organic composition of capital, for the imperialistic exploitation.

      Monopoly superprofits can by sustained in the long term only thanks to the support of an imperialsitic state (patents, natural resources, war etc).

    2. Hi CJ – yes there will be some transfer of value between countries and so those countries making substantial transfers to the imperialist countries can also receive transfers (small as you say) from even weaker economies. But these latter transfers are small compared to the transfers from the periphery to the recognisable imperialist bloc. And that applies to China as well. The gap on all measures of transfers (value, capital and credit) between the imperialist bloc of about 13 or so countries and the rest is so large that the differences between countries of the periphery are not significant enough, in my view, to talk of ‘sub-imperialism’. Another important feature of the gap between the imperialist countries and the rest is that it is long-lasting (100 years!) while gaps between peripheral economies are not only small but often fleeting. Also if we accept the category of ‘sub-imperialism’ in effect we are saying that every economy is partly imperialist and partly exploited. While true in a sense, it starts to distort and hide the powerful role of the imperialist bloc led by the US. In other words, is Brazil to be put on the same level as the US because it gets some transfers of value from say Paraguay?

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