The Economic Foundations of Imperialism: Guglielmo Carchedi and Michael Roberts HM London November 2019
The Economic Foundations of Imperialism: Guglielmo Carchedi and Michael Roberts HM London November 2019
The Economic Foundations of Imperialism: Guglielmo Carchedi and Michael Roberts HM London November 2019
of imperialism
Guglielmo Carchedi and Michael Roberts
HM London November 2019
Many aspects of imperialism
• Imperialism is primarily an economic mechanism and not a political
mechanism. Its basic aim is not political dominance but economic
exploitation. The former is a means to achieve the latter and not a
cause.
Focus on the transfer of value
• Its economic exploitation mechanism (international value transfers)
works via normal capitalist competition and not only in monopolist
competition (i.e. imperialist surplus-value extraction exists
irrespectively of the existence of monopolist super-profits).
• Value flows from the dominated countries to the imperialist countries
in a number of ways.
Ways to transfer value
• Unequal exchange through international trade
• Factor income flows (primary income from debt, equity and property)
500,000 0
400,000 Japan
Can -50,000 South Africa
300,000 Ita China
Fra -100,000 India
200,000
Ger Russ
UK -150,000 Bra
100,000
US TOTAL
0 Total -200,000
-100,000 -250,000
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
1975
1977
1985
1987
1989
1995
1999
2001
2003
2009
2011
2013
1979
1981
1983
1991
1993
1997
2005
2007
2015
2017
10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0
0.0
2.0
4.0
6.0
8.0
US
N e th
Ja p a n
C h in a
UK
G e rm a n y
F ra n ce
Lu xe m b o u rg
S w it z e r la n d
Ir e la n d
Canada
It a ly
S p a in
R u s s ia
Sw eden
A u s t r a lia
K o re a
In d ia
H u n g a ry
P o la n d
B r a z il
M e x ic o
P h ilip p in e s
Share of total gross primary income %
C h ile
US: the hegemonic economic power
In d o n e s ia
S A f r ic a
T u rk e y
C o lo m b ia
A r g e n ti n a
N ig e r ia
M a la y s ia
V ie t n a m
1000
1500
2000
2500
3000
3500
4000
4500
5000
0
500
Sw eden
UK
US
F ra n c e
G e rm a n y
Canada
Ja p a n
A u s t r a lia
H u n ga ry
S p a in
It a ly
K o re a
C h ile
R u s s ia
P o la n d
C h in a
C o lo m b ia
Imperialism and the also rans
S A fr ic a
P h ilip p in e s
Primary income credit/person $
M a la y s ia
M e x ic o
A r g e n ti n a
T u rke y
B r a z il
N ig e r ia
In d o n e s ia
In d ia
V ie t n a m
Imperialism owns the assets
Foreign direct investment stock ($trn)
20
18
16 G8 includes Netherlands
14
12
10
8
6
4
2
0
G8 BRICS
Unequal exchange (UE)
• The main way to appropriate surplus value for imperialist countries
from the periphery is through unequal exchange in international
trade.
• UE is the gain/loss of value when the producers sell at internationally
determined production prices. If the market price deviates from the
production price, there is a further loss/gain of value.
Transfer of value
•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 now 140 and the North gets a
transfer of value of 20 from the South. Thus 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.
Method of computing UE
• To work out the country national output (in labour hours)
• P = C + V + S where
• C = No 11 (K) capital stock x depreciation ratio 13 as above
= C consumed in annual production
• V = (N) no of employees (No 6) x w average real wage (No 21) as above.
• P = X Real GDP (no 10)
• S = P-(C+V)
• Then to adjust for the export sectors only; we adjust C +V +S by the share of exports to GDP for the bilateral trade.
• Source: World Bank for exports to GDP and IMF for direction of trade shares.
• Then we have C’+V’+S’ = EXPORT P for each country’s export trade with the other.
• Assuming C,V,S are known for the export sectors. We compute the average rate of profit (ARP) = total surplus value
divided by total capital invested in the export sectors. The market price (MP) is the value of the output before
equalization in each country, i.e. MP = C+V+S. The production price (PP) = total capital invested (C+V) + (C+V)R.
Finally, UE = PP (after equalization) – MP (before equalization), i.e. loss or gain due to equalization.
Recession. 0
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
The hit to GDP
• The transfer of value is much higher UE value transfer in trade between G7 and dominated economies as
% of GDP
as a share of GDP for the dominated 0.10
countries (5-10% of GDP) than for 0.05
the G7 (2-3%) although the negative 0.00
transfer of value for the dominated -0.05
has been declining. -0.10
Ricci*: Over the period, the global amount of value -0.15
transfers, corresponding to the 1.8 percent of global value
added… for developing economies, the relative size of -0.20
outflow transfers was very consistent, ranging from 10 to -0.25
20 percent of the domestic value added.
-0.30
*Unequal Exchange in the Age of Globalization, Review of
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Radical Political Economics 2019, Vol. 51(2) 225 –245
G7 Dominated
Higher composition of capital…..
• From Marx’s value theory, Organic composition of capital relative to the US (=100)
we would expect the 90
82
imperialist countries to 80
71
have significantly higher 70
organic composition of 60
productivity than 40
30
peripheral economies. 17
20 16
10
0
G7 BRICS
1963 2008
….higher productivity of labour
Labour productivity level relative to the US (=100)
90
81
80
70 64
60
50
40
30
21
20 15
10
0
G7 BRICS
1963 2008
Super-exploitation
• The question of super-exploitation in the ‘less developed nations’, as
revealed by extremely low levels of poverty, has taken a prominent role
in discussions over imperialism since the 1970s.
• In the lower technology countries (LTC), the OCCs are usually lower and
the rate of profit (before global equalization) higher than in higher
technology countries (HTC) because of lower productivity in LTCs.
• After the equalization of profit rates in trade, a part of the profits
generated in LTCs (with lower OCCs) is lost to HTCs (with higher OCCs).
So the rate of profit falls in the former. Capital in LTCs reacts by slashing
wages, through the use of “slaves and coolies”.
Transfer of value with super exploitation
• 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.
• MOST OF THE EXTRA SURPLUS VALUE FROM SUPER EXPLOITATION GOES TO THE NORTH. THE NORTH
NOW GETS 65S COMPARED TO 40S BEFORE.
• BUT THE SOUTH ALSO GETS A HIGHER SURPLUS VALUE THAN BEFORE (45S COMPARED TO 40S BEFORE)
THROUGH DRIVING WAGES BELOW THE VALUE OF LABOUR POWER.
Lower wages, higher rate of exploitation
• Wage levels in the G7 countries Rate of surplus value relative to the US (%)
are about 70-80% of the US, 5.0
4.5
while they are less than 20% in
4.0
the BRICS. The lower wage level 3.5
increases the rate of 3.0
exploitation in those countries. 2.5
2.0
1.5
1.0
0.5
0.0
UK Ger Fra Ita Can Jap G7 Bra Ind Chin Russ SAFr BRICS
1963 2008
Exploitation depends on two factors not one
• The rate of surplus value is determined both by labor’s productivity and
by the wages level. It is mistaken to focus exclusively either on the one
or on the other.
• These two factors do not have the same importance; one is determinant
and the other determined. Lower wages are a countervailing reaction to
the lower labour productivity and OCC in LTCs.
• Through international trade, surplus value flows from the low wage
countries to the high wage countries not because wages are lower in
the former than in the latter, but because in the low wage countries the
rate of surplus value is higher.
There is no international average
• Each country has its own value of labour power. Given the
technologically determined necessary and surplus labour, the national
values of labour power and the rate of surplus value fluctuate
according to the power relation between the two fundamental classes
in each country. Historically, specific features play also a role.
• What matters is the rate of surplus value between countries not
relative to some international average rate of surplus value.
Value transfer with a trade surplus
• North = 80c + 20v + 20s = 120V.
• Rate of profit 20s/(80c+20v) = 20% Rate of exploitation 20s/20v = 100%
• South: 80c + 120v + 120s= 320V.
• Rate of profit = 120/(80c+120v) = 60% Rate of exploitation = 60s/60v = 100%
• Trade surplus for South rises from 40V to 200V
• Total: 160c + 140v + 140s = 440V
Average rate of profit = 140s/(160c+140v) = 46%.
• Transfer of value:
• North 80c + 20v + 47s = 147
• South 80c + 120v + 94s= 294
• North gains 27s and South loses 27s in value even though trade surplus rises by 160V
2016
2013
2010
2007
2004
Ratio of productivity of labour China-US (%)
China runs a huge surplus in trade with the
2001
1998
1995
1992
1989
1986
1983
US but has much lower productivity
1980
1977
1974
1971
1968
1965
1962
1959
1956
1953
1950
5
0
25
20
15
10
_x0004_2017
_x0004_2015
_x0004_2013
_x0004_2011
_x0004_2009
US deficit on trade with China $m
_x0004_2007
_x0004_2005
_x0004_2003
_x0004_2001
_x0004_1999
_x0004_1997
_x0004_1995
_x0004_1993
_x0004_1991
_x0004_1989
_x0004_1987
_x0004_1985
-100000
-150000
-200000
-250000
-300000
-350000
-400000
0
-50000
China transfers value to the US in trade
• The US gains more value UE transfer of value US-China $bn
through UE with China in spite 50
productivity. 10
-10
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Summary of UE results
• The productivity of labour is key to the transfer of value in trade between
imperialist countries and the periphery
• The major cause of UE between imperialist countries is technological
superiority. Differences in the rates of surplus value are significant but play a
lesser role.
• Between the imperialist and the dominated countries, the main factor in UE
is the different rate of surplus value.
• Exclusive emphasis on only one of these two factors is misleading. In the
last analysis, the result depends on whether the ratio of the two rates of
surplus value is greater or smaller than the ratio of the two organic
compositions of capital
Imperialism rules
• The 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 the
G7-10. There are no ‘sub-imperialist’ economies.
• China is not imperialist on these measures.
• The transfer of value from the periphery to the imperialist core is
rising.